Glacier Bancorp, Inc.

Good day and thank you for standing by. Welcome to the Glacier Bancorp Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randy Chesler, President and CEO of Glacier Bancorp. Please go ahead.

Good morning and thank you for joining us today. With me here in Kalispell is Ron Cofer, our Chief Financial Officer, Tom Dolan, our Chief Credit Administrator, Angela Dosey, our Chief Accounting Officer, and Byron Pollan, our Treasurer. I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined starting on page 13 of our press release, and we encourage you to review this section. We delivered an excellent quarter, continuing our momentum with higher loan yields, lower deposit costs, increasing margin, solid growth, and disciplined expense management. We successfully completed the acquisition of the Bank of Idaho, adding $1.4 billion in assets and expanding our presence in Idaho and eastern Washington. The integration is progressing very smoothly, and we're excited about the long-term opportunities this brings. We also announced a definitive agreement to acquire Guaranty Bank Shares, a $3.1 billion bank headquartered in Mount Pleasant, Texas. This marks our first entry into the state and represents a significant step for our company and in our strategic expansion of our Southwest presence. We report a net income of $52.8 million for the second quarter, or 45 cents per diluted share. Our results include $19.9 million in credit loss expense and acquisition-related expenses, primarily from the completion of the Bank of Idaho acquisition. While the second quarter net income represents a decline of 3% from the prior quarter due to acquisition expenses, It reflects an 18% increase in net income and a 15% increase in earnings per share compared to the same quarter last year. Our loan portfolio grew $1.3 billion to $18.5 billion, an 8% increase from the prior quarter, with $239 million or 6% annualized in organic growth. Commercial real estate continues to be a key driver of loan growth. Deposits also grew, reaching $21.6 billion, up 5% quarter over quarter. Notably, non-interest-bearing deposits increased 8% and continue to represent 30% of total deposits. Deposits and repurchase agreements organically increased by $43 million, or 1% annualized from the prior quarter. We reported net interest income of $208 million, up $17.6 million, or 9% from the prior quarter, and up $41.1 million, or 25% from the same quarter last year. This growth was driven by higher average loan balances, improved loan yields, and declining funding costs. Our net interest margin on a tax-adjusted basis expanded to 3.21%, up 17 basis points from the first quarter and up 53 basis points year over year. This marks our sixth consecutive quarter of margin expansion reflecting the strength of our loan portfolio repricing, our ability to get good margin on new loans, and our continued focus on managing funding costs. The loan yield of 5.86% in the current quarter increased nine basis points from the prior quarter loan yield and increased 28 basis points from the prior year second quarter. The total earning asset yield of 4.73% in the current quarter increased 12 basis points from the prior quarter and increased 36 basis points from the prior year second quarter. Total funding costs declined to 1.63% down five basis points from the prior quarter as we reduced higher cost federal home loan bank borrowings by $265 million in the quarter. Core deposit costs remained stable at 1.25%. On the expense side, non-interest expense was $155 million, up 3% from the prior quarter. This includes $3.2 million in acquisition-related costs. Compensation and benefits rose due to increased headcount from the Bank of Idaho acquisition and annual merit increases. Non-interest income totaled $32.9 million in the current quarter, up slightly from the first quarter, and up 2% year over year. Service charges and fees increased 8% from the prior quarter, while gains on loans remained steady. Our efficiency ratio improved to 62.1%. 0.08% down from 65.49% in the prior quarter and 67.97% a year ago, reflecting positive operating leverage. Credit quality remains very strong. Our non-performing assets remain low at 0.17% of total assets. and net charge-offs were just 1.6 million for the quarter. Our allowance for credit remains at 1.22% of loans, reflecting our conservative approach to risk management. We recorded a provision for credit loss of 20.3 million, which includes 16.7 million related to the Bank of Idaho acquisition. Excluding that, Our core provision for credit loss was $3.6 million. We continue to maintain a strong capital position. Tangible book value per share increased to $19.79, up 8% year over year, and we declared our 161st consecutive quarterly dividend of $0.33 per share. underscoring our commitment to delivering consistent shareholder returns. We are very pleased with our performance this quarter. Our expanding footprint, unique business model, strong business performance, disciplined credit culture, and strong capital base provide a solid foundation for future growth. That ends my formal remarks. And I would now like the conference call operator to open the line for any questions our analysts may have.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Jeff Ruiz with DA Davidson. Your line is open.