Q3 2023 Glacier Bancorp Inc Earnings Call
Okay.
Speaker 1: Good day and thank you for standing by. Welcome to Glacier Bancorp's third quarter earnings conference call.
Good day, and thank you for standing by and welcome to the Glacier Bancorp third quarter earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an audit.
Speaker 1: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker 1: To ask a question during the session, you'll need to press star 11 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 Chief Executive Officer of Glacier Bancorp. Please begin.
Made it message at Pfizer in your hands right to withdraw your question. Please press star one again, please be advised that today's conference is being recorded.
I'd now like to hand, the conference over to your Speaker today, Randy Chesler, President and Chief Executive Officer of Glacier Bancorp. Please begin sir.
Speaker 2: All right, thank you, Norma. Good morning and thank you for joining us today. With me here in Kalispell this morning is Ron Cofer, our Chief Financial Officer, Angela Dosi, our Chief Accounting Officer, Byron Pollin, our Treasurer, Tom Zolan, our Chief Credit Administrator. Don Cherry, our Chief Administrative Officer, is on the road today visiting our Mountain West Division.
Alright. Thank you Norma good morning, and thank you for joining US today with me here in Kalispell. This morning is Ron Copher, our Chief Financial Officer, Angela dose, our Chief Accounting Officer, Byron Pollan, our treasurer, Tom Dolan, our chief credit administrator, Don Chery, our Chief administrative officer is on the road today visiting our mountain West.
Speaker 2: I'd like to point out that the discussion today is subject to the same forward-looking considerations found on page 12 of our press release, and we encourage you to review this section.
Vision.
I'd like to point out that the discussion today is subject to the same forward looking considerations found on page 12 of our press release and we encourage you to review this section.
Speaker 2: So we released our third quarter earnings after the close of the market yesterday and the Glacier Bank Corp team delivered another strong quarter. Net income was $52 million for the current quarter and we generated earnings per share of $0.47.
So we released our third quarter earnings after the close of the market yesterday and the Glacier Bancorp team delivered another strong quarter.
Net income was 52 million for the current quarter and we generated earnings per share of 47 cents.
Speaker 2: Net interest income ended the quarter at $167 million. Pre-tax, pre-provision net revenue came in at $68 million.
Net interest income ended the quarter at $167 million pretax pre provision net revenue came in at 68 million.
Speaker 2: Interest income of $265 million in the current quarter increased $18 million, or 7%, over the prior quarter and increased $51 million, or 24%, over the prior year third quarter.
Interest income up $265 million in the current quarter increased $18 million or 7% over the prior quarter and increased $51 million or 24% over the prior year third quarter.
Speaker 2: The current quarter interest expense of $98 million increased $23 million, or 30%, over the prior quarter.
The current quarter interest expense of $98 million increased 23 million or 30% over the prior quarter.
Speaker 2: Our net interest margin as a percentage of earning assets on a tax equivalent basis was 2.58% for the current quarter compared to 2.74% in the prior quarter.
Our net interest margin as a percentage of earning assets on a tax equivalent basis was 2.58% for the current quarter compared to $2, 74% in the prior quarter.
Speaker 2: And although the net interest margin has been negatively impacted by the increase in interest rates in the current year, we experienced a slower pace in the decline in the net interest margin during the current quarter.
And although the net interest margin has been negatively impacted by the increase in interest rates in the current year, we experienced a slower pace and a decline in the net interest margin during the current quarter.
Speaker 2: We like the positive trends on our interest income and expect some moderating trends on interest expense at this point. And believe this sets the stage for Margin Growth in 2024.
We like the positive trends on our interest income and expect some moderating trends on interest expense at this point.
I believe this sets the stage for margin growth in 2024.
Speaker 2: During the current quarter, the team continued to focus on our diversified deposit and repurchase agreement products. Total deposits and retail repurchase agreements of 22 billion at the current quarter and increased 530 million or 10 percent annualized during the current quarter.
During the current quarter the team continued to focus on our diversified deposit.
Repurchase agreement products total deposits and retail repurchase agreements of 22 billion at the current quarter and increased $530 million or 10% annualized during the current quarter.
Speaker 2: With the increased court deposits, we allowed 411 million of higher cost wholesale-brokered CDs to mature and not renew, excluding these wholesale deposits. Court deposits in retail repurchase agreements increased 941 million or 18% annualized during the current quarter.
With the increased core deposits, we allowed 411 million of higher cost wholesale brokered Cds to mature and not renewed.
Excluding these wholesale deposits court.
Core deposits and reach out repurchase agreements increased $941 million or 18% annualized during the current quarter.
Speaker 2: Non-interest bearing deposits increased $7 million over the prior quarter, representing 32% of total core deposits at quarter ends.
Noninterest bearing deposits increased $7 million over the prior quarter, representing 32% of total core deposits at quarter end.
Speaker 2: We're very pleased to see this strong deposit growth driven by all of our divisions. Our teams were able to leverage their strong existing relationships and market presence to achieve these impressive results.
We're very pleased to see the strong deposit growth driven by all of our divisions. Our teams were able to leverage their strong existing relationships and market presence to achieve these impressive results.
Speaker 2: Total non-interest expense of 130 million for the current quarter decreased, one million, or 79 basis points over the prior quarter, and decreased 484,000 or 37 basis points over the prior year of third quarter.
Total noninterest expense of $130 million for the current quarter decreased $1 million or <unk> 79 basis points over the prior quarter and decreased 484000 or 37 basis points over the prior year third quarter.
Speaker 2: Our divisions continue to show great judgment in managing people and hiring positions only needed and containing costs in other areas.
Yes.
Our divisions continue to show, great judgment, and managing people and hiring positions only if needed and containing cost in other areas.
Speaker 2: The current quarter provision for credit loss expense was 5.1 million, which is a decrease of 160,000 from the prior quarter and a 3.3 million increase from the prior year, third quarter.
The current quarter provision for credit loss expense was $5 1 million, which is a decrease of 160000 from the prior quarter and a $3 3 million.
Kris from the prior year third quarter.
Speaker 2: The percentage of provisional loans was essentially flat to the last quarter at 1.19%.
The percentage of provisions to loans was essentially flat to last quarter at 1.19%.
Speaker 2: Our credit performance continues to be excellent. Non-performing assets to bank assets at 15 basis points was little changed from last quarter, as was net charge off to average loans, which ended the quarter at only four basis points.
Our credit performance continues to be excellent nonperforming assets to bank assets of 15 basis points was little changed from last quarter as well as net charge offs to average loans, which ended the quarter at only four basis points.
Speaker 2: Early stage delinquencies, a 15 million at the end of the quarter decreased 10 million from the prior quarter and decreased 6 million from the prior year end.
Early stage delinquencies.
A $15 million at the end of the quarter decreased $10 million from the prior quarter and decreased $6 million from the prior year end.
Speaker 2: Early stage delinquencies as a percentage of loans at September 30th was nine basis points compared to 16 basis points for the prior quarter and 14 basis points for the prior year end.
Early stage delinquencies as a percentage of loans.
At September 30 was nine basis points compared to 16 basis points for the prior quarter and 14 basis points.
For the prior year end.
Speaker 2: The loan portfolio of 16 billion increased 180 million or 5% in the current quarter with a largest dollar increase in commercial real estate, which increased 72 million or 3% in the last.
The loan portfolio of 16 billion increased $180 million or 5% annualized during the current quarter with largest dollar increase in commercial real estate, which increased $72 million or 3% annualized.
Speaker 2: New loan production yields were 7.92% up 55 basis points from the last quarter.
New loan production yields were 792% up 55 basis points from the last quarter.
Speaker 2: Overall, the portfolio alone yield of 5.27% in the quarter increased. 15 basis points from the prior quarter alone yield of 5.12%.
Overall, the portfolio loan yield of 527% in the quarter increased 15 basis points from the prior quarter loan yield of 512%.
Speaker 2: Non-interest income for the quarter total 30.2 million, which was an increase of 1.2 million or 4% over the prior quarter.
Noninterest income for the quarter totaled $32 million.
It was an increase of $1 2 million or 4% over the prior quarter.
Speaker 2: We added over 3,000 new retail and business accounts in the quarter with over 360 million in new relationship deposit.
We added over 3000, new retail and business accounts in the quarter with over $360 million in new relationship deposits.
Speaker 2: We declare the quarterly dividend of 33 cents a share.
We declared a quarterly dividend of 33.
Speaker 2: Glacier Bank Corp has declared 154 consecutive quarterly dividends and has increased the dividend 49 times.
Sure.
The Glacier bank.
Bancorp has declared 154 consecutive quarterly dividends and has increased the dividend 49 times.
Speaker 2: And we announce the signing of a definitive agreement to acquire Community Financial Group Inc. The parent of Wheatland Bank, a leading Eastern Washington Community Bank, headquartered in Spokane, Washington, with total assets of $763 million as of September 30th.
And we announced the signing of a definitive agreement to acquire community Financial Group, Inc. The parent of Wheatland Bank, a leading eastern Washington Community Bank headquartered in Spokane, Washington, with total assets of $763 million as of September 30th.
Speaker 2: This will be our 25th acquisition since 2000.
This will be our 25 acquisitions since 2000.
Speaker 2: We've already received some of our regulatory approvals for this transaction and expect the clothes as we previously indicated by this year end.
We've already received some of our regulatory approvals for this transaction and expect to close as we've previously indicated by this year end.
Speaker 2: Our capital levels are strong and growing with estimated CET1 increasing 13 basis points from the prior quarter to 12.55%. We believe this level of capital is more than 100 basis points greater than the average of the 21 peer banks listed in our proxy.
Our capital levels are strong and growing with estimated CET, one increasing 13 basis points from the prior quarter to $12 five 5%.
We believe this level of capital is more about 100 basis points greater than the average of the 'twenty one peer banks listed in our proxy.
Speaker 2: So with that, we remain confident in the dynamic Western markets we serve and our unique business model to continue to deliver strong results.
Great.
So with that we remain confident in the dynamic western markets, we serve and our unique business model to continue to deliver strong results.
Speaker 2: So, normally that ends my formal remarks and I'd now like you to open the line for any questions that are endless may have.
So normal that ends my formal remarks, and I'd now like you to open the line for any questions that our analysts may have.
Speaker 1: Thank you. As a reminder to ask your question, you'll need to press star 111 on your telephone. To withdraw your question, please press star 111 again. Please wait for your name to be announced. Please stand by. We'll recompile the Q&A roster.
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Please standby, while we compile the Q&A roster.
One moment for your first question. Please.
Okay.
Okay.
Speaker 1: question comes from the line of Matthew Clark with Piper Famel. Your line is now up.
Next question comes from the line of Matthew Clark with Piper Sandler Your line is now open.
Speaker 3: Hey, good morning. More of you, Matthew. Just a few questions around the margin to start.
Hey, good morning.
Good morning, Matthew.
Just a few questions around the margin to start.
Speaker 3: try to get some visibility going in the next quarter. Do you have the spot rate on deposit at the end of September and then the average margin in the month of September ?
Yeah.
Try to get some visibility going into next quarter or do you have the spot rate on deposits at the end of September and then.
The average margin in the month of September .
Speaker 4: Alright, what are you going to chase in? Yeah, Matthew, this is Byron. The spot rate at the end of September for Total Deposit was 117.
Okay.
However, you wanted to take them, yes, Matthew this is Byron.
The spot rate at the end of September our total deposits was 117.
Speaker 4: The margin for the month of September was 2509.
The margin for the month of September .
It was $2 59.
Yes.
Okay.
Okay great.
Speaker 3: And then the BTFP comes to do in March, I think it's about 2.7 billion. What's your plan on that front? You added some cash or built some cash this quarter. Is that the plan to continue to accumulate cash and pay the whole thing off? Or do you expect to refice some portion of it? Yeah, right.
Yes.
And then the Bts P comes due in March thinks about $2 7 billion, what's your plan on that front.
You added some cash or build some cash this quarter or is that the plan to continue to accumulate cash and pay the whole thing off or do you expect to refi some portion of it.
Yes, right now.
Speaker 2: We're creating options for ourselves. And I think we're in very good position, as you noted, with that level of cash, over 1.7 billion in cash. So we're evaluating our options, looking at other funding alternatives, and really at this point, Matthew, our main.
We're creating options for ourselves and I think we're in very good position position as you've noted with that level of cash over $1 7 billion in cash.
So we're evaluating our options looking at other funding alternatives and really at this point Matthew our main goal is to get us in a good position to.
Speaker 2: goal is to get us in a good position to, you know, to take care of that.
To take care of that.
Speaker 2: So we'll see how we, what kind of position we are at that time, but certainly, our goal is to...
So we'll see how we what kind of position we are at that time, but certainly our goal is to.
Speaker 2: is to bring that down at what level that remains to be seen.
Is to have to bring that down at what level that remains to be see.
Speaker 3: And then shifting gears to expenses, any updated thoughts on the run rate outlook here for 4Q.
Okay.
And then shifting gears to expenses any updated thoughts on the run rate outlook here for <unk>.
Speaker 5: and into the Ron here Matthew. Yeah, Philip the guide will be 132 to 134 million dollars.
And into the afternoon, Ron here, Matthew Yes, Phil.
The guide will be $130 million to $134 million.
Speaker 5: You know, we feel very comfortable with that as an F to this fourth quarter typically, so you've got some cleanup and, you know, just leave in room for that as well.
<unk>.
We feel very comfortable with that as an estimate fourth quarter typically you got some cleanup and.
Leaving room for that as well.
Okay.
Speaker 3: And then the uptick and non-performers, I know it's just coming off a small base, and it's only $10 million, but any color around what drove that increase in terms of types of borrowers and geography and...
And then the uptick in non performers I know, it's coming off a small base in the call it $10 million, but.
Any color around what drove that increase in terms of the types of borrowers and.
Geography.
Plans to resolve them.
Speaker 6: Sure, Maddie, this is Tom. Yeah, he's made you said.
Sure Matthew this is Tom.
As you said.
Speaker 5: Start off of a low number, so any movement can move the needle. Really what this quarter was about was, really just a business as usual situation, just the ongoing ebb and flow of NPAs. There's no common theme. And you know, both of them are non-owner Siri, ones us student housing. The other one is self storage. We're really the larger drivers. We really appreciate R.O.R.S. Office. We've never been a black driver since then. That's sort of weird to say anything We don't know the? we already knew yesterday that were here.
Starting off of a low number so let's kind of move to move the needle.
Really well this quarter was about was just really just business as usual situation just the ongoing ebb and flow of NPA is there is there is no common theme.
And.
Both of them are non owner CRE, one thus student housing the other one is <unk>.
Self storage or really the larger drivers.
Okay. Thank you.
Thank you.
For next question please.
Speaker 5: Questions come from the line of David Feaster with Raymond James. Your line is now open. Hey, good morning everybody. We're in David.
Question comes from the line of David Feaster with Raymond James Your line is now open.
Hey, good morning, everybody.
David.
Maybe just.
Speaker 7: Touching on the core funding side, it's great to see the stabilization and the non-adjusting deposit.
Touching on the core funding side, it's great to see the stabilization in the noninterest bearing.
Speaker 7: Obviously seen a decent amount of growth in the interest bearing side.
<unk>, obviously seen a decent amount of growth in the interest bearing side.
Speaker 7: I'm just curious maybe if you could help us understand some of the underlying trends that you're seeing on the core funding side and where you're having the most opportunity to drive core deposit growth and then just digging into the new account growth where you have in 60
I'm just curious maybe if you could help us understand some of the underlying trends that youre seeing on the core funding side.
And where you're having the most opportunity to drive core deposit growth and then just digging into the new account growth.
Speaker 7: driving those attracting new relationship points.
Are you having success driving those attracting new relationship clients today.
Speaker 2: Yeah, let me take a shot at that and we'll see then if Byron wants to add...
Yeah, Let me take a shot at that and we'll see then if Byron wants to one to add.
Speaker 2: So the core funding, we're very, very happy to see the growth that we put forth. And really at the core, it's back to the divisions and the model. They've got the relationships, they've got the customers. And I think we saw a lot of existing customers just moving deposits back into our banks.
So the core funding now we're very very happy to see the growth that we put forth.
Really at the core it's back to the divisions in the model.
They've got the relationships they have got the customers and I think we saw a lot of existing customers just moving deposits back into our banks.
Speaker 2: from other places. So we're very, very pleased to see that. I think
From other places so we're very very pleased to see that I think.
Speaker 2: That's a very positive. We don't have to go too far outside of existing relationships. The show, the kind of growth that we did.
That's a very positive we don't have to go too far outside of existing relationships to show the kind of growth that we did.
Speaker 2: In terms of new, very happy with that as well, we still are seeing a decent amount of immigration. And then as we build scale in a lot of our markets, becoming the largest institution or one of the larger institutions.
A new.
Very happy with that as well.
Still are seeing.
Decent amount of in migration.
And then as we build scale in a lot of our markets.
Becoming the largest institution are one of the larger institutions delivering really good service as some competitors take their eye off the ball.
Speaker 5: delivering really good service as some competitors take their eye off the ball. You know, it just creates an opportunity for us to bring new people in. And as you know, Dave, we have a machine really...
This creates an opportunity for us to bring new people in and as you know, Dave we have a machine.
Speaker 2: that we focus on, meaning all our divisions, if the one thing, one consistent theme across all of them is that drive for good quality new customers in the marketplace. And they've got a pretty good process to do that. So.
Really.
That we focus on meaning all our divisions is the one thing one consistent theme across all of them is the drive for good quality new customers in the marketplace and they've got a pretty good process to do that so starts with taking care of existing customers and bringing more of those relationships back to our balance.
Speaker 2: Starts with taking care of existing customers and bringing more of those relationships back to our balance sheet. And then we also continue to have a fairly robust new account strategy that's working well for us.
And then we also continue to have a fairly.
Robust new account strategy, that's working well for us.
Speaker 7: And then maybe following up on the margin commentary, I'm just curious.
That's great.
And then maybe maybe following up on the margin commentary I'm just curious.
Speaker 7: How do you think about, it's increasingly likely, it seems like that we're gonna be in a higher for longer environment. I'm curious how you think about the margin in the NIJ trajectory as we look forward in a higher for longer environment. of
How do you think about it's increasingly likely it seems like that we're going to be at a higher for longer environment.
I'm curious how you think about.
The margin and the NII trajectory as we look forward.
In a higher for longer environment.
Speaker 7: I mean, funding pressures probably persist in your term. It seems like given a larger balance sheet, maybe we can see NII stabilized, and maybe a bit of margin compression into the first or second quarter next year. But I'm just curious if rates do stay high, how you think about the margin in the NII trajectory as we look forward.
I mean funding pressures probably persist near term it seems like given the larger balance sheet, maybe we can see NII stabilize.
It may be a bit of margin compression.
First or second quarter next year, but I'm just curious if rates do stay high how you think about the margin and the NII trajectory as we look forward.
Speaker 4: Yeah, David, this is Byron. I can address that. I think higher for longer, you know, sets up really well for us. You know, we're already seeing signs of slowing the positive cost increase. And so that's going to be very helpful. Every month, you know, we have loans that are reprising higher into this, into this rate environment. We're getting the remix of cash flow from investments into loans.
Yes, David this is Darren I can I can address that I think higher for longer.
It sets up really well for us.
Anything signs of slowing deposit cost increase and so thats going to be very helpful. Every month, we have loans that are repricing higher into the end of this rate environment, we are getting a remix.
Cash flow from investments into loans.
Speaker 4: And with the pace of deposit cost increase flowing, I think that's going to be helpful long-term for the margin. And as that deposit cost really leveled off, I think we'll see growth.
And with the pace of deposit cost increase slowing.
I think thats going to be helpful. Long term for the margin and as that as that deposit costs really levels off I think we will see I think we will see growth.
Speaker 4: next year is Randy noted in his comments in 24. The timing of that, we're still trying to pin down, we're right in the middle of our budgeting process. And so a lot of it has to do with our outlook for growth and loans and deposits. A lot of it has to be dependent on the Fed.
Next year as Randy noted in his comments and in 'twenty for the timing of that.
Still trying to pin down we're right in the middle.
Our budgeting process and so a lot of it has to do with.
Our outlook for growth in loans and deposits a lot of it is dependent on effect.
Speaker 4: and what the Fed does. Do they need to get more aggressive in order to really stem inflation? We'll have to see, but I am very optimistic about the trajectory for margins in a higher balance.
And what the fed does not do they need to get more aggressive in order to really stem inflation.
We'll have to we'll have to see but I am very optimistic about the trajectory for margins and the higher for longer environment.
Speaker 7: And then last one for me, I'm just curious, maybe you're touching on the loan demand side. Dad, what are you hearing from your clients? What's the pulse across your footprint? How's the pipeline shaping up as we head into the fourth quarter? Where are new loan yields? And then especially just digging into the CRE side. I'm curious where you're seeing good opportunities there and what type of deals still pencil at these higher rates?
Okay.
Perfect.
And last one from me I'm just curious maybe you can touch on the loan demand side.
What are you hearing from your clients, what's the pulse across your footprint how is the pipeline shaping up.
As we head into the fourth quarter, where new loan yields, especially just digging into the CRE side, I'm curious, where you're seeing good opportunities there and what type of deals still pencil at these higher rates.
Speaker 2: Yeah, I think I just say overall and I want Tom to fill in the details, but overall, the rates are getting to a point where it's starting to reduce loan demand. And customers still feel I think relatively confident, but at these...
Yes, I think I'd, just say overall and then one time the fill in the details, but overall you know where the rates are getting to a point, where it's starting to reduce loan demand and customers still feel I think relatively confident but it is.
Speaker 6: rates are really rethinking some of their projects, not all, but we are seeing a deceleration in incoming business, huh? Yeah, the only thing I'd add to that is, you know, certainly it's...
Rates are really rethinking.
Some of their projects not all of them, but we are seeing a deceleration in.
Incoming business, Tom the only thing I'd add to that is.
No.
Speaker 6: takes a lot more cash equity to make the deals pencil of these into trades than they did a year ago. And so, you know, the pipelines are off from the last couple of quarters, so they're off from last year, relatively stable just the last couple of months.
Certainly.
It takes a lot more cash equity.
Deals pencil at these interest rates than they did a year ago and so the.
Pipelines are off from the last couple of quarters, certainly theyre off from last year relatively stable or just the last couple of months.
Speaker 8: And, you know, as Randy said, you know, we're still pushing kind of that just shy of 8% even on the theory side. But what we're seeing is the deal that come through generally are coming in with more cash equity at the front of them. That makes sense. And, you know, we're still pushing.
And as Randy said.
<unk>, we're still pushing kind of that just shy of 8% even on the CRE side, but what we're seeing is the deals that come through generally or are coming in with more cash equity at the front of it.
That makes sense.
Appreciate it guys. Thank you all.
Thank you welcome.
One moment for our next question please.
Speaker 1: And next question comes from the line of Jeff Rulis with DA Davidson. Your line is now open. Thanks. Good morning.
Our next question comes from the line of Jeff <unk> with D. A Davidson your line is now open.
Thanks, Good morning.
Speaker 5: I wanted to check in on the, I guess the pace of the decline in that wholesale or the kind of the broker cities, it was that sort of spread pretty evenly across the gun. I don't know you came in close to 500 million and you're down to.
Morning, Jeff.
I wanted to check in on the I guess the pace of the decline in wholesale are the kind of the brokered Cds was that sort of spread pretty evenly across the garden. How you came in close to $500 million and you're down to.
Speaker 9: under 100 side. I just wanted to see if that was pretty steady throughout the quarter. If it was,
Under $100.
Just wanted to see if that was pretty steady throughout the quarter or if it was.
Kind of lumpy.
Speaker 4: The decline in brokered was mostly happened in July . So the bulk of that happened in July with a little bit of follow-on in August .
The decline in brokered.
Mostly happened in July so the bulk of that happened in July with a little bit of a follow on in August and September .
Speaker 9: Okay, so you probably captured a decent amount of that benefit in cost of funds or or
I see.
So you probably captured a decent amount of that benefit.
Cost of funds are or.
Speaker 9: I just try to get a sense for Byron as you.
Just trying to get a sense for buyer and as you.
Speaker 9: range bound to these variables and into timing. And I know that, you know, I respect the work and on the timing, but you know, a bottom of the margin in the fourth quarter, all things being equal would you be surprised if that is the bottom in Q4?
Range bound these variables and tests into timing and I know that and I respect that still working on the timing.
Our bottom of the margin in the fourth quarter.
All things being equal would you be surprised if that is the bottom in Q4.
Speaker 4: It's possible. I could see scenarios where that happens, but there are risks to that as well. On one hand, as Randy mentioned, we are building cash that's accreted to NI, but it does weigh on margin. Again, it depends on what the Fed does. As the Fed have to get more aggressive. Also, a very helpful for margin was the stabilization of our noninterstering balance.
It is possible.
The scenarios, where that where that happens, but there are risks to that as well.
On one hand, as Randy mentioned, we are building cash that's accretive to NII, but it does weigh on margin again.
It kind of depends on what that what the fed does.
As the fed has.
To get more aggressive also very helpful to margin was the stabilization of our noninterest bearing balances.
Speaker 4: you know, you see some additional runoff there, you know, that could, that could put some pressure on margin. So I could, I could see a scenario where, where we do see a bottom in the fourth quarter, but, you know, there, there are a lot of variables that play here that we still have to see how they play.
No.
Some additional runoff there that could that could put some pressure on margin. So I could I could see a scenario, where we do see a bottom in the fourth quarter, but.
There are a lot of variables that play here.
See how that plays out.
Speaker 9: Okay, and he said the September average was 255.
Okay, and you said the September average was 255.
Speaker 4: I'm sorry. What are you asking for a margin? A number margin average. The September margin was 250.
Okay.
I'm sorry, what are you asking from a marketing.
Margin average the September margin was $2 59.
Speaker 9: 259, okay, I appreciate it. And then just a couple housekeeping, rainy on that, the Wheatland.
$2 59, Okay I appreciate it and then just a couple of housekeeping.
Okay.
Randy on the Wheatland close.
Speaker 2: in by your end to see more back into the quarter or just specific timing. You know, we're still getting the regulatory provost, but we're being conservative towards the end of the year. Back end, yes, that's probably more likely.
Again.
By year end it would be more back ended the quarter or just.
This specific timing.
We're still getting the regulatory approvals, but we're being conservative towards the end of the year.
Backend, yes, that's probably more likely.
Speaker 9: And last one, Ron, you touched on expenses for Q4. I look at spin-off.
Got it.
And last one Ron you touched on expenses for Q4, okay.
Speaker 9: phenomenal year from an expense, like expense standpoint.
Look it's been a.
Phenomenal year from an extent expense standpoint.
Speaker 9: don't know what that means for 24. You've really held the line.
I don't know what that means for 'twenty four you've really held the line.
Speaker 9: continue to find efficiencies, but if you could hazard a thought on 24 expense growth.
I don't know if it's.
Continue to find efficiencies, but if you could hazard a thought on 24 expense growth.
Speaker 4: You know, let me, we're in the middle of budgeting and I don't want to get ahead of the team and what I think, but, you know, and thank you for recognizing the hard work that's been done and, you know, we could see that that.
Let me, we're in the middle of budgeting and I.
I don't want to get ahead of the team and what what I think but.
Yes.
Thank you for recognizing the hard work that's been done.
We could see that.
Speaker 8: Approach will continue into 2024. We're very focused on
Approach will continue into 2024, we're very focused on.
Speaker 8: head count FTE and and realizing more even more of the technology the operated efficiencies that are coming along with that Okay, sounds good. Thank you
Headcount FTE in Rio.
Realizing more even more of a technology the operating efficiencies that are coming along with that.
Okay sounds good thank you.
Thank you one moment for our next question. Please.
Okay.
Speaker 1: And next question comes from the line of Kelly Mocha with KBW. Your line is now open. Hey guys, good morning. Good morning.
Our next question comes from the line of Kelly Motta with <unk>. Your line is now open.
Hey, guys. Good morning, good morning Kelly.
Speaker 10: I was nice to see the deposit growth this quarter. I believe some of that was seasonal inflows. Do you have a sense of kind of just how, a dollar contribution, how much that was and as that flows out, how that should we should be thinking about the dollar amount of NII? Would you expect that to trend lower off at this Q3 level?
It was nice to see that.
Deposit growth this quarter I believe some of that was.
In.
Thank you Doug.
Hi, Amit dollar contribution how much.
That was.
That flows out.
How we should be thinking about.
The dollar amount of NII would you expect that to trend lower often face.
Q3 level.
Speaker 4: Yeah, I can speak to the seasonality. So yeah, we had great progress growing deposits in the third quarter. Some of that was driven by seasonal strengths that we typically see during the summertime. Some of that was, some of that growth was also helped by our pricing strategy. I would say what's really encouraging is that the growth that we realized in the third quarter was based on a lower overall pace of cost increase than in the second quarter.
Yes, I can speak to the seasonality. So yes, we had great progress growing deposits in the third quarter. Some of that was driven by seasonal strength that would typically see.
During the summertime some of that was some of that growth was also helped by our pricing strategy I would say, what's really encouraging is that the growth that we realized in the third quarter.
Based on our lower overall pace of cost increase than in the second quarter.
Speaker 4: To pin it down, it's really hard to tease apart how much of that growth to quantify with seasonal versus rate. Probably I would guess about half of that was from a seasonal perspective, the other half being from other dynamics that Randy noted in his prepared comments. Thank you.
To pin it down its really hard to tease apart, how much of that growth or quantify with seasonal versus versus rate.
<unk> I would guess about half of that was from.
From a seasonal perspective, the other half being trial.
The other dynamics that Randy Randy noted.
In his prepared comments.
Okay. Thanks for that Brian .
Speaker 10: Can you remind us just with the seasonal trends? I know that the summer is usually strong. Just, does that mostly outflow in Q4 or does that kind of come through enough the...
Can you remind us just with the seasonal trends I know that the summer is usually strong.
Does that mostly outflow in Q4 or does that kind of come through.
Speaker 10: of over the next couple quarters kind of dribble out like can you just remind us kind of the dynamics of what we should be thinking about there as well as.
Over the next couple of quarter attendance dribble out like can you can you just remind us kind of the dynamics of what we should be thinking about there as well as.
Speaker 10: You know, are you holding any cash against that? That is kind of boosted your security's yield mixed in there this quarter. Just trying to get a thoughts around the dynamics about.
<unk>.
Are you holding any.
Cash against that.
Kind of with that your.
Securities yields mixed in there this quarter just trying to get at.
Thoughts around the dynamics about.
Speaker 10: what the security feels will look like if that cash kind of comes out with a seasonal deposit and just overall the timing of that more probably.
Sure.
What the securities yields will look like that.
That cash credit comes out with that.
Hotbed overall, but the timing of that more broadly.
Speaker 4: Sure, from a seasonal perspective, four quarters a little bit of the mixed bag. I think we have some strength kind of in the first half of the quarter and then it didn't add in the back half of the quarter.
Sure.
Seasonal perspective fourth quarter is a little bit of a mixed bag I think some strength kind of in the first half of the quarter and then.
Then that adds.
In the back half of the quarter.
Speaker 4: Overall, I could see the pod is coming in, maybe flat, slightly up in the fourth quarter.
Overall, I could see deposit coming in maybe it's flat to slightly up.
Speaker 4: In terms of securities, that cash low continues to come up with a portfolio. It is looking like that cash low and it's supposed to be closer to $250 million per quarter now. Previously, we were seeing a little bit stronger growth that the portfolio is in runoff. And so those cash lows have come down a little bit.
In the fourth quarter.
In terms of security.
Cash flow continues to come up with a portfolio.
It is it is looking like that cash flow, we anticipate being closer to $250 million.
Per quarter now previously we are seeing on a stronger growth the portfolio is in runoff and so those cash flows have come down a little bit.
Operator: Good day, and thank you for standing by.
Operator: Welcome to Glacier Bancorp's third quarter earnings conference call. At this time, all participants are no listen only male.
Speaker 4: But from that perspective, are we holding any cash against any seasonal outflow? I don't think we're I'm not expecting seasonal outflows to require.
But.
That perspective, you asked are we holding any cash against any.
Operator: After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.
Therefore, I don't think we are.
Im not expecting.
Seasonal outflows to require any of our cash balance.
Speaker 2: And Kelly, just, you know, the drivers there, we have tourism as a thread that runs through all of our markets. And a lot of our customers are banking reserves up in the third quarter. And then they live off that in the fourth quarter, so to speak. And so that's why generally we're flat, but sometimes down. And I think some of that's...
And Kelly just.
The drivers there we have tourism is a thread that runs through all of our markets and a lot of our customers are banking reserves up in the third quarter and then.
Operator: I would now like to hand the conference over to your speaker today.
Randall Chesler: Randy Chesler, President, and Chief Executive Officer of Glacier Bancorp. Please begin, sir. All right. Thank you, Norma. Good morning, and thank you for joining us today with me here in Calispell this morning is Ron Cofure, our Chief Financial Officer, Angela Dosey, our Chief Accounting Officer, Byron Pollan, our Treasurer, Tom Dolan, our Chief Credit Administrator. Don Cherry, our Chief Administrative Officer, is on the road today, visiting our Mountain West Division.
Live off that in the fourth quarter, so to speak and so that's.
<unk> generally were flat sometimes down.
And I think some of that.
Speaker 2: You know, also, gonna be driven by what happens in the fourth quarter here. We have a government shutdown that's gonna create some, probably some more demand for cash than we would expect. So we're just in a volatile environment, but the usual environment note is usually a flat fourth quarter.
Also.
Going to be driven by what happens in the fourth quarter here, we have a government shutdown that's going to create some.
Probably some more demand for for cash then we would expect so we're just in a volatile environment, but the usual as Byron noted is usually a flat fourth quarter.
Randall Chesler: I'd like to point out that the discussion today is subject to the same forward-looking considerations found on page 12 of our press release, and we encourage you to review this section. So, we released our third quarter earnings after the close of the market yesterday in the Glacier Bancorp team delivered another strong quarter. Net income was 52 million for the current quarter, and we generate an earnings per share of 47 cents. Net interest income ended the quarter at 167 million, pre-tax, pre-provision net revenue came in at 68 million.
Speaker 10: Thank you, thank you so much for all the color. Just kind of a high level question. Are there any markets that are performing particularly well as a blade versus other sets that might be slower and one that you might be watching more closely? Just interested since you guys do cover much of the West wondering about what you're seeing on the ground.
Thank you. Thank you so much for all the color.
Kind of a high level question.
Are there are there any markets that are performing particularly well as of late versus others that that might might be.
And ones that you might be watching more closely just interested with you. Thank you.
Cover.
The last wondering about what you're seeing on the ground there.
Speaker 2: Yeah, the eight states, so from Montana down to Arizona, I would say it's pretty even across all our states. Arizona continues to have a very, very strong economy, but we also see continued growth in Idaho, Utah, Colorado, Colorado.
Randall Chesler: Interest income of 265 million in the current quarter increased 18 million or 7% over the prior quarter and increased 51 million or 24% over the prior year third quarter. The current quarter interest expense of 98 million increased 23 million or 30% over the prior quarter. Our net interest margin as a percentage of earning assets on a tax equivalent basis was 2.58% for the current quarter compared to 2.74% in the prior quarter. And although the net interest margin has been negatively impacted by the increase in interest rates in the current year, we experienced a slower pace in the decline in the net interest margin during the current quarter.
Yes, the eight states so for Montana down in Arizona, I would say, it's pretty even across all our states.
Arizona continues to have a very very strong economy.
But we also see continued growth in Idaho.
Utah.
Speaker 2: And so, you know, just all doing well, I think.
Colorado.
And so.
Just all doing well I think.
Speaker 2: you know, the same trends that drove the growth prior to the pandemic are still there, you know, lower cost of living, higher quality of life, a little business-friendly environments, still pulling in, you know, we're still seeing the immigration and I think good economic activity as well, despite...
<unk>.
The same trends that drove the growth prior to the pandemic are still there lower cost of living higher quality of life, a little business friendly environments still pulling in we're still seeing the in migration and I think.
Good economic activity as well despite.
Speaker 5: Kind of amazing if you think about all that external headwinds outside the banking industry, still seeing fair amount of optimism and growth. Thank you so much.
Randall Chesler: We like the positive trends on our interest income and expect some moderating trends on interest expense at this point and believe this sets the stage for margin growth in 2024. During the current quarter, the team continued to focus on our diversified deposit and repurchase agreement products. Total deposits in retail repurchase agreements of 22 billion at the current quarter and increased 530 million or 10% annualized during the current quarter. With the increased core deposits, we allowed 411 million of higher cost wholesale brokerage CDs to mature and not renew excluding these wholesale deposits.
Kind of.
Amazing if you think about all of that external headwinds.
Outside the banking industry.
Still seeing a fair amount of optimism and growth.
Thank you so much for all the color I'll step back.
Thank you.
One moment for our next question.
Speaker 5: Our next question comes from the line of Brandon King with Truist. Your line is now open. Good morning. Morning, Brandon.
Our next question comes from the line of Brandon King with <unk>. Your line is now open.
Hey, good morning, good morning.
Brandon.
Yes, so loan yields.
Speaker 11: I've picked pretty materially compared to my expectations. So I just wanted to get a sense of are you speaking expecting a similar type of increase in loan yields for next couple of quarters?
Okay pretty materially compared to my expectations. So I just wanted to get a sense of are you expecting a similar type of increase in loan yields for the next couple of quarters.
Randall Chesler: Core deposits in retail repurchase agreements increased 941 million or 18% annualized during the current quarter. Non-interest bearing deposits increased 7 million over the prior quarter, representing 32% of total core deposits at quarter end. We're very pleased to see this strong deposit growth driven by all of our divisions. Our teams are able to leverage their strong existing relationships and market presence to achieve these impressive results. Total non-interest expense of 130 million for the current quarter decreased, 1 million, or 79 basis points over the prior quarter, and decreased 484,000 or 37 basis points over the prior year or third quarter.
Speaker 6: Yeah, right. This is not to the same level I would expect that I think
Yes, Brian this is Tom not to the same level I would expect that I think we're starting to hear kind of the top of the new production yield curve and as Randy mentioned earlier. They are at a level now, but it is starting to impact the pipeline of demand.
Speaker 6: starting near kind of the top of a new production yield curve. But as Rianne mentioned earlier, they're at a level now that it's starting to impact.
Speaker 11: Okay, and then as far as, you know, low repricing.
Okay, and then as far as.
Loan repricing.
Speaker 11: Could you give us a sense of how much is repricing near-term?
Could you give us a sense of how much is re pricing near term.
Speaker 11: off-con backbook levels and this already mentioned new production rates, but just want to get a sense of what you have in every price.
Off current.
Back book levels.
That's already missing your new production rates, but I just wanted to get a sense of what you have in the repricing pipeline.
Speaker 6: Yeah, so every year in the totality of the portfolio, about 20% either the chance to repribe.
Yes, so every year.
The totality of the portfolio about 20% either returns or re prices.
Speaker 6: That does include the variable rate, which represents 9% along.
Randall Chesler: Our divisions continue to show great judgment in managing people and hiring physicians only needed and containing costs in other areas. The current quarter provision for credit loss expense was 5.1 million, which is a decrease of 160,000 from the prior quarter and a 3.3 million in decrease from the prior year or third quarter. The percentage of provision to loans was essentially flat to the last quarter at 1.19%. Our credit performance continues to be excellent.
Does include the variable rate, which represents 9% of loans.
Speaker 6: So that's what we're continuing to see in actuality as well.
So thats and Thats what were Thats, what were continuing to see.
In actuality as well.
Okay and that adjustable portion how much of that portion.
Speaker 6: I'm sorry, the floating portion like this.
The.
I'm sorry are you asking the floating portion.
No.
Speaker 11: The adjustable rate portion that... Yeah, so that'd be 11% of...
The adjustable rate portion.
So that would be 11%.
Speaker 11: Okay, okay, so not floating, but kind of fixing and adjusting every far user. So yeah, okay. Okay.
Yeah.
Okay, Okay, so not floating but kind of fixing and adjusting every.
Randall Chesler: Non-performing assets to bank assets at 15 basis points was little change from last quarter, as was net charge off to average loans, which ended the quarter at only four basis points. Early stage delinquencies, a 15 million at the end of the quarter decreased 10 million from the prior quarter and decreased 6 million from the prior year end. Early stage delinquencies as a percentage of loans at September 30 was 9 basis points compared to 16 basis points for the prior quarter and 14 basis points for the prior year end.
Okay. Okay.
Okay.
Thank you.
Welcome.
Our next question please.
Speaker 1: And next question comes from the line of entry to row with Stevens. Your line is now open.
Our next question comes from the line of Andrew <unk> with Stephens. Your line is now open.
Hey, good morning.
Morning, Andrew.
Speaker 12: I appreciate all the color on the deposit kind of expectations as good as you could grow fifth quarter. I was just curious for the incremental, for the mix of the incremental deposit growth that you would expect, would you expect that to look similar to three Qs? So I have your tilt towards CD balances and then,
I appreciate all the color on the deposit kind of expectations is good to see the growth. This quarter I was just curious.
The incremental.
But the mix of the incremental deposit growth that you would expect would you expect that to look similar to <unk>. So.
Of your tilt towards CD balances and then.
Speaker 12: Can you just maybe talk just a little bit about your CD pricing strategy where new time deposits or where the new time deposits come on at during the third quarter?
Randall Chesler: The loan portfolio of 16 million increased 180 million or 5% annualized during the current quarter with a larger dollar increase in commercial real estate, which increased 72 million or 3% annualized. New loan production yields were 7.92% up 55 basis points from the last quarter. Overall, the portfolio loan yield of 5.27% in the quarter increased 15 basis points from the prior quarter loan yield of 5.12%. Non-interest income for the quarter total 30.2 million, which was an increase of 1.2 million or 4% over the prior quarter.
Can you just maybe talk to us a little bit about your CD pricing strategy, where our new time deposits were aware of the new time deposits come on at during the third quarter.
Speaker 4: Sure, I can touch on that. In terms of growth drivers going forward, I think should we see growth? I probably look similar to what we saw in the third quarter, in terms of product mix, CD, are clearly a very popular product right now. Pricing strategy. Each division is priced for their market.
Hi.
Sure I can I can touch on that.
In terms of.
Growth drivers going forward.
I think yes.
Should we see growth probably look similar to what we saw.
In the third quarter in terms of kind of product mix Cds are clearly.
A very popular product right now pricing strategy.
Each division is price for their market.
Speaker 4: So, you know, that's one thing that I love about our models. We can optimize to 17 different markets around our footprint. We're competitive on our pricing. I would say most of our cities, you know, the new cities that we're bringing in are somewhere in the range of 4 to 5%.
No.
That's one thing that I love about our model, we can optimize to 17 different different markets around our footprint.
Randall Chesler: We added over 3,000 new retail and business accounts in the quarter with over 360 million in new relationship deposits. We declared a quarterly dividend of 33 cents a share. Glacier Bank Corp has declared 154 consecutive quarterly dividends and has increased the dividend 49 times.
We're competitive in our pricing I would say most of our Cds the new the new Cds that were bringing in are somewhere in the range of 4% to 5%.
Got it okay.
Speaker 12: And then just wanted to revisit the deposit beta guidance last quarter. I think the expectation was revised to 25% kind of through cycle beta expectation. Is that still in the cards? Do you think we could see some incremental pressure to that 25%?
Thank you.
And then just wanted to revisit the.
The deposit beta guidance last quarter, I think the expectation was revised to 25% kind of through cycle beta.
Randall Chesler: We announced the signing of a definitive agreement to acquire community financial group Inc., the parent of Wheatland Bank, a leading Eastern Washington community bank had quartered in Spokane, Washington with total assets of 763 million as of September 30th. This will be our 25th acquisition since 2000. We've already received some of our regulatory approvals for this transaction and expect to close as we previously indicated by this year end. Our capital levels are strong and growing with estimated CET-1 increasing 13 basis points from the prior quarter to 12.55%. We believe this level of capital is more than 100 basis points greater than the average of the 21 peer banks listed in our proxy.
Expectation is that still in the cards or do you think we could see some incremental pressure to that 25%.
Speaker 4: Right now I see it says we're still on track to hold to the 25%. I mentioned the declining pace of cost increase. I think we're right on the path right now. So very encouraged by science and the progress that we've made so far. We did see some meaningful increase, second quarter, third quarter, about that cost increase is really leveling out. And so if we're able to hold on that path, then we're right on track for 25% to the second.
Right now I see it.
We're still on track to hold to the 25% I mentioned that the declining pace of cost increase I think we're right on path right now so.
So very encouraged by the science and the progress that we've made so far and we did see some.
Meaningful increase second quarter third quarter about that cost increase is really leveling out and so if we're able to hold on that path then than we are right on track for 25% respectively.
Yes, okay.
Speaker 12: And then just I wanted to kind of ask the margin question maybe a different way because I know the margins going to be influenced by some of the cash that was put on this quarter and presumably maybe a little bit of cash bill going forward. But in terms of net interest income dollars, would you expect that 3Q was the trough in NII? Or could we see maybe some leveling off again in the fourth quarter before NII starts to grow throughout 2024 in line with kind of some of your margin commentary?
And then just I wanted to kind of ask the margin question, maybe a different way because I know the margin is going to be influenced by some of the cash that was put on this quarter and presumably maybe a little bit of cash build going forward, but in terms of net interest income dollars or would you expect that <unk> was the trough in NII or.
Randall Chesler: With that, we remain confident in the dynamic Western markets we serve and our unique business model to continue to deliver strong results.
Could we see maybe some leveling off again in the fourth quarter before NII starts to grow throughout 2024 in line with kind of some of your margin commentary.
Randall Chesler: So, Norma, that ends my formal remarks and I'd now like you to open the line for any questions that our analysts may have. Thank you.
Speaker 4: I think leveling off is probably the right word. You know, stabilization. We've seen some encouraging signs of stabilization.
I would I think leveling off as the right is probably the right word.
Stabilization, we are seeing some encouraging signs of stabilization.
Operator: As a reminder, to ask your question, you'll need to press start 1-1 on your telephone. To withdraw your question, please press start 1-1 again. Please wait for your name to be announced. Please stand by, will we compile the Q&A roster? One moment for our first question, please.
Speaker 4: So I would think it would probably see fourth quarter come and really close to where we came in.
And so I would think we'd probably see fourth quarter comment really close to where we came in in the third.
Speaker 12: Okay. If I could ask one more for Randy, maybe just wanted to get your updated thoughts on the M&A landscape as we sit today. And I know you've got a current deal pending that sounds like it'll close by by end of year. But as we move into 2024, just how you're saying he about M&A is a strategy for glacier.
Sure.
Okay.
If I could ask one more for Randy maybe just.
Wanted to get your updated thoughts on the M&A landscape as we sit today and I know you've got a current deal pending that sounds like that will close by.
Matthew Clark: I think the first question comes from the line of Matthew Clark with Piper Fandmore.
Byron Pollan: Your line is now open. Hey, good morning. Good morning, Matthew. Just a few questions around the margin to start. Let me try to get some visibility going in the next quarter. Do you have the spot rate on deposits at the end of September and then the average margin in the month of September? I remember when we chased in.
By end of year, but as we move into 2024, just how youre thinking about M&A as a strategy for glacier.
Speaker 9: Yeah, well, we're very optimistic, I think, and we're optimistic because probably the number of people can really act, the number of companies can really actively pursue it is probably less so than in the past. So I think that...
Yeah, well we're.
Very optimistic I think.
And we're optimistic because probably the.
Number of people, who can really act as a number of companies can really actively pursue it as probably less so than in the past so.
I think that.
Speaker 2: That's positive for us, given our experience in it. We do have, you know, I think the activity is still about the same. It's, there are discussions, it's not at the level that it was a year ago, or I'm sorry, two years ago, you know, pre-pandemic and it's, but there are good discussions. I think as banks look at their balance sheets and think about,
Byron Pollan: Yeah, Matthew, this is Byron. The spot rate at the end of September for total deposits was 117. The margin for the month of September was 259. Okay. Okay, great. And then the BPFP comes to do in March. I think about 2.7 billion. What's your plan on that front? Obviously, you added some cash or built some cash this quarter. Is that the plan to continue to accumulate cash and pay the whole thing off?
That's positive for us given our experience in it.
We do have.
The activity is so about.
About the same.
There are discussions it's not at the level that it was a year ago.
Or I'm, sorry, two years ago.
<unk> pre pandemic.
But there are good discussions I think as banks look at their balance sheets and think about.
Byron Pollan: Or do you expect to refile some portion of it? Yeah, right now we're creating options for ourselves. I think we're in very good position as you noted with that level of cash over 1.7 billion in cash. So we're evaluating our options, looking at other funding alternatives. And really, at this point, Matthew, our main goal is to get us in a good position to take care of that. So we'll see what kind of position we are at that time. But certainly, our goal is to bring that down at what level that remains to be seen. Okay.
Speaker 2: higher for longer, you know, that's going to drive a fair amount of discussions about the future and how long some banks are willing to wait for things to turn positive for them versus, you know, looking at some other options. And there's a lot of really good banks.
Higher for longer.
It's going to drive a fair amount of discussions about the future.
<unk>.
How long some banks are willing to wait for things to turn positive for them.
Versus looking at some other options and Theres a lot of really good banks out there I think asking those questions. So we're we're optimistic.
Speaker 5: out there, you know, I think asking those questions. So we're optimistic. We have to get into 24 and see if that pans out. But at least at this point, we don't see a tidal wave of deals. But we do see slow and steady conversations with, I think, some very good banks. So we're encouraged by that.
I think we have to get into 'twenty, four and see if that pans out but at least at this point.
We don't we don't see a tidal wave of deals, but we do see slow and steady conversations with with I think some very good very good banks. So we're encouraged by that.
Speaker 12: Okay, thank you for taking the questions and congrats on the recorder.
Okay.
Thank you for taking the questions and congrats on a great quarter.
Speaker 1: Thank you. Thank you. As a reminder, to ask a question, you'll need to press star 111 on your telephone.
Ron Cofure: And then shifting gears to expenses, any updated thoughts on the run rate outlook here for 4Q?
Thank you. Thank you as a reminder to ask a question you will need to press star one on your telephone.
Ron Cofure: Ron here, Matthew. The guide will be $132 to $134 million, and we feel very comfortable with that as an estimate. Fourth quarter, typically, if you've got some cleanup, and you know, just leave in room for that as well.
Speaker 1: I have a follow up questions from Matthew Clark with Piper San Juan, your line is out.
Matthew Clark: Okay.
I have a follow up question from Matthew Clark with Piper Sandler Your line is now open.
Speaker 3: Okay, you had just a couple more around the margin. The September margin was above the quarterly average. And.
Okay.
Yeah, just a couple a couple more.
Around margin.
September margin was above the quarterly average.
Speaker 3: I just want to get a sense that there was anything unusual in there, any purchase accounting, the creation, or kind of accelerated purchase kind of creation or anything lumpy that we should, that we can strip out and try to normalize for that trend.
I just wanted to get a sense for if there was anything unusual in there.
Tom Dolan: And then the uptick and non-performers, I know it's just coming off a small base, and it's only $10 million, but any color around what drove that increase in terms of types of borrowers and geography and kind of plans to resolve them.
Purchase accounting accretion kind of accelerated purchase accounting accretion or anything lumpy that we should that we can strip out and try to normalize for that.
<unk> trend.
Speaker 4: Now I don't think there was anything unusual in the month of the quarter that...
No I don't think there was anything unusual.
In the month of the quarter that.
But with standout.
Speaker 3: Okay. And then I'm just back to the deposit beta conversation through the cycle. You know, we get a five handle now on the 10 year, which I'm assuming might wake up some people. Can you just talk through your strategy and how you might handle people looking to gravitate or kind of resume that?
Tom Dolan: Sure, Matthew, this is Tom. Yeah, as you said, start off with a low number, so I need to move the needle. Really, what this quarter was about was really just a business as usual situation, just the ongoing ebb and flow of NPAs.
Okay.
And then on just back to the deposit beta conversation through the cycle.
A five handle now on the tenure, which.
I mean might wake up some people can you just talk through your strategy and how you might handle people looking to gravitate or kind of resume that.
Matthew Clark: There's no common theme. And, you know, both of them are non-owners here. He wants us. Student housing, the other one is self-storage. We're really the larger drivers. Okay, thank you. Thank you.
Speaker 3: trend that we saw earlier this year, um, you know, we're willing to pay up, or will you let some of that money go?
Trend that we saw earlier this year.
Operator: One moment for our next question, please.
Are you willing to pay up or will you, let some of that money go.
Yes.
Speaker 2: Yeah, no, that's going to be interesting. You're right about these inflection points. You know, 4% was a big wake up call, 5%. Just don't know how much of the, you know, the anxious money has moved. And I would say the bulk of it is already positioned. But there's also that will create some more reflection. Know that about it. If it sticks and grows.
Okay.
Yes.
That's going to be interesting.
Youre right about these inflection points, 4% was a big wakeup call, 5% just don't know how much of the the anxious money has moved in I would say the bulk of it is already positioned.
David Feaster: Questions come from the line of David Feister with Raymond James. Your line is now open. Hey, good morning, everybody.
But theres always that will create some more reflection no doubt about it if it sticks and grows from there.
Speaker 2: from there. You know, I think we're firmly in the mode of retaining and growing deposits now. We initially were slow to react because we wanted to see whether this is gonna play out, but we feel like it's a pretty clear picture now. I think hire for longers very likely. And it's easier to retain the customers you have than let them go and try to bring them back later.
Randall Chesler: We're in David. Maybe just touching on the core funding side. It's great to see the stabilization in the non-intersparing deposits. Obviously seeing a decent amount of growth on the interest bearing side. And I'm just curious maybe if you could help us understand some of the underlying trends that you're seeing on the core funding side and where you're having the most opportunity to drive core deposit growth and then just digging into the new account growth, where you haven't success driving those attracting new relationship clients today.
Randall Chesler: Yeah, let me take a shot at that and we'll see then if Byron wants to one to add. So the core funding, you know, we're very, very happy to see the growth that we put forth. And really at the core, it's back to the divisions and the model. They've got the relationships. They've got the customers. And I think we saw a lot of existing customers just moving deposits back into our banks from other places.
I think we're firmly in the mode of.
Retaining and growing deposits now.
We initially were slow to react because we wanted to see where this is going to play out, but we feel like it's a pretty clear picture and I think higher for longer is very likely.
And it's easier to retain the customers you have then let them go and try to bring them back later.
Okay, great. Thank you.
Okay.
Thank you.
Speaker 1: At this time I'd like to turn the conference back to Mr. Randall Tesla for closing remarks.
At this time I would like to turn the conference back to Mr. Randall Chesler for closing remarks.
Sure.
Speaker 5: Thank you, Norma. We appreciate everybody dialing in, having a conversation about how the quarter went, very happy with it, and we hope you all have a great, great Friday and a great weekend. Thank you.
Thank you Norma.
We appreciate everybody dialing in.
Having a conversation about how the quarter went very happy with it and we hope you all have a great great Friday and a great weekend. Thank you.
Speaker 1: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
Okay.
Randall Chesler: So we're very, very pleased to see that. I think that's a very positive. We don't have to go too far outside of existing relationships. The show, the kind of growth that we did terms of new, very happy with that as well. You know, we still are seeing a decent amount of in migration. And then as we build scale and a lot of our markets, becoming the largest institution or one of the larger institutions, delivering really good service as some competitors take their eye off the wall.
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Randall Chesler: You know, it just creates an opportunity for us to bring new people in. And as you know, Dave, we have a machine really that we focus on, meaning all our divisions. If the one thing, one consistent theme across all of them is that drive for good quality new customers in the marketplace. And they've got a pretty good process to do that. So starts with taking care of existing customers and bringing more of those relationships back to our balance sheet. And then we also continue to have a fairly robust new account strategy that's working well for us.
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Byron Pollan: That's great. And then maybe following up on the margin commentary, I'm just curious how do you think about it's increasingly likely it seems like that we're going to be in a higher for longer environment. I'm curious how you think about the margin in the NIH trajectory as we look forward in a higher for longer environment. I mean, funding pressure is probably persistent in your term, it seems like given a larger balance sheet, maybe we can see NII stabilized and maybe a bit of margin compression into the, you know, first or second quarter next year, but I'm just curious if rates do stay high, how you think about the margin in the NIH trajectory as we look forward.
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Byron Pollan: Yeah, David, this is Byron. I can address that. I think higher for longer, you know, sets up really well for us. You know, we're already seeing signs of slowing the positive cost increase. And so that's going to be very helpful every month. You know, we have loans that are repricing higher into this into this rate environment. We're getting the remix of cash flow from investments into loans. And with the pace of deposit cost increased flowing, you know, we're, I think that's going to be helpful long term for the margin.
Byron Pollan: And as that deposit cost really leveled off, I think we'll see, I think we'll see growth next year as Randy noted in his comments in 24. The timing of that, you know, we're still trying to pin down right in the middle of our budgeting process. And so, you know, a lot of it has to do with, you know, our outlook for growth and loans and deposit. A lot of it has to depend on the Fed. And what the Fed does, you know, do they need to get more aggressive in order to really stem inflation.
Byron Pollan: You know, we'll have to, we'll have to see, but but I am very optimistic about the trajectory for margin in a higher for longer. Okay, that's perfect.
Randall Chesler: And then last one for me, I'm just curious, maybe touching on on the loan demand side. What are you hearing from your clients? What's the pulse across your footprint? How's the pipeline shaping up as we head into the fourth quarter? Where are new loan yielding in, especially just digging into the CRE side? I'm curious where you're seeing good opportunities there and what type of deals still pencil at these higher rates. Yeah, I think I just say overall, and I want Tom to fill in the details, but overall, you know, the rates are getting to a point where it's starting to reduce loan demand and customers still feel, I think, relatively confident, but at these rates, they're really rethinking some of their projects, not all, but we are seeing a deceleration and incoming business.
Randall Chesler: Yeah, the only thing I'd add to that is, you know, certainly it takes a lot more cash equity to make deals pencil of these at the rates than they did a year ago. And so, you know, the pipelines are off from the last couple of quarters, so they're off from last year, relatively stable, just the last couple of months. And, you know, as Randy said, you know, we're still pushing kind of that just shy of 8% even on the CRE side, but what we're seeing is the deals that come through generally are coming in with more cash equity at the front of them. James. I appreciate it, guys. Thank you all. One moment for our next question, please.
Jeff Rulis: Our next question comes from the line of Jeff Rulis with DA Davidson.
Byron Pollan: Your line is now open. Thanks. Good morning. I wanted to check in on the, I guess the pace of the decline in that wholesale or the kind of the broker cities. It was that sort of spread pretty evenly across the gun. You came in close to 500 million and you're down to under 100 side. I just wanted to see if that was pretty steady throughout the quarter if it was kind of won't be. The decline in broker was mostly happened in July. So the bulk of the happen in July with a little bit of follow on in August and September.
Byron Pollan: I see. Okay, so you probably captured a decent amount of that benefit in cost of funds or just trying to get a sense for Byron as you range bound these variables into into timing. I mean, I know that I respect the still working on the timing, but you know, a bottom of the margin in the fourth quarter. All things being equal. Would you be surprised if that is the bottom.
Byron Pollan: Thank you for. It's possible. I could see, you know, scenarios where that where that happens, but there are risks to that as well. You know, on one hand is as Randy mentioned, you know, we are building cash that's accreted to and I, but it does weigh on margin. Again, we, you know, it kind of depends on what that what the Fed does, you know, is the Fed have to get more aggressive.
Byron Pollan: Also, very helpful for margin was the stabilization of our non interest bearing balances. You know, you see some additional runoff there, you know, that could that could put some pressure on margin. So I could I could see a scenario where where we do see a bottom in the fourth quarter, but you know, there are a lot of variable that player that we still have to see how they play out.
Matthew Clark: Okay. And he said the September average was 255. I'm sorry, what are you asking for a margin? September margin average. The September margin was 259. 259. Okay.
Operator: I appreciate it. And then just a couple housekeeping.
Jeff Rulis: Randy on that, the Wheatland close. Again, for, you know, by your end, this seem more back into the quarter for specific timing.
Randall Chesler: You know, we're still getting the regulatory provost, but I, you know, we're being conservative, you know, towards the end of the year. Back end, yes, that's probably more likely.
Ron Cofure: And last one, Ron, you touched on expenses for Q4, I look, it's been a phenomenal year from an expense, it's like a spend standpoint.
Ron Cofure: I don't know what that means for 24. You've really held the line. I don't know if it's, you continue to find efficiencies, but if you could hazard a thought on 24 expense growth. You know, let me, we're in the middle of budgeting and I don't want to get ahead of the team and what what I think, but you know it and thank you for recognizing the hard work that's been done and you know we could see that that approach will continue into 2024.
Operator: Okay, sounds good.
Operator: Thank you.
Operator: One moment for our next question please.
Kelly Motta: Our next question comes from the line of Kelly Motta with KBW. Your line is now open. Hey guys, good morning. Good morning, Kelly. I was nice to see the deposit growth this quarter. I believe some of that was seasonal inflows. Do you have a sense of kind of just how I'm in dollar contribution, how much that was and as that flows out. How, how that we should be thinking about the dollar amount of NII, would you expect that to trend lower off of this Q3 level?
Kelly Motta: Yeah, I can speak to the seasonality. So yeah, we had great progress growing deposits in the third quarter. Some of that was driven by seasonal strengths that we typically see during the summertime. Some of that was some of that growth was also helped by by our pricing strategy. I would say what's really encouraging is that the growth that we realized in the third quarter was based on a lower overall pace of cost increase than in the second quarter.
Kelly Motta: To pin it down, it's really hard to tease apart how much of that growth to quantify with seasonal versus rate. Probably I would guess about half of that was from a seasonal perspective, the other half being from other dynamics that Randy noted in his prepared comments. I think for that Byron, can you, can you remind us just with the seasonal trends? I know that the summer is usually strong.
Byron Pollan: Does that mostly outflow in Q4 or does that kind of come come through the, you know, over the next couple quarters, kind of dribble out like can you just remind us kind of the dynamics of what we should be thinking about there, as well as you know, are you holding any, you know, cash against that that is kind of boosted your securities yields mixed in there this quarter, just trying to get a thoughts around the dynamics about what the security deals will look like if that cash kind of comes out with the seasonal deposits and just overall the timing of that more broadly. Sure, from a seasonal perspective, fourth quarter is a little bit of a mixed bag.
Byron Pollan: I think we have some strength kind of in the first half of the quarter and then in the back half of the quarter. Overall, you know, I could see, you know, deposits coming in maybe slightly up in the fourth quarter. In terms of securities, you know, that cash low, you know, continues to come up with a portfolio. It is, it is looking like that cash low, we anticipate being closer to $250 million per quarter now, you know, previously we were seeing a little bit stronger growth.
Byron Pollan: The portfolio is in runoff and so those cash lows have come down a little bit. But from that perspective, you know, yes, are we holding any cash against any seasonal outflow? I don't think we're, I'm not expecting seasonal outflows to require any of our cash, and Kelly, just the drivers there, we have tourism as a thread that runs through all of our markets and a lot of our customers are banking reserves up in the third quarter.
Byron Pollan: And then they live off that in the fourth quarter, so to speak. And so that's why generally we're flat to sometimes down. And I think some of that, you know, also going to be driven by what happens in the fourth quarter here, if we have a government shutdown, that's going to create some probably some more demand for cash than we would expect. So we just didn't evolve to the environment, but the usual environment note is usually a flat fourth quarter.
Kelly Motta: Thank you. Thank you so much for all the color.
Randall Chesler: Just kind of a high level question.
Randall Chesler: And are there are there any markets that are performing particularly well out of late versus other sets that might might be slower in one site, you might be watching more closely, just interested since you guys do, you know, cover much of the West wondering about what you're seeing on the ground there. Yeah, the eight states, so from Montana down to Arizona, I would say it's pretty even across all our states. Arizona continues to have a very, very strong economy, but, you know, we also see continued growth in Idaho, Utah, Colorado.
Randall Chesler: And so, you know, just all doing well, I think. You know, the same trends that drove the growth prior to the pandemic are still there, you know, lower cost of living higher quality of life, a little business friendly environments, still pulling in, you know, we're still seeing the in migration. And I think good economic activity as well. Despite kind of amazing if you think about all that external headwinds outside the banking industry. So, you know, we're still seeing, you know, a fair amount of optimism and growth.
Operator: Thank you so much for all the color.
Operator: I'll step back.
Operator: Thank you.
Brandon King: One moment for our next question. Our next question comes from the line of Brandon King with Chouist. Your line is now open. Hey, good morning. Morning, Brandon. Yeah, so loan yields up to pretty materially compared to my expectations. So I just wanted to get a sense of, are you expecting me expecting a similar type of increase in loan yields for next couple of quarters. Yeah, Brandon, this is not to the same level.
Brandon King: I would expect that. I think we're starting near kind of the top of a new production yield curve. But as Randy mentioned earlier, you know, they're at a level now that have started to impact the pipeline in demand.
Tom Dolan: Okay. And then as far as, you know, loan repricing, could you give us a sense of how much is repricing near term? Off-Con, what are the back book levels in this already mentioned new production rates, but just want to get a sense of what you have in the reprising pipeline. Yeah, so every year in the totality of the portfolio, about 20% either returns or reprises. That does include the variable rate, which represents 90% alone.
Tom Dolan: And that's what we're continuing to see in actuality as well. And that adjustable portion, how much is that portion? I'm sorry, are you asking the floating portion like the adjustable rate portion? Yeah, so that would be 11% of the 20. Okay, so not floating, but kind of fixing and adjusting every farm.
Brandon King: Okay, that's all I had. Thank you.
Operator: One moment for our next question, please.
Andrew Roe: Our next question comes from the line of entry to Roe with Stevens. Your line is now open. Hey, good morning. Morning, Andrew. I appreciate all the color on the deposit kind of expectations as good to see the growth this quarter. I was just curious for the incremental or the mix of the incremental deposit growth that you would expect, which would you expect that to look similar to three cues? So I have your tilt towards CD balances.
Andrew Roe: And then can you just maybe talk just a little bit about your CD pricing strategy where new time deposits were, where did new time deposits come on at during the third quarter? Sure, I can touch on that. In terms of, you know, growth drivers going forward, I, you know, I think you should we see growth. I probably look, you know, similar to what we saw in the third quarter in terms of kind of product mix CDs are clearly, you know, a very popular product right now pricing strategy.
Andrew Roe: You know, each division is priced for their market. And so, you know, that's one thing that I love about our models. We can optimize to 17 different different markets around our footprint. We're competitive on our pricing. I would say most of our CDs, you know, the new, the new CDs that we're bringing in are somewhere in the range of four to five percent. Got it. Okay. Thank you. And then just wanted to revisit the deposit beta guidance last quarter.
Andrew Roe: I think the expectation was revised to a 25 percent kind of through cycle beta expectation. Is that still in the cards? Do you think we could see some incremental pressure to that 25 percent? Right now, I see it says we're still in track to hold to the 25 percent. You know, I mentioned the declining pace of cost increase. I think we're right on on the path right now. So very encouraged by, you know, science and the progress that we've made so far.
Andrew Roe: You know, we did see some meaningful increase, second quarter, third quarter, about that cost increase is really leveling out. And so if we're able to hold on on that path, then then we're right on track for 25 percent. Yeah, okay. And then just I wanted to kind of ask the margin question maybe a different way because I know the margin is going to be influenced by some of the cash that was put on this quarter and presumably maybe a little bit of cash bill going forward.
Andrew Roe: But in terms of net interest income dollars, would you expect that 3Q was the trough in an eye or could we see maybe some some leveling off again in the fourth quarter before an eye starts to grow throughout 2024 in line with kind of some year margin commentary I would I think leveling off is the right is probably the right word you know stabilization we've seen some encouraging signs of stabilization. And so I would I would think you know it would probably see fourth quarter coming really close to where we came in in the center.
Randall Chesler: Okay, if I could ask one more for Randy maybe just wanted to get your updated thoughts on the M&A landscape as we sit today and I know you've got a current deal pending that sounds like it'll close by by end of year. But as we move into 2024 just how you're saying he about M&A is a strategy for Glacier. Yeah, well we're very optimistic I think and we're optimistic because probably the number of people can really act the number of companies can really actively pursue it is probably less so than in the past.
Randall Chesler: So I think that that's positive for us given our experience in it. We do have you know I think the activity is still about the same it's there are discussions it's not at the level that it was a year ago or I'm sorry two years ago you know pre pre pandemic and it's but there are good discussions I think as banks look at their balance sheets and think about higher for longer you know that's going to drive a fair amount of discussions about the future and how long some banks are willing to wait for things to turn positive for them versus you know looking at some other options and there's a lot of really good banks out there you know I think asking those questions.
Randall Chesler: So we're we're optimistic you know I think we have to get into 24 and see if that pans out but at least at this point you know we don't we don't see a tidal wave of deals but we do see you know slow and steady conversations with with I think some very good very good banks so we're encouraged by that.
Randall Chesler: Okay thank you for taking the questions and congrats on the recorder. Thank you.
Operator: Thank you As a reminder to ask a question you'll need to press star 111 on your telephone.
Matthew Clark: I have a follow-up question from Matthew Clark with Piper Sandwell your line is now open. Okay yeah just a couple a couple more around the margin you know September margin was above the quarterly average and I just want to get a sense if there was anything unusual in there, any purchase accounting accretion or kind of accelerated purchase kind of accretion or anything lumpy that we should, that we can strip out and try to normalize for that trend. Now, I don't think there was anything unusual in the month of the quarter that would stand out.
Randall Chesler: Okay. And then I'm just back to the deposit beta conversation through the cycle. You know, we get a five handle now on the 10 year, which I'm assuming might wake up some people. Can you just talk through your strategy and how you might handle people looking to gravitate or kind of resume that trend that we saw earlier this year, you know, we're willing to pay up or will you let some of that money go?
Randall Chesler: Yeah. No. That's going to be interesting. You're right about these inflection points, you know, 4% was a big wake up call, 5%. Just don't know how much of the, you know, the anxious money has moved. And I would say the bulk of it is already positioned. But there's all that will create some more reflection, know that about it, if it sticks and grows from there. You know, I think we're firmly in the mode of retaining and growing deposits now.
Randall Chesler: We initially were slow to react because we wanted to see where this is going to play out. But we feel like it's a pretty clear picture now, I think, higher for longers very likely. And it's easier to retain the customers you have and let them go and try to bring them back later.
Matthew Clark: Okay. Great.
Operator: Thank you.
Randall Chesler: At this time, I'd like to turn the conference back to Mr. Randall Tesla for closing remarks. Hey. Thank you, Norma. We appreciate everybody dialing in. Having a conversation about how the quarter went, very happy with it. And we hope you all have a great, great Friday and a great weekend. Thank you.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. .