Glacier Bancorp, Inc.

Ladies and gentlemen, thank you for standing by. Your conference call shall begin momentarily. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you for standing by, and welcome to the Glacier Bancorp First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star then 1 on your touchtone telephone. As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Mr. Randy Chesler, President and CEO. Sir, you may begin.

Randy Chesler Great. Thank you, Valerie. Well, good morning and thank you for joining us today. With me here in Kalispell this morning is Ron Cofer, our Chief Financial Officer, Angela Dosey, our Chief Accounting Officer, Byron Pollin, our Treasurer, Tom Dolan, our Chief Credit Administrator, and Don Sherry. our chief administrative officer. So we ended the quarter very encouraged by our strong results across the business that are evident in many of the key performance metrics that we'll cover today. Results were better than what we expected given some of the economic uncertainty caused by the biggest quarterly increase in interest rates in decades and steadily increasing inflation. Our leadership position in some of the best high-growth markets in the country continues to be a strong tailwind for the company as we build one of the premier community banks in the western United States. According to Forbes, the top five states in the U.S. for GDP growth in 2021 were all in our eight-state footprint. Utah, Washington, Idaho, Colorado, and Arizona. I'll touch on the business highlights first and then provide some additional thoughts on the quarter. Net income for the quarter was $67.8 million, an increase of $17.1 million, or 34% from the prior quarter net income of $50.7 million. Pre-tax, pre-provision net revenue was $88.8 million versus prior quarter of $87.9 million. an increase of $900,000, or 1%. The loan portfolio, excluding Triple P loans, had very strong organic growth during the quarter of $407 million, or 12% annualized. This is a very strong first quarter. Historically, our first quarters have been a bit more subdued. Net interest income in the quarter, on a tax equivalent basis, was $190 million. excluding payroll protection program loans or triple P loans, net interest income was 187 million, an increase of 3.2 million or 2% from the prior quarter of 184 million. Net interest margin for the quarter as a percentage of earning assets on a tax equivalent basis was 3.2% compared to 3.21 in the prior quarter. The core net interest margin for the current quarter of 3.07% increased three basis points from 3.04% in the prior quarter. Non-interest expense of $130 million decreased $3.7 million or 3% from the prior quarter. Excluding the $6.2 million of acquisition-related expenses Non-interest expense was $124 million during the quarter. Core deposits continued to flow into the divisions, growing organically by $383 million, or 7% during the quarter. The cost of core deposits remained steady at seven basis points. Earnings per share for the quarter was 61 cents versus 46 cents in the prior quarter. Credit quality continued to improve and show strength in most all measures. We kept our allowance for credit loss reserves flat to the prior quarter at 1.28% of total loans, reflecting our strong credit metrics and our view of the economic outlook. We declared a regular dividend for the quarter of 33 cents per share, an increase of a penny per share or 3% over the prior quarter dividend. The company has declared 148 consecutive quarterly regular dividends and has increased the regular dividend 49 times. We completed the core conversion of the Alta Bank division with assets of $4.1 billion, the largest and most complex conversion in the company's history. So core deposit growth continues to be surprisingly strong across our footprint. This is a good example of the value of our long-term focus on core relationship accounts. This quarter, core deposits increased by $383 million, or 7% annualized. Excluding the ALTA acquisition, core deposits increased $2.4 billion, or 15% from the prior first year quarter. Non-interest bearing deposits increased $211 million or 11% annualized during the quarter and now account for 37% of core deposits. Total debt securities of $10.1 billion decreased $257 million or 2% from the prior quarter and increased $3.7 billion or 57% from the prior year first quarter. We're pleased to invest more of our excess deposits into loans this quarter, and we continue to purchase debt securities with our excess liquidity. Debt securities represented 39% of total assets at the end of the quarter, compared to 40 at the end of 2021. Despite our strong loan growth, our loan-to-deposit ratio remains low at 64%. giving us plenty of fuel for future growth. Credit quality improved during the quarter with non-performing assets improving to 24 basis points from 26 in the prior quarter. Early stage delinquencies as a percentage of loans ended the quarter at 12 basis points, which was a 26 basis point decrease from the prior quarter. The company's net interest margin as a percentage of earning assets on a tax equivalent basis for the quarter was 3.2% compared to 3.21 in the prior quarter. The core net interest margin for the quarter was 3.07% compared to 3.04 in the prior quarter. The growing margin was driven by higher yields on investments. The yield on debt securities ended the quarter at 1.59% compared to 1.5% in the prior quarter. New investments in debt securities were added at 2.25%. The yield on the loan portfolio ended the quarter at 4.59%, down 11 basis points from the prior quarter. We added $1.9 billion in new core loan production with yields around 4.2%, which was an increase of about 20 basis points versus the prior quarter. We saw excellent loan growth in our markets with Wyoming, Montana, and Colorado leading the growth across our eight-state footprint. We're pleased to see the continued strong performance in commercial real estate lending growing organically by $235 million in the quarter. New loan production for the quarter was robust, with $1.9 billion in new loans originated. We continue to focus on responsible growth with a through-the-cycle underwriting lens. We're cautiously optimistic with our low double-digit growth outlook. We've yet to see a material impact of increasing inflation and interest rates on growth outside of the residential mortgage market. Non-interest income of $33.6 million declined 799,000 or 2% from the prior quarter and decreased 6.6 million or 16% from the same quarter last year. due primarily to the reduced gain on sale from residential mortgages. The hot housing market and refinancing slowed down a bit across our footprint, and our biggest concern in the real estate business remains the supply of homes available for sale, increasing interest rates, and the increasing cost of housing. We were very pleased to see effective expense control at the divisions. These results are a tribute to our unique operating model that empowers the divisions to make operating decisions that are right for their markets while still delivering excellent results. We continue to wind down the remnants of the PPP program, receiving $108 million in PPP loan forgiveness during the quarter, with 60.7 million of PPP loans remaining. We recognize 3.3 million of interest income from the PPP loans during the quarter and have 1.9 million of remaining fees to be recognized when the remaining loans are forgiven. Our acquisition of Alta Bank continues to proceed very well. We successfully converted ALTA to our core banking system in March, and we are on track to achieve the targeted cost saves in 2022 that we identified when we announced this transaction in May of 2021. We remain very optimistic about the long-term growth trends in Utah, and we're very pleased that the American Legislative Exchange Council ranked Utah the number one state for its economic outlook for the 15th year in a row. The Glacier team got off to a great start in the first quarter. We completed the core processing platform conversion of AltaBank, the largest and most complex conversion in our history, and the team still achieved record results. We think we are very well positioned to continue to prosperably grow in 2022. So that ends my formal remarks, and I would now like to ask Valerie to open the line for any questions that you may have.

Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star then one on your touch-tone telephone. Again, to ask a question, please press star then one. One moment for our first question. Our first question comes from Matthew Clark of Piper Stanley. Your line is open.