Glacier Bancorp, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; balance-sheet comparisons are primarily with December 31, 2023 and Q1 2023. Figures are in U.S. dollars; financial statement amounts are generally in millions. The interim financial statements are unaudited.
Business context and results
Glacier Bancorp is a regional bank holding company operating through Glacier Bank in eight western states. On January 31, 2024, it acquired Community Financial Group and Wheatland Bank, expanding its Washington operations. Wheatland’s results are included from the acquisition date.
- Income and earnings: Net interest income was $166.5 million, down 10.6% year over year, as higher funding costs more than offset increased interest income. Total non-interest income was $30.0 million; total income (net interest income plus non-interest income) was $196.5 million, down $17.6 million year over year. Net income was $32.6 million, down 47%; diluted EPS was $0.29 versus $0.55.
- Margins and costs: Tax-equivalent net interest margin was 2.59%, up from 2.56% in Q4 2023 but down from 3.08% in Q1 2023. The efficiency ratio rose to 74.41% from 60.39% a year earlier. Non-interest expense increased 12% year over year to $151.8 million.
- Credit: Provision for credit losses was $8.2 million, versus $5.5 million a year earlier. The allowance for credit losses was $198.8 million, or 1.19% of loans. Net charge-offs were $3.1 million. Non-performing assets were $25.4 million, 0.09% of subsidiary assets; accruing loans 30–89 days past due increased to $62.4 million from $25.0 million a year earlier.
- Balance sheet: Total assets were $27.82 billion. Loans were $16.73 billion, up $534 million from year-end; excluding Wheatland, loan growth was $84 million, or 2% annualized. Deposits were $20.43 billion, up $498 million, but excluding Wheatland decreased $119 million. Non-interest-bearing deposits were 30% of deposits, down from 35% a year earlier.
- Liquidity and funding: Cash and cash equivalents were $788.7 million, down $565.7 million during the quarter. The company repaid its $2.74 billion Federal Reserve Bank Term Funding Program balance using cash and $2.14 billion of FHLB advances. FHLB advances included $1.8 billion of term borrowings with a weighted average rate of 4.75%. Disclosed available capacity included $2.38 billion of FHLB borrowing capacity, $1.94 billion at the FRB discount window, $565 million of unsecured lines, and $4.18 billion of unencumbered securities.
- Cash flow: Operating activities used $56.7 million, versus providing $98.2 million in Q1 2023; investing activities provided $209.4 million, and financing activities used $718.3 million. Cash, cash equivalents and restricted cash decreased $565.7 million to $788.7 million.
- Capital and shareholder returns: Stockholders’ equity was $3.11 billion; tangible book value per share was $18.00. Glacier Bank’s reported total capital, Tier 1, CET1 and leverage ratios were 13.86%, 12.77%, 12.77% and 8.88%, respectively. The quarterly dividend remained $0.33 per share.
Material changes and unusual items
- Wheatland acquisition consideration was approximately $93.2 million, including 2.39 million Glacier shares and $0.8 million cash; preliminary goodwill recognized was $38.4 million. Wheatland contributed approximately $5.8 million of net interest and non-interest income and a $7.7 million net loss from acquisition through quarter-end.
- Q1 results included $5.7 million of acquisition-related expense, $5.0 million of Wheatland operating expense, and a $1.5 million increase in the FDIC special assessment. The company reported $6.1 million of credit loss expense associated with the acquisition.
- Interest expense rose 147% year over year, reflecting higher deposit and borrowing costs. Core deposit cost, including non-interest-bearing deposits, was 1.34%, versus 0.23% a year earlier. Management said the 10-basis-point quarterly increase in core deposit cost was the smallest since Q4 2022.
- Available-for-sale securities had $495.9 million of gross unrealized losses and held-to-maturity securities had $361.7 million at quarter-end. Management attributed the declines primarily to interest rates and market spreads, reported the securities as investment grade, and recorded no securities credit-loss allowance.
- Accumulated other comprehensive loss was $372.3 million. The company reported no material change in risk factors from its 2023 Form 10-K; pending ordinary-course litigation was not expected by management to materially affect its financial position, results or liquidity.
Outlook, commentary and risks
The filing provides no specific earnings or financial guidance. Management noted that Q1 net interest margin increased for the first time since Q3 2022, as loan yields rose faster than deposit costs, but cautioned that results depend on rates, deposit pricing, balance-sheet mix and customer behavior. The company’s modeled net interest income sensitivity showed declines under upward rate shocks: 5.40% over one year and 4.04% over two years for a +100-basis-point shock; 11.02% and 8.24%, respectively, for +200 basis points. Management cautioned that these scenarios are hypothetical, not forecasts, and depend on assumptions.
Key disclosed risks include loan credit deterioration, especially given the portfolio’s concentration in commercial real estate (65% of loans); deposit competition and funding costs; interest-rate changes and securities valuations; economic and local-market conditions; regulatory costs; acquisition integration and goodwill impairment; and cybersecurity, operational and natural-disaster exposures. A purchase of six Montana branches from HTLF was announced, subject to approvals and customary conditions, with completion expected in Q3 2024.
Important facts for investors to verify
- Track deposit trends and funding mix excluding Wheatland, including the share and pricing of non-interest-bearing deposits and certificates.
- Monitor net interest margin, deposit-cost increases, and performance versus the filing’s rate-sensitivity assumptions.
- Review commercial real estate concentrations, the rise in early-stage delinquencies, criticized loan trends, and the adequacy of the allowance.
- Assess Wheatland integration costs, acquired loan credit quality, preliminary purchase accounting and goodwill; the filing says fair-value estimates remain preliminary.
- Evaluate liquidity and the cost, maturity profile and collateral requirements of replacement FHLB funding, alongside the large unrealized securities losses.
- Confirm progress and regulatory approval for the proposed six-branch Montana acquisition and consider its expected effect on expenses, capital and funding.