Glacier Bancorp, Inc.

Good day, and thank you for standing by. Welcome to the Glacier Bancorp third quarter earnings conference call. At this time, all participants are on 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 1-1 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 are Ron Copher, our Chief Financial Officer, Tom Dolan, our Chief Credit Administrator, Angela Dose, our Chief Accounting Officer, and Byron Pollin, our Deputy CFO and Treasurer. I would like to remind everyone that today's discussion is subject to the forward-looking statement considerations included in our earnings release and we encourage you to review that language. Last night we issued our earnings release for the third quarter of 2026 and we are very pleased to report record net income for Glacier. The quarter reflected continued earnings momentum are 11th consecutive quarter of margin expansion, strong deposit growth, solid loan growth, and excellent credit performance. Net income was 105 million for the third quarter, a record for the company, and the first time we exceeded 100 million in net income in a quarter. We were up 7% from the prior quarter and up 54% from the third quarter of last year. Diluted earnings per share were 80 cents, up 7% from the prior quarter and up 40% from the prior year third quarter. Operating diluted earnings per share were 81 cents, up 7% from the prior quarter and up 31% from the prior year third quarter. A key driver of our strong performance continues to be net interest income and margin expansion. Net interest income increased to $290 million, up 5% from the second quarter and up 29% from the third quarter of last year. Our tax equivalent net interest margin expanded to 4.01%, up 11 basis points from the second quarter and up 62 basis points from the prior year third quarter. This marks our 11th consecutive quarter of margin expansion, and we have now crossed the 4% mark with a strong tailwind driving momentum for further growth in the fourth quarter and into 2027. From a pre-tax, pre-provision net revenue perspective, our PPNR for the third quarter was $138 million, an increase of 6% from the prior quarter. Turning to the balance sheet, loans ended the quarter at $21.6 billion, increasing $256 million, or 5% annualized, from the second quarter. The growth reflected our continued focus on disciplined loan production in our attractive markets. The average loan yield of 6.22% in the current quarter increased 10 basis points from the prior quarter and increased 25 basis points from the prior year third quarter. Non-interest bearing deposits increased $279 million or 15% annualized to $7.7 billion and represented 30% of total deposits at quarter end. Total deposits were $25.3 billion at quarter end increasing $619 million or 10% annualized from the prior quarter and increased $3.4 billion or 16% from the prior year third quarter. Our loan to deposit ratio improved to 85.7% from 86.8% at the end of the prior quarter. and our deposit base continues to comfortably support our liquidity, funding strategy and future loan growth. The total cost of funding declined to 1.32%, down one basis point from the prior quarter and down 26 basis points from the third quarter of last year. Core deposit costs, including non-interest-bearing deposits, was 1.17% down one basis point from the prior quarter and down six basis points from the prior year third quarter. Credit quality remains excellent, consistent with our market-focused divisional model and disciplined underwriting culture. Early stage delinquencies declined to 0.27% of loans from 0.31% in the prior quarter, and non-performing assets decreased $1.2 million to $90.6 million, or 0.28% of subsidiary assets. Net charge-offs were $6 million for the quarter, which included $3.5 million of deposit overdraft charge-offs. Non-interest expense was well managed in the quarter. The efficiency ratio improved to 56.08% from 56.65% in the prior quarter. Return on average assets increased to 1.31%, up from 1.25% last quarter, and 0.93% in the third quarter of last year. During the quarter, the Board increased the quarterly dividend by 2 cents, or 6%, to 35 cents per share. This marks our 166th consecutive quarterly dividend. and we have now increased the dividend 50 times over our history. Tangible book value per share grew to $22.05, up 1% from the prior quarter and up 8% from the prior year third quarter. We are very encouraged by our results for the third quarter and through the first nine months of the year. Record earnings, a margin above 4%, Strong deposit growth, disciplined loan growth, and excellent credit performance, all driven by Glacier's community banking model, demonstrate the power of the Glacier franchise and provide strong momentum heading into the fourth quarter and 2027. That concludes my remarks. I will now ask the operator to open the line for questions from our analysts.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Our first question comes from the line of Jeff Rulis with DA Davidson. Your line is now open.