GBCI Glacier Bancorp Inc

HIGHLIGHTS: 

Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income of $29.5 million for the current quarter, an increase of $1.4 million, or 5 percent, from the $28.1 million of net income for the prior year fourth quarter.  Diluted earnings per share for the current quarter was $0.39 per share, an increase of $0.02, or 5 percent, from the prior year fourth quarter diluted earnings per share of $0.37.  Included in the current quarter was $658 thousand of one-time acquisition related expenses.  “The fourth quarter capped off another very good year for Glacier Bancorp,” said Mick Blodnick, President and Chief Executive Officer.  “We produced all time record earnings led by strong loan growth, continued improvement in our credit quality and a solid and consistent net interest margin.  Collectively, this helped us to once again this year post some excellent performance metrics, a feat our entire staff should be very proud of what they helped achieve,” Blodnick said.

Net income for the twelve months ended December 31, 2015 was a record $116.1 million, an increase of $3.4 million, or 3 percent, from the $112.8 million of net income for the same period in the prior year.  Diluted earnings per share for the twelve months ended December 31, 2015 was $1.54 per share, an increase of $0.03, or 2 percent, from the diluted earnings per share for the prior year.

On October 31, 2015, the Company completed the acquisition of Cañon Bank Corporation and its subsidiary Cañon National Bank (collectively, “Cañon”).  Goodwill of $9.8 million resulted from the acquisition which was based on the estimated fair value of the assets acquired and liabilities assumed.  “With the closing of Cañon National Bank this past quarter we add another quality financial institution to our Company,” Blodnick stated.  “This new addition not only gains us access to the “front range” of Colorado with some new and exciting markets, but more importantly gives us some very talented bankers which were the real key to this transaction.”  On February 28, 2015, the Company completed the acquisition of Montana Community Banks, Inc. and its subsidiary, Community Bank, Inc. (collectively, “CB”) which resulted in goodwill of $1.1 million.  The Company incurred $2.3 million of legal and professional expenses in connection with the CB and Cañon acquisitions and the CB data conversion and integration during the current year.  The Company’s results of operations and financial condition include the acquisitions of CB and Cañon from the acquisition dates and the following table provides information on the fair value of selected classifications of assets and liabilities acquired:

	Cañon				CB
	Oct 31,				Feb 28,
(Dollars in thousands)	2015				2015			Total
Total assets	$	270,121			175,774			445,895
Investment securities	68,486				42,350			110,836
Loans receivable	159,759				84,689			244,448
Non-interest bearing deposits	89,083				41,779			130,862
Interest bearing deposits	148,243				105,041			253,284
Federal Home Loan Bank advances and other borrowed funds	—				3,292			3,292

Asset Summary

											$ Change from
	Dec 31,				Sep 30,			Dec 31,			Sep 30,			Dec 31,
(Dollars in thousands)	2015				2015			2014			2015			2014
Cash and cash equivalents	$	193,253			242,835			442,409			(49,582	)		(249,156	)
Investment securities, available-for-sale	2,610,760				2,530,994			2,387,428			79,766			223,332
Investment securities, held-to-maturity	702,072				651,822			520,997			50,250			181,075
Total investment securities	3,312,832				3,182,816			2,908,425			130,016			404,407
Loans receivable
Residential real estate	688,912				644,694			611,463			44,218			77,449
Commercial	3,733,517				3,581,667			3,263,448			151,850			470,069
Consumer and other	656,252				650,058			613,184			6,194			43,068
Loans receivable	5,078,681				4,876,419			4,488,095			202,262			590,586
Allowance for loan and lease losses	(129,697		)		(130,768	)		(129,753	)		1,071			56
Loans receivable, net	4,948,984				4,745,651			4,358,342			203,333			590,642
Other assets	634,163				592,997			597,331			41,166			36,832
Total assets	$	9,089,232			8,764,299			8,306,507			324,933			782,725

Total investment securities of $3.313 billion at December 31, 2015 increased $130 million, or 4 percent, during the current quarter and increased $404 million, or 14 percent, from December 31, 2014.  The increase in the investment portfolio from the prior quarter and the prior year fourth quarter was the result of continuing to selectively purchase investment securities with the Company’s excess liquidity resulting from the sustained increase in deposits.  Investment securities represented 36 percent of total assets at December 31, 2015 compared to 35 percent at December 31, 2014.

Excluding the Cañon acquisition, the Company continues to experience growth in the loan portfolio which increased $43.0 million, or 1 percent, during the current quarter.  Excluding the acquisition, the loan category with the largest dollar increase during the current quarter was commercial real estate loans which increased $25.7 million, or 1 percent.  The loan category with the largest percentage increase was residential construction (i.e., regulatory classification) which increased $12.4 million or 11 percent over the prior quarter.  Excluding the CB and Cañon acquisitions, the loan portfolio increased $346 million, or 8 percent, since December 31, 2014 with $278 million of the increase coming from growth in commercial loans.  “Our organic loan growth was well beyond our expectation this past year as a very strong first half of the year gave us the momentum to exceed our loan goal for 2015,” Blodnick said.  “Loan volume in the fourth quarter was much better than what we historically experience even with the customary drop in agricultural lending.  It was especially encouraging to again see an increase in residential construction lending.  We have been working very hard this year to improve our totals in this particular loan category and it’s nice to see it continue to generate positive results.”

Credit Quality Summary

					At or for the
	At or for the				Nine Months			At or for the
	Year ended				ended			Year ended
	Dec 31,				Sep 30,			Dec 31,
(Dollars in thousands)	2015				2015			2014
Allowance for loan and lease losses
Balance at beginning of period	$	129,753			129,753			130,351
Provision for loan losses	2,284				1,873			1,912
Charge-offs	(7,001		)		(4,671	)		(7,603	)
Recoveries	4,661				3,813			5,093
Balance at end of period	$	129,697			130,768			129,753
Other real estate owned	$	26,815			26,609			27,804
Accruing loans 90 days or more past due	2,131				3,784			214
Non-accrual loans	51,133				54,632			61,882
Total non-performing assets 1	$	80,079			85,025			89,900
Non-performing assets as a percentage of subsidiary assets	0.88		%		0.97	%		1.08	%
Allowance for loan and lease losses as a percentage of non-performing loans	244		%		224	%		209	%
Allowance for loan and lease losses as a percentage of total loans	2.55		%		2.68	%		2.89	%
Net charge-offs as a percentage of total loans	0.05		%		0.02	%		0.06	%
Accruing loans 30-89 days past due	$	19,413			17,822			25,904
Accruing troubled debt restructurings	$	63,590			63,638			69,129
Non-accrual troubled debt restructurings	$	27,057			27,442			33,714

__________1 As of December 31, 2015, non-performing assets have not been reduced by U.S. government guarantees of $2.3 million.

Non-performing assets at December 31, 2015 were $80.1 million, a decrease of $4.9 million, or 6 percent, during the current quarter.  Non-performing assets at December 31, 2015 decreased $9.8 million, or 11 percent, from a year ago.  Early stage delinquencies (accruing loans 30-89 days past due) of $19.4 million at December 31, 2015 increased $1.6 million from the prior quarter and decreased $6.5 million from the prior year fourth quarter.

The allowance for loan and lease losses (“allowance”) was $130 million at December 31, 2015 consistent with prior periods.  The allowance was 2.55 percent of total loans outstanding at December 31, 2015 compared to 2.68 percent at September 30, 2015 and 2.89 percent at December 31, 2014. The reduction in the allowance as a percentage of total loans was driven primarily by loan growth, stabilizing credit quality, and no allowance carried over from the bank acquisitions as a result of the acquired loans recorded at fair value.

Credit Quality Trends and Provision for Loan Losses

												Accruing
												Loans 30-89			Non-Performing
	Provision				Net				ALLL			Days Past Due			Assets to
	for Loan				Charge-Offs				as a Percent			as a Percent of			Total Subsidiary
(Dollars in thousands)	Losses				(Recoveries)				of Loans			Loans			Assets
Fourth quarter 2015	$	411			$	1,482			2.55	%		0.38	%		0.88	%
Third quarter 2015	826				577				2.68	%		0.37	%		0.97	%
Second quarter 2015	282				(381		)		2.71	%		0.59	%		0.98	%
First quarter 2015	765				662				2.77	%		0.71	%		1.07	%
Fourth quarter 2014	191				1,070				2.89	%		0.58	%		1.08	%
Third quarter 2014	360				364				2.93	%		0.39	%		1.21	%
Second quarter 2014	239				332				3.11	%		0.44	%		1.30	%
First quarter 2014	1,122				744				3.20	%		1.05	%		1.37	%

Net charge-offs of loans for the current quarter were $1.5 million compared to net charge-offs of $577 thousand for the prior quarter and net charge-offs of $1.1 million from the same quarter last year.  The current quarter provision for loan losses of $411 thousand decreased $415 thousand from the prior quarter and increased $220 thousand from the prior year fourth quarter.  Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of the loan loss provision.

Supplemental information regarding credit quality and identification of the Company’s loan portfolio based on regulatory classification is provided in the exhibits at the end of this press release.  The regulatory classification of loans is based primarily on collateral type while the Company’s loan segments presented herein are based on the purpose of the loan.

Liability Summary

											$ Change from
	Dec 31,				Sep 30,			Dec 31,			Sep 30,			Dec 31,
(Dollars in thousands)	2015				2015			2014			2015			2014
Non-interest bearing deposits	$	1,918,310			1,893,723			1,632,403			24,587			285,907
Interest bearing deposits	5,026,698				4,779,456			4,712,809			247,242			313,889
Repurchase agreements	423,414				441,041			397,107			(17,627	)		26,307
Federal Home Loan Bank advances	394,131				329,299			296,944			64,832			97,187
Other borrowed funds	6,602				6,619			7,311			(17	)		(709	)
Subordinated debentures	125,848				125,812			125,705			36			143
Other liabilities	117,579				113,541			106,181			4,038			11,398
Total liabilities	$	8,012,582			7,689,491			7,278,460			323,091			734,122

Excluding the Cañon acquisition, non-interest bearing deposits of $1.918 billion at December 31, 2015, decreased $64 million, or 3 percent, from the prior quarter which was primarily from seasonality and timing of deposits of large deposit customers.  Excluding the CB and Cañon acquisitions, non-interest bearing deposits increased $155 million, or 10 percent, from December 31, 2014.  Interest bearing deposits of $5.027 billion at December 31, 2015 included $230 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts).  Excluding the increase of $39.9 million in wholesale deposits and the Cañon acquisition, interest bearing deposits at December 31, 2015 increased $59.1 million, or 1 percent, during the current quarter.  Excluding the decrease of $19.5 million in wholesale deposits and the CB and Cañon acquisitions, core interest bearing deposits at December 31, 2015 increased $80 million, or 2 percent, from December 31, 2014.

Securities sold under agreements to repurchase (“repurchase agreements”) of $423 million at December 31, 2015 decreased $17.6 million, or 4 percent, from the prior quarter and was primarily the result of timing of deposits in existing repurchase agreements.  Federal Home Loan Bank (“FHLB”) advances of $394 million at December 31, 2015 increased $64.8 million, or 20 percent, for the current quarter due to seasonal reduction in deposit balances and increased $97.2 million, or 33 percent, since December 31, 2014 due to deposit fluctuations and the Company taking advantage of attractive term borrowings that were available from FHLB of Seattle prior to its merger with FHLB of Des Moines during the second quarter of 2015.

Stockholders’ Equity Summary

											$ Change from
	Dec 31,				Sep 30,			Dec 31,			Sep 30,			Dec 31,
(Dollars in thousands, except per share data)		2015			2015			2014			2015			2014
Common equity	$	1,074,661			1,066,801			1,010,303			7,860			64,358
Accumulated other comprehensive income		1,989			8,007			17,744			(6,018	)		(15,755	)
Total stockholders’ equity		1,076,650			1,074,808			1,028,047			1,842			48,603
Goodwill and core deposit intangible, net		(155,193	)		(141,624	)		(140,606	)		(13,569	)		(14,587	)
Tangible stockholders’ equity	$	921,457			933,184			887,441			(11,727	)		34,016
Stockholders’ equity to total assets		11.85	%		12.26	%		12.38	%
Tangible stockholders’ equity to  total tangible assets		10.31	%		10.82	%		10.87	%
Book value per common share	$	14.15			14.23			13.70			(0.08	)		0.45
Tangible book value per common share	$	12.11			12.35			11.83			(0.24	)		0.28
Market price per share at end of period	$	26.53			26.39			27.77			0.14			(1.24	)

Tangible stockholders’ equity of $921 million at December 31, 2015 decreased $11.7 million, or 1 percent, from the prior quarter primarily from a decrease in accumulated other comprehensive income and an increase in goodwill and intangibles from the Cañon acquisition, both of which were partially offset by $15.2 million of Company stock issued in connection with the Cañon acquisition.  Tangible stockholders’ equity increased $34.0 million, or 4 percent, from a year ago, the result of earnings retention and Company stock issued in connection with the CB and Cañon acquisitions, both of which offset the decrease in accumulated other comprehensive income and increases in goodwill and intangibles from acquisitions.  At December 31, 2015, the tangible book value per common share was $12.11 a decrease of $0.24 per share from $12.35 the prior quarter.  The decrease resulted from shares issued in the Cañon acquisition and the decrease in accumulated other comprehensive income.  Tangible book value per common share for December 31, 2015, increased $0.28 per share from the prior year fourth quarter.

Cash DividendOn December 30, 2015, the Company’s Board of Directors declared a special cash dividend of $0.30 per share, which was the twelfth special dividend approved by the Company.  The dividend was payable January 21, 2016 to shareholders of record on January 12, 2016.  On November 24, 2015, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.19 per share.  The dividend was payable December 17, 2015 to shareholders of record on December 8, 2015.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

 

Operating Results for Three Months Ended December 31, 2015
Compared to September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014
Income Summary
	Three Months ended
	Dec 31,				Sep 30,				Jun 30,			Mar 31,			Dec 31,
(Dollars in thousands)	2015				2015				2015			2015			2014
Net interest income
Interest income	$	83,211			80,367				78,617			77,486			76,179
Interest expense	7,215				7,309				7,369			7,382			7,368
Total net interest income	75,996				73,058				71,248			70,104			68,811
Non-interest income
Service charges, loan fees, and other fees	15,966				16,030				15,445			14,156			15,129
Gain on sale of loans	6,033				7,326				7,600			5,430			5,424
Gain (loss) on sale of investments	143				(31		)		(98	)		5			(28	)
Other income	2,325				2,474				2,855			3,102			3,453
Total non-interest income	24,467				25,799				25,802			22,693			23,978
	$	100,463			98,857				97,050			92,797			92,789
Net interest margin (tax-equivalent)	4.02		%		3.96		%		3.98	%		4.03	%		3.92	%
					$ Change from
					Sep 30,				Jun 30,			Mar 31,			Dec 31,
(Dollars in thousands)					2015				2015			2015			2014
Net interest income
Interest income					$	2,844			4,594			5,725			7,032
Interest expense					(94		)		(154	)		(167	)		(153	)
Total net interest income					2,938				4,748			5,892			7,185
Non-interest income
Service charges, loan fees, and other fees					(64		)		521			1,810			837
Gain on sale of loans					(1,293		)		(1,567	)		603			609
Gain (loss) on sale of investments					174				241			138			171
Other income					(149		)		(530	)		(777	)		(1,128	)
Total non-interest income					(1,332		)		(1,335	)		1,774			489
					$	1,606			3,413			7,666			7,674

Net Interest IncomeIn the current quarter, interest income of $83.2 million increased $2.8 million, or 4 percent from the prior quarter and was driven primarily by increases in interest income on investment securities, residential real estate loans and  commercial loans.  Interest income during the current quarter increased $7.0 million, or 9 percent, over the prior year fourth quarter and was principally due to higher interest income on commercial loans which increased $5.2 million, or 14 percent, as a result of an increased volume and yield on commercial loans.  Interest income of $23.7 million on investment securities increased $1.3 million, or 6 percent, over the prior quarter and increased $1.7 million, or 8 percent, over the prior year fourth quarter with both increases the result of higher volume and yield on the investment portfolio.

An interest rate swap with a notional amount of $100 million and a three and a half year deferred start began its  accrual period in December of 2015 with a fixed interest rate of 2.498 percent.  The interest rate swap expense will be offset by the maturity of a $75 million term FHLB borrowing in December with a 3.48 percent rate and was replaced with lower cost funding.  The Company’s total accruing notional amount of interest rate swaps at year end was $260 million. The current quarter interest expense of $7.2 million decreased $94 thousand, or 1 percent, from the prior quarter.  The current quarter interest expense decreased $153 thousand from the prior year fourth quarter.  The total cost of funding (including non-interest bearing deposits) for the current quarter was 37 basis points compared to 39 basis points for the prior quarter and 42 basis points in the prior year fourth quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.02 percent compared to 3.96 percent in the prior quarter. The 6 basis points increase in the current quarter net interest margin was primarily driven by a 4 basis points increase in the yield on the investment portfolio.  Included in the current quarter net interest margin was 2 basis points related to the recovery of interest on loans previously placed on non-accrual compared to 4 basis points in the prior quarter.  The Company’s current quarter net interest margin  increased 10 basis points from the prior year fourth quarter net interest margin of 3.92 percent.  The increase in the net interest margin from the prior year fourth quarter was the result of a 5 basis points reduction in cost of funding, increased yield on investments securities, and increased volume of higher yielding commercial loans.  “Maintaining the stable net interest margin during the challenging interest rate environment of the current quarter and year reflects the Bank divisions’ commitment to pricing loans at higher yields where possible and growing a lower cost deposit base, especially non-interest bearing deposits,” said Ron Copher, Chief Financial Officer.  “The Bank’s non-interest bearing deposit base will serve the Bank well across higher interest rate environments.”

Non-interest IncomeNon-interest income for the current quarter totaled $24.5 million, a decrease of $1.3 million, or 5 percent, from the prior quarter and an increase of $489 thousand, or 2 percent, over the same quarter last year.  Service fee income of $16.0 million, increased $837 thousand, or 6 percent, from the prior year fourth quarter driven by the increased number of deposit accounts.  The Company generated $6.0 million on the sale of residential loans in the current quarter a decrease of $1.3 million, or 18 percent, from the prior quarter as a result of seasonal fluctuations.   Gain on sale of residential loans for the current quarter increased $609 thousand, or 11 percent, from the prior year fourth quarter as a result of an increase in mortgage purchase activity.  Other non-interest income for the current quarter decreased $1.1 million, or 33 percent, over the prior year fourth quarter primarily due to insurance proceeds recognized in the prior year fourth quarter from a bank owned life insurance policy.  Included in other income was operating revenue of $28 thousand from OREO and a gain of $211 thousand from the sale of OREO, a combined total of $239 thousand for the current quarter compared to $129 thousand for the prior quarter and $442 thousand for the prior year fourth quarter.

Non-interest Expense Summary

	Three Months ended
	Dec 31,				Sep 30,				Jun 30,			Mar 31,			Dec 31,
(Dollars in thousands)	2015				2015				2015			2015			2014
Compensation and employee benefits	$	35,902			33,534				32,729			32,244			30,807
Occupancy and equipment	8,090				7,887				7,810			7,362			7,191
Advertising and promotions	2,035				2,459				2,240			1,927			2,046
Data processing	1,733				1,258				1,593			1,249			1,815
Other real estate owned	511				1,047				1,377			758			893
Regulatory assessments and insurance	1,494				1,478				1,006			1,305			1,009
Core deposit intangibles amortization	758				720				755			731			716
Other expenses	11,680				10,729				12,435			9,921			11,221
Total non-interest expense	$	62,203			59,112				59,945			55,497			55,698
					$ Change from
					Sep 30,				Jun 30,			Mar 31,			Dec 31,
(Dollars in thousands)					2015				2015			2015			2014
Compensation and employee benefits					$	2,368			3,173			3,658			5,095
Occupancy and equipment					203				280			728			899
Advertising and promotions					(424		)		(205	)		108			(11	)
Data processing					475				140			484			(82	)
Other real estate owned					(536		)		(866	)		(247	)		(382	)
Regulatory assessments and insurance					16				488			189			485
Core deposit intangibles amortization					38				3			27			42
Other expense					951				(755	)		1,759			459
Total non-interest expense					$	3,091			2,258			6,706			6,505

Compensation and employee benefits for the current quarter increased by $2.4 million, or 7 percent, from the prior quarter as a result of an increased number of employees from the Cañon acquisition and benefit accruals from higher performance.  Compensation and employee benefits for the current quarter increased by $5.1 million, or 17 percent, from the prior year fourth quarter due to the increased number of employees from the CB and Cañon acquisitions, annual salary increases, and an increase in the number of employees.  Current quarter occupancy and equipment expense increased $899 thousand, or 13 percent, from the prior year fourth quarter as a result of added costs associated with the CB and Cañon acquisitions and equipment expense related to additional information technology infrastructure.  The current quarter advertising expense decreased $424 thousand, or 17 percent, from the prior quarter as a result of timing of advertising expense. The current quarter data processing expense increased $475 thousand, or 38 percent, from the prior quarter primarily from outsourced data processing expense from the Cañon acquisition.  The current quarter OREO expense of $511 thousand was a decrease of $536 thousand from the prior quarter and included $358 thousand of operating expense, $54 thousand of fair value write-downs, and $99 thousand of loss from the sales of OREO.  Current quarter other expenses of $11.7 million increased by $951 thousand, or 9 percent, from the prior quarter primarily from professional expenses associated with the Cañon acquisition and expenses connected with equity investments in New Market Tax Credits (“NMTC”) projects.  The NMTC expenses were more than offset by the tax benefits included in federal income tax expense.  Federal and state income tax expense of $8.3 million in the current quarter decreased $964 thousand from the prior quarter and was primarily the result of the increase in NMTC credits recognized during the current quarter.

Efficiency RatioThe efficiency ratio for the current quarter was 56.52 percent compared to 54.32 percent in the prior quarter.  The  2.20 percent increase in efficiency ratio was from increased compensation expense from the Cañon acquisition and increased benefit accruals combined with seasonal decreases in gain on sale of residential loans, both of which were higher than the increased interest income the Company experienced during the current quarter.  The current quarter efficiency ratio of 56.52 percent compares to 55.11 percent in the prior year fourth quarter.  The 1.41 percent increase in efficiency ratio resulted primarily from increased compensation expense from recent acquisitions and increased salary and benefits which outpaced the increases to net interest income and non-interest income for the same period. 

Operating Results for Year ended December 31, 2015
Compared to December 31, 2014
Income Summary
	Year ended								$ Change				% Change
(Dollars in thousands)	Dec 31,  2015				Dec 31,  2014
Net interest income
Interest income	$	319,681			$	299,919			$	19,762			7	%
Interest expense	29,275				26,966				2,309				9	%
Total net interest income	290,406				272,953				17,453				6	%
Non-interest income
Service charges, loan fees, and other fees	61,597				58,785				2,812				5	%
Gain on sale of loans	26,389				19,797				6,592				33	%
Gain (loss) on sale of investments	19				(188		)		207				(110	)%
Other income	10,756				11,908				(1,152		)		(10	)%
Total non-interest income	98,761				90,302				8,459				9	%
	$	389,167			$	363,255			$	25,912			7	%
Net interest margin (tax-equivalent)	4.00		%		3.98		%

Net Interest IncomeInterest income for 2015 increased $19.8 million, or 7 percent, from the prior year and was principally due to an increase in income from commercial loans.  Current year interest income of $165 million on commercial loans increased $19.3 million, or 13 percent, from the prior year and was primarily the result of an increased volume of commercial loans.  Current year interest income of $91.1 million on investment securities decreased $2.0 million, or 2 percent, over the same period last year, due to a decreased yield on investment securities.  On a tax-equivalent  basis, the current year interest income of $118.8 million on investment securities increased $2.8 million, or 2 percent, over the prior year.

Interest expense for 2015 increased $2.3 million, or 9 percent, from the prior year and was primarily due to the interest expense associated with the interest rate swaps.  Excluding the impact of the interest rate swaps, interest expense for 2015 decreased by $1.7 million, or 7 percent, from the prior year.  The total funding cost (including non-interest bearing deposits) for the current year was 40 basis points compared to 39 basis points for the prior year.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current year was 4.00 percent, an increase of 2 basis point from the prior year net interest margin of 3.98 percent.  The 2 basis points increase was attributable to a combination of items including a shift in earning assets to the higher yielding loan portfolio and an increased yield on the investment securities portfolio.  In addition, the continued decreased yield on core deposits offset the increased interest expense from the interest rate swaps.  Excluding the effects of the interest rate swaps, the current year cost of funds was 33 basis points compared to 38 basis points in the prior year.

Non-interest IncomeNon-interest income of $98.8 million for the current year increased $8.5 million, or 9 percent, over the same period last year.  Service charges and other fees of $61.6 million for the current year increased $2.8 million, or 5 percent, from last year and was driven by the increased number of deposit accounts and higher usage of deposit services from legacy customers.  The gain of $26.4 million on the sale of residential loans for the current year increased $6.6 million, or 33 percent, from the prior year which was attributable to an increase in mortgage refinancing and purchase activity.  Other income of $10.8 million for the current year decreased $1.2 million, or 10 percent, over the prior year due to a decrease in gain on sale of OREO and insurance proceeds recognized in the prior year fourth quarter from a bank owned life insurance policy.  Included in other income was operating revenue of $123 thousand from OREO and gains of $986 thousand from the sales of OREO, which totaled $1.1 million for 2015 compared to $2.3 million for the same period in the prior year.

Non-interest Expense Summary

	Year ended								$ Change				% Change
(Dollars in thousands)	Dec 31,  2015				Dec 31,  2014
Compensation and employee benefits	$	134,409			$	118,571			$	15,838			13	%
Occupancy and equipment	31,149				27,498				3,651				13	%
Advertising and promotions	8,661				7,912				749				9	%
Data processing	5,833				6,607				(774		)		(12	)%
Other real estate owned	3,693				2,568				1,125				44	%
Regulatory assessments and insurance	5,283				5,064				219				4	%
Core deposit intangible amortization	2,964				2,811				153				5	%
Other expenses	44,765				41,648				3,117				7	%
Total non-interest expense	$	236,757			$	212,679			$	24,078			11	%

Compensation and employee benefits for the current year increased $15.8 million, or 13 percent, from last year due to the increased number of employees primarily from the acquired banks, additional benefit costs and annual salary increases.  Occupancy and equipment expense increased $3.7 million, or 13 percent, as a result of increased costs associated with  acquisitions and equipment expense related to additional information technology infrastructure. Outsourced data processing expense decreased $774 thousand, or 12 percent, from the prior year as a result of a decrease in conversion related expenses and outsourced data processing expense from an acquired bank.  OREO expense of $3.7 million in the current year increased $1.1 million, or 44 percent, from the prior year.  OREO expenses continue to fluctuate based on the level of activity in various quarters.  OREO expense for 2015 included $1.8 million of operating expenses, $1.6 million of fair value write-downs, and $349 thousand of loss from the sales of OREO.  OREO expense for 2014 included $1.4 million of operating expenses, $691 thousand of fair value write-downs, and $442 thousand of loss from the sales of OREO.  Other expense of $44.8 million for the current year increased by $3.1 million, or 7 percent, from the prior year primarily due to increases in conversion and acquisition related expenses.

Provision for Loan LossesThe provision for loan losses was $2.3 million for the current year, an increase of $372 thousand, or 19 percent, from the same period in the prior year.  Net charged-off loans during 2015 were $2.3 million, a decrease of $170 thousand from 2014.

Efficiency RatioThe efficiency ratio was 55.40 percent for 2015 compared to 54.31 percent for 2014.  The increase in the efficiency ratio resulted primarily from compensation expense from increased acquired bank employees and salary increases outpacing the increase in net interest income primarily from commercial loans and non-interest income principally from the increase in gain on sale of loans.

About Glacier Bancorp, Inc.Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 88 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and  is the parent company for Glacier Bank, Kalispell and Bank divisions First Security Bank of Missoula; Valley Bank of Helena; Big Sky Western Bank, Bozeman; Western Security Bank, Billings; and First Bank of Montana, Lewistown, all operating in Montana; as well as Mountain West Bank, Coeur d’Alene operating in Idaho, Utah and Washington; Citizens Community Bank, Pocatello, operating in Idaho; 1st Bank, Evanston, operating in Wyoming and Utah;  First Bank of Wyoming, Powell and First State Bank, Wheatland,   each operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and Bank of the San Juans, Durango, operating in Colorado.

Forward-Looking StatementsThis news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning.  These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.  The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio;
• changes in market interest rates, which could adversely affect the Company’s net interest income and profitability;
• legislative or regulatory changes that adversely affect the Company’s business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;
• costs or difficulties related to the completion and integration of acquisitions;
• the goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings and capital;
• reduced demand for banking products and services;
• the risks presented by public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions;
• consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources could change the competitive landscape;
• dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank divisions;
• potential interruption or breach in security of the Company’s systems; and
• the Company’s success in managing risks involved in the foregoing.

The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition
	December 31,				September 30,			December 31,
(Dollars in thousands, except per share data)	2015				2015			2014
Assets
Cash on hand and in banks	$	117,137			104,363			122,834
Federal funds sold	6,080				2,210			1,025
Interest bearing cash deposits	70,036				136,262			318,550
Cash and cash equivalents	193,253				242,835			442,409
Investment securities, available-for-sale	2,610,760				2,530,994			2,387,428
Investment securities, held-to-maturity	702,072				651,822			520,997
Total investment securities	3,312,832				3,182,816			2,908,425
Loans held for sale	56,514				40,456			46,726
Loans receivable	5,078,681				4,876,419			4,488,095
Allowance for loan and lease losses	(129,697		)		(130,768	)		(129,753	)
Loans receivable, net	4,948,984				4,745,651			4,358,342
Premises and equipment, net	194,030				185,864			179,175
Other real estate owned	26,815				26,609			27,804
Accrued interest receivable	44,524				46,786			40,587
Deferred tax asset	58,475				55,095			41,737
Core deposit intangible, net	14,555				10,781			10,900
Goodwill	140,638				130,843			129,706
Non-marketable equity securities	27,495				24,905			52,868
Other assets	71,117				71,658			67,828
Total assets	$	9,089,232			8,764,299			8,306,507
Liabilities
Non-interest bearing deposits	$	1,918,310			1,893,723			1,632,403
Interest bearing deposits	5,026,698				4,779,456			4,712,809
Securities sold under agreements to repurchase	423,414				441,041			397,107
FHLB advances	394,131				329,299			296,944
Other borrowed funds	6,602				6,619			7,311
Subordinated debentures	125,848				125,812			125,705
Accrued interest payable	3,517				3,641			4,155
Other liabilities	114,062				109,900			102,026
Total liabilities	8,012,582				7,689,491			7,278,460
Stockholders’ Equity
Preferred shares, $0.01 par value per share, 1,000,000  shares authorized, none issued or outstanding	—				—			—
Common stock, $0.01 par value per share, 117,187,500  shares authorized	761				755			750
Paid-in capital	736,368				720,639			708,356
Retained earnings - substantially restricted	337,532				345,407			301,197
Accumulated other comprehensive income	1,989				8,007			17,744
Total stockholders’ equity	1,076,650				1,074,808			1,028,047
Total liabilities and stockholders’ equity	$	9,089,232			8,764,299			8,306,507
Number of common stock shares issued and outstanding	76,086,288				75,532,082			75,026,092

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
	Three Months ended										Year ended
	December 31,				September 30,			December 31,			December 31,			December 31,
(Dollars in thousands, except per share data)	2015				2015			2014			2015			2014
Interest Income
Investment securities	$	23,731			22,437			22,050			91,086			93,052
Residential real estate loans	8,572				7,878			8,464			32,153			30,721
Commercial loans	43,109				42,137			37,935			164,966			145,631
Consumer and other loans	7,799				7,915			7,730			31,476			30,515
Total interest income	83,211				80,367			76,179			319,681			299,919
Interest Expense
Deposits	3,932				3,947			4,018			16,138			13,195
Securities sold under agreements to repurchase	287				261			238			1,021			865
Federal Home Loan Bank advances	2,156				2,273			2,253			8,841			9,570
Federal funds purchased and other borrowed funds	18				21			64			81			199
Subordinated debentures	822				807			795			3,194			3,137
Total interest expense	7,215				7,309			7,368			29,275			26,966
Net Interest Income	75,996				73,058			68,811			290,406			272,953
Provision for loan losses	411				826			191			2,284			1,912
Net interest income after provision for loan losses	75,585				72,232			68,620			288,122			271,041
Non-Interest Income
Service charges and other fees	15,044				14,975			14,004			57,321			54,089
Miscellaneous loan fees and charges	922				1,055			1,125			4,276			4,696
Gain on sale of loans	6,033				7,326			5,424			26,389			19,797
Gain (loss) on sale of investments	143				(31	)		(28	)		19			(188	)
Other income	2,325				2,474			3,453			10,756			11,908
Total non-interest income	24,467				25,799			23,978			98,761			90,302
Non-Interest Expense
Compensation and employee benefits	35,902				33,534			30,807			134,409			118,571
Occupancy and equipment	8,090				7,887			7,191			31,149			27,498
Advertising and promotions	2,035				2,459			2,046			8,661			7,912
Data processing	1,733				1,258			1,815			5,833			6,607
Other real estate owned	511				1,047			893			3,693			2,568
Regulatory assessments and insurance	1,494				1,478			1,009			5,283			5,064
Core deposit intangibles amortization	758				720			716			2,964			2,811
Other expenses	11,680				10,729			11,221			44,765			41,648
Total non-interest expense	62,203				59,112			55,698			236,757			212,679
Income Before Income Taxes	37,849				38,919			36,900			150,126			148,664
Federal and state income tax expense	8,341				9,305			8,846			33,999			35,909
Net Income	$	29,508			29,614			28,054			116,127			112,755
Basic earnings per share	$	0.39			0.39			0.37			1.54			1.51
Diluted earnings per share	$	0.39			0.39			0.37			1.54			1.51
Dividends declared per share	$	0.49			0.19			0.48			1.05			0.98
Average outstanding shares - basic	75,893,521				75,531,923			75,025,201			75,542,455			74,641,957
Average outstanding shares - diluted	75,968,169				75,586,453			75,082,566			75,595,581			74,687,315

Glacier Bancorp, Inc.
Average Balance Sheet
	Three Months ended											Year ended
	December 31, 2015											December 31, 2015
									Average											Average
	Average				Interest &				Yield/			Average				Interest &				Yield/
(Dollars in thousands)	Balance				Dividends				Rate			Balance				Dividends				Rate
Assets
Residential real estate loans	$	728,346			$	8,572			4.71	%		$	687,013			$	32,153			4.68	%
Commercial loans 1	3,601,427				43,828				4.83	%		3,459,470				167,587				4.84	%
Consumer and other loans	648,683				7,799				4.77	%		631,512				31,476				4.98	%
Total loans 2	4,978,456				60,199				4.80	%		4,777,995				231,216				4.84	%
Tax-exempt investment securities 3	1,361,905				20,173				5.92	%		1,328,908				77,199				5.81	%
Taxable investment securities 4	1,988,643				11,176				2.25	%		1,918,283				41,648				2.17	%
Total earning assets	8,329,004				91,548				4.36	%		8,025,186				350,063				4.36	%
Goodwill and intangibles	147,572											143,293
Non-earning assets	400,730											389,126
Total assets	$	8,877,306										$	8,557,605
Liabilities
Non-interest bearing deposits	$	1,918,399			$	—			—	%		$	1,756,888			$	—			—	%
NOW accounts	1,441,615				284				0.08	%		1,371,340				1,074				0.08	%
Savings accounts	811,804				97				0.05	%		758,776				360				0.05	%
Money market deposit accounts	1,372,881				522				0.15	%		1,340,967				2,066				0.15	%
Certificate accounts	1,081,921				1,607				0.59	%		1,131,210				6,891				0.61	%
Wholesale deposits 5	201,695				1,422				2.80	%		206,889				5,747				2.78	%
FHLB advances	332,910				2,156				2.53	%		319,565				8,841				2.73	%
Repurchase agreements and  other borrowed funds	523,213				1,127				0.85	%		509,431				4,296				0.84	%
Total funding liabilities	7,684,438				7,215				0.37	%		7,395,066				29,275				0.40	%
Other liabilities	94,505											91,360
Total liabilities	7,778,943											7,486,426
Stockholders’ Equity
Common stock	759											755
Paid-in capital	730,927											720,827
Retained earnings	358,860											336,998
Accumulated other comprehensive income	7,817											12,599
Total stockholders’ equity	1,098,363											1,071,179
Total liabilities and stockholders’ equity	$	8,877,306										$	8,557,605
Net interest income (tax-equivalent)					$	84,333										$	320,788
Net interest spread (tax-equivalent)									3.99	%										3.96	%
Net interest margin (tax-equivalent)									4.02	%										4.00	%

__________1    Includes tax effect of $719 thousand and $2.6 million on tax-exempt municipal loan and lease income for the three months and year  ended December 31, 2015.2   Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale.  Non-accrual loans were included in the average volume for the entire period.3    Includes tax effect of $7.3 million and $26.3 million on tax-exempt investment security income for the three months and year ended December 31, 2015.4    Includes tax effect of $362 thousand and $1.4 million on federal income tax credits for the three months and year ended December 31, 2015.5    Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts.

Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification
	Loans Receivable, by Loan Type												% Change from
	Dec 31,				Sep 30,				Dec 31,				Sep 30,			Dec 31,
(Dollars in thousands)	2015				2015				2014				2015			2014
Custom and owner occupied construction	$	75,094			$	64,951			$	56,689			16	%		32	%
Pre-sold and spec construction	50,288				46,921				47,406				7	%		6	%
Total residential construction	125,382				111,872				104,095				12	%		20	%
Land development	62,356				83,756				82,829				(26	)%		(25	)%
Consumer land or lots	97,270				98,490				101,818				(1	)%		(4	)%
Unimproved land	73,844				74,439				86,116				(1	)%		(14	)%
Developed lots for operative builders	12,336				13,697				14,126				(10	)%		(13	)%
Commercial lots	22,035				22,937				16,205				(4	)%		36	%
Other construction	156,784				122,347				150,075				28	%		4	%
Total land, lot, and other construction	424,625				415,666				451,169				2	%		(6	)%
Owner occupied	938,625				885,736				849,148				6	%		11	%
Non-owner occupied	774,192				739,057				674,381				5	%		15	%
Total commercial real estate	1,712,817				1,624,793				1,523,529				5	%		12	%
Commercial and industrial	649,553				619,688				547,910				5	%		19	%
Agriculture	367,339				386,523				310,785				(5	)%		18	%
1st lien	856,193				801,705				775,785				7	%		10	%
Junior lien	65,383				67,351				68,358				(3	)%		(4	)%
Total 1-4 family	921,576				869,056				844,143				6	%		9	%
Multifamily residential	201,542				189,944				160,426				6	%		26	%
Home equity lines of credit	372,039				359,605				334,788				3	%		11	%
Other consumer	150,469				154,095				133,773				(2	)%		12	%
Total consumer	522,508				513,700				468,561				2	%		12	%
Other	209,853				185,633				124,203				13	%		69	%
Total loans receivable, including loans held for sale	5,135,195				4,916,875				4,534,821				4	%		13	%
Less loans held for sale 1	(56,514		)		(40,456		)		(46,726		)		40	%		21	%
Total loans receivable	$	5,078,681			$	4,876,419			$	4,488,095			4	%		13	%

_______

1 Loans held for sale are primarily 1st lien 1-4 family loans.

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification
														Accruing
											Non-			Loans 90 Days			Other
											Accrual			or  More			Real Estate
	Non-performing Assets, by Loan Type										Loans			Past  Due			Owned
	Dec 31,				Sep 30,			Dec 31,			Dec 31,			Dec 31,			Dec 31,
(Dollars in thousands)	2015				2015			2014			2015			2015			2015
Custom and owner occupied construction	$	1,016			1,048			1,132			1,016			—			—
Pre-sold and spec construction	—				—			218			—			—			—
Total residential construction	1,016				1,048			1,350			1,016			—			—
Land development	17,582				17,719			20,842			6,791			—			10,791
Consumer land or lots	2,250				2,430			3,581			934			20			1,296
Unimproved land	12,328				12,055			14,170			8,382			—			3,946
Developed lots for operative builders	488				492			1,318			267			—			221
Commercial lots	1,521				1,631			2,660			241			—			1,280
Other construction	4,236				4,244			5,151			—			—			4,236
Total land, lot and other construction	38,405				38,571			47,722			16,615			20			21,770
Owner occupied	10,952				12,719			13,574			8,794			—			2,158
Non-owner occupied	3,446				3,833			3,013			2,634			—			812
Total commercial real estate	14,398				16,552			16,587			11,428			—			2,970
Commercial and industrial	3,993				5,110			4,375			3,916			20			57
Agriculture	3,281				3,114			3,074			2,666			167			448
1st lien	10,691				11,953			9,580			9,264			64			1,363
Junior lien	668				660			442			668			—			—
Total 1-4 family	11,359				12,613			10,022			9,932			64			1,363
Multifamily residential	113				—			440			113			—			—
Home equity lines of credit	5,486				6,013			6,099			5,338			15			133
Other consumer	228				204			231			109			45			74
Total consumer	5,714				6,217			6,330			5,447			60			207
Other	1,800				1,800			—			—			1,800			—
Total	$	80,079			85,025			89,900			51,133			2,131			26,815

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
	Accruing 30-
	89 Days Delinquent Loans,  by Loan Type												% Change from
(Dollars in thousands)	Dec 31,  2015				Sep 30,  2015				Dec 31,  2014				Sep 30,  2015			Dec 31,  2014
Custom and owner occupied construction	$	462			$	138			$	—			235	%		n/m
Pre-sold and spec construction	181				144				869				26	%		(79	)%
Total residential construction	643				282				869				128	%		(26	)%
Land development	447				—				—				n/m			n/m
Consumer land or lots	166				266				391				(38	)%		(58	)%
Unimproved land	774				304				267				155	%		190	%
Commercial lots	—				—				21				n/m			(100	)%
Other construction	337				—				—				n/m			n/m
Total land, lot and other construction	1,724				570				679				202	%		154	%
Owner occupied	2,760				2,497				5,971				11	%		(54	)%
Non-owner occupied	923				5,529				3,131				(83	)%		(71	)%
Total commercial real estate	3,683				8,026				9,102				(54	)%		(60	)%
Commercial and industrial	1,968				2,774				2,915				(29	)%		(32	)%
Agriculture	1,014				867				994				17	%		2	%
1st lien	6,272				2,510				6,804				150	%		(8	)%
Junior lien	1,077				228				491				372	%		119	%
Total 1-4 family	7,349				2,738				7,295				168	%		1	%
Multifamily Residential	662				114				—				481	%		n/m
Home equity lines of credit	1,046				1,599				1,288				(35	)%		(19	)%
Other consumer	1,227				811				928				51	%		32	%
Total consumer	2,273				2,410				2,216				(6	)%		3	%
Other	97				41				1,834				137	%		(95	)%
Total	$	19,413			$	17,822			$	25,904			9	%		(25	)%

_______

n/m - not measurable

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
	Net Charge-Offs (Recoveries), Year-to-Date
	Period Ending, By Loan Type										Charge-Offs			Recoveries
(Dollars in thousands)	Dec 31,  2015				Sep 30,  2015			Dec 31,  2014			Dec 31,  2015			Dec 31,  2015
Pre-sold and spec construction	$	(53	)		(34	)		(94	)		—			53
Land development	(288		)		(293	)		(390	)		957			1,245
Consumer land or lots	66				(8	)		375			512			446
Unimproved land	(325		)		(152	)		52			—			325
Developed lots for operative builders	(85		)		(72	)		(140	)		51			136
Commercial lots	(26		)		(5	)		(6	)		—			26
Other construction	(1		)		(1	)		—			—			1
Total land, lot and other construction	(659		)		(531	)		(109	)		1,520			2,179
Owner occupied	247				249			669			668			421
Non-owner occupied	93				105			(162	)		116			23
Total commercial real estate	340				354			507			784			444
Commercial and industrial	1,389				1,011			1,069			2,166			777
Agriculture	50				(8	)		28			59			9
1st lien	834				(80	)		372			971			137
Junior lien	(125		)		(106	)		183			79			204
Total 1-4 family	709				(186	)		555			1,050			341
Multifamily residential	(318		)		(318	)		138			—			318
Home equity lines of credit	740				531			190			897			157
Other consumer	143				39			226			525			382
Total consumer	883				570			416			1,422			539
Other	(1		)		—			—			—			1
Total	$	2,340			858			2,510			7,001			4,661

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CONTACT:  
Michael J. Blodnick
(406) 751-4701
Ron J. Copher
(406) 751-7706