Glacier Bancorp(GBCI) - 2023 Q1 - Quarterly Report

Part I. Financial Information Item 1 – Financial Statements Presents Glacier Bancorp, Inc.'s unaudited condensed consolidated financial statements for Q1 2023 and 2022, including detailed notes Unaudited Condensed Consolidated Statements of Financial Condition Presents the Company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | March 31, 2023 (in billions) | December 31, 2022 (in billions) | Change (QoQ, in billions) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $27.802 | $26.635 | +$1.167 | | Cash and cash equivalents | $1.530 | $0.402 | +$1.128 | | Total debt securities | $8.863 | $9.022 | -$0.160 | | Loans receivable, net | $15.332 | $15.065 | +$0.267 | | Total Liabilities | $24.876 | $23.792 | +$1.083 | | Non-interest bearing deposits | $7.001 | $7.691 | -$0.690 | | Interest bearing deposits | $13.147 | $12.916 | +$0.231 | | FRB Bank Term Funding | $2.740 | — | +$2.740 | | Total Stockholders' Equity | $2.927 | $2.843 | +$0.084 | Unaudited Condensed Consolidated Statements of Operations Presents the Company's financial performance, detailing revenues, expenses, and net income over specific periods | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | Change (YoY, in millions) | | :---------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | Total interest income | $231.888 | $190.516 | +$41.372 | | Total interest expense | $45.696 | $4.961 | +$40.735 | | Net Interest Income | $186.192 | $185.555 | +$0.637 | | Provision for credit losses | $5.470 | $7.031 | -$1.561 | | Total non-interest income | $27.895 | $33.563 | -$5.668 | | Total non-interest expense | $134.982 | $130.308 | +$4.674 | | Net Income | $61.211 | $67.795 | -$6.584 | | Basic earnings per share | $0.55 | $0.61 | -$0.06 | | Diluted earnings per share | $0.55 | $0.61 | -$0.06 | | Dividends declared per share | $0.33 | $0.33 | No Change | Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income Presents the Company's comprehensive income, including net income and other comprehensive income/loss components | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | Change (YoY, in millions) | | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | Net Income | $61.211 | $67.795 | -$6.584 | | Unrealized gain (losses) on available-for-sale securities (net of tax) | $59.319 | -$277.386 | +$336.705 | | Total Comprehensive (Loss) Income | $119.775 | -$207.373 | +$327.148 | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity Details changes in stockholders' equity, including net income, other comprehensive income, and dividends | Metric | March 31, 2023 (in billions) | March 31, 2022 (in billions) | Change (YoY, in millions) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period (Jan 1) | $2.843 | $3.178 | -$334.317 | | Net income | $61.211 | $67.795 | -$6.584 | | Other comprehensive loss | $58.564 | -$275.168 | +$333.732 | | Cash dividends declared | -$36.686 | -$36.648 | -$0.038 | | Balance at end of period (Mar 31) | $2.927 | $2.934 | -$7.289 | Unaudited Condensed Consolidated Statements of Cash Flows Presents the Company's cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | Change (YoY, in millions) | | :------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | Net cash provided by operating activities | $98.179 | $78.358 | +$19.821 | | Net cash used in investing activities | -$29.866 | -$456.283 | +$426.417 | | Net cash provided by financing activities | $1.059 | $377.044 | +$682.182 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $1.128 | -$0.881 | +$1.128 | | Cash, cash equivalents and restricted cash at end of period | $1.530 | $436.805 | +$1.093 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed disclosures for financial statements, covering accounting policies, financial instruments, and fair value measurements Note 1. Nature of Operations and Summary of Significant Accounting Policies Details the Company's operations and outlines significant accounting policies and critical estimates - Glacier Bancorp, Inc. provides banking services to individuals and businesses in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada through its wholly-owned bank subsidiary, Glacier Bank[18] - The Company's sole operating segment is Glacier Bank, which consists of seventeen bank divisions and a corporate division[22] - Material estimates susceptible to significant change include the allowance for credit losses, valuation of debt securities, real estate acquired in foreclosures, and goodwill impairment[21] - The Company adopted FASB ASU 2022-02 on January 1, 2023, eliminating the accounting guidance for Troubled Debt Restructurings (TDRs) and enhancing disclosure requirements for loan modifications to borrowers experiencing financial difficulty (MBFD)[58][86] Note 2. Debt Securities Provides details on the Company's debt securities portfolio, including available-for-sale and held-to-maturity classifications | Metric | March 31, 2023 (in billions) | December 31, 2022 (in billions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total debt securities | $8.863 | $9.022 | | Debt securities, available-for-sale | $5.198 | $5.307 | | Debt securities, held-to-maturity | $3.664 | $3.715 | | Gross unrealized losses (AFS) | $547.328 | $623.881 | | Gross unrealized losses (HTM) | $374.108 | $441.305 | - The decline in fair value of available-for-sale debt securities was determined to be unrelated to credit losses and primarily resulted from changes in interest rates and market spreads, with recovery expected as payments are received and securities approach maturity[102][214] - No Allowance for Credit Losses (ACL) was recorded on available-for-sale or held-to-maturity debt securities, as an insignificant amount of credit losses is expected[102][106][214] Note 3. Loans Receivable, Net Details the Company's loan portfolio, including categories, allowance for credit losses, and net charge-offs | Metric | March 31, 2023 (in billions) | December 31, 2022 (in billions) | Change (QoQ, in millions) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Loans receivable | $15.519 | $15.247 | +$271.800 | | Allowance for credit losses | ($186.604) | ($182.283) | -$4.321 | | Loans receivable, net | $15.332 | $15.065 | +$267.479 | | Commercial real estate loans | $9.992 | $9.797 | +$194.972 | | Non-accrual loans with no ACL | $28.153 | $31.036 | -$2.883 | - The Allowance for Credit Losses (ACL) for loans increased primarily as a result of loan portfolio growth[111] | Loan Segment | Q1 2023 Net Charge-offs (in thousands) | | :------------------- | :------------------------------------- | | Residential real estate | ($2) | | Commercial real estate | $230 | | Other commercial | ($382) | | Home equity | ($39) | | Other consumer | $125 | | Total | $1,939 | - The sizeable charge-offs in the other consumer loan segment are driven by deposit overdraft charge-offs, consistent with historical trends[112] Note 4. Leases Details the Company's lease assets and liabilities, including weighted-average lease terms and discount rates | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Net ROU assets | $69.399 | $71.045 | | Lease liabilities | $73.070 | $74.783 | | Weighted-average remaining lease term (Operating) | 16 years | 17 years | | Weighted-average discount rate (Operating) | 3.6 % | 3.6 % | | Total lease expense (Q1 2023) | $3.401 | $2.020 (Q1 2022) | Note 5. Goodwill Reports the net carrying value of goodwill and the results of the annual impairment test - The net carrying value of goodwill remained at $985.393 million at March 31, 2023, with no impairment identified during the annual test in Q3 2022[129] Note 6. Loan Servicing Details the carrying value of mortgage servicing rights and principal balances of loans serviced for others | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Carrying value of mortgage servicing rights | $13.276 | $13.488 | | Principal balances of loans serviced for others | $1.642 | $1.661 | | Fair value of servicing rights | $19.665 | $19.716 | Note 7. Variable Interest Entities Details the Company's consolidated and unconsolidated variable interest entities and related commitments - The Company consolidates certain Certified Development Entities (CDEs) and tax credit funds (LIHTC partnerships) where it is deemed the primary beneficiary, with total consolidated assets of $185.438 million and liabilities of $49.631 million at March 31, 2023[133][134][137] - Unconsolidated LIHTC partnerships had carrying values of $75.813 million at March 31, 2023, with future unfunded contingent equity commitments totaling $102.527 million[138] Note 8. Securities Sold Under Agreements to Repurchase Details securities sold under repurchase agreements and their collateralization - Securities sold under agreements to repurchase totaled $1.191 billion at March 31, 2023, secured by debt securities with carrying values of $1.445 billion[140] Note 9. Derivatives and Hedging Activities Details the Company's use of interest rate derivatives for hedging and residential real estate commitments - The Company uses interest rate caps as cash flow hedges for variable rate subordinated debentures, with a fair value of $6.705 million at March 31, 2023[142] - Residential real estate derivatives (interest rate locks) totaled $42.228 million in commitments, with a fair value of $732 thousand at March 31, 2023[144] Note 10. Other Expenses Details the components of other non-interest expenses, including merger and acquisition-related costs | Metric | Q1 2023 (in millions) | Q1 2022 (in millions) | Change (YoY, in millions) | | :----------------------------- | :--------------------- | :--------------------- | :----------- | | Total other expenses | $22.132 | $23.844 | -$1.712 | | Mergers and acquisition expenses | $0.352 | $6.207 | -$5.855 | Note 11. Accumulated Other Comprehensive (Loss) Income Details changes in accumulated other comprehensive income/loss, including current period adjustments | Metric | March 31, 2023 (in millions) | January 1, 2023 (in millions) | Change (QoQ, in millions) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Balance at end of period | ($410.228) | ($468.792) | +$58.564 | | Net current period other comprehensive (loss) income | $58.564 | N/A | N/A | Note 12. Earnings Per Share Provides basic and diluted earnings per share calculations, including net income and average outstanding shares | Metric | Q1 2023 | Q1 2022 | | :-------------------------- | :------ | :------ | | Basic earnings per share | $0.55 | $0.61 | | Diluted earnings per share | $0.55 | $0.61 | | Net income (in millions) | $61.211 | $67.795 | | Average outstanding shares - basic | 110,824,648 | 110,724,655 | | Average outstanding shares - diluted | 110,881,708 | 110,800,001 | Note 13. Fair Value of Assets and Liabilities Details assets and liabilities measured at fair value, categorizing them by fair value hierarchy levels - Available-for-sale debt securities, loans held for sale, interest rate caps, and interest rate locks are measured at fair value on a recurring basis, primarily classified as Level 2[152][154][155][156][157][158] - Collateral-dependent impaired loans and Other Real Estate Owned (OREO) are measured at fair value on a non-recurring basis, classified as Level 3[161][162][164] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Reviews Glacier Bancorp, Inc.'s financial condition and operating results for Q1 2023, analyzing key metrics, trends, and resources Forward-Looking Statements Outlines forward-looking statements subject to significant business, economic, and competitive uncertainties - The report contains forward-looking statements subject to significant business, economic, and competitive uncertainties, including risks related to lending, monetary policies, regulatory changes, economic conditions, acquisitions, and cybersecurity[177] Financial Highlights Summarizes key financial performance metrics, including net income, EPS, and various ratios | Metric | Mar 31, 2023 | Dec 31, 2022 | Mar 31, 2022 | Change (QoQ) | Change (YoY) | | :----------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Net income (in millions) | $61.211 | $79.677 | $67.795 | -$18.466 | -$6.584 | | Basic earnings per share | $0.55 | $0.72 | $0.61 | -$0.17 | -$0.06 | | Diluted earnings per share | $0.55 | $0.72 | $0.61 | -$0.17 | -$0.06 | | Dividends declared per share | $0.33 | $0.33 | $0.33 | No Change | No Change | | Return on average assets (annualized) | 0.93 % | 1.19 % | 1.06 % | -0.26 % | -0.13 % | | Return on average equity (annualized) | 8.54 % | 11.35 % | 8.97 % | -2.81 % | -0.43 % | | Efficiency ratio | 60.39 % | 53.18 % | 57.11 % | +7.21 % | +3.28 % | | Loan to deposit ratio | 77.09 % | 74.05 % | 63.52 % | +3.04 % | +13.57 % | - Net income decreased by 10% YoY, primarily due to a significant increase in funding costs[180] Financial Condition Analysis Analyzes the Company's balance sheet, detailing changes in assets, liabilities, and stockholders' equity, and discusses cash dividends Assets Analyzes changes in total assets, cash and cash equivalents, debt securities, and the loan portfolio - Total assets increased by $1.167 billion QoQ to $27.802 billion at March 31, 2023[9][183] - Cash and cash equivalents increased by $1.128 billion QoQ to $1.530 billion, strengthening liquidity[9][183] - Total debt securities decreased by $160 million QoQ to $8.863 billion, with cash flow used to primarily fund loan growth[9][183] - The loan portfolio grew by $272 million QoQ (7% annualized) to $15.519 billion, primarily driven by commercial real estate[184] Liabilities Analyzes changes in total deposits, non-interest bearing deposits, and the utilization of borrowing programs - Total deposits decreased by $458 million QoQ to $20.148 billion at March 31, 2023[186] - Non-interest bearing deposits decreased by $690 million QoQ, representing 35% of total core deposits[186] - The Company utilized the FRB Bank Term Funding Program, increasing borrowings by $2.740 billion QoQ, to pay off higher-rate FHLB advances and support its cash position[187] Stockholders' Equity Analyzes changes in total stockholders' equity, tangible stockholders' equity, and tangible book value per common share - Total stockholders' equity increased by $83.6 million QoQ to $2.927 billion at March 31, 2023[9][189] - Tangible stockholders' equity increased by $86.0 million QoQ to $1.902 billion, primarily due to earnings retention and a decrease in net unrealized loss on AFS debt securities[189] - Tangible book value per common share increased by $0.76 QoQ to $17.16[189] Cash Dividend Reports the declared quarterly cash dividend, consistent with prior periods - A quarterly cash dividend of $0.33 per share was declared, consistent with prior periods[190] Operating Results for Three Months Ended March 31, 2023 Compared to December 31, 2022, March 31, 2022 Details operating performance, analyzing changes in income, expenses, and efficiency ratio for the current quarter versus prior periods Income Summary Summarizes net interest income, total non-interest income, total income, and net interest margin | Metric | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | Mar 31, 2022 (in millions) | Change (QoQ, in millions) | Change (YoY, in millions) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :----------- | :----------- | | Net interest income | $186.192 | $204.059 | $185.555 | -$17.867 | +$0.637 | | Total non-interest income | $27.895 | $28.483 | $33.563 | -$0.588 | -$5.668 | | Total income | $214.087 | $232.542 | $219.118 | -$18.455 | -$5.031 | | Net interest margin (tax-equivalent) | 3.08 % | 3.30 % | 3.20 % | -0.22 % | -0.12 % | Net Interest Income Analyzes changes in net interest income, interest income, interest expense, core deposit cost, and net interest margin - Net interest income was $186.192 million, a slight increase of $0.637 million YoY, but a decrease of $17.867 million QoQ[10][193] - Interest income increased by $6.8 million QoQ and $41.4 million YoY, driven by loan portfolio growth and higher loan yields (new loan production yields at 6.96%)[194][196] - Interest expense significantly increased by $24.7 million QoQ and $40.7 million YoY, primarily due to higher rates on deposits and increased use of borrowing programs[195] - Core deposit cost rose to 23 basis points (Q1 2023) from 8 basis points (Q4 2022) and 7 basis points (Q1 2022)[195] - Net interest margin (tax-equivalent) decreased to 3.08% from 3.30% QoQ and 3.20% YoY, mainly due to increased funding costs[193][196] Non-interest Income Analyzes changes in total non-interest income, primarily due to gain on sale of residential loans - Total non-interest income decreased by $5.7 million YoY to $27.895 million, primarily due to a 73% decrease in gain on sale of residential loans[197] Non-interest Expense Analyzes changes in total non-interest expense, including compensation, regulatory assessments, and acquisition-related expenses - Total non-interest expense increased by $6.0 million QoQ and $4.7 million YoY to $134.982 million[198] - Compensation and employee benefits increased by $2.4 million YoY due to annual salary increases[199] - Regulatory assessments and insurance increased by $1.8 million YoY, mainly due to FDIC premium increases[199] - Other expenses decreased by $1.7 million YoY, primarily as a result of a decrease in acquisition-related expense[199] Efficiency Ratio Analyzes the efficiency ratio, driven by changes in interest and non-interest expenses - The efficiency ratio increased to 60.39% in Q1 2023 from 53.18% in Q4 2022 and 57.11% in Q1 2022, driven by increased interest and non-interest expenses[200] Provision for Credit Losses for Loans Analyzes the provision for credit losses on loans, net charge-offs, and ACL as a percentage of loans | Metric | Q1 2023 (in millions) | Q4 2022 (in millions) | Q1 2022 (in millions) | Change (QoQ, in thousands) | Change (YoY, in millions) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :----------- | :----------- | | Provision for credit losses on loans | $6.260 | $6.060 | $4.344 | +$200 | +$1.916 | | Net Charge Offs (Recoveries) | $1.939 | $1.968 | $0.850 | -$29 | +$1.089 | | ACL as a Percent of Loans | 1.20 % | 1.20 % | 1.28 % | No Change | -0.08 % | | Non-Performing Assets to Total Subsidiary Assets | 0.12 % | 0.12 % | 0.24 % | No Change | -0.12 % | - The increase in provision for credit loss expense for loans was primarily due to loan portfolio growth[202] Additional Management's Discussion and Analysis Provides in-depth analysis of financial performance, including investment, lending, asset quality, funding, liquidity, capital, and tax information Investment Activity Details changes in total debt securities, their composition, and unrealized losses - Total debt securities decreased by $160 million QoQ and $1.250 billion YoY to $8.863 billion at March 31, 2023[183][207] - Debt securities represented 32% of total assets at March 31, 2023, down from 39% a year prior[183] - The portfolio is primarily comprised of state and local government securities and mortgage-backed securities, with a weighted-average yield of 1.74% at March 31, 2023[207][214] - All available-for-sale and held-to-maturity debt securities with unrealized losses were determined to be investment grade and declines were due to interest rate changes, not credit losses[102][106][214] Equity securities Discusses non-marketable equity securities, primarily FHLB stock, and impairment evaluations - Non-marketable equity securities, primarily FHLB stock, are carried at cost and evaluated for impairment[216] - No impairment was identified for non-marketable or marketable equity securities without readily determinable fair values as of March 31, 2023[217] Lending Activity Details the growth and composition of the loan portfolio, with commercial real estate as the largest segment - The loan portfolio increased by $1.788 billion YoY to $15.519 billion at March 31, 2023[184][218] - Commercial real estate loans remain the largest segment, accounting for 65% of the total loan portfolio[218] Non-performing Assets Analyzes total non-performing assets, their percentage of subsidiary assets, and accruing loans past due | Metric | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | Mar 31, 2022 (in millions) | Change (QoQ, in millions) | Change (YoY, in millions) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :----------- | :----------- | | Total non-performing assets | $31.979 | $32.742 | $62.476 | -$0.763 | -$30.497 | | Non-performing assets as a percentage of subsidiary assets | 0.12 % | 0.12 % | 0.24 % | No Change | -0.12 % | | Accruing loans 30-89 days past due | $24.993 | $20.967 | $16.080 | +$4.026 | +$8.913 | - Most non-performing assets are secured by real estate, and the value of the underlying collateral is believed to be adequate to minimize significant charge-offs or losses[222] Modifications to Borrowers Experiencing Financial Difficulty Details loans modified for borrowers experiencing financial difficulty, including interest rate reductions and term extensions - Loans modified for borrowers experiencing financial difficulty (MBFD) totaled $6.6 million in amortized cost basis at March 31, 2023[114][223] | Loan Segment | Weighted Average Interest Rate Reduction | Weighted Average Term Extension | Principal Forgiveness (in thousands) | | :------------------- | :------------------------------------- | :------------------------------ | :----------------------------------- | | Commercial real estate | 2.11% | 10 months | — | | Other commercial | —% | 6 months | — | | Other consumer | —% | 8 months | $10 | Other Real Estate Owned and Foreclosed Assets Reports the low balance of Other Real Estate Owned (OREO) at period end - The balance of Other Real Estate Owned (OREO) remained low at $31 thousand at March 31, 2023[225] Allowance for Credit Losses - Loans Receivable Details the Allowance for Credit Losses (ACL) on loans and its adequacy to absorb estimated credit losses - The Allowance for Credit Losses (ACL) on loans was $186.6 million at March 31, 2023, representing 1.20% of total loans outstanding, and is considered adequate to absorb estimated credit losses[226][228] - The ACL methodology considers loan portfolio growth, composition, credit quality, economic forecasts, and other environmental factors[229] Loans by Regulatory Classification Details total loans receivable by regulatory classification, including commercial real estate loans and net charge-offs - Total loans receivable by regulatory classification increased by 13% YoY to $15.519 billion at March 31, 2023[236] - Commercial real estate loans (owner-occupied and non-owner occupied) totaled $6.517 billion, increasing 11% YoY[236] - Net charge-offs for the year-to-date period ending March 31, 2023, were $1.939 million[241] Sources of Funds Outlines the Company's primary sources of funds, including customer deposits and various borrowing programs - The Company's primary source of funds is customer deposits, supplemented by loan repayments, debt securities, repurchase agreements, FHLB advances, and borrowings from the FRB[242] Deposits Details total deposits, non-interest bearing deposits, and wholesale deposits | Metric | March 31, 2023 (in billions) | December 31, 2022 (in billions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total deposits | $20.148 | $20.607 | | Non-interest bearing deposits | $7.001 | $7.691 | | Wholesale deposits | $420.390 | $31.999 | - Non-interest bearing deposits constituted 35% of total deposits at March 31, 2023[245] Borrowings Describes the Company's utilization of repurchase agreements, FHLB advances, and the FRB Bank Term Funding Program - The Company utilizes repurchase agreements, Federal Home Loan Bank (FHLB) advances, and the Federal Reserve Bank (FRB) Bank Term Funding Program (BTFP) for funding[246][247][248] - Participation in the BTFP enabled the Company to pay off higher-rate FHLB advances and support its current cash position[248] Subordinated Debentures Details outstanding subordinated debentures and their inclusion in Tier 2 capital - Subordinated debentures outstanding were $133 million at March 31, 2023, and are included in Tier 2 capital for regulatory purposes[251] Contractual Obligations and Off-Balance Sheet Arrangements Details the Allowance for Credit Losses (ACL) for off-balance sheet credit exposures - The Company maintains an Allowance for Credit Losses (ACL) of $24.5 million for off-balance sheet credit exposures, including unfunded loan commitments[252] Liquidity Risk Discusses liquidity risk management, funding needs, and available liquidity sources - The Company manages liquidity risk by assessing current and future funding needs, maintaining an adequate cushion for unanticipated cash flow, and balancing the benefits and costs of liquidity[254] | Liquidity Source | March 31, 2023 (in billions) | December 31, 2022 (in billions) | | :----------------------------- | :----------------------------- | :----------------------------- | | FHLB advances (Amount available) | $3.603 | $2.556 | | FRB discount window (Amount available) | $1.642 | $1.680 | | FRB Bank Term Funding Program (Amount available) | $0.836 | $0 | | Unencumbered debt securities | $2.551 | $6.254 | - Total unencumbered debt securities decreased significantly due to increased pledges to the FRB's Bank Term Funding Program[255] Capital Resources Details regulatory capital ratios and the election of a five-year transition period for CECL impact on capital | Regulatory Capital Ratio | Glacier Bank Actual (Mar 31, 2023) | Minimum Capital Requirements | Well Capitalized Requirements | | :-------------------------------- | :--------------------------------- | :--------------------------- | :---------------------------- | | Total Capital (To Risk-Weighted Assets) | 13.73 % | 8.00 % | 10.00 % | | Tier 1 Capital (To Risk-Weighted Assets) | 12.69 % | 6.00 % | 8.00 % | | Common Equity Tier 1 (To Risk-Weighted Assets) | 12.69 % | 4.50 % | 6.50 % | | Leverage Ratio/Tier 1 Capital (To Average Assets) | 9.06 % | 4.00 % | 5.00 % | - The Company has elected to utilize a five-year transition period for the CECL accounting standard's impact on regulatory capital[259] Federal and State Income Taxes Details the effective tax rate, reasons for deviation from statutory rates, and expected federal income tax credits - The effective tax rate was 16.9% for the three months ended March 31, 2023, lower than the federal statutory rate of 21% due to income from tax-exempt debt securities, municipal loans and leases, and federal income tax credits[262] - Expected federal income tax credits from New Markets Tax Credits, Low-Income Housing Tax Credits, and Debt Securities Tax Credits total $224.885 million for future years[264] Average Balance Sheet Presents average balances for loans, earning assets, core deposits, and interest-bearing liabilities, along with net interest margin | Metric | Q1 2023 Average Balance (in billions) | Q1 2022 Average Balance (in billions) | Change (YoY, in billions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Total loans | $15.357 | $13.534 | +$1.823 | | Total earning assets | $25.171 | $24.140 | +$1.031 | | Total core deposits | $19.916 | $21.437 | -$1.521 | | Total interest bearing liabilities | $23.553 | $22.619 | +$0.934 | | Net interest margin (tax-equivalent) | 3.08 % | 3.20 % | -0.12 % | Rate/Volume Analysis Analyzes changes in net interest income, interest income, and interest expense due to rate and volume fluctuations - Net interest income (tax-equivalent) increased by $1.0 million YoY for the three months ended March 31, 2023[269] - Interest income increased due to loan growth and higher loan yields, while interest expense increased significantly due to higher interest rates and increased borrowing costs[269] Item 3 – Quantitative and Qualitative Disclosure about Market Risk Discusses market risk, primarily interest rate risk, using a simulation model to quantify NII sensitivity and confirm policy adherence Interest Rate Risk Identifies interest rate risk as the primary market risk, quantified using a simulation model for NII sensitivity - Interest rate risk is the Company's primary market risk exposure, with the potential for loss of future earnings resulting from adverse changes in interest rates[271] - The Company uses a detailed and dynamic simulation model to quantify the estimated exposure of net interest income (NII) to sustained interest rate changes[273] Net interest income simulation Presents the estimated sensitivity of net interest income to various interest rate shock scenarios | Rate Scenarios | Estimated Sensitivity (One Year) | Estimated Sensitivity (Two Years) | | :------------- | :------------------------------- | :-------------------------------- | | -100 bps Rate shock | 3.87 % | 2.48 % | | +100 bps Rate shock | (3.19 %) | (3.04 %) | | +200 bps Rate shock | (6.23 %) | (5.96 %) | | +300 bps Rate shock | (9.30 %) | (8.91 %) | | +400 bps Rate shock | (12.36 %) | (11.87 %) | - The Company's NII sensitivity remained within policy limits at March 31, 2023[274] Item 4 – Controls and Procedures Confirms the effectiveness of disclosure controls and procedures, reporting no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Confirms the effectiveness of the Company's disclosure controls and procedures as of March 31, 2023 - The Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2023[278] Changes in Internal Controls Reports no material changes in the Company's internal control over financial reporting during the first quarter of 2023 - There have been no material changes in the Company's internal control over financial reporting during the first quarter of 2023[279] Part II. Other Information Item 1 – Legal Proceedings Addresses various claims, legal actions, and complaints arising in the ordinary course of business - The Company is involved in various claims, legal actions, and complaints arising in the ordinary course of business, which management believes will not have a material adverse effect on the financial condition or results of operations[281] Item 1A – Risk Factors Highlights updated risk factors, including potential adverse effects from recent financial services industry events like bank failures - Recent events impacting the financial services industry, including bank failures, could adversely affect the Company's results of operations and financial condition, potentially leading to reduced demand for products, deposit withdrawals, increased FDIC premiums, and stricter regulatory oversight[283] Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not Applicable[286] Item 3 – Defaults upon Senior Securities This item is not applicable for the reporting period - Not Applicable[286] Item 4 – Mine Safety Disclosures This item is not applicable for the reporting period - Not Applicable[285] Item 5 – Other Information This item is not applicable for the reporting period - Not Applicable[287] Item 6 – Exhibits Lists the exhibits, including CEO and CFO certifications and XBRL documents - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL instance documents and related taxonomy files[289] Signatures Provides the signatures of the President and CEO, and Executive Vice President and CFO - The report was signed by Randall M. Chesler (President and CEO) and Ron J. Copher (Executive Vice President and CFO) on May 2, 2023[292]