Glacier Bancorp(GBCI) - 2024 Q1 - Quarterly Report

Part I. Financial Information Item 1 – Financial Statements This section presents the unaudited condensed consolidated financial statements of Glacier Bancorp, Inc. for the quarter ended March 31, 2024, including the statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes on accounting policies, debt securities, loans, leases, goodwill, loan servicing, variable interest entities, repurchase agreements, derivatives, other expenses, accumulated other comprehensive income, earnings per share, fair value measurements, and recent mergers and acquisitions Unaudited Condensed Consolidated Statements of Financial Condition Condensed Consolidated Statements of Financial Condition (March 31, 2024 vs. December 31, 2023) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Assets | | | | | | Cash and cash equivalents | $788,660 | $1,354,342 | $(565,682) | -41.77% | | Total debt securities | $8,080,656 | $8,288,130 | $(207,474) | -2.50% | | Loans receivable, net | $16,533,723 | $16,005,325 | $528,398 | 3.30% | | Total assets | $27,822,170 | $27,742,629 | $79,541 | 0.29% | | Liabilities | | | | | | Non-interest bearing deposits | $6,055,069 | $6,022,980 | $32,089 | 0.53% | | Interest bearing deposits | $14,372,454 | $13,906,187 | $466,267 | 3.35% | | Federal Home Loan Bank advances | $2,140,157 | $0 | $2,140,157 | N/A | | FRB Bank Term Funding | $0 | $2,740,000 | $(2,740,000) | -100.00% | | Total liabilities | $24,711,463 | $24,722,348 | $(10,885) | -0.04% | | Stockholders' Equity | | | | | | Total stockholders' equity | $3,110,707 | $3,020,281 | $90,426 | 2.99% | | Number of common stock shares outstanding | 113,388,590 | 110,888,942 | 2,499,648 | 2.25% | Unaudited Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Total interest income | $279,402 | $231,888 | $47,514 | 20.50% | | Total interest expense | $112,922 | $45,696 | $67,226 | 147.09% | | Net Interest Income | $166,480 | $186,192 | $(19,712) | -10.59% | | Provision for credit losses | $8,249 | $5,470 | $2,779 | 50.80% | | Total non-interest income | $29,989 | $27,895 | $2,094 | 7.51% | | Total non-interest expense | $151,843 | $134,982 | $16,861 | 12.49% | | Net Income | $32,627 | $61,211 | $(28,584) | -46.70% | | Basic earnings per share | $0.29 | $0.55 | $(0.26) | -47.27% | | Diluted earnings per share | $0.29 | $0.55 | $(0.26) | -47.27% | | Dividends declared per share | $0.33 | $0.33 | $0 | 0.00% | Unaudited Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :---------------------------------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Net Income | $32,627 | $61,211 | $(28,584) | -46.70% | | Net of tax amount (Available-For-Sale and Transferred Securities) | $2,259 | $59,319 | $(57,060) | -96.19% | | Net of tax amount (Cash Flow Hedge) | $(451) | $(755) | $304 | -40.27% | | Total other comprehensive income, net of tax | $1,808 | $58,564 | $(56,756) | -96.91% | | Total Comprehensive Income | $34,435 | $119,775 | $(85,340) | -71.25% | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity Condensed Consolidated Statements of Changes in Stockholders' Equity (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Balance at January 1 | $3,020,281 | $2,843,305 | $176,976 | 6.22% | | Net income | $32,627 | $61,211 | $(28,584) | -46.70% | | Other comprehensive income | $1,808 | $58,564 | $(56,756) | -96.91% | | Cash dividends declared | $(37,514) | $(36,686) | $(828) | 2.26% | | Stock issued in connection with acquisitions | $92,385 | $0 | $92,385 | N/A | | Stock-based compensation and related taxes | $1,120 | $510 | $610 | 119.61% | | Balance at March 31 | $3,110,707 | $2,926,904 | $183,803 | 6.28% | Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Net cash (used in) provided by operating activities | $(56,729) | $98,179 | $(154,908) | -157.78% | | Net cash provided by (used in) investing activities | $209,368 | $(29,866) | $239,234 | -801.76% | | Net cash (used in) provided by financing activities | $(718,321) | $1,059,226 | $(1,777,547) | -167.82% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(565,682) | $1,127,539 | $(1,693,221) | -150.18% | | Cash, cash equivalents and restricted cash at end of period | $788,660 | $1,529,534 | $(740,874) | -48.44% | Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Nature of Operations and Summary of Significant Accounting Policies This note outlines Glacier Bancorp, Inc.'s core banking services across eight states, its consolidation principles including wholly-owned subsidiaries and certain variable interest entities (VIEs), and key accounting policies for cash, debt securities, loans, allowance for credit losses, premises and equipment, leases, other real estate owned, business combinations, loan servicing rights, equity securities, borrowings, bank-owned life insurance, derivatives, and revenue recognition - Glacier Bancorp, Inc. provides a full range of banking services in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona, and Nevada through its subsidiary, Glacier Bank[19] - The Company completed the acquisition of Community Financial Group, Inc. and its subsidiary, Wheatland Bank, on January 31, 2024, integrating its operations into the consolidated financial statements from that date[26] - The Company adopted ASU 2023-02 on January 1, 2024, allowing the proportional amortization method for investments in tax credit structures, which did not materially impact financial position or results[89][90] Note 2. Debt Securities This note provides a detailed breakdown of the Company's debt securities, categorized as available-for-sale (AFS) and held-to-maturity (HTM), including their amortized cost, unrealized gains/losses, and fair values Total Debt Securities (March 31, 2024 vs. December 31, 2023) | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Total available-for-sale | $4,629,073 | $4,785,719 | $(156,646) | -3.27% | | Total held-to-maturity | $3,451,583 | $3,502,411 | $(50,828) | -1.45% | | Total debt securities | $8,080,656 | $8,288,130 | $(207,474) | -2.50% | Unrealized Losses on Available-for-Sale Debt Securities (March 31, 2024) | Category | Fair Value (in thousands) | Unrealized Loss (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | U.S. government and federal agency | $452,171 | $(29,957) | | U.S. government sponsored enterprises | $306,626 | $(22,766) | | State and local governments | $79,349 | $(3,782) | | Corporate bonds | $13,362 | $(675) | | Residential mortgage-backed securities | $2,678,311 | $(350,700) | | Commercial mortgage-backed securities | $1,056,032 | $(88,023) | | Total available-for-sale | $4,585,851 | $(495,903) | - The Company determined that the decline in fair value of available-for-sale debt securities was due to interest rate changes and market spreads, not credit losses, and does not intend to sell these securities before recovery of amortized cost. No ACL was recorded for AFS or HTM debt securities[105][108] Note 3. Loans Receivable, Net This note details the Company's loan portfolio by segment, the activity in the Allowance for Credit Losses (ACL), and an aging analysis of loans Loans Receivable by Segment (March 31, 2024 vs. December 31, 2023) | Loan Segment | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Residential real estate | $1,752,514 | $1,704,544 | $47,970 | 2.81% | | Commercial real estate | $10,672,269 | $10,303,306 | $368,963 | 3.58% | | Other commercial | $3,030,608 | $2,901,863 | $128,745 | 4.44% | | Home equity | $883,062 | $888,013 | $(4,951) | -0.56% | | Other consumer | $394,049 | $400,356 | $(6,307) | -1.58% | | Loans receivable | $16,732,502 | $16,198,082 | $534,420 | 3.30% | | Allowance for credit losses | $(198,779) | $(192,757) | $(6,022) | 3.12% | | Loans receivable, net | $16,533,723 | $16,005,325 | $528,398 | 3.30% | Allowance for Credit Losses (ACL) Activity (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Balance at beginning of period | $192,757 | $182,283 | $10,474 | 5.75% | | Provision for credit losses | $9,091 | $6,260 | $2,831 | 45.22% | | Charge-offs | $(4,295) | $(3,293) | $(1,002) | 30.42% | | Recoveries | $1,223 | $1,354 | $(131) | -9.68% | | Balance at end of period | $198,779 | $186,604 | $12,175 | 6.52% | - Total loans modified for borrowers experiencing financial difficulty (MBFD) amounted to $66.9 million at March 31, 2024, a significant increase from $6.6 million at March 31, 2023. The majority of these modifications involved term extension and payment deferral[118][119] Note 4. Leases This note details the Company's lease arrangements, distinguishing between finance and operating leases, and provides carrying values for Right-of-Use (ROU) assets and lease liabilities Lease Summary (March 31, 2024 vs. December 31, 2023) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Net ROU assets (Finance Leases) | $23,383 | $24,282 | | Net ROU assets (Operating Leases) | $40,065 | $40,781 | | Lease liabilities (Finance Leases) | $24,335 | $25,116 | | Lease liabilities (Operating Leases) | $43,706 | $44,319 | | Weighted-average remaining lease term (Finance) | 11 years | 11 years | | Weighted-average remaining lease term (Operating) | 16 years | 16 years | | Weighted-average discount rate (Finance) | 3.6% | 3.6% | | Weighted-average discount rate (Operating) | 3.7% | 3.7% | Lease Expense (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Finance lease cost | $1,314 | $1,270 | $44 | 3.46% | | Operating lease cost | $1,318 | $1,496 | $(178) | -11.90% | | Short-term lease cost | $123 | $205 | $(82) | -40.00% | | Variable lease cost | $464 | $443 | $21 | 4.74% | | Total lease expense | $3,209 | $3,401 | $(192) | -5.64% | Note 5. Goodwill This note outlines the changes in the carrying value of goodwill, primarily due to acquisitions, with no impairment identified during the last annual test Goodwill Carrying Value (March 31, 2024 vs. March 31, 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Net carrying value at beginning of period | $985,393 | $985,393 | $0 | 0.00% | | Acquisitions and adjustments | $38,369 | $0 | $38,369 | N/A | | Net carrying value at end of period | $1,023,762 | $985,393 | $38,369 | 3.89% | - The increase in goodwill is primarily attributable to the acquisition of Wheatland Bank, with $38.4 million recognized from this acquisition[131][184] - The Company performed its annual goodwill impairment test in Q3 2023 and determined no impairment, with accumulated impairment charges remaining at $40.2 million[131] Note 6. Loan Servicing This note provides details on the Company's loan servicing activities, including the carrying value of mortgage servicing rights, the principal balances of loans serviced for others, and the fair value of these servicing rights Loan Servicing Rights (March 31, 2024 vs. December 31, 2023) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Carrying value at end of period | $12,298 | $12,534 | $(236) | -1.88% | | Principal balances of loans serviced for others | $1,550,129 | $1,570,834 | $(20,705) | -1.32% | | Fair value of servicing rights | $17,933 | $18,000 | $(67) | -0.37% | Note 7. Variable Interest Entities This note explains the Company's involvement with Variable Interest Entities (VIEs), distinguishing between consolidated and unconsolidated VIEs, and detailing their assets and liabilities - The Company consolidates certain CDEs (NMTC) and tax credit funds (LIHTC) where it is deemed the primary beneficiary, with their assets and liabilities included in the consolidated financial statements[136][137] Consolidated VIEs' Assets and Liabilities (March 31, 2024 vs. December 31, 2023) | Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Total assets | $226,218 | $185,827 | $40,391 | 21.74% | | Total liabilities | $93,602 | $57,002 | $36,600 | 64.21% | - The Company holds equity investments in unconsolidated LIHTC partnerships totaling $189.6 million at March 31, 2024, with future unfunded equity commitments of $104.2 million[140] Note 8. Securities Sold Under Agreements to Repurchase This note summarizes the carrying value of securities sold under repurchase agreements, categorized by remaining contractual maturity and collateral type Securities Sold Under Agreements to Repurchase (March 31, 2024 vs. December 31, 2023) | Collateral Type | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | U.S. government and federal agency | $0 | $113,509 | $(113,509) | -100.00% | | Residential mortgage-backed securities | $1,540,008 | $1,306,047 | $233,961 | 17.91% | | Commercial mortgage-backed securities | $0 | $67,294 | $(67,294) | -100.00% | | Total | $1,540,008 | $1,486,850 | $53,158 | 3.58% | - Repurchase agreements are secured by debt securities with carrying values of $1.83 billion at March 31, 2024, and $1.80 billion at December 31, 2023[143] Note 9. Derivatives and Hedging Activities This note details the Company's use of derivative instruments for managing interest rate risk, specifically interest rate cap contracts for cash flow hedges and interest rate swap contracts for fair value hedges - The Company uses interest rate cap derivatives as cash flow hedges for variable rate subordinated debentures, with notional amounts totaling $130.5 million and a fair value of $4.3 million at March 31, 2024[144] - Fair value hedges include interest rate swap agreements with a notional amount of $1.5 billion for fixed rate debt securities, aiming to offset changes in fair value due to SOFR rate fluctuations[146][147] - Residential real estate derivatives, such as interest rate locks ($58.1 million commitments) and TBA commitments ($34.3 million), are used to manage interest rate risk for loans intended for sale[149] Note 10. Other Expenses This note provides a breakdown of various other expenses incurred by the Company, highlighting significant increases in merger and acquisition expenses and other categories Other Expenses (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Mergers and acquisition expenses | $5,725 | $352 | $5,373 | 1526.42% | | Consulting and outside services | $4,727 | $4,081 | $646 | 15.83% | | Debit card expenses | $3,582 | $2,965 | $617 | 20.81% | | VIE amortization and other expenses | $3,308 | $2,528 | $780 | 30.86% | | Loan expenses | $2,299 | $1,707 | $592 | 34.68% | | Business development | $1,648 | $1,361 | $287 | 21.09% | | Checking and operating expenses | $1,518 | $666 | $852 | 127.93% | | Total other expenses | $30,483 | $22,132 | $8,351 | 37.73% | Note 11. Accumulated Other Comprehensive (Loss) Income This note illustrates the activity within accumulated other comprehensive (loss) income, net of tax, by component, including gains/losses on available-for-sale and transferred debt securities and derivatives used for cash flow hedges Accumulated Other Comprehensive (Loss) Income (March 31, 2024 vs. March 31, 2023) | Item | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :---------------------------------------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Balance at January 1 | $(374,113) | $(468,792) | $94,679 | -20.20% | | Net current period other comprehensive income (loss) | $1,808 | $58,564 | $(56,756) | -96.91% | | Balance at March 31 | $(372,305) | $(410,228) | $37,923 | -9.24% | Note 12. Earnings Per Share This note details the calculation of basic and diluted earnings per share, based on net income available to common stockholders and the weighted-average number of common shares outstanding Earnings Per Share Calculation (Three Months Ended March 31, 2024 vs. 2023) | Item | March 31, 2024 | March 31, 2023 | Change | Change (%) | | :------------------------------------------------ | :------------- | :------------- | :------- | :--------- | | Net income available to common stockholders (in thousands) | $32,627 | $61,211 | $(28,584) | -46.70% | | Average outstanding shares - basic | 112,492,142 | 110,824,648 | 1,667,494 | 1.50% | | Average outstanding shares - diluted | 112,554,402 | 110,881,708 | 1,672,694 | 1.51% | | Basic earnings per share | $0.29 | $0.55 | $(0.26) | -47.27% | | Diluted earnings per share | $0.29 | $0.55 | $(0.26) | -47.27% | Note 13. Fair Value of Assets and Liabilities This note defines fair value and outlines the fair value hierarchy (Level 1, 2, and 3 inputs), describing valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis Assets Measured at Fair Value on a Recurring Basis (March 31, 2024) | Item | Fair Value (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Debt securities, available-for-sale | $4,629,073 | $0 | $4,629,073 | $0 | | Loans held for sale, at fair value | $27,035 | $0 | $27,035 | $0 | | Interest rate caps | $4,345 | $0 | $4,345 | $0 | | Interest rate locks | $1,032 | $0 | $1,032 | $0 | | Interest rate swap | $1,067 | $0 | $1,067 | $0 | | Total assets measured at fair value on a recurring basis | $4,662,552 | $0 | $4,662,552 | $0 | Assets Measured at Fair Value on a Non-Recurring Basis (March 31, 2024) | Item | Fair Value (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Collateral-dependent impaired loans, net of ACL | $1,542 | $0 | $0 | $1,542 | | Total assets measured at fair value on a non-recurring basis | $1,542 | $0 | $0 | $1,542 | - The fair value of loans receivable, net of ACL, is estimated at $16.55 billion, slightly higher than its carrying amount of $16.53 billion, primarily using Level 3 unobservable inputs[176][183] Note 14. Mergers and Acquisitions This note details the Company's acquisition of Community Financial Group, Inc. (Wheatland Bank) on January 31, 2024, outlining the preliminary fair value of consideration transferred, identifiable assets acquired, liabilities assumed, and the resulting goodwill - On January 31, 2024, the Company acquired Wheatland Bank for a preliminary value of $93.2 million, issuing 2,389,684 common shares and paying $771,000 in cash[184] Preliminary Fair Value Estimates for Wheatland Acquisition (January 31, 2024) | Item | Amount (in thousands) | | :------------------------------------------ | :-------------------- | | Fair value of consideration transferred | $93,156 | | Total identifiable assets acquired | $739,290 | | Liabilities assumed | $684,503 | | Total identifiable net assets | $54,787 | | Goodwill recognized | $38,369 | - The acquisition resulted in $38.4 million in goodwill, largely representing expected synergies and economies of scale, and incurred $5.6 million in acquisition-related expenses during Q1 2024[184][187] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive review of Glacier Bancorp, Inc.'s financial condition and results of operations for the three months ended March 31, 2024, compared to prior periods, covering financial highlights, detailed analysis of assets, liabilities, and stockholders' equity, operating results including net interest income and non-interest income/expense, efficiency ratio, and provision for credit losses Financial Highlights Key Financial Highlights (Three Months Ended March 31, 2024 vs. 2023) | Metric | Mar 31, 2024 | Mar 31, 2023 | Change | Change (%) | | :------------------------------------ | :----------- | :----------- | :------- | :--------- | | Net income (in thousands) | $32,627 | $61,211 | $(28,584) | -46.70% | | Diluted earnings per share | $0.29 | $0.55 | $(0.26) | -47.27% | | Dividends declared per share | $0.33 | $0.33 | $0 | 0.00% | | Return on average assets (annualized) | 0.47% | 0.93% | -0.46% | -49.46% | | Return on average equity (annualized) | 4.25% | 8.54% | -4.29% | -50.23% | | Efficiency ratio | 74.41% | 60.39% | 14.02% | 23.22% | | Loan to deposit ratio | 82.04% | 77.09% | 4.95% | 6.42% | | Number of locations | 232 | 222 | 10 | 4.50% | - Net income decreased by 47% year-over-year, primarily due to increased funding costs and acquisition-related expenses from Wheatland Bank ($5.7 million) and FDIC special assessment ($1.5 million)[195] - The Company completed the acquisition of Wheatland Bank on January 31, 2024, adding 14 branches in eastern Washington, and announced an agreement to purchase six Montana branches from Rocky Mountain Bank[196] Financial Condition Analysis Assets The Company's total assets increased slightly, driven by loan portfolio growth, while cash and debt securities decreased Asset Summary (March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $788,660 | $1,354,342 | $1,529,534 | -41.77% | -48.44% | | Total debt securities | $8,080,656 | $8,288,130 | $8,862,706 | -2.50% | -8.83% | | Loans receivable | $16,732,502 | $16,198,082 | $15,518,612 | 3.30% | 7.82% | | Total assets | $27,822,170 | $27,742,629 | $27,802,434 | 0.29% | 0.07% | - Cash balance decreased by $566 million in Q1 2024, primarily used to partially fund the maturity of the Bank Term Funding Program (BTFP)[198] - The loan portfolio increased by $534 million (3%) in Q1 2024, and $1.214 billion (8%) year-over-year. Excluding the Wheatland acquisition, the loan portfolio grew by $84.0 million (2% annualized) in Q1 2024[200] Liabilities Total liabilities remained relatively stable, with deposits increasing and a significant shift in borrowings as the Company paid off its BTFP borrowings using FHLB advances and cash Liability Summary (March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Total deposits | $20,427,523 | $19,929,167 | $20,148,308 | 2.50% | 1.39% | | Non-interest bearing deposits | $6,055,069 | $6,022,980 | $7,001,241 | 0.53% | -13.51% | | Federal Home Loan Bank advances | $2,140,157 | $0 | $335,000 | N/A | 538.85% | | FRB Bank Term Funding | $0 | $2,740,000 | $2,740,000 | -100.00% | -100.00% | | Total liabilities | $24,711,463 | $24,722,348 | $24,875,530 | -0.04% | -0.66% | - Total deposits increased by $498 million (3%) in Q1 2024. Excluding the Wheatland acquisition, deposits decreased by $119 million (1%). Non-interest bearing deposits remained at 30% of total deposits[201] - The Company paid off $2.74 billion in BTFP borrowings, replacing them with $2.14 billion in FHLB borrowings and cash, resulting in a net reduction of $600 million in borrowings[202] Stockholders' Equity Stockholders' equity increased, primarily driven by the issuance of common stock for the Wheatland acquisition, though tangible book value per share saw a slight decrease quarter-over-quarter Stockholders' Equity Summary (March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :------------------------------------ | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' equity | $3,110,707 | $3,020,281 | $2,926,904 | 2.99% | 6.28% | | Tangible stockholders' equity | $2,040,899 | $2,003,018 | $1,902,359 | 1.89% | 7.28% | | Book value per common share | $27.43 | $27.24 | $26.40 | 0.70% | 3.90% | | Tangible book value per common share | $18.00 | $18.06 | $17.16 | -0.33% | 4.89% | - Tangible stockholders' equity increased by $37.9 million (2%) from the prior quarter, mainly due to $92.4 million in common stock issued for the Wheatland acquisition, partially offset by increased goodwill and core deposit intangibles[204] Cash Dividend The Company declared a quarterly cash dividend of $0.33 per share, consistent with prior periods, marking its 156th consecutive regular dividend - A quarterly cash dividend of $0.33 per share was declared on March 27, 2024, consistent with the prior quarter and prior year first quarter[205] Operating Results for Three Months Ended March 31, 2024 Compared to December 31, 2023, and March 31, 2023 Income Summary Total income decreased slightly quarter-over-quarter and significantly year-over-year, primarily driven by a decline in net interest income despite an increase in total interest income Income Summary (Three Months Ended March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Total net interest income | $166,480 | $166,456 | $186,192 | 0.01% | -10.59% | | Total non-interest income | $29,989 | $30,865 | $27,895 | -2.84% | 7.51% | | Total income | $196,469 | $197,321 | $214,087 | -0.43% | -8.23% | | Net interest margin (tax-equivalent) | 2.59% | 2.56% | 3.08% | 1.17% | -15.91% | Net Interest Income Net interest income remained stable quarter-over-quarter but decreased significantly year-over-year due to a substantial increase in interest expense that outpaced interest income growth - Total interest income increased by $5.9 million (2%) quarter-over-quarter and $47.5 million (20%) year-over-year, driven by higher loan yields and average loan portfolio balances[209] - Total interest expense surged by $5.9 million (6%) quarter-over-quarter and $67.2 million (147%) year-over-year, primarily due to increased rates on deposits and borrowings[210] - Net interest margin (tax-equivalent) increased to 2.59% in Q1 2024 from 2.56% in Q4 2023, marking the first increase since Q3 2022, as loan yields outpaced deposit cost increases[211] Non-interest Income Non-interest income saw a slight decrease quarter-over-quarter, mainly due to a prior quarter gain on sale of securities, though gain on sale of residential loans increased significantly Non-interest Income (Three Months Ended March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Service charges and other fees | $18,563 | $19,115 | $17,771 | -2.89% | 4.46% | | Gain on sale of loans | $3,362 | $2,228 | $2,400 | 50.90% | 40.08% | | Gain (loss) on sale of investments | $16 | $1,712 | $(114) | -99.07% | N/A | | Total non-interest income | $29,989 | $30,865 | $27,895 | -2.84% | 7.51% | - Gain on sale of residential loans increased by $1.1 million (51%) quarter-over-quarter and $962 thousand (40%) year-over-year[213] - The prior quarter's non-interest income included a $1.7 million gain from the sale of Visa class B shares, which was not present in the current quarter[213] Non-interest Expense Total non-interest expense increased significantly quarter-over-quarter and year-over-year, primarily driven by expenses related to the Wheatland acquisition and additional FDIC special assessments Non-interest Expense (Three Months Ended March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Compensation and employee benefits | $85,789 | $71,420 | $81,477 | 20.12% | 5.29% | | Regulatory assessments and insurance | $7,761 | $12,435 | $4,903 | -37.60% | 58.29% | | Other expenses | $30,483 | $23,382 | $22,132 | 30.37% | 37.73% | | Total non-interest expense | $151,843 | $132,196 | $134,982 | 14.86% | 12.49% | - Total non-interest expense increased by $19.6 million (15%) quarter-over-quarter and $16.9 million (12%) year-over-year[214] - The current quarter included $10.7 million of non-interest expense from the Wheatland acquisition ($5.0 million operating, $5.7 million acquisition-related) and an additional $1.5 million FDIC special assessment[214] Efficiency Ratio The efficiency ratio increased significantly, reflecting higher operating costs, particularly from the Wheatland acquisition, and a decrease in net interest income Efficiency Ratio Trends | Period | Efficiency Ratio | | :----------------- | :--------------- | | Q1 2024 | 74.41% | | Q4 2023 | 65.20% | | Q1 2023 | 60.39% | - The efficiency ratio increased to 74.4% in Q1 2024 from 65.20% in Q4 2023 and 60.39% in Q1 2023, driven by increased operating costs from the Wheatland acquisition and a decrease in net interest income[217] Provision for Credit Losses for Loans Provision for credit losses on loans increased quarter-over-quarter and year-over-year, influenced by loan portfolio growth and the Wheatland acquisition, with net charge-offs also increasing compared to the prior year Provision for Credit Losses on Loans and Net Charge-Offs (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric | Q1 2024 (in thousands) | Q4 2023 (in thousands) | Q1 2023 (in thousands) | Change from Q4 2023 (%) | Change from Q1 2023 (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Provision for credit losses on loans | $9,091 | $4,181 | $6,260 | 117.44% | 45.22% | | Net Charge-Offs (Recoveries) | $3,072 | $3,695 | $1,939 | -16.86% | 58.43% | | ACL as a Percent of Loans | 1.19% | 1.19% | 1.20% | 0.00% | -0.83% | - Net charge-offs for Q1 2024 were $3.1 million, including $2.4 million in deposit overdrafts and $626 thousand in net loan charge-offs[218] - Excluding the Wheatland acquisition, the Q1 2024 provision for credit loss expense for loans was $3.8 million, a decrease from both prior periods[219] Additional Management's Discussion and Analysis Investment Activity Debt Securities The Company's debt securities portfolio, comprising available-for-sale (AFS) and held-to-maturity (HTM) securities, decreased in Q1 2024, with a significant portion of state and local government securities being investment grade Debt Securities Portfolio Composition (March 31, 2024) | Category | Carrying Amount (in thousands) | Percent of Total | | :-------------------------------- | :----------------------------- | :--------------- | | Available-for-sale | $4,629,073 | 58% | | Held-to-maturity | $3,451,583 | 42% | | Total debt securities | $8,080,656 | 100% | - The debt securities portfolio decreased by $207 million in Q1 2024 and $782 million (9%) year-over-year, representing 29% of total assets[198][199] - All state and local government securities in the HTM portfolio are investment grade, with the majority rated AAA/Aaa or AA+/Aa1-3 by S&P/Moody's[226] Equity Securities Non-marketable equity securities, primarily FHLB stock, are carried at cost less impairment, and the Company found no impairment as of March 31, 2024 - Non-marketable equity securities, mainly FHLB stock, are carried at cost less impairment and were not impaired as of March 31, 2024[231][232] Lending Activity Non-performing Assets Non-performing assets (NPAs) decreased slightly quarter-over-quarter and significantly year-over-year, but early stage delinquencies (30-89 days past due) increased, primarily due to one large credit relationship Non-performing Assets (March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Total non-performing assets | $25,425 | $25,631 | $31,979 | -0.80% | -20.50% | | Non-performing assets as a percentage of subsidiary assets | 0.09% | 0.09% | 0.12% | 0.00% | -25.00% | | Accruing loans 30-89 days past due | $62,423 | $49,967 | $24,993 | 24.93% | 149.76% | - Early stage delinquencies (30-89 days past due) increased by $12.5 million from the prior quarter and $37.4 million from the prior year, largely due to one $18.1 million credit relationship[235] Modifications to Borrowers Experiencing Financial Difficulty Loans modified for borrowers experiencing financial difficulty (MBFDs) had an amortized cost of $66.9 million at March 31, 2024, reflecting separately negotiated terms based on the borrower's ability to service obligations - Loans modified for borrowers experiencing financial difficulty (MBFDs) had an amortized cost of $66.9 million at March 31, 2024[237] Other Real Estate Owned and Foreclosed Assets The balance of Other Real Estate Owned (OREO) and foreclosed assets decreased in Q1 2024 due to sales, despite some additions from foreclosures Other Real Estate Owned (OREO) Activity (Three Months Ended March 31, 2024 vs. 2023) | Item | Mar 31, 2024 (in thousands) | Mar 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Balance at beginning of period | $1,503 | $32 | $1,471 | 4596.88% | | Additions | $16 | $8 | $8 | 100.00% | | Sales | $(629) | $(9) | $(620) | 6888.89% | | Balance at end of period | $891 | $31 | $860 | 2774.19% | Allowance for Credit Losses - Loans Receivable The Allowance for Credit Losses (ACL) for loans receivable increased, primarily due to loan portfolio growth and the Wheatland acquisition, with the ACL as a percentage of total loans remaining stable and deemed adequate by management ACL Allocation by Loan Segment (March 31, 2024) | Loan Segment | ACL (in thousands) | Percent of ACL in Category | Percent of Loans in Category | | :-------------------- | :----------------------------- | :------------------------- | :------------------------- | | Residential real estate | $24,166 | 12% | 11% | | Commercial real estate | $135,153 | 68% | 64% | | Other commercial | $22,094 | 11% | 18% | | Home equity | $10,999 | 6% | 5% | | Other consumer | $6,367 | 3% | 2% | | Total | $198,779 | 100% | 100% | - The ACL increased to $198.8 million at March 31, 2024, from $192.8 million at December 31, 2023, primarily due to loan portfolio growth and the Wheatland acquisition[240] - ACL as a percentage of total loans was 1.19% at March 31, 2024, consistent with December 31, 2023, and management deems it adequate[240] Loans by Regulatory Classification This section provides a breakdown of the Company's loan portfolio, non-performing assets, and charge-offs/recoveries based on regulatory classifications, highlighting changes in various loan categories and their credit quality Loans Receivable by Regulatory Classification (March 31, 2024 vs. December 31, 2023) | Loan Type | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | Total residential construction | $497,129 | $527,168 | $(30,039) | -5.70% | | Total commercial real estate | $6,978,044 | $6,778,684 | $199,360 | 2.94% | | Commercial and industrial | $1,371,201 | $1,363,479 | $7,722 | 0.57% | | Agriculture | $929,420 | $772,458 | $156,962 | 20.32% | | Total 1-4 family | $2,328,217 | $2,175,219 | $152,998 | 7.03% | | Multifamily residential | $881,117 | $796,538 | $84,579 | 10.62% | | Home equity lines of credit | $947,652 | $979,891 | $(32,239) | -3.29% | | Total loans receivable | $16,732,502 | $16,198,082 | $534,420 | 3.30% | Net Charge-Offs (Recoveries) by Regulatory Classification (YTD March 31, 2024) | Loan Type | Net Charge-Offs (Recoveries) (in thousands) | | :-------------------------------- | :---------------------------------------- | | Total residential construction | $(4) | | Total land, lot and other construction | $(2) | | Total commercial real estate | $(4) | | Commercial and industrial | $328 | | Agriculture | $68 | | Total 1-4 family | $(9) | | Multifamily residential | $0 | | Home equity lines of credit | $5 | | Other consumer | $251 | | Other | $2,439 | | Total | $3,072 | Sources of Funds Deposits Deposits remain the primary funding source, with total deposits increasing, while non-interest bearing deposits decreased as a percentage of total deposits and certificate accounts saw significant growth Deposit Composition (March 31, 2024 vs. December 31, 2023 vs. March 31, 2023) | Deposit Type | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Mar 31, 2023 (in thousands) | Change from Dec 31, 2023 (%) | Change from Mar 31, 2023 (%) | | :-------------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | | Non-interest bearing deposits | $6,055,069 | $6,022,980 | $7,001,241 | 0.53% | -13.51% | | NOW and DDA accounts | $5,376,605 | $5,321,257 | $5,156,709 | 1.04% | 4.26% | | Savings accounts | $2,949,908 | $2,833,887 | $2,985,351 | 4.10% | -1.19% | | Money market deposit accounts | $3,002,942 | $2,831,624 | $3,429,123 | 6.05% | -12.42% | | Certificate accounts | $3,039,190 | $2,915,393 | $1,155,494 | 4.25% | 162.94% | | Total deposits | $20,427,523 | $19,929,167 | $20,148,308 | 2.50% | 1.39% | - Non-interest bearing deposits constituted 30% of total deposits at March 31, 2024, down from 35% a year prior[257] Borrowings The Company utilizes repurchase agreements and FHLB advances as key borrowing sources, and in Q1 2024, repaid its $2.74 billion BTFP borrowings, primarily by increasing FHLB advances - The Company repaid $2.74 billion in BTFP borrowings in Q1 2024, primarily through $2.14 billion in FHLB borrowings and other liquidity sources[260] - New FHLB borrowings of $1.8 billion will mature between March 2025 and March 2026 at a weighted average rate of 4.75% (4.41% FHLB dividend adjusted)[260] Short-term borrowings Short-term borrowings are a critical component of the Company's liquidity, managed by the ALCO, with sources including FHLB advances, FRB facilities, federal funds, and repurchase agreements, offering options to convert to long-term borrowings - Short-term borrowing sources include FHLB advances, FRB Bank Term Funding facility, federal funds purchased, and retail/wholesale repurchase agreements, with options for long-term conversion[263] Subordinated Debentures Subordinated debentures, totaling $133 million at March 31, 2024, are issued in conjunction with trust preferred securities and are included in Tier 2 capital for regulatory purposes - Subordinated debentures amounted to $133 million at March 31, 2024, including fair value adjustments, and are included in Tier 2 capital for regulatory purposes[264] Contractual Obligations and Off-Balance Sheet Arrangements The Company has various off-balance sheet credit exposures, including unfunded loan commitments and letters of credit, for which an Allowance for Credit Losses (ACL) of $18.5 million is maintained and deemed adequate by management - The Company maintains an ACL of $18.5 million for off-balance sheet credit exposures, such as unfunded loan commitments, which management deems adequate[265] Liquidity Risk The Company actively manages liquidity risk to ensure sufficient funds for current and future obligations, monitoring liquid assets, borrowing capacity, and maintaining contingency funding plans, with ALCO regularly assessing these risks Liquidity Sources and Capacity (March 31, 2024 vs. December 31, 2023) | Item | Mar 31, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :--------- | | FHLB advances (Amount available) | $2,379,499 | $4,442,261 | $(2,062,762) | -46.43% | | FRB discount window (Amount available) | $1,935,875 | $1,916,312 | $19,563 | 1.02% | | FRB Bank Term Funding Program (Amount available) | $0 | $113,209 | $(113,209) | -100.00% | | Unsecured lines of credit available | $565,000 | $565,000 | $0 | 0.00% | | Total unencumbered debt securities | $4,175,348 | $1,808,636 | $2,366,712 | 130.86% | - The Company's available FHLB borrowing capacity decreased significantly due to increased utilization, while unencumbered debt securities more than doubled, enhancing liquidity[268] Capital Resources Maintaining capital strength is a key objective for the Company, supporting growth and providing protection against asset value declines, with both the Company and Bank meeting all regulatory capital adequacy requirements Glacier Bank Regulatory Capital Ratios (March 31, 2024) | Ratio | Glacier Bank Actual | Minimum Capital Requirements | Minimum + Capital Conservation Buffer | Well Capitalized Requirements | | :-------------------------------- | :------------------ | :--------------------------- | :------------------------------------ | :---------------------------- | | Total Capital (To Risk-Weighted Assets) | 13.86% | 8.00% | 10.50% | 10.00% | | Tier 1 Capital (To Risk-Weighted Assets) | 12.77% | 6.00% | 8.50% | 8.00% | | Common Equity Tier 1 (To Risk-Weighted Assets) | 12.77% | 4.50% | 7.00% | 6.50% | | Leverage Ratio/Tier 1 Capital (To Average Assets) | 8.88% | 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, phasing out the capital benefit over three years starting January 1, 2022[272] Federal and State Income Taxes The Company's effective tax rate decreased due to increased federal income tax credits and lower pre-tax income, benefiting from various tax credit programs including New Markets Tax Credits (NMTC) and Low-Income Housing Tax Credits (LIHTC) Federal and State Income Taxes (Three Months Ended March 31, 2024 vs. 2023) | Item | Mar 31, 2024 (in thousands) | Mar 31, 2023 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :--------- | | Income Before Income Taxes | $36,377 | $73,635 | $(37,258) | -50.59% | | Federal and state income tax expense | $3,750 | $12,424 | $(8,674) | -69.82% | | Net Income | $32,627 | $61,211 | $(28,584) | -46.70% | | Effective tax rate | 10.3% | 16.9% | -6.6% | -39.05% | - The effective tax rate decreased to 10.3% in Q1 2024 from 16.9% in Q1 2023, driven by increased federal income tax credits and a decrease in pre-tax income[275] Expected Federal Income Tax Credits (Total) | Year | Total (in thousands) | | :--------- | :------------------- | | 2024 | $29,906 | | 2025 | $32,625 | | 2026 | $32,404 | | 2027 | $30,465 | | 2028 | $25,994 | | Thereafter | $92,077 | | Total | $243,471 | Average Balance Sheet This section provides an average balance sheet analysis, detailing interest and dividend income for earning assets, average yields, interest expense on interest-bearing liabilities, average rates, net interest and dividend income, and net interest margin Average Balance Sheet and Yield/Rate Analysis (Three Months Ended March 31, 2024 vs. 2023) | Item | Mar 31, 2024 (Avg Balance, in thousands) | Mar 31, 2024 (Avg Yield/Rate) | Mar 31, 2023 (Avg Balance, in thousands) | Mar 31, 2023 (Avg Yield/Rate) | | :-------------------------------- | :------------------------------------- | :---------------------------- | :------------------------------------- | :---------------------------- | | Total earning assets | $26,441,342 | 4.31% | $25,170,999 | 3.82% | | Total interest bearing liabilities | $24,661,369 | 1.84% | $23,553,059 | 0.79% | | Net interest income (tax-equivalent) | N/A | $170,469 | N/A | $191,438 | | Net interest spread (tax-equivalent) | N/A | 2.47% | N/A | 3.03% | | Net interest margin (tax-equivalent) | N/A | 2.59% | N/A | 3.08% | Rate/Volume Analysis This analysis breaks down changes in net interest income into components attributable to changes in volume and changes in interest rates, showing that increased interest expense due to rate changes led to an overall decrease in net interest income Rate/Volume Analysis of Net Interest Income (Three Months Ended March 31, 2024 vs. 2023) | Item | Increase (Decrease) Due to Volume (in thousands) | Increase (Decrease) Due to Rate (in thousands) | Net Change (in thousands) | | :-------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------ | | Total interest income | $16,875 | $29,383 | $46,258 | | Total interest expense | $10,303 | $56,924 | $67,227 | | Net interest income (tax-equivalent) | $6,572 | $(27,541) | $(20,969) | - Net interest income (tax-equivalent) decreased by $21.0 million year-over-year, primarily due to a $56.9 million increase in interest expense driven by rate changes, which offset a $29.4 million increase in interest income from rate changes and $16.9 million from volume[283] Market Risk Market risk is defined as the potential for loss from adverse changes in market rates or prices, with the Company's primary exposure being interest rate risk - The Company's primary market risk exposure is interest rate risk, which is the potential for loss of future earnings from adverse changes in interest rates[284][285] Interest Rate Risk Net interest income simulation The Company uses a dynamic simulation model to quantify Net Interest Income (NII) exposure to sustained interest rate changes over one-year and two-year horizons, indicating NII sensitivity to both upward and downward rate movements Estimated NII Sensitivity to Rate Changes (March 31, 2024) | Rate Scenarios | One Year | Two Years | | :-------------- | :------- | :-------- | | -400 bp Rate ramp | (0.14%) | 1.18% | | -200 bp Rate ramp | 0.07% | 0.29% | | -200 bp Rate shock | (0.03%) | (0.53%) | | -100 bp Rate shock | 0.75% | 2.54% | | +100 bp Rate shock | (5.40%) | (4.04%) | | +200 bp Rate shock | (11.02%) | (8.24%) | | +200 bp Rate ramp | (6.63%) | (8.00%) | | +400 bp Rate ramp | (6.67%) | (12.25%) | - The simulation model shows that NII is negatively sensitive to rising interest rates, with a 100 bp rate shock resulting in a 5.40% decrease over one year and an 11.02% decrease for a 200 bp shock[288] Item 3 – Quantitative and Qualitative Disclosure about Market Risk This section refers to the 'Market Risk' discussion within Management's Discussion and Analysis for details on quantitative and qualitative disclosures about market risk - Quantitative and qualitative disclosures about market risk are provided in the 'Market Risk' section of Management's Discussion and Analysis of Financial Condition and Results of Operations[290] Item 4 – Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and states that there have been no material changes in internal control over financial reporting during the first quarter of 2024 Evaluation of Disclosure Controls and Procedures The CEO and CFO evaluated the Company's disclosure controls and procedures as of March 31, 2024, and concluded they are effective and timely - The Company's CEO and CFO concluded that disclosure controls and procedures were effective and timely as of March 31, 2024[291] Changes in Internal Controls No material changes in the Company's internal control over financial reporting occurred during the first quarter of 2024 - There have been no material changes in the Company's internal control over financial reporting during the first quarter of 2024[292] Part II. Other Information Item 1 – Legal Proceedings The Company is involved in various legal claims in the ordinary course of business, which management believes are adequately covered by insurance, lack merit, or would not materially affect the Company's financial condition or results of operations - Management believes that pending legal proceedings will not have a material adverse effect on the Company's financial condition, results of operations, or liquidity[294] Item 1A – Risk Factors The Company states that there have been no material changes to the risk factors previously disclosed in its 2023 Annual Report on Form 10-K and advises reviewing those risks, as additional unforeseen risks could also adversely affect the business - No material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K have occurred[295] Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds This item is marked as 'Not Applicable' for the reporting period - This item is not applicable for the reporting period[299] Item 3 – Defaults upon Senior Securities This item is marked as 'Not Applicable' for the reporting period - This item is not applicable for the reporting period[299] Item 4 – Mine Safety Disclosures This item is marked as 'Not Applicable' for the reporting period - This item is not applicable for the reporting period[298] Item 5 – Other Information This item is marked as 'None' for the reporting period - This item is marked as 'None' for the reporting period[300] Item 6 – Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, XBRL instance documents, and taxonomy extension documents - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32) and various XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[302] Signatures The report is signed by Randall M. Chesler, President and CEO, and Ron J. Copher, Executive Vice President and CFO, on May 7, 2024 - The report was signed by Randall M. Chesler, President and CEO, and Ron J. Copher, Executive Vice President and CFO, on May 7, 2024[305]