Glacier Bancorp, Inc. GBCI

4th Quarter 2020 Highlights:

• Record net income of $81.9 million, an increase of $24.5 million, or 43 percent, over the prior year fourth quarter net income of $57.4 million.
• Diluted earnings per share of $0.86, an increase of 39 percent from the prior year fourth quarter diluted earnings per share of $0.62.
• Gain on sale of loans of $26.2 million, increased $16.1 million, or 159 percent, compared to the prior year fourth quarter.
• Bank loan modifications related to the coronavirus disease of 2019 (“COVID-19”) decreased $371 million from the prior quarter and decreased $1.420 billion from the second quarter to $94.9 million, or 93 basis points of loans excluding the PPP loans.
• Non-performing assets as a percentage of subsidiary assets was 0.19 percent, which compared to 0.25 percent in the prior quarter and 0.27 percent in the prior year fourth quarter.
• Core deposits increased $579 million, or 4 percent.
• The loan portfolio, excluding Payroll Protection Program (“PPP”) loans, organically increased $43.2 million, or 42 basis points, in the current quarter.
• The Company was active in submitting applications to the SBA for PPP loan forgiveness resulting in a $539 million decrease, or 37 percent, in the PPP loan portfolio and a $14.0 million acceleration of net deferred fees included in interest income.
• Declared and paid a regular quarterly dividend of $0.30 per share. The Company has declared 143 consecutive quarterly dividends and has increased the dividend 46 times.
• Declared a special dividend of $0.15 per share.   This was the 17th special dividend the Company has declared.

Year 2020 Highlights:

• Record net income of $266 million for 2020, an increase of $55.9 million, or 27 percent, over the prior year net income of $211 million.
• Diluted earnings per share of $2.81, an increase of 18 percent from the prior year diluted earnings per share of $2.38.
• The Company originated U.S. Small Business Administration (“SBA”) PPP loans for businesses in its communities. The Company originated 16,090 PPP loans in the amount of $1.472 billion.
• The loan portfolio organically grew $1.158 billion, or 12 percent, during 2020. Excluding PPP loans, the loan portfolio organically increased $249 million, or 3 percent during the current year.
• Core deposits organically increased $3.4 billion, or 32 percent, during 2020, with non-interest bearing deposit growth of $1.6 billion, or 44 percent.
• A record year for gain on sale of loans of $99.5 million, which increased $65.4 million, or 192 percent, compared to the prior year.
• Dividends declared of $1.33 per share, an increase of $0.02 per share, or 2 percent, over the prior year dividends of $1.31.
• On February 29, 2020, the Company completed the acquisition of State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona with total assets of $745 million.
• During the current year, S&P Dow Jones Indices selected the Company to transition from the S&P SmallCap 600® to the S&P MidCap 400®.

Financial Highlights  

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¹ Includes a special dividend declared of $0.15 and $0.20 per share for the three and twelve months ended December 31, 2020 and December 31, 2019, respectively.  
² Excluding the special dividend, the dividend payout ratio was 34.88 percent and 46.77 percent for the three months ended December 31, 2020 and 2019, respectively and 41.99 percent and 46.44 percent for the twelve months ended December 31, 2020 and 2019, respectively.

KALISPELL, Mont., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $81.9 million for the current quarter, an increase of $24.5 million, or 43 percent, from the $57.4 million of net income for the prior year fourth quarter.   Diluted earnings per share for the current quarter was $0.86 per share, an increase of 39 percent from the prior year fourth quarter diluted earnings per share of $0.62. “While the pandemic has created a difficult time for the country and our Company, the Glacier Team did an outstanding job managing through the challenges and still delivering excellent results for the quarter and full year,” said Randy Chesler, President and Chief Executive Officer. “We are especially pleased with our credit performance which reflects the strong markets in which we operate as well as our conservative lending culture. We are optimistic about the future and the opportunity for continued profitable growth.”

Net income for 2020 was $266 million, an increase of $55.9 million, or 27 percent, from the $211 million net income from the prior year. Diluted earnings per share for the current year was $2.81 per share, an increase of 18 percent, from the diluted earnings per share of $2.38 for last year.

In order to meet the needs of customers impacted by the pandemic, during the second quarter of 2020 the Company modified 3,054 loans in the amount of $1.515 billion primarily with short-term payment deferrals under six months. The majority of these modified loan deferral periods expired and the loans returned to regular payment status with only $94.9 million loans, or 93 basis points, remaining deferred as of December 31, 2020.

In addition, the Company originated SBA PPP loans primarily for small businesses in its communities. The Company originated 16,090 PPP loans in the amount of $1.472 billion during the current year. The majority of the PPP loans are expected to be forgiven by the SBA resulting in the forgiven loan amounts paid to the Company by the SBA. During the current quarter, the PPP loans provided $21.5 million of interest income (including deferred fees and deferred costs) of which $14.0 million was accelerated by the SBA forgiveness.

On February 29, 2020, the Company completed the acquisition of State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona (collectively, “SBAZ”). SBAZ provides banking services to individuals and businesses in Arizona with ten banking offices located in Bullhead City, Cottonwood, Kingman, Lake Havasu City, Phoenix, Prescott Valley and Prescott. Upon closing of the transaction, SBAZ merged into the Company's Foothills Bank division, which expanded the Company's footprint in Arizona to cover all major markets in the state and established it as a leading community bank in Arizona.

The Company’s results of operations and financial condition include the SBAZ acquisition and the following table discloses the preliminary fair value estimates of selected classifications of assets and liabilities acquired:

Asset Summary

Total debt securities of $5.528 billion at December 31, 2020 increased $1.209 billion, or 28 percent, during the current quarter and increased $2.728 billion, or 97 percent, from the prior year end. The Company continues to purchase debt securities with excess liquidity from the increase in core deposits and SBA forgiveness of PPP loans. Debt securities represented 30 percent of total assets at December 31, 2020 compared to 24 percent of total assets at September 30, 2020 and 20 percent of total assets at December 31, 2019.

The loan portfolio of $11.123 billion decreased $496 million, or 4 percent, during the current quarter which was driven by the SBA forgiveness of the PPP loans. Excluding the decrease in the PPP loans, the loan portfolio increased $43.2 million, or 42 basis points, during the current quarter with the largest increase in commercial real estate loans which increased $114 million, or 2 percent. Excluding the PPP loans and the SBAZ acquisition, the loan portfolio increased $249 million, or 3 percent, from the prior year end with the largest increase in commercial real estate loans which increased $401 million, or 7 percent.

Credit Quality Summary

Non-performing assets of $35.4 million at December 31, 2020 decreased $9.2 million, or 21 percent, over the prior quarter and decreased $2.0 million, or 5 percent, over the prior year fourth quarter. Non-performing assets as a percentage of subsidiary assets at December 31, 2020 was 0.19 percent. Excluding the government guaranteed PPP loans, the non-performing assets as a percentage of subsidiary assets at December 31, 2020 was 0.20 percent, a decrease of 7 basis points from the prior quarter and from the prior year end. Early stage delinquencies (accruing loans 30-89 days past due) of $22.7 million at December 31, 2020 increased $5.1 million from the prior quarter and decreased $471 thousand from the prior year fourth quarter. Early stage delinquencies as a percentage of loans at December 31, 2020 was 0.20 percent, which was an increase of 5 basis points from prior quarter and a 4 basis points decrease from prior year fourth quarter. Excluding PPP loans, early stage delinquencies as a percentage of loans at December 31, 2020 was 0.22 percent, which was an increase of 5 basis points from prior quarter and a 2 basis points decrease from prior year fourth quarter.

During the current quarter, the Company reclassified the current year credit loss expense for unfunded loan commitments from non-interest expense to provision for credit losses in the income statement. The Company believes reporting the credit loss expense on unfunded loan commitments together with credit loss expense on the loan portfolio is more appropriate than reporting credit loss expense on unfunded loan commitments as non-interest expense.   The current quarter provision for credit loss benefit of $1.5 million included a provision for credit loss benefit of $1.5 million on the loan portfolio and a provision for credit loss benefit of $8 thousand on unfunded loan commitments.

The current quarter provision for credit loss benefit on loans was a decrease of $4.4 million from the prior quarter provision for credit loss expense of $2.9 million. The current year provision for credit loss expense on loans was $37.6 million and primarily attributable to provision for credit losses related to COVID-19 and an additional $4.8 million of provision for credit losses related to the SBAZ acquisition. The allowance for credit losses on loans (“ACL”) as a percentage of total loans outstanding at December 31, 2020 was 1.42 percent which remained unchanged compared to the prior quarter. Excluding the PPP loans, the ACL as percentage of loans was 1.55 percent compared to 1.62 percent in as of the prior quarter.

Credit Quality Trends and Provision for Credit Losses on the Loan Portfolio

Net charge-offs for the current quarter were $4.8 million compared to $826 thousand for the prior quarter and $1.0 million from the same quarter last year.   The current quarter increase was primarily isolated to one credit relationship. The increase in the current quarter loan portfolio growth, composition, average loan size, credit quality considerations, economic forecasts and other environmental factors will continue to determine the level of the provision for credit losses. 

PPP Loans

During the current year, the PPP loan originations generated $55.2 million of SBA processing fees, or an average of 3.75 percent, and $8.9 million of deferred compensation costs for total net deferred fees of $46.3 million. During the current quarter, the Company actively worked with its customers to submit applications to the SBA for PPP loan forgiveness which resulted in a decrease of $539 million, or 37 percent, of the PPP loans.

The Company recognized $38.2 million of interest income (including deferred fees and costs) from the PPP loans in 2020, which included $14.0 million acceleration of net deferred fees in interest income resulting from the SBA forgiveness of loans. Net deferred fees remaining on the balance of PPP loans at December 31, 2020 were $17.6 million, which will be recognized into interest income over the remaining life of the loans or when the loans are forgiven in whole or in part by the SBA.

COVID-19 Bank Loan Modifications

In response to COVID-19, the Company modified 3,054 loans in the amount of $1.515 billion during the second quarter of 2020. These modifications were primarily short-term payment deferrals under six months. During the second half of 2020, the majority of the modified loan deferral periods expired, and the loans returned to regular payment status. As of December 31, 2020, $94.9 million of the modifications, or 93 basis points of the $10.214 billion of loans, net of the PPP loans, remain in the deferral period, a reduction of $371 million in the current quarter and a reduction of $1.420 billion from the $1.515 billion of the original loan modifications in the second quarter.

In addition to the Bank loan modifications presented above, the state of Montana created the Montana Loan Deferment Program for only Montana-based businesses and was implemented only in the third quarter. Cares Act Funds were used to provide interest payments upfront and directly to lenders on behalf of participating borrowers to convert existing commercial loans to interest only status, resulting in the deferral of principal and interest for a period of six to twelve months. None of the interest payments are required to be repaid by the borrowers, thus providing a grant to the borrowers. This program was unique to Montana, had minimal qualification requirements, and required that participating lenders modify eligible loans to conform to the program in order for borrowers to qualify for the grant. As of December 31, 2020, the Company had $278 million in eligible loans benefiting from this grant program, which was 2.8 percent of total loans receivable, net of PPP loans. Given the unique nature of the Montana only grant program, the $278 million was not included in the Bank loan modifications presented above.

COVID-19 Higher Risk Industries - Enhanced Monitoring

Excluding the PPP loans, the Company has $642 million, or 6 percent, of its total loan portfolio with direct exposure to industries for which it has identified as higher risk, requiring enhanced monitoring. As of December 31, 2020, $23.5 million, or 3.65 percent, of the loans in the higher risk industries have modifications which was a reduction of $54.0 million, or 70 percent, from the $77.5 million of modifications at the end of the prior quarter.   The Company continues to conduct enhanced portfolio reviews and monitoring for potential credit deterioration.

Supplemental information regarding credit quality and identification of the Company’s loan portfolio based on regulatory classification is provided in the exhibits at the end of this press release. The regulatory classification of loans is based primarily on collateral type while the Company’s loan segments presented herein are based on the purpose of the loan.

Liability Summary

Core deposits of $14.759 billion as of December 31, 2020 increased $579 million, or 4 percent, from the prior quarter. Excluding the SBAZ acquisition, core deposits increased $3.433 billion, or 32 percent, from the prior year end, with non-interest bearing deposits increasing $1.616 billion, or 44 percent. The current year significant increase in deposits was attributable to a number of factors including the PPP loan proceeds deposited by customers and the increase in customer savings.   Non-interest bearing deposits were 37 percent of total core deposits at December 31, 2020 compared to 39 percent of total core deposits at September 30, 2020 and 34 percent at December 31, 2019.

Wholesale deposits of $38.1 million at December 31, 2020 decreased $81.0 million, or 68 percent, from the prior quarter and decreased $15.2 million, or 28 percent, from the prior year end. The remaining wholesale deposits at December 31, 2020 had contractual maturities. Federal Home Loan Bank (“FHLB”) advances were paid off as of December 31, 2020 which resulted in a decrease of $7.3 million from the prior quarter and a decrease of $38.6 million from the prior year. The reduction in wholesale deposits and FHLB advances were the result of the significant increase in core deposits which funded loans and debt security growth. Wholesale deposits and FHLB advances will continue to fluctuate as necessary for balance sheet growth and to supplement liquidity needs of the Company.

Stockholders’ Equity Summary

Tangible stockholders’ equity of $1.738 billion at December 31, 2020 increased $54.6 million, or 3 percent, from the prior quarter and was primarily the result of earnings retention and an increase in other comprehensive income. Tangible stockholders’ equity increased $296 million over the prior year, which was the result of $112 million of Company stock issued for the acquisitions of SBAZ and an increase in other comprehensive income and earnings retention. These increases more than offset the increase in goodwill and core deposit intangible associated with the acquisition. The current year decrease in both the stockholder’s equity to total assets ratio and the tangible stockholders’ equity to total tangible assets ratio was primarily the result of adding $909 million of PPP loans and $2.7 billion in debt securities.   Tangible book value per common share of $18.21 at the current quarter end increased $0.57 per share from the prior quarter and increased $2.60 per share from a year ago.

Cash Dividends
On December 29, 2020, the Company’s Board of Directors declared a special cash dividend of $0.15 per share, the 17th special dividend the Company has declared. The special dividend was payable on January 19, 2021 to shareholders of record on January 8, 2021. On November 18, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.30 per share. The regular quarterly dividend was payable December 17, 2020 to shareholders of record on December 8, 2020. The dividend was the 143rd consecutive dividend. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

S&P MidCap 400® Index
During the second quarter of 2020, S&P Dow Jones Indices selected the Company to transition from the S&P SmallCap 600® to the S&P MidCap 400®. S&P MidCap 400® index consists of 400 companies that are chosen with regard to market capitalization, liquidity and industry representations.

Operating Results for Three Months Ended December 31, 2020 
Compared to September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019

Income Summary

Net Interest Income
The current quarter net interest income of $166 million increased $14.4 million, or 9 percent, over the prior quarter and increased $29.3 million, or 21 percent, from the prior year fourth quarter. The current quarter interest income of $171 million increased $13.8 million, or 9 percent, compared to the prior quarter and increased $26.0 million, or 18 percent, over the prior year fourth quarter. These increases include increased income from commercial loans (primarily from the PPP loans) and increased income on debt securities.   The interest income (which included deferred fees and deferred costs) from the PPP loans was $21.5 million in the current quarter and $9.3 million in the prior quarter.

The current quarter interest expense of $5.6 million decreased $534 thousand, or 9 percent, over the prior quarter and decreased $3.3 million, or 37 percent, over the prior year fourth quarter primarily as result of a decrease in deposit rates and borrowing interest rates. During the current quarter, the total cost of funding (including non-interest bearing deposits) declined 2 basis points to 14 basis points compared to 16 basis points for the prior quarter primarily as a result of a decrease in rates on both deposits and borrowings. The total cost of funding decreased 16 basis points from the prior year fourth quarter and was attributable to a decrease in rates and a shift from higher cost borrowings to low cost deposits.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.03 percent compared to 3.92 percent in the prior quarter. The core net interest margin, excluding 3 basis points of discount accretion and 24 basis points increase from the PPP loans, was 3.76 percent compared to 4.02 in the prior quarter and 4.33 percent in the prior year fourth quarter. The core net interest margin decreased 11 basis points in the current quarter and decreased 57 basis points from the prior year fourth quarter due to a decrease in earning asset yields that outpaced the decrease in the total cost of funding along with a shift in the earning asset mix from higher yielding loans to lower yielding debt securities.

Non-interest Income
Non-interest income for the current quarter totaled $44.7 million which was a decrease of $9.0 million, or 17 percent, over the prior quarter and an increase of $16.3 million, or 57 percent, over the same quarter last year. Service charges and other fees decreased $1.0 million from the prior year fourth quarter due to the decreased overdraft activity. Gain on the sale of loans of $26.2 million for the current quarter decreased $9.3 million, or 26 percent, compared to the prior quarter as a result of seasonal decreases, although remained at elevated levels as a result of the current low interest rate environment.   Gain on sale of loans increased $16.1 million, or 159 percent, from the prior year fourth quarter due to the significant increase in purchase and refinance activity driven by the decrease in interest rates.

Non-interest Expense Summary

Total non-interest expense of $111 million for the current quarter increased $7.8 million, or 8 percent, over the prior quarter and increased $16.0 million, or 17 percent, over the prior year fourth quarter. Compensation and employee benefits increased by $5.7 million, or 9 percent, from the prior quarter which was primarily driven by the increase in accrued expenses for employee benefits due to strong financial performance. Compensation and employee benefits increased $15.0 million, or 27 percent, from the prior year fourth quarter primarily due to an increased number of employees driven by acquisitions and organic growth, increased real estate commissions and increased performance-related compensation. Occupancy and equipment expense increased $579 thousand, or 6 percent, over the prior year fourth quarter primarily as a result of increased costs from acquisitions. Regulatory assessment and insurance decreased $461 thousand from the prior quarter primarily due to an accrual adjustment in the current quarter for waiver of the State of Montana regulatory semi-annual assessment for the second half of 2020. Regulatory assessment and insurance increased $989 thousand from the prior year fourth quarter primarily due to $1.3 million in Small Bank Assessment credits applied in the prior year fourth quarter which more than offset the decrease in the current quarter waiver from the State of Montana assessment.  

Other expenses of $18.7 million, increased $2.2 million, or 14 percent, from the prior quarter and decreased $906 thousand, or 5 percent, from the prior year fourth quarter. Current quarter other expenses included acquisition-related expenses of $501 thousand compared to $793 thousand in the prior quarter and $4.4 million in the prior year fourth quarter.

Federal and State Income Tax Expense
Tax expense during the fourth quarter of 2020 was $19.0 million, an increase of $196 thousand, or 1 percent, compared to the prior quarter and an increase of $6.7 million, or 55 percent, from the prior year fourth quarter. The effective tax rate in the current and prior quarter was 19 percent compared to 18 percent in the prior year fourth quarter.

Efficiency Ratio
The efficiency ratio was 50.34 percent in the current quarter and 48.05 percent in the prior quarter. Excluding the impact from the PPP loans, the efficiency ratio would have been 55.96 percent in the current quarter, which was a 545 basis points increase from the prior quarter efficiency ratio of 50.51 percent and was the result of the decrease in gain on sale of loans and the increase in non-interest expense during the current quarter. Excluding the current year impact from the PPP loans, the current quarter efficiency ratio of 55.96 was an increase of 106 basis points the prior year fourth quarter efficiency ratio of 54.90 and was primarily the result of the increase in compensation costs that outpaced the increase in gain on sale of loans and net interest income.

Operating Results for Year Ended December 31, 2020
Compared to December 31, 2019

Income Summary

Net Interest Income
Net-interest income of $600 million for 2020 increased $96.3 million, or 19 percent, over 2019. Interest income of $627 million for the current year increased $80.9 million, or 15 percent, from the prior year and was primarily attributable to a $67.4 million increase in income from commercial loans, including $38.2 million from the PPP loans. Additionally, interest income on debt securities increased $14.1 million, or 17 percent, over the prior year which resulted from the increased volume of debt securities. Interest expense of $27.3 million for 2020 decreased $15.5 million, or 36 percent over the prior year primarily as a result of decreased higher cost FHLB advances combined with the decrease in the cost of deposits and borrowings. The total funding cost (including non-interest bearing deposits) for 2020 was 19 basis points, which decreased 20 basis points compared to 39 basis points in 2019.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during 2020 was 4.09 percent, a 30 basis points decrease from the net interest margin of 4.39 percent for 2019. The core net interest margin, excluding 3 basis points of discount accretion, 1 basis point of non-accrual interest was 4.05 compared to a core margin of 4.30 percent in the prior year. Although the Company was successful in reducing the total cost of funding, it was not enough to outpace the decrease in yields on loans and debt securities driven by the current interest rate environment and the shift in the earning asset mix to lower yielding debt securities. For the year, the 24 basis points increase in the fourth quarter net interest margin from the PPP loans offset the combined 24 basis points decrease in the net interest margin from the PPP loans that occurred in the second and third quarters of the current year.

Non-interest Income
Non-interest income of $173 million for 2020 increased $42.1 million, or 32 percent, over last year. Service charges and other fees of $52.5 million for 2020 decreased $15.4 million, or 23 percent, from prior year as a result of a decrease in overdraft activity and the impact of the Durbin Amendment which outpaced the additional fees from increased customer accounts. As of July 1, 2019, the Company became subject to the Durbin Amendment which established limits on the amount of interchange fees that can be charged to merchants for debit card processing. Miscellaneous loan fees increased $2.0 million, or 38 percent, driven by increased activity primarily in residential real estate. Gain on the sale of loans of $99.5 million for 2020, increased $65.4 million, or 192 percent, compared to the prior year as a result of a significant increase in purchase and refinance activity driven by the decrease in interest rates. Other income increased $3.4 million from the prior year and was primarily the result of a gain of $2.4 million on the sale of a former branch building in the first quarter of 2020.

During the prior year third quarter, the Company terminated $260 million notional pay-fixed interest rate swaps and corresponding debt along with the sale of $308 million of available-for-sale debt securities. Sale of the investment securities resulted in a gain of $13.8 million in the prior year third quarter. Offsetting the gain was a $10 million loss recognized on the early termination of the interest swaps and a $3.5 million write-off of deferred prepayment penalties on FHLB borrowings.

Non-interest Expense Summary

Total non-interest expense of $405 million for 2020 increased $29.9 million, or 8 percent, over the prior year. Compensation and employee benefits for 2020 increased $30.3 million, or 14 percent, from last year due to the increased number of employees from acquisitions and organic growth, increased real estate commissions, increased performance-related compensation and annual salary increases which more than offset the $8.9 million deferral of compensation cost from the PPP loans in the current year and the $5.4 million of stock compensation expense in the prior year from the Heritage Bancorp acquisition. Occupancy and equipment expense for current year increased $3.2 million, or 9 percent from the prior year primarily from increased cost from acquisitions. Data processing expense for the current year increased $3.7 million, or 22 percent, from the prior year as a result of the increased costs from acquisitions along with increased investment in technology infrastructure. Regulatory assessment and insurance for the current year increased $885 thousand from the prior quarter primarily due to $2.5 million in Small Bank Assessment credits applied in 2019 that more than offset the $530 thousand in Small Bank credits applied in 2020 and the current year waiver of the State of Montana regulatory assessment. Other expenses of $66.8 million, increased $4.0 million, or 6 percent, from the prior year, including $1.9 million for third party consulting regarding improvements in technology, product and service offerings.   Acquisition-related expenses were $7.8 million in the current year compared to $8.5 million in the prior year.

The prior year $13.5 million loss on termination of hedging activities included a $3.5 million write-off of the remaining unamortized deferred prepayment penalties on FHLB debt and a $10 million loss on the termination of pay-fixed interest rate swaps with notional amount of $260 million in the prior year third quarter.

Provision for Credit Losses
The provision for credit losses was $39.8 million for 2020, including provision for credit losses of $37.6 million on the loan portfolio and $2.1 million of provision for credit losses on unfunded loan commitments. The provision for credit losses of $37.6 million on the loan portfolio in the current year increased $37.6 million over the $57 thousand prior year provision for credit losses on the loan portfolio which was primarily attributable to changes in the economic forecast related to COVID-19. Net charge-offs during the current year were $7.6 million compared to $6.8 million during the prior year.

Federal and State Income Tax Expense
Tax expense of $61.6 million in 2020 increased $13.0 million, or 27 percent, over the prior year same period. The effective tax rate for each year was 19 percent.

Efficiency Ratio
The efficiency ratio was 49.97 percent for 2020. Excluding the impact from the PPP loans, the efficiency ratio would have been 53.70 percent. The prior year efficiency ratio was 57.78 and excluding the impact from the termination of the cash flow hedges and the accelerated stock compensation expense, the efficiency ratio would have been 54.79 percent. Excluding these adjustments, the current year efficiency ratio decreased 109 basis points from the prior year efficiency ratio which was driven primarily by the combined increased on gain on sale of loans and the increased net interest income that more than offset the decrease in service fee income from the Durbin Amendment and increased compensation expense.

Forward-Looking Statements  
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio;
• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and profitability;
• changes in the cost and scope of insurance from the Federal Deposit Insurance Corporation and other third parties;
• legislative or regulatory changes, such as the recently adopted CARES Act addressing the economic effects of the COVID-19 pandemic, as well as increased banking and consumer protection regulation that adversely affect the Company’s business, both generally and as a result of the Company exceeding $10 billion in total consolidated assets;
• ability to complete pending or prospective future acquisitions;
• costs or difficulties related to the completion and integration of acquisitions;
• the goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings and capital;
• reduced demand for banking products and services;
• the reputation of banks and the financial services industry could deteriorate, which could adversely affect the Company's ability to obtain and maintain customers;
• competition among financial institutions in the Company's markets may increase significantly;
• the risks presented by continued public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions;
• the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
• consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources could change the competitive landscape;
• dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank divisions;
• material failure, potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks (e.g., cybersecurity), fraud or system failures;
• natural disasters, including fires, floods, earthquakes, and other unexpected events;
• the Company’s success in managing risks involved in the foregoing; and
• the effects of any reputational damage to the Company resulting from any of the foregoing.

The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

Conference Call Information
A conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, January 29, 2021. The conference call will be accessible by telephone and webcast. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 6941139. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/ghaqi5ja. If you are unable to participate during the live webcast, the call will be archived on our website, www.glacierbancorp.com, or by calling 855-859-2056 with the ID 6941139 by February 12, 2021.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. (NASDAQ:GBCI), a member of the Russell 2000® and the S&P MidCap 400® indices, is the parent company for Glacier Bank and its Bank divisions: Bank of the San Juans (Durango, CO), Citizens Community Bank (Pocatello, ID), Collegiate Peaks Bank (Buena Vista, CO), First Bank of Montana (Lewistown, MT), First Bank of Wyoming (Powell, WY), First Community Bank Utah (Layton, UT), First Security Bank (Bozeman, MT), First Security Bank of Missoula (Missoula, MT), First State Bank (Wheatland, WY), Glacier Bank (Kalispell, MT), Heritage Bank of Nevada (Reno, NV), Mountain West Bank (Coeur d’Alene, ID), North Cascades Bank (Chelan, WA), The Foothills Bank (Yuma, AZ), Valley Bank of Helena (Helena, MT), and Western Security Bank (Billings, MT).

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

Glacier Bancorp, Inc.
Average Balance Sheets

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¹ Includes tax effect of $1.4 million and $1.3 million on tax-exempt municipal loan and lease income for the three months ended December 31, 2020 and September 30, 2020, respectively.
² Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
³ Includes tax effect of $3.0 million and $2.8 million on tax-exempt debt securities income for the three months ended December 31, 2020 and September 30, 2020, respectively.
⁴ Includes tax effect of $266 thousand and $266 thousand on federal income tax credits for the three months ended December 31, 2020 and September 30, 2020, respectively.
⁵ Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.

Glacier Bancorp, Inc.
Average Balance Sheets (continued)

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¹ Includes tax effect of $1.4 million and $1.3 million on tax-exempt municipal loan and lease income for the three months ended December 31, 2020 and 2019, respectively.
² Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
³ Includes tax effect of $3.0 million and $1.8 million on tax-exempt debt securities income for the three months ended December 31, 2020 and 2019, respectively.
⁴ Includes tax effect of $266 thousand and $276 thousand on federal income tax credits for the three months ended December 31, 2020 and 2019, respectively.
⁵ Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.

Glacier Bancorp, Inc.
Average Balance Sheets (continued)

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¹ Includes tax effect of $5.3 million and $4.8 million on tax-exempt municipal loan and lease income for the year ended December 31, 2020 and 2019, respectively.
² Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
³ Includes tax effect of $10.5 million and $7.8 million on tax-exempt debt securities income for the year ended December 31, 2020 and 2019, respectively.
⁴ Includes tax effect of $1.1 million and $1.1 million on federal income tax credits for the year ended December 31, 2020 and 2019, respectively.
⁵ Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.

Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification

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¹ Loans held for sale are primarily 1st lien 1-4 family loans.

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)