Q2 2025 Glacier Bancorp Inc Earnings Call
Good day and thank you for standing by. Welcome to the Glacier Bank Corp. Second quarter 2025 earnings conference call.
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Speaker Change: Oh, now I'd like to hand the conference over to your speaker today.
Speaker Change: Randy Chesler president and CEO of Glacier Bank court. Please go ahead.
Speaker Change: Good morning, and thank you for joining us today with me here in Kalispell as Ron Cooper, our Chief Financial Officer, Tom Dolan, our chief credit administrator
Speaker Change: Angela dossi our chief accounting, officer and Byron pollen. Our treasurer
I'd like to point out that the discussions today is subject to the same forward-looking considerations outlined starting on page 13 of our press release and we encourage you to review this section.
Speaker Change: We delivered an excellent quarter, continuing our momentum with higher loan, yields lower deposit costs, increasing margin solid growth and disciplines expense management.
Speaker Change: We successfully completed the acquisition of the Bank of Idaho adding 1.4 billion in assets and expanding our presence in Idaho, and Eastern Washington.
Speaker Change: The integration is progressing, very smoothly and we're excited about the long-term opportunities. This brings
We also announced a definitive agreement to acquire Guarantee Bank shares a 3.1 Billion Dollar Bank headquartered in Mount Pleasant Texas.
Speaker Change: This marks our first entry into the state and represents a significant step for our company and in our strategic expansion of our Southwest presidents.
Speaker Change: We reported net income of 52.8 million for the second quarter or 45 cents per diluted. Share, our results include 19.9 million in credit loss, expense and acquisition related expenses primarily from the completion of the Bank of Idaho acquisition.
While the second quarter, net income represents a decline of 3% from the prior quarter due to acquisition expenses.
Speaker Change: It reflects an 18% increase in net income and a 15% increase in earnings per share, compared to the same quarter last year.
Speaker Change: Our loan portfolio, grew 1.3 billion to 18.5 billion and 8% increase from the prior quarter.
Speaker Change: With 239 million or 6% annualized in organic growth.
Speaker Change: Commercial, real estate continues to be a key driver of loan growth.
Speaker Change: Deposits also, grew reaching 21.6 billion up 5% quarter over quarter, notably non-interest-bearing deposits increased 8% and continue to represent 30% of total deposits.
The deposits and repurchase agreements, organically increased by 43 million or 1% annualized from the prior quarter.
We reported net interest, income of 208, million up, 17.6 million or 9% from the prior quarter and up 41.1 million or 25% from the same quarter last year.
Speaker Change: This growth was driven by higher average loan. Balances improved. Loan yields and declining funding costs?
Speaker Change: Our net interest margin on a tax adjusted basis, expanded to 3.21% up 17 basis points from the first quarter and up 53 basis, points year-over-year.
Speaker Change: And expansion reflecting the strength of our loan, portfolio repricing.
Our ability to get good margin on new loans and our continued focus on managing funding costs.
Speaker Change: The loan yield of 5.86% in the current quarter increased 9 basis points from the prior quarter loan, yield and increased 28 basis points from the prior year. Second quarter.
Speaker Change: The total earning asset yield of 4.73% and the current quarter increased 12. Basis points from the prior quarter and increased 36 basis points from the prior year. Second quarter,
Speaker Change: As we reduced higher cost Federal Home Loan Bank borrowings by 265 million in the quarter.
Speaker Change: Core deposit cost remains stable at 1.25%.
On the expense side, non-interest expense was 155 million up 3% from the prior quarter.
Speaker Change: This includes 3.2 million in acquisition related cost.
Compensation and benefits Rose due to increased headcount from the Bank of Idaho, acquisition and annual Merit increases.
Speaker Change: Non-interest income totaled, 32.9 million in the current quarter up slightly from the first quarter and up 2% year-over-year.
Speaker Change: Chart charges and fees increased 8% from the prior quarter, while gains on loans remained steady.
Speaker Change: Our efficiency ratio improved to 62.08% down from 65.49% in the prior quarter and 67.97% a year ago.
Speaker Change: Reflecting positive operating Leverage.
Speaker Change: Credit, quality remains very strong. Our non-performing assets, remain low, at 0.17% of total assets,
And net charge offs were just 1.6 million for the quarter.
Our allowance for credit remains at 1.22% of loans, reflecting our conservative approach to risk management.
We recorded a provision for credit loss of 20.3 million which includes 16.7 million related to the Bank of Idaho acquisition.
Speaker Change: Excluding that our core provision for credit loss was 3.6 million.
Speaker Change: We continue to maintain a strong Capital position.
Speaker Change: Tangible book value per share. Increased to 19.79 up 8% year-over-year and we declared our 161st consecutive quarterly. Dividend of 33 cents per share. Underscoring, our commitment to delivering consistent shareholder returns
We are very pleased with our performance. This quarter, our expanding footprint, unique business model, strong business performance,
Speaker Change: Disciplined credit culture and strong Capital base, provide a solid foundation for future growth.
Speaker Change: that ends my formal remarks and I would now like the conference call Operator to open the line for any questions or analysts may have
Speaker Change: To ask a question.
Speaker Change: And wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star 1 1 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from Jeff rules with da Davidson your line is open.
Speaker Change: Thanks. Good morning morning, Jeff.
Jeff Davidson: I wanted to check in, on the the margin, uh, certainly seems to be tracking really well to, to the guide. I think you've talked about it a, a 350, exit towards the end of the year. Just wanted to see if there's anything.
In the current quarter on kind of 1 timer our accretion bumper is that all-in number.
Kind of again, stair. Stepping towards that. That exit kind of preparing.
Also saw stronger than expected long growth in the second quarter uh which which helped lift our margin. There, there is some variability around that Outlook um you know depending on what happens with with loans between now and the end of the year you know, what happens with deposits between now and the end of the year. Um, you know, that could that could drive some uh some some variability there.
Also uh, with uh, with guarantee and the announced acquisition there, depending on the timing of, when we close that acquisition, I think guarantee could add an additional 6 to 7 basis points on top of, you know what? What we just discussed
Uh Byron. Thank you really detailed, appreciate it. Um, on the
Speaker Change: It sounds really positive the expense side Ron, you know, maybe we start applying at 80% of your expense guy, but I guess the, the bank's been pretty efficient, um, and and I guess X merger costs. If we think about the third quarter, uh, we got a little pause between deals potentially, um, I guess X merger costs and getting a full quarter of Bank of Idaho.
Speaker Change: Kind of getting into that 155 million, maybe that's a little skinny. If you could just course correct on where you think expenses plus growth, uh, head from here,
Thank you. Um, just let me go back for the benefit of everyone, uh, that 153 and a half million, Randy covered in his opening remarks, um, 3 and a half million below second quarter, guide of 1 157, to 158 million for core not interest expense. Just want to remind everyone that that guide included 6 million dollars for the Bank of Idaho for the 2-month after its April 30th. And so uh, think back to the first quarter, the second quarter um
Speaker Change: had the same environment, uh, in that we remain cautious in spending, given the continuing economic uncertainty Market volatility,
Speaker Change: I think we're all aware of the noise that's in Washington, Etc. Um so of that 3 and a half million uh 500,000 half a million is attributable to Bank of Idaho coming in lower than the 6 million dollars.
Speaker Change: They're not yet converted that'll happen later. But nonetheless.
Speaker Change: Came in lowered by 500,000.
And of that remaining 3 million dollars. Uh, 1.2 million is due to lower third-party outside Consulting Services.
Another 300,000 is lower occupancy and Facilities. Expense in part is noticed last year in this quarter as well. We had a number of sales of former Brands facilities so it's getting more efficient there. And then the remainder, that 1.5 million it really was spread across.
Many other expenses of collectively the um including the Bank of Idaho, these are corporate departments. Each of the bank divisions have done a great job in controlling
Speaker Change: Their expenses and of that 1.5 million. There was no category, you know, greater than 250,000. So it really was pretty. Widespread
Speaker Change: So looking ahead to the second half of 25. Uh the previous guy I gave in April for core non-interest expense. Uh, for it was 160 to 162 million for each of the Third.
Fourth quarter.
Speaker Change: Um, the call that that higher guide, uh, it reflects the 9 to 10 million dollar increase.
Speaker Change: Because we're going to have 3 months of the Bank of Idaho.
Versus the 6 million. Was there only for the 2 months in quarter 2.
Speaker Change: So that's uh increase of 3 to 4 million on each side of that guide.
And then for the um, third quarter, uh we're going to reduce the core non-interest expense guide to 159.
Speaker Change: To 161 million.
Speaker Change: And I'll go ahead and for the fourth quarter of the guide will go to 161.
To 163 million.
Speaker Change: I do want to point out that that increase um when we went we had 153 and a half million. If you compare that back to the 152 million we had for q1 that represents a 1% increase.
you guys and that represents an increase of 6 and a half million dollars over the 153 million operating expenses for Q2,
That 6.5 million includes uh incrementally 3 and a half million.
Speaker Change: For the Bank of Idaho acquisition.
Speaker Change: The remainder is 3 million dollars from all the other divisions, corporate Department.
so I want to add perspective in that 3 million dollars uh, aside from
Bank of Idaho that represent represents a 2% increase when you compare that to the base of 153.5 million for Q2.
Speaker Change: Um, we are going to see some increase in in that 3 million dollars because we've had some pretty strong deferred expenses back in, um, q1. As a reminder third-party Consulting, we came in lower, by almost 800,000. And then here in the, uh, as I said, a moment ago, third-party Consulting came in 1.2 million. If you had that together, that's a million dollars. So we'll, we are expecting some additional hiring in the third quarter and some of that uh, deferred Consulting will show up to false but there'll be other increases, but that's the false of it.
Speaker Change: And then looking through the fourth quarter, the midpoint for the Q4 guide is 162 million which is 2 million more over the third quarter estimate. So if you could put that into perspective that 2 million over the Q3 base midpoint 160, that's 1 and a quarter increase. My point is is that we're going to have a, a step up in Q3. But overall, we continue to moderate the growth in our operating expenses. And just as a reminder, operating core means excluding m&a and any gain or losses on the sale of branches anything else that's really
Speaker Change: Really unique here. So,
Speaker Change: Let me just so I don't forget. Um,
Assuming we're going to close on Guarantee and say October 31st, uh you would add 14 million dollars to the the guy that gave for the fourth quarter to include guaranteed.
Speaker Change: With that, let me ask for any questions.
No Ronnie. You you a very thorough, I appreciate it. Thanks for walking me through that. I'll I'll step back. Thanks.
Speaker Change: Thank you.
Our next question comes from Matthew Clark with Piper Sandler, your line is open.
Hey, thanks and good morning. Everyone morning.
Speaker Change: Um, just going back to the the loan yield.
Um, expansion.
Speaker Change: Um, can you quantify just how much in
Purchase accounting. Accretion contributed to interesting. Come, this quarter versus last quarter. I'm just trying to get a handle on the Quarry loan yield trends.
I think it's um right around 4 basis points.
Speaker Change: For this quarter.
Okay.
Speaker Change: And last quarter. Do you recall I want to say? Yeah, that was closer to 8.
Speaker Change: Okay. Okay. Okay. Thank you.
Speaker Change: Um, great. And then
Speaker Change: on the, uh,
Speaker Change: on your interest bearing deposit cost. I think they were up 1 basis. Point this quarter.
trying to get a sense for, um, if that was
From Bank of Idaho, you know, inflating that number a little bit or is there, I know the feds been on. Hold, you guys have probably been pretty steady in terms of your
Speaker Change: Rates out there. But just trying to get a sense for um any impact from the deal and and kind of what you're seeing on the pricing front.
Matthew: Yeah. Matthew that that was from the uh, the acquisition of of, of Bank of Bank of Idaho.
Matthew: I think from here in terms of deposit cost, uh, I would see our cost as as being very fairly stable, you know, kind of moving sideways. Um, a catalyst for for change or or additional cost reduction would be another fed cut. If if we do get that, I would say, that's that's on our cost of deposits. I would say on a cost of funds, we do expect that to continue to come down as we uh as we expect it to continue to pay down our higher cost of hlb following.
Yep. Got it. And then if you had the spot rate on deposits, at the end of June, I'll take it in the average margin in the month of June.
Matthew: Spot rates uh at the end of June on deposits was 1.25% and the uh spot margin adjusted for timing differences within the quarter uh spot margin. June was 330.
Matthew: Okay. 330, for the month, not the end of not the end of June, correct.
Matthew: Okay, thank you.
Matthew: Welcome.
Speaker Change: Thank you. Our next question comes from David Fester with Raymond, James. Your line is now open.
David Fester: Hi, good morning everybody morning.
David Fester: Um, I wanted to touch on on the organic growth side. I mean, obviously, we got a couple deals going on there. There's a lot of focus there, but I mean you're organic loan growth was solid. I I'm curious. Maybe how pipelines are shaping up today? The pulse of your clients, with maybe tariff uncertainty of abating a bit and just maybe the competitive landscape from your perspective.
David Fester: Yeah, David this is Tom. Yeah, we were quite happy with the organic growth. Um, you know, second quarter is generally seasonally stronger, you know. And then in addition to that, you know, from not only from my Top Line perspective but also, you know, we enter the construction and the agriculture season. So we see stronger line utilization, which is a, which is a Tailwind as well. Um,
David Fester: You know you you mentioned your production levels were you know, seasonally strong as well particularly in theory and you know from a pipeline perspective we continue to see good and consistent deal flow and customers continue to be optimistic. I, I think the instances of us hearing from a customer that they're, you know, tapping, the brakes and waiting for more clarity is, is fewer and farther between, um, certainly more. So today, since the, you know, from the beginning of the quarter, so, you know, I think, you know, when you look at the whole year, you know, second quarter is generally the strongest. Um,
David Fester: Third quarter, all show shows and strength a little bit less. So in first quarter and fourth quarter um but you know we we've got some Tailwind as well.
Speaker Change: Okay. And can you maybe touch on on the competitive side? You know you know anecdotally we hear across the industry. Um you know that competition is increasing especially on the pricing front are. Are you seeing that and just, you know, have you seen anything beyond pricing? Are you seeing competition maybe? Increase on on structure and underwriting.
Speaker Change: Yeah, I think it's we're not really seeing that much competition on the structure side, which is encouraging. Uh, we're glad to see that we do. See it on the pricing a little bit in some of the larger markets but areas where we have more of a commanding market share. Um, you know, we we we tend to get you know, pretty strong margins and I think if you look at just margins overall, we're we're still seeing really strong uh production yields. I mean for the for the quarter we were at uh 7.34
5, average production yield for the quarter, which is still, you know, a pretty good spread.
Okay, that's great. Um and then you know you touched on you touched on some hiring that you guys are looking at potentially here in the in the third quarter, I'm curious. What where are you seeing opportunities? Are these Revenue, producers are more back office and then just, you know, again, high level it's, it's still early. I'm curious. Maybe your thoughts on on potential opportunities in in Texas, just giving the additional m&a. That's come after your deal with announced. And whether that the guarantee team might be looking at opportunities to add Talent there from that potential disruption.
Speaker Change: Yeah, um so the hiring that we've been very slow to kind of fill positions. And so Dave, some of this is just infrastructure back office to support some of the growth. That's, um, we've stretched a couple places so we're going to fill fill those. There is some Revenue uh, expansion hiring in there as well, uh, but the bulk of it is, um, more operational across the 17 divisions and upholding company that taxes. Yeah, there's a lot going on down there. Uh, we've been talking to the guaranteed folks, and they are all over these changes. And so, I think there will be some opportunity as some of those, um, transactions pan out. Um, that being said, we got a great staff down there. Uh, time and his team, have some have a great, uh, lending staff.
Speaker Change: Already in place. So I think they'll be very selective, but there could be some opportunities given some of the transactions that have been announced.
Speaker Change: Okay, that's helpful. Thanks everybody.
Speaker Change: You're welcome.
Thank you as a reminder to ask a question. Please press star 1, 1 on your telephone.
Speaker Change: Again, that is star 1. 1 to ask a question.
Andrew Terrell: Our next question comes from Andrew Terrell with Stevens. Your line is open.
Hey, good morning.
Speaker Change: Morning.
On loan growth for a bit. Um, you know, the, the, the production and kind of pipeline commentary, all sounds, uh, pretty solid. And, and good to hear you guys are, are getting some good pricing as well. I know that, you know, in the first quarter, there were some heavier payoffs.
Speaker Change: Um, to the extent, you guys do have kind of line of sight into that. Do you feel like the the payoff pressure is somewhat, um, abated for you kind of moving into the back half of the year and then just kind of rounding out the loan growth. Do, do you feel like this kind of mid single digit organic pace of growth is kind of achievable at least kind of in the near term?
Speaker Change: Yeah, the payoff pressure, we we still saw that in the second quarter, um, you know, especially when you're, you're looking at some of the multi-family stuff where we did construction and stabilization, and then the asset either sold or, you know, went to a secondary, uh, provider, um, that was still present in the second quarter. I do see that possibly a baiting somewhat towards the end of the year, just looking at the volume and the Cadence of those of those projects coming around. Um, you know, so I, I think the the growth in the second quarter was, you know, boosted by a couple of different factors 1 of, uh, some increase in Topline production and then also better line utilization as we enter the construction and axis. But um, you know, I think for the full year, you know, that low to mid
Speaker Change: Single digits is is still where we're comfortable.
Speaker Change: Got it. Okay. Thank you. Um and then maybe for buyer or yeah, Byron. Um on the, on the margin. Um, you know, I'm looking at the the borrowing position, you guys are obviously doing a good job in in deleveraging. Um, I'm curious as the you kind of give the the margin expectations and I appreciate all the color there, you know, how should we think about the the pace of borrowing reduction that we could see over the balance of of 2025 is
Speaker Change: You know, 250 million or so off this quarter on the fhlb is that kind of a, a fair fair run rate, or does it does it more match Securities cash flow? Just how should we think about, you know, the borrowing reduction and just size of the balance sheet?
Yeah, we put we put a ladder of of term method of the advances in place, some time ago and those mature on a quarterly basis and the quarterly maturities do increase. So I think uh, you know, we we had a hundred million dollar maturity in Q2 that was offset. We did inherit 35 million dollars of of advances from Bank of Idaho. But, um, in terms of the third quarter, I think we'll see, uh, north of 300 terms of fhlb maturity Q4. I think, you know, somewhere in the in the, you know, 400 440 million, uh, range in terms of maturity. I, I
Speaker Change: Do expect, it will be able to pay down most, if not all of of those matures but, but we'll see, we'll, we'll evaluate, you know what the lending opportunities are on on Tom's side of the balance sheet, you know what deposits are doing? But, uh, to answer your question, in terms of maturity, we do have a progressively increasing maturity and the final maturity will land in the first quarter of next year at that point. Um, those term advances will have will have matured
Understood okay so yeah maybe a slightly increasing pace and I'm assuming that um that's kind of fully reflected in in the margin details.
Speaker Change: um, for margin guidance, you gave earlier
Speaker Change: Yes, it is.
Speaker Change: Okay, great. Um, the rest of them might have been addressed. Thanks for taking the questions.
Speaker Change: Welcome.
Speaker Change: Thank you. Our next question comes from Kelly motto with KBW, your line is now open.
Hey, good morning, thanks for the question. Um, good morning. I I did want to stick on the margin. Um, it's great expansion. This quarter nice nice loan growth. Um, and it seems like the trajectory remains quite strong. Um, as we look to next year, are there any other factors in terms of either an acceleration or slowdown of bakbuk pricing? That would mitigate some of the the really strong pickup? We saw this year, maybe set another way pre-pandemic you were. Um,
Speaker Change: Uh, 4% plus, is there anything structurally different that would prohibit you from continuing to make progress towards that level?
Getting back to some of our historic margin um Norms um, you know, may maybe by the end of next year.
Speaker Change: Okay. Um, that's, that's really helpful. Um, and you know, I appreciate all the color Ron on the expense, uh, expense moving Parts. Um, you know, at a higher level as you as you guys kind of grow and scale up through, you know, the real successful success you've had with Acquisitions. Are there any other areas of technology or um, we
Within the organization that you're looking to strengthen, um, in order to continue to support, you know, your really nice growth that you've been. You've been having these past couple years.
Speaker Change: so, the technology Kelly, um,
Speaker Change: In terms of, uh, we are looking at it in a number of places, it's making us more efficient, you're seeing some of that in the reduction in the efficiency. Um, and you know, we're we're continuing on those things. So, implementation of a commercial loan, platform across the entire company, um, is really delivering, really, really strong results. Um, that's also welcome by the folks, uh, that were acquiring. They get excited about the, um, more advanced technology and the capabilities to do a lot of things, um, uh, that make their lives easier. And I think ultimately,
The customer have a better experience.
Speaker Change: Um, our treasury platform or upgrading that and pushing that out right now, that's going really well, uh, but that, um, gives better tools to customers where they can, um, manage their account and their, their finances more effectively. So, those are just a couple of things, but we continue to, um, look at our, uh, roadmap and look for ways to, um, to enhancing and there's more behind that. We just tend to wait until they're out. And, uh, getting traction before we really get into detail and describe them.
Speaker Change: Thanks. Thanks Andy. I'll step back.
Speaker Change: You're welcome.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions at this time.
Speaker Change: Oh, now like to turn it.
To Randy Chesley.
Speaker Change: Closing remarks.
Well, thank you everyone for joining us today. We appreciate your interest. As always have any questions. Give us a ring and have a fantastic weekend. Thanks again.
Speaker Change: This concludes today's conference call, thank you for participating. You may now disconnect