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Press release from GlobeNewswire (a Nasdaq OMX company)

Glacier Bancorp, Inc. Announces Results for the Quarter Ended June 30, 2012

Thursday, July 26, 2012

Glacier Bancorp, Inc. Announces Results for the Quarter Ended June 30, 201213:15 EDT Thursday, July 26, 2012 HIGHLIGHTS: All time record earnings for the current quarter of $19.0 million, an increase of 60 percent from the prior year second quarter. Current quarter diluted earnings per share of $0.26, an increase of 53 percent from the prior year second quarter. Annualized return on average equity was 8.69 percent for the current quarter compared to 5.54 percent for the prior year second quarter. Loan portfolio increased $12.0 million, or 1 percent annualized, during the current quarter. Non-interest deposits increased $27.6 million, or 11 percent annualized, during the current quarter from the prior quarter. Non-interest income increased $1.5 million, or 7 percent, during the current quarter compared to the prior quarter. Converted eleven bank charters into eleven bank divisions. Dividend declared of $0.13 per share during the quarter. Results Summary         Three Months ended Six Months ended (Dollars in thousands, except per share data) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011           Net income  $ 18,981  11,886  35,314  22,171 Diluted earnings per share  $ 0.26  0.17  0.49  0.31 Return on average assets (annualized) 1.04% 0.69% 0.97% 0.66% Return on average equity (annualized) 8.69% 5.54% 8.14% 5.25%           KALISPELL, Mont., July 26, 2012 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income for the current quarter of $19.0 million, an increase of $7.1 million, or 60 percent, compared to $11.9 million for the prior year second quarter. The earnings improvement for the current quarter and the first half of 2012 was reflective of the reduction in the provision for loan losses as a result of the improvement in the credit quality. Diluted earnings per share for the current quarter was $0.26 per share, an increase of 53 percent from the prior year second quarter earnings per share of $0.17. "This was our best quarter ever from an earnings perspective and the highest return on average assets since March 2009," said Mick Blodnick, President and Chief Executive Officer. "In addition, loans also grew in the quarter for the first time in three years. We also achieved great growth in both the number and balances of our checking accounts, something our staff works very hard at," Blodnick said. "Unfortunately, our net interest margin continues to contract as the premium amortization continues to cause a significant decrease to our margin. We were wrong in assuming that by now refinance activity would have slowed. Instead, the quarter saw a substantial increase in the refinancing index which caused the much higher premium amortization and much more pressure on our net interest margin," Blodnick said. Net income for the six months ended June 30, 2012 was $35.3 million, which was an increase of $13.1 million, or 59 percent, over the prior year first six months. Diluted earnings per share of $0.49 was an increase of $0.18, or 58 percent, earned in the first half of 2011.  During the current quarter, the Company combined its eleven bank subsidiaries into eleven bank divisions under one bank charter. The bank subsidiaries now operate as separate divisions of Glacier Bank under the same names and management teams as before the combination.    Asset Summary                     $ Change from $ Change from   June 30, December 31, June 30, December 31, June 30, (Unaudited - Dollars in thousands) 2012 2011 2011 2011 2011             Cash and cash equivalents  $ 140,419  128,032  129,041  12,387  11,378 Investment securities, available-for-sale  3,404,282  3,126,743  2,784,415  277,539  619,867 Loans receivable           Residential real estate  525,551  516,807  527,808  8,744  (2,257) Commercial   2,293,876  2,295,927  2,390,388  (2,051)  (96,512) Consumer and other  625,769  653,401  683,615  (27,632)  (57,846) Loans receivable  3,445,196  3,466,135  3,601,811  (20,939)  (156,615) Allowance for loan and lease losses  (137,459)  (137,516)  (139,795)  57  2,336 Loans receivable, net  3,307,737  3,328,619  3,462,016  (20,882)  (154,279)             Other assets  581,664  604,512  602,848  (22,848)  (21,184) Total assets  $ 7,434,102  7,187,906  6,978,320  246,196  455,782             Investment securities increased $165 million, or 5 percent, during the current quarter and increased $620 million, or 22 percent, from June 30, 2011. During the current quarter and previous twelve months, the Company purchased investment securities to primarily offset the lack of loan growth and to maintain interest income. The increase in investment securities for the current quarter occurred in collateralized mortgage obligation ("CMO"), corporate and municipal bonds. The majority of the purchases were CMOs which were significantly offset by CMO principal paydowns during the quarter. Investment securities represent 46 percent of total assets at June 30, 2012 versus 44 percent at December 31, 2011 and 40 percent at June 30, 2011.  A real positive for the current quarter was the loan portfolio grew for the first time in several years. The loan portfolio increased during the current quarter by $12.0 million, or 1 percent annualized, to a total of $3.445 billion at June 30, 2012. Excluding net charge-offs of $7.1 million and loans of $5.4 million transferred to other real estate owned, loans increased $24.5 million, or 3 percent annualized, during the current quarter. The largest increase in dollars during the current quarter was in commercial loans which increased $10.4 million, or 0.5 percent, from March 31, 2012. The largest increase by percentage during the current quarter was in residential real estate loans which increased $10.1 million, or 2 percent, from March 31, 2012. The decrease in consumer and other loans was primarily driven by the Company reducing its exposure to consumer land and lot loans in combination with customers paying down lines of credit and reducing other debt. "It was good to see growth in our loan portfolio finally after three years of declines," said Blodnick. "However, loan demand is still soft and competition for good credits is intense. It was good to see loan volume pickup in the current quarter, but it is premature to think that it will sustain itself. We certainly hope it will." The continued slowness in the economy and low levels of loan demand could continue to place pressure on the Company in future periods and was the cause of the decrease in the loan portfolio over the prior periods. During the past twelve months, the loan portfolio decreased $157 million, or 4 percent, from total loans of $3.602 billion at June 30, 2011. The Company continues to reduce its exposure to land, lot and other construction loans which totaled $346 million as of June 30, 2012, a decrease of $92.9 million, or 21 percent, since the prior year second quarter.  Credit Quality Summary           At or for the Six Months ended At or for the Year ended At or for the Six Months ended (Dollars in thousands) June 30, 2012 December 31, 2011 June 30, 2011         Allowance for loan and lease losses       Balance at beginning of period  $ 137,516  137,107  137,107 Provision for loan losses  16,550  64,500  38,650 Charge-offs  (19,737)  (69,366)  (38,318) Recoveries  3,130  5,275  2,356 Balance at end of period  $ 137,459  137,516  139,795         Other real estate owned  $ 69,170  78,354  99,585 Accruing loans 90 days or more past due  3,267  1,413  7,177 Non-accrual loans  126,463  133,689  154,784 Total non-performing assets 1  $ 198,900  213,456  261,546         Non-performing assets as a percentage of subsidiary assets 2.69% 2.92% 3.68%         Allowance for loan and lease losses as a percentage of non-performing loans 106% 102% 86%         Allowance for loan and lease losses as a percentage of total loans 3.99% 3.97% 3.88%         Net charge-offs as a percentage of total loans 0.48% 1.85% 1.00%         Accruing loans 30-89 days past due  $ 48,707  49,086  41,151        1 As of June 30, 2012, non-performing assets have not been reduced by U.S. government guarantees of $2.4 million.   The Company continues to actively and methodically manage the disposition of non-performing assets which has resulted in a reduction of $15.7 million, or 7 percent, during the current quarter to a total of $198.9 million in non-performing assets. The non-performing assets also decreased $62.6 million, or 24 percent, from the prior year second quarter. The Company's early stage delinquencies (accruing loans 30-89 days past due) of $48.7 million continue to fluctuate and at June 30, 2012 increased $6.1 million from the prior quarter early stage delinquencies of $42.6 million and increased $7.6 million from the prior year second quarter early stage delinquencies of $41.2 million. At June 30, 2012, the allowance for loan and lease losses ("ALLL" or "allowance") was $137 million, a decrease of $57 thousand from the prior year end and a decrease of $2.3 million from a year ago. The allowance was 3.99 percent of total loans outstanding at June 30, 2012, compared to 3.97 percent at December 31, 2011 and 3.88 percent at June 30, 2011. The allowance was 106 percent of non-performing loans at June 30, 2012, an increase from 102 percent at December 31, 2011 and an increase from 86 percent at June 30, 2011.  The largest category of non-performing assets was the land, lot and other construction category which was $100 million, or 50 percent, of the non-performing assets at June 30, 2012. Included in this category was $47.2 million of land development loans and $28.9 million in unimproved land loans at June 30, 2012. Although land, lot and other construction loans the past three years put pressure on the Company's credit quality, the Company has continued to reduce this category. During the current quarter, land, lot and other construction non-performing assets were reduced by $7.2 million, or 7 percent.  Credit Quality Trends and Provision for Loan Losses                     Accruing            Loans 30-89  Non-Performing   Provision    ALLL   Days Past Due  Assets to   for Loan Net  as a Percent   as a Percent of   Total Subsidiary  (Dollars in thousands) Losses Charge-Offs  of Loans  Loans  Assets  Q2 2012 $ 7,925  7,052 3.99% 1.41% 2.69% Q1 2012  8,625  9,555 3.98% 1.24% 2.91% Q4 2011  8,675  9,252 3.97% 1.42% 2.92% Q3 2011  17,175  18,877 3.92% 0.60% 3.49% Q2 2011  19,150  20,184 3.88% 1.14% 3.68% Q1 2011  19,500  15,778 3.86% 1.44% 3.78% Q4 2010  27,375  24,525 3.66% 1.21% 3.91% Q3 2010  19,162  26,570 3.47% 1.06% 4.03%             The levels of net-charged off loans continue to trend lower as the Company continues to work through the non-performing assets. Net charged-off loans during the current quarter of $7.1 million decreased $2.5 million compared to the prior quarter and decreased $13.1 million, or 65 percent, compared to the prior year second quarter.   The current quarter provision for loan losses was $7.9 million, which decreased $700 thousand compared to the $8.6 million for the prior quarter and a decrease of $11.2 million from the second quarter of 2011. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of provision for loan loss expense.  For additional information regarding credit quality and identification of the loan portfolio by regulatory classification, see the exhibits at the end of this press release. Liability Summary                     $ Change from $ Change from   June 30, December 31, June 30, December 31, June 30, (Unaudited - Dollars in thousands) 2012 2011 2011 2011 2011             Non-interest bearing deposits  $ 1,066,662  1,010,899  916,887  55,763  149,775 Interest bearing deposits  3,915,607  3,810,314  3,787,912  105,293  127,695 Federal funds purchased  --  --  48,000  --  (48,000) Repurchase agreements  466,784  258,643  251,303  208,141  215,481 FHLB advances  906,029  1,069,046  925,061  (163,017)  (19,032) Other borrowed funds  9,973  9,995  14,799  (22)  (4,826) Subordinated debentures  125,347  125,275  125,203  72  144 Other liabilities  67,519  53,507  44,383  14,012  23,136 Total liabilities  $ 6,557,921  6,337,679  6,113,548  220,242  444,373             At June 30, 2012, non-interest bearing deposits of $1.067 billion increased $27.6 million, or 3 percent, since March 31, 2012 and increased $150 million, or 16 percent, since June 30, 2011. Interest bearing deposits of $3.916 billion at June 30, 2012 included $646 million of wholesale deposits of which $180 million were reciprocal deposits (e.g., Certificate of Deposit Account Registry System deposits). In addition to reciprocal deposits, wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts. Interest bearing deposits increased $105 million, or 3 percent, since December 31, 2011 and included an increase of $38.2 million in wholesale deposits. Interest bearing deposits increased $128 million, or 3 percent, from June 30, 2011 and included a decrease of $43.4 million in wholesale deposits. The increase in deposits during the first half of 2012 and throughout 2011 has been driven by the Company's success in generating new personal and business customer relationships, as well as existing customers retaining cash deposits for liquidity purposes due to the continued uncertainty in the current economic environment. These deposit increases have been beneficial to the Company in funding the investment securities portfolio growth at lower cost over the prior twelve months.  The Company's level and mix of borrowings has fluctuated as needed to supplement deposit growth and to fund the growth in investment securities. Since the prior year end, Federal Home Loan Bank ("FHLB") advances decreased $163 million and have decreased $19.0 million since the prior year second quarter. The increase in funding through repurchase agreements from the prior year end and the prior year second quarter was primarily due to the $195 million in wholesale repurchase agreements as of current quarter end compared to no wholesale repurchase agreements as of year end and only $15.0 million of wholesale repurchase agreements as of the prior year second quarter. The wholesale repurchase agreements were utilized as a source of low cost alternative funding.  Stockholders' Equity Summary                     $ Change from $ Change from   June 30, December 31, June 30, December 31, June 30, (Unaudited - Dollars in thousands, except per share data) 2012 2011 2011 2011 2011             Common equity  $ 832,128  816,740  840,133  15,388  (8,005) Accumulated other comprehensive income  44,053  33,487  24,639  10,566  19,414 Total stockholders' equity  876,181  850,227  864,772  25,954  11,409 Goodwill and core deposit intangible, net  (113,297)  (114,384)  (155,699)  1,087  42,402 Tangible stockholders' equity  $ 762,884  735,843  709,073  27,041  53,811             Stockholders' equity to total assets 11.79% 11.83% 12.39%     Tangible stockholders' equity to total tangible assets 10.42% 10.40% 10.39%     Book value per common share  $ 12.18  11.82  12.02  0.36  0.16 Tangible book value per common share  $ 10.61  10.23  9.86  0.38  0.75 Market price per share at end of period  $ 15.46  12.03  13.48  3.43  1.98             Tangible stockholders' equity and book value per share increased $27.0 million and $0.38 per share from the prior year end, resulting in tangible stockholders' equity to tangible assets of 10.42 percent and tangible book value per share of $10.61 as of June 30, 2012.    The increases came from earnings retention and an increase in accumulated other comprehensive income. Tangible stockholders' equity increased $53.8 million, or $0.75 per share since June 30, 2011, primarily a result of an increase in accumulated other comprehensive income. The $8.0 million decrease in common equity from June 30, 2011 included a third quarter 2011 goodwill impairment charge (net of tax) of $32.6 million. Cash Dividend On June 27, 2012, the Company's Board of Directors declared a cash dividend of $0.13 per share, payable July 19, 2012 to shareholders of record on July 10, 2012. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.Operating Results for Three Months Ended June 30, 2012 Compared to March 31, 2012 and June 30, 2011 Revenue Summary         Three Months ended     June 30, March 31, June 30,   (Dollars in thousands) 2012 2012 2011   Net interest income         Interest income  $ 64,192  67,884  71,562   Interest expense  9,044  9,598  11,331   Total net interest income  55,148  58,286  60,231             Non-interest income         Service charges, loan fees, and other fees  12,404  11,438  12,258   Gain on sale of loans  7,522  6,813  4,291   Loss on sale of investments  --  --  (591)   Other income  1,865  2,087  1,893   Total non-interest income  21,791  20,338  17,851      $ 76,939  78,624  78,082             Net interest margin (tax-equivalent) 3.49% 3.73% 4.01%               $ Change from $ Change from % Change from % Change from   March 31, June 30, March 31, June 30, (Dollars in thousands) 2012 2011 2012 2011 Net interest income         Interest income  $ (3,692)  $ (7,370) -5% -10% Interest expense  (554)  (2,287) -6% -20% Total net interest income  (3,138)  (5,083) -5% -8%           Non-interest income         Service charges, loan fees, and other fees  966  146 8% 1% Gain on sale of loans  709  3,231 10% 75% Loss on sale of investments  --  591 n/m -100% Other income  (222)  (28) -11% -1% Total non-interest income  1,453  3,940 7% 22%    $ (1,685)  $ (1,143) -2% -1%           Net Interest Income The current quarter net interest income of $55.1 million decreased $3.1 million, or 5 percent, over the prior quarter and decreased $5.1 million, or 8 percent, over the prior year second quarter. The current quarter interest income of $64.2 million decreased $3.7 million, or 5 percent, over the prior quarter and decreased $7.4 million, or 10 percent, over the prior year second quarter. A primary driver of the decrease in interest income was the $15.9 million of premium amortization (net of discount accretion) on investment securities in the current quarter which was an increase of $2.6 million over the prior quarter and an increase of $8.3 million over the prior year second quarter. The decrease in interest expense of $554 thousand, or 6 percent, from the prior quarter and the decrease of $2.3 million, or 20 percent, in interest expense from the prior year second quarter was the result of a decrease in interest rates on deposits as a result of the Company's continued focus on reducing deposit and borrowing costs. The funding cost for the current quarter was 68 basis points compared to 72 basis points for the prior quarter and 89 basis points for the prior year second quarter.  The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.49 percent, a decrease of 24 basis points from the prior quarter net interest margin of 3.73 percent. Although there was a reduction in funding costs of 4 basis points during the current quarter compared to the prior quarter, the reduction was not enough to offset the 28 basis points reduction in yield on earning assets during the current quarter compared to the prior quarter. The decrease in yield on earning assets during the current quarter compared to the prior quarter was the result of a 12 basis points reduction in yield on the loan portfolio and a 41 basis points reduction in yield on the investment securities. Of the 41 basis points reduction in yield on the investment securities, 28 basis points was due to the increase in premium amortization. The premium amortization in the current quarter accounted for a 94 basis points reduction in the net interest margin compared to a 79 basis points reduction in the prior quarter and 48 basis points reduction in the net interest margin in the prior year second quarter. As a result of fewer loans moving to non-accrual status and the greater dispositions of existing non-accrual loans, the reversal of interest income on non-accrual loans accounted for a 2 basis points reduction in the net interest margin during the current quarter. "The accelerated premium amortization during the current and prior quarters reflects the growth in the CMO investment securities over the course of the prior year as well as the increased mortgage refinance activity as mortgage rates have declined significantly to record lows over the same time period, " said Ron Copher, Chief Financial Officer.  Non-interest Income Non-interest income for the current quarter totaled $21.8 million, an increase of $1.5 million over the prior quarter and an increase of $3.9 million over the same quarter last year. Gain on sale of loans increased $709 thousand, or 10 percent, over the prior quarter and $3.2 million, or 75 percent, over the prior year second quarter as there was an increase in origination and refinance volume due to lower interest rates and borrowers taking advantage of government assistance programs.  Service charge fee income increased $966 thousand from the linked quarter, the majority of which was from higher overdraft fees driven by the increased number of deposit accounts. Service charge fee income increased $146 thousand, or 1 percent, from the prior year second quarter.  Other income of $1.9 million for the current quarter was a decrease of $222 thousand from the prior quarter as a result of small changes in several categories. Included in other income was operating revenue of $186 thousand from other real estate owned and gains of $228 thousand on the sale of other real estate owned, which total $414 thousand for the current quarter compared to $528 thousand for the prior quarter and $697 thousand for the prior year second quarter. Non-interest Expense Summary         Three Months ended     June 30,  March 31, June 30,   (Dollars in thousands) 2012 2012 2011             Compensation and employee benefits  $ 23,684  23,560  21,170   Occupancy and equipment  5,825  5,968  5,728   Advertising and promotions  1,713  1,402  1,635   Outsourced data processing  788  846  791   Other real estate owned  2,199  6,822  5,062   Federal Deposit Insurance Corporation premiums  1,300  1,712  2,197   Core deposit intangibles amortization  535  552  590   Other expense  10,146  8,183  9,047   Total non-interest expense  $ 46,190  49,045  46,220                         $ Change from $ Change from % Change from  % Change from    March 31, June 30, March 31, June 30, (Dollars in thousands) 2012 2011 2012 2011           Compensation and employee benefits  $ 124  $ 2,514 1% 12% Occupancy and equipment  (143)  97 -2% 2% Advertising and promotions  311  78 22% 5% Outsourced data processing  (58)  (3) -7% 0% Other real estate owned  (4,623)  (2,863) -68% -57% Federal Deposit Insurance Corporation premiums  (412)  (897) -24% -41% Core deposit intangibles amortization  (17)  (55) -3% -9% Other expense  1,963  1,099 24% 12% Total non-interest expense  $ (2,855)  $ (30) -6% 0%           Non-interest expense of $46.2 million for the current quarter decreased by $2.9 million, or 6 percent, from the prior quarter and decreased by $30 thousand from the prior year second quarter. The changes over the prior quarter and the prior year second quarter were driven primarily by other real estate owned expense. Other real estate owned expense decreased $4.6 million, or 68 percent, from the prior quarter and decreased $2.9 million, or 57 percent, from the prior year second quarter. The current quarter other real estate owned expense of $2.2 million included $639 thousand of operating expense, $1.2 million of fair value write-downs, and $316 thousand of loss on sale of other real estate owned. Other real estate owned expense will fluctuate as the Company continues to work through non-performing loans and dispose of foreclosed properties. Excluding other real estate owned expense, non-interest expense increased $1.8 million, or 4 percent, from the prior quarter and increased $2.8 million, or 7 percent, from the prior year second quarter. Compensation and employee benefits increased by $2.5 million, or 12 percent, from the prior year second quarter and was attributable to a revised Company incentive program and the restoration in 2012 of certain compensation cuts made in 2011. Advertising and promotion expense of $1.7 million for the current quarter increased $311 thousand over the                                                prior quarter as the Company typically spends less on advertising in the first quarter. Other expense increased $2.0 million, or 24 percent, from the prior quarter primarily due to expenses associated with New Markets Tax Credit investments. Other expense increased $1.1 million, or 12 percent, from the prior year second quarter as a result of increases in several categories including loan expenses and miscellaneous expenses. The Company continues to work diligently in reducing expenses in areas of direct control. Efficiency Ratio The efficiency ratio for the current quarter was 54 percent compared to 52 percent for the prior year second quarter. The higher efficiency ratio was the result of a decrease in net interest income, primarily from an increase in premium amortization on investment securities, and an increase in non-interest expense, largely from higher compensation and other expenses.Operating Results for Six Months Ended June 30, 2012 Compared to June 30, 2011  Revenue Summary           Six Months ended       June 30, June 30,     (Dollars in thousands) 2012 2011 $ Change % Change Net interest income         Interest income  $ 132,076  $ 139,935  $ (7,859) -6% Interest expense  18,642  23,000  (4,358) -19% Total net interest income  113,434  116,935  (3,501) -3%           Non-interest income         Service charges, loan fees, and other fees  23,842  23,443  399 2% Gain on sale of loans  14,335  8,985  5,350 60% Loss on sale of investments  --  (467)  467 -100% Other income  3,952  3,285  667 20% Total non-interest income  42,129  35,246  6,883 20%    $ 155,563  $ 152,181  $ 3,382 2%           Net interest margin (tax-equivalent) 3.61% 3.96%               Net Interest Income Net interest income for the first half of 2012 decreased $3.5 million, or 3 percent, over the same period last year. During 2012, interest income decreased $7.9 million, or 6 percent, while interest expense decreased $4.4 million, or 19 percent from the first half of 2011. The decrease in interest income from the first half of the prior year was due to the increase in premium amortization on investment securities coupled with the reduction in loan balances, the combination of which put further pressure on earning asset yields. Interest income was reduced by $29.2 million in premium amortization (net of discount accretion) on investment securities which was an increase of $11.7 million from the first six months of the prior year. This increase in premium amortization was the result of both the increased purchases of investment securities combined with the continued refinance activity. The decrease in interest expense during the current year was primarily attributable to the decreases in rates on interest bearing deposits and borrowings. The funding cost for the first half of 2012 was 70 basis points compared to 92 basis points for the first half 2011.  The net interest margin, on a tax-equivalent basis, for the first half of 2012 was 3.61 percent, a 35 basis points reduction from the net interest margin of 3.96 percent for the first half of 2011. The reduction was attributable to a lower yield and volume of loans coupled with an increase in lower yielding investment securities and higher premium amortization on investment securities. The premium amortization in 2012 accounted for an 87 basis points reduction in the net interest margin which is an increase of 31 basis points compared to a 56 basis points reduction in the net interest margin for the same period last year.  Non-interest Income Non-interest income of $42.1 million for 2012 increased $6.9 million, or 20 percent, over non-interest income of $35.2 million for the first half of 2011. Gain on sale of loans for the first half of 2012 increased $5.4 million, or 60 percent, from the first half of 2011 due to greater refinance and loan origination activity. Other income for the first half of 2012 increased $667 thousand, or 20 percent, over the first half of 2011 of which $573 thousand of the increase was from debit card income. Included in other income was operating revenue of $237 thousand from other real estate owned and gains of $704 thousand on the sale of other real estate owned, which aggregated $942 thousand for the first half of 2012 compared to $965 thousand for the same period in the prior year. Non-interest Expense Summary           Six Months ended       June 30,  June 30,     (Dollars in thousands) 2012 2011 $ Change % Change           Compensation and employee benefits  $ 47,244  $ 42,773  $ 4,471 10% Occupancy and equipment  11,793  11,682  111 1% Advertising and promotions  3,115  3,119  (4) 0% Outsourced data processing  1,634  1,564  70 4% Other real estate owned  9,021  7,161  1,860 26% Federal Deposit Insurance Corporation premiums  3,012  4,521  (1,509) -33% Core deposit intangibles amortization  1,087  1,317  (230) -17% Other expense  18,329  16,559  1,770 11% Total non-interest expense  $ 95,235  $ 88,696  $ 6,539 7%           Compensation and employee benefits for the first half of 2012 increased $4.5 million, or 10 percent, and was attributable to a revised Company incentive program and the restoration in the first half of 2012 of certain compensation cuts made in the first half of 2011. Other real estate owned expense of $9.0 million in the first six months of 2012 increased $1.9 million, or 26 percent, from the first half of the prior year. The other real estate owned expense for the first half of 2012 included $1.5 million of operating expenses, $6.7 million of fair value write-downs, and $865 thousand of loss on sale of other real estate owned. Other expense in the first six months of 2012 increased $1.8 million, or 11 percent, from the first half of the prior year and was primarily driven by increases in loan expenses and several miscellaneous categories.  Provision for loan losses The provision for loan losses was $16.6 million for the first half of 2012, a decrease of $22.1 million, or 57 percent, from the same period in the prior year. Net charged-off loans during the first half of 2012 was $16.6 million, a decrease of $19.4 million from the first half of 2011. The largest category of net charge-offs was in land, lot and other construction loans which had net charge-offs of $6.3 million, or 38 percent of total net charged-off loans.  Efficiency Ratio The efficiency ratio was 53 percent for the first half of 2012 and 52 percent for the first half of 2011. Although there were significant increases in non-interest income from the first half of the prior year, it was not enough to offset the decrease in net interest income and the increase in non-interest expense in the first half of 2012.  About Glacier Bancorp, Inc. Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 60 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and  is the parent company for Glacier Bank, Kalispell and bank divisions First Security Bank of Missoula; Valley Bank of Helena; Big Sky Western Bank, Bozeman; Western Security Bank, Billings; and First Bank of Montana, Lewistown; all operating in Montana; as well as Mountain West Bank, Coeur d'Alene operating in Idaho, Utah and Washington; Citizens Community Bank, Pocatello, operating in Idaho; 1st Bank, Evanston, operating in Wyoming and Utah;  First Bank of Wyoming, Powell, operating in Wyoming; and Bank of the San Juans, Durango operating in Colorado. Forward Looking Statements This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about management's plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "should," "projects," "seeks," "estimates" or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release: the risks associated with lending and potential adverse changes of the credit quality of loans in the Company's portfolio, including as a result of declines in the housing and real estate markets in its geographic areas; increased loan delinquency rates; the risks presented by a continued economic downturn, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations; changes in market interest rates, which could adversely affect the Company's net interest income and profitability; legislative or regulatory changes that adversely affect the Company's business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations; costs or difficulties related to the integration of acquisitions; the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital; reduced demand for banking products and services; the risks presented by public stock market volatility, which could adversely affect the market price of our common stock and our ability to raise additional capital in the future; competition from other financial services companies in our markets;  loss of services from the senior management team; and the Company's success in managing risks involved in the foregoing. The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement. Visit our website at www.glacierbancorp.comGlacier Bancorp, Inc.Unaudited Condensed Consolidated Statements of Financial Condition           June 30, December 31, June 30, (Dollars in thousands, except per share data) 2012 2011 2011        Assets       Cash on hand and in banks  $ 92,119  104,674  94,890 Interest bearing cash deposits  48,300  23,358  34,151 Cash and cash equivalents  140,419  128,032  129,041         Investment securities, available-for-sale  3,404,282  3,126,743  2,784,415 Loans held for sale  88,442  95,457  35,440         Loans receivable  3,445,196  3,466,135  3,601,811 Allowance for loan and lease losses  (137,459)  (137,516)  (139,795) Loans receivable, net  3,307,737  3,328,619  3,462,016         Premises and equipment, net  159,432  158,872  154,410 Other real estate owned  69,170  78,354  99,585 Accrued interest receivable  37,108  34,961  35,229 Deferred tax asset  22,892  31,081  23,548 Core deposit intangible, net  7,197  8,284  9,440 Goodwill  106,100  106,100  146,259 Non-marketable equity securities  50,371  49,694  50,762 Other assets  40,952  41,709  48,175         Total assets  $ 7,434,102  7,187,906  6,978,320        Liabilities       Non-interest bearing deposits  $ 1,066,662  1,010,899  916,887 Interest bearing deposits  3,915,607  3,810,314  3,787,912 Federal funds purchased  --  --  48,000 Securities sold under agreements to repurchase  466,784  258,643  251,303 Federal Home Loan Bank advances  906,029  1,069,046  925,061 Other borrowed funds  9,973  9,995  14,799 Subordinated debentures  125,347  125,275  125,203 Accrued interest payable  5,076  5,825  6,261 Other liabilities  62,443  47,682  38,122 Total liabilities  6,557,921  6,337,679  6,113,548        Stockholders' Equity        Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding  --  --  --  Common stock, $0.01 par value per share, 117,187,500 shares authorized  719  719  719 Paid-in capital  641,656  642,882  642,878 Retained earnings - substantially restricted  189,753  173,139  196,536 Accumulated other comprehensive income  44,053  33,487  24,639 Total stockholders' equity  876,181  850,227  864,772         Total liabilities and stockholders' equity  $ 7,434,102  7,187,906  6,978,320         Number of common stock shares issued and outstanding  71,931,386  71,915,073  71,915,073  Glacier Bancorp, Inc.Unaudited Condensed Consolidated Statements of Operations             Three Months ended June 30, Six Months ended June 30, (Dollars in thousands, except per share data) 2012 2011 2012 2011          Interest Income         Residential real estate loans  $ 7,495  8,156  15,279  16,872 Commercial loans  30,430  32,977  61,471  66,035 Consumer and other loans  8,813  10,211  17,983  20,661 Investment securities  17,454  20,218  37,343  36,367  Total interest income  64,192  71,562  132,076  139,935          Interest Expense         Deposits  4,609  6,584  9,563  13,672 Securities sold under agreements to repurchase  303  319  602  676 Federal Home Loan Bank advances  3,218  3,093  6,599  5,641 Federal funds purchased and other borrowed funds  61  62  123  95 Subordinated debentures  853  1,273  1,755  2,916  Total interest expense  9,044  11,331  18,642  23,000          Net Interest Income  55,148  60,231  113,434  116,935           Provision for loan losses  7,925  19,150  16,550  38,650  Net interest income after provision for loan losses  47,223  41,081  96,884  78,285          Non-Interest Income         Service charges and other fees  11,291  11,330  21,783  21,538 Miscellaneous loan fees and charges  1,113  928  2,059  1,905 Gain on sale of loans  7,522  4,291  14,335  8,985 Loss on sale of investments  --  (591)  --  (467) Other income  1,865  1,893  3,952  3,285  Total non-interest income  21,791  17,851  42,129  35,246          Non-Interest Expense         Compensation and employee benefits  23,684  21,170  47,244  42,773 Occupancy and equipment  5,825  5,728  11,793  11,682 Advertising and promotions  1,713  1,635  3,115  3,119 Outsourced data processing  788  791  1,634  1,564 Other real estate owned  2,199  5,062  9,021  7,161 Federal Deposit Insurance Corporation premiums  1,300  2,197  3,012  4,521 Core deposit intangibles amortization  535  590  1,087  1,317 Other expense  10,146  9,047  18,329  16,559  Total non-interest expense  46,190  46,220  95,235  88,696          Income Before Income Taxes  22,824  12,712  43,778  24,835           Federal and state income tax expense  3,843  826  8,464  2,664          Net Income  $ 18,981  11,886  35,314  22,171           Basic earnings per share  $ 0.26  0.17 0.49  0.31 Diluted earnings per share  $ 0.26  0.17 0.49  0.31 Dividends declared per share  $ 0.13  0.13 0.26  0.26 Average outstanding shares - basic  71,928,697  71,915,073 71,921,885  71,915,073 Average outstanding shares - diluted  71,928,853  71,915,073 71,921,990  71,915,073   Glacier Bancorp, Inc.  Average Balance Sheet                  Three Months ended June 30, 2012 Six Months ended June 30, 2012       Average     Average   Average Interest & Yield/ Average Interest & Yield/ (Dollars in thousands) Balance Dividends Rate Balance Dividends RateAssets             Residential real estate loans  $ 590,516  7,495 5.08%  $ 587,637  15,279 5.20% Commercial loans  2,280,478  30,430 5.35%  2,285,357  61,471 5.39% Consumer and other loans  628,155  8,813 5.63%  633,729  17,983 5.69% Total loans 1  3,499,149  46,738 5.36%  3,506,723  94,733 5.42% Tax-exempt investment securities 2  882,988  9,309 4.22%  875,304  18,982 4.34% Taxable investment securities 3  2,472,893  8,145 1.32%  2,427,506  18,361 1.51% Total earning assets  6,855,030  64,192 3.76%  6,809,533  132,076 3.89% Goodwill and intangibles  113,587      113,862     Non-earning assets  362,873      360,584     Total assets  $ 7,331,490      $ 7,283,979                  Liabilities             NOW accounts  $ 859,523  355 0.17%  $ 845,172  724 0.17% Savings accounts  446,431  86 0.08%  436,780  177 0.08% Money market deposit accounts  882,154  576 0.26%  878,197  1,176 0.27% Certificate accounts  1,048,941  3,013 1.15%  1,060,470  6,298 1.19% Wholesale deposits 4  640,300  579 0.36%  641,903  1,188 0.37% FHLB advances  1,001,208  3,218 1.29%  1,006,459  6,599 1.31% Repurchase agreements, federal funds purchased and other borrowed funds  487,863  1,217 1.00%  472,102  2,480 1.05% Total interest bearing liabilities  5,366,420  9,044 0.68%  5,341,083  18,642 0.70% Non-interest bearing deposits  1,030,231      1,016,917     Other liabilities  56,013      53,432     Total liabilities  6,452,664      6,411,432                  Stockholders' Equity             Common stock  719      719     Paid-in capital  641,765      642,317     Retained earnings  190,389      186,180     Accumulated other comprehensive income  45,953      43,331     Total stockholders' equity  878,826      872,547      Total liabilities and stockholders' equity  $ 7,331,490      $ 7,283,979                   Net interest income    $ 55,148      $ 113,434   Net interest spread     3.08%     3.19% Net interest margin      3.23%     3.34% Net interest margin (tax-equivalent)     3.49%     3.61%              1 Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.            2 Excludes tax effect of $4,122,000 and $8,404,000 on tax-exempt investment security income for the three and six months ended June 30, 2012, respectively.            3 Excludes tax effect of $386,000 and $772,000 on investment security tax credits for the three and six months ended June 30, 2012, respectively.             4 Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts, including reciprocal deposits.              Glacier Bancorp, Inc.Loan Portfolio by Regulatory Classification                 Loans Receivable, by Loan Type % Change % Change   Balance Balance Balance from  from  (Dollars in thousands) 6/30/12 12/31/11 6/30/11 12/31/11 6/30/11 Custom and owner occupied construction $ 39,052  35,422  32,094 10% 22% Pre-sold and spec construction  49,638  58,811  61,022 -16% -19%  Total residential construction  88,690 94,233 93,116-6%-5%             Land development  93,361  103,881  134,539 -10% -31% Consumer land or lots  114,475  125,396  136,255 -9% -16% Unimproved land  59,548  66,074  74,597 -10% -20% Developed lots for operative builders  21,101  25,180  26,976 -16% -22% Commercial lots  25,035  26,621  27,581 -6% -9% Other construction  32,079  34,346  38,536 -7% -17%  Total land, lot, and other construction  345,599 381,498 438,484-9%-21%             Owner occupied  701,078  697,131  691,370 1% 1% Non-owner occupied  444,419  436,021  436,674 2% 2%  Total commercial real estate  1,145,497 1,133,152 1,128,0441%2%            Commercial and industrial  413,908 408,054 425,5241%-3%             1st lien  690,638  688,455  659,950 0% 5% Junior lien  87,544  95,508  97,344 -8% -10%  Total 1-4 family  778,182 783,963 757,294-1%3%             Home equity lines of credit  338,459  350,229  368,864 -3% -8% Other consumer  109,043  109,235  112,567 0% -3%  Total consumer  447,502 459,464 481,431-3%-7%            Agriculture  162,534 151,031 164,4988%-1%Other  151,726 150,197 148,8601%2%Loans held for sale  (88,442) (95,457) (35,440)-7%150%              Total$ 3,445,196 3,466,135 3,601,811-1%-4%  Glacier Bancorp, Inc.Credit Quality Summary                    Non-   Accruing  Other   Non-performing Assets, by Loan Type  Accruing   Loans 90 Days   Real Estate    Balance Balance Balance  Loans   or More Past Due   Owned  (Dollars in thousands) 6/30/12 12/31/11 6/30/11 6/30/12 6/30/12 6/30/12  Custom and owner occupied construction $ 2,914  1,531  2,979  1,821  415  678 Pre-sold and spec construction  7,473  5,506  17,941  5,036  --   2,437  Total residential construction  10,387 7,037 20,920 6,857 415 3,115               Land development  47,154  56,152  80,685  25,248  356  21,550 Consumer land or lots  9,728  8,878  12,693  4,847  127  4,754 Unimproved land  28,914  35,771  43,215  17,213  96  11,605 Developed lots for operative builders  6,932  9,001  6,731  5,089  186  1,657 Commercial lots  2,581  2,032  2,353  960  --   1,621 Other construction  5,124  5,133  4,582  212  --   4,912                Total land, lot and other construction  100,433 116,967 150,259 53,569 765 46,099               Owner occupied  18,210  23,931  21,591  10,551  829  6,830 Non-owner occupied  3,509  4,897  8,210  3,380  --   129  Total commercial real estate  21,719 28,828 29,801 13,931 829 6,959              Commercial and industrial  8,077 12,855 13,262 7,588 433 56               1st lien  34,285  31,083  31,312  26,203  15  8,067 Junior lien  8,861  2,506  2,687  8,536  325  --   Total 1-4 family  43,146 33,589 33,999 34,739 340 8,067               Home equity lines of credit  6,939  6,361  5,764  6,454  227  258 Other consumer  405  360  382  281  47  77 Total consumer 7,344 6,721 6,146 6,735 274 335              Agriculture  7,541 7,010 7,159 3,044 211 4,286Other 253 449 --  --  --  253                Total$ 198,900 213,456 261,546 126,463 3,267 69,170                 Accruing 30-89 Days Delinquent Loans, by Loan Type         Balance Balance Balance       (Dollars in thousands) 6/30/12 12/31/11 6/30/11       Custom and owner occupied construction $ --  --  285       Pre-sold and spec construction  968  250  962        Total residential construction  968 250 1,247                     Land development  460  458  1,826       Consumer land or lots  1,650  1,801  982       Unimproved land  1,129  1,342  1,200       Developed lots for operative builders  199  1,336  125       Commercial lots  --  --  148       Other construction  --  --  120                      Total land, lot and other construction  3,438 4,937 4,401                     Owner occupied  10,943  8,187  10,789       Non-owner occupied  950  1,791  6,643        Total commercial real estate  11,893 9,978 17,432                    Commercial and industrial  20,847 4,637 5,033                     1st lien  7,220  14,405  5,618       Junior lien  880  6,471  1,297        Total 1-4 family 8,100 20,876 6,915                     Home equity lines of credit  2,541  3,416  4,043       Other consumer  698  1,172  1,089        Total consumer 3,239 4,588 5,132                    Agriculture  222 3,428 352      Other -- 392 639                      Total$ 48,707 49,086 41,151        Glacier Bancorp, Inc.Credit Quality Summary (continued)               Net Charge-Offs (Recoveries), Year-to-Date Period Ending, By Loan Type       Balance Balance Balance  Charge-Offs   Recoveries  (Dollars in thousands) 6/30/12 12/31/11 6/30/11 6/30/12 6/30/12             Custom and owner occupied construction $ --  206  131  --  -- Pre-sold and spec construction  2,393  4,069  3,123  2,511  118  Total residential construction 2,393 4,275 3,254 2,511 118             Land development  2,706  17,055  8,088  3,321  615 Consumer land or lots  1,957  7,456  4,570  2,187  230 Unimproved land  517  4,047  1,905  758  241 Developed lots for operative builders  1,201  943  617  1,212  11 Commercial lots  (81)  237  184  39  120 Other construction  --  1,568  1,615  --  --            Total land, lot and other construction 6,300 31,306 16,979 7,517 1,217             Owner occupied  1,318  3,815  1,869  1,418  100 Non-owner occupied  189  3,861  1,101  549  360  Total commercial real estate 1,507 7,676 2,970 1,967 460            Commercial and industrial 819 7,871 6,237 1,393 574             1st lien  2,122  7,031  3,635  2,232  110 Junior lien  2,441  1,663  1,346  2,614  173  Total 1-4 family 4,563 8,694 4,981 4,846 283             Home equity lines of credit  807  3,261  1,262  911  104 Other consumer  32  615  245  258  226  Total consumer 839 3,876 1,507 1,169 330      Agriculture 94 134 (2) 230 136Other 92 259 36 104 12 Total$ 16,607 64,091 35,962 19,737 3,130CONTACT: Michael J. Blodnick (406) 751-4701 Ron J. Copher (406) 751-7706