Exhibit 99.1
Glacier Bancorp, Inc. Earnings for Quarter and
Nine Months Ended September 30, 2003
HIGHLIGHTS:
* Earnings for quarter of $9.697 million, up 13 percent from last year's
quarter.
* Diluted earnings per share of $.49, up 9 percent from last year's
quarter.
* Record nine month earnings of $28.477 million, up 20 percent from last
year.
* Record diluted earnings per share of $1.46 for the nine months, up
19 percent from last year.
* Acquisition of Pend Oreille Bank with total assets of $66 million
completed July 15, 2003.
* Non-interest bearing deposits increased $56 million, or 16 percent,
during the quarter.
* Cash dividend of $.20 declared; up 5 percent from the prior quarter and
33 percent from prior year quarter.
* New downtown Bozeman office opened September 29, 2003.
Earnings Summary Three months Nine months
($ in thousands, ended September ended September
except per share data) 30, 30,
2003 2002 2003 2002
Net earnings $9,697 $8,616 $28,477 $23,641
Diluted earnings per share $0.49 $0.45 $1.46 $1.23
Return on average assets 1.49% 1.58% 1.58% 1.48%
Return on average equity 17.10% 17.03% 17.00% 16.42%
KALISPELL, Mont., Oct. 23 /PRNewswire-FirstCall/ -- Glacier Bancorp, Inc.
(Nasdaq: GBCI) reported net quarterly earnings of $9.697 million which is an
increase of $1.081 million, or 13 percent, over the $8.616 million for the
third quarter of 2002. Diluted earnings per share of $.49, is an increase of
9 percent over the per share earnings of $.45 for the same quarter of 2002.
Return on average assets and return on average equity for the quarter were
1.49 percent and 17.10 percent, respectively, which compares with prior year
returns of 1.58 percent and 17.03 percent.
"We were pleased with the performance of all of our banks in the third
quarter," said Mick Blodnick, President and CEO. "However, prepayment of our
mortgage securities and the resulting premium amortization continued to
present earnings challenges and put pressure on our net interest margin.
Through growth in earning assets, especially in the form of loans, and the
continued success of generating low cost deposits, we have offset some of the
margin compression."
September 30,
Assets ($ in thousands) 2003 2002 $ %
change change
Cash on hand and in banks $67,538 $62,723 $4,815 8%
Investment securities and interest
bearing deposits 1,046,446 716,013 330,433 46%
Loans:
Real estate 345,091 383,890 (38,799) -10%
Commercial 829,513 674,139 155,374 23%
Consumer 292,516 291,164 1,352 0%
Total loans 1,467,120 1,349,193 117,927 9%
Allowance for loan losses (23,920) (21,342) (2,578) 12%
Total loans net of allowance
for loan losses 1,443,200 1,327,851 115,349 9%
Other assets 125,890 117,227 8,663 7%
Total Assets $2,683,074 $2,223,814 $459,260 21%
At September 30, 2003 total assets were $2.683 billion which is $459
million greater than the September 30, 2002 assets of $2.224 billion, an
increase of 21 percent. Internal growth was supported by the Pend Oreille
Bank acquisition which added $66 million to the asset base.
Total loans, net of the allowance for loan losses, have increased $115
million from September 30, 2002. $61 million of the increase occurred during
the current quarter, of which $50 million was from the acquisition.
Commercial loans have increased $155 million, or 23 percent, and continue to
be the focus of our lending. Real estate loan origination volume has been at
record levels, with $655 million for the nine months ended September 30, 2003,
up from $268 million for the nine months ended September 30, 2002, some of
which refinanced loans previously held by our banks. The refinancing of our
existing loans coupled with our decision to sell the majority of the real
estate loan production has resulted in a reduction in real estate loans of
$39 million from September 30, 2002. Consumer loans have increased $1 million
resulting from increases in home equity loans. Home-equity loans continue to
be the primary source of our consumer loan originations and have increased
approximately $25 million, or 15 percent, from a year ago. Home equity loans
comprise 66 percent of consumer loans at September 30, 2003.
Investment securities, including interest bearing deposits in other
financial institutions, have increased $330 million from September 30, 2002.
The cash received from the reduction in real estate loans has been redeployed
in mortgage related investment securities. These securities have
characteristics that result in less interest rate risk in an increasing
interest rate environment than retaining 30 year loans. Additional
investments were made to utilize funding liquidity that exceeded loan growth
opportunities, and expected principal reductions on mortgage related
investments.
September 30,
Liabilities ($ in thousands) 2003 2002 $ %
change change
Non-interest bearing deposits $392,746 $292,653 $100,093 34%
Interest-bearing deposits 1,225,653 1,206,000 19,653 2%
Advances from Federal Home Loan
Bank 714,837 402,367 312,470 78%
Securities sold under agreements to
repurchase and other borrowed
funds 58,787 50,371 8,416 17%
Other liabilities 27,946 31,231 (3,285) -11%
Trust preferred securities 35,000 35,000 -- 0%
Total liabilities $2,454,969 $2,017,622 $437,347 22%
Total deposits have increased $120 million from the September 30, 2002
balances of which $59 million came with the acquisition. There was a large
increase of $100 million, or 34 percent, in non-interest bearing deposits.
This growth in low cost stable funding gives us increased flexibility in
managing our asset mix. During the quarter non-interest bearing deposits
increased $56 million, or 16 percent, as the High Performance Checking program
(HPC) gained momentum. Based on the experience of the three banks previously
using HPC, we expect over time to replicate their results, increasing our base
of customers, providing additional low cost deposit balances and enhancing fee
income. Interest-bearing deposits are up $20 million, or 2 percent, the
result of the acquisition of $49 million. Federal Home Loan Bank advances,
other borrowed funds, and repurchase agreements, have also increased $321
million as we continue to take advantage of the flexibility of these funding
sources in this current period of low interest rates.
Stockholders' equity September 30,
($ in thousands except per $ %
share data) 2003 2002 change change
Common equity $224,149 $194,541 $29,608 15%
Net unrealized gain on
securities 3,956 11,651 (7,695) -66%
Total stockholders' equity $228,105 $206,192 $21,913 11%
Stockholders' equity to total
assets 8.50% 9.27%
Tangible equity to total assets 7.02% 7.59%
Book value per common share $11.80 $10.88 $0.92 8%
Tangible book value per common
share $9.57 $8.75 $0.82 9%
Market price per share at end
of quarter $27.43 $20.71 $6.72 32%
Total equity and book value per share amounts have increased substantially
from the prior year, primarily the result of earnings retention, and stock
options exercised. Net unrealized gains on securities declined $8 million
from a year ago the result of increasing intermediate term interest rates and
gains realized on sale of securities.
Operating Results for Three Months Ended September 30, 2003 Compared to
September 30, 2002
Operating results include amounts related to the operation of the three
branches acquired with the Pend Oreille Bank as of July 15, 2003.
Revenue summary
($ in thousands) Three months ended September 30,
$ %
2003 2002 change change
Net interest income $23,664 $22,132 $1,532 7%
Fees and other revenue:
Service charges, loan fees, and
other fees 5,172 4,699 473 10%
Gain on sale of loans 3,258 1,283 1,975 154%
Gain on sale of investments 5 -- 5 100%
Other income 478 475 3 1%
Total non-interest income 8,913 6,457 2,456 38%
Total revenue $32,577 $28,589 $3,988 14%
Tax equivalent net interest margin 4.12% 4.58%
Net Interest Income
Net interest income for the quarter increased $1.532 million, or 7
percent, over the same period in 2002. Total interest income is $726
thousand, or 2 percent lower than the same quarter in 2002, while total
interest expense is $2.258 million or 19 percent lower. The increase in
non-interest bearing deposits reduced the need to borrow additional funds.
The net interest margin as a percentage of earning assets, on a tax equivalent
basis, decreased from 4.58 percent for the 2002 quarter, 4.35 for the first
quarter of 2003, 4.17 percent for the second quarter of 2003, to 4.12 percent
in the current quarter. The decrease in our net interest margin slowed in the
third quarter. Premium amortization on mortgage related investments was
$3.976 million during the quarter, an increase of $3.059 million over last
year's quarter. Financial markets expect prepayments will slow, which would
result in less amortization expense allowing our net interest margin to
stabilize. We continue to deploy a strategy of investing in short term
securities that carry lower current yields. We believe it is inappropriate in
this rate environment to extend maturities in order to achieve higher yields.
This strategy in the near term will put pressure on our net interest margin,
however from a longer term perspective we are more comfortable with this
approach.
Non-interest Income
Fee income increased 10 percent over the same period last year, driven
primarily by an increased number of loan and deposit accounts. Gain on sale
of loans increased $1.975 million reflecting the low level of mortgage
interest rates and resulting increased home purchase and loan refinancing
activity. The income from mortgage origination activity serves as a
counter-balance to net interest income reductions from low interest rates.
Other income was substantially the same as the prior years' quarter.
Non-interest expense summary
($ in thousands) Three months ended September 30,
$ %
2003 2002 change change
Compensation and employee benefits $9,448 $7,541 $1,907 25%
Occupancy and equipment expense 2,536 2,340 196 8%
Outsourced data processing 393 547 (154) -28%
Core deposit intangibles amortization 308 359 (51) -14%
Other expenses 4,362 3,210 1,152 36%
Total non-interest expense $17,047 $13,997 $3,050 22%
Non-interest Expense
Non-interest expense increased by $3.050 million, or 22 percent, from the
same quarter of 2002 including expenses from the acquisition of the three Pend
Oreille branches, two additional branches in Boise, Idaho, and a new branch in
downtown Bozeman, one of the fastest growing cities in Montana. Compensation
and benefit expense increased $1.907 million, or 25 percent from the third
quarter of 2002, with commissions for loan originators, additional support
staff for increased volumes, the new bank branches, and a higher accrual rate
for employee profit sharing contributions, accounting for the majority of the
increase. Occupancy and equipment expense increased $196 thousand, or 8
percent, the result of adding additional facilities. Outsourced data
processing expense decreased by $154 thousand, or 28 percent, resulting from
bringing the core processing for each subsidiary bank onto our in-house data
system. Other expenses increased $1.152 million, or 36 percent, however, the
2002 quarter benefited from the reversal of a $323 thousand merger related
expense accrual so the increase from operations was $829 thousand, or 26
percent. The increase was primarily from start up expenses on implementing
the High Performance Checking program at the four banks not previously on the
program, additional advertising expense, and costs associated with new branch
offices and the Pend Oreille acquisition. The efficiency ratio (non-interest
expense/net interest income + non-interest income) was 52 percent for the 2003
quarter which is up from 49 percent for the 2002 quarter but lower than the 53
percent, excluding net security gains, in the second quarter of 2003
September June December September
30, 30, 31, 30,
Credit quality information
($ in thousands) 2003 2003 2002 2002
Allowance for loan losses $23,920 $22,354 $20,944 $21,342
Non-performing assets 10,489 10,675 11,582 10,960
Allowance as a percentage of non
performing assets 228% 209% 181% 195%
Non-performing assets as a percentage
of total assets 0.39% 0.42% 0.51% 0.49%
Allowance as a percentage of total
loans 1.63% 1.59% 1.58% 1.58%
Net charge-offs as a percentage of
loans 0.075% 0.034% 0.261% 0.114%
Allowance for Loan Loss and Non-Performing Assets
Non-performing assets as a percentage of total assets at September 30,
2003 were at .39 percent, a decrease from .49 percent at September 30, 2002
and from the December 31, 2002 .51 percent. This compares to the Peer Group
average of .63 percent at June 30, 2003, the most recent information
available. The allowance for loan losses was 228 percent of non-performing
assets at September 30, 2003, compared to 195 percent a year ago. "Asset
quality continues to be an area where we spend a considerable amount of time
and resources to maintain quality," Blodnick said. "We continue to make
progress in the level of non-performing assets. Loan charge-offs have been at
very low levels through the first three quarters."
With the continuing change in loan mix from residential real estate to
commercial and consumer loans, which historically have greater credit risk,
the Company has continued to increase the balance in the allowance for loan
losses. The allowance has increased $2.578 million, or 12 percent, from a
year ago to $23.920 million, which is 1.63 percent of total loans outstanding,
up from 1.58 percent a year ago. The third quarter provision expense for loan
losses was $1.221 million, a decrease of $444 thousand from the same quarter
in 2002.
Operating Results for Nine Months Ended September 30, 2003 Compared to
September 30, 2002
Operating results include amounts related to the operation of the three
branches acquired with the Pend Oreille Bank as of July 15, 2003.
Revenue summary
($ in thousands) Nine months ended September 30,
2003 2002 $ %
change change
Net interest income $67,465 $64,099 $3,366 5%
Fees and other revenue:
Service charges, loan fees, and
other fees 14,769 13,169 1,600 12%
Gain on sale of loans 8,740 3,716 5,024 135%
Gain on sale of investments,
net of impairment charge 1,253 2 1,251 62550%
Other income 1,477 1,753 (276) -16%
Total non-interest income 26,239 18,640 7,599 41%
Total revenue $93,704 $82,739 $10,965 13%
Tax equivalent net interest margin 4.21% 4.52%
Net Interest Income
Net interest income increased $3.366 million, or 5 percent, over the same
period in 2002. Total interest income is $3.636 million, or 4 percent lower
than in 2002, while total interest expense is $7.002 million or 19 percent
lower. Lower interest rates were the main reason for the reduction in
interest income and interest expense. Investment income is also lower because
of prepayments on our mortgage related investments which increased the
year-to-date premium amortization by $7.3 million over the prior year. The
net interest margin as a percentage of earning assets, on a tax equivalent
basis, decreased from 4.52 percent in 2002 to 4.21 percent in 2003. The
additional investments add to net interest income but at a lower yield. The
interest spread on the increased investments is lower than the historic spread
which reduces the net interest margin.
Non-interest Income
Fee income increased $1.600 million, or 12 percent, over the same period
last year, driven primarily by an increased number of loan and deposit
accounts. Gain on sale of loans increased $5.024 million reflecting the low
level of mortgage interest rates and resulting increased home purchase and
loan refinancing activity. Other income was lower in the current year by
$276 thousand primarily the result of reduced loan servicing income.
Gain on sale of investments, net of an impairment charge of $2.279 million
for impairment of value of collateralized mortgage obligations, increased
$1.251 million from the prior year. Market conditions provided an opportunity
to realize income currently that would have taken several years to earn if the
investments were held.
Non-interest expense summary
($ in thousands) Nine months ended September 30,
$ %
2003 2002 change change
Compensation and employee benefits $26,477 $22,856 $3,621 16%
Occupancy and equipment expense 7,266 6,965 301 4%
Outsourced data processing 1,221 1,508 (287) -19%
Core deposit intangibles amortization 937 1,080 (143) -13%
Other expenses 12,354 10,294 2,060 20%
Total non-interest expense $48,255 $42,703 $5,552 13%
Non-interest Expense
Non-interest expense increased by $5.552 million, or 13 percent, from
2002. Compensation and benefit expense increased $3.621 million, or 16
percent from 2002, with commissions for loan originators, other incentives,
additional support staff for increased volumes, acquisition of the three Pend
Oreille branches, three additional start-up branches in operation in Boise and
Bozeman, and increased accrual of employee profit sharing expense accounting
for the majority of the increase. Occupancy and equipment expense increased
$301 thousand, or 4 percent, the result of adding additional facilities.
Outsourced data processing expense decreased by $287 thousand, or 19 percent,
resulting from bringing the core processing for each subsidiary bank onto our
in-house data system. Other expenses increased $2.060 million, or 20 percent,
however, 2002 included a $323 thousand merger related expense reversal. The
increase in other expenses from operations was $1.737 million, or 17 percent.
Charges for data conversion of Mountain West Bank to the in-house data system,
start up expenses on implementing the High Performance Checking program at the
four banks not previously on the program, and volume related increases were
the primary reasons for the increased expense. The efficiency ratio
(non-interest expense/net interest income + non-interest income) was 51
percent for 2003 which is down from the 52 percent for 2002.
Allowance for Loan Loss and Non-Performing Assets
The provision expense for loan losses was $3.113 million which is a
decrease of $1.112 million from the prior year's nine month provision. The
allowance balance has increased $2.578 million, or 12 percent, from prior year
to $23.920 million, which is 1.63 percent of total loans outstanding, up from
1.58 percent a year ago. Net charge off loans as a percentage of loans
outstanding were .075 percent for the first nine months of 2003 which is down
from .11 percent for the same period in 2002.
Cash dividend
On September 24, 2003 the board of directors declared a cash dividend of
$.20 payable October 16, 2003 to shareholders of record on October 7, 2003.
This was a $.05 increase from the same quarters' dividend in 2002, or a 33
percent increase, and is a 25 percent increase over the dividend declared in
the first quarter of 2003.
Headquartered in Kalispell, Montana, Glacier Bancorp, Inc. conducts
business from Glacier Bank of Kalispell, First Security Bank of Missoula,
Glacier Bank of Whitefish, Valley Bank of Helena, Big Sky Western Bank of
Bozeman, Western Security Bank of Billings, all located in Montana, and
Mountain West Bank located in Idaho with two branches in Utah and one in
Washington.
Glacier Bancorp, Inc.
Consolidated Statements of Financial Condition
(Unaudited - dollars
in thousands, except September December September
per share data) 30, 31, 30,
2003 2002 2002
Assets:
Cash on hand and in banks $67,538 74,624 62,723
Interest bearing cash deposits 27,517 4,753 18,690
Cash and cash equivalents 95,055 79,377 81,413
Investments:
Investment securities, available-
for-sale 299,773 260,606 233,229
Mortgage backed securities,
available-for-sale 673,325 479,355 421,966
Federal Home Loan Bank and Federal
Reserve Bank stock, at cost 45,831 42,864 42,128
Total investments 1,018,929 782,825 697,323
Net loans receivable:
Real estate loans 345,091 361,522 383,890
Commercial Loans 829,513 673,256 674,139
Consumer and other loans 292,516 286,819 291,164
Allowance for loan losses (23,920) (20,944) (21,342)
Total loans, net 1,443,200 1,300,653 1,327,851
Premises and equipment, net 53,025 47,215 47,524
Real estate and other assets owned,
net 577 1,542 852
Accrued interest receivable 14,204 13,421 13,447
Core deposit intangible, net 6,171 6,822 7,181
Goodwill, net 36,909 33,189 33,189
Other assets 15,004 16,300 15,034
$2,683,074 2,281,344 2,223,814
Liabilities and stockholders' equity:
Non-interest bearing deposits $392,746 295,016 292,653
Interest bearing deposits 1,225,653 1,164,907 1,206,000
Advances from Federal Home Loan Bank
of Seattle 714,837 483,660 402,367
Securities sold under agreements to
repurchase 53,047 46,206 33,572
Other borrowed funds 5,740 15,087 16,799
Accrued interest payable 4,779 6,090 6,291
Current income taxes 1,731 815 1,642
Deferred tax liability 4,916 8,629 8,240
Trust preferred securities 35,000 35,000 35,000
Other liabilities 16,520 13,685 15,058
Total liabilities 2,454,969 2,069,095 2,017,622
Preferred shares, 1,000,000 shares
authorized. None outstanding -- -- --
Common stock, $.01 par value per share.
50,000,000 shares authorized 193 173 172
Paid-in capital 221,216 173,408 171,457
Retained earnings - substantially
restricted 2,740 28,557 22,912
Accumulated other comprehensive
income 3,956 10,111 11,651
Total stockholders' equity 228,105 212,249 206,192
$2,683,074 2,281,344 2,223,814
Number of shares outstanding 19,333,985 19,014,400 18,945,931
Book value per share $11.80 11.16 10.88
Tangible book value per share $9.57 9.06 8.75
Glacier Bancorp, Inc.
Consolidated Statements of Operations
(unaudited - dollars
in thousands,
except per share Three months ended Nine months ended
data) Sept. 30, Sept. 30,
2003 2002 2003 2002
Interest income:
Real estate loans $6,016 7,190 18,117 22,253
Commercial loans 13,137 12,007 37,116 35,088
Consumer and other
loans 4,999 5,643 15,131 17,142
Investment securities
and other 8,951 8,989 26,414 25,931
Total interest
income 33,103 33,829 96,778 100,414
Interest expense:
Deposits 4,102 6,429 13,480 20,544
Federal Home Loan Bank
of Seattle Advances 4,252 4,189 12,551 12,555
Securities sold under
agreements to
repurchase 157 144 490 433
Trust preferred
securities 903 903 2,711 2,711
Other borrowed funds 25 32 81 72
Total interest
expense 9,439 11,697 29,313 36,315
Net interest income 23,664 22,132 67,465 64,099
Provision for loan
losses 1,221 1,665 3,113 4,225
Net interest
income after
provision for
loan losses 22,443 20,467 64,352 59,874
Non-interest income:
Service charges and
other fees 4,088 3,726 11,523 10,332
Miscellaneous loan
fees and charges 1,084 973 3,246 2,837
Gains on sale of loans 3,258 1,283 8,740 3,716
Gains on sale of
investments, net of
impairment charge 5 -- 1,253 2
Other income 478 475 1,477 1,753
Total non-interest
income 8,913 6,457 26,239 18,640
Non-interest expense:
Compensation, employee
benefits and related
expenses 9,448 7,541 26,477 22,856
Occupancy and
equipment expense 2,536 2,340 7,266 6,965
Outsourced data
processing expense 393 547 1,221 1,508
Core deposit intangibles
amortization 308 359 937 1,080
Other expenses 4,362 3,210 12,354 10,294
Total non-interest
expense 17,047 13,997 48,255 42,703
Earnings before income
taxes 14,309 12,927 42,336 35,811
Federal and state
income tax expense 4,612 4,311 13,859 12,170
Net earnings $9,697 8,616 28,477 23,641
Basic earnings per share $0.50 0.46 1.48 1.26
Diluted earnings per
share $0.49 0.45 1.46 1.23
Dividends declared per
share $0.20 0.15 0.55 0.45
Return on average assets
(annualized) 1.49% 1.58% 1.58% 1.48%
Return on average equity
(annualized) 17.10% 17.03% 17.00% 16.42%
Return on tangible average
equity (annualized) 21.11% 21.32% 20.78% 20.94%
Average outstanding
shares - basic 19,310,538 18,930,436 19,244,857 18,832,983
Average outstanding
shares - diluted 19,667,623 19,251,694 19,558,424 19,162,317
SOURCE Glacier Bancorp, Inc.
-0- 10/23/2003
/CONTACT: Michael J. Blodnick, +1-406-751-4701, or James H. Strosahl,
+1-406-751-4702, both of Glacier Bancorp, Inc./
(GBCI)
CO: Glacier Bancorp, Inc.
ST: Montana
IN: FIN
SU: ERN DIV