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)

Financial Data and Key Metrics Changes - The company generated net income of $77.6 million, an increase of $14.2 million or 22% compared to the prior year second quarter net income of $63.4 million [5] - Diluted earnings per share were $0.81, a 23% increase from the prior year second quarter diluted earnings per share of $0.66 [5] - Nonperforming assets as a percentage of subsidiary assets was 26 basis points, compared to 19 basis points in the prior quarter and 27 basis points in the prior year second quarter [6] - Noninterest expense was $100 million, an increase of only $3.5 million or 4% compared to the prior quarter [7] Business Line Data and Key Metrics Changes - The loan portfolio, excluding Payroll Protection Program (PPP) loans, increased by $249 million or 10% annualized in the current quarter and increased $517 million or 5% from the prior year second quarter [5] - Core deposits increased by $669 million or 17% annualized during the current quarter and increased $3.4 billion or 26% from the prior year second quarter [6] - Noninterest income declined to $36 million from $40 million or 11% in the prior quarter, primarily due to a reduced gain on sale of residential mortgages [23] Market Data and Key Metrics Changes - Solid loan growth was observed in Montana, Wyoming, and Nevada, leading the growth across the 8-state footprint [11] - Noninterest-bearing deposits increased by $267 million or 4% over the last quarter and increased $1.3 billion or 25% from the prior year second quarter [15] - Total debt securities of $7.2 billion increased by $730 million or 11% from the prior quarter and are up $3.4 billion or 92% from the prior year second quarter [16] Company Strategy and Development Direction - The company is focused on growing net interest income while managing the quality and duration of debt securities and loans [21][40] - The combination with Altabancorp is proceeding well, with plans for closing at the end of October and conversion in early 2022 [25] - The company aims for a loan growth target of 4% to 6% for the full year, despite headwinds from borrowers using excess liquidity to pay down loans [13] Management's Comments on Operating Environment and Future Outlook - Management noted that in-migration of new residents into their 8-state footprint continued, contributing to strong loan and deposit growth [10] - The company expects some normalization in in-migration trends but anticipates that it will remain above the U.S. average [56] - Management expressed caution regarding excess liquidity and potential payoffs from borrowers, which could impact loan growth [36] Other Important Information - The company declared a quarterly dividend of $0.32 per share, an increase of $0.01 per share or 3% over the prior quarter [8] - The efficiency ratio was 49.92% in the current quarter, compared to 46.75% in the prior quarter [24] Q&A Session Summary Question: What is the expected run rate for expenses? - Management expects the run rate to be closer to $103 million, with additional hiring and business development expenses anticipated [31] Question: What are the mortgage expectations for the group? - Management expects a decline of about 20% to 25% in mortgage activity, consistent with industry forecasts, due to low housing supply [32] Question: Can you provide details on nonperforming assets? - The nonperforming asset issue is predominantly one agricultural relationship, which is adequately secured and in the process of liquidation [34] Question: How do you feel about the loan growth range for the year? - Management is optimistic about achieving the higher end of the 4% to 6% growth range, given strong trends observed [36] Question: What types of projects are being financed? - The growth has been primarily in industrial and multifamily projects, with no significant growth in high-risk COVID-sensitive industries like hotels and restaurants [40] Question: What is the status of mortgage locks? - Mortgage locks for the quarter were about $350 million, down from the previous quarter, attributed to low housing inventory [62]

Part I. Financial Information This section presents Glacier Bancorp, Inc.'s unaudited condensed consolidated financial statements and notes for the first quarter of 2021 [Item 1 – Financial Statements](index=4&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) This section presents Glacier Bancorp, Inc.'s unaudited condensed consolidated financial statements for Q1 2021, with notes on accounting policies [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 equity at specific reporting dates Consolidated Statements of Financial Condition (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $878,450 | $633,142 | | Total debt securities | $6,442,066 | $5,527,650 | | Loans receivable, net | $11,113,483 | $10,964,453 | | **Total assets** | **$19,770,552** | **$18,504,206** | | Non-interest bearing deposits | $6,040,440 | $5,454,539 | | Interest bearing deposits | $10,063,884 | $9,342,990 | | **Total liabilities** | **$17,475,167** | **$16,197,165** | | Total stockholders' equity | $2,295,385 | $2,307,041 | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This statement outlines the company's revenues, expenses, and net income over specific periods, reflecting operational performance Consolidated Statements of Operations (Three Months Ended March 31, 2021 vs. 2020) | Metric | Three Months ended March 31, 2021 (in thousands) | Three Months ended March 31, 2020 (in thousands) | YoY Change (%) | | :----------------------- | :------------------------------------- | :------------------------------------- | :------------- | | Net Income | $80,802 | $43,339 | 86.4% | | Basic earnings per share | $0.85 | $0.46 | 84.8% | | Diluted earnings per share | $0.85 | $0.46 | 84.8% | | Total interest income | $161,552 | $142,865 | 13.1% | | Total interest expense | $4,740 | $8,496 | -44.2% | | Net Interest Income | $156,812 | $134,369 | 16.7% | | Credit loss expense | $48 | $19,185 | -99.7% | | Total non-interest income | $40,121 | $33,272 | 20.6% | | Total non-interest expense | $96,585 | $95,487 | 1.1% | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, providing a complete view of changes in equity from non-owner sources Consolidated Statements of Comprehensive Income (Three Months Ended March 31, 2021 vs. 2020) | Metric | Three Months ended March 31, 2021 (in thousands) | Three Months ended March 31, 2020 (in thousands) | YoY Change (%) | | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------- | | Net Income | $80,802 | $43,339 | 86.4% | | Net unrealized (losses) gains on available-for-sale securities (net of tax) | $(63,613) | $59,498 | -206.9% | | Total Comprehensive Income | $17,632 | $102,837 | -82.8% | [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 details the changes in each component of stockholders' equity over the reporting period, including net income and dividends Changes in Stockholders' Equity (Three Months Ended March 31, 2021) | Metric | Balance at January 1, 2021 (in thousands) | Net Income (in thousands) | Other Comprehensive Loss (in thousands) | Cash Dividends Declared (in thousands) | Stock-based Compensation & Taxes (in thousands) | Balance at March 31, 2021 (in thousands) | | :------------------------------------- | :------------------------------------- | :-------------------------- | :------------------------------------ | :------------------------------------- | :--------------------------------------------- | :------------------------------------- | | Total Stockholders' Equity | $2,307,041 | $80,802 | $(63,170) | $(29,674) | $386 | $2,295,385 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities, showing liquidity changes Consolidated Statements of Cash Flows (Three Months Ended March 31, 2021 vs. 2020) | Activity | Three Months ended March 31, 2021 (in thousands) | Three Months ended March 31, 2020 (in thousands) | | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | $147,745 | $25,762 | | Net cash used in investing activities | $(1,178,720) | $(720,130) | | Net cash provided by financing activities | $1,276,283 | $636,848 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $245,308 | $(57,520) | | Cash, cash equivalents and restricted cash at end of period | $878,450 | $273,441 | - Net increase in deposits from financing activities was **$1.31 billion** for the three months ended March 31, 2021, compared to **$178.13 million** for the same period in 2020[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements, clarifying accounting policies and specific line items [Note 1. Nature of Operations and Summary of Significant Accounting Policies](index=10&type=section&id=Note%201.%20Nature%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the company's business activities and outlines the key accounting principles applied in preparing the financial statements - Glacier Bancorp, Inc. provides a full range of banking services, including retail, business, real estate, commercial, agriculture, and consumer loans, and mortgage origination services across eight states[18](index=18&type=chunk) - The Company's consolidated financial statements include the parent holding company and its wholly-owned bank subsidiary, Glacier Bank, which is considered the sole operating segment[22](index=22&type=chunk) - On January 1, 2020, the Company adopted FASB ASU 2016-13 (CECL), significantly changing accounting policies for the allowance for credit losses on debt securities and loans[26](index=26&type=chunk)[37](index=37&type=chunk) - Debt securities are classified as held-to-maturity (amortized cost) or available-for-sale (fair value with unrealized gains/losses in OCI); the Company does not hold trading securities[27](index=27&type=chunk) - The Company's loan segments are residential real estate, commercial real estate, other commercial, home equity, and other consumer loans, each with specific credit risk characteristics[38](index=38&type=chunk)[45](index=45&type=chunk) - The CARES Act and related regulatory guidance allowed certain COVID-19 related loan modifications not to be designated as Troubled Debt Restructurings (TDRs)[60](index=60&type=chunk) - Revenue from contracts with customers, primarily service charges and debit card fees, totaled **$13.7 million** for the three months ended March 31, 2021[86](index=86&type=chunk) [Note 2. Debt Securities](index=20&type=section&id=Note%202.%20Debt%20Securities) This note details the company's debt securities portfolio, including classifications, fair values, and unrealized gains or losses Debt Securities Portfolio (March 31, 2021) | Type | Amortized Cost (in thousands) | Fair Value (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | | :------------------------------------- | :----------------------------- | :-------------------------- | :------------------------------------ | :------------------------------------ | | **Available-for-sale:** | | | | | | U.S. government and federal agency | $36,122 | $35,863 | $231 | $(490) | | State and local governments | $914,572 | $978,652 | $64,593 | $(513) | | Residential mortgage-backed securities | $3,369,683 | $3,363,627 | $16,420 | $(22,476) | | Commercial mortgage-backed securities | $1,145,668 | $1,181,139 | $39,958 | $(4,487) | | **Total available-for-sale** | **$5,750,190** | **$5,853,315** | **$131,176** | **$(28,051)** | | **Held-to-maturity:** | | | | | | State and local governments | $588,751 | $598,960 | $10,937 | $(728) | | **Total held-to-maturity** | **$588,751** | **$598,960** | **$10,937** | **$(728)** | | **Total debt securities** | **$6,338,941** | **$6,452,275** | **$142,113** | **$(28,779)** | - The Company's available-for-sale debt securities in an unrealized loss position totaled **$2.46 billion** with unrealized losses of **$(28.05) million** at March 31, 2021, primarily due to changes in interest rates and market spreads[96](index=96&type=chunk)[99](index=99&type=chunk) - All held-to-maturity debt securities were investment grade, with no Allowance for Credit Losses (ACL) recorded for debt securities at March 31, 2021, or December 31, 2020[100](index=100&type=chunk)[102](index=102&type=chunk) [Note 3. Loans Receivable, Net](index=24&type=section&id=Note%203.%20Loans%20Receivable%2C%20Net) This note provides a breakdown of the loan portfolio by segment, along with details on the allowance for credit losses and loan quality Loans Receivable by Portfolio Segment (March 31, 2021) | Loan Segment | Amount (in thousands) | Percentage of Total | | :----------------------- | :-------------------- | :------------------ | | Commercial real estate | $6,474,701 | 57.4% | | Other commercial | $3,100,584 | 27.5% | | Residential real estate | $745,097 | 6.6% | | Home equity | $625,369 | 5.5% | | Other consumer | $324,178 | 2.9% | | **Total Loans Receivable** | **$11,269,929** | **100%** | | Allowance for credit losses | $(156,446) | | | **Loans receivable, net** | **$11,113,483** | | Allowance for Credit Losses (ACL) Activity (Three Months Ended March 31, 2021) | Metric | Total (in thousands) | Residential Real Estate (in thousands) | Commercial Real Estate (in thousands) | Other Commercial (in thousands) | Home Equity (in thousands) | Other Consumer (in thousands) | | :----------------------- | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :-------------------- | | Balance at beginning of period | $158,243 | $9,604 | $86,999 | $49,133 | $8,182 | $4,325 | | Provision for credit losses | $489 | $(582) | $7,463 | $(7,265) | $(89) | $962 | | Charge-offs | $(4,246) | $(38) | $0 | $(2,762) | $(45) | $(1,401) | | Recoveries | $1,960 | $34 | $789 | $279 | $20 | $838 | | **Balance at end of period** | **$156,446** | **$9,018** | **$95,251** | **$39,385** | **$8,068** | **$4,724** | - The ACL decreased primarily due to an improvement in quantitative factors, including economic forecasts, during the three months ended March 31, 2021[109](index=109&type=chunk) - Total past due and non-accrual loans were **$78.24 million** at March 31, 2021, including **$41.74 million** in accruing loans 30-59 days past due[111](index=111&type=chunk) - Collateral-dependent loans totaled **$86.02 million** at March 31, 2021, with no significant changes to collateral during the period[114](index=114&type=chunk) - Seven Troubled Debt Restructurings (TDRs) occurred during Q1 2021, with a post-modification recorded balance of **$1.75 million**; no TDRs subsequently defaulted[115](index=115&type=chunk) [Note 4. Leases](index=32&type=section&id=Note%204.%20Leases) This note outlines the company's lease arrangements, including right-of-use assets, lease liabilities, and associated expenses Lease Balances (March 31, 2021) | Metric | Finance Leases (in thousands) | Operating Leases (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Net ROU assets | $5,665 | $46,298 | | Lease liabilities | $5,864 | $49,250 | | Weighted-average remaining lease term | 24 years | 17 years | | Weighted-average discount rate | 2.6% | 3.4% | - Total lease expense for the three months ended March 31, 2021, was **$1.71 million**[127](index=127&type=chunk) [Note 5. Goodwill](index=33&type=section&id=Note%205.%20Goodwill) This note reports the carrying value of goodwill and confirms the absence of impairment based on recent assessments - The net carrying value of goodwill was **$514.01 million** at March 31, 2021, with no impairment identified during the annual test in the third quarter of 2020[128](index=128&type=chunk) [Note 6. Loan Servicing](index=34&type=section&id=Note%206.%20Loan%20Servicing) This note provides information on mortgage servicing rights, including their carrying value and the principal balances of loans serviced for others Mortgage Servicing Rights (MSRs) (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Carrying value at end of period | $9,936 | $8,976 | | Principal balances of loans serviced for others | $1,377,187 | $1,269,080 | | Fair value of servicing rights | $14,263 | $12,087 | [Note 7. Variable Interest Entities](index=34&type=section&id=Note%207.%20Variable%20Interest%20Entities) This note details the company's involvement with and consolidation of variable interest entities, including associated assets and liabilities - The Company consolidates certain Certified Development Entities (CDEs) and tax credit funds (LIHTC) where it is the primary beneficiary, with total consolidated VIE assets of **$149.53 million** and liabilities of **$27.77 million** at March 31, 2021[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - Equity investments in unconsolidated LIHTC partnerships had carrying values of **$45.30 million** at March 31, 2021, with future unfunded contingent equity commitments totaling **$45.49 million**[137](index=137&type=chunk) - Amortization expense from LIHTC investments was **$2.33 million**, and tax credits and other tax benefits recognized were **$3.10 million** for the three months ended March 31, 2021[139](index=139&type=chunk) [Note 8. Securities Sold Under Agreements to Repurchase](index=36&type=section&id=Note%208.%20Securities%20Sold%20Under%20Agreements%20to%20Repurchase) This note describes the company's repurchase agreements, including the amounts outstanding and the collateral securing these obligations - Securities sold under agreements to repurchase totaled **$996.88 million** at March 31, 2021, secured by debt securities with carrying values of **$1.15 billion**[140](index=140&type=chunk) [Note 9. Derivatives and Hedging Activities](index=37&type=section&id=Note%209.%20Derivatives%20and%20Hedging%20Activities) This note explains the company's use of derivative instruments for hedging interest rate risk and their fair value - The Company uses interest rate caps as cash flow hedges for variable rate subordinated debentures, with notional amounts totaling **$130.5 million** and a fair value of **$752 thousand** at March 31, 2021[143](index=143&type=chunk) - Residential real estate derivatives include interest rate lock commitments of **$242.41 million** and TBA commitments of **$206 million** at March 31, 2021, used to manage interest rate risk[145](index=145&type=chunk) [Note 10. Other Expenses](index=38&type=section&id=Note%2010.%20Other%20Expenses) This note itemizes various non-interest expenses, providing a comparative breakdown for the reporting periods Other Expenses (Three Months Ended March 31, 2021 vs. 2020) | Metric | Three Months ended March 31, 2021 (in thousands) | Three Months ended March 31, 2020 (in thousands) | | :----------------------- | :------------------------------------- | :------------------------------------- | | Consulting and outside services | $2,171 | $2,235 | | Loan expenses | $1,624 | $864 | | Mergers and acquisition expenses | $104 | $2,791 | | **Total other expenses** | **$12,646** | **$15,104** | [Note 11. Accumulated Other Comprehensive Income (Loss)](index=38&type=section&id=Note%2011.%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note details changes in accumulated other comprehensive income, including unrealized gains and losses on debt securities and derivatives Accumulated Other Comprehensive Income (Loss) Activity (Three Months Ended March 31, 2021) | Metric | Balance at January 1, 2021 (in thousands) | Net Current Period Other Comprehensive Income (Loss) (in thousands) | Balance at March 31, 2021 (in thousands) | | :------------------------------------- | :------------------------------------- | :---------------------------------------------------- | :------------------------------------- | | Gains (Losses) on Available-For-Sale Debt Securities | $143,443 | $(63,613) | $79,830 | | (Losses) Gains on Derivatives Used for Cash Flow Hedges | $(353) | $443 | $90 | | **Total** | **$143,090** | **$(63,170)** | **$79,920** | [Note 12. Earnings Per Share](index=38&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share, along with net income available to common stockholders Earnings Per Share (Three Months Ended March 31, 2021 vs. 2020) | Metric | Three Months ended March 31, 2021 | Three Months ended March 31, 2020 | | :------------------------------------- | :---------------------------------- | :---------------------------------- | | Net income available to common stockholders (in thousands) | $80,802 | $43,339 | | Basic earnings per share | $0.85 | $0.46 | | Diluted earnings per share | $0.85 | $0.46 | [Note 13. Fair Value of Assets and Liabilities](index=39&type=section&id=Note%2013.%20Fair%20Value%20of%20Assets%20and%20Liabilities) This note describes fair value measurement methodologies for assets and liabilities, distinguishing recurring and non-recurring measurements - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[153](index=153&type=chunk) - Total assets measured at fair value on a recurring basis were **$5.98 billion** at March 31, 2021, all classified as Level 2, including available-for-sale debt securities and derivatives[161](index=161&type=chunk) - Total assets measured at fair value on a non-recurring basis were **$19.73 million** at March 31, 2021, all classified as Level 3, primarily consisting of collateral-dependent impaired loans[166](index=166&type=chunk) - For financial instruments not carried at fair value, loans receivable, net of ACL, had a carrying amount of **$11.11 billion** and an estimated fair value of **$11.39 billion** (Level 3) at March 31, 2021[175](index=175&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Glacier Bancorp, Inc.'s operating results and financial condition, analyzing assets, liabilities, equity, and performance [FORWARD-LOOKING STATEMENTS](index=45&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent uncertainties and risks associated with forward-looking statements, advising caution to readers - The Form 10-Q contains forward-looking statements subject to significant business, economic, and competitive uncertainties, including risks related to lending, policy changes, regulatory changes, acquisitions, market volatility, and operational risks[178](index=178&type=chunk) - The Company does not undertake any obligation to update or revise forward-looking statements, except as required by law[179](index=179&type=chunk) [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=46&type=section&id=MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance and condition, covering key operational and balance sheet trends [Financial Highlights](index=46&type=section&id=Financial%20Highlights) This section summarizes key financial performance indicators and operational metrics for the reporting period Operating Results (Three Months Ended March 31, 2021 vs. 2020) | Metric | Mar 31, 2021 | Mar 31, 2020 | Change | YoY Change (%) | | :----------------------- | :----------- | :----------- | :----- | :------------- | | Net income (in thousands) | $80,802 | $43,339 | $37,463 | 86.4% | | Diluted earnings per share | $0.85 | $0.46 | $0.39 | 84.8% | | Return on average assets (annualized) | 1.73% | 1.25% | 48 bps | | Return on average equity (annualized) | 14.12% | 8.52% | 560 bps | | Efficiency ratio | 46.75% | 52.55% | -580 bps | | Loan to deposit ratio | 70.72% | 88.10% | -1738 bps | - The Company reported **2,994** full-time equivalent employees, **193** locations, and **250** ATMs as of March 31, 2021[181](index=181&type=chunk) [Financial Condition Analysis](index=47&type=section&id=Financial%20Condition%20Analysis) This section analyzes the company's balance sheet components, including assets, liabilities, and stockholders' equity, and their changes [Assets](index=47&type=section&id=Assets) This section reviews changes in the company's asset composition, including cash, debt securities, and loans receivable Total Assets (March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | Change from Dec 31, 2020 (in thousands) | Change from Mar 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------------- | :------------------------------------- | | Cash and cash equivalents | $878,450 | $633,142 | $273,441 | $245,308 | $605,009 | | Total debt securities | $6,442,066 | $5,527,650 | $3,633,704 | $914,416 | $2,808,362 | | Loans receivable, net | $11,113,483 | $10,964,453 | $9,938,016 | $149,030 | $1,175,467 | | **Total assets** | **$19,770,552** | **$18,504,206** | **$15,158,384** | **$1,266,346** | **$4,612,168** | - Total debt securities increased by **$914 million** (17%) during Q1 2021 and **$2.81 billion** (77%) from Q1 2020, representing **33%** of total assets at March 31, 2021[184](index=184&type=chunk) - The loan portfolio increased by **$147 million** (5% annualized) in Q1 2021, and **$1.18 billion** (12%) from Q1 2020; excluding PPP loans, the portfolio increased by **$80.6 million** (3% annualized) in Q1 2021, primarily in commercial real estate[185](index=185&type=chunk)[186](index=186&type=chunk) [Liabilities](index=48&type=section&id=Liabilities) This section examines the company's liabilities, focusing on deposits, repurchase agreements, and other borrowings Total Liabilities (March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | Change from Dec 31, 2020 (in thousands) | Change from Mar 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------------- | :------------------------------------- | | Deposits, total | $16,104,324 | $14,797,529 | $11,557,837 | $1,306,795 | $4,546,487 | | Securities sold under agreements to repurchase | $996,878 | $1,004,583 | $580,335 | $(7,705) | $416,543 | | Federal Home Loan Bank advances | $0 | $0 | $513,055 | $0 | $(513,055) | | **Total liabilities** | **$17,475,167** | **$16,197,165** | **$13,021,740** | **$1,278,002** | **$4,453,427** | - Core deposits increased by **$1.31 billion** (35% annualized) in Q1 2021 and **$4.57 billion** (40%) from Q1 2020; non-interest bearing deposits increased by **$586 million** (11%) in Q1 2021 and **$2.17 billion** (56%) from Q1 2020, comprising **38%** of total core deposits[188](index=188&type=chunk) - The Company paid off **$7.5 million** of subordinated debt in Q1 2021, reflecting reduced reliance on borrowings due to significant core deposit growth[189](index=189&type=chunk) [Stockholders' Equity](index=49&type=section&id=Stockholders'%20Equity) This section discusses changes in stockholders' equity, including tangible equity and book value per share Stockholders' Equity Balances (March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | Change from Dec 31, 2020 (in thousands) | Change from Mar 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------------- | :------------------------------------- | | Total stockholders' equity | $2,295,385 | $2,307,041 | $2,136,644 | $(11,656) | $158,741 | | Tangible stockholders' equity | $1,728,351 | $1,737,519 | $1,559,943 | $(9,168) | $168,408 | | Book value per common share | $24.03 | $24.18 | $22.39 | $(0.15) | $1.64 | | Tangible book value per common share | $18.10 | $18.21 | $16.35 | $(0.11) | $1.75 | - Tangible stockholders' equity decreased by **$9.2 million** QoQ, primarily due to a decrease in unrealized gains on available-for-sale debt securities driven by increased interest rates, but increased by **$168 million** YoY due to earnings retention[190](index=190&type=chunk) - Stockholders' equity to total assets was **11.61%** and tangible stockholders' equity to total tangible assets was **9.00%** at March 31, 2021, both decreasing from prior periods due to asset growth[190](index=190&type=chunk) [Cash Dividend](index=49&type=section&id=Cash%20Dividend) This section reports on the company's declared cash dividend, highlighting its consistency - The Board of Directors declared a quarterly cash dividend of **$0.31 per share** on March 31, 2021, marking the 144th consecutive dividend[191](index=191&type=chunk) [Operating Results for Three Months Ended March 31, 2021 Compared to December 31, 2020, and March 31, 2020](index=50&type=section&id=Operating%20Results%20for%20Three%20Months%20Ended%20March%2031%2C%202021%20Compared%20to%20December%2031%2C%202020%2C%20and%20March%2031%2C%202020) This section provides a comparative analysis of the company's operating performance across different periods, focusing on income and expense trends [Income Summary](index=50&type=section&id=Income%20Summary) This section summarizes total net interest income and non-interest income, along with the net interest margin Total Income (Three Months Ended March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | QoQ Change (in thousands) | YoY Change (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Total net interest income | $156,812 | $165,758 | $134,369 | $(8,946) | $22,443 | | Total non-interest income | $40,121 | $44,704 | $33,272 | $(4,583) | $6,849 | | **Total income** | **$196,933** | **$210,462** | **$167,641** | **$(13,529)** | **$29,292** | | Net interest margin (tax-equivalent) | 3.74% | 4.03% | 4.36% | | | [Net Interest Income](index=50&type=section&id=Net%20Interest%20Income) This section analyzes the components of net interest income, including interest income from loans and securities, and interest expense on deposits - Net interest income for Q1 2021 was **$156.8 million**, a decrease of **$8.9 million** (5%) QoQ but an increase of **$22.4 million** (17%) YoY[195](index=195&type=chunk) - Interest income from PPP loans was **$13.5 million** in Q1 2021, down from **$21.5 million** in Q4 2020, with overall interest income increasing YoY due to PPP loans and debt securities[195](index=195&type=chunk) - Interest expense decreased by **$810 thousand** (15%) QoQ and **$3.8 million** (44%) YoY, primarily due to lower deposit and borrowing interest rates, with the total cost of funding declining by **2 bps** QoQ and **17 bps** YoY to **12 bps**[196](index=196&type=chunk) - The core net interest margin (excluding specific adjustments) decreased by **20 bps** QoQ and **74 bps** YoY, driven by lower earning asset yields due to increased lower-yielding debt securities and decreased yields on loans and debt securities[197](index=197&type=chunk) [Non-interest Income](index=51&type=section&id=Non-interest%20Income) This section details the various sources of non-interest income, such as service charges, loan sale gains, and other fees - Non-interest income totaled **$40.1 million** in Q1 2021, a decrease of **$4.6 million** (10%) QoQ but an increase of **$6.8 million** (21%) YoY[198](index=198&type=chunk) - Service charges and other fees decreased by **$921 thousand** QoQ and **$1.2 million** YoY due to decreased overdraft activity[198](index=198&type=chunk) - Gain on sale of loans was **$21.6 million** in Q1 2021, decreasing **$4.6 million** (18%) QoQ but increasing **$9.8 million** (82%) YoY due to increased purchase and refinance activity[198](index=198&type=chunk) - Other income decreased by **$2.6 million** (50%) YoY due to a **$2.4 million** gain on the sale of a former branch building in the prior year[198](index=198&type=chunk) [Non-interest Expense](index=51&type=section&id=Non-interest%20Expense) This section reviews the company's non-interest expenses, including compensation, occupancy, and other operating costs - Total non-interest expense was **$96.6 million** in Q1 2021, a decrease of **$14.6 million** (13%) QoQ but an increase of **$1.1 million** (1%) YoY[199](index=199&type=chunk) - Compensation and employee benefits decreased by **$8.1 million** (11%) QoQ, primarily due to a **$5.2 million** increase in deferred compensation on originating Round 2 PPP loans[199](index=199&type=chunk) - Other expenses decreased by **$6.1 million** (32%) QoQ and **$2.5 million** (16%) YoY, with acquisition-related expenses dropping from **$2.8 million** in Q1 2020 to **$104 thousand** in Q1 2021[199](index=199&type=chunk) [Efficiency Ratio](index=51&type=section&id=Efficiency%20Ratio) This section discusses the company's efficiency ratio, indicating operational effectiveness in generating income relative to expenses - The efficiency ratio improved to **46.75%** in Q1 2021 from **50.34%** in Q4 2020[200](index=200&type=chunk) - Excluding PPP loans, the efficiency ratio was **52.89%** in Q1 2021, a **307 bps** decrease from Q4 2020 (**55.96%**) and a **176 bps** decrease from Q1 2020 (**54.65%**), driven by decreased non-interest expense and increased income[200](index=200&type=chunk) [Provision for Credit Losses](index=52&type=section&id=Provision%20for%20Credit%20Losses) This section details the provision for credit losses on loans, net charge-offs, and the adequacy of the allowance for credit losses - The provision for credit losses on loans was **$489 thousand** in Q1 2021, an increase of **$2.0 million** from the prior quarter's benefit but a **$22.3 million** decrease from Q1 2020[202](index=202&type=chunk) - Net charge-offs for Q1 2021 were **$2.3 million**, compared to **$4.8 million** in Q4 2020 and **$813 thousand** in Q1 2020[202](index=202&type=chunk) - The Allowance for Credit Losses (ACL) as a percentage of total loans was **1.39%** in Q1 2021 (**1.51%** excluding PPP loans), considered adequate by management[202](index=202&type=chunk) [ADDITIONAL MANAGEMENT'S DISCUSSION AND ANALYSIS](index=53&type=section&id=ADDITIONAL%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS) This section provides further in-depth analysis on specific financial areas, including investment, lending, funding, liquidity, and capital [Investment Activity](index=53&type=section&id=Investment%20Activity) This section reviews the company's investment portfolio, including debt and equity securities, and their performance [Debt Securities](index=53&type=section&id=Debt%20Securities) This section details the composition, classification, and credit quality of the company's debt securities portfolio Debt Securities Portfolio (March 31, 2021) | Type | Carrying Amount (in thousands) | Percent of Total | | :------------------------------------- | :----------------------------- | :------------------ | | Available-for-sale | $5,853,315 | 91% | | Held-to-maturity | $588,751 | 9% | | **Total debt securities** | **$6,442,066** | **100%** | - The Company transferred **$404 million** of available-for-sale securities into the held-to-maturity portfolio in Q1 2021, with the portfolio primarily comprised of state and local government securities and mortgage-backed securities[206](index=206&type=chunk) - All debt securities were determined to be investment grade, and no ACL was recognized for debt securities at March 31, 2021[207](index=207&type=chunk)[213](index=213&type=chunk) - Weighted-average yields for available-for-sale and held-to-maturity debt securities were **1.82%** and **2.60%**, respectively, at March 31, 2021[213](index=213&type=chunk) [Equity securities](index=56&type=section&id=Equity%20securities) This section describes the company's equity securities, primarily FHLB stock, and their impairment status - Non-marketable equity securities primarily consist of FHLB stock carried at cost, with no impairment identified for any equity securities as of March 31, 2021[215](index=215&type=chunk)[216](index=216&type=chunk) [Lending Activity](index=56&type=section&id=Lending%20Activity) This section provides an overview of the company's loan portfolio, including segment breakdown, non-performing assets, and credit quality [Loan Portfolio Summary](index=56&type=section&id=Loan%20Portfolio%20Summary) This section presents a summary of the loan portfolio, categorized by segment and their respective proportions Loan Portfolio by Segment (March 31, 2021) | Loan Segment | Amount (in thousands) | Percent of Total | | :----------------------- | :-------------------- | :------------------ | | Commercial real estate | $6,474,701 | 58% | | Other commercial | $3,100,584 | 28% | | Residential real estate | $745,097 | 7% | | Home equity | $625,369 | 6% | | Other consumer | $324,178 | 3% | | **Loans receivable** | **$11,269,929** | **102%** | | Allowance for credit losses | $(156,446) | (2)% | | **Loans receivable, net** | **$11,113,483** | **100%** | [Non-performing Assets](index=57&type=section&id=Non-performing%20Assets) This section details the company's non-performing assets, including non-accrual loans and early-stage delinquencies Non-performing Assets (March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total non-performing assets | $36,585 | $35,433 | $39,378 | | Non-performing assets as a percentage of subsidiary assets | 0.19% | 0.19% | 0.26% | | Accruing loans 30-89 days past due | $44,616 | $22,721 | $41,375 | - Non-performing assets increased by **$1.2 million** QoQ but decreased by **$2.8 million** YoY, with early stage delinquencies increasing by **$21.9 million** QoQ, primarily due to one credit relationship[218](index=218&type=chunk)[219](index=219&type=chunk) - The Company believes the value of underlying real estate collateral for most non-performing assets is adequate to minimize significant charge-offs or losses[220](index=220&type=chunk) [Restructured Loans](index=58&type=section&id=Restructured%20Loans) This section discusses Troubled Debt Restructurings (TDRs) and the impact of COVID-19 related loan modifications - The Company had **$46.0 million** in Troubled Debt Restructurings (TDRs) at March 31, 2021, a slight increase from **$45.5 million** at December 31, 2020[221](index=221&type=chunk) - The CARES Act and related regulatory guidance allowed certain COVID-19 related loan modifications to not be classified as TDRs[222](index=222&type=chunk) [Other Real Estate Owned](index=58&type=section&id=Other%20Real%20Estate%20Owned) This section reports on the activity and balance of Other Real Estate Owned (OREO) during the period Other Real Estate Owned (OREO) Activity (Three Months Ended March 31, 2021) | Metric | Mar 31, 2021 (in thousands) | | :----------------------- | :----------------------------- | | Balance at beginning of period | $1,744 | | Additions | $1,397 | | Sales | $(176) | | **Balance at end of period** | **$2,965** | [PPP Loans](index=59&type=section&id=PPP%20Loans) This section provides an update on the company's Paycheck Protection Program (PPP) loan originations, forgiveness, and associated fees - The Company originated **$487 million** in Round 2 PPP loans in Q1 2021, generating **$27.7 million** in SBA processing fees (average **5.67%**)[224](index=224&type=chunk) - Round 1 PPP loans decreased by **$426 million** due to forgiveness in Q1 2021, with **$489 million** (**33%** of original) remaining[225](index=225&type=chunk) - Interest income from PPP loans was **$13.5 million** in Q1 2021, including **$7.8 million** from accelerated net deferred fees due to forgiveness[226](index=226&type=chunk) - Net deferred fees remaining on PPP loans were **$28.1 million** at March 31, 2021[226](index=226&type=chunk) [COVID-19 Bank Loan Modifications](index=60&type=section&id=COVID-19%20Bank%20Loan%20Modifications) This section details the status of COVID-19 related loan modifications and their impact on the loan portfolio - Of the **$1.52 billion** in loans modified in Q2 2020 due to COVID-19, **$81.3 million** (**0.79%** of loans net of PPP) remained in deferral at March 31, 2021, a reduction of **$1.43 billion**[227](index=227&type=chunk) - The Montana Loan Deferment Program provided **$272 million** in interest-only modifications for Montana-based businesses, which were not classified as TDRs and are separate from the Bank's modifications[228](index=228&type=chunk) [COVID-19 Higher Risk Industries - Enhanced Monitoring](index=61&type=section&id=COVID-19%20Higher%20Risk%20Industries%20-%20Enhanced%20Monitoring) This section identifies loans to higher-risk industries impacted by COVID-19 and the associated monitoring efforts - The Company has **$643 million** (**6.24%** of loans net of PPP) with direct exposure to higher-risk industries (e.g., hotel/motel, restaurant) requiring enhanced monitoring[230](index=230&type=chunk) - Loan modifications in these higher-risk industries totaled **$14.9 million** at March 31, 2021, a **36%** reduction from the prior quarter[230](index=230&type=chunk) [Allowance for Credit Losses - Loans Receivable](index=62&type=section&id=Allowance%20for%20Credit%20Losses%20-%20Loans%20Receivable) This section explains the allocation and adequacy of the allowance for credit losses on loans, including methodology and risk mitigation Allowance for Credit Losses (ACL) Allocation (March 31, 2021) | Loan Segment | ACL (in thousands) | Percent of ACL in Category | Percent of Loans in Category | | :----------------------- | :----------------- | :------------------------- | :------------------------- | | Commercial real estate | $95,251 | 61% | 57% | | Other commercial | $39,385 | 25% | 27% | | Residential real estate | $9,018 | 6% | 7% | | Home equity | $8,068 | 5% | 6% | | Other consumer | $4,724 | 3% | 3% | | **Total** | **$156,446** | **100%** | **100%** | - The ACL as a percentage of total loans was **1.39%** (**1.51%** excluding PPP loans) at March 31, 2021, a **3 bps** decrease QoQ, with the provision for credit loss expense on loans being **$489 thousand** in Q1 2021, a significant decrease from **$22.7 million** in Q1 2020[236](index=236&type=chunk) - The ACL methodology estimates credit losses based on loan segments, credit quality indicators, and economic forecasts, with individual reviews for loans not sharing similar risk characteristics (primarily non-accrual loans)[239](index=239&type=chunk) - The Company's diverse market areas and decentralized bank division model help mitigate credit risk[240](index=240&type=chunk) [Loans by Regulatory Classification](index=65&type=section&id=Loans%20by%20Regulatory%20Classification) This section categorizes loans receivable by regulatory classification, including non-performing assets and net charge-offs Loans Receivable by Regulatory Classification (March 31, 2021) | Loan Type | Loans Receivable (in thousands) | % Change from Dec 31, 2020 | % Change from Mar 31, 2020 | | :------------------------------------- | :----------------------------- | :-------------------------- | :-------------------------- | | Total residential construction | $307,538 | 0% | (13)% | | Total land, lot, and other construction | $992,296 | 6% | 19% | | Total commercial real estate | $4,345,953 | 3% | 8% | | Commercial and industrial | $1,883,438 | 2% | 64% | | Agriculture | $728,579 | 1% | 5% | | Total 1-4 family | $1,165,569 | (8)% | (8)% | | Multifamily residential | $380,172 | (3)% | 8% | | Home equity lines of credit | $664,800 | 1% | 1% | | Other consumer | $191,152 | 1% | 6% | | States and political subdivisions | $546,086 | (5)% | (4)% | | Other | $183,077 | 17% | 56% | | **Total loans receivable** | **$11,269,929** | **1%** | **12%** | - Total non-performing assets by regulatory classification were **$36.59 million** at March 31, 2021, comprising **$29.89 million** in non-accrual loans, **$3.73 million** in accruing loans 90 days or more past due, and **$2.97 million** in OREO[247](index=247&type=chunk) - Accruing loans 30-89 days delinquent totaled **$44.62 million** at March 31, 2021, a **96%** increase from December 31, 2020, with a notable increase in agriculture loans[248](index=248&type=chunk) - Net charge-offs for Q1 2021 were **$2.29 million**, with significant amounts in 'Other' and 'Commercial and industrial' categories[250](index=250&type=chunk) [Sources of Funds](index=69&type=section&id=Sources%20of%20Funds) This section describes the company's funding sources, including deposits, repurchase agreements, and other borrowings [Deposits](index=69&type=section&id=Deposits) This section details the composition of deposits, including non-interest bearing and interest bearing categories Total Deposits (March 31, 2021 vs. December 31, 2020 vs. March 31, 2020) | Metric | Mar 31, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Mar 31, 2020 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Non-interest bearing deposits | $6,040,440 | $5,454,539 | $3,875,848 | | Total interest bearing deposits | $10,063,884 | $9,342,990 | $7,681,989 | | **Total deposits** | **$16,104,324** | **$14,797,529** | **$11,557,837** | - Non-interest bearing deposits constituted **37%** of total deposits at March 31, 2021, up from **34%** at March 31, 2020[252](index=252&type=chunk) [Securities Sold Under Agreements to Repurchase, Federal Home Loan Bank Advances and Other Borrowings](index=69&type=section&id=Securities%20Sold%20Under%20Agreements%20to%20Repurchase%2C%20Federal%20Home%20Loan%20Bank%20Advances%20and%20Other%20Borrowings) This section outlines the company's use of repurchase agreements, FHLB advances, and other borrowing lines for liquidity management - The Company uses repurchase agreements and FHLB advances as funding sources, collateralized by eligible loans and debt securities, with FHLB advances fluctuating to meet liquidity needs and support growth[253](index=253&type=chunk) - Other secured and unsecured borrowing lines are also available to the Company[254](index=254&type=chunk) [Short-term borrowings](index=70&type=section&id=Short-term%20borrowings) This section details the company's short-term borrowing activities, including repurchase agreements and their associated interest rates - Short-term borrowing sources include FHLB advances, federal funds purchased, and repurchase agreements, with repurchase agreements outstanding totaling **$996.88 million** at March 31, 2021, at a weighted interest rate of **0.29%**[255](index=255&type=chunk)[256](index=256&type=chunk) [Subordinated Debentures](index=70&type=section&id=Subordinated%20Debentures) This section reports on the outstanding subordinated debentures and their classification as Tier 2 capital - Subordinated debentures totaled **$132 million** at March 31, 2021, and are included in Tier 2 capital for regulatory purposes[257](index=257&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=70&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) This section describes the company's off-balance sheet credit exposures, including loan commitments and letters of credit - The Company has off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, with the ACL for off-balance sheet credit exposures being **$15.6 million** at March 31, 2021, deemed adequate[258](index=258&type=chunk) [Liquidity Risk](index=71&type=section&id=Liquidity%20Risk) This section addresses the company's approach to managing liquidity risk and its available sources of funds - The Company manages liquidity risk to fund present and future obligations, maintaining a cushion for unanticipated cash flow needs[260](index=260&type=chunk) Available Liquidity Sources (March 31, 2021) | Source | Amount Available (in thousands) | | :----------------------- | :----------------------------- | | FHLB advances | $2,494,255 | | FRB discount window | $1,355,044 | | Unsecured lines of credit | $635,000 | | Unencumbered debt securities | $4,067,013 | [Capital Resources](index=72&type=section&id=Capital%20Resources) This section outlines the company's capital management objectives and regulatory capital ratios, ensuring compliance and financial strength - Maintaining capital strength is a long-term objective to support growth, provide protection against asset value declines, and safeguard depositors' funds[263](index=263&type=chunk) Glacier Bank Regulatory Capital Ratios (March 31, 2021) | Ratio | Glacier Bank | Minimum Capital Requirements | Minimum + Capital Conservation Buffer | Well Capitalized Requirements | | :------------------------------------- | :----------- | :----------------------------- | :------------------------------------ | :------------------------------------ | | Total Capital (To Risk-Weighted Assets) | 14.01% | 8.00% | 10.50% | 10.00% | | Tier 1 Capital (To Risk-Weighted Assets) | 12.90% | 6.00% | 8.50% | 8.00% | | Common Equity Tier 1 (To Risk-Weighted Assets) | 12.90% | 4.50% | 7.00% | 6.50% | | Leverage Ratio/Tier 1 Capital (To Average Assets) | 9.40% | 4.00% | N/A | 5.00% | - The Company has elected a five-year transition period for the CECL accounting standard's impact on regulatory capital, delaying the initial adoption impact for two years[265](index=265&type=chunk) [Federal and State Income Taxes](index=72&type=section&id=Federal%20and%20State%20Income%20Taxes) This section explains the company's effective tax rate and the impact of tax-exempt income and federal income tax credits - The Company's effective tax rate was **19.4%** for Q1 2021, lower than the **21%** federal statutory rate, due to income from tax-exempt debt securities, municipal loans, leases, and federal income tax credits[268](index=268&type=chunk) - The Company benefits from federal income tax credits from New Markets Tax Credits (NMTC), Low-Income Housing Tax Credits (LIHTC), and Qualified School Construction bonds, with expected total federal income tax credits of **$129.48 million**[268](index=268&type=chunk)[270](index=270&type=chunk) [Average Balance Sheet](index=74&type=section&id=Average%20Balance%20Sheet) This section provides an average balance sheet analysis, detailing earning assets, interest-bearing liabilities, and net interest margin Average Earning Assets (Three Months Ended March 31, 2021) | Asset Type | Average Balance (in thousands) | Interest and Dividends (in thousands) | Average Yield | | :----------------------- | :----------------------------- | :------------------------------------ | :------------ | | Total loans | $11,255,069 | $135,633 | 4.89% | | Tax-exempt investment securities | $1,545,484 | $14,710 | 3.81% | | Taxable investment securities | $4,713,936 | $15,851 | 1.35% | | **Total earning assets** | **$17,514,489** | **$166,194** | **3.85%** | Average Interest Bearing Liabilities (Three Months Ended March 31, 2021) | Liability Type | Average Balance (in thousands) | Interest and Dividends (in thousands) | Average Rate | | :----------------------- | :----------------------------- | :------------------------------------ | :----------- | | Total core deposits | $15,205,755 | $2,995 | 0.08% | | Repurchase agreements | $1,001,394 | $689 | 0.28% | | Subordinated debentures and other borrowed funds | $165,830 | $1,037 | 2.54% | | **Total interest bearing liabilities** | **$16,411,055** | **$4,740** | **0.12%** | - Net interest spread (tax-equivalent) was **3.73%** and net interest margin (tax-equivalent) was **3.74%** for the three months ended March 31, 2021[273](index=273&type=chunk) [Rate/Volume Analysis](index=75&type=section&id=Rate%2FVolume%20Analysis) This section analyzes the impact of changes in interest rates and asset/liability volumes on net interest income - Net interest income (tax-equivalent) increased by **$23.6 million** for Q1 2021 compared to Q1 2020, primarily driven by a **$42.3 million** increase due to volume, partially offset by an **$18.7 million** decrease due to rate changes[275](index=275&type=chunk) [Effect of inflation and changing prices](index=75&type=section&id=Effect%20of%20inflation%20and%20changing%20prices) This section discusses the primary financial impact of interest rate fluctuations on the company's monetary assets and liabilities - Interest rates generally have a more significant impact on the Company's performance than inflation, as virtually all assets are monetary in nature[276](index=276&type=chunk) [Item 3 – Quantitative and Qualitative Disclosure about Market Risk](index=76&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section confirms no material changes in market risk disclosures from the prior annual report - There have been no material changes in the quantitative and qualitative disclosures about market risk from those in the Company's 2020 Annual Report on Form 10-K[278](index=278&type=chunk) [Item 4 – Controls and Procedures](index=76&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=76&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness and timeliness of the company's disclosure controls and procedures - The Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective and timely as of March 31, 2021[279](index=279&type=chunk) [Changes in Internal Controls](index=76&type=section&id=Changes%20in%20Internal%20Controls) This section reports on the absence of material changes in the company's internal control over financial reporting - There have been no material changes in the Company's internal control over financial reporting during the first quarter of 2021[280](index=280&type=chunk) [Part II. Other Information](index=76&type=section&id=Part%20II.%20Other%20Information) This section provides additional information not covered in financial statements or MD&A, including legal, risk factors, and exhibits [Item 1 – Legal Proceedings](index=76&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) This section addresses the company's involvement in legal claims, assessing their potential financial impact - The Company is involved in various legal claims in the ordinary course of business, but management believes these matters are adequately covered by insurance, lack merit, or are not material enough to adversely affect financial condition or results of operations[282](index=282&type=chunk) [Item 1A – Risk Factors](index=76&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) This section refers to previously disclosed risk factors, noting no material changes and advising review of potential business impacts - There have been no material changes from the risk factors previously disclosed in the Company's 2020 Annual Report on Form 10-K; readers are advised to review those risks, as additional unknown or immaterial risks could also adversely affect the business[283](index=283&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the current reporting period - This item is marked as 'Not Applicable'[286](index=286&type=chunk) [Item 3 – Defaults upon Senior Securities](index=76&type=section&id=Item%203%20%E2%80%93%20Defaults%20upon%20Senior%20Securities) This item is not applicable for the current reporting period - This item is marked as 'Not Applicable'[286](index=286&type=chunk) [Item 4 – Mine Safety Disclosures](index=77&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable for the current reporting period - This item is marked as 'Not Applicable'[287](index=287&type=chunk) [Item 5 – Other Information](index=77&type=section&id=Item%205%20%E2%80%93%20Other%20Information) This item is not applicable for the current reporting period - This item is marked as 'Not Applicable'[288](index=288&type=chunk) [Item 6 – Exhibits](index=78&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the report, including certifications and XBRL documents - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) and various XBRL (eXtensible Business Reporting Language) documents[291](index=291&type=chunk) [Signatures](index=79&type=section&id=Signatures) This section provides the official signatures of the company's executive officers, certifying the report's accuracy - The report was signed by Randall M. Chesler, President and CEO, and Ron J. Copher, Executive Vice President and CFO, on May 3, 2021[295](index=295&type=chunk)

Altabancorp (ALTA) Q1 2021 Earnings Conference Call April 29, 2021 12:00 PM ET Company Participants Mark Olson - Executive Vice President and Chief Financial Officer Len Williams - President and Chief Executive Officer Conference Call Participants David Feaster - Raymond James Jeffrey Rulis - D.A. Davidson & Co. Andrew Liesch - Piper Sandler John Rodis - Janney Montgomery Scott Operator Good day and thank you for standing by. Welcome to the Altabancorp Q1 Earnings Call. At this time, all participants are in ...

Investor Presentation First Quarter 2021 Len Williams, President and Chief Executive Officer Mark Olson, EVP and Chief Financial Officer April 28, 2021 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, including, but not limited to: ▪ The duration and impact of the COVID-19 pandemic; ▪ Changes in general economic conditions, eithe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________________________________________________________________________________________________ FORM 10-K ________________________________________________________________________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF TH ...