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Press release from GlobeNewswire (a Nasdaq OMX company)

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

Thursday, October 25, 2012

Glacier Bancorp, Inc. Announces Results for the Quarter Ended September 30, 201213:56 EDT Thursday, October 25, 2012 HIGHLIGHTS: All time record earnings for the current quarter of $19.4 million, an increase of 43 percent from the prior year third quarter operating net income of $13.6 million. Current quarter diluted earnings per share of $0.27, an increase of 42 percent from the prior year third quarter diluted earnings per share of $0.19. Non-interest income increased $2.2 million, or 10 percent, during the current quarter compared to the prior quarter. Non-interest bearing deposits increased $113 million, or 11 percent, during the current quarter from the prior quarter. Non-performing assets decreased $22.1 million, or 11 percent, from the prior quarter. The Company's early stage delinquencies (accruing loans 30-89 days past due) decreased $20.3 million, or 42 percent, from the prior quarter. Dividend declared of $0.13 per share during the quarter. KALISPELL, Mont., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income for the current quarter of $19.4 million, an increase of $5.9 million, or 43 percent, compared to $13.6 million of operating net income (net income excluding goodwill impairment charge) for the prior year third quarter. Net operating income is considered a non-GAAP financial measure and additional information regarding this measurement and reconciliation is provided herein. Diluted earnings per share for the current quarter was $0.27 per share, an increase of $0.08, or 42 percent, from the prior year third quarter diluted earnings per share of $0.19. "The Company had another solid quarter with credit costs continually improving and helping to offset the pressure to net interest income," said Mick Blodnick, President and Chief Executive Officer. "Once again this quarter we had record levels of premium amortization within our investment portfolio further compressing our net interest margin. Until we see a slow down in refinance volume, this higher level of premium amortization will persist," Blodnick said. Results Summary Net income for the nine months ended September 30, 2012 was $54.8 million, which was an increase of $19.0 million, or 53 percent, over the prior year first nine months operating net income. Diluted earnings per share of $0.76 was an increase of $0.26, or 52 percent, from the diluted earnings per share in the prior year first nine months. The operating net income improvement for the the first nine months of 2012 was reflective of the reduction in the provision for loan losses as a result of the improvement in credit quality.   Three Months ended Nine Months ended (Dollars in thousands, except per share data) September 30, September 30, September 30, September 30,   2012 2011 2012 2011 Net income (loss) (GAAP) $ 19,444 (19,048) 54,758 3,123 Add goodwill impairment charge, net of tax — 32,613 — 32,613 Operating net income (non-GAAP) $ 19,444 13,565 54,758 35,736 Diluted earnings (loss) per share (GAAP) $ 0.27 (0.27) 0.76 0.04 Add goodwill impairment charge, net of tax — 0.46 — 0.46 Diluted earnings per share (non-GAAP) $ 0.27 0.19 0.76 0.50 Return on average assets (annualized) (GAAP) 1.03% (1.08)% 0.99% 0.22% Add goodwill impairment charge, net of tax —% 1.85% —% 0.48% Return on average assets (annualized) (non-GAAP) 1.03% 0.77% 0.99% 0.70% Return on average equity (annualized) (GAAP) 8.68% (8.61)% 8.32% 1.76% Add goodwill impairment charge, net of tax —% 14.74% —% 3.80% Return on average equity (annualized) (non-GAAP) 8.68% 6.13% 8.32% 5.56%           Non-GAAP Financial Measures In addition to the results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), this press release contains certain non-GAAP financial measures. The Company believes that providing these non-GAAP financial measures provides investors with information useful in understanding the Company's financial performance, performance trends, and financial position. While the Company uses these non-GAAP measures in its analysis of the Company's performance, this information should not be considered an alternative to measurements required by GAAP.  The preceding results summary table provides a reconciliation of certain GAAP financial measures to non-GAAP financial measures. The reconciling item between the GAAP and non-GAAP financial measures was the prior year third quarter goodwill impairment charge (net of tax) of $32.6 million.  The goodwill impairment charge was $40.2 million with a tax benefit of $7.6 million which resulted in a goodwill impairment charge (net of tax) of $32.6 million. The tax benefit applied only to the $19.4 million of goodwill associated with taxable acquisitions and was determined based on the Company's marginal income tax rate of 38.9 percent.  The diluted earnings per share reconciling item was determined based on the goodwill impairment charge (net of tax) divided by the weighted average diluted shares of 71,915,073.  The goodwill impairment charge (net of tax) was included but not annualized in determining annualized earnings for both the GAAP return on average assets and GAAP return on average equity. The average assets used in the GAAP and non-GAAP return on average assets ratios were $6.996 billion and $6.854 billion for the three and nine month periods, respectively. The average equity used in the GAAP and non-GAAP return on average equity ratios were $877 million and $860 million for the three and nine month periods, respectively.  Asset Summary         $ Change from $ Change from (Dollars in thousands) September 30, 2012 December 31,  2011 September 30, 2011 December 31,  2011 September 30, 2011 Cash and cash equivalents $ 172,399 128,032 133,771 44,367 38,628 Investment securities, available-for-sale 3,586,355 3,126,743 2,935,011 459,612 651,344 Loans receivable           Residential real estate 528,177 516,807 518,786 11,370 9,391 Commercial 2,272,959 2,295,927 2,336,744 (22,968) (63,785) Consumer and other 606,958 653,401 668,052 (46,443) (61,094) Loans receivable 3,408,094 3,466,135 3,523,582 (58,041) (115,488) Allowance for loan and lease losses (136,660) (137,516) (138,093) 856 1,433 Loans receivable, net 3,271,434 3,328,619 3,385,489 (57,185) (114,055) Other assets 602,017 604,512 588,418 (2,495) 13,599 Total assets $ 7,632,205 7,187,906 7,042,689 444,299 589,516             Investment securities increased $182 million, or 5 percent, during the current quarter and increased $651 million, or 22 percent, from September 30, 2011. The Company continues to purchase 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 U.S. Agency collateralized mortgage obligation ("CMO"), corporate and municipal bonds. The majority of the purchases were short weighted-average life CMOs which were significantly offset by CMO principal paydowns during the quarter.  Investment securities represent 47 percent of total assets at September 30, 2012 versus 44 percent at December 31, 2011 and 42 percent at September 30, 2011.  The continued uncertainty in the sluggish economy and low levels of loan demand continue to put pressure on the Company and was the primary cause of the decrease in the loan portfolio. The loan portfolio decreased during the current quarter by $37.1 million, or 1 percent, to a total of $3.408 billion at September 30, 2012. The largest decrease in dollars during the current quarter was in commercial loans which decreased $20.9 million, or 1 percent, from June 30, 2012. The largest decrease by percentage during the current quarter was in consumer and other loans which decreased $18.8 million, or 3 percent, from June 30, 2012.  The decrease in consumer and other loans was primarily attributable to the reduction in consumer land and lot loans in combination with customers paying down lines of credit and reducing other debt. During the past nine months, the loan portfolio decreased $58 million, or 2 percent, from total loans of $3.466 billion at December 31, 2011. Excluding net charge-offs of $20.1 million and loans of $21.0 million transferred to other real estate owned, loans decreased $16.9 million, or 1 percent annualized, during the past nine months. The Company continues to reduce its exposure to land, lot and other construction loans which totaled $333 million as of September 30, 2012, a decrease of $69 million, or 17 percent, since the prior year third quarter.  Credit Quality Summary   At or for the Nine Months ended At or for the Year ended At or for the Nine Months ended   September 30, December 31, September 30, (Dollars in thousands) 2012 2011 2011 Allowance for loan and lease losses       Balance at beginning of period $ 137,516 137,107 137,107 Provision for loan losses 19,250 64,500 55,825 Charge-offs (24,789) (69,366) (58,298) Recoveries 4,683 5,275 3,459 Balance at end of period $ 136,660 137,516 138,093 Other real estate owned $57,650 78,354 93,649 Accruing loans 90 days or more past due 3,271 1,413 4,002 Non-accrual loans 115,856 133,689 151,753 Total non-performing assets 1 $ 176,777 213,456 249,404 Non-performing assets as a percentage of subsidiary assets 2.33% 2.92% 3.49% Allowance for loan and lease losses as a percentage of non-performing loans 115% 102% 89% Allowance for loan and lease losses as a percentage of total loans 4.01% 3.97% 3.92% Net charge-offs as a percentage of total loans 0.59% 1.85% 1.56% Accruing loans 30-89 days past due $ 28,434 49,086 21,130        1 As of September 30, 2012, non-performing assets have not been reduced by U.S. government guarantees of $2.2 million. A continuing positive trend was the current quarter decrease of $22.1 million, or 11 percent, in non-performing assets to $176.8 million at September 30, 2012; the non-performing assets also decreased $72.6 million, or 29 percent, from the prior year third quarter. The Company continues to actively and methodically manage the disposition of its non-performing assets.   Another encouraging sign during the current quarter was the improvement in the Company's early stage delinquencies (accruing loans 30-89 days past due) which decreased $20.3 million, or 42 percent, to $28.4 million at September 30, 2012 compared to early stage delinquencies of $48.7 million as of June 30, 2012. "We continue to see improved trends for most of the credit metrics we track," said Blodnick. "There was good progress made reducing non-performing assets during the quarter as we work hard to resolve and sell these distressed assets. In addition, net charge offs are also tracking well below the previous three years, as real estate prices continue to stabilize."  At September 30, 2012, the allowance for loan and lease losses ("allowance") was $137 million, a decrease of $856 thousand from the prior year end and a decrease of $1.4 million from a year ago. The allowance was 4.01 percent of total loans outstanding at September 30, 2012, compared to 3.97 percent at December 31, 2011 and 3.92 percent at September 30, 2011. The allowance was 115 percent of non-performing loans at September 30, 2012, an increase from 102 percent at December 31, 2011 and an increase from 89 percent at September 30, 2011.  The largest category of non-performing assets was the land, lot and other construction category which was $86.6 million, or 49 percent, of the non-performing assets at September 30, 2012. Included in this category was $38.3 million of land development loans and $25.4 million in unimproved land loans at September 30, 2012. Although land, lot and other construction loans has put pressure on the Company's credit quality, the Company has continued to reduce this category over the preceding seven consecutive quarters. During the current quarter, the land, lot and other construction non-performing asset category was reduced by $13.9 million, or 14 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 Q3 2012 $ 2,700 3,499 4.01% 0.83% 2.33% 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% The levels of net-charged off loans continue to trend lower as the Company continues to manage non-performing assets. Net charged-off loans during the current quarter of $3.5 million decreased $3.6 million, or 50 percent, compared to the prior quarter and decreased $15.4 million, or 81 percent, compared to the prior year third quarter.   The current quarter provision for loan losses was $2.7 million, which decreased $5.2 million compared to the $7.9 million provision for loan losses for the prior quarter and decreased $14.5 million from the third 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 (Dollars in thousands) September 30, 2012 December 31, 2011 September 30, 2011 December 31, 2011 September 30, 2011 Non-interest bearing deposits $ 1,180,066 1,010,899 996,265 169,167 183,801 Interest bearing deposits 4,023,031 3,810,314 3,774,263 212,717 248,768 Federal funds purchased — — 45,000 — (45,000) Repurchase agreements 414,836 258,643 301,820 156,193 113,016 FHLB advances 917,021 1,069,046 889,053 (152,025) 27,968 Other borrowed funds 10,152 9,995 14,792 157 (4,640) Subordinated debentures 125,382 125,275 125,239 107 143 Other liabilities 71,560 53,507 44,869 18,053 26,691 Total liabilities $ 6,742,048 6,337,679 6,191,301 404,369 550,747             Another beneficial trend for the Company has been the increase in deposits over the past several years which has allowed the Company to fund the increase in the investment securities portfolio at lower funding costs. The increase in deposits during the first nine months 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. At September 30, 2012, non-interest bearing deposits of $1.180 billion increased $113 million, or 11 percent, since June 30, 2012 and increased $184 million, or 18 percent, since September 30, 2011. Interest bearing deposits of $4.023 billion at September 30, 2012 included $744 million of wholesale deposits of which $167 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 $107 million, or 3 percent, since June 30, 2012 and included an increase of $99.0 million in wholesale deposits. Interest bearing deposits increased $249 million, or 7 percent, from September 30, 2011 and included a increase of $97.4 million in wholesale deposits.  The Company's level and mix of borrowings has fluctuated as needed to supplement deposit growth and to fund the growth in investment securities.  Federal Home Loan Bank ("FHLB") advances decreased $152 million from the prior year and have increased $28.0 million since the prior year third quarter. The increase in funding through repurchase agreements from the prior year end and the prior year third quarter was primarily due to the $116 million in wholesale repurchase agreements as of current quarter end compared to no wholesale repurchase agreements as of year end and only $40.0 million of wholesale repurchase agreements as of the prior year third quarter end. The wholesale repurchase agreements were utilized as a source of low cost alternative funding.  Stockholders' Equity Summary         $ Change from $ Change from (Dollars in thousands, except per share data) September 30, 2012 December 31, 2011 September 30, 2011 December 31, 2011 September 30, 2011 Common equity $ 842,301 816,740 811,738 25,561 30,563 Accumulated other comprehensive income 47,856 33,487 39,650 14,369 8,206 Total stockholders' equity 890,157 850,227 851,388 39,930 38,769 Goodwill and core deposit intangible, net (112,765) (114,384) (114,941) 1,619 2,176 Tangible stockholders' equity $ 777,392 735,843 736,447 41,549 40,945 Stockholders' equity to total assets 11.66% 11.83% 12.09%     Tangible stockholders' equity to total tangible assets 10.34% 10.40% 10.63%     Book value per common share $ 12.37 11.82 11.84 0.55 0.53 Tangible book value per common share $ 10.81 10.23 10.24 0.58 0.57 Market price per share at end of period $ 15.59 12.03 9.37 3.56 6.22 Tangible stockholders' equity and tangible book value per share increased $41.5 million and $0.58 per share from the prior year end, resulting in tangible stockholders' equity to tangible assets of 10.34 percent and tangible book value per share of $10.81 as of September 30, 2012. The increases came from earnings retention and an increase in accumulated other comprehensive income.  Cash Dividend On September 26, 2012, the Company's Board of Directors declared a cash dividend of $0.13 per share, payable October 18, 2012 to shareholders of record on October 9, 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 September 30, 2012 Compared to June 30, 2012 and September 30, 2011 Revenue Summary   Three Months ended     September 30, June 30, September 30,   (Dollars in thousands)  2012 2012 2011   Net interest income         Interest income $ 62,015 64,192 71,433   Interest expense 8,907 9,044 11,297   Total net interest income 53,108 55,148 60,136             Non-interest income         Service charges, loan fees, and other fees 13,019 12,404 12,536   Gain on sale of loans 8,728 7,522 5,121   Gain on sale of investments — — 813   Other income 2,227 1,865 2,466   Total non-interest income 23,974 21,791 20,936     $ 77,082 76,939 81,072   Net interest margin (tax-equivalent) 3.24% 3.49% 3.92%                         $ Change from $ Change from % Change from % Change from   June 30, September 30, June 30, September 30, (Dollars in thousands) 2012 2011 2012 2011 Net interest income         Interest income $ (2,177) (9,418) (3)% (13)% Interest expense (137) (2,390) (2)% (21)% Total net interest income (2,040 (7,028) (4)% (12)%           Non-interest income         Service charges, loan fees, and other fees 615 483 5% 4% Gain on sale of loans 1,206 3,607 16% 70% Gain on sale of investments — (813) n/m (100)% Other income 362 (239) 19% (10)% Total non-interest income 2,183 3,038 10% 15%   $ 143 (3,990) —% (5)%           Net Interest Income The current quarter net interest income of $53.1 million decreased $2.0 million, or 4 percent, over the prior quarter and decreased $7.0 million, or 12 percent, over the prior year third quarter. The current quarter interest income of $62.0 million decreased $2.2 million, or 3 percent, over the prior quarter and decreased $9.4 million, or 13 percent, over the prior year third quarter. The primary driver of the decrease in interest income was the $19.5 million of premium amortization (net of discount accretion) on investment securities in the current quarter which was an increase of $3.6 million over the prior quarter and an increase of $11.3 million over the prior year third quarter. The current quarter decrease in interest expense of $137 thousand, or 2 percent, from the prior quarter and the decrease of $2.4 million, or 21 percent, in interest expense from the prior year third 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 (including non-interest bearing deposits) for the current quarter was 54 basis points compared to 57 basis points for the prior quarter and 74 basis points for the prior year third quarter.  The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.24 percent, a decrease of 25 basis points from the prior quarter net interest margin of 3.49 percent. "Although the Company had a 3 basis points improvement in funding costs, there was a 28 basis points reduction in the yield on earning assets of which 17 basis points was attributable to premium amortization," said Ron Copher, Chief Financial Officer. The decrease in yield on earning assets from the current quarter compared to the prior quarter was the result of a 6 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, 32 basis points was due to the increase in premium amortization. The premium amortization in the current quarter accounted for a 111 basis points reduction in the net interest margin compared to a 94 basis points reduction in the prior quarter and 51 basis points reduction in the net interest margin in the prior year third quarter.  Non-interest Income The $2.2 million increase in non-interest income for the current quarter offset the $2.2 million decrease in interest income for the current quarter and resulted in an increase of $6 thousand in net revenue (interest income and non-interest income) for the current quarter. Non-interest income for the current quarter totaled $24.0 million, an increase of $2.2 million over the prior quarter and an increase of $3.0 million over the same quarter last year. Gain on sale of loans increased $1.2 million, or 16 percent, over the prior quarter and $3.6 million, or 70 percent, over the prior year third quarter as there was an increase in origination and refinance volume due to lower interest rates and borrowers taking advantage of U.S. government loan modification programs.  Service charge fee income increased $615 thousand from the prior quarter, the majority of which was from higher debit card income and overdraft fees driven by the increased number of deposit accounts. Service charge fee income increased $483 thousand, or 4 percent, from the prior year third quarter. Other income of $2.2 million for the current quarter increased $362 thousand, or 19 percent, from the prior quarter. Included in other income was operating revenue of $49 thousand from other real estate owned and gains of $482 thousand on the sale of other real estate owned, which total $531 thousand for the current quarter compared to $414 thousand for the prior quarter and $903 thousand for the prior year third quarter. Non-interest Expense Summary   Three Months ended     September 30, June 30, September 30,   (Dollars in thousands)  2012 2012 2011   Compensation and employee benefits  $ 24,046 23,684 21,607   Occupancy and equipment 6,001 5,825 6,027   Advertising and promotions 1,820 1,713 1,762   Outsourced data processing 801 788 740   Other real estate owned 6,373 2,199 7,198   Federal Deposit Insurance Corporation premiums 1,767 1,300 1,638   Core deposit intangibles amortization 532 535 599   Other expense 8,838 10,146 8,568   Total non-interest expense before goodwill impairment charge 50,178 46,190 48,139   Goodwill impairment charge — — 40,159   Total non-interest expense  $ 50,178 46,190 88,298                         $ Change from $ Change from % Change from % Change from   June 30, September 30, June 30, September 30, (Dollars in thousands)  2012 2011 2012 2011 Compensation and employee benefits  $ 362  $ 2,439 2% 11% Occupancy and equipment 176 (26) 3% — Advertising and promotions 107 58 6% 3% Outsourced data processing 13 61 2% 8% Other real estate owned 4,174 (825) 190% (11)% Federal Deposit Insurance Corporation premiums 467 129 36% 8% Core deposit intangibles amortization (3) (67) (1)% (11)% Other expense (1,308) 270 (13)% 3% Total non-interest expense before goodwill impairment charge 3,988 2,039 9% 4% Goodwill impairment charge — (40,159) n/m (100)% Total non-interest expense  $ 3,988 $ (38,120) 9% (43)%           Non-interest expense of $50.2 million for the current quarter increased by $4.0 million, or 9 percent, from the prior quarter and increased by $2.0 million from the prior year third quarter, excluding the goodwill impairment charge.  Compensation and employee benefits increased by $2.4 million, or 11 percent, from the prior year third quarter primarily the result of an increase in commissions from increased residential real estate loan originations. Other real estate owned expense increased $4.2 million, or 190 percent, from the prior quarter and decreased $825 thousand, or 11 percent, from the prior year third quarter. The current quarter other real estate owned expense of $6.4 million included $1.0 million of operating expense, $4.7 million of fair value write-downs, and $599 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.   Other expense decreased by $1.3 million, or 13 percent, from the prior quarter primarily due to decreases in expenses associated with New Markets Tax Credit investments. The current quarter decrease in other expense was partially offset by the $288 thousand loss on the sale of the Company's remaining $345 thousand mortgage servicing portfolio during the third quarter of 2012. Efficiency Ratio The efficiency ratio for the current quarter was 55 percent compared to 50 percent for the prior year third quarter. Although there was an increase in non-interest income during the current quarter, it was not enough to offset the combination of the decrease in net interest income, due to the increase in premium amortization on investment securities, and the increase in non-interest expense (before the goodwill impairment charge).Operating Results for Nine Months ended September 30, 2012Compared to September 30, 2011  Revenue Summary   Nine Months ended       September 30, September 30,     (Dollars in thousands)  2012 2011 $ Change % Change Net interest income         Interest income  $ 194,091  $ 211,368 $ (17,277) (8)% Interest expense 27,549 34,297 (6,748) (20)% Total net interest income 166,542 177,071 (10,529) (6)%           Non-interest income         Service charges, loan fees, and other fees 36,861 35,979 882 2% Gain on sale of loans 23,063 14,106 8,957 63% Gain on sale of investments — 346 (346) (100)% Other income 6,179 5,751 428 7% Total non-interest income 66,103 56,182 9,921 18%    $ 232,645  $ 233,253 $ (608) —% Net interest margin (tax-equivalent) 3.48% 3.95%               Net Interest Income Net interest income for the first nine months of 2012 decreased $10.5 million, or 6 percent, over the same period last year. Interest income decreased $17.3 million, or 8 percent, while interest expense decreased $6.7 million, or 20 percent from the first nine months of 2011. The decrease in interest income from the first nine months of the prior year was principally due to the increase in premium amortization on investment securities and the reduction in loan balances, the combination of which put further pressure on earning asset yields. Interest income was reduced by $48.7 million in premium amortization (net of discount accretion) on investment securities which was an increase of $22.9 million from the first nine 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 (including non-interest bearing deposits) for the first nine months of 2012 was 57 basis points compared to 77 basis points for the first nine months 2011.  The net interest margin, on a tax-equivalent basis, for the first nine months of 2012 was 3.48 percent, a 47 basis points reduction from the net interest margin of 3.95 percent for the first nine months 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, both of which outpaced the reduction in funding cost. The premium amortization in 2012 accounted for a 95 basis points reduction in the net interest margin which was an increase of 40 basis points compared to the 55 basis points reduction in the net interest margin for the same period last year.  Non-interest Income Non-interest income of $66.1 million for the first nine months of 2012 increased $9.9 million, or 18 percent, over non-interest income of $56.2 million for the first nine months of 2011. Gain on sale of loans for the first nine months of 2012 increased $9.0 million, or 63 percent, from the first nine months of 2011 due to greater refinance and loan origination activity. Other income for the first nine months of 2012 increased $428 thousand, or 7 percent, over the first nine months of 2011. Included in other income was operating revenue of $287 thousand from other real estate owned and gains of $1.2 million on the sale of other real estate owned, which aggregated $1.5 million for the first nine months of 2012 compared to $1.9 million for the same period in the prior year. Non-interest Expense Summary   Nine Months ended       September 30, September 30,     (Dollars in thousands)  2012 2011 $ Change % Change Compensation and employee benefits  $ 71,290  $ 64,380  $ 6,910 11% Occupancy and equipment 17,794 17,709 85 —% Advertising and promotions 4,935 4,881 54 1% Outsourced data processing 2,435 2,304 131 6% Other real estate owned 15,394 14,359 1,035 7% Federal Deposit Insurance Corporation premiums 4,779 6,159 (1,380) (22)% Core deposit intangibles amortization 1,619 1,916 (297) (16)% Other expense 27,167 25,127 2,040 8% Total non-interest expense before goodwill impairment charge 145,413 136,835 8,578 6% Goodwill impairment charge — 40,159 (40,159) (100)% Total non-interest expense  $ 145,413  $ 176,994 $ (31,581) (18)%           Compensation and employee benefits for the first nine months of 2012 increased $6.9 million, or 11 percent, and was attributable to an increase in commissions on residential real estate loan originations, a revised Company incentive program and the restoration in the first nine months of 2012 of certain compensation cuts made in the first nine months of 2011. Other real estate owned expense of $15.4 million in the first nine months of 2012 increased $1.0 million, or 7 percent, from the first nine months of the prior year. The other real estate owned expense for the first nine months of 2012 included $2.5 million of operating expenses, $11.4 million of fair value write-downs, and $1.5 million of loss on sale of other real estate owned. Other expense in the first nine months of 2012 increased $2.0 million, or 8 percent, from the first nine months of the prior year and was primarily driven by increases in loan expenses, checking and operating losses and several miscellaneous categories.  Provision for loan losses The provision for loan losses was $19.3 million for the first nine months of 2012, a decrease of $36.6 million, or 66 percent, from the same period in the prior year. Net charged-off loans during the first half of 2012 was $20.1 million, a decrease of $34.7 million from the first nine months of 2011. The largest category of net charge-offs was in land, lot and other construction loans which had net charge-offs of $7.0 million, or 35 percent of total net charged-off loans.  Efficiency Ratio The efficiency ratio was 53 percent for the first nine months of 2012 and 51 percent for the first nine months of 2011. Although there was a significant increase in non-interest income from the first nine months of the prior year, it was not enough to offset the combination of the decrease in net interest income and the increase in non-interest expense (before the goodwill impairment charge) in the first nine months 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.Glacier Bancorp, Inc.Unaudited Condensed Consolidated Statements of Financial Condition           September 30, December 31, September 30, (Dollars in thousands, except per share data)  2012 2011 2011Assets       Cash on hand and in banks $98,772 104,674 98,151 Interest bearing cash deposits 73,627 23,358 35,620 Cash and cash equivalents 172,399 128,032 133,771 Investment securities, available-for-sale 3,586,355 3,126,743 2,935,011 Loans held for sale 118,986 95,457 67,876 Loans receivable 3,408,094 3,466,135 3,523,582 Allowance for loan and lease losses (136,660) (137,516) (138,093) Loans receivable, net 3,271,434 3,328,619 3,385,489 Premises and equipment, net 159,386 158,872 157,734 Other real estate owned 57,650 78,354 93,649 Accrued interest receivable 39,359 34,961 35,296 Deferred tax asset 20,462 31,081 20,572 Core deposit intangible, net 6,665 8,284 8,841 Goodwill 106,100 106,100 106,100 Non-marketable equity securities 50,363 49,694 49,691 Other assets 43,046 41,709 48,659 Total assets $7,632,205 7,187,906 7,042,689Liabilities       Non-interest bearing deposits $1,180,066 1,010,899 996,265 Interest bearing deposits 4,023,031 3,810,314 3,774,263 Federal funds purchased — — 45,000 Securities sold under agreements to repurchase 414,836 258,643 301,820 Federal Home Loan Bank advances 917,021 1,069,046 889,053 Other borrowed funds 10,152 9,995 14,792 Subordinated debentures 125,382 125,275 125,239 Accrued interest payable 4,654 5,825 5,693 Other liabilities 66,906 47,682 39,176 Total liabilities 6,742,048 6,337,679 6,191,301Stockholders' 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 641,737 642,882 642,880 Retained earnings - substantially restricted 199,845 173,139 168,139 Accumulated other comprehensive income 47,856 33,487 39,650 Total stockholders' equity 890,157 850,227 851,388 Total liabilities and stockholders' equity 7,632,205 7,187,906 7,042,689 Number of common stock shares issued and outstanding 71,937,222 71,915,073 71,915,073        Glacier Bancorp, Inc.Unaudited Condensed Consolidated Statements of Operations             Three Months ended Nine Months ended (Dollars in thousands, except per share data) September 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011Interest Income         Residential real estate loans  $ 7,740 7,990 23,019 24,862 Commercial loans 30,293 32,585 91,764 98,620 Consumer and other loans 8,826 10,224 26,809 30,885 Investment securities 15,156 20,634 52,499 57,001 Total interest income 62,015 71,433 194,091 211,368Interest Expense         Deposits 4,485 6,218 14,048 19,890 Securities sold under agreements to repurchase 395 357 997 1,033 Federal Home Loan Bank advances 3,116 3,491 9,715 9,132 Federal funds purchased and other borrowed funds 53 60 176 155 Subordinated debentures 858 1,171 2,613 4,087 Total interest expense 8,907 11,297 27,549 34,297Net Interest Income 53,108 60,136 166,542 177,071 Provision for loan losses 2,700 17,175 19,250 55,825 Net interest income after provision for loan losses 50,408 42,961 147,292 121,246Non-Interest Income         Service charges and other fees 11,939 11,563 33,722 33,101 Miscellaneous loan fees and charges 1,080 973 3,139 2,878 Gain on sale of loans 8,728 5,121 23,063 14,106 Gain on sale of investments — 813 — 346 Other income 2,227 2,466 6,179 5,751 Total non-interest income 23,974 20,936 66,103 56,182Non-Interest Expense         Compensation and employee benefits 24,046 21,607 71,290 64,380 Occupancy and equipment 6,001 6,027 17,794 17,709 Advertising and promotions 1,820 1,762 4,935 4,881 Outsourced data processing 801 740 2,435 2,304 Other real estate owned 6,373 7,198 15,394 14,359 Federal Deposit Insurance Corporation premiums 1,767 1,638 4,779 6,159 Core deposit intangibles amortization 532 599 1,619 1,916 Goodwill impairment charge — 40,159 — 40,159 Other expense 8,838 8,568 27,167 25,127 Total non-interest expense 50,178 88,298 145,413 176,994Income (Loss) Before Income Taxes 24,204 (24,401) 67,982 434 Federal and state income tax expense (benefit) 4,760 (5,353) 13,224 (2,689)Net Income (Loss)  $ 19,444 (19,048) 54,758 3,123 Basic earnings (loss) per share  $ 0.27 (0.27) 0.76 0.04 Diluted earnings (loss) per share  $ 0.27 (0.27) 0.76 0.04 Dividends declared per share  $ 0.13 0.13 0.39 0.39 Average outstanding shares - basic 71,933,141 71,915,073 71,925,664 71,915,073 Average outstanding shares - diluted 71,973,985 71,915,073 71,925,761 71,915,073  Glacier Bancorp, Inc.Average Balance Sheet                 Three Months ended Nine Months ended   September 30, 2012 September 30, 2012       Average     Average   Average Interest & Yield/ Average Interest & Yield/  (Dollars in thousands)  Balance  Dividends Rate Balance  Dividends  RateAssets             Residential real estate loans  $ 625,778 7,740 4.95%  $ 600,443 23,019 5.11% Commercial loans 2,269,189 30,293 5.30% 2,279,928 91,764 5.36% Consumer and other loans 612,541 8,826 5.72% 626,614 26,809 5.70% Total loans 1 3,507,508 46,859 5.30% 3,506,985 141,592 5.38% Tax-exempt investment securities 2 890,211 13,219 5.94% 880,310 40,605 6.15% Taxable investment securities 3 2,653,151 6,379 0.96% 2,503,270 25,511 1.36% Total earning assets 7,050,870 66,457 3.74% 6,890,565 207,708 4.02% Goodwill and intangibles 113,041     113,587     Non-earning assets 392,735     371,379     Total assets  $ 7,556,646      $ 7,375,531    Liabilities             Non-interest bearing deposits  $ 1,109,645 — —%  $ 1,048,052 — —% NOW accounts 881,707 361 0.16% 857,439 1,086 0.17% Savings accounts 460,400 89 0.08% 444,711 265 0.08% Money market deposit accounts 893,332 563 0.25% 883,278 1,739 0.26% Certificate accounts 1,053,807 2,802 1.05% 1,058,233 9,100 1.15% Wholesale deposits 4 656,321 670 0.41% 646,744 1,858 0.38% FHLB advances 975,763 3,116 1.27% 996,153 9,715 1.30% Repurchase agreements, federal funds purchased and other borrowed funds 547,138 1,306 0.95% 497,296 3,786 1.01% Total funding liabilities 6,578,113 8,907 0.54% 6,431,906 27,549 0.57% Other liabilities 87,133     64,748     Total liabilities 6,665,246     6,496,654    Stockholders' Equity             Common stock 719     719     Paid-in capital 641,672     642,101     Retained earnings 200,238     190,900     Accumulated other comprehensive income 48,771     45,157     Total stockholders' equity 891,400     878,877     Total liabilities and stockholders' equity  $ 7,556,646      $ 7,375,531     Net interest income (tax-equivalent)    $ 57,550      $ 180,159   Net interest spread (tax-equivalent)     3.20%     3.45% Net interest margin (tax-equivalent)     3.24%     3.48%               (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) Includes tax effect of $4,056,000 and $12,459,000 on tax-exempt investment security income for the three and nine months ended September 30, 2012, respectively. (3) Includes tax effect of $386,000 and $1,158,000 on investment security tax credits for the three and nine months ended September 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 from % Change from (Dollars in thousands) September 30, December 31, September 30, December 31, September 30,   2012 2011 2011 2011 2011 Custom and owner occupied construction  $ 39,937 35,422 31,592 13% 26% Pre-sold and spec construction 46,149 58,811 57,813 (22)% (20)%Total residential construction86,08694,23389,405(9)%(4)% Land development 88,272 103,881 116,500 (15)% (24)% Consumer land or lots 109,648 125,396 130,417 (13)% (16)% Unimproved land 54,988 66,074 68,654 (17)% (20)% Developed lots for operative builders 19,943 25,180 26,271 (21)% (24)% Commercial lots 21,674 26,621 27,085 (19)% (20)% Other construction 37,981 34,346 32,682 11% 16%Total land, lot, and other construction332,506381,498401,609(13)%(17)% Owner occupied 703,253 697,131 701,578 1% —% Non-owner occupied 450,402 436,021 431,664 3% 4%Total commercial real estate1,153,6551,133,1521,133,2422%2%Commercial and industrial401,717408,054411,465(2)%(2)% 1st lien 719,030 688,455 675,980 4% 6% Junior lien 84,687 95,508 97,583 (11)% (13)%Total 1-4 family803,717783,963773,5633%4% Home equity lines of credit 326,878 350,229 360,459 (7)% (9)% Other consumer 108,069 109,235 112,546 (1)% (4)%Total consumer434,947459,464473,005(5)%(8)%Agriculture157,587151,031163,4824%(4)%Other156,865150,197145,6874%8%Loans held for sale(118,986)(95,457)(67,876)25%75% Total  $ 3,408,094 3,466,135 3,523,582 (2)% (3)%            Glacier Bancorp, Inc.Credit Quality Summary                         Accruing             Loans 90           Non- Days Other         Accruing or More Real Estate   Non-performing Assets, by Loan Type Loans Past Due Owned   September 30, December 31, September 30, September 30, September 30, September 30, (Dollars in thousands)  2012 2011 2011 2012 2012 2012 Custom and owner occupied construction  $ 2,468 1,531 2,440 1,375 415 678 Pre-sold and spec construction 5,993 5,506 10,375 5,293 — 700Total residential construction8,4617,03712,8156,6684151,378 Land development 38,295 56,152 73,550 20,286 356 17,653 Consumer land or lots 9,332 8,878 10,128 4,524 236 4,572 Unimproved land 25,369 35,771 39,925 16,205 56 9,108 Developed lots for operative builders 6,471 9,001 4,195 4,571 151 1,749 Commercial lots 2,002 2,032 2,211 480 — 1,522 Other construction 5,111 5,133 4,832 200 — 4,911Total land, lot and other construction86,580116,967134,84146,26679939,515 Owner occupied 15,845 23,931 25,012 9,826 238 5,781 Non-owner occupied 3,929 4,897 7,275 3,518 42 369Total commercial real estate19,77428,82832,28713,3442806,150Commercial and industrial7,06012,85514,9826,22777855 1st lien 30,578 31,083 37,715 23,395 400 6,783 Junior lien 9,213 2,506 2,219 8,829 384 —Total 1-4 family39,79133,58939,93432,2247846,783 Home equity lines of credit 7,502 6,361 6,622 7,100 175 227 Other consumer 462 360 322 316 40 106Total consumer7,9646,7216,9447,416215333Agriculture6,8947,0107,1153,711—3,183Other253449486——253 Total  $ 176,777 213,456 249,404 115,856 3,271 57,650              Glacier Bancorp, Inc.Credit Quality Summary (continued)                   Accruing 30-89 Days Delinquent Loans,  by Loan Type   September 30, December 31, September 30, (Dollars in thousands)  2012 2011 2011 Custom and owner occupied construction  $ 852 — — Pre-sold and spec construction — 250 —Total residential construction852250— Land development 774 458 398 Consumer land or lots 850 1,801 1,137 Unimproved land 1,126 1,342 2,873 Developed lots for operative builders 129 1,336 255 Commercial lots — — 151 Other construction — — 138Total land, lot and other construction2,8794,9374,952 Owner occupied 6,849 8,187 3,998 Non-owner occupied 4,927 1,791 1,787Total commercial real estate11,7769,9785,785Commercial and industrial2,8034,6374,122 1st lien 4,462 14,405 2,751 Junior lien 750 6,471 600Total 1-4 family5,21220,8763,351 Home equity lines of credit 3,433 3,416 1,653 Other consumer 943 1,172 973Total consumer4,3764,5882,626Agriculture3453,428207Other19139287 Total  $ 28,434 49,086 21,130        Glacier Bancorp, Inc.Credit Quality Summary (continued)               Net Charge-Offs (Recoveries), Year-to-Date       Period Ending, By Loan Type Charge-Offs Recoveries   September 30, December 31, September 30, September 30, September 30, (Dollars in thousands)  2012 2011 2011 2012 2012 Custom and owner occupied construction  $ 24 206 206 74 50 Pre-sold and spec construction 2,516 4,069 4,744 2,641 125Total residential construction2,5404,2754,9502,715175 Land development 2,654 17,055 14,435 3,480 826 Consumer land or lots 2,537 7,456 6,218 2,869 332 Unimproved land 543 4,047 3,417 802 259 Developed lots for operative builders 1,257 943 481 1,269 12 Commercial lots 41 237 175 167 126 Other construction — 1,568 1,615 — —Total land, lot and other construction7,03231,30626,3418,5871,555 Owner occupied 1,254 3,815 3,343 1,433 179 Non-owner occupied 232 3,861 3,532 628 396Total commercial real estate1,4867,6766,8752,061575Commercial and industrial1,7907,8717,3652,604814 1st lien 2,864 7,031 4,564 3,637 773 Junior lien 2,668 1,663 1,518 2,888 220Total 1-4 family5,5328,6946,0826,525993 Home equity lines of credit 1,412 3,261 2,343 1,526 114 Other consumer 133 615 454 435 302Total consumer1,5453,8762,7971,961416Agriculture95134134231136Other8625929510519 Total  $ 20,106 64,091 54,839 24,789 4,683             Visit our website at www.glacierbancorp.comCONTACT: Michael J. Blodnick (406) 751-4701 Ron J. Copher (406) 751-7706