GLACIER BANCORP INC
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
GBCI$48.16-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0000868671-24-000064
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000868671-24-000084
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 166 previous paragraphs and 186 current paragraphs.
123 unchanged; 35 reworded; 25 added; 8 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 31 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
The loan portfolio of $16.852 billion at June 30, 2024 increased $119 million, or 3 percent annualized, during the current quarter and increased $897 million, or 6 percent, from the prior year second quarter. Excluding the Wheatland acquisition, the loan portfolio increased $204 million, or 3 percent annualized, during the first half of 2024 and increased $447 million, or 3 percent, from the prior year second quarter.
Current report
Non-interest income for the current quarter totaled $32.2 million, which was an increase of $2.2 million, or 7 percent, over the prior quarter and an increase of $3.1 million, or 11 percent, over the prior year second quarter. Service charges and other fees of $19.4 million for the current quarter increased $859 thousand, or 5 percent, compared to the prior quarter and increased $455 thousand, or 2 percent, compared to the prior year second quarter. Gain on the sale of residential loans of $4.7 million for the current quarter increased $1.3 million, or 39 percent, compared to the prior quarter and increased $1.1 million, or 32 percent, from the prior year second quarter.
Current report
Total non-interest expense of $141 million for the current quarter decreased $10.9 million, or 7 percent, over the prior quarter and increased $10.3 million, or 8 percent, over the prior year second quarter. Compensation and employee benefits of $84.4 million decreased $1.4 million from the prior quarter and was primarily driven by a decrease in performance-related compensation. Compensation and employee benefits increased $5.7 million, or 7 percent, from the prior year second quarter and was driven by annual salary increases and increases from the acquisition of Wheatland. Regulatory assessment and insurance of $5.4 million decreased $2.4 million, or 31 percent, from the prior quarter and was primarily attributable to the prior quarter accrual adjustment of the FDIC special assessment for the estimated losses associated with the bank failures in March of 2023.
Current report
Other expenses of $22.6 million decreased $7.9 million, or 26 percent, from the prior quarter which was primarily attributable to a $3.9 million decrease in acquisition-related expenses and a $2.5 million decrease in expenses associated with equity investments in tax credits.
Current report
Operating Results for Six Months Ended June 30, 2024
Current report
Compared to June 30, 2023
Current report
Income Summary
Current report
Net Interest Income
Current report
Net-interest income of $333 million for the first half of 2024 decreased $25.2 million, or 7 percent, over 2023 and was primarily driven by increased interest expense which outpaced the increase in interest income. Interest income of $553 million for 2024 increased $74.0 million, or 15 percent, from the prior year and was primarily attributable to the increase in the loan portfolio and an increase in loan yields. The loan yield was 5.52 percent during the first half of 2024, an increase of 45 basis points from the prior year first half loan yield of 5.07 percent.
Current report
Interest expense of $220 million for the first half of 2024 increased $99 million, or 82 percent, over the same period in the prior year and was primarily the result of higher interest rates on deposits. Core deposit cost (including non-interest bearing deposits) was 1.35 percent for the first six months of 2024 compared to 0.40 percent for the same period in the prior year. The total funding cost (including non-interest bearing deposits) for the first six months of 2024 was 1.82 percent, which was an increase of 79 basis points over the first six months of the prior year funding cost of 1.03 percent.
Current report
The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during the first half of 2024 was 2.64 percent, a 27 basis points decrease from the net interest margin of 2.91 percent for the first half of the prior year. Excluding the 3 basis points from discount accretion and 1 basis point from non-accrual interest, the core net interest margin was 2.60 percent in the first half of the current year compared to 2.90 percent in the prior year first half.
Current report
Non-interest Income
Current report
Non-interest income of $62.2 million for the first six months of 2024 increased $5.2 million, or 9 percent, over the same period last year. Gain on sale of residential loans of $8.0 million for the first six months of 2024 increased by $2.1 million, or 35 percent, over the first six months of the prior year.
Current report
Non-interest Expense
Current report
Total non-interest expense of $293 million for the first half of 2024 increased $27.2 million, or 10 percent, over the same period in the prior year. Compensation and employee benefits expense of $170 million in the first six months of 2024 increased $10.0 million, or 6 percent, over the same period in the prior year and was driven by annual salary increases and the acquisition of Wheatland. Data processing expenses of $18.5 million for the first half of 2024 increased $2.0 million, or 12 percent, from the same period in the prior year. Regulatory assessments and insurance expense of $13.2 million for the first half of 2024 increased $2.9 million, or 29 percent, over the same period in the prior year which was principally due to the accrual adjustment for the FDIC special assessment. Other expenses of $53.1 million for the first half of 2024 increased $9.8 million, or 23 percent, from the first half of the prior year and was primarily driven by an increase of $6.9 million of acquisition-related expenses, which was partially offset by gains of $2.5 million from the sale of former branch facilities and disposal of fixed assets.
Current report
Efficiency Ratio
Current report
The efficiency ratio was 71.17 percent for the first six months of 2024 compared to 61.52 percent for the same period of 2023. The increase from the prior year was primarily attributable to the increase in interest expense in the current year that outpaced the increase in interest income and increased non-interest expense.
Current report
Provision for Credit Losses
Current report
The provision for credit loss expense was $11.8 million for the first half of 2024, an increase of $3.5 million, or 43 percent, over the same period in the prior year and was primarily attributable to $5.3 million from the acquisition of Wheatland. Net charge-offs for the first half of 2024 were $6.0 million compared to $4.4 million in the first half of 2023.
Current report
The largest category of the Company’s loan portfolio is Commercial Real Estate (“CRE”). An additional breakdown of the Company’s CRE portfolio follows.
Current report
The following table summarizes the Company’s CRE portfolio by geographic location, including occupancy as of the dates indicated:
Current report
The CRE portfolio is comprised of loans made to purchase, construct and finance commercial real estate properties. On average, the balances are small and geographically disbursed across our eight-state footprint. Specifically, our CRE portfolio has an average loan balance of $777 thousand with an average loan-to-value ratio (“LTV”) of 59% as of June 30, 2024.
Current report
Due to the recent trends in the banking industry, there has been increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many large metropolitan areas continue to show signs of stress. The Company has limited exposure to the office building sector in central business districts as the office portfolio is generally diversified in suburban and rural markets with strong occupancy levels. The Company maintains a practice of regular and ongoing loan reviews, stress tests, and sensitivity analyses to assess the level of risk in the loan portfolio. Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTV’s, among other qualitative factors. Loan policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company.
Current report
The following table summarizes net charge-offs as a percentage of average loans for the periods indicated:
Current report
Average Balance Sheet - continued
Removed paragraphs (8)
Previous report
During the current quarter, the Company announced the signing of a purchase and assumption agreement to purchase six Montana branches from the Rocky Mountain Bank division of HTLF. The branches will join Glacier Bank divisions operating in Montana. The branch acquisition is subject to regulatory approvals and other customary conditions of closing and is expected to be completed in the third quarter of 2024.
Previous report
The loan portfolio of $16.733 billion at March 31, 2024 increased $534 million, or 3 percent, during the current quarter and increased $1.214 billion, or 8 percent, from the prior year. Excluding the Wheatland acquisition, the loan portfolio increased $84.0 million, or 2 percent annualized, with the largest increase in commercial real estate, which increased $63.9 million, or 2 percent annualized. Excluding the Wheatland acquisition, the loan portfolio increased $763 million, or 5 percent, from the prior year first quarter with the largest increase in commercial real estate loans, which increased $375 million, or 4 percent.
Previous report
Non-interest income for the current quarter totaled $30.0 million, which was a decrease of $876 thousand, or 3 percent, over the prior quarter. Gain on the sale of residential loans of $3.4 million for the current quarter increased $1.1 million, or 51 percent, compared to the prior quarter and increased $962 thousand, or 40 percent, from the prior year first quarter. Included in the prior quarter gain on sale of securities was $1.7 million of gain on the sale of all of the Company’s Visa class B shares.
Previous report
Total non-interest expense of $152 million for the current quarter increased $19.6 million, or 15 percent, over the prior quarter and increased $16.9 million, or 12 percent, over the prior year first quarter. In the prior quarter, the FDIC issued a special assessment for the estimated losses associated with the bank failures in March of 2023 of $6.0 million and FDIC loss estimates were again increased in the current quarter resulting in an additional assessment of $1.5 million. Also included in the current quarter was a total of $10.7 million of non-interest expense associated with the Wheatland acquisition, including $5.0 million in operating expenses and $5.7 million in acquisition-related expenses. Excluding the $10.7 million impact of the Wheatland acquisition and the $1.5 million FDIC special assessment, non-interest expense for the current quarter was $139.6 million. Excluding the $6.0 million FDIC special assessment, $459 thousand of acquisition-related expenses, and a $6.0 million reduction in accrued performance-related compensation, non-interest expense for the prior quarter was $131.7 million. As adjusted, total non-interest expense of $139.6 million for the current quarter increased $7.9 million, or 6 percent, over the prior quarter adjusted non-interest expense of $131.7 million, and an increase of $5.0 million, or 4 percent, over the prior year first quarter.
Previous report
Compensation and employee benefits expense of $85.8 million for the current quarter increased $14.4 million, or 20 percent, from the prior quarter and increased $4.3 million, or 5 percent, over the prior year first quarter which was driven by the acquisition of Wheatland, annual salary increases and increases in other benefits. Excluding the prior quarter $6.0 million accrual reduction and the $2.2 million compensation from the Wheatland acquisition, compensation and employee benefit expenses for the current quarter increased $6.2 million, or 8 percent over the prior quarter.
Previous report
Other expense of $30.5 million increased $7.1 million, or 30 percent, from the prior quarter and increased $8.4 million from the prior year first quarter with both increases primarily attributable to increased acquisition-related expenses. Included in other expenses was acquisition-related expenses of $5.7 million in the current quarter, $459 thousand in the prior quarter and $352 thousand in the prior year first quarter.
Previous report
Excluding the acquisition of Wheatland, the current quarter provision for credit loss expense for loans was $3.8 million, which was a decrease of $361 thousand from the prior quarter and a $2.4 million decrease from the prior year first quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, economic forecasts and other environmental factors will continue to determine the level of the provision for credit losses for loans.
Previous report
On January 1, 2020, the Company adopted the current expected credit losses (“CECL”) accounting standard that requires management’s estimate of credit losses over the expected contractual lives of the Company's relevant financial assets. On March 27, 2020, in response to the COVID-19 pandemic, federal banking regulators issued an interim final rule to delay for two years the initial adoption impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during 2020 and 2021 (i.e., a five-year transition period). The Company has elected to utilize the five-year transition period. During the two-year delay, the Company added back to Common Tier 1 capital 100 percent of the initial adoption impact of CECL plus 25 percent of the cumulative quarterly changes in ACL (i.e., quarterly transitional amounts). Starting on January 1, 2022, the quarterly transitional amounts along with the initial adoption impact of CECL is being phased out of Common Tier 1 capital evenly over a three-year period.
Reworded paragraphs (35)
Previous wording
The following management’s discussion and anlaysis is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in “Part I. Item 1. Financial Statements.”
Current wording
The following management’s discussion and analysis is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in “Part I. Item 1. Financial Statements.”
Previous wording
•legislative or regulatory changes, including increased FDIC insurance rates and assessments, changes in the review and regulation of bank mergers, or increased banking and consumer protection regulations, that may adversely affect the Company’s business and strategies;
Current wording
•legislative or regulatory changes, including increased FDIC insurance rates and assessments, changes in the review and regulation of banks and bank mergers, or increased banking and consumer protection regulations, that may adversely affect the Company’s business and strategies;
Previous wording
•changes in the competitive landscape, including as may result from new market entrants or further consolidation in the financial services industry, resulting in the creation of larger competitors with greater financial resources;
Current wording
•changes in the competitive landscape, including as may result from new market entrants or technologies or further consolidation in the financial services industry, which may result in the creation or further growth of larger competitors or new market entrants with greater financial resources;
Previous wording
•risks presented by continued public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow through acquisitions;
Current wording
•risks presented by public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow through acquisitions;
Previous wording
•success in managing risks involved in the foregoing; and
Current wording
•risks associated with managing risks involved in the foregoing; and
Previous wording
The Company reported net income of $32.6 million for the current quarter, a decrease of $28.6 million, or 47 percent, from the $61.2 million of net income for the prior year first quarter. Diluted earnings per share for the current quarter was $0.29 per share, a decrease of 47 percent from the prior year first quarter diluted earnings per share of $0.55. The decrease in net income compared to the prior year first quarter was primarily due to the significant increase in funding costs over the year combined with the increased costs associated with the acquisition of Wheatland Bank. The current quarter included $5.7 million of acquisition-related expense and $6.1 million of credit loss expense from the acquisition of Wheatland Bank. Included in the current quarter non-interest expense was $1.5 million related to the FDIC increased loss estimates from the special assessment pursuant to a systemic risk determination.
Current wording
The Company reported net income of $44.7 million for the current quarter, an increase of $12.1 million, or 37 percent from the prior quarter net income of $32.6 million and a decrease of $10.2 million, or 19 percent, from the $55.0 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.39 per share, an increase of 34 percent from the prior quarter diluted earnings per share of $0.29 per share and a decrease of 22 percent from the prior year second quarter diluted earnings per share of $0.50. The decrease in net income compared to the prior year second quarter was primarily due to the significant increase in funding costs over the prior year second quarter combined with the increased costs associated with the acquisition of Wheatland.
Previous wording
The $789 million cash balance at March 31, 2024 decreased $566 million during the current quarter as cash was utilized to partially fund the maturity of the Bank Term Funding Program (“BTFP”). Total debt securities of $8.081 billion at March 31, 2024 decreased $207 million during the current quarter and decreased $782 million, or 9 percent, from the prior year. Debt securities represented 29 percent of total assets at March 31, 2024 compared to 30 percent at December 31, 2023 and 32 percent at March 31, 2023.
Current wording
The $801 million cash balance at June 30, 2024 decreased $554 million from the prior year end as cash was utilized to partially fund the maturity of the BTFP at the end of the prior quarter. Total debt securities of $7.900 billion at June 30, 2024 decreased $181 million, or 2 percent, during the current quarter and decreased $708 million, or 8 percent, from the prior year second quarter. Debt securities represented 28 percent of total assets at June 30, 2024 compared to 30 percent at December 31, 2023 and 31 percent at June 30, 2023.
Previous wording
Total deposits of $20.428 billion at March 31, 2024 increased $498 million, or 3 percent, during the current quarter and increased $279 million, or 1 percent, from the prior year first quarter. Excluding the Wheatland acquisition, total deposits decreased $119 million, or 1 percent, during the current quarter and decreased $338 million, or 2 percent, from the prior year first quarter. Non-interest bearing deposits represented 30 percent of total deposits at both March 31, 2024 and December 31, 2023 compared to 35 percent at March 31, 2023.
Current wording
Total core deposits of $20.099 billion at June 30, 2024 decreased $325 million, or 2 percent, during the current quarter and increased $569 million, or 3 percent, from the prior year second quarter. Excluding the Wheatland acquisition, total core deposits decreased $48.0 million, or 25 basis points, from the prior year second quarter. Non-interest bearing deposits of $6.093 billion increased $38.4 million, or 3 percent annualized, during the current quarter. Non-interest bearing deposits represented 30 percent of total deposits at both June 30, 2024 and December 31, 2023 compared to 32 percent at June 30, 2023.
Previous wording
Upon maturity in the current quarter, the Company paid off its $2.740 billion BTFP borrowings with a combination of $2.140 billion in FHLB borrowings and cash, resulting in a net reduction of $600 million in borrowings. The FHLB borrowings of $2.140 billion at quarter end included $340 million of overnight borrowings and $1.800 billion in term borrowings that will mature between March of 2025 and March of 2026 at a weighted average rate of 4.75 percent and a FHLB dividend adjusted weighted average rate of 4.41 percent compared to 4.38 percent for the matured BTFP borrowings.
Current wording
FHLB borrowings of $2.350 billion increased $210 million, or 10 percent, during the quarter. Upon maturity in the prior quarter, the Company paid off its $2.740 billion BTFP borrowings with a combination of $2.140 billion in FHLB borrowings and cash. See “Additional Management’s Discussion and Analysis - Source of Funds - Borrowers” for additional information regarding borrowings.
Previous wording
Tangible stockholders’ equity of $2.041 billion at March 31, 2024 increased $37.9 million, or 2 percent, compared to the prior quarter and was primarily due to $92.4 million of Company common stock issued for the acquisition of Wheatland. The increase was partially offset by the increase in goodwill and core deposits associated the acquisition of Wheatland. Tangible book value per common share of $18.00 at the current quarter end decreased $0.06 per share, or 33 basis points, from the prior quarter and increased $0.84 per share, or 5 percent, from the prior year first quarter.
Current wording
Tangible stockholders’ equity of $2.071 billion at June 30, 2024 increased $67.6 million, or 3 percent, compared to the prior year end and was primarily due to $92.4 million of Company common stock issued for the acquisition of Wheatland. The increase was partially offset by the increase in goodwill and core deposits associated with the acquisition of Wheatland. Tangible book value per common share of $18.26 at the current quarter end increased $0.20 per share, or 1 percent, from the prior year end and increased $1.08 per share, or 6 percent, from the prior year second quarter.
Previous wording
On March 27, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share. The current quarter dividend of $0.33 per share was consistent with the dividend declared in the prior quarter and the prior year first quarter. The dividend was payable April 18, 2024 to shareholders of record on April 9, 2024. The dividend was the Company’s 156th consecutive regular dividend. Future cash dividends will depend on a variety of factors, including net income, capital levels, asset quality, general economic conditions and regulatory considerations.
Current wording
On June 25, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share. The current quarter dividend of $0.33 per share was consistent with the dividend declared in the prior quarter and the prior year second quarter. The dividend was payable July 18, 2024 to shareholders of record on July 9, 2024. The dividend was the Company’s 157th consecutive regular dividend. Future cash dividends will depend on a variety of factors, including net income, capital levels, asset quality, general economic conditions and regulatory considerations.
Previous wording
The current quarter interest income of $279 million increased $5.9 million, or 2 percent, over the prior quarter and increased $47.5 million, or 20 percent, from the prior year first quarter. Both increases were primarily driven by the increase in the loan yields and the increase in average balances of the loan portfolio. The loan yield of 5.46 percent in the current quarter increased 12 basis points from the prior quarter loan yield of 5.34 percent and increased 44 basis points from the prior year first quarter loan yield of 5.02 percent.
Current wording
The current quarter interest income of $274 million decreased $5.6 million, or 2 percent, over the prior quarter and was driven by the decrease in cash balances used to partially pay off of the BTFP borrowings at the end of the first quarter of the current year. The current quarter interest income increased $26.5 million, or 11 percent, from the prior year second quarter was due to the increase in the loan yields and the increase in average balances of the loan portfolio. The loan yield of 5.58 percent in the current quarter increased 12 basis points from the prior quarter loan yield of 5.46 percent and increased 46 basis points from the prior year second quarter loan yield of 5.12 percent.
Previous wording
The current quarter interest expense of $113 million increased $5.9 million, or 6 percent, over the prior quarter and increased $67.2 million, or 147 percent, over the prior year first quarter primarily the result of an increase in rates on deposits and borrowings. Core deposit cost (including non-interest bearing deposits) was 1.34 percent for the current quarter compared to 1.24 percent in the prior quarter and 0.23 percent for the prior year first quarter. The increase in core deposit costs during the current quarter of 10 basis points was the smallest increase since the fourth quarter of 2022. The total cost of funding (including non-interest bearing deposits) was 1.84 percent in the current quarter compared to 1.72 percent in the prior quarter and 0.79 percent in the prior year first quarter, which was the result of the increased deposit and borrowing rates.
Current wording
The current quarter interest expense of $107 million decreased $5.6 million, or 5 percent, over the prior quarter and was primarily attributable to the payoff of the BTFP borrowings. The current quarter interest expense increased $32.0 million, or 42 percent, over the prior year second quarter primarily the result of an increase in rates on deposits and borrowings. Core deposit cost (including non-interest bearing deposits) was 1.36 percent for the current quarter compared to 1.34 percent in the prior quarter and 0.57 percent for the prior year second quarter. The total cost of funding (including non-interest bearing deposits) of 1.80 percent in the current quarter decreased 4 basis points from the prior quarter which was driven by the decrease in borrowings. The current quarter cost of funds increased 54 basis points from the prior year second quarter which was the result of the increased deposit rates.
Previous wording
The current quarter experienced an increase in the net interest margin for the first time since the third quarter of 2022. The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 2.59 percent compared to 2.56 percent in the prior quarter and was primarily driven by the increase in loan yields outpacing the increase in deposit costs. Excluding the 3 basis points from discount accretion and the 1 basis point from recovery of non-accrual interest, the core net interest margin was 2.55 percent compared to 2.54 in the prior quarter and 3.07 percent in the prior year first quarter.
Current wording
The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 2.68 percent, an increase of 9 basis points from the prior quarter net interest margin of 2.59 percent and was primarily driven by a decrease in average cash and wholesale funding balances resulting from the payoff of BTFP borrowings at the end of the first quarter of 2024 as well as an increase in loan yields. Excluding the 4 basis points from discount accretion and 1 basis point from non-accrual interest, the core net interest margin was 2.63 percent in the current quarter compared to 2.55 percent in the prior quarter.
Previous wording
The efficiency ratio was 74.4 percent in the current quarter compared to 65.20 percent in the prior quarter and 60.39 percent in the prior year first quarter. The increase from the prior quarter was principally driven by the increased operating costs, including acquisition-related costs, from the Wheatland acquisition. The increase in the efficiency ratio from prior year first quarter was the combined impact of the expenses related to the Wheatland acquisition and a decrease in net interest income.
Current wording
The efficiency ratio was 67.97 percent in the current quarter compared to 74.41 percent in the prior quarter and 62.73 percent in the prior year second quarter. The decrease from the prior quarter was principally driven by the decreased operating costs, including acquisition-related costs, from the Wheatland acquisition. The increase in the efficiency ratio from prior year second quarter was the combined impact of the expenses related to the Wheatland acquisition and a decrease in net interest income.
Previous wording
Net charge-offs for the current quarter were $3.1 million compared to $3.7 million in the prior quarter and $1.9 million for the prior year first quarter. Net charge-offs of $3.1 million included $2.4 million in deposit overdraft net charge-offs and $626 thousand of net loan charge-offs.
Current wording
Net charge-offs for the current quarter were $2.9 million compared to $3.1 million in the prior quarter and $2.5 million for the prior year second quarter. Net charge-offs of $2.9 million included $2.2 million in deposit overdraft net charge-offs and $716 thousand of net loan charge-offs.
Previous wording
The Company’s investment securities primarily consist of debt securities classified as either available-for-sale or held-to-maturity. Non-marketable equity securities consist of capital stock issued by the FHLB of Des Moines.
Current wording
The Company’s investment securities primarily consist of debt securities classified as either available-for-sale or held-to-maturity. Non-marketable equity securities primarily consist of capital stock issued by the FHLB of Des Moines.
Previous wording
Non-performing assets of $25.4 million at March 31, 2024 decreased $206 thousand, or 1 percent, over the prior quarter and decreased $6.6 million, or 20 percent, over the prior year first quarter. Non-performing assets as a percentage of subsidiary assets at March 31, 2024 was 0.09 percent compared to 0.09 percent in the prior quarter and 0.12 percent in the prior year first quarter.
Current wording
Non-performing assets of $18.0 million at June 30, 2024 decreased $7.4 million, or 29 percent, over the prior quarter and decreased $14.0 million, or 44 percent, over the prior year second quarter. Non-performing assets as a percentage of subsidiary assets at June 30, 2024 was 0.06 percent compared to 0.09 percent in the prior quarter and 0.12 percent in the prior year second quarter.
Previous wording
Early stage delinquencies (accruing loans 30-89 days past due) of $62.4 million at March 31, 2024 increased $12.5 million from the prior quarter and increased $37.4 million from prior year first quarter. The increase over the prior period was primarily isolated to one credit relationship of $18.1 million. Early stage delinquencies as a percentage of loans at March 31, 2024 were 0.37 percent compared to 0.31 percent for the prior quarter end and 0.16 percent for the prior year first quarter.
Current wording
Early stage delinquencies (accruing loans 30-89 days past due) of $49.7 million at June 30, 2024 decreased $12.7 million from the prior quarter and increased $24.8 million from the prior year second quarter. Early stage delinquencies as a percentage of loans at June 30, 2024 were 0.29 percent compared to 0.37 percent for the prior quarter end and 0.16 percent for the prior year second quarter.
Previous wording
Modifications to borrowers experiencing financial difficulties are considered modification if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. Each debt modification is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service their obligations as modified. Such loans at March 31, 2024 had an amortized cost of $66.9 million.
Current wording
The company identifies modifications to borrowers experiencing financial difficulty (“MBFD”) as a loan that has been modified for the borrower that is experiencing financial difficulties. The Company considers some of the indicators that a borrower is experiencing financial difficulty to be: currently in payment default on any of their debt, declaring bankruptcy, going concern, borrower’s securities have been delisted, and other indicators of inability to meet obligations. Each debt modification is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service their obligations as modified. Such loans at June 30, 2024 had an amortized cost of $50.5 million.
Previous wording
The book value of loans prior to the acquisition of collateral and transfer of the loans into other real estate owned (“OREO”) and other foreclosed assets during 2024 was $35 thousand. The fair value of the loan collateral acquired in foreclosure during 2024 was $16 thousand. The following table sets forth the changes in OREO for the periods indicated:
Current wording
The book value of loans prior to the acquisition of collateral and transfer of the loans into other real estate owned (“OREO”) and other foreclosed assets during 2024 was $180 thousand. The fair value of the loan collateral acquired in foreclosure during 2024 was $104 thousand. The following table sets forth the changes in OREO for the periods indicated:
Previous wording
The current quarter credit loss expense of $8.2 million included $5.3 million of provision for credit losses on loans and $818 thousand of provision for credit loss on unfunded loan commitments from the acquisition of Wheatland. Excluding the acquisition of Wheatland, the current quarter credit loss expense was $2.1 million, including a $3.8 million credit loss expense from loans and $1.7 million of credit loss benefit from unfunded loan commitments. The ACL as a percentage of total loans outstanding at March 31, 2024 and December 31, 2023 was 1.19 percent compared to 1.20 percent at March 31, 2023. The Company’s ACL of $199 million is considered adequate to absorb the estimated credit losses from any segment of its loan portfolio. For the periods ended March 31, 2024 and 2023, the Company believes the ACL is commensurate with the risk in the Company’s loan portfolio and is directionally consistent with the change in the quality of the Company’s loan portfolio.
Current wording
The current quarter credit loss expense of $3.5 million included $5.1 million of credit loss expense from loans and $1.6 million of credit loss benefit from unfunded loan commitments. For the first half of the current year, the provision for credit losses included $5.3 million of provision for credit losses on loans and $818 thousand of provision for credit losses on unfunded loan commitments from the acquisition of Wheatland. The Company’s ACL of $201 million is considered adequate to absorb the estimated credit losses from any segment of its loan portfolio. For the periods ended June 30, 2024 and 2023, the Company believes the ACL is commensurate with the risk in the Company’s loan portfolio and is directionally consistent with the change in the quality of the Company’s loan portfolio.
Previous wording
The Company provides commercial banking services to individuals, small to medium-sized businesses, community organizations and public entities from 232 locations, including 198 branches, across Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada. The states in which the Company operates have diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the changes in the global, national, and local economies are not uniform across the Company’s geographic locations. The geographic dispersion of these market areas helps to mitigate the risk of credit loss. The Company’s model of seventeen bank divisions with separate management teams is also a significant benefit in mitigating and managing the Company’s credit risk. This model provides substantial local oversight to the lending and credit management function and requires multiple reviews of larger loans before credit is extended.
Current wording
The Company provides commercial banking services to individuals, small to medium-sized businesses, community organizations and public entities from 231 locations, including 195 branches, across Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada. The states in which the Company operates have diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the changes in the global, national, and local economies are not uniform across the Company’s geographic locations. The geographic dispersion of these market areas helps to mitigate the risk of credit loss. The Company’s model of seventeen bank divisions with separate management teams is also a significant benefit in mitigating and managing the Company’s credit risk. This model provides substantial local oversight to the lending and credit management function and requires multiple reviews of larger loans before credit is extended.
Previous wording
The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process of identifying non-performing loans is necessary to support management’s evaluation of the ACL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer and management’s evaluation of the loan portfolio credit quality. The ACL evaluation is well documented and approved by the Company’s Board. In addition, the policy and procedures for determining the balance of the ACL are reviewed annually by the Company’s Board, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.
Current wording
The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process of identifying non-performing loans is necessary to support management’s evaluation of the ACL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer’s and management’s evaluation of the loan portfolio credit quality. The ACL evaluation is well documented and approved by the Company’s Board. In addition, the policy and procedures for determining the balance of the ACL are reviewed annually by the Company’s Board, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.
Previous wording
During the first quarter 2023, the Federal Reserve Bank (“FRB”) offered a new Bank Term Funding Program (“BTFP”) to eligible depository institutions. The BTFP offered loans of up to one year in length to institutions pledging collateral eligible for purchase by the FRB in open market operations such as U.S. Treasuries, U.S. Agency securities, and U.S. agency mortgage-backed securities. These assets were valued at par value. During 2023 the Company borrowed $2.740 billion from the BTFP which enabled the Company to pay off higher rate FHLB advances and support its liquidity position. In the first quarter of 2024, the Company paid-off all of the BTFP borrowings through a combination of the FHLB borrowings and additional sources of liquidity. The FHLB borrowings will mature between March 2025 and March 2026 at a weighted rate of 4.75 percent and a FHLB dividend adjusted weighted rate of 4.41 percent.
Current wording
During the first quarter 2023, the Federal Reserve Bank (“FRB”) offered a new Bank Term Funding Program (“BTFP”) to eligible depository institutions. The BTFP offered loans of up to one year in length to institutions pledging collateral eligible for purchase by the FRB in open market operations such as U.S. Treasuries, U.S. Agency securities, and U.S. agency mortgage-backed securities. These assets were valued at par value. During 2023 the Company borrowed $2.740 billion from the BTFP which enabled the Company to pay off higher rate FHLB advances and support its liquidity position. In the first quarter of 2024, the Company paid-off all of the BTFP borrowings through a combination of the FHLB borrowings and additional sources of liquidity.
Previous wording
A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by the Bank’s Asset Liability Committee (“ALCO”) such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, FRB Bank Term Funding facility, federal funds purchased and retail and wholesale repurchase agreements. The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the FRB as well as a line of credit with a large national banking institution. FHLB advances and certain other short-term borrowings may be renewed as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased cost of funds and other risks.
Current wording
A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by the Bank’s Asset Liability Committee (“ALCO”) such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, federal funds purchased and retail and wholesale repurchase agreements. The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the FRB as well as a line of credit with a large national banking institution. FHLB advances and certain other short-term borrowings may be renewed as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased cost of funds and other risks.
Previous wording
In the normal course of business, there may be various outstanding commitments to obtain funding and to extend credit, such as letters of credit and unfunded loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. The Company assessed the off-balance sheet credit exposures as of March 31, 2024 and determined its ACL of $18.5 million was adequate to absorb the estimated credit losses.
Current wording
In the normal course of business, there may be various outstanding commitments to obtain funding and to extend credit, such as letters of credit and unfunded loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. The Company assessed the off-balance sheet credit exposures as of June 30, 2024 and determined its ACL of $16.9 million was adequate to absorb the estimated credit losses.
Previous wording
1 Total unencumbered debt securities at March 31, 2024, included $2.3 billion classified as AFS and $1.9 billion classified as HTM. Total unencumbered debt securities at December 31, 2023, included $441.5 million classified as AFS, and $1.4 billion classified as HTM.
Current wording
1 Total unencumbered debt securities at June 30, 2024, included $2.0 billion classified as AFS and $1.8 billion classified as HTM. Total unencumbered debt securities at December 31, 2023, included $441.5 million classified as AFS, and $1.4 billion classified as HTM.
Previous wording
Maintaining capital strength continues to be a long-term objective of the Company. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. The Company has the capacity to issue 234,000,000 shares of common stock of which 113,388,590 have been issued as of March 31, 2024. The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none have been issued as of March 31, 2024. Conversely, the Company may decide to utilize a portion of its strong capital position, as it has done in the past, to repurchase shares of its outstanding common stock, depending on market price and other relevant considerations.
Current wording
Maintaining capital strength continues to be a long-term objective of the Company. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. The Company has the capacity to issue 234,000,000 shares of common stock of which 113,394,092 have been issued as of June 30, 2024. The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none have been issued as of June 30, 2024. Conversely, the Company may decide to utilize a portion of its strong capital position, as it has done in the past, to repurchase shares of its outstanding common stock, depending on market price and other relevant considerations.
Previous wording
Tax expense during the first quarter of 2024 was $3.8 million, a decrease of $4.0 million, or 52 percent, compared to the prior quarter and a decrease of $8.7 million, or 70 percent, from the prior year first quarter. The effective tax rate in the current quarter was 10.3 percent compared to 12.6 percent in the prior quarter and 16.9 percent in the prior year first quarter. The current quarter decrease in tax expense and the resulting effective tax rate was the result of a combination of increased federal income tax credits and a decrease in pre-tax income.
Current wording
Tax expense of $13.3 million for the first six months of 2024 decreased $11.9 million, or 47 percent, over the prior year. The effective tax rate for the first six months of 2024 was 14.6 percent compared to 17.8 percent for the same period in the prior year. The decrease in tax expense and the resulting effective tax rate was the result of a combination of increased federal tax credits and a decrease in the pre-tax income.
Previous wording
1 Includes tax effect of $1.6 million and $1.8 million on tax-exempt municipal loan and lease income for the three months ended March 31, 2024, and 2023, respectively.
Current wording
1 Includes tax effect of $1.6 million and $3.2 million on tax-exempt municipal loan and lease income for the six months ended June 30, 2024, and 2023, respectively.
Previous wording
3 Includes tax effect of $2.2 million and $3.3 million on tax-exempt debt securities income for the three months ended March 31, 2024, and 2023, respectively.
Current wording
3 Includes tax effect of $2.2 million and $4.4 million on tax-exempt debt securities income for the six months ended June 30, 2024, and 2023, respectively.
Previous wording
4 Includes interest income of $15.3 million and $2.1 million on average interest-bearing cash balances of $1.12 billion and $176.9 million for the three months ended March 31, 2024, and 2023, respectively.
Current wording
4 Includes interest income of $1.9 million and $2.1 million on average interest-bearing cash balances of $143.0 million and $176.9 million for the three months ended June 30, 2024, and 2023, respectively.
Previous wording
5 Includes tax effect of $215 thousand and $215 thousand on federal income tax credits for the three months ended March 31, 2024, and 2023, respectively.
Current wording
5 Includes tax effect of $211 thousand and $426 thousand on federal income tax credits for the six months ended June 30, 2024, and 2023, respectively.
Previous wording
Net interest income (tax-equivalent) decreased $21.0 million for the three months ended March 31, 2024 compared to the same period in 2023. The interest income for the first three months of 2024 increased over the same period last year primarily from loan growth and increased loan yields. The increase in interest expense for the first three months of 2023 was primarily the result of an increase in interest rates.
Current wording
Net interest income (tax-equivalent) decreased $25.7 million for the six months ended June 30, 2024 compared to the same period in 2023. The interest income for the first six months of 2024 increased over the same period last year primarily from loan growth and increased loan yields. The increase in interest expense for the first six months of 2023 was primarily the result of an increase in interest rates.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The current quarter credit loss expense of $3.5 million included $5.1 million of credit loss expense from loans and $1.6 million of credit loss benefit from unfunded loan commitments. For the first half of the current year, the provision for credit losses included $5.3 million of provision for credit losses on loans and $818 thousand of provision for credit losses on unfunded loan commitments from the acquisition of Wheatland.
Current report — wording carried from elsewhere
The following table summarizes income for the periods indicated:
Current report — wording carried from elsewhere
The following table summarizes non-interest expense for the periods indicated: