FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ 49 Commons Loop Kalispell, ...

Glacier Bancorp, Inc. (NYSE:GBCI) Q2 2022 Earnings Conference Call July 22, 2022 11:00 AM ET Company Participants Randall Chesler - President and Chief Executive Officer Ron Copher - Chief Financial Officer Tom Dolan - Chief Credit Administrator Byron Pollan - Treasurer Conference Call Participants Matthew Clark - Piper Sandler David Feaster - Raymond James Brandon King - Truist Securities Andrew Terrell - Stephens Jeff Rulis - D.A. Davidson Operator Good day. And thank you for standing by. Welcome to the ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 00 ...

Financial Data and Key Metrics Changes - Net income for the quarter was $67.8 million, an increase of $17.1 million or 34% from the prior quarter's net income of $50.7 million [6] - Pre-tax pre-provision net revenue was $88.8 million, compared to the prior quarter of $87.9 million, an increase of $900,000 or 1% [6] - Earnings per share for the quarter was $0.61, versus $0.46 in the prior quarter [9] - Non-interest expense of $130 million decreased by $3.7 million or 3% from the prior quarter [8] - Non-interest income of $33.6 million declined by $799,000 or 2% from the prior quarter and decreased by $6.6 million or 16% from the same quarter last year [16] Business Line Data and Key Metrics Changes - The loan portfolio, excluding PPP loans, had strong organic growth during the quarter, up $407 million or 12% annualized [6] - Net interest income on a tax-equivalent basis was $190 million, with net interest income excluding PPP loans at $187 million, an increase of $3.2 million or 2% from the prior quarter [7] - Core deposits grew organically by $383 million or 7% during the quarter, with non-interest bearing deposits increasing by $211 million or 11% annualized [11] Market Data and Key Metrics Changes - Total debt securities of $10.1 billion decreased by $257 million or 2% from the prior quarter but increased by $3.7 billion or 57% from the prior year first quarter [12] - The yield on the loan portfolio ended the quarter at 4.59%, down 11 basis points from the prior quarter [14] - Non-performing assets improved to 24 basis points from 26 in the prior quarter [13] Company Strategy and Development Direction - The company aims for low double-digit growth outlook and is cautiously optimistic about future performance despite economic uncertainties [16] - The acquisition of Alta Bank is progressing well, with successful conversion to the core banking system and targeted cost savings expected to be realized in 2022 [19][20] - The company continues to focus on responsible growth with a through-the-cycle underwriting lens, particularly in commercial real estate lending [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic uncertainty caused by rising interest rates and inflation has not yet materially impacted growth outside of the residential mortgage market [16] - Concerns regarding the real estate market include the supply of homes available for sale and the impact of increasing interest rates on affordability [17][48] - Management remains comfortable with credit quality and has tightened underwriting guidelines in response to market conditions [35] Other Important Information - The company declared a regular dividend of $0.33 per share, an increase of 3% over the prior quarter [10] - The allowance for credit loss reserves remained flat at 1.28% of total loans, reflecting strong credit metrics [9] Q&A Session Summary Question: What drove the lower expenses this quarter? - Management attributed the lower expenses to controlled compensation growth and effective expense management by divisions [23][24] Question: What are the loan yields and outlook? - New loan production yields were around 4.20%, which is about 20 basis points better than the last quarter [25][26] Question: How is organic growth shaping up? - Management indicated strong growth in commercial real estate and noted that Utah remains a key growth area [30][31] Question: What are the concerns regarding credit quality? - Management is closely monitoring the consumer book due to inflationary pressures but feels prepared for the uncertain market [32][34] Question: How does the company view deposit growth going forward? - Management expects deposit growth to slow but believes the foundation of relationship accounts will remain stable [36][38] Question: What is the appetite for M&A? - Management indicated no changes in M&A appetite and remains focused on the current integration of Alta Bank [60] Question: What is the expected tax rate for the year? - The expected tax rate is projected to be between 19% and 20% [61] Question: Is there a qualitative adjustment in the reserve? - Management confirmed there is a qualitative component but does not expect significant adjustments [62]

Company Overview - As of December 31, 2021, Glacier Bancorp, Inc. operates 224 locations across 8 states, with a focus on retail and business banking services[19]. - The company serves 75 counties, holding 26.8% of FDIC insured deposits in Montana, 14.4% in Wyoming, and 8.0% in Idaho as of June 30, 2021[24]. - Glacier Bancorp employs 3,559 individuals, with 3,270 in full-time positions, emphasizing a commitment to employee relations and retention strategies[25]. - The company has 224 properties with a total net book value of $293.949 million as of December 31, 2021, including 179 owned and 45 leased properties[132]. - The company's stock closed at $56.70 on December 31, 2021, with approximately 1,909 shareholders of record[136]. - The company has not made any stock repurchases during 2021, indicating a focus on maintaining capital[137]. Acquisitions and Growth Strategy - The company has completed several acquisitions in the last five years, including Altabancorp with total assets of $4.13 billion, loans of $1.90 billion, and deposits of $3.27 billion as of October 1, 2021[20]. - The company aims for profitable growth through internal expansion and selective acquisitions, focusing on markets in the Rocky Mountain and Western states[20]. - The Company acquired Altabancorp, enhancing its presence in Utah, with total assets of $4.132 billion, marking the largest acquisition in its history[156]. Financial Performance - Total assets increased to $25.94 billion in 2021, up from $18.50 billion in 2020, representing a 40.2% growth rate[151]. - Net interest income for 2021 was $662.52 million, a 10.5% increase from $599.75 million in 2020[151]. - Net income for 2021 reached $284.76 million, reflecting a 6.9% increase compared to $266.40 million in 2020[151]. - Basic earnings per share rose to $2.87 in 2021, up 2.1% from $2.81 in 2020[151]. - Total loans receivable, net, increased to $13.26 billion in 2021, compared to $10.96 billion in 2020, marking a 20.9% growth[151]. - Deposits grew to $21.34 billion in 2021, a 44.2% increase from $14.80 billion in 2020[151]. - Non-interest income decreased to $144.82 million in 2021, down 16.2% from $172.87 million in 2020[151]. - Provision for credit losses was $23.08 million in 2021, a significant decrease of 42.0% from $39.77 million in 2020[151]. - The company's equity per share increased to $28.71 in 2021, up from $24.18 in 2020, representing an 18.7% growth[151]. - The effective income tax rate for 2021 was 22.7%, compared to 23.1% in 2020, indicating a slight improvement[151]. - The Company reported a record net income of $285 million for 2021, an increase of $18.4 million, or 7%, compared to $266 million in 2020[159]. Regulatory Environment - The company is subject to extensive federal and state regulations, impacting its operations and compliance costs[34]. - The Company is prohibited from acquiring or retaining more than 5% of voting shares in non-bank companies, with exceptions for activities closely related to banking[39]. - Bank subsidiaries face restrictions on credit extensions to the holding company, with the Dodd-Frank Act expanding the definition of "affiliate" and requiring collateral for covered transactions[40]. - The Company must act as a source of financial strength for the Bank, committing capital and resources even when it may not be in its best interest[43]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, with additional capital conservation buffer requirements[64]. - The Dodd-Frank Act significantly changed the bank regulatory structure, impacting lending, deposit, investment, and trading activities[55]. - The Company is subject to various consumer protection laws, with increased examination and enforcement by federal and state agencies[46]. - The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB), which has broad authority over consumer protection laws[60]. - The Company is not currently subject to Dodd-Frank Act stress testing requirements due to the Economic Growth, Regulatory Relief, and Consumer Protection Act[62]. - The Dodd-Frank Act repealed the federal prohibitions on the payment of interest on demand deposits, allowing institutions to pay interest on business transaction accounts[59]. - The company is required to maintain a Tier 1 common equity capital ratio of at least 6.5%, a Tier 1 capital ratio of at least 8%, and a total capital ratio of at least 10% to qualify as "well capitalized" under FDIC rules[66]. - The application of the Final Rules may lead to lower returns on invested capital and may require raising additional capital or modifying business strategies due to changes in asset risk-weights[67]. - The Federal Reserve conducts periodic inspections of bank holding companies to assess their financial strength and the effects of transactions between subsidiaries[68]. - Banks are subject to examinations every 12 to 18 months based on their asset size and capital status, with the frequency linked to compliance ratings[69]. - The Dodd-Frank Act increased FDIC deposit insurance from $100,000 to $250,000 per depositor, enhancing consumer protection[78]. - The company is subject to heightened requirements under the Dodd-Frank Act, including compliance with federal consumer protection laws[82]. Risk Factors - The ongoing effects of the COVID-19 pandemic may adversely affect the company's results of operations and market price of its stock, despite a strong liquidity and capital position[129]. - The company faces risks related to operational disruptions and security breaches, which could damage its reputation and result in financial losses[120]. - The company is heavily dependent on its senior management team, and the unexpected loss of key executives could adversely affect future growth prospects[126]. - The company is exposed to risks from climate change, which may lead to cost increases and changes in consumer behavior affecting demand for its products and services[130]. - The company utilizes models to forecast losses and assess risks, but these models may not adequately anticipate current and evolving risks, potentially leading to operational and financial harm[127]. - A high concentration of loans secured by real estate increases credit risk, and any deterioration in real estate markets could require material increases in the ACL[103]. - Non-performing assets may increase, adversely affecting earnings as the Bank does not record interest income on non-accrual loans[104]. - The Bank's profitability is heavily dependent on net interest income, and fluctuations in interest rates could adversely affect the interest rate spread and profitability[110]. - The Bank faces significant competition from other financial institutions and emerging technologies, which may pressure pricing and market share[109]. - Future acquisitions may have a dilutive effect on earnings per share and could disrupt ongoing business operations[98]. - The Bank's loan portfolio contains a high percentage of commercial loans, which are viewed as having a higher risk of default compared to residential loans[102]. - Regulatory authorities may require the Bank to recognize further provisions for credit losses, which could differ from the Bank's assessments[101]. - The Bank's ability to pay dividends may be affected by earnings and capital levels, with future dividends dependent on these factors[100]. - The transition from LIBOR to alternative reference rates may significantly impact the availability and cost of hedging instruments and borrowings, potentially incurring substantial transition expenses[112]. Employee Benefits and Corporate Governance - The company has a comprehensive employee benefit program, including health insurance, retirement plans, and profit-sharing options[29]. - The company is committed to improving its environmental, social, and governance (ESG) performance, overseen by its Nominating/Corporate Governance Committee[90]. Loan Portfolio and Credit Losses - The Bank maintains an allowance for credit losses (ACL) but may need to increase it significantly due to potential loan losses, which could adversely impact earnings[101]. - The commercial real estate loans represented 65% of the total loan portfolio as of December 31, 2021, up from 58% in the previous year[193]. - The residential real estate loans increased to $1,052 million, accounting for 8% of the total loan portfolio, compared to 7% in 2020[193]. - The allowance for credit losses (ACL) was $172.7 million, representing 1% of total loans receivable as of December 31, 2021, compared to 2% in 2020[193]. - The Company conducts regular internal and external credit examinations to manage credit risk within the loan portfolio[205].

Financial Data and Key Metrics Changes - The loan portfolio, excluding Payroll Protection Program (PPP) loans, experienced strong organic growth of $448 million or 16% annualized in Q4 2021, and $1.2 billion or 11% annualized for the full year, marking record quarterly growth for the company [5][12] - Net interest income for Q4 2021 was $184 million, an increase of $29.4 million or 19% from the prior quarter, while full-year net interest income reached $636 million, up $57.5 million or 10% year-over-year [6][7] - Net income for the year was $285 million, reflecting an increase of $18.4 million or 7% from $266 million in the previous year, with earnings per share reaching a record $2.86, up 2% [7][8] - The company declared dividends of $1.37 per share, a 3% increase from the prior year, marking 147 consecutive quarterly dividends [8] Business Line Data and Key Metrics Changes - Core deposits grew organically by $560 million or 13% during Q4 2021, and $3.3 billion or 22% annualized for the year [6][13] - Non-interest income for Q4 2021 was $34.4 million, a decline of $453,000 or 1% from the prior quarter, and a decrease of $10.3 million or 23% year-over-year, primarily due to reduced gains on the sale of residential mortgages [18] - Non-interest expense included $17 million from the Altabank division and $8.2 million in acquisition-related expenses, with a 5% increase in non-interest expense from the prior quarter when excluding these items [19] Market Data and Key Metrics Changes - The company saw excellent loan growth in Utah, Arizona, and Colorado, with commercial real estate lending growing organically by $175 million in Q4 2021 [11] - Non-interest bearing deposits increased by $2.3 billion or 43% year-over-year, now representing 37% of core deposits [13] Company Strategy and Development Direction - The company completed the acquisition of Altabancorp, the largest community bank in Utah, with assets of $4.1 billion, marking the largest acquisition in its history [9] - The company is focused on integrating Altabank and achieving targeted cost savings in 2022, with plans to roll out technology from Altabank to other divisions [21][78] - The company aims to maintain a strong efficiency ratio of 54% to 55% while investing in technology to improve operations [79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic environment in the Western United States, citing strong trends in local economies and consumer confidence in property purchases [28][30] - The company anticipates low double-digit loan growth for 2022, despite potential headwinds such as supply chain issues and increased construction costs [61] - Management expects deposit growth to be in the high single digits for 2022, with loans outpacing deposits [64] Other Important Information - The company is nearing the end of the PPP program, with only $169 million of loans remaining to be forgiven as of the end of 2021 [10] - The tangible book value per share increased from $19.11 to $19.33 in Q4 2021, reflecting a 1% increase for the quarter and a 6% increase for the year [21] Q&A Session Summary Question: Contribution of Altabancorp to loan growth and economic outlook for 2022 - Management noted that loan growth was broad-based across the footprint, with strong performance in Utah, Arizona, and Colorado, and emphasized the positive economic trends in these regions [28][30] Question: Expense outlook and impact of inflation - Management provided insights on expected expenses, estimating a first-quarter run rate of $128 million, with elevated merger-related expenses anticipated during the Altabank conversion [33][34] Question: Trends in new loan yields and competitive landscape - Management indicated that loan pricing is under pressure, with expectations for rates to rise, but noted that competition may delay the full benefits of any rate increases [36][39] Question: Credit quality and delinquency trends - Management addressed concerns about increased delinquency, attributing it to one specific relationship and expecting resolution in the near term [51][52] Question: Confidence in achieving loan growth targets for 2022 - Management expressed confidence in achieving low double-digit loan growth for 2022, despite potential headwinds [61] Question: Tax rate outlook for the year - Management indicated that the effective tax rate is expected to ramp up to around 19% for the full year [96]

[ABBREVIATIONS/ACRONYMS](index=3&type=section&id=ABBREVIATIONS%2FACRONYMS) This section provides a list of abbreviations and acronyms used throughout the report for clarity and conciseness [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended September 30, 2021 [Item 1 – Financial Statements](index=4&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) This section contains the company's unaudited condensed consolidated financial statements as of September 30, 2021, including statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, along with related notes, providing detailed information on the company's financial performance and position [Unaudited Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) This statement presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2021, and December 31, 2020 | Indicator | September 30, 2021 (Thousands of USD) | December 31, 2020 (Thousands of USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 348,888 | 633,142 | | Total debt securities | 8,518,879 | 5,527,650 | | Loans receivable, net | 11,140,282 | 10,964,453 | | Total assets | 21,314,019 | 18,504,206 | | **Liabilities** | | | | Non-interest-bearing deposits | 6,632,402 | 5,454,539 | | Interest-bearing deposits | 10,870,912 | 9,342,990 | | Total liabilities | 18,926,403 | 16,197,165 | | **Stockholders' Equity** | | | | Total stockholders' equity | 2,387,616 | 2,307,041 | - As of September 30, 2021, the company's **total assets reached $21.314 billion**, an increase of **15.18%** from December 31, 2020[9](index=9&type=chunk) - Total debt securities significantly increased from **$5.528 billion** at the end of 2020 to **$8.519 billion** as of September 30, 2021, a **54.12%** growth[9](index=9&type=chunk) - Both non-interest-bearing and interest-bearing deposits grew, contributing to a **16.85% increase in total liabilities**[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income for the three and nine months ended September 30, 2021 and 2020, providing insights into operational performance | Indicator | Three Months Ended September 30, 2021 (Thousands of USD) | Three Months Ended September 30, 2020 (Thousands of USD) | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | Total interest income | 166,741 | 157,487 | 488,249 | 455,756 | | Total interest expense | 4,128 | 6,084 | 13,355 | 21,765 | | Net interest income | 162,613 | 151,403 | 474,894 | 433,991 | | Provision for credit losses | 725 | 5,186 | (4,880) | 41,300 | | Total non-interest income | 34,815 | 53,667 | 110,458 | 128,163 | | Total non-interest expense | 104,108 | 103,373 | 300,775 | 293,624 | | Net income | 75,619 | 77,757 | 234,048 | 184,540 | | Basic earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Dividends per share | 0.32 | 0.30 | 0.95 | 0.88 | - For the three months ended September 30, 2021, **net income was $75.619 million**, a year-over-year decrease of **2.75%**, primarily due to reduced gains on loan sales[10](index=10&type=chunk) - For the nine months ended September 30, 2021, **net income was $234.048 million**, a year-over-year increase of **26.83%**, driven by higher net interest income and a reduction in the provision for credit losses[10](index=10&type=chunk) - Over the nine-month period, the provision for credit losses shifted from **$41.3 million** in 2020 to a **negative $4.88 million (benefit)** in 2021, significantly boosting earnings after net interest income[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the company's net income and other comprehensive income (loss) components, leading to total comprehensive income for the three and nine months ended September 30, 2021 and 2020 | Indicator | Three Months Ended September 30, 2021 (Thousands of USD) | Three Months Ended September 30, 2020 (Thousands of USD) | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | Net income | 75,619 | 77,757 | 234,048 | 184,540 | | Other comprehensive income (loss), net of tax | (12,783) | 1,189 | (65,431) | 90,872 | | Total comprehensive income | 62,836 | 78,946 | 168,617 | 275,412 | - For the nine months ended September 30, 2021, **other comprehensive income (loss) net of tax was a negative $65.431 million**, compared to a positive **$90.872 million** in the prior year, primarily due to unrealized losses on available-for-sale securities[12](index=12&type=chunk) - Total comprehensive income for the nine months ended September 30, 2021, significantly decreased to **$168.617 million**, a **38.77% reduction** from **$275.412 million** in the prior year[12](index=12&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement outlines the changes in the company's stockholders' equity for the nine months ended September 30, 2021 and 2020, reflecting net income, other comprehensive income, dividends, and equity transactions | Indicator | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Beginning balance | 2,307,041 | 1,960,733 | | Net income | 234,048 | 184,540 | | Other comprehensive loss (income) | (65,431) | 90,872 | | Cash dividends | (90,929) | (84,134) | | Stock issued (acquisition related) | — | 112,133 | | Stock issued under stock option plans | — | — | | Share-based compensation and related taxes | 2,887 | 3,292 | | Cumulative effect of accounting change | — | (12,347) | | Ending balance | 2,387,616 | 2,255,089 | - As of September 30, 2021, **total stockholders' equity was $2.388 billion**, an increase of **5.88%** from September 30, 2020, primarily driven by increased net income[16](index=16&type=chunk) - For the first nine months of 2021, **other comprehensive loss was $65.431 million**, compared to a **$90.872 million gain** in the same period of 2020, reflecting the impact of valuation changes in available-for-sale securities[16](index=16&type=chunk) - Cash dividends per share increased from **$0.88** for the first nine months of 2020 to **$0.95** for the same period in 2021[10](index=10&type=chunk)[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash flows into operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020, illustrating changes in cash and cash equivalents | Activity Type | Nine Months Ended September 30, 2021 (Thousands of USD) | Nine Months Ended September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Net cash from operating activities | 417,310 | 113,757 | | Net cash from investing activities | (3,360,929) | (2,878,828) | | Net cash from financing activities | 2,659,365 | 3,203,989 | | Net (decrease) increase in cash and cash equivalents | (284,254) | 438,918 | | Cash and cash equivalents at end of period | 348,888 | 769,879 | - Net cash provided by operating activities significantly increased to **$417.31 million** for the first nine months of 2021, a **266.85% increase** from **$113.76 million** in the same period of 2020[18](index=18&type=chunk) - Net cash used in investing activities increased to **$3.361 billion**, primarily due to a substantial increase in purchases of available-for-sale debt securities[18](index=18&type=chunk) - Net cash provided by financing activities decreased from **$3.204 billion** in 2020 to **$2.659 billion** in 2021, mainly due to a reduction in the net increase in deposits[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, offering additional context and breakdowns for key accounts and accounting policies [Note 1. Nature of Operations and Summary of Significant Accounting Policies](index=12&type=section&id=Note%201.%20Nature%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines Glacier Bancorp, Inc.'s operations as a Montana-based company providing banking services across eight states through its subsidiary, and details significant accounting policies, including consolidation, cash, debt securities, loans, credit losses, and revenue recognition - The company provides comprehensive banking services through its wholly-owned bank subsidiary, Glacier Bank, across Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona, and Nevada[21](index=21&type=chunk) - The company adopted FASB ASU 2016-13 on January 1, 2020, which significantly altered accounting policies for credit losses on debt securities and loans[29](index=29&type=chunk)[40](index=40&type=chunk) - The company considers Glacier Bank its sole operating segment due to similar business activities, regular review of operating results by the CEO, and availability of financial information[25](index=25&type=chunk) Provision for Credit Losses (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Provision for credit losses on loans | 2,313 | 2,869 | (2,921) | 39,165 | | Provision for credit losses on unfunded commitments | (1,588) | 2,317 | (1,959) | 2,135 | | Total provision for credit losses | 725 | 5,186 | (4,880) | 41,300 | [Note 2. Debt Securities](index=22&type=section&id=Note%202.%20Debt%20Securities) This note details the company's debt securities, including amortized cost, unrealized gains/losses, and fair value for available-for-sale and held-to-maturity securities, noting that unrealized losses are primarily due to interest rate changes, not credit losses Debt Securities Composition (Thousands of USD) | Security Type | Amortized Cost September 30, 2021 | Fair Value September 30, 2021 | Amortized Cost December 31, 2020 | Fair Value December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Available-for-Sale** | | | | | | U.S. government and federal agencies | 31,449 | 31,373 | 38,568 | 38,588 | | Residential mortgage-backed securities | 5,498,676 | 5,491,345 | 2,261,463 | 2,289,090 | | Commercial mortgage-backed securities | 1,081,008 | 1,114,001 | 1,177,458 | 1,234,574 | | Total available-for-sale | 7,328,737 | 7,390,580 | 5,145,866 | 5,337,814 | | **Held-to-Maturity** | | | | | | State and municipal government | 1,128,299 | 1,146,453 | 189,836 | 203,216 | | Total held-to-maturity | 1,128,299 | 1,146,453 | 189,836 | 203,216 | | **Total Debt Securities** | 8,518,879 | 8,537,033 | 5,335,702 | 5,541,030 | - As of September 30, 2021, **total unrealized losses on available-for-sale debt securities were $25.616 million**, compared to **$0.792 million** as of December 31, 2020[92](index=92&type=chunk) - The company realized **$151 million** from sales and redemptions of debt securities in the first nine months of 2021, with total realized gains of **$0.945 million** and total realized losses of **$0.075 million**[95](index=95&type=chunk) - As of September 30, 2021, all available-for-sale debt securities in an unrealized loss position were determined to be investment grade, and the company does not intend to sell these securities[100](index=100&type=chunk)[102](index=102&type=chunk) [Note 3. Loans Receivable, Net](index=26&type=section&id=Note%203.%20Loans%20Receivable%2C%20Net) This note provides a detailed breakdown of the company's loans receivable and changes in the allowance for credit losses (ACL), noting that ACL decreased due to improved economic forecasts and qualitative factor adjustments Loans Receivable Composition (Thousands of USD) | Loan Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Residential real estate | 781,538 | 802,508 | | Commercial real estate | 6,912,569 | 6,315,895 | | Other commercial | 2,598,616 | 3,054,817 | | Home equity | 660,920 | 636,405 | | Other consumer | 340,248 | 313,071 | | Total loans receivable | 11,293,891 | 11,122,696 | | Allowance for credit losses | (153,609) | (158,243) | | Loans receivable, net | 11,140,282 | 10,964,453 | - As of September 30, 2021, **commercial real estate loans grew to $6.913 billion**, while **other commercial loans (including PPP loans) decreased to $2.599 billion**[108](index=108&type=chunk) Allowance for Credit Losses Movement (Thousands of USD) | Indicator | Nine Months Ended September 30, 2021 | | :--- | :--- | | Beginning balance | 158,243 | | Provision for credit losses | (2,921) | | Total charge-offs | (8,566) | | Total recoveries | 6,853 | | Ending balance | 153,609 | - For the first nine months of 2021, the **allowance for credit losses decreased by $2.921 million**, primarily due to improved economic forecasts and qualitative factor adjustments[112](index=112&type=chunk) - As of September 30, 2021, **non-accrual loans 90 days or more past due and not covered by an allowance for credit losses were $24.989 million**, compared to **$29.532 million** as of December 31, 2020[115](index=115&type=chunk) [Note 4. Leases](index=35&type=section&id=Note%204.%20Leases) This note provides information on the company's lease activities, including ROU assets and lease liabilities for operating and finance leases, and details lease maturities and expenses Lease Assets and Liabilities (Thousands of USD) | Indicator | Finance Leases September 30, 2021 | Operating Leases September 30, 2021 | Finance Leases December 31, 2020 | Operating Leases December 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net ROU assets | 5,542 | 44,480 | 5,726 | 46,820 | | Lease liabilities | 5,810 | 47,590 | 5,891 | 49,675 | | Weighted average remaining lease term | 23 years | 17 years | 24 years | 17 years | | Weighted average discount rate | 2.6% | 3.5% | 2.6% | 3.4% | Lease Expenses (Thousands of USD) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Finance lease cost | 99 | 99 | 297 | 295 | | Operating lease cost | 1,302 | 1,254 | 3,883 | 3,553 | | Short-term lease cost | 93 | 88 | 261 | 266 | | Variable lease cost | 264 | 264 | 759 | 977 | | Sublease income | (11) | (2) | (32) | (5) | | Total lease expense | 1,747 | 1,703 | 5,168 | 5,086 | [Note 5. Goodwill](index=36&type=section&id=Note%205.%20Goodwill) This note discloses changes in the carrying value of goodwill, which remained at $514.013 million as of September 30, 2021, with no impairment identified during the annual impairment test Goodwill Carrying Value Movement (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Beginning net carrying value | 514,013 | 513,355 | 514,013 | 456,418 | | Acquisitions and adjustments | — | 658 | — | 57,595 | | Ending net carrying value | 514,013 | 514,013 | 514,013 | 514,013 | - The company conducted its annual goodwill impairment test in the third quarter of 2021 and determined that **no impairment of goodwill occurred**[132](index=132&type=chunk) - As of September 30, 2021, and December 31, 2020, **accumulated impairment charges were $40.159 million**[132](index=132&type=chunk) [Note 6. Loan Servicing](index=37&type=section&id=Note%206.%20Loan%20Servicing) This note details changes in mortgage loan servicing rights, which increased to $11.645 million as of September 30, 2021, reflecting growth in the principal balance of serviced loans Mortgage Loan Servicing Rights Movement (Thousands of USD) | Indicator | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Beginning carrying value | 8,976 | 1,618 | | Additions | 3,996 | 8,298 | | Amortization | (1,327) | (940) | | Ending carrying value | 11,645 | 8,976 | | Principal balance of serviced loans | 1,511,199 | 1,269,080 | | Fair value of servicing rights | 15,477 | 12,087 | - As of September 30, 2021, the **carrying value of loan servicing rights was $11.645 million**, a **29.74% increase** from December 31, 2020[134](index=134&type=chunk) - The **principal balance of serviced loans increased from $1.269 billion** as of December 31, 2020, to **$1.511 billion** as of September 30, 2021, a **19.08% increase**[134](index=134&type=chunk) [Note 7. Variable Interest Entities](index=37&type=section&id=Note%207.%20Variable%20Interest%20Entities) This note describes the company's investments in variable interest entities (VIEs), including consolidated CDE and LIHTC funds where the company is the primary beneficiary, and discloses future unfunded equity commitments for non-consolidated LIHTC investments - The company is the primary beneficiary of certain CDE (New Markets Tax Credit) and tax credit funds (Low-Income Housing Tax Credit), thus consolidating their assets, liabilities, and operating results into its financial statements[137](index=137&type=chunk)[138](index=138&type=chunk) Assets and Liabilities of Consolidated VIEs (Thousands of USD) | Indicator | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total assets | 150,455 | 130,875 | | Total liabilities | 28,086 | 27,400 | Future Unfunded Contingent Equity Commitments for Non-Consolidated LIHTC Investments (Thousands of USD) | Year | Amount | | :--- | :--- | | 2021 | 7,237 | | 2022 | 28,759 | | 2023 | 26,446 | | 2024 | 8,937 | | 2025 | 300 | | Thereafter | 1,178 | | Total | 72,857 | Amortization Expense and Tax Credits (Thousands of USD) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Amortization expense | 1,604 | 1,936 | 6,330 | 5,766 | | Tax credits and other tax benefits recognized | 2,983 | 2,608 | 9,260 | 7,771 | [Note 8. Securities Sold Under Agreements to Repurchase](index=39&type=section&id=Note%208.%20Securities%20Sold%20Under%20Agreements%20to%20Repurchase) This note summarizes the carrying value of securities sold under repurchase agreements (repos), totaling $1.041 billion as of September 30, 2021, primarily collateralized by residential mortgage-backed securities Securities Sold Under Agreements to Repurchase (Thousands of USD) | Collateral Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | State and municipal government | 118,957 | 787,016 | | Corporate bonds | 137,461 | 217,567 | | Residential mortgage-backed securities | 773,204 | — | | Commercial mortgage-backed securities | 11,317 | — | | Total | 1,040,939 | 1,004,583 | - As of September 30, 2021, **total repurchase agreements were $1.041 billion**, an increase of **3.62%** from December 31, 2020[144](index=144&type=chunk) - Repurchase agreements were collateralized by debt securities with carrying values of **$1.197 billion** as of September 30, 2021, and **$1.151 billion** as of December 31, 2020[144](index=144&type=chunk) [Note 9. Derivatives and Hedging Activities](index=39&type=section&id=Note%209.%20Derivatives%20and%20Hedging%20Activities) This note describes the company's derivative and hedging activities, primarily interest rate caps designated as cash flow hedges and interest rate lock commitments for residential real estate loans, used to manage interest rate risk - The company purchased **interest rate caps with a total notional amount of $130.5 million** as cash flow hedges to manage interest rate risk on variable-rate subordinated debentures[146](index=146&type=chunk) - As of September 30, 2021, the **fair value of interest rate caps was $0.553 million**, compared to **$0.201 million** as of December 31, 2020, with changes recorded in other comprehensive income[146](index=146&type=chunk) - As of September 30, 2021, **total interest rate lock commitments were $179.58 million**, with a fair value of **$3.884 million** for related derivatives[148](index=148&type=chunk) [Note 10. Other Expenses](index=40&type=section&id=Note%2010.%20Other%20Expenses) This note details the composition of other expenses, which totaled $41.926 million for the nine months ended September 30, 2021, a 12.7% decrease from the prior year, primarily due to reduced acquisition-related costs and gains on fixed asset disposals Other Expenses Composition (Thousands of USD) | Expense Type | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Consulting and outside services | 3,003 | 4,050 | 7,918 | 8,604 | | Loan expenses | 1,649 | 1,743 | 5,028 | 3,732 | | VIE amortization and other expenses | 1,668 | 1,510 | 4,342 | 3,396 | | Acquisition-related expenses | 472 | 792 | 1,654 | 7,311 | | (Gain) loss on disposal of fixed assets | (65) | — | (1,463) | 125 | | Total other expenses | 15,320 | 16,469 | 41,926 | 48,094 | - For the nine months ended September 30, 2021, **acquisition-related expenses significantly decreased from $7.311 million** in the prior year to **$1.654 million**[149](index=149&type=chunk) - Gains on disposal of fixed assets were **$1.463 million** for the first nine months of 2021, compared to a **$0.125 million loss** in the same period of 2020[149](index=149&type=chunk) [Note 11. Accumulated Other Comprehensive Income (Loss)](index=41&type=section&id=Note%2011.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note presents the components and changes in accumulated other comprehensive income (loss), primarily from available-for-sale debt securities and derivatives, which significantly decreased to $77.659 million as of September 30, 2021 Accumulated Other Comprehensive Income (Loss) Movement (Thousands of USD) | Indicator | Gains (Losses) on Available-for-Sale and Transferred Debt Securities | (Losses) Gains on Derivatives Designated as Cash Flow Hedges | Total | | :--- | :--- | :--- | :--- | | Balance as of January 1, 2021 | 143,443 | (353) | 143,090 | | Other comprehensive (loss) income before reclassifications | (63,468) | 359 | (63,109) | | Reclassification adjustments | (2,322) | — | (2,322) | | Net other comprehensive (loss) income for the period | (65,790) | 359 | (65,431) | | Balance as of September 30, 2021 | 77,653 | 6 | 77,659 | - As of September 30, 2021, **accumulated other comprehensive income was $77.659 million**, a **45.73% decrease** from **$143.09 million** as of January 1, 2021, primarily due to unrealized losses on available-for-sale and transferred debt securities[151](index=151&type=chunk) [Note 12. Earnings Per Share](index=41&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note provides the calculation and results for basic and diluted earnings per share, which both increased to $2.45 for the nine months ended September 30, 2021, compared to the prior year Earnings Per Share Calculation (Thousands of USD, except per share data) | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common stockholders | 75,619 | 77,757 | 234,048 | 184,540 | | Basic average common shares outstanding | 95,510,772 | 95,411,656 | 95,494,211 | 94,704,198 | | Diluted average common shares outstanding | 95,586,202 | 95,442,576 | 95,573,519 | 94,747,894 | | Basic earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | - For the nine months ended September 30, 2021, **basic and diluted earnings per share were both $2.45**, representing a **25.64% increase** from **$1.95** in the same period of 2020[153](index=153&type=chunk) [Note 13. Fair Value of Assets and Liabilities](index=42&type=section&id=Note%2013.%20Fair%20Value%20of%20Assets%20and%20Liabilities) This note provides fair value measurements for the company's assets and liabilities, categorized by fair value hierarchy (Level 1, 2, 3), with most available-for-sale debt securities and derivatives classified as Level 2 - Fair value hierarchy is categorized into three levels: **Level 1 (quoted prices in active markets)**, **Level 2 (observable inputs other than Level 1 quoted prices)**, and **Level 3 (unobservable inputs)**[154](index=154&type=chunk) Assets Measured at Fair Value on a Recurring Basis (Thousands of USD) | Asset Type | Fair Value September 30, 2021 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Total available-for-sale debt securities | 7,390,580 | — | 7,390,580 | — | | Loans held for sale (at fair value) | 94,138 | — | 94,138 | — | | Interest rate caps | 553 | — | 553 | — | | Interest rate locks | 3,884 | — | 3,884 | — | | TBA hedges | 759 | — | 759 | — | | Total assets measured at fair value on a recurring basis | 7,489,914 | — | 7,489,914 | — | Assets Measured at Fair Value on a Non-Recurring Basis (Thousands of USD) | Asset Type | Fair Value September 30, 2021 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Collateral-dependent impaired loans (net of ACL) | 28,651 | — | — | 28,651 | - As of September 30, 2021, the **fair value of collateral-dependent impaired loans (net of ACL) was $28.651 million**, entirely classified as **Level 3**, primarily valued using the cost and sales comparison approaches[170](index=170&type=chunk)[171](index=171&type=chunk) [Note 14. Subsequent Events](index=48&type=section&id=Note%2014.%20Subsequent%20Events) This note discloses the company's acquisition of Altabancorp and its subsidiary Altabank on October 1, 2021, valued at $839.852 million through the issuance of 15,173,480 common shares, expanding its presence in Utah - The company acquired Altabancorp and its wholly-owned subsidiary Altabank on **October 1, 2021**, expanding its operations in Utah[180](index=180&type=chunk) - As of September 30, 2021, Altabancorp had **total assets of $3.647728 billion**, **total loans of $1.901181 billion**, and **total deposits of $3.278907 billion**[180](index=180&type=chunk) - The preliminary value of the acquisition was **$839.852 million**, with the company issuing **15,173,480 shares of common stock** as consideration[180](index=180&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of the company's financial condition and operating results for the three and nine months ended September 30, 2021, highlighting key trends, balance sheet changes, and impacts from PPP loans and recent acquisitions [FORWARD-LOOKING STATEMENTS](index=49&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section clarifies that the 10-Q report contains forward-looking statements based on management's current beliefs and expectations, subject to significant business, economic, and competitive uncertainties and contingencies - This 10-Q report contains forward-looking statements regarding management's plans, objectives, expectations, and intentions, based on current beliefs and expectations, subject to significant business, economic, and competitive uncertainties and contingencies[184](index=184&type=chunk) - Factors that could cause actual results to differ include changes in loan credit quality, monetary and fiscal policy shifts, regulatory changes, acquisition integration costs, goodwill impairment, increased market competition, and cybersecurity risks[185](index=185&type=chunk) [Financial Highlights](index=50&type=section&id=Financial%20Highlights) This section summarizes key financial performance indicators for the three and nine months ended September 30, 2021 and 2020, including net income, EPS, dividends, and various ratios | Indicator | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (Thousands of USD) | 75,619 | 77,757 | 234,048 | 184,540 | | Diluted earnings per share | 0.79 | 0.81 | 2.45 | 1.95 | | Dividends per share | 0.32 | 0.30 | 0.95 | 0.88 | | Return on average assets (annualized) | 1.43% | 1.80% | 1.57% | 1.56% | | Return on average equity (annualized) | 12.49% | 13.73% | 13.27% | 11.40% | | Efficiency ratio | 50.17% | 48.05% | 48.94% | 49.83% | | Loans to deposits ratio | 65.06% | 82.29% | 65.06% | 82.29% | - Third quarter 2021 **net income was $75.6 million**, a **3% year-over-year decrease**, with **diluted EPS of $0.79**, down **2%**, primarily due to a **$21.6 million reduction in residential mortgage loan sale gains**[187](index=187&type=chunk) - For the first nine months of 2021, **net income was $234 million**, a **26.83% year-over-year increase**, with **diluted EPS of $2.45**, up **25.64%**[187](index=187&type=chunk) [Acquisition](index=50&type=section&id=Acquisition) This section highlights the company's acquisition of Altabancorp and its subsidiary Altabank on October 1, 2021, which expanded its operations in Utah and significantly increased its asset base - The company acquired Altabancorp and its wholly-owned subsidiary Altabank on **October 1, 2021**, expanding its operations in Utah[188](index=188&type=chunk) - As of September 30, 2021, Altabank had **total assets of $3.648 billion**, **total loans of $1.901 billion**, and **total deposits of $3.279 billion**[188](index=188&type=chunk) [Financial Condition Analysis](index=51&type=section&id=Financial%20Condition%20Analysis) This section analyzes the company's financial position, including changes in assets, liabilities, and stockholders' equity, providing context for balance sheet trends and key drivers [Assets](index=51&type=section&id=Assets) This section details changes in the company's assets, including cash, debt securities, and loans receivable, highlighting significant growth in debt securities driven by increased liquidity | Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 348,888 | 769,879 | (420,991) | -54.68% | | Total debt securities | 8,518,879 | 4,319,057 | 4,199,822 | 97.24% | | Loans receivable, net | 11,140,282 | 11,454,179 | (313,897) | -2.74% | | Total assets | 21,314,019 | 17,926,067 | 3,387,952 | 18.90% | - As of September 30, 2021, **total debt securities were $8.519 billion**, a **97% increase** from the prior year, primarily due to excess liquidity from increased core deposits[190](index=190&type=chunk) - The **total loan portfolio was $11.294 billion**, a **3% decrease** from the prior year; excluding PPP loans, the portfolio grew by **$755 million**, or **7%**, with commercial real estate loans increasing by **$711 million (11%)**[192](index=192&type=chunk) [Liabilities](index=52&type=section&id=Liabilities) This section analyzes changes in the company's liabilities, focusing on significant growth in core deposits driven by federal stimulus and customer savings, which kept other borrowings low | Liability Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Total core deposits | 17,477,191 | 14,180,757 | 3,296,434 | 23.25% | | Non-interest-bearing deposits | 6,632,402 | 5,479,311 | 1,153,091 | 21.04% | | Total deposits | 17,503,314 | 14,299,888 | 3,203,426 | 22.40% | | Securities sold under agreements to repurchase | 1,040,939 | 965,668 | 75,271 | 7.80% | | Total liabilities | 18,926,403 | 15,670,978 | 3,255,425 | 20.77% | - As of September 30, 2021, **total core deposits were $17.477 billion**, a **23% increase** from the prior year, driven by PPP loan proceeds, federal stimulus deposits, and increased customer savings[194](index=194&type=chunk) - **Non-interest-bearing deposits accounted for 38% of core deposits**, consistent with the prior year[194](index=194&type=chunk) - Due to the significant increase in core deposits, borrowings such as wholesale deposits and Federal Home Loan Bank (FHLB) advances remained at low levels[195](index=195&type=chunk) [Stockholders' Equity](index=53&type=section&id=Stockholders'%20Equity) This section examines changes in stockholders' equity, including tangible stockholders' equity, which grew due to retained earnings offsetting a decline in other comprehensive income | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Total stockholders' equity | 2,387,616 | 2,255,089 | 132,527 | 5.88% | | Tangible stockholders' equity | 1,825,558 | 1,682,955 | 142,603 | 8.47% | | Stockholders' equity to total assets ratio | 11.20% | 12.58% | -1.38% | -10.97% | | Book value per share | 25.00 | 23.63 | 1.37 | 5.79% | | Tangible book value per share | 19.11 | 17.64 | 1.47 | 8.33% | - As of September 30, 2021, **tangible stockholders' equity was $1.826 billion**, an **8% increase** from the prior year, primarily due to retained earnings offsetting a decrease in other comprehensive income[197](index=197&type=chunk) - Both the ratio of stockholders' equity to total assets and tangible stockholders' equity to tangible assets decreased, mainly due to a **$2.991 billion increase in debt securities**, driven by a significant influx of deposits during the year[197](index=197&type=chunk) [Cash Dividend](index=53&type=section&id=Cash%20Dividend) This section reports the company's declaration of a quarterly cash dividend of $0.32 per share, marking its 146th consecutive dividend payment - The company's Board of Directors declared a **quarterly cash dividend of $0.32 per share** on September 30, 2021, marking its **146th consecutive dividend payment**[198](index=198&type=chunk) [Operating Results for Three Months Ended September 30, 2021 Compared to June 30, 2021, March 31, 2021, and September 30, 2020](index=54&type=section&id=Operating%20Results%20for%20Three%20Months%20Ended%20September%2030%2C%202021%20Compared%20to%20June%2030%2C%202021%2C%20March%2031%2C%202021%2C%20and%20September%2030%2C%202020) This section compares the company's operating results for the three months ended September 30, 2021, against prior quarters and the prior year, analyzing income, expenses, and credit loss provisions [Income Summary](index=54&type=section&id=Income%20Summary) This section provides a summary of the company's income components, including net interest income and non-interest income, for the three months ended September 30, 2021, compared to the prior year | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 162,613 | 151,403 | 11,210 | 7.40% | | Total non-interest income | 34,815 | 53,667 | (18,852) | -35.13% | | Total revenue | 197,428 | 205,070 | (7,642) | -3.73% | | Net interest margin (tax equivalent) | 3.39% | 3.92% | -0.53% | -13.52% | - Third quarter 2021 **net interest income was $162.613 million**, a **7% increase** from the prior year, primarily due to higher interest income from PPP loans and debt securities[202](index=202&type=chunk) - **Total non-interest income was $34.815 million**, a **35% decrease** from the prior year, mainly due to a **$21.614 million reduction in gains on loan sales**[201](index=201&type=chunk)[206](index=206&type=chunk) [Net Interest Income](index=54&type=section&id=Net%20Interest%20Income) This section analyzes the drivers of net interest income, including PPP loan interest and deposit rate changes, and explains the decline in net interest margin for the third quarter of 2021 - Third quarter 2021 **net interest income was $163 million**, a **5% increase** from the prior quarter and a **7% increase** from the prior year[202](index=202&type=chunk) - Interest income from PPP loans (including deferred fees and costs) was **$12.9 million** this quarter, compared to **$10.3 million** in the prior quarter and **$9.3 million** in the prior year[202](index=202&type=chunk) - Interest expense for the quarter was **$4.1 million**, an **8% decrease** from the prior quarter and a **32% decrease** from the prior year, primarily due to lower deposit rates[203](index=203&type=chunk) - The **net interest margin (tax equivalent) was 3.39%**, a **5 basis point decrease** from the prior quarter and a **53 basis point decrease** from the prior year, mainly due to lower yields on interest-earning assets[204](index=204&type=chunk) [Non-interest Income](index=55&type=section&id=Non-interest%20Income) This section analyzes non-interest income, which decreased in the third quarter of 2021 due to slower mortgage activity and reduced loan sale gains, despite growth in service charges - Third quarter 2021 **non-interest income totaled $34.8 million**, a **2% decrease** from the prior quarter and a **35% decrease** from the prior year[205](index=205&type=chunk) - Service charges and other fees increased by **$1.4 million** from the prior quarter and **$1.8 million** from the prior year, primarily due to increased customer account and transaction activity[205](index=205&type=chunk) - **Gains on loan sales were $13.9 million**, a **14% decrease** from the prior quarter and a **61% decrease** from the prior year, reflecting a slowdown in mortgage activity[206](index=206&type=chunk) [Non-interest Expense](index=55&type=section&id=Non-interest%20Expense) This section details non-interest expenses, including compensation and employee benefits, and other expenses, noting a slight increase in total expenses for the third quarter of 2021 | Expense Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (Thousands of USD) | Change from September 30, 2020 (%) | | :--- | :--- | :--- | :--- | :--- | | Compensation and employee benefits | 66,364 | 64,866 | 1,498 | 2.31% | | Other expenses | 15,320 | 16,469 | (1,149) | -6.98% | | Total non-interest expense | 104,108 | 103,373 | 735 | 0.71% | - Third quarter 2021 **total non-interest expense was $104.108 million**, a **4% increase** from the prior quarter and a **0.71% increase** from the prior year[207](index=207&type=chunk) - **Compensation and employee benefits increased by $2.3 million (4%)** from the prior quarter and **$1.5 million** from the prior year[207](index=207&type=chunk) - Other expenses for the quarter were **$15.3 million**, including **$0.472 million in acquisition-related expenses**, a **7% decrease** from the prior year[208](index=208&type=chunk) [Efficiency Ratio](index=55&type=section&id=Efficiency%20Ratio) This section presents the company's efficiency ratio, which increased in the third quarter of 2021, primarily due to a decline in loan sale gains, when excluding the impact of PPP loans - The **efficiency ratio was 50.17%** in the third quarter of 2021, compared to **49.92%** in the prior quarter and **48.05%** in the prior year[209](index=209&type=chunk) - Excluding the impact of PPP loans, the **efficiency ratio was 53.59%** this quarter, an increase of **308 basis points** from **50.51%** in the prior year, mainly due to decreased gains on loan sales[209](index=209&type=chunk) [Provision for Credit Losses for Loans](index=56&type=section&id=Provision%20for%20Credit%20Losses%20for%20Loans) This section details the provision for credit losses for loans, which increased in the third quarter of 2021 compared to the prior quarter, alongside information on net charge-offs and asset quality ratios | Indicator | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Provision for credit losses on loans (Thousands of USD) | 2,313 | 2,869 | | Net charge-offs (Thousands of USD) | 152 | 826 | | Allowance for credit losses as a percentage of loans | 1.36% | 1.42% | | Loans 30-89 days past due as a percentage of loans | 0.23% | 0.15% | | Non-performing assets as a percentage of subsidiary assets | 0.24% | 0.25% | - The **provision for credit losses on loans was $2.3 million** in the third quarter of 2021, an **$8 million increase** from the prior quarter (negative $5.7 million) and a **$0.556 million decrease** from the prior year ($2.9 million)[211](index=211&type=chunk) - **Net charge-offs were $0.152 million** this quarter, compared to **$0.725 million in net recoveries** in the prior quarter and **$0.826 million in net charge-offs** in the prior year[212](index=212&type=chunk) [Operating Results for Nine Months Ended September 30, 2021 Compared to September 30, 2020](index=57&type=section&id=Operating%20Results%20for%20Nine%20Months%20Ended%20September%2030%2C%202021%20Compared%20to%20September%2030%2C%202020) This section compares the company's operating results for the nine months ended September 30, 2021, against the prior year, analyzing income, expenses, and the provision for credit losses [Income Summary](index=57&type=section&id=Income%20Summary) This section summarizes the company's income components, including net interest income and non-interest income, for the nine months ended September 30, 2021, compared to the prior year | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change (Thousands of USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 474,894 | 433,991 | 40,903 | 9% | | Total non-interest income | 110,458 | 128,163 | (17,705) | -14% | | Total revenue | 585,352 | 562,154 | 23,198 | 4% | | Net interest margin (tax equivalent) | 3.52% | 4.12% | -0.60% | -14.56% | - For the first nine months of 2021, **net interest income was $475 million**, a **9% increase** from the same period in 2020[215](index=215&type=chunk) - **Total non-interest income was $110 million**, a **14% decrease** from the same period in 2020, primarily due to a **$21.604 million reduction in gains on loan sales**[215](index=215&type=chunk)[219](index=219&type=chunk) [Net Interest Income](index=57&type=section&id=Net%20Interest%20Income) This section analyzes the drivers of net interest income for the nine months ended September 30, 2021, highlighting growth from commercial loans and debt securities, and reduced interest expense from lower deposit costs - For the first nine months of 2021, **net interest income was $475 million**, an increase of **$40.9 million (9%)** from the same period in 2020[216](index=216&type=chunk) - Interest income increased by **$32.5 million (7%)**, primarily attributable to higher interest income from commercial loans (including PPP loans) and debt securities[216](index=216&type=chunk) - Interest expense decreased by **$8.4 million (39%)**, mainly due to lower deposit costs[216](index=216&type=chunk) - The **net interest margin (tax equivalent) was 3.52%**, a **60 basis point decrease** from the prior year, primarily due to lower yields on core loans and debt securities, and a shift in interest-earning asset mix towards lower-yielding debt securities[217](index=217&type=chunk) [Non-interest Income](index=58&type=section&id=Non-interest%20Income) This section analyzes non-interest income for the nine months ended September 30, 2021, noting a decrease primarily due to reduced loan sale gains, despite growth in service charges and miscellaneous loan fees - For the first nine months of 2021, **non-interest income was $110 million**, a **$17.7 million (14%) decrease** from the prior year[219](index=219&type=chunk) - Service charges and other fees increased by **$3 million (8%)**, and miscellaneous loan fees and charges increased by **$3.2 million (64%)**, primarily due to increased customer account and transaction activity[219](index=219&type=chunk) - **Gains on loan sales were $51.6 million**, a **$21.6 million (29%) decrease** from the prior year, reflecting a slowdown in purchase and refinancing activity[219](index=219&type=chunk) [Non-interest Expense](index=58&type=section&id=Non-interest%20Expense) This section details non-interest expenses for the nine months ended September 30, 2021, noting an overall increase driven by compensation and employee benefits, partially offset by reduced acquisition-related costs | Expense Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | Change (Thousands of USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Compensation and employee benefits | 192,941 | 182,507 | 10,434 | 6% | | Regulatory assessments and insurance | 5,592 | 3,622 | 1,970 | 54% | | Other expenses | 41,926 | 48,094 | (6,168) | -13% | | Total non-interest expense | 300,775 | 293,624 | 7,151 | 2% | - For the first nine months of 2021, **total non-interest expense was $301 million**, an increase of **$7.2 million (2%)** from the prior year[220](index=220&type=chunk) - **Compensation and employee benefits increased by $10.4 million (6%)**, primarily due to increased headcount, higher performance-related compensation, and annual salary increases[220](index=220&type=chunk) - Other expenses decreased by **$6.2 million (13%)**, mainly due to reduced acquisition-related expenses, from **$7.3 million** in the prior year to **$1.7 million** this period[220](index=220&type=chunk) [Efficiency Ratio](index=58&type=section&id=Efficiency%20Ratio) This section presents the company's efficiency ratio for the nine months ended September 30, 2021, noting a slight improvement compared to the prior year, and stability when excluding PPP loan impacts - The **efficiency ratio was 48.94%** for the first nine months of 2021, compared to **49.83%** in the prior year[221](index=221&type=chunk) - Excluding the impact of PPP loans, the **efficiency ratio was 53.34%** in 2021, largely consistent with **53.30%** in 2020[221](index=221&type=chunk) [Provision for Credit Losses](index=58&type=section&id=Provision%20for%20Credit%20Losses) This section details the company's provision for credit losses, which resulted in a $4.9 million benefit for the nine months ended September 30, 2021, primarily due to improved economic forecasts related to COVID-19 - For the first nine months of 2021, the **provision for credit losses was a $4.9 million benefit**, comprising a **$2.9 million benefit** for the loan portfolio and a **$2 million benefit** for unfunded loan commitments[222](index=222&type=chunk) - The **loan portfolio provision for credit losses benefit decreased by $42.1 million** from the prior year (a $39.2 million expense), primarily attributed to changes in economic forecasts related to COVID-19[222](index=222&type=chunk) - **Net charge-offs were $1.7 million** this year, compared to **$2.9 million** in the prior year[222](index=222&type=chunk) [ADDITIONAL MANAGEMENT'S DISCUSSION AND ANALYSIS](index=59&type=section&id=ADDITIONAL%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS) This section provides supplementary information to the management's discussion and analysis, covering investment and lending activities, asset quality, funding sources, liquidity, capital resources, and tax information [Investment Activity](index=59&type=section&id=Investment%20Activity) This section details the company's investment activities, focusing on debt and equity securities, including transfers between available-for-sale and held-to-maturity portfolios [Debt Securities](index=59&type=section&id=Debt%20Securities) This section provides a breakdown of the company's debt securities portfolio, including available-for-sale and held-to-maturity categories, and their composition by type and credit rating | Security Type | Carrying Value September 30, 2021 (Thousands of USD) | Carrying Value September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total available-for-sale debt securities | 7,390,580 | 4,125,548 | | Total held-to-maturity debt securities | 1,128,299 | 193,509 | | Total debt securities | 8,518,879 | 4,319,057 | - The company transferred a total of **$844 million** in available-for-sale securities to the held-to-maturity portfolio during the first and second quarters of 2021[225](index=225&type=chunk) - Debt securities primarily consist of state and municipal government securities and mortgage-backed securities, with **mortgage-backed securities accounting for 64% of available-for-sale securities**[225](index=225&type=chunk) State and Municipal Government Securities by NRSRO Rating (Thousands of USD) | Rating | Amortized Cost September 30, 2021 | Fair Value September 30, 2021 | | :--- | :--- | :--- | | S&P: AAA / Moody's: Aaa | 389,559 | 398,464 | | S&P: AA+, AA, AA- / Moody's: Aa1, Aa2, Aa3 | 1,122,979 | 1,156,558 | | S&P: A+, A, A- / Moody's: A1, A2, A3 | 87,099 | 92,155 | | S&P: BBB+, BBB, BBB- / Moody's: Baa1, Baa2, Baa3 | 92 | 95 | | Unrated | 7,686 | 7,872 | | Total | 1,607,415 | 1,655,144 | [Equity securities](index=62&type=section&id=Equity%20securities) This section discusses the company's equity securities, primarily non-marketable capital stock issued by FHLB Des Moines, which are carried at cost less impairment, with no impairment identified as of September 30, 2021 - Non-marketable equity securities primarily include **capital stock issued by FHLB Des Moines**, carried at cost less impairment[234](index=234&type=chunk) - As of September 30, 2021, the company assessed that **no impairment occurred for non-marketable equity securities** and marketable equity securities without readily determinable fair values[235](index=235&type=chunk) [Lending Activity](index=62&type=section&id=Lending%20Activity) This section describes the company's lending activities, primarily focused on residential and commercial real estate, other commercial loans, and consumer installment loans, and provides a breakdown of the loan portfolio - The company's lending activities primarily focus on residential real estate mortgages, commercial loans (including agricultural and public entities), and consumer installment loans (e.g., home equity, auto loans)[236](index=236&type=chunk) | Loan Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Residential real estate | 781,538 | 862,614 | | Commercial real estate | 6,912,569 | 6,201,817 | | Other commercial | 2,598,616 | 3,593,322 | | Home equity | 660,920 | 646,850 | | Other consumer | 340,248 | 314,128 | | Total loans receivable | 11,293,891 | 11,618,731 | | Allowance for credit losses | (153,609) | (164,552) | | Loans receivable, net | 11,140,282 | 11,454,179 | - As of September 30, 2021, **commercial real estate loans accounted for 62% of the loan portfolio**, an increase from **54%** as of September 30, 2020[237](index=237&type=chunk) [Non-performing Assets](index=63&type=section&id=Non-performing%20Assets) This section provides an overview of the company's non-performing assets, including other real estate owned and non-accrual loans, and discusses the adequacy of the allowance for credit losses relative to these assets | Non-performing Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Other real estate owned and foreclosed assets | 106 | 5,361 | | Total accruing loans 90 days or more past due | 5,172 | 2,952 | | Total non-accrual loans | 45,901 | 36,350 | | Total non-performing assets | 51,179 | 44,663 | | Non-performing assets as a percentage of subsidiary assets | 0.24% | 0.25% | | ACL as a percentage of non-performing loans | 301% | 419% | - As of September 30, 2021, **total non-performing assets were $51.179 million**, a **4% decrease** from the prior quarter and a **15% increase** from the prior year[238](index=238&type=chunk) - Early stage past due loans (accruing loans 30-89 days past due) were **$26.002 million**, an increase of **$13.9 million** from the prior quarter, primarily concentrated in one credit relationship[239](index=239&type=chunk) - The company believes that most non-performing assets are collateralized by real estate, and based on available information, the collateral value is sufficient to minimize significant charge-offs or losses[240](index=240&type=chunk) [Restructured Loans](index=64&type=section&id=Restructured%20Loans) This section discusses the company's troubled debt restructurings (TDRs), which decreased to $39.5 million as of September 30, 2021, and notes that COVID-19 related loan modifications were not classified as TDRs - As of September 30, 2021, the company's **troubled debt restructurings (TDRs) were $39.5 million**, compared to **$45.5 million** as of December 31, 2020[241](index=241&type=chunk) - In accordance with the CARES Act and related regulatory guidance, the company provided loan modifications to borrowers affected by COVID-19, which were not classified as TDRs[242](index=242&type=chunk) [Other Real Estate Owned and Foreclosed Assets](index=64&type=section&id=Other%20Real%20Estate%20Owned%20and%20Foreclosed%20Assets) This section details the changes in other real estate owned (OREO) and foreclosed assets, noting a significant decrease in the OREO balance to $0.106 million as of September 30, 2021 | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Beginning balance | 1,744 | 5,142 | | Additions | 1,481 | 2,062 | | Charge-offs | (120) | (189) | | Sales | (2,999) | (2,102) | | Ending balance | 106 | 5,361 | - In 2021, the **carrying value of loans prior to acquisition of collateral and transfer to other real estate owned (OREO) was $1.6 million**, with the fair value of collateral obtained through foreclosure being **$1.5 million**[243](index=243&type=chunk) - As of September 30, 2021, the **OREO balance was $0.106 million**, a significant decrease from **$5.361 million** as of September 30, 2020[243](index=243&type=chunk) [PPP Loans](index=65&type=section&id=PPP%20Loans) This section provides an overview of the company's Paycheck Protection Program (PPP) loan activity, including interest income, loan originations, and forgiveness amounts, highlighting remaining loan balances | Indicator | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | PPP interest income | 12,894 | 9,300 | | Total PPP loans | 368,913 | 1,448,417 | | Total remaining net fees | 12,986 | 36,099 | - In the first half of 2021, the company originated **$555 million in Round 2 PPP loans**, generating **$33.2 million in SBA deferred processing fees** and **$6.7 million in deferred compensation costs**, for **total net deferred fees of $26.5 million**[245](index=245&type=chunk) - In 2021, the company received **$327 million in PPP loan forgiveness**, with **$1.103 billion** in total forgiveness for the first nine months[247](index=247&type=chunk) - As of September 30, 2021, the company still held **$56 million in Round 1 PPP loans** and **$313 million in Round 2 PPP loans**[247](index=247&type=chunk) [Allowance for Credit Losses - Loans Receivable](index=66&type=section&id=Allowance%20for%20Credit%20Losses%20-%20Loans%20Receivable) This section details the allowance for credit losses (ACL) for loans receivable, providing a breakdown by loan type and assessing its adequacy to absorb estimated credit losses within the loan portfolio | Loan Type | ACL September 30, 2021 (Thousands of USD) | ACL as a Percentage (%) September 30, 2021 | Loans as a Percentage (%) September 30, 2021 | | :--- | :--- | :--- | :--- | | Residential real estate | 11,859 | 8% | 7% | | Commercial real estate | 100,038 | 65% | 62% | | Other commercial | 28,845 | 19% | 23% | | Home equity | 7,865 | 5% | 5% | | Other consumer | 5,002 | 3% | 3% | | Total | 153,609 | 100% | 100% | - As of September 30, 2021, the **allowance for credit losses (ACL) was 1.36% of total loans**, an increase of **1 basis point** from the prior quarter and a **6 basis point decrease** from the prior year[254](index=254&type=chunk) - Excluding PPP loans, the **ACL as a percentage of loans was 1.40%**, a decrease from **1.62%** in the prior year[254](index=254&type=chunk) - The company believes its **$154 million ACL is sufficient to absorb estimated credit losses** in any portion of the loan portfolio[254](index=254&type=chunk) [Loans by Regulatory Classification](index=69&type=section&id=Loans%20by%20Regulatory%20Classification) This section provides a detailed breakdown of loans by regulatory classification, including construction, commercial real estate, and consumer loans, along with information on non-performing assets and net charge-offs | Loan Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total residential construction | 359,157 | 323,437 | | Total land, lot, and other construction | 1,036,514 | 914,024 | | Total commercial real estate | 4,631,328 | 4,148,574 | | Commercial and industrial | 1,407,353 | 2,308,710 | | Agricultural | 748,548 | 747,145 | | Total 1-4 family | 1,196,207 | 1,299,466 | | Multi-family residential | 373,022 | 359,030 | | Home equity lines of credit | 709,828 | 651,546 | | Other consumer | 198,763 | 191,761 | | Total consumer | 908,591 | 843,307 | | Total loans receivable | 11,293,891 | 11,618,731 | - As of September 30, 2021, **commercial and industrial loans decreased by 39%** from the prior year, while **commercial real estate loans increased by 12%**[263](index=263&type=chunk) | Non-performing Asset Category | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total non-performing assets | 51,179 | 44,663 | | Non-accrual loans | 45,901 | 36,350 | | Accruing loans 90 days or more past due | 5,172 | 2,952 | | Other real estate owned | 106 | 5,361 | | Loan Type | Net Charge-offs (Recoveries) September 30, 2021 (Thousands of USD) | Net Charge-offs (Recoveries) September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Total residential construction | (12) | (28) | | Total land, lot, and other construction | (568) | (774) | | Total commercial real estate | (766) | 164 | | Commercial and industrial | (87) | 740 | | Agricultural | — | 309 | | Total 1-4 family | (761) | (196) | | Total consumer | (456) | 312 | | Total | 1,713 | 2,872 | [Sources of Funds](index=73&type=section&id=Sources%20of%20Funds) This section outlines the company's primary sources of funds, including deposits from individuals and businesses, and various borrowings such as repurchase agreements and Federal Home Loan Bank advances [Deposits](index=73&type=section&id=Deposits) This section details the company's deposits, which serve as a primary funding source, primarily from individuals and businesses within its geographic markets, and provides a breakdown of deposit types - Deposits are the company's primary source of funding for loans and other operations, mainly from individuals and business residents within the bank's geographic market areas[269](index=269&type=chunk)[270](index=270&type=chunk) | Deposit Type | September 30, 2021 (Thousands of USD) | September 30, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Non-interest-bearing deposits | 6,632,402 | 5,479,311 | | Total interest-bearing deposits | 10,870,912 | 8,820,577 | | Total deposits | 17,503,314 | 14,299,888 | - As of September 30, 2021, **non-interest-bearing deposits accounted for 38% of total deposits**, consistent with the prior year[270](index=270&type=chunk) [Securities Sold Under Agreements to Repurchase, Federal Home Loan Bank Advances and Other Borrowings](index=73&type=section&id=Securities%20Sold%20Under%20Agreements%20to%20Repurchase%2C%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Other%20Borrowings) This section describes the company's borrowing activities, including securities sold under repurchase agreements, primarily with municipal entities, and Federal Home Loan Bank advances collateralized by eligible loans and debt securities - The company borrows through **securities sold under repurchase agreements**, primarily with local municipalities and specific customers, typically with overnight terms[271](index=271&type=chunk) - The bank is a member of the Federal Home Loan Bank (FHLB) of Des Moines, accessing funding through **FHLB advances collateralized by eligible loans and debt securities**[272](index=272&type=chunk) [Short-term borrowings](index=74&type=section&id=Short-term%20borrowings) This section outlines the company's short-term borrowing sources, including FHLB advances, federal funds purchased, and repurchase agreements, and provides details on outstanding amounts and weighted average interest rates - The company's short-term borrowing sources include **FHLB advances, federal funds purchased, and retail and wholesale repurchase agreements**, with access to the Federal Reserve Bank's short-term discount window borrowing program[274](index=274&type=chunk) | Indicator | September 30, 2021 (Thousands of USD) | December 31, 2020 (Thousands of USD) | | :--- | :--- | :--- | | Repurchase agreements outstanding at period-end | 1,040,939 | 1,004,583 | | Weighted average interest rate on repurchase agreements outstanding | 0.19% | 0.33% | | Average balance of repurchase agreements | 988,092 | 783,100 | | Weighted average interest rate on repurchase agreements | 0.25% | 0.46% | [Subordinated Debentures](index=74&type=section&id=Subordinated%20Debentures) This section describes the company's subordinated debentures, issued through financing subsidiaries, which totaled $133 million as of September 30, 2021, and are included as Tier 2 regulatory capital - The company issues **trust preferred securities through the formation or acquisition of financing subsidiaries**, and issues subordinated debentures with terms identical to the trust preferred securities[276](index=276&type=chunk) - As of September 30, 2021, **outstanding subordinated debentures were $133 million** (including fair value adjustments from acquisitions), counted as Tier 2 capital for regulatory purposes[276](index=276&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=74&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) This section discusses the company's off-balance sheet arrangements, including unfunded loan commitments and letters of credit, and confirms the adequacy of the allowance for credit losses for these exposures - The company has various outstanding financing and credit commitments in the normal course of business, such as **letters of credit and unfunded loan commitments**, which are not reflected in the condensed consolidated financial statements[277](index=277&type=chunk) - As of September 30, 2021, the company assessed its off-balance sheet credit exposure and determined that its **$14.1 million allowance for credit losses is sufficient to absorb estimated credit losses**[277](index=277&type=chunk) [Liquidity Risk](index=75&type=section&id=Liquidity%20Risk) This section defines liquidity risk as the inability to meet obli

Financial Data and Key Metrics Changes - Net income for the first nine months of the year was $234 million, an increase of $50 million or 27% from the $185 million in the first nine months of the prior year [6] - Pre-tax pre-provision income was $285 million for the first nine months of the current year, an increase of $18 million or 7% compared to the $266 million in the prior year [6] - Net interest income, excluding PPP loans for the current quarter, was $154 million, an increase of $4.6 million or 3% from the prior quarter [7] - Efficiency ratio for the current quarter was 50.17%, compared to 49.92% in the prior quarter [20] Business Line Data and Key Metrics Changes - The loan portfolio, excluding Payroll Protection Program loans, had strong growth of $382 million or 14% annualized [5] - Core deposits grew $742 million or 18% during the quarter and $2.7 billion or 25% annualized from the beginning of the year [5] - Non-performing assets decreased $1.9 million or 4% from the prior quarter, ending the quarter at $51.2 million [8] Market Data and Key Metrics Changes - Excellent loan growth was observed in Wyoming, Arizona, and Idaho, with total market growth of $382 million or 14% annualized, excluding PPP loans [10] - Non-interest bearing deposits increased $325 million or 5% over the last quarter and $1.2 billion or 21% from the prior year third quarter [15] Company Strategy and Development Direction - The company is focused on disciplined lending and risk management strategies while avoiding a race to the bottom on credit [12] - The merger with Altabancorp is proceeding well, with a focus on integration and leveraging Altabancorp's technology platform [21][22] - The company aims to maintain a strong pipeline of new loans and is optimistic about closing out 2021 with growth closer to 8% to 10% [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan growth momentum entering the fourth quarter and the strong pipeline of new loans [13][23] - The company is optimistic about 2022, citing strong market conditions and business formation trends in their footprint [50] Other Important Information - The company declared a quarterly dividend of $0.32 a share, marking 146 consecutive quarterly dividends [9] - The net interest margin for the current quarter was 3.39%, down from 3.44% in the prior quarter [17] Q&A Session Summary Question: Health of the portfolio at Altabancorp - The portfolio is healthy, with non-performing assets at 15 basis points, and the credit cultures of both banks are similar, facilitating integration [29] Question: Growth potential of Altabancorp - Altabancorp is well-positioned for growth, leveraging Glacier's resources and the strong economic environment in Utah [30][31] Question: Expense outlook post-merger - Excluding merger-related expenses, the estimated run rate for the fourth quarter is $122 million to $125 million, with potential cost savings in 2022 [32] Question: Trends in mortgage business - The mortgage business is expected to perform well, with a forecasted decline in origination volumes being less severe than industry predictions due to the addition of Altabancorp [39] Question: Competition in commercial real estate - There is strong competition in pricing, especially in larger metro markets, but the company maintains a focus on credit quality [43] Question: Business formation trends - There is an increase in business relocations and expansions within the footprint, particularly in Arizona, which is attracting businesses from California [49]

INVESTOR PRESENTATION September 2021 Forward-Looking Statements 1 This presentation 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," " ...

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) The unaudited condensed consolidated financial statements for Glacier Bancorp, Inc. as of June 30, 2021, show significant growth in the company's financial position and net income Consolidated Statement of Financial Condition Highlights (Unaudited) | Financial Metric | June 30, 2021 | December 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $20.49 billion | $18.50 billion | +10.7% | | Total Debt Securities | $7.17 billion | $5.53 billion | +29.7% | | Loans Receivable, net | $11.09 billion | $10.96 billion | +1.1% | | Total Deposits | $16.76 billion | $14.80 billion | +13.3% | | Total Liabilities | $18.13 billion | $16.20 billion | +12.0% | | Total Stockholders' Equity | $2.35 billion | $2.31 billion | +2.0% | Consolidated Statement of Operations Highlights (Unaudited) | Financial Metric | Six Months ended June 30, 2021 | Six Months ended June 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $312.3 million | $282.6 million | +10.5% | | Provision for credit losses | $(5.6 million) | $36.1 million | N/A | | Non-Interest Income | $75.6 million | $74.5 million | +1.5% | | Non-Interest Expense | $196.7 million | $190.3 million | +3.4% | | Net Income | $158.4 million | $106.8 million | +48.4% | | Diluted Earnings Per Share | $1.66 | $1.13 | +46.9% | [Note 2. Debt Securities](index=21&type=section&id=Note%202.%20Debt%20Securities) As of June 30, 2021, total debt securities increased to $7.17 billion, with $6.15 billion classified as available-for-sale (AFS) and $1.02 billion as held-to-maturity (HTM) Debt Securities Portfolio Composition (June 30, 2021) | Security Type | Available-for-Sale (Fair Value) | Held-to-Maturity (Amortized Cost) | | :--- | :--- | :--- | | U.S. government & federal agency | $34,481 | - | | U.S. government sponsored enterprises | $48,016 | - | | State and local governments | $536.5 million | $1.02 billion | | Corporate bonds | $257.9 million | - | | Residential mortgage-backed securities | $4.14 billion | - | | Commercial mortgage-backed securities | $1.13 billion | - | | **Total** | **$6.15 billion** | **$1.02 billion** | - The company evaluated its AFS debt securities with unrealized losses of **$19.5 million** and determined the decline was primarily due to interest rate changes, not credit losses As a result, no ACL was recorded for AFS securities[97](index=97&type=chunk)[100](index=100&type=chunk) - Similarly, after evaluating the HTM portfolio, which consists of highly-rated state and local government securities, the company concluded that expected credit losses were insignificant and recorded no ACL[101](index=101&type=chunk)[103](index=103&type=chunk) [Note 3. Loans Receivable, Net](index=25&type=section&id=Note%203.%20Loans%20Receivable%2C%20Net) The net loan portfolio stood at $11.09 billion as of June 30, 2021, with the Allowance for Credit Losses (ACL) decreasing to $151.4 million due to an improved economic forecast Loan Portfolio Composition (June 30, 2021) | Loan Segment | Amount | % of Total | | :--- | :--- | :--- | | Commercial real estate | $6.58 billion | 58.6% | | Other commercial | $2.93 billion | 26.1% | | Residential real estate | $734.8 million | 6.5% | | Home equity | $648.8 million | 5.8% | | Other consumer | $337.7 million | 3.0% | | **Total Loans Receivable** | **$11.24 billion** | **100.0%** | - The Allowance for Credit Losses (ACL) decreased by **$6.8 million** during the first six months of 2021, from **$158.2 million** to **$151.4 million** This was driven by a net provision benefit of **$5.2 million**, reflecting improvements in quantitative factors like economic forecasts[110](index=110&type=chunk) - Total past due and non-accrual loans were **$64.3 million** as of June 30, 2021, up from **$56.4 million** at December 31, 2020 Non-accrual loans increased to **$48.1 million** from **$32.0 million** over the same period[113](index=113&type=chunk) [Note 13. Fair Value of Assets and Liabilities](index=41&type=section&id=Note%2013.%20Fair%20Value%20of%20Assets%20and%20Liabilities) The company details its fair value measurements, categorizing assets and liabilities into a three-level hierarchy, with most recurring measurements classified as Level 2 - Assets measured at fair value on a recurring basis totaled **$6.25 billion**, with the vast majority consisting of available-for-sale debt securities (**$6.15 billion**) and loans held for sale (**$98.4 million**) All of these assets were valued using Level 2 inputs (significant observable inputs)[162](index=162&type=chunk) - Assets measured at fair value on a non-recurring basis were **$15.4 million**, consisting entirely of collateral-dependent impaired loans These were valued using Level 3 inputs (significant unobservable inputs) based on the fair value of the underlying collateral[169](index=169&type=chunk) Fair Value of Financial Instruments Not Carried at Fair Value (June 30, 2021) | Instrument | Carrying Amount | Estimated Fair Value | | :--- | :--- | :--- | | **Assets** | | | | Debt securities, held-to-maturity | $1.02 billion | $1.05 billion | | Loans receivable, net of ACL | $11.09 billion | $11.35 billion | | **Liabilities** | | | | Term deposits | $939.6 million | $943.0 million | | Subordinated debentures | $132.5 million | $127.8 million | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=4&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management reported strong Q2 2021 results driven by increased net interest income and reduced credit loss provisions, with balance sheet expansion and a pending acquisition - Net income for Q2 2021 was **$77.6 million**, or **$0.81** per diluted share, a **22%** increase from **$63.4 million**, or **$0.66** per diluted share, in Q2 2020[184](index=184&type=chunk) - The company announced a definitive agreement to acquire Altabancorp, a Utah-based community bank with **$3.5 billion** in assets The acquisition is expected to close in Q4 2021[185](index=185&type=chunk) - Total debt securities increased by **92%** year-over-year to **$7.17 billion** as the company deployed excess liquidity from strong core deposit growth and PPP loan forgiveness[188](index=188&type=chunk) - Core deposits grew by **$3.42 billion**, or **26%**, from the prior year's second quarter, reaching **$16.74 billion** This growth was attributed to PPP loan proceeds, federal stimulus, and increased customer savings[191](index=191&type=chunk) [Financial Condition Analysis](index=49&type=section&id=Financial%20Condition%20Analysis) As of June 30, 2021, total assets reached $20.49 billion, primarily funded by a $1.96 billion increase in deposits, with significant expansion in the debt securities portfolio Change in Key Balance Sheet Items (Dec 31, 2020 to June 30, 2021) | Item | Change | | :--- | :--- | | Total Debt Securities | +$1.64 billion | | Loans Receivable, net | +$122.1 million | | Total Deposits | +$1.96 billion | | Total Stockholders' Equity | +$46.9 million | - The loan portfolio, excluding PPP loans, increased by **$249 million** (**10%** annualized) during Q2 2021[189](index=189&type=chunk) - Tangible book value per common share increased by **10%** year-over-year to **$18.74** at June 30, 2021, driven by strong earnings retention[194](index=194&type=chunk) [Operating Results Analysis](index=52&type=section&id=Operating%20Results%20Analysis) For the six months ended June 30, 2021, net interest income grew 11% to $312.3 million, driven by PPP loan income and reduced interest expense, despite net interest margin compression Operating Results Comparison (Six Months Ended June 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $312.3 million | $282.6 million | +11% | | Provision for Credit Losses | $(5.6 million) | $36.1 million | N/A | | Non-Interest Income | $75.6 million | $74.5 million | +2% | | Non-Interest Expense | $196.7 million | $190.3 million | +3% | | Net Income | $158.4 million | $106.8 million | +48% | - The tax-equivalent net interest margin for the first half of 2021 was **3.58%**, a **65 basis point** decrease from **4.23%** in the same period of 2020, primarily due to lower earning asset yields[212](index=212&type=chunk) - The efficiency ratio for the first six months of 2021 improved to **48.31%** from **50.86%** in the prior year period[216](index=216&type=chunk) [Credit Quality and Allowance for Credit Losses](index=61&type=section&id=Credit%20Quality%20and%20Allowance%20for%20Credit%20Losses) Credit quality remained strong with low non-performing assets and a net provision for credit loss benefit reflecting an improved economic outlook - Non-performing assets were **$53.0 million**, or **0.26%** of subsidiary assets, at June 30, 2021, compared to **$46.0 million**, or **0.27%**, a year prior[234](index=234&type=chunk) - The company recorded a provision for credit loss benefit on loans of **$5.7 million** in Q2 2021, a significant reversal from the **$13.6 million** provision expense in Q2 2020, which was driven by negative economic forecasts related to COVID-19[249](index=249&type=chunk) - The ACL as a percentage of total loans was **1.35%** at quarter-end Excluding PPP loans, the ratio was **1.43%**, down from **1.62%** in the prior year second quarter[250](index=250&type=chunk) [PPP Loans](index=63&type=section&id=PPP%20Loans) The Paycheck Protection Program (PPP) continued to significantly impact the company's results, contributing $10.3 million in interest income for Q2 2021 PPP Loan Balances and Fees (as of June 30, 2021) | Item | Amount | | :--- | :--- | | PPP Round 1 Loans Outstanding | $176.5 million | | PPP Round 2 Loans Outstanding | $518.1 million | | **Total PPP Loans** | **$694.6 million** | | **Total Net Remaining Fees** | **$24.0 million** | - In Q2 2021, PPP loans generated **$10.3 million** in interest income This included **$6.0 million** from the acceleration of net deferred fees due to SBA loan forgiveness[244](index=244&type=chunk) [Liquidity and Capital Resources](index=73&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with significant borrowing capacity and unencumbered debt securities, while capital ratios remained well above regulatory minimums Available Liquidity Sources (June 30, 2021) | Source | Amount Available | | :--- | :--- | | FHLB Advances | $2.59 billion | | FRB Discount Window | $1.33 billion | | Unsecured Lines of Credit | $635.0 million | | Unencumbered Debt Securities | $4.70 billion | Glacier Bank Regulatory Capital Ratios (June 30, 2021) | Ratio | Bank Ratio | Well Capitalized Requirement | | :--- | :--- | :--- | | Total Capital to Risk-Weighted Assets | 13.71% | 10.00% | | Tier 1 Capital to Risk-Weighted Assets | 12.67% | 8.00% | | Common Equity Tier 1 to Risk-Weighted Assets | 12.67% | 6.50% | | Tier 1 Capital to Average Assets (Leverage) | 9.00% | 5.00% | - The company has elected to use the five-year transition period allowed by regulators to phase in the initial adoption impact of the CECL accounting standard on its regulatory capital[280](index=280&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=78&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company reports no material changes in its quantitative and qualitative disclosures about market risk from its 2020 Annual Report on Form 10-K - The company's assessment of market risk as of June 30, 2021, indicates no material changes from the disclosures in the 2020 Annual Report on Form 10-K[292](index=292&type=chunk) [Controls and Procedures](index=78&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the second quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[293](index=293&type=chunk) - There were no material changes to the company's internal control over financial reporting during the second quarter of 2021[294](index=294&type=chunk) Part II. Other Information [Legal Proceedings](index=78&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, but their disposition is not expected to materially affect its financial condition - The company is involved in various claims and legal actions arising in the ordinary course of business, which are not expected to have a material adverse effect on its financial condition[296](index=296&type=chunk) [Risk Factors](index=78&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) The company states that there have been no material changes from the risk factors previously disclosed in its 2020 Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the company's 2020 Annual Report on Form 10-K[297](index=297&type=chunk) [Exhibits](index=80&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the merger agreement with Altabancorp and required certifications - Key exhibits filed include the Agreement and Plan of Merger with Altabancorp, Restated Articles of Incorporation, Amended Bylaws, and CEO/CFO certifications[305](index=305&type=chunk)