Glacier Bancorp, Inc.

Thank you for standing by. Welcome to the Glacier Bancorp First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Randy Kessler, President and Chief Executive Officer of Glacier Bank Corp. Please go ahead, sir.

All right. Thank you, Jonathan. And 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. I'd like to point out that the discussion today is subject to the same forward-looking considerations starting on page 10 of our press release, and we encourage you to review this section. Yesterday we released our first quarter earnings and an announcement regarding the approval of our purchase of six Montana branches after the close of the market. We experienced an increase in the net interest margin for the first time since the third quarter of 2022. The company's net interest margin as a percentage of earning assets on a tax equivalent basis was 2.59% compared to 2.56% in the prior quarter and was primarily driven by the increase in loan yields outpacing the increase in deposit costs. This was a very welcome result and arrived a quarter sooner than we expected. We believe this trend will continue throughout 24 and into 25. It appears that we are entering a higher for longer period of interest rates, and that environment is good for the company, as are lower rates. Interest income of $279 million in the quarter increased $5.9 million, or 2%, over the prior quarter. and increased 47.5 million or 20% over the prior year first quarter. The loan yield for the current quarter was 5.46%. It increased 12 basis points compared to 5.34% in the prior quarter and increased 44 basis points from the prior year first quarter. The loan portfolio of $16.7 billion increased $534 million, or 3% during the quarter. The core deposit cost was 1.34%, which increased 10 basis points for the quarter, which was the smallest increase since the fourth quarter of 2022. Total deposits of $20.4 billion increased $498 million or 3% during the current quarter and increased $279 million or 1% from the prior year first quarter. The $2.7 billion of Federal Reserve bank term funding was paid off during the quarter through a combination of Federal Home Loan Bank advances and cash. Non-performing assets of 25 million at quarter end decreased 206,000 or 1% from the prior quarter and decreased 6.6 million or 20% from the prior year first quarter. Net income was 32.6 million for the current quarter, a decrease of 21.7 million or 40% from the prior quarter net income of $54.3 million. However, the current quarter included a total of $13.3 million related to credit loss expense from the acquisition of Wheatland Bank, acquisition-related expense, and increased expense from the Federal Deposit Insurance Corporation special assessment. We completed the acquisition and core conversion of Community Financial Group the parent of Wheatland Bank, a leading eastern Washington community bank headquartered in Spokane with total assets of $778 million. As you may remember, we consolidated our other eastern Washington division, North Cascades Bank, under Wheatland to create one brand in eastern Washington. The two divisions have been combined and the team has done an excellent job bringing our employees and customers together and focusing on building the Wheatland brand across the state. In February, we announced a purchase and assumption agreement with Heartland Bank to purchase six Montana branches from its Rocky Mountain Bank division, including the deposits, loans, owned real estate, and fixed assets associated with the branches. I'm very pleased to announce that we receive all regulatory approvals yesterday and expect to close this transaction in July. It is a rare opportunity to purchase six branches of a well-running franchise in good markets where we already have divisional branch leadership and a good knowledge of the customers. This transaction includes high quality deposits and loans and a great team of employees too. We expect to close and convert these branches in July. We also declared a quarterly dividend of 33 cents per share. The company has declared 156 quarterly dividends and has increased the dividend 49 times. In this quarter, we're very pleased to be recognized by J.D. Power to be number one in retail banking satisfaction in Montana, Idaho, and Washington. And Forbes also announced that they ranked Glacier Bank as top 10 in the US of the world's best banks. And that now makes it five consecutive years we have achieved this recognition. So Jonathan, that ends my formal remarks. And I would now like you to open the line for any questions that our analysts may have.

Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, simply press star 11 on your telephone. Our first question comes from the line of David Feaster from Raymond James. Your question, please. Hey, good morning, everybody. Morning, David.