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美國
證券交易委員會
華盛頓特區20549 
____________________________________________________________
表格 10-Q
____________________________________________________________

☒ 根据1934年证券交易法第13或15(d)条款的季度报告 截至2024年6月30日季度結束 2024年9月30日
 
☐ 根据1934年证券交易法第13或15(d)条款的过渡报告 為了從__________到__________的過渡期
委員會文件編號 000-18911
____________________________________________________________
冰川銀行股份有限公司。
（依憑章程所載的完整登記名稱）
 ____________________________________________________________
蒙大拿81-0519541
(成立地或組織其他管轄區)(國稅局雇主身份識別號碼)
49 Commons Loop卡利斯珀,蒙大拿59901
(總部辦公地址)（郵政編碼）
(406)756-4200
(註冊人電話號碼，包括區號)
 ____________________________________________________________
根據法案第12(b)條規定註冊的證券：
每種類別的名稱交易標的（s）每個註冊交易所的名稱
普通股，每股面值0.01美元GBCI紐約證券交易所
請在核選記號區域表明：（1）本登記申請人在過去12個月（或申請人需要提交此項申報的較短期間）內已提交證券交易所法案第13條或第15(d)條要求提交的所有報告，且（2）本申請人在過去90日內已遵守上述提交要求。☒  是    ☐ 沒有
請在勾選符號上註明，是否在過去的12個月內（或更短的時間內，如果註冊人需提交此類文件），根據Regulation S-t第405條規定向本章第232.405條提交所需提交的每個交互式資料檔案。☒ 是    ☐ 沒有
請勾選指示登記者是否為大型快速提交人、快速提交人、非快速提交人、較小的報告公司或新興成長型公司。請參閱交易所法規120億2條，了解「大型快速提交人」、「快速提交人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速歸檔人☒加速檔案提交者☐
非加速歸檔人☐較小報告公司☐
新興成長型企業☐
如果一家新興成長型企業，請打勾表示公司已選擇不使用擴展過渡期以符合根據《交易所法案》第13(a)條所提供的任何新的或修訂財務會計準則。 ☐
請勾選表示公司是否為電子交易所法規第120億2條定義的空殼公司。☐是的☒否
2024年10月22日，登記公司的普通股股份數目為 113,397,845。無發行或未終止的特別股份。


目 錄
 

 頁面
第一部分. 財務信息
項目1 - 基本報表










縮寫/首字母縮略詞
ACL或者損失允許 －信用損失允許
AFS - 可供銷售的
ALCO －資產負債委員會
ASC 480 －會計標準法典編碼TM
ASU 會計準則更新
ATM自動借貸機 自動櫃員機
銀行 冰川銀行
BTFP - 美聯儲銀行條款融資計劃
CDE – 認證發展機構
CDFI 基金 – 社區發展金融機構基金
CECL – 目前預期信用損失
首席執行官 – Chief Executive Officer
首席財務官 – Chief Financial Officer
CFGW – Community Financial Group, Inc.
CRE - Commercial real estate
權益代理 – 冰河銀行(臨時代碼)，Inc。
DDA – 活期存款賬戶(臨時代碼)
房利美 – 聯邦國家抵押貸款協會(臨時代碼)
金融會計準則委員會 – 財務會計準則委員會(臨時代碼)
FDIC(美國)聯邦存款保險公司 - 聯邦存款保險公司
FHLB - 聯邦住房貸款銀行
最終規則 - 聯邦銀行機構實施的最終規則，確立了一個全面的監管資本框架
  新的全面監管資本體系
聯邦儲備局 - 美聯儲銀行
房地美 ─聯邦住宅貸款抵押公司
GAAP ─美國通用會計準則
國內生產總值 ─國內生產總值
Ginnie Mae ─政府國家抵押協會
hk銀行 - 持有到期日
利率鎖定 - 用於承諾的住宅房地產衍生工具
LIBOR – 倫敦銀行同業拆借利率
LIHTC – 低收入住房稅收抵免
MBFD - 調整債務人面臨財務困難
NMTC - 新市場稅收抵免
現在 - 可議付款順序
NRSRO - 全國認可的統計評級機構
OCI 其他綜合收益
房地產業 ─其他擁有房地產
PCD ─已購買信用惡化
PPP ─薪支保護計劃
回購協議 證券已出售並同意購回
人民幣 洛基山銀行
租賃資產 使用權
S&P 標準普爾
美國小企業管理局 – 美國小型企業管理局
美國證券交易委員會 – 美國證券交易委員會
待定 – 待公布
TDR – 債務困擾重組
VIE 變量利益實體
Wheatland －Wheatland銀行




冰川銀行股份有限公司。
未經審核的財務狀況摘要合併報表

（金額以千美元計，每股數據除外）九月三十日，
2024		12月31日，
2023
資產
現金及存於銀行的資金$342,105 246,525 
利息收入現金存款645,728 1,107,817 
現金及現金等價物987,833 1,354,342 
債券，可供出售4,436,578 4,785,719 
持有至到期日之債務證券3,348,698 3,502,411 
應付債券總額7,785,276 8,288,130 
待售的貸款，按公允價值衡量46,126 15,691 
應收貸款17,181,187 16,198,082 
信貸損失準備(205,170)(192,757)
淨放款16,976,017 16,005,325 
場地和設備，淨值466,977 421,791 
其他房地產所有權和被查封的資產
633 1,503 
應計利息應收款114,121 94,526 
递延所得税資產125,432 159,070 
無形資產淨值52,780 31,870 
商譽1,053,556 985,393 
不可流通的股權證券98,285 12,755 
銀行持有的壽險保險188,971 171,101 
其他資產309,762 201,132 
資產總額$28,205,769 27,742,629 
負債
非利息軸承存款$6,407,728 6,022,980 
利息支票存款14,307,036 13,906,187 
根據回購協議出售的證券1,831,501 1,486,850 
聯邦住房貸款銀行預付款1,800,000 — 
FRb銀行定期資金— 2,740,000 
其他借入資金84,168 81,695 
次順位債券133,065 132,943 
應計利息應付 35,382 125,907 
其他負債361,839 225,786 
總負債24,960,719 24,722,348 
承諾和應變責任— — 
股東權益
優先股，$0.01 每股面額為 1,000,000 股份已授權 無 已發行或流通
— — 
0.010.01 每股面額為 234,000,000 shares authorized at
  September 30, 2024 and December 31, 2023, respectively
1,134 1,109 
資本剩餘2,447,200 2,350,104 
Retained earnings - substantially restricted1,059,022 1,043,181 
累積其他全面損失(262,306)(374,113)
股東權益總額3,245,050 3,020,281 
負債和股東權益總額$28,205,769 27,742,629 
已發行和流通的普通股股份數量113,394,786 110,888,942 

See accompanying notes to unaudited condensed consolidated financial statements.
4

GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months endedNine Months ended
(Dollars in thousands, except per share data)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Interest Income
Investment securities$46,371 53,397 144,754 144,697 
Residential real estate loans23,118 18,594 65,636 51,508 
Commercial loans196,901 173,437 566,699 493,706 
Consumer and other loans23,188 19,478 65,725 54,248 
Total interest income289,578 264,906 842,814 744,159 
Interest Expense
Deposits70,607 54,697 205,655 98,942 
Securities sold under agreements to repurchase14,737 10,972 40,901 24,185 
Federal Home Loan Bank advances22,344 — 50,772 26,910 
FRB Bank Term Funding— 30,229 27,097 63,160 
Other borrowed funds
252 489 949 1,428 
Subordinated debentures1,407 1,465 4,251 4,308 
Total interest expense109,347 97,852 329,625 218,933 
Net Interest Income180,231 167,054 513,189 525,226 
Provision for credit losses8,005 3,539 19,772 11,782 
Net interest income after provision for credit losses172,226 163,515 493,417 513,444 
Non-Interest Income
Service charges and other fees20,587 19,304 58,572 56,042 
Miscellaneous loan fees and charges4,970 4,322 14,153 12,451 
Gain on sale of loans4,898 4,046 12,929 9,974 
Gain (loss) on sale of securities26 (65)30 (202)
Other income4,223 2,633 11,213 8,949 
Total non-interest income34,704 30,240 96,897 87,214 
Non-Interest Expense
Compensation and employee benefits85,083 77,387 255,306 237,628 
Occupancy and equipment11,989 10,553 35,466 33,045 
Advertising and promotions4,062 4,052 12,407 12,020 
Data processing9,196 8,730 27,742 25,241 
Other real estate owned and foreclosed assets13 15 187 41 
Regulatory assessments and insurance5,150 6,060 18,304 16,277 
Intangibles amortization3,367 2,428 9,144 7,304 
Other expenses25,848 20,351 78,947 63,606 
Total non-interest expense144,708 129,576 437,503 395,162 
Income Before Income Taxes62,222 64,179 152,811 205,496 
Federal and state income tax expense11,167 11,734 24,421 36,885 
Net Income$51,055 52,445 128,390 168,611 
Basic earnings per share$0.45 0.47 1.14 1.52 
Diluted earnings per share$0.45 0.47 1.13 1.52 
Dividends declared per share$0.33 0.33 0.99 0.99 
Average outstanding shares - basic113,394,758 110,877,534 113,093,583 110,857,788 
Average outstanding shares - diluted113,473,107 110,886,959 113,137,861 110,882,718 


See accompanying notes to unaudited condensed consolidated financial statements.
5


GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
 
 Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Net Income$51,055 52,445 128,390 168,611 
Other Comprehensive Income (Loss), Net of Tax
Available-For-Sale and Transferred Securities:
Unrealized gains (losses) on available-for-sale securities
123,403 (93,822)148,998 (45,984)
Reclassification adjustment for (gains) losses included in net income
(27)— (56)31 
Reclassification adjustment for securities transferred from available-for-sale to held-to-maturity
1,161 1,304 3,198 4,492 
Tax effect(31,171)23,380 (38,097)10,478 
Net of tax amount93,366 (69,138)114,043 (30,983)
Cash Flow Hedge:
Unrealized (losses) gains on derivatives used for cash flow hedges
(57)654 870 2,540 
Reclassification adjustment for gains included in net income
(1,304)(1,244)(3,852)(3,331)
Tax effect340 148 746 199 
Net of tax amount(1,021)(442)(2,236)(592)
Total other comprehensive income (loss), net of tax
92,345 (69,580)111,807 (31,575)
Total Comprehensive Income (Loss)$143,400 (17,135)240,197 137,036 




















See accompanying notes to unaudited condensed consolidated financial statements.
6

GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY
Three Months ended September 30, 2024 and 2023

(Dollars in thousands, except per share data)Common StockPaid-in CapitalRetained
Earnings-
Substantially Restricted		Accumulated
Other Compre-
hensive (Loss) Income		 
SharesAmountTotal
Balance at July 1, 2023110,873,887 $1,109 2,346,422 1,009,782 (430,787)2,926,526 
Net income— — — 52,445 — 52,445 
Other comprehensive loss— — — — (69,580)(69,580)
Cash dividends declared ($0.33 per share)
— — — (36,680)— (36,680)
Stock issuances under stock incentive plans
5,478 — — — — — 
Stock-based compensation and related taxes
— — 1,883 — — 1,883 
Balance at September 30, 2023110,879,365 $1,109 2,348,305 1,025,547 (500,367)2,874,594 
Balance at July 1, 2024113,394,092 $1,134 2,445,479 1,045,483 (354,651)3,137,445 
Net income— — — 51,055 — 51,055 
Other comprehensive income— — — — 92,345 92,345 
Cash dividends declared ($0.33 per share)
— — — (37,516)— (37,516)
Stock issuances under stock incentive plans
694 — — — — — 
Stock-based compensation and related taxes
— — 1,721 — — 1,721 
Balance at September 30, 2024113,394,786 $1,134 2,447,200 1,059,022 (262,306)3,245,050 















See accompanying notes to unaudited condensed consolidated financial statements.
7

GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY
Nine Months ended September 30, 2024 and 2023  
(Dollars in thousands, except per share data)Common StockPaid-in CapitalRetained
Earnings-
Substantially Restricted		Accumulated
Other Compre-
hensive (Loss) Income		 
SharesAmountTotal
Balance at January 1, 2023110,777,780 $1,108 2,344,005 966,984 (468,792)2,843,305 
Net income— — — 168,611 — 168,611 
Other comprehensive income— — — — (31,575)(31,575)
Cash dividends declared ($0.99 per share)
— — — (110,048)— (110,048)
Stock issuances under stock incentive plans
101,585 1 (1)— — — 
Stock-based compensation and related taxes
— — 4,301 — — 4,301 
Balance at September 30, 2023110,879,365 $1,109 2,348,305 1,025,547 (500,367)2,874,594 
Balance at January 1, 2024110,888,942 $1,109 2,350,104 1,043,181 (374,113)3,020,281 
Net income— — — 128,390 — 128,390 
Other comprehensive income— — — — 111,807 111,807 
Cash dividends declared ($0.99 per share)
— — — (112,549)— (112,549)
Stock issued in connection with acquisitions
2,389,684 24 92,361 — — 92,385 
Stock issuances under stock incentive plans
116,160 1 (1)— — — 
Stock-based compensation and related taxes
— — 4,736 — — 4,736 
Balance at September 30, 2024113,394,786 $1,134 2,447,200 1,059,022 (262,306)3,245,050 














See accompanying notes to unaudited condensed consolidated financial statements.
8


GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Nine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023
Operating Activities
Net income$128,390 168,611 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses19,772 11,782 
Net amortization of debt securities9,609 11,745 
Net amortization of purchase accounting adjustments
  and deferred loan fees and costs		(4,980)(2,879)
Origination of loans held for sale(483,494)(332,582)
Proceeds from loans held for sale551,051 395,216 
Gain on sale of loans(12,929)(9,974)
(Gain) loss on sale of securities(30)202 
Bank-owned life insurance income, net(3,391)(2,915)
Stock-based compensation, net of tax benefits4,376 4,577 
Depreciation and amortization of premises and equipment21,557 20,322 
Gain on sale and write-downs of other real estate owned, net(1,147)(118)
Amortization of core deposit intangibles9,144 7,304 
Amortization of investments in variable interest entities18,955 15,418 
Net increase in accrued interest receivable(13,982)(20,939)
Net increase in other assets(1,632)(1,764)
Net (decrease) increase in accrued interest payable(91,936)87,543 
Net increase (decrease) in other liabilities6,707 (2,038)
Net cash provided by operating activities156,040 349,511 
Investing Activities
Sales of available-for-sale debt securities237,502 29,972 
Maturities, prepayments and calls of available-for-sale debt securities464,028 479,442 
Purchases of available-for-sale debt securities(21,252)— 
Maturities, prepayments and calls of held-to-maturity debt securities150,973 159,502 
Principal collected on loans2,816,803 2,167,746 
Loan originations(3,174,085)(3,133,352)
Net additions to premises and equipment(27,340)(36,492)
Proceeds from sale of other real estate owned2,183 179 
Proceeds from redemption of non-marketable equity securities149,488 628,801 
Purchases of non-marketable equity securities(231,075)(558,117)
Proceeds from bank-owned life insurance193 1,787 
Investments in variable interest entities(37,798)(22,342)
Net cash received from acquisitions107,684 — 
Net cash provided by (used in) investing activities437,304 (282,874)




See accompanying notes to unaudited condensed consolidated financial statements.
9

GLACIER BANCORP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 
 Nine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023
Financing Activities
Net decrease in deposits$(227,255)(210,838)
Net increase in securities sold under agreements to repurchase340,346 553,780 
Net decrease in short-term Federal Home Loan Bank advances(58,500)(1,800,000)
Proceeds from short-term FRB Bank Term Funding advances— 2,740,000 
Repayments of short-term FRB Bank Term Funding(2,740,000)— 
Proceeds from long-term Federal Home Loan Bank advances1,800,000 — 
Net increase (decrease) in other borrowed funds2,180 (4,196)
Cash dividends paid(75,166)(73,485)
Tax withholding payments for stock-based compensation(1,458)(1,799)
Net cash (used in) provided by financing activities(959,853)1,203,462 
Net (decrease) increase in cash, cash equivalents and restricted cash(366,509)1,270,099 
Cash, cash equivalents and restricted cash at beginning of period1,354,342 401,995 
Cash, cash equivalents and restricted cash at end of period$987,833 1,672,094 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest$421,560 131,390 
Cash paid during the period for income taxes14,012 17,841 
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Sale and refinancing of other real estate owned$6 23 
Transfer of loans to other real estate owned171 100 
Right-of-use assets obtained in exchange for new lease liabilities339 1,096 
Equity investments obtained in exchange for delayed equity contributions15,148 34,712 
Dividends declared during the period but not paid37,711 36,873 
Acquisitions
Fair value of common stock shares issued92,385 — 
Cash consideration26,009 — 
Fair value of assets acquired1,180,710 — 
Liabilities assumed1,087,555 — 













See accompanying notes to unaudited condensed consolidated financial statements.
10

GLACIER BANCORP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Note 1. Nature of Operations and Summary of Significant Accounting Policies

General
Glacier Bancorp, Inc. (“Company”) is a Montana corporation headquartered in Kalispell, Montana. The Company provides a full range of banking services to individuals and businesses in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada through its wholly-owned bank subsidiary, Glacier Bank (“Bank”). The Company offers a wide range of banking products and services, including: 1) retail banking; 2) business banking; 3) real estate, commercial, agriculture and consumer loans; and 4) mortgage origination and loan servicing. The Company serves individuals, small to medium-sized businesses, community organizations and public entities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature. These interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements and they should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Operating results for the nine months ended September 30, 2024 are not necessarily indicative of the results anticipated for the year ending December 31, 2024. The condensed consolidated statement of financial condition of the Company as of December 31, 2023 has been derived from the audited consolidated statements of the Company as of that date.

The Company is a defendant in legal proceedings arising in the normal course of business. In the opinion of management, the disposition of pending litigation will not have a material affect on the Company’s consolidated financial position, results of operations or liquidity.

Material estimates that are particularly susceptible to significant change include: 1) the determination of the allowance for credit losses (“ACL” or “allowance”) on loans; 2) the valuation of debt securities; 3) the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans; and 4) the evaluation of goodwill impairment. For the determination of the ACL on loans and real estate valuation estimates, management obtains independent appraisals (new or updated) for significant items. Estimates relating to the investment valuations are obtained from independent third parties. Estimates relating to the evaluation of goodwill for impairment are determined based on internal calculations using independent party inputs.

Principles of Consolidation
The consolidated financial statements of the Company include the parent holding company and the Bank, which consists of seventeen bank divisions and a corporate division. The corporate division includes the Bank’s investment portfolio, wholesale borrowings and other centralized functions. The Bank divisions operate under separate names, management teams and advisory directors. The Company considers the Bank to be its sole operating segment as the Bank 1) engages in similar bank business activity from which it earns revenues and incurs expenses; 2) the operating results of the Bank are regularly reviewed by the Chief Executive Officer (“CEO”) (i.e., the chief operating decision maker) who makes decisions about resources to be allocated to the Bank; and 3) financial information is available for the Bank. All significant inter-company transactions have been eliminated in consolidation.

The Bank has subsidiary interests in variable interest entities (“VIE”) for which the Bank has both the power to direct the VIE’s significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could potentially be significant to the VIE. These subsidiary interests are included in the Company’s consolidated financial statements. The Bank also has subsidiary interests in VIEs for which the Bank does not have a controlling financial interest and is not the primary beneficiary. These subsidiary interests are not included in the Company’s consolidated financial statements. For additional information on the Bank’s interest in VIEs, see Note 7.

The parent holding company owns non-bank subsidiaries that have issued trust preferred securities. The trust subsidiaries are not included in the Company’s consolidated financial statements. The Company's investments in the trust subsidiaries are included in other assets on the Company's statements of financial condition.

11

On January 31, 2024, the Company completed the acquisition of Community Financial Group, Inc. and its wholly-owned subsidiary, Wheatland Bank (“Wheatland”), a community bank based in Spokane, Washington. The business combination was accounted for using the acquisition method, with the results of operations included in the Company’s consolidated financial statements as of the acquisition date.

On July 19, 2024, the Bank completed its acquisition of six Montana branch banking offices of Rocky Mountain Bank (“RMB”) from HTLF Bank (”HTLF”), a wholly owned subsidiary of Heartland Financial USA, Inc. The RMB branches are located in Billings, Bozeman, Plentywood, Stevensville, and Whitehall. The RMB branches have joined Glacier Bank divisions operating in Montana.

For additional information relating to mergers and acquisitions, see Note 14.

Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash on hand, cash held as demand deposits at various banks and the Federal Reserve Bank (“FRB”), interest bearing deposits, federal funds sold, and liquid investments with original maturities of three months or less. Interest bearing deposits are maintained at other financial institutions as collateral for certain derivative contracts and are considered restricted cash. The Company had $21,650,000 and $17,440,000 of restricted cash held as collateral for derivative contracts as of September 30, 2024 and December 31, 2023, respectively. The Bank is required to maintain an average reserve balance with either the FRB or in the form of cash on hand at a reserve rate determined by the FRB. Effective March 26, 2020, the FRB Board reduced the reserve requirement ratio to zero percent. The required reserve balance at September 30, 2024 was $0.

Debt Securities
Debt securities for which the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at amortized cost. Debt securities held primarily for the purpose of selling in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses included in income. Debt securities not classified as held-to-maturity or trading are classified as available-for-sale and are reported at fair value with unrealized gains and losses, net of income taxes, as a separate component of other comprehensive income (“OCI”). Premiums and discounts on debt securities are amortized or accreted into income using a method that approximates the interest method. The objective of the interest method is to calculate periodic interest income at a constant effective yield. The Company does not have any debt securities classified as trading securities. When the Company acquires another entity, it records the debt securities at fair value.

The Company reviews and analyzes the various risks that may be present within the investment portfolio on an ongoing basis, including market risk, credit risk and liquidity risk. Market risk is the risk to an entity’s financial condition resulting from adverse changes in the value of its holdings arising from movements in interest rates, foreign exchange rates, equity prices or commodity prices. The Company assesses the market risk of individual debt securities as well as the investment portfolio as a whole. Credit risk, broadly defined, is the risk that an issuer or counterparty will fail to perform on an obligation. The credit rating of a security is considered the primary credit quality indicator for debt securities. Liquidity risk refers to the risk that a security will not have an active and efficient market in which the security can be sold.

A debt security is investment grade if the issuer has adequate capacity to meet its commitment over the expected life of the investment, i.e., the risk of default is low and full and timely repayment of interest and principal is expected. To determine investment grade status for debt securities, the Company conducts due diligence of the creditworthiness of the issuer or counterparty prior to acquisition and ongoing thereafter consistent with the risk characteristics of the security and the overall risk of the investment portfolio. Credit quality due diligence takes into account the extent to which a security is guaranteed by the U.S. government and other agencies of the U.S. government. The depth of the due diligence is based on the complexity of the structure, the size of the security, and takes into account material positions and specific groups of securities or stratifications for analysis and review of similar risk positions. The due diligence includes consideration of payment performance, collateral adequacy, internal analyses, third party research and analytics, external credit ratings and default statistics.

The Company has acquired debt securities through acquisitions and if the securities have more than insignificant credit deterioration since origination, they are designated as purchased credit-deteriorated (“PCD”) securities. An ACL is determined using the same methodology as with other debt securities. The sum of a PCD security’s fair value and associated ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the debt security is a noncredit discount or premium, which is amortized into interest income over the life of the security. Subsequent changes to the ACL are recorded through provision for credit losses.

For additional information relating to debt securities, see Note 2.
12

Allowance for Credit Losses - Available-for-Sale Debt Securities
For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more-likely-than-not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through loss on sale of securities. For the available-for-sale securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In such assessment, the Company considers the extent to which fair value is less than amortized cost, if there are any changes to the investment grade of the security by a rating agency, and if there are any adverse conditions that impact the security. If this assessment indicates a credit loss exists, the present value of the cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a potential credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any estimated credit losses that have not been recorded through an ACL are recognized in OCI.

The Company has elected to exclude accrued interest from the estimate of credit losses for available-for-sale debt securities. As part of its non-accrual policy, the Company charges-off uncollectable interest at the time it is determined to be uncollectable.

Allowance for Credit Losses - Held-to-Maturity Debt Securities
For estimating the allowance for held-to-maturity (“HTM”) debt securities that share similar risk characteristics with other securities, such securities are pooled based on major security type. For pools of such securities with similar risk characteristics, the historical lifetime probability of default and severity of loss in the event of default is derived or obtained from external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities on those historical credit losses. Expected credit losses on securities in the held-to-maturity portfolio that do not share similar risk characteristics with any of the pools of debt securities are individually measured based on net realizable value, or the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the recorded amortized cost basis of the securities.

The Company has elected to exclude accrued interest from the estimate of credit losses for held-to-maturity debt securities. As part of its non-accrual policy, the Company charges off uncollectable interest at the time it is determined to be uncollectable.

Loans Held for Sale
Loans held for sale generally consist of long-term, fixed rate, conforming, single-family residential real estate loans intended to be sold on the secondary market. Loans held for sale are recorded at fair value and may or may not be sold with servicing rights released. Changes in fair value are recognized in non-interest income. Fair value elections are made at the time of origination based on the Company’s fair value election policy.

Loans Receivable
The Company’s loan segments or classes are based on the purpose of the loan and consist of residential real estate, commercial real estate, other commercial, home equity, and other consumer loans. Loans that are intended at origination to be held-to-maturity are reported at the unpaid principal balance less net charge-offs and adjusted for deferred fees and costs on originated loans and unamortized premiums or discounts on acquired loans. Interest income is accrued on the unpaid principal balance. Fees and costs on originated loans and premiums or discounts on acquired loans are deferred and subsequently amortized or accreted as a yield adjustment over the expected life of the loan utilizing the interest or straight-line methods. The interest method is utilized for loans with scheduled payment terms and the objective is to calculate periodic interest income at a constant effective yield. The straight-line method is utilized for revolving lines of credit or loans with no scheduled payment terms. When a loan is paid off prior to maturity, the remaining unamortized fees and costs on originated loans and unamortized premiums or discounts on acquired loans are immediately recognized as interest income.

Loans that are 30 days or more past due based on payments received and applied to the loan are considered delinquent. Loans are designated non-accrual and the accrual of interest is discontinued when the collection of the contractual principal or interest is unlikely. A loan is typically placed on non-accrual when principal or interest is due and has remained unpaid for 90 days or more, unless the loan is in active collection and is adequately secured. When a loan is placed on non-accrual status, interest previously accrued but not collected is reversed against current period interest income. Subsequent payments on non-accrual loans are applied to the outstanding principal balance if doubt remains as to the ultimate collectability of the loan. Interest accruals are not resumed on partially charged-off impaired loans. For other loans on non-accrual, interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

13

The Company has acquired loans through acquisitions, some of which have experienced more than insignificant credit deterioration since origination. The Company considers all acquired non-accrual loans to be PCD loans. In addition, the Company considers loans accruing 90 days or more past due or substandard loans to be PCD loans. An ACL is determined using the same methodology as other loans held for investment. The ACL determined on a collective basis is allocated to individual loans. The sum of a loan’s fair value and ACL becomes the initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision for credit losses.

For additional information relating to loans, see Note 3.

Allowance for Credit Losses - Loans Receivable
The ACL for loans receivable represents management’s estimate of credit losses over the expected contractual life of the loan portfolio. The estimate is determined based on the amortized cost of the loan portfolio including the loan balance adjusted for charge-offs, recoveries, deferred fees and costs, and loan discount and premiums. Recoveries are included only to the extent that such amounts were previously charged-off. The Company has elected to exclude accrued interest from the estimate of credit losses for loans. Determining the adequacy of the allowance is complex and requires a high degree of judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance in those future periods.

The allowance is increased for estimated credit losses which are recorded as expense. The portion of loans and overdraft balances determined by management to be uncollectable are charged-off as a reduction to the allowance and recoveries of amounts previously charged-off increase the allowance. The Company’s charge-off policy is consistent with bank regulatory standards. Consumer loans generally are charged-off when the loan becomes over 120 days delinquent. Real estate acquired as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned (“OREO”) until such time as it is sold.

The expected credit loss estimate process involves procedures to consider the unique characteristics of each of the Company’s loan portfolio segments, which consist of residential real estate, commercial real estate, other commercial, home equity, and other consumer loans. When computing the allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, credit and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The Company has determined a four consecutive quarter forecasting period is a reasonable and supportable period. Expected credit loss for periods beyond reasonable and supportable forecast periods are determined based on a reversion method which reverts back to historical loss estimates over a four consecutive quarter period on a straight-line basis.

Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and the process for estimating the expected credit losses. The following paragraphs describe the risk characteristics relevant to each portfolio segment.

Residential Real Estate.  Residential real estate loans are secured by owner-occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans is impacted by economic conditions within the Company’s market areas that affect the value of the residential property securing the loans and affect the borrowers' personal incomes. Mitigating risk factors for this loan segment include a large number of borrowers, geographic dispersion of market areas and the loans are originated for relatively smaller amounts.

Commercial Real Estate.  Commercial real estate loans typically involve larger principal amounts, and repayment of these loans is generally dependent on the successful operation of the property securing the loan and/or the business conducted on the property securing the loan. Credit risk in these loans is impacted by the creditworthiness of a borrower, valuation of the property securing the loan and conditions within the local economies in the Company’s diverse geographic market areas.

Commercial.  Commercial loans consist of loans to commercial customers for use in financing working capital needs, equipment purchases and business expansions. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations across the Company’s diverse geographic market areas.


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Home Equity.  Home equity loans consist of junior lien mortgages and first and junior lien lines of credit (revolving open-end and amortizing closed-end) secured by owner-occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans is impacted by economic conditions within the Company’s market areas that affect the value of the residential property securing the loans and affect the borrowers' personal incomes. Mitigating risk factors for this loan segment are a large number of borrowers, geographic dispersion of market areas and the loans are originated for terms that range from 10 to 15 years.

Other Consumer.  The other consumer loan portfolio consists of various short-term loans such as automobile loans and loans for other personal purposes. Repayment of these loans is primarily dependent on the personal income of the borrowers. Credit risk is driven by consumer economic factors (such as unemployment and general economic conditions in the Company’s diverse geographic market areas) and the creditworthiness of a borrower.

The allowance is impacted by loan volumes, delinquency status, credit ratings, historical loss experiences, estimated prepayment speeds, weighted average lives and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance has two basic components: 1) individual loans that do not share similar risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and 2) the expected credit losses for pools of loans that share similar risk characteristics.

Loans that do not Share Similar Risk Characteristics with Other Loans. For a loan that does not share similar risk characteristics with other loans, expected credit loss is measured based on the net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For these loans, the expected credit loss is equal to the amount by which the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge-offs and deferred loan fees and costs), except when the loan is collateral-dependent, that is, when foreclosure is probable or the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. The Company has determined that non-accrual loans do not share similar risk characteristics with other loans and these loans are individually evaluated for estimated allowance for credit losses. The Company, through its credit monitoring process, may also identify other loans that do not share similar risk characteristics and individually evaluate such loans. The starting point for determining the fair value of collateral is to obtain external appraisals or evaluations (new or updated). The valuation techniques used in preparing appraisals or evaluations (new or updated) include the cost approach, income approach, sales comparison approach, or a combination of the preceding valuation techniques. The Company’s credit department reviews appraisals, giving consideration to the highest and best use of the collateral. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. Adjustments may be made to the fair value of the collateral after review and acceptance of the collateral appraisal or evaluation (new or updated).

Loans that Share Similar Risk Characteristics with other Loans. For estimating the allowance for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments. Loans are designated into loan segments based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the ACL, the Company derives an estimated credit loss assumption from a model that categorizes loan pools based on loan type. This model calculates an expected loss percentage for each loan segment by considering the non-discounted simple annual average historical loss rate of each loan segment (calculated through an “open pool” method), multiplying the loss rate by the amortized loan balance and incorporating that segment’s internally generated prepayment speed assumption and contractually scheduled remaining principal pay downs on a loan level basis. The annual historical loss rates are adjusted over a reasonable economic forecast period by a multiplier that is calculated based upon current national economic forecasts as a proportion of each segment’s historical average loss levels. The Company will then revert from the economic forecast period back to the historical average loss rate in a straight-line basis. After the reversion period, the loans will be assumed to experience their historical loss rate for the remainder of their contractual lives. The model applies the expected loss rate over the projected cash flows at the individual loan level and then aggregates the losses by loan segment in determining their quantitative allowance. The Company will also include qualitative adjustments to adjust the ACL on loan segments to the extent the current or future market conditions are believed to vary substantially from historical conditions in regards to:

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•lending policies and procedures;
•international, national, regional and local economic business conditions, developments, or environmental conditions that affect the collectability of the portfolio, including the condition of various markets;
•the nature and volume of the loan portfolio including the terms of the loans;
•the experience, ability, and depth of the lending management and other relevant staff;
•the volume and severity of past due and adversely classified or graded loans and the volume of non-accrual loans;
•the quality of our loan review system;
•the value of underlying collateral for collateralized loans;
•the existence and effect of any concentrations of credit, and changes in the level of concentrations; and
•the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

The Company regularly reviews loans in the portfolio to assess credit quality indicators and to determine the appropriate loan classification and grading in accordance with applicable bank regulations. The primary credit quality indicator for residential, home equity and other consumer loans is the days past due status, which consists of the following categories: 1) performing loans; 2) 30 to 89 days past due loans; and 3) non-accrual and 90 days or more past due loans. The primary credit quality indicator for commercial real estate and commercial loans is the Company’s internal risk rating system, which includes the following categories: 1) pass loans; 2) special mention loans; 3) substandard loans; and 4) doubtful or loss loans. Such credit quality indicators are regularly monitored and incorporated into the Company’s allowance estimate. The following paragraphs further define the internal risk ratings for commercial real estate and commercial loans.

Pass Loans. These ratings represent loans that are of acceptable, good or excellent quality with very limited to no risk. Loans that do not have one of the following ratings are considered pass loans.

Special Mention Loans. These ratings represent loans that are designated as special mention per the regulatory definition. Special mention loans are currently protected but are potentially weak. The credit risk may be relatively minor yet constitute an undue and unwarranted risk in light of the circumstances surrounding a specific loan. The rating may be used to identify credit with potential weaknesses that if not corrected may weaken the loan to the point of inadequately protecting the Bank’s credit position. Examples include a lack of supervision, inadequate loan agreement, condition, or control of collateral, incomplete, or improper documentation, deviations from lending policy, and adverse trends in operations or economic conditions.

Substandard Loans. This rating represents loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. A loan so classified must have a well-defined weakness that jeopardizes the liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregated amount of substandard loans, does not have to exist in an individual loan classified substandard.

Doubtful/Loss Loans. A loan classified as doubtful has the characteristics that make collection in full, on the basis of currently existing facts, conditions, and values, highly improbable. The possibility of loss is extremely high, but because of pending factors, which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. Loans are classified as loss when they are deemed to be not collectible and of such little value that continuance as an active asset of the Bank is not warranted. Loans classified as loss must be charged-off. Assignment of this classification does not mean that an asset has absolutely no recovery or salvage value, but that it is not practical or desirable to defer writing off a basically worthless asset, even though partial recovery may be attained in the future.

Modifications
The Company identifies modifications to borrowers experiencing financial difficulty (“MBFD”) as a loan that has been modified for the borrower that is experiencing financial difficulties. The Company considers some of the indicators that a borrower is experiencing financial difficulty to be: currently in payment default on any of their debt, declaring bankruptcy, going concern, borrower’s securities have been delisted, and other indicators of inability to meet obligations. This list does not include all potential indicators of a borrower’s financial difficulties. Each debt modification is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service their obligations as modified. The allowance for credit losses on loans that are considered MBFD’s are measured using the same method as all other loans held for investment.
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Allowance for Credit Losses - Off-Balance Sheet Credit Exposures
The Company maintains a separate allowance for credit losses for off-balance sheet credit exposures, including unfunded loan commitments. Such ACL is included in other liabilities on the Company’s statements of financial condition. The Company estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures and applying the loss factors used in the allowance for credit loss methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan segment. No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by the Bank or for unfunded amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.

Provision for Credit Losses
The Company recognizes provision for credit losses on the allowance for off-balance sheet credit exposures (e.g., unfunded loan commitments) together with provision for credit losses on the loan portfolio in the income statement line item provision for credit losses.

The following table presents the provision for credit losses on the loan portfolio and off-balance sheet exposures:
Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Provision for credit loss loans$6,981 5,095 21,138 16,609 
Provision for credit loss unfunded1,024 (1,556)(1,366)(4,827)
Total provision for credit losses$8,005 3,539 19,772 11,782 

There was no provision for credit losses on debt securities for the nine months ended September 30, 2024, and 2023, respectively.

Premises and Equipment
Premises and equipment are accounted for at cost less depreciation. Depreciation is computed on a straight-line method over the estimated useful lives or the term of the related lease. The estimated useful life for office buildings is 15 to 40 years and the estimated useful life for furniture, fixtures, and equipment is 3 to 10 years. Interest is capitalized for any significant building projects.

Leases
The Company leases certain land, premises and equipment from third parties. A lessee lease is classified as an operating lease unless it meets certain criteria (e.g., lease contains option to purchase that Company is reasonably certain to exercise), in which case it is classified as a finance lease. These leases are included in net premises and equipment as right-of-use (“ROU”) assets. The operating leases have other liabilities on the Company’s statements of financial condition and lease expense for lease payments is recognized on a straight-line basis over the lease term. The finance leases have liabilities that are included in other borrowed funds on the Company’s statements of financial condition. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. An ROU asset represents the right to use the underlying asset for the lease term and also includes any direct costs and payments made prior to lease commencement and excludes lease incentives. When an implicit rate is not available, an incremental borrowing rate based on the information available at commencement date is used in determining the present value of the lease payments. A lease term may include an option to extend or terminate the lease when it is reasonably certain the option will be exercised. The Company accounts for lease and non-lease components (e.g., common-area maintenance) together as a single combined lease component for all asset classes. The Company has elected to recognize payments for short-term leases of 12 months or less on a straight-line basis over the lease term, and exclude such leases from the Company’s statements of financial condition. Renewal and termination options are considered when determining short-term leases. Leases are accounted for on an individual lease level.

Lease improvements incurred at the inception of the lease are recorded as an asset and depreciated over the initial term of the lease and lease improvements incurred subsequently are depreciated over the remaining term of the lease.

The Company also leases certain premises and equipment to third parties. A lessor lease is classified as an operating lease unless it meets certain criteria that would classify it as either a sales-type lease or a direct financing lease. For additional information relating to leases, see Note 4.


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Other Real Estate Owned
Property acquired by foreclosure or deed-in-lieu of foreclosure is initially recorded at fair value, less estimated selling cost, at acquisition date (i.e., cost of the property). The Company is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan upon the occurrence of either the Company obtaining legal title to the property or the borrower conveying all interest in the property through a deed-in-lieu or similar agreement. Fair value is determined as the amount that could be reasonably expected in a current sale between a willing buyer and a willing seller in an orderly transaction between market participants at the measurement date. Subsequent to the initial acquisition, if the fair value of the asset, less estimated selling cost, is less than the cost of the property, a loss is recognized in other expense and the asset carrying value is reduced. Gain or loss on disposition of OREO is recorded in non-interest income or non-interest expense, respectively. In determining the fair value of the properties on the date of transfer and any subsequent estimated losses of net realizable value, the fair value of other real estate acquired by foreclosure or deed-in-lieu of foreclosure is determined primarily based upon appraisal or evaluation of the underlying property value.

Business Combinations and Intangible Assets
Acquisition accounting requires the total purchase price to be allocated to the estimated fair values of assets acquired and liabilities assumed, including certain intangible assets. Goodwill is recorded if the purchase price exceeds the net fair value of assets acquired and a bargain purchase gain is recorded in other income if the net fair value of assets acquired exceeds the purchase price.

Adjustment of the allocated purchase price may be related to fair value estimates for which all information has not been obtained of the acquired entity known or discovered during the allocation period, the period of time required to identify and measure the fair values of the assets and liabilities acquired in the business combination. The allocation period is generally limited to one year following consummation of a business combination.

Core deposit intangible represents the intangible value of depositor relationships resulting from deposit liabilities assumed in acquisitions and is amortized using an accelerated method based on an estimated runoff of the related deposits. The core deposit intangible is evaluated for impairment and recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life.

The Company tests goodwill for impairment at the reporting unit level annually during the third quarter. The Company has identified that each of the Bank divisions are reporting units (i.e., components of the Glacier Bank operating segment) given that each division has a separate management team that regularly reviews its respective division financial information; however, the reporting units are aggregated into a single reporting unit due to the reporting units having similar economic characteristics.

The goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Examples of events and circumstances that could trigger the need for interim impairment testing include:
•a significant change in legal factors or in the business climate;
•an adverse action or assessment by a regulator;
•unanticipated competition;
•a loss of key personnel;
•a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of; and
•the testing for recoverability of a significant asset group within a reporting unit.

For the goodwill impairment assessment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. The Company elected to bypass the qualitative assessment for its 2024 and 2023 annual goodwill impairment testing and proceed directly to the goodwill impairment assessment. The goodwill impairment process requires the Company to make assumptions and judgments regarding fair value. The Company calculates an implied fair value and if the implied fair value is less than the carrying value, an impairment loss is recognized for the difference. For additional information relating to goodwill, see Note 5.

Loan Servicing Rights
For residential real estate loans that are sold with servicing retained, servicing rights are initially recorded at fair value in other assets and gain on sale of loans. Fair value is based on market prices for comparable mortgage servicing contracts. The
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servicing asset is subsequently measured using the amortization method which requires the servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Loan servicing rights are evaluated for impairment based upon the fair value of the servicing rights compared to the carrying value. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the carrying value. If the Company later determines that all or a portion of the impairment no longer exists, a reduction in the valuation allowance may be recorded. Changes in the valuation allowance are recorded in other income. The fair value of the servicing assets are subject to significant fluctuations as a result of changes in estimated actual prepayment speeds and default rates and losses.

Servicing fee income is recognized in other income for fees earned for servicing loans. The fees are based on contractual percentage of the outstanding principal; or a fixed amount per loan and is recorded when earned. The amortization of loan servicing fees is netted against loan servicing fee income. For additional information relating to loan servicing rights, see Note 6.

Equity Securities
Non-marketable equity securities primarily consist of Federal Home Loan Bank (“FHLB”) stock. FHLB stock is restricted because such stock may only be sold to FHLB at its par value. Due to restrictive terms, and the lack of a readily determinable fair value, FHLB stock is carried at cost and evaluated for impairment. The investments in FHLB stock are required investments related to the Company’s borrowings from FHLB. FHLB obtains its funding primarily through issuance of consolidated obligations of the FHLB system. The U.S. government does not guarantee these obligations, and each of the regional FHLBs is jointly and severally liable for repayment of each other’s debt.

The Company also has an insignificant amount of equity securities that are included in other assets on the Company’s statements of financial condition. Equity securities with readily determinable fair values are measured at fair value and changes in fair value are recognized in other income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.

Federal Reserve Bank Term Funding Program
During the first quarter 2023, the FRB offered a new Bank Term Funding Program (“BTFP”) for eligible depository institutions. The BTFP offered loans of up to one year in length to institutions pledging collateral eligible for purchase by the FRB in open market operations such as U.S. Treasuries, U.S. Agency securities, and U.S. agency mortgage-backed securities. The assets were valued at par for pledging purposes. The Company paid off the BTFP loans in the first quarter of 2024.

Other Borrowings
Borrowings of the Company’s consolidated variable interest entities and finance lease arrangements are included in other borrowings. For additional information relating to VIE’s, see Note 7.

Bank-Owned Life Insurance
The Company maintains bank-owned life insurance policies on certain current and former employees and directors, which are recorded at their cash surrender values as determined by the insurance carriers. The appreciation in the cash surrender value of the policies is recognized as a component of other non-interest income in the Company’s statements of operations.

Derivatives and Hedging Activities
The Company is exposed to certain risks relating to its ongoing operations. The primary risk managed by using derivative instruments is interest rate risk. Interest rate cap contracts have been entered into to manage interest rate risk associated with variable rate borrowings and were designated as cash flow hedges. Interest rate swap contracts have been entered into to manage interest rate risk associated with fixed rate debt securities and were designated as fair value hedges. The Company does not enter into derivative instruments for trading or speculative purposes.

The fair value hedges and cash flow hedges were recognized as other assets or other liabilities on the Company’s statements of financial condition and were measured at fair value. For the fair value hedges, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Cash flows resulting from the fair value hedges and cash flow hedges were classified in the Company’s cash flow statement in the same category as the cash flows of the items being hedged.

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The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are designated are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company has elected not to offset the fair value amounts recognized for derivative instruments and the fair value amounts recognized for the right to reclaim cash collateral arising from derivative instruments recognized at fair value executed with the same counterparty under a master netting arrangement.

For additional information relating to the derivatives and hedging activity, see Note 9.

Revenue Recognition
The Company recognizes revenue when services or products are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled. The Company’s principal source of revenue is interest income from debt securities and loans. Revenue from contracts with customers within the scope of ASC Topic 606 was $69,973,000 and $65,938,000 for the nine months ended September 30, 2024 and 2023, respectively, and largely consisted of revenue from service charges and other fees from deposits (e.g., overdraft fees, ATM fees, debit card fees). Due to the short-term nature of the Company’s contracts with customers, an insignificant amount of receivables related to such revenue was recorded at September 30, 2024 and December 31, 2023 and there were no impairment losses recognized. Policies specific to revenue from contracts with customers include the following:

Service Charges. Revenue from service charges consists of service charges and fees on deposit accounts under depository agreements with customers to provide access to deposited funds and, when applicable, pay interest on deposits. Service charges on deposit accounts may be transactional or non-transactional in nature. Transactional service charges occur in the form of a service or penalty and are charged upon the occurrence of an event (e.g., overdraft fees, ATM fees, wire transfer fees). Transactional service charges are recognized as services are delivered to and consumed by the customer, or as penalty fees are charged. Non-transactional service charges are charges that are based on a broader service, such as account maintenance fees and dormancy fees, and are recognized on a monthly basis.

Debit Card Fees. Revenue from debit card fees includes interchange fee income from debit cards processed through card association networks. Interchange fees represent a portion of a transaction amount that the Company and other involved parties retain to compensate themselves for giving the cardholder immediate access to funds. Interchange rates are generally set by the card association networks and are based on purchase volumes and other factors. The Company records interchange fees as services are provided.
Accounting Guidance Adopted in 2024
The ASC is the Financial Accounting Standards Board (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative. The following provides a description of a recently adopted Accounting Standards Updates (“ASU”) that could have a material effect on the Company’s financial position or results of operations.

ASU 2023-02 - Investments Equity Method and Joint Ventures. In March 2023, FASB amended Topic ASC 323 relating to accounting for investments in tax credit structures using the proportional amortization method. The amendments in this Update allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits. Previously, the accounting standards limited the proportional amortization method to account for qualifying investment in low-income-housing tax credit structures. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the tax credits being presented net in the income statement as a component of income tax expense (benefit). The amendments in this Update permit an entity to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The amendments are effective for public business entities beginning with the first interim and annual reporting periods after December 15, 2023. The Company adopted the amendments beginning January 1, 2024 for each tax credit program. The Company adjusted its processes and procedures related to the amendments and there was no material impact to the Company’s financial position and results of operations.


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Accounting Guidance Pending Adoption in 2024
The following provides a description of a recently issued but not yet effective ASU that could have a material effect on the Company’s financial position or results of operations.

ASU 2023-09 - Income Tax Disclosures. In December 2023, FASB amended topic 740 related to certain income tax disclosures (the “Update”). The amendments provide updates related to the rate reconciliation and income taxes paid disclosures to improve transparency of income disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. Other amendments in the Update improve the effectiveness and comparability of disclosures and remove disclosures that are no longer considered cost beneficial or relevant. The amendments are effective for public business entities beginning with the first annual reporting period after December 15, 2024 with early adoption permitted in any annual period. The amendments in this Update should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of this Update, but does not expect the adoption of this guidance to have a material impact to the financial statements, including related disclosures, or significant impact on its current processes.

Note 2. Debt Securities
The following tables present the amortized cost, the gross unrealized gains and losses and the fair value of the Company’s debt securities:
 September 30, 2024
(Dollars in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Available-for-sale
U.S. government and federal agency$484,314 17 (16,725)467,606 
U.S. government sponsored enterprises323,387 — (13,318)310,069 
State and local governments74,691 340 (2,661)72,370 
Corporate bonds14,838 — (296)14,542 
Residential mortgage-backed securities2,780,411 18 (256,225)2,524,204 
Commercial mortgage-backed securities1,107,531 664 (60,408)1,047,787 
Total available-for-sale$4,785,172 1,039 (349,633)4,436,578 
Held-to-maturity
U.S. government and federal agency857,858 — (43,408)814,450 
State and local governments1,630,264 1,874 (172,903)1,459,235 
Residential mortgage-backed securities860,576 — (53,712)806,864 
Total held-to-maturity3,348,698 1,874 (270,023)3,080,549 
Total debt securities$8,133,870 2,913 (619,656)7,517,127 


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 December 31, 2023
(Dollars in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Available-for-sale
U.S. government and federal agency$485,005 11 (29,669)455,347 
U.S. government sponsored enterprises321,993 — (22,774)299,219 
State and local governments101,903 302 (3,273)98,932 
Corporate bonds27,007 2 (756)26,253 
Residential mortgage-backed securities3,166,589 7 (355,333)2,811,263 
Commercial mortgage-backed securities1,180,756 519 (86,570)1,094,705 
Total available-for-sale$5,283,253 841 (498,375)4,785,719 
Held-to-maturity
U.S. government and federal agency853,273 — (65,472)787,801 
State and local governments1,650,000 2,843 (181,192)1,471,651 
Residential mortgage-backed securities999,138 — (78,396)920,742 
Total held-to-maturity3,502,411 2,843 (325,060)3,180,194 
Total debt securities$8,785,664 3,684 (823,435)7,965,913 


Maturity Analysis
The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity at September 30, 2024. Actual maturities may differ from expected or contractual maturities since some issuers have the right to prepay obligations with or without prepayment penalties.
 September 30, 2024
 Available-for-SaleHeld-to-Maturity
(Dollars in thousands)Amortized CostFair ValueAmortized CostFair Value
Due within one year$56,222 55,073 9,139 9,133 
Due after one year through five years787,336 758,562 938,197 894,304 
Due after five years through ten years16,296 15,732 189,027 183,962 
Due after ten years37,376 35,220 1,351,759 1,186,286 
897,230 864,587 2,488,122 2,273,685 
Mortgage-backed securities 1
3,887,942 3,571,991 860,576 806,864 
Total$4,785,172 4,436,578 3,348,698 3,080,549 
______________________________
1 Mortgage-backed securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds.

22

Sales and Calls of Debt Securities
Proceeds from sales and calls of debt securities and the associated gains and losses that have been included in earnings are listed below for the periods shown:
 Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Available-for-sale
Proceeds from sales and calls of debt securities$77,099 410 250,818 31,695 
Gross realized gains 1
753 — 782 145 
Gross realized losses 1
(725)— (725)(176)
Held-to-maturity
Proceeds from calls of debt securities2,310 4,735 8,495 15,205 
Gross realized gains 1
— 1 — 10 
Gross realized losses 1
(2)(66)(27)(181)
______________________________
1 The gain or loss on the sale or call of each debt security is determined by the specific identification method.

Allowance for Credit Losses - Available-for-Sale Debt Securities
In assessing whether a credit loss existed on available-for-sale debt securities with unrealized losses, the Company compared the present value of cash flows expected to be collected from the debt securities with the amortized cost basis of the debt securities. In addition, the following factors were evaluated individually and collectively in determining the existence of expected credit losses:
•credit ratings from Nationally Recognized Statistical Rating Organizations (“NRSRO” entities such as Standard and Poor’s [“S&P”] and Moody’s);
•extent to which the fair value is less than cost;
•adverse conditions, if any, specifically related to the impaired securities, including the industry and geographic area;
•the overall deal and payment structure of the debt securities, including the investor entity’s position within the structure, underlying obligors, financial condition and near-term prospects of the issuer, including specific events that may affect the issuer’s operations or future earnings, and credit support or enhancements; and
•failure of the issuer and underlying obligors, if any, to make scheduled payments of interest and principal.
23

The following tables summarize available-for-sale debt securities that were in an unrealized loss position for which an ACL has not been recorded, based on the length of time the individual securities have been in an unrealized loss position. The number of available-for-sale debt securities in an unrealized position is also disclosed.
 September 30, 2024
 Number
of
Securities		Less than 12 Months12 Months or MoreTotal
(Dollars in thousands)Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss
Available-for-sale
U.S. government and federal agency
51 $2,772 (32)461,815 (16,693)464,587 (16,725)
U.S. government sponsored enterprises
14 — — 310,068 (13,318)310,068 (13,318)
State and local governments47 — — 52,048 (2,661)52,048 (2,661)
Corporate bonds2 — — 13,731 (296)13,731 (296)
Residential mortgage-backed securities
378 25 (1)2,521,798 (256,224)2,521,823 (256,225)
Commercial mortgage-backed securities
140 18,248 (375)989,901 (60,033)1,008,149 (60,408)
Total available-for-sale
632 $21,045 (408)4,349,361 (349,225)4,370,406 (349,633)
 
 December 31, 2023
 Number
of
Securities		Less than 12 Months12 Months or MoreTotal
(Dollars in thousands)Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss		Fair
Value		Unrealized
Loss
Available-for-sale
U.S. government and federal agency
57 $3,702 (56)448,909 (29,613)452,611 (29,669)
U.S. government sponsored enterprises
14 — — 299,220 (22,774)299,220 (22,774)
State and local governments85 3,039 (2)64,645 (3,271)67,684 (3,273)
Corporate bonds4 — — 23,262 (756)23,262 (756)
Residential mortgage-backed securities
402 1,430 (44)2,809,482 (355,289)2,810,912 (355,333)
Commercial mortgage-backed securities
151 21,232 (268)1,034,183 (86,302)1,055,415 (86,570)
Total available-for-sale
713 $29,403 (370)4,679,701 (498,005)4,709,104 (498,375)

With respect to severity, the majority of available-for-sale debt securities with unrealized loss positions at September 30, 2024 were issued by Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), Government National Mortgage Association (“Ginnie Mae”) and other agencies of the U.S. government or have credit ratings issued by one or more of the NRSRO entities in the four highest credit rating categories. All of the Company’s available-for-sale debt securities with unrealized loss positions at September 30, 2024 have been determined to be investment grade.

The Company did not have any past due available-for-sale debt securities as of September 30, 2024 and December 31, 2023, respectively. Accrued interest receivable on available-for-sale debt securities totaled $8,364,000 and $9,319,000 at September 30, 2024, and December 31, 2023, respectively, and was excluded from the estimate of credit losses.


24

Based on an analysis of its available-for-sale debt securities with unrealized losses as of September 30, 2024, the Company determined the decline in value was unrelated to credit losses and was primarily the result of changes in interest rates and market spreads subsequent to acquisition. The fair value of the debt securities is expected to recover as payments are received and the debt securities approach maturity. In addition, as of September 30, 2024, management determined it did not intend to sell available-for-sale debt securities with unrealized losses, and there was no expected requirement to sell such securities before recovery of their amortized cost. As a result, no ACL was recorded on available-for-sale debt securities at September 30, 2024. As part of this determination, the Company considered contractual obligations, regulatory constraints, liquidity, capital, asset/liability management and securities portfolio objectives and whether or not any of the Company’s investment securities were managed by third-party investment funds.

Allowance for Credit Losses - Held-to-Maturity Debt Securities
The Company measured expected credit losses on held-to-maturity debt securities on a collective basis by major security type and NRSRO credit ratings, which is the Company’s primary credit quality indicator for state and local government securities. The estimate of expected credit losses considered historical credit loss information that was adjusted for current conditions as well as reasonable and supportable forecasts. The following table summarizes the amortized cost of held-to-maturity municipal bonds aggregated by NRSRO credit rating:
(Dollars in thousands)September 30,
2024		December 31,
2023
Municipal bonds held-to-maturity
S&P: AAA / Moody’s: Aaa
$419,314 427,918 
S&P: AA+, AA, AA- / Moody’s: Aa1, Aa2, Aa3
1,173,331 1,182,894 
S&P: A+, A, A- / Moody’s: A1, A2, A3
33,984 37,742 
Not rated by either entity
3,635 1,446 
Total municipal bonds held-to-maturity
$1,630,264 1,650,000 

The Company’s municipal bonds in the held-to-maturity debt securities portfolio is primarily comprised of general obligation and revenue bonds with NRSRO ratings in the four highest credit rating categories. All of the Company’s municipal bonds that are classified as held-to-maturity debt securities at September 30, 2024 have been determined to be investment grade. Held-to-maturity debt securities included in the Company’s U.S. government and federal agency and residential mortgage-backed security categories are issued and guaranteed by the U.S. Treasury, Fannie Mae, Freddie Mac, Ginnie Mae and other agencies of the U.S. government are considered to be zero-loss securities. This determination is in consideration of the explicit and implicit guarantees by the US Government, the US Government’s ability to print its own currency, a history of no credit losses by the US Government and noted agencies and the current economic and financial condition of the United States and US Government providing no indication the zero-loss determination is unjustified.

As of September 30, 2024 and December 31, 2023, the Company did not have any held-to-maturity debt securities past due. Accrued interest receivable on held-to-maturity debt securities totaled $19,303,000 and $16,990,000 at September 30, 2024 and December 31, 2023, respectively, and were excluded from the estimate of credit losses.

Based on the Company’s evaluation, an insignificant amount of credit losses is expected on the held-to-maturity debt securities portfolio; therefore, no ACL was recorded at September 30, 2024 or December 31, 2023.






25


Note 3. Loans Receivable, Net

The following table presents loans receivable for each portfolio segment of loans:
.
(Dollars in thousands)September 30,
2024		December 31,
2023
Residential real estate$1,837,697 1,704,544 
Commercial real estate10,833,841 10,303,306 
Other commercial3,177,051 2,901,863 
Home equity931,440 888,013 
Other consumer401,158 400,356 
Loans receivable17,181,187 16,198,082 
Allowance for credit losses(205,170)(192,757)
Loans receivable, net$16,976,017 16,005,325 
Net deferred origination (fees) costs included in loans receivable$(27,749)(25,577)
Net purchase accounting (discounts) premiums included in loans receivable$(36,722)(13,802)
Accrued interest receivable on loans$85,533 67,362 

Substantially all of the Company’s loans receivable are with borrowers in the Company’s geographic market areas. Although the Company has a diversified loan portfolio, a substantial portion of borrowers’ ability to service their obligations is dependent upon the economic performance in the Company’s markets.

The Company had no significant purchases or sales of portfolio loans or reclassification of loans held for investment to loans held for sale during the nine months ended September 30, 2024.

Allowance for Credit Losses - Loans Receivable
The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on loans. The following tables summarize the activity in the ACL:
Three Months ended September 30, 2024
(Dollars in thousands)TotalResidential Real EstateCommercial Real EstateOther CommercialHome EquityOther Consumer
Balance at beginning of period$200,955 24,653 136,346 22,219 11,261 6,476 
Provision for credit losses6,981 626 2,176 1,947 145 2,087 
Charge-offs(3,976)— — (1,456)(2)(2,518)
Recoveries1,210 10 25 459 54 662 
Balance at end of period$205,170 25,289 138,547 23,169 11,458 6,707 

Three Months ended September 30, 2023
(Dollars in thousands)TotalResidential Real EstateCommercial Real EstateOther CommercialHome EquityOther Consumer
Balance at beginning of period$189,385 20,847 129,598 21,797 11,053 6,090 
Provision for credit losses5,095 848 1,415 306 534 1,992 
Charge-offs(3,201)— (203)(654)— (2,344)
Recoveries992 2 42 322 37 589 
Balance at end of period$192,271 21,697 130,852 21,771 11,624 6,327 
26

Nine Months ended September 30, 2024
(Dollars in thousands)TotalResidential Real EstateCommercial Real EstateOther CommercialHome EquityOther Consumer
Balance at beginning of period$192,757 22,325 130,924 21,194 11,766 6,548 
Acquisitions3 — 3 — — — 
Provision for credit losses21,138 2,934 7,965 5,321 (409)5,327 
Charge-offs(12,406)— (395)(4,849)(27)(7,135)
Recoveries3,678 30 50 1,503 128 1,967 
Balance at end of period$205,170 25,289 138,547 23,169 11,458 6,707 

Nine Months ended September 30, 2023
(Dollars in thousands)TotalResidential Real EstateCommercial Real EstateOther CommercialHome EquityOther Consumer
Balance at beginning of period$182,283 19,683 125,816 21,454 10,759 4,571 
Provision for credit losses16,609 2,021 5,369 1,845 881 6,493 
Charge-offs(10,284)(20)(619)(2,895)(102)(6,648)
Recoveries3,663 13 286 1,367 86 1,911 
Balance at end of period$192,271 21,697 130,852 21,771 11,624 6,327 

During the nine months ended September 30, 2024, the ACL increased primarily as a result of loan portfolio growth.

The sizeable charge-offs in the other consumer loan segment was driven by deposit overdraft charge-offs which typically experience high charge-off rates and the amounts were comparable to historical trends. The other segments generally experience routine charge-offs and recoveries, with occasional large credit relationships charge-offs and recoveries that cause fluctuations from prior periods. During the nine months ended September 30, 2024, there have been no significant changes to the types of collateral securing collateral-dependent loans.

Aging Analysis
The following tables present an aging analysis of the recorded investment in loans:
 September 30, 2024
(Dollars in thousands)TotalResidential
Real Estate		Commercial
Real Estate		Other
Commercial		Home
Equity		Other
Consumer
Accruing loans 30-59 days past due$32,973 133 10,608 15,680 3,142 3,410 
Accruing loans 60-89 days past due23,240 2,621 4,685 13,371 1,556 1,007 
Accruing loans 90 days or more past due
11,551 2,003 5,415 2,698 971 464 
Non-accrual loans with no ACL13,669 3,319 5,715 1,839 1,995 801 
Non-accrual loans with ACL2,268 — 2,145 20 — 103 
Total past due and
  non-accrual loans
83,701 8,076 28,568 33,608 7,664 5,785 
Current loans receivable17,097,486 1,829,621 10,805,273 3,143,443 923,776 395,373 
Total loans receivable$17,181,187 1,837,697 10,833,841 3,177,051 931,440 401,158 
27

 
 December 31, 2023
(Dollars in thousands)TotalResidential
Real Estate		Commercial
Real Estate		Other
Commercial		Home
Equity		Other
Consumer
Accruing loans 30-59 days past due$43,455 5,342 18,134 12,745 3,006 4,228 
Accruing loans 60-89 days past due6,512 729 2,439 774 1,527 1,043 
Accruing loans 90 days or more past due
3,312 107 2,161 530 283 231 
Non-accrual loans with no ACL20,722 2,562 13,680 1,869 1,966 645 
Non-accrual loans with ACL94 — — 7 — 87 
Total past due and non-accrual loans
74,095 8,740 36,414 15,925 6,782 6,234 
Current loans receivable16,123,987 1,695,804 10,266,892 2,885,938 881,231 394,122 
Total loans receivable$16,198,082 1,704,544 10,303,306 2,901,863 888,013 400,356 

The Company had $163,000 and $108,000 of interest reversed on non-accrual loans during the nine months ended September 30, 2024 and September 30, 2023, respectively.

Collateral-Dependent Loans
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The collateral on the loans is a significant portion of what secures the collateral-dependent loans and significant changes to the fair value of the collateral can impact the ACL. During the nine months ended September 30, 2024, there were no significant changes to collateral which secures the collateral-dependent loans, whether due to general deterioration or other reasons. The following table presents the amortized cost basis of collateral-dependent loans by collateral type:
 September 30, 2024
(Dollars in thousands)TotalResidential
Real Estate		Commercial
Real Estate		Other
Commercial		Home
Equity		Other
Consumer
Business assets$11,901 — — 11,901 — — 
Residential real estate13,725 3,316 7,676 516 1,976 241 
Other real estate29,401 3 27,807 1,198 19 374 
Other831 — — 238 — 593 
Total$55,858 3,319 35,483 13,853 1,995 1,208 

 December 31, 2023
(Dollars in thousands)TotalResidential
Real Estate		Commercial
Real Estate		Other
Commercial		Home
Equity		Other
Consumer
Business assets$3,236 — 6 3,230 — — 
Residential real estate17,578 11,099 4,317 98 1,968 96 
Other real estate21,635 35 20,598 620 25 357 
Other595 — — 15 — 580 
Total$43,044 11,134 24,921 3,963 1,993 1,033 


28

Loan Modifications Made to Borrowers Experiencing Financial Difficulty
The following disclosures for loan modifications made to borrowers experiencing financial difficulty (“MBFD”) are presented in accordance with ASC Topic 310. The following tables show the amortized cost basis at the end of the period of the loans modified to borrowers experiencing financial difficulty by segment:

At or for the Three Months ended September 30, 2024
Term Extension and Payment DeferralCombination - Term Extension and Interest Rate Reduction
(Dollars in thousands)Amortized Cost Basis% of Total ClassAmortized Cost Basis% of Total ClassTotal
Commercial real estate$1,509 — %$— — %$1,509 
Other commercial4,193 0.1 %— — %4,193 
Total$5,702 $— $5,702 

At or for the Three Months ended September 30, 2023
Term Extension and Payment DeferralCombination - Term Extension and Interest Rate Reduction
(Dollars in thousands)Amortized Cost Basis% of Total ClassAmortized Cost Basis% of Total ClassTotal
Residential real estate$679 — %$— — %$679 
Commercial real estate32,090 0.3 %2,534 — %34,624 
Other commercial5,069 0.2 %1,176 — %6,245 
Other consumer102 — %550 0.1 %652 
Total$37,940 $4,260 $42,200 

At or for the Nine Months ended September 30, 2024
Term Extension and Payment DeferralCombination - Term Extension and Interest Rate Reduction
(Dollars in thousands)Amortized Cost Basis% of Total ClassAmortized Cost Basis% of Total ClassTotal
Residential real estate$204 — %$— — %$204 
Commercial real estate11,727 0.1 %27,979 0.3 %39,706 
Other commercial13,728 0.4 %— — %13,728 
Total$25,659 $27,979 $53,638 

29

At or for the Nine Months ended September 30, 2023
Term Extension and Payment DeferralCombination - Term Extension and Interest Rate Reduction
(Dollars in thousands)Amortized Cost Basis% of Total ClassAmortized Cost Basis% of Total ClassTotal
Residential real estate$679 — %$— — %$679 
Commercial real estate37,880 0.4 %2,869 — %40,749 
Other commercial10,398 0.4 %1,199 — %11,597 
Home equity51 — %— — %51 
Other consumer118 — %550 0.1 %668 
Total$49,126 $4,618 $53,744 

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty by segment:
At or for the Three Months ended September 30, 2024
Weighted Average Interest Rate ReductionWeighted Average Term ExtensionPrincipal Forgiveness
Other commercial—%7 months—

At or for the Three Months ended September 30, 2023
Weighted Average Interest Rate ReductionWeighted Average Term ExtensionPrincipal Forgiveness
Commercial real estate0.17%6 months—
Other commercial0.04%7 months—
Home equity1.17%1 year, 10 months—

At or for the Nine Months ended September 30, 2024
Weighted Average Interest Rate ReductionWeighted Average Term ExtensionPrincipal Forgiveness
Residential real estate—%1 year, 8 months—
Commercial real estate2.08%1 year, 1 month—
Other commercial—%3 months—

At or for the Nine Months ended September 30, 2023
Weighted Average Interest Rate ReductionWeighted Average Term ExtensionPrincipal Forgiveness
Commercial real estate0.19%8 months—
Other commercial0.04%1 year, 7 months—
Other consumer1.17%1 year, 10 months$10 thousand

There were no loans modified in the twelve months that had a payment default during the period at September 30, 2024. There were $638,000 and $5,361,000 of additional unfunded commitments on MBFDs outstanding at September 30, 2024 and December 31, 2023, respectively. At September 30, 2024 and December 31, 2023, the Company had $76,000 and $98,000, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At September 30, 2024 and December 31, 2023, the Company had $0 and $15,000, respectively, of OREO secured by residential real estate properties.

The following tables depict the performance of loans that have been modified in the last twelve months by segment:
30

September 30, 2024
(Dollars in thousands)TotalCurrent30-89 Days Past Due90 Days or More Past DueNon-Accrual
Residential real estate$204 204 — — — 
Commercial real estate39,706 37,143 101 561 1,901 
Other commercial13,728 12,922 806 — — 
Total$53,638 50,269 907 561 1,901 
September 30, 2023
(Dollars in thousands)TotalCurrent30-89 Days Past Due90 Days or More Past DueNon-Accrual
Residential real estate$679 679 — — — 
Commercial real estate40,749 39,196 — — 1,553 
Other commercial11,597 10,081 926 25 565 
Home equity51 — — — 51 
Other consumer668 668 — — — 
Total$53,744 50,624 926 25 2,169 

Credit Quality Indicators
The Company categorizes commercial real estate and other commercial loans into risk categories based on relevant information about the ability of borrowers to service their obligations. The following tables present the amortized cost in commercial real estate and other commercial loans based on the Company’s internal risk rating. The date of a modification, renewal or extension of a loan is considered for the year of origination if the terms of the loan are as favorable to the Company as the terms are for a comparable loan to other borrowers with similar credit risk.
31

 September 30, 2024
(Dollars in thousands)Gross Charge-OffsTotalPassSpecial MentionSubstandardDoubtful/
Loss
Commercial real estate loans
Term loans by origination year
2024 (year-to-date)$— 961,105 929,837 3,288 27,980 — 
2023— 1,347,109 1,324,359 20,171 2,579 — 
202272 2,436,334 2,367,328 42,098 26,908 — 
2021— 2,118,399 2,082,746 22,744 12,909 — 
20205 1,076,187 1,068,940 — 7,247 — 
Prior318 2,580,465 2,509,239 28,535 42,691 — 
Revolving loans— 314,242 310,004 3,100 1,137 1 
Total$395 10,833,841 10,592,453 119,936 121,451 1 
Other commercial loans
Term loans by origination year
2024 (year-to-date)$3,526 284,596 283,831 566 156 43 
202373 358,204 354,798 635 2,771 — 
2022298 546,601 534,151 1,259 11,143 48 
2021422 495,113 475,194 10,294 9,615 10 
2020284 222,404 218,060 268 4,075 1 
Prior246 534,047 507,283 — 26,764 — 
Revolving loans— 736,086 703,921 19,031 13,120 14 
Total$4,849 3,177,051 3,077,238 32,053 67,644 116 

32

 December 31, 2023
(Dollars in thousands)Gross Charge-OffsTotalPassSpecial MentionSubstandardDoubtful/
Loss
Commercial real estate loans
Term loans by origination year
2023$889 $1,316,100 1,313,446 97 2,557 — 
2022430 2,547,939 2,520,484 12,855 14,600 — 
2021145 2,200,677 2,178,153 19,782 2,742 — 
2020— 1,130,117 1,124,525 — 5,592 — 
2019— 691,810 656,203 1,104 34,503 — 
Prior616 2,129,808 2,053,011 18,818 57,948 31 
Revolving loans— 286,855 285,432 1 1,421 1 
Total$2,080 $10,303,306 10,131,254 52,657 119,363 32 
Other commercial loans
Term loans by origination year
2023$3,080 $369,059 367,337 — 1,603 119 
2022406 566,295 561,567 3,319 1,408 1 
2021— 531,558 519,151 10,187 2,218 2 
202092 245,962 240,613 — 5,347 2 
2019— 145,828 141,336 — 4,490 2 
Prior313 448,619 443,400 — 5,219 — 
Revolving loans— 594,542 577,953 11,977 4,612 — 
Total$3,891 $2,901,863 2,851,357 25,483 24,897 126 

33

For residential real estate, home equity and other consumer loan segments, the Company evaluates credit quality primarily on the aging status of the loan. The following tables present the amortized cost in residential real estate, home equity and other consumer loans based on payment performance:
 September 30, 2024
(Dollars in thousands)Gross Charge-OffsTotalPerforming30-89 Days Past DueNon-Accrual and 90 Days or More Past Due
Residential real estate loans
Term loans by origination year
2024 (year-to-date)$— 134,710 134,389 321 — 
2023— 292,783 292,088 174 521 
2022— 664,274 663,051 467 756 
2021— 467,136 466,558 — 578 
2020— 93,073 93,073 — — 
Prior— 185,721 180,462 1,792 3,467 
Revolving loans— — — — — 
Total$— 1,837,697 1,829,621 2,754 5,322 
Home equity loans
Term loans by origination year
2024 (year-to-date)$— 211 211 — — 
202317 1,165 1,165 — — 
2022— 2,102 2,102 — — 
2021— 893 893 — — 
2020— 83 83 — — 
Prior10 4,558 4,439 33 86 
Revolving loans— 922,428 914,883 4,665 2,880 
Total$27 931,440 923,776 4,698 2,966 
Other consumer loans
Term loans by origination year
2024 (year-to-date)$6,156 96,566 94,696 1,804 66 
2023325 99,808 98,939 542 327 
2022323 71,791 70,439 1,133 219 
2021209 43,649 42,851 325 473 
202024 20,749 20,681 22 46 
Prior98 22,138 21,862 72 204 
Revolving loans— 46,457 45,905 519 33 
Total$7,135 401,158 395,373 4,417 1,368 

34

 December 31, 2023
(Dollars in thousands)Gross Charge-OffsTotalPerforming30-89 Days Past DueNon-Accrual and 90 Days or More Past Due
Residential real estate loans
Term loans by origination year
2023$— $234,568 233,753 815 — 
20225 673,782 671,196 2,586 — 
2021— 495,645 495,645 — — 
2020— 99,199 99,199 — — 
2019— 42,054 42,054 — — 
Prior15 158,828 153,489 2,670 2,669 
Revolving loans— 468 468 — — 
Total$20 $1,704,544 1,695,804 6,071 2,669 
Home equity loans
Term loans by origination year
2023$— $— — — — 
2022— 20 20 — — 
202148 — — — — 
202050 21 21 — — 
2019— 178 178 — — 
Prior31 5,492 5,277 11 204 
Revolving loans— 882,302 875,735 4,522 2,045 
Total$129 $888,013 881,231 4,533 2,249 
Other consumer loans
Term loans by origination year
2023$7,801 $139,295 137,035 2,079 181 
2022715 98,630 97,536 870 224 
2021170 62,961 62,107 805 49 
202085 29,143 29,012 119 12 
201973 12,335 12,279 43 13 
Prior131 17,314 16,664 173 477 
Revolving loans— 40,678 39,489 1,182 7 
Total$8,975 $400,356 394,122 5,271 963 


35

Note 4. Leases

The Company leases certain land, premises and equipment from third parties. ROU assets for operating and finance leases are included in net premises and equipment and lease liabilities are included in other liabilities and other borrowed funds, respectively, on the Company’s statements of financial condition. The following table summarizes the Company’s leases:
September 30, 2024December 31, 2023
(Dollars in thousands)Finance
Leases		Operating
Leases		Finance
Leases		Operating
Leases
ROU assets$31,077 31,222 
Accumulated depreciation(10,020)(6,940)
Net ROU assets$21,057 37,111 24,282 40,781 
Lease liabilities$22,257 40,642 25,116 44,319 
Weighted-average remaining lease term11 years16 years11 years16 years
Weighted-average discount rate3.6 %3.7 %3.6 %3.7 %

Maturities of lease liabilities consist of the following:
September 30, 2024
(Dollars in thousands)Finance
Leases		Operating
Leases
Maturing within one year$4,665 4,560 
Maturing one year through two years4,679 4,690 
Maturing two years through three years4,688 4,494 
Maturing three years through four years1,614 3,932 
Maturing four years through five years596 3,526 
Thereafter10,697 34,507 
Total lease payments26,939 55,709 
Present value of lease payments
Short-term3,943 3,128 
Long-term18,314 37,514 
Total present value of lease payments22,257 40,642 
Difference between lease payments and present value of lease payments$4,682 15,067 

The components of lease expense consist of the following:
Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Finance lease cost
Amortization of ROU assets$1,090 1,060 3,281 3,118 
Interest on lease liabilities207 239 647 723 
Operating lease cost1,302 1,359 3,929 4,243 
Short-term lease cost114 151 347 528 
Variable lease cost465 410 1,220 1,262 
Sublease income(10)(9)(30)(32)
Total lease expense$3,168 3,210 9,394 9,842 

36

Supplemental cash flow information related to leases is as follows:
Three Months ended
September 30, 2024September 30, 2023
(Dollars in thousands)Finance
Leases		Operating
Leases		Finance
Leases		Operating
Leases
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows$207 874 239 892 
Financing cash flows967 N/A892 N/A

Nine Months ended
September 30, 2024September 30, 2023
(Dollars in thousands)Finance
Leases		Operating
Leases		Finance
Leases		Operating
Leases
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows$647 2,564 723 2,714 
Financing cash flows2,883 N/A2,633 N/A
The Company also leases office space to third parties through operating leases. Rent income from these leases for the nine months ended September 30, 2024 and 2023 was not significant.

Note 5. Goodwill

The following schedule discloses the changes in the carrying value of goodwill:
Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Net carrying value at beginning of period$1,023,762 985,393 985,393 985,393 
Acquisitions and adjustments29,794 — 68,163 — 
Net carrying value at end of period$1,053,556 985,393 1,053,556 985,393 

The Company performed its annual goodwill impairment test during the third quarter of 2024 and determined the fair value of the aggregated reporting units exceeded the carrying value, such that the Company’s goodwill was not considered impaired. Changes in the economic environment, operations of the aggregated reporting units, or other factors could result in the decline in the fair value of the aggregated reporting units which could result in a goodwill impairment in the future. Accumulated impairment charges were $40,159,000 as of September 30, 2024 and December 31, 2023. For additional information relating to current year acquisitions, see Note 14.

37


Note 6. Loan Servicing

Mortgage loans that are serviced for others are not reported as assets, only the servicing rights are recorded and included in other assets. The following schedules disclose the change in the carrying value of mortgage servicing rights that is included in other assets, principal balances of loans serviced and the fair value of mortgage servicing rights:
(Dollars in thousands)September 30,
2024		December 31,
2023
Carrying value at beginning of period$12,534 13,488 
Additions565 434 
Amortization(1,031)(1,388)
Carrying value at end of period$12,068 12,534 
Principal balances of loans serviced for others$1,522,822 1,570,834 
Fair value of servicing rights$17,317 18,000 

Note 7. Variable Interest Entities

A VIE is a partnership, limited liability company, trust or other legal entity that meets one of the following criteria: 1) the entity’s equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties; 2) the holders of the equity investment at risk, as a group, lack the characteristics of a controlling financial interest; and 3) the voting rights of some holders of the equity investment at risk are disproportionate to their obligation to absorb losses or receive returns, and substantially all of the activities are conducted on behalf of the holder of equity investment at risk with disproportionately few voting rights. A VIE must be consolidated by the Company if it is deemed to be the primary beneficiary, which is the party involved with the VIE that has both: 1) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and 2) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company’s VIEs are regularly monitored to determine if any reconsideration events have occurred that could cause the primary beneficiary status to change. A previously unconsolidated VIE is consolidated when the Company becomes the primary beneficiary. A previously consolidated VIE is deconsolidated when the Company ceases to be the primary beneficiary or the entity is no longer a VIE.

Consolidated Variable Interest Entities
The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). The NMTC program provides federal tax incentives to investors to make investments in distressed communities and promotes economic improvements through the development of successful businesses in these communities. The NMTC is available to investors over seven years and is subject to recapture if certain events occur during such period. The maximum exposure to loss in the CDEs is the amount of equity invested and credit extended by the Company. However, the Company has credit protection in the form of indemnification agreements, guarantees, and collateral arrangements. The Company has evaluated the variable interests held by the Company in each CDE (NMTC) investment and determined the Company does not individually meet the characteristics of a primary beneficiary; however, the related-party group does meet the criteria as a group and substantially all of the activities of the CDEs either involve or are conducted on behalf of the Company. As a result, the Company is the primary beneficiary of the CDEs and their assets, liabilities, and results of operations are included in the Company’s consolidated financial statements. The primary activities of the CDEs are recognized in commercial loans interest income and other borrowed funds interest expense on the Company’s statements of operations and the federal income tax credit allocations from the investments are recognized in the Company’s statements of operations as a component of income tax expense. Such related cash flows are recognized in loans originated, principal collected on loans and change in other borrowed funds.


38

The Bank is also the sole member of certain tax credit funds that make direct investments in qualified affordable housing projects (e.g., Low-Income Housing Tax Credit [“LIHTC”] partnerships). As such, the Company is the primary beneficiary of these tax credit funds and their assets, liabilities, and results of operations are included in the Company’s consolidated financial statements.

The following table summarizes the carrying amounts of the consolidated VIEs’ assets and liabilities included in the Company’s statements of financial condition and are adjusted for intercompany eliminations. All assets presented can be used only to settle obligations of the consolidated VIEs and all liabilities presented consist of liabilities for which creditors and other beneficial interest holders therein have no recourse to the general credit of the Company.
(Dollars in thousands)September 30,
2024		December 31,
2023
Assets
Loans receivable$122,938 136,527 
Accrued interest receivable761 376 
Other assets72,941 48,924 
Total assets$196,640 185,827 
Liabilities
Other borrowed funds$61,911 56,578 
Accrued interest payable580 242 
Other liabilities19,186 182 
Total liabilities$81,677 57,002 



Unconsolidated Variable Interest Entities
The Company has equity investments in LIHTC partnerships, both directly and through tax credit funds, with carrying values of $187,428,000 and $83,962,000 as of September 30, 2024 and December 31, 2023, respectively. The LIHTCs are indirect federal subsidies to finance low-income housing and are used in connection with both newly constructed and renovated residential rental buildings. Once a project is placed in service, it is generally eligible for the tax credit for ten years. To continue generating the tax credit and to avoid tax credit recapture, a LIHTC building must satisfy specific low-income housing compliance rules for a full fifteen years. The maximum exposure to loss in the VIEs is the amount of equity invested and credit extended by the Company. However, the Company has credit protection in the form of indemnification agreements, guarantees, and collateral arrangements. The Company has evaluated the variable interests held by the Company in each LIHTC investment and determined that the Company does not have controlling financial interests in such investments, and is not the primary beneficiary. The Company reports the investments in the unconsolidated LIHTCs as other assets on the Company’s statements of financial condition and any unfunded equity commitments in other liabilities. There were no impairment losses on the Company’s LIHTC investments during the nine months ended September 30, 2024 and 2023. Future unfunded contingent equity commitments related to the Company’s LIHTC investments at September 30, 2024 are as follows:

(Dollars in thousands)Amount
Years ending December 31,
2024$25,629 
202542,269 
202614,040 
20271,594 
2028649 
Thereafter2,547 
Total$86,728 


39

The Company has elected to use the proportional amortization method, and more specifically the practical expedient method, for the amortization of all eligible LIHTC investments and amortization expense is recognized as a component of income tax expense. The following table summarizes the amortization expense and the amount of tax credits and other tax benefits recognized for qualified affordable housing project investments during the periods presented.
Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Amortization expense
$5,224 3,728 15,612 11,636 
Tax credits and other tax benefits recognized
6,812 4,981 20,422 15,552 

The Company also owns the following trust subsidiaries, each of which issued trust preferred securities as capital instruments: Glacier Capital Trust II, Glacier Capital Trust III, Glacier Capital Trust IV, Citizens (ID) Statutory Trust I, Bank of the San Juans Bancorporation Trust I, First Company Statutory Trust 2001, First Company Statutory Trust 2003, FNB (UT) Statutory Trust I and FNB (UT) Statutory Trust II. The trust subsidiaries have no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the securities held by third parties. The trust subsidiaries are not included in the Company’s consolidated financial statements because the sole asset of each trust subsidiary is a receivable from the Company, even though the Company owns all of the voting equity shares of the trust subsidiaries, has fully guaranteed the obligations of the trust subsidiaries and may have the right to redeem the third party securities under certain circumstances. The Company reports the trust preferred securities issued to the trust subsidiaries as subordinated debentures on the Company’s statements of financial condition.


Note 8. Securities Sold Under Agreements to Repurchase

The following table summarizes the carrying value of the Company’s securities sold under agreements to repurchase (“repurchase agreements”) by remaining contractual maturity of the agreements and category of collateral:
Overnight and Continuous
(Dollars in thousands)September 30,
2024		December 31,
2023
U.S. government and federal agency$— $113,509 
Residential mortgage-backed securities1,831,501 1,306,047 
Commercial mortgage-backed securities— 67,294 
Total$1,831,501 1,486,850 

The repurchase agreements are secured by debt securities with carrying values of $2,161,361,000 and $1,800,829,000 at September 30, 2024 and December 31, 2023, respectively. Securities are pledged to customers at the time of the transaction in an amount at least equal to the outstanding balance and are held in custody accounts by third parties. The fair value of collateral is continually monitored and additional collateral is provided as deemed appropriate.

Note 9. Derivatives and Hedging Activities

Cash Flow Hedges

Interest Rate Cap Derivatives. The Company has purchased interest rate caps designated as cash flow hedges with notional amounts totaling $130,500,000 on its variable rate subordinated debentures and were determined to be fully effective during the nine months ended September 30, 2024. The interest rate caps require receipt of variable amounts from the counterparty when interest rates rise above the strike price in the contracts. The strike prices in the five year term contracts range from 1.5 percent to 2 percent. The variable rate is based on 90 days of compounded overnight SOFR plus a spread of 0.26161 percent. At September 30, 2024 and December 31, 2023, the interest rate caps had a fair value of $1,883,000 and $4,990,000, respectively, and were reported as other assets on the Company’s statements of financial condition. Amortization recorded on the interest rate caps totaled $126,000 for the nine months ended September 30, 2024 and 2023, respectively, and was reported as a component of interest expense on subordinated debentures.


40

The effect of cash flow hedge accounting on OCI for the periods ending September 30, 2024 and 2023 was as follows:

Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Amount of (loss) gain recognized in OCI
$(57)654 870 2,540 
Amount of gain reclassified from OCI to net income
1,304 1,244 3,852 3,331 

Fair Value Hedges

Interest Rate Swap Agreements. The Company entered into fair value hedges for a closed pool of fixed rate debt securities. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the hedged item attributable to changes in the compounded overnight secured overnight financing (“SOFR”) rate, the designated benchmark interest rate. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for the Company making fixed-rate payments over the life of the contract, without the exchange of the underlying notional value.

The following tables present the notional and estimated fair value amount of derivative positions outstanding:
September 30, 2024
Weighted Average
(Dollars in thousands)Notional AmountAsset DerivativeLiability DerivativeRemaining MaturityReceive RatePay Rate
Interest rate swap - securities$1,630,500 $— $19,839 1.4 yearsSOFR4.56 %

December 31, 2023
Weighted Average
(Dollars in thousands)Notional AmountAsset DerivativeLiability DerivativeRemaining MaturityReceive RatePay Rate
Interest rate swap - securities$1,500,000 $— $17,988 2.1 yearsSOFR4.63 %

The following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

(Dollars in thousands)Amortized cost of the Hedged AssetsAmortized Cost of Fair Value Hedging Included in the Carrying Amount of the Hedged Assets
Line item on the balance sheetSeptember 30,
2024		December 31,
2023		September 30,
2024		December 31,
2023
Investment securities available-for-sale$3,354,388 $3,807,239 $19,839 $17,988 

The effects of the fair value hedge relationships on the income statement were as follows:
Three Months EndedNine Months ended
(Dollars in thousands)Location of Gain (Loss)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Interest rate swapInterest income on investment securities$(18,935)$— $7,023 — 
AFS debt
   securities		Interest income on investment securities22,148 — 1,851 — 


41

Residential Real Estate Derivatives
The Company enters into residential real estate derivatives for commitments (“interest rate locks”) to fund certain residential real estate loans to be sold into the secondary market. At September 30, 2024 and December 31, 2023, loan commitments with interest rate lock commitments totaled $53,743,000 and $22,738,000, respectively. At September 30, 2024 and December 31, 2023, the fair value of the related derivatives on the interest rate lock commitments was $985,000 and $604,000, respectively, and was included in other assets with corresponding changes recorded in gain on sale of loans. The Company enters into free-standing derivatives to mitigate interest rate risk for most residential real estate loans to be sold. These derivatives include forward commitments to sell to-be-announced (“TBA”) securities which are used to economically hedge the interest rate risk associated with such loans and unfunded commitments. At September 30, 2024 and December 31, 2023, TBA commitments were $52,250,000 and $22,000,000, respectively. At September 30, 2024 and December 31, 2023, the fair value of the related derivatives on the TBA securities was $311,000 and $350,000, respectively, and was included in other liabilities with corresponding changes recorded in gain on sale of loans. The Company does not enter into a commitment to sell these loans to an investor until the loan is funded and is ready to be delivered to the investor. Due to the forward sales commitments being short-term in nature, the corresponding derivatives are not significant. For all other residential real estate loans to be sold, the Company enters into “best efforts” forward sales commitments for the future delivery of loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. Forward sales commitments on a “best efforts” basis are not designated in hedge relationships until the loan is funded.

Note 10. Other Expenses

Other expenses consists of the following:
 Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Consulting and outside services$6,440 3,697 $16,452 12,863 
Debit card expenses3,959 2,955 10,841 8,682 
Mergers and acquisition expenses1,916 279 9,424 842 
Loan expenses1,922 2,032 5,856 5,513 
VIE amortization and other expenses1,131 1,603 5,293 5,349 
Employee expenses1,617 1,480 4,651 4,727 
Telephone1,482 1,545 4,534 4,599 
Checking and operating expenses1,039 713 4,374 2,429 
Business development1,526 1,399 4,258 3,929 
Postage1,206 1,097 3,639 3,223 
Printing and supplies867 798 2,357 2,334 
Legal fees357 276 1,314 1,163 
Accounting and audit fees309 131 1,308 1,157 
(Gain) loss on dispositions of fixed assets(586)37 (3,124)23 
Other2,663 2,309 7,770 6,773 
Total other expenses$25,848 20,351 $78,947 63,606 


42

Note 11. Accumulated Other Comprehensive (Loss) Income

The following table illustrates the activity within accumulated other comprehensive (loss) income by component, net of tax:
 
(Dollars in thousands)(Losses) Gains on Available-For-Sale and Transferred Debt Securities(Losses) Gains on Derivatives Used for Cash Flow HedgesTotal
Balance at January 1, 2023$(474,338)5,546 (468,792)
Other comprehensive (losses) income before reclassifications(34,364)1,898 (32,466)
Reclassification adjustments for gains (losses) and transfers included in net income24 (2,490)(2,466)
Reclassification adjustments for amortization included in net income for transferred securities3,357 — 3,357 
Net current period other comprehensive income (loss)(30,983)(592)(31,575)
Balance at September 30, 2023$(505,321)4,954 (500,367)
Balance at January 1, 2024$(377,728)3,615 (374,113)
Other comprehensive income before reclassifications111,704 652 112,356 
Reclassification adjustments for losses and transfers included in net income(42)(2,888)(2,930)
Reclassification adjustments for amortization included in net income for transferred securities2,381 — 2,381 
Net current period other comprehensive income (loss)114,043 (2,236)111,807 
Balance at September 30, 2024$(263,685)1,379 (262,306)

Note 12. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares as if dilutive outstanding restricted stock units were vested and stock options were exercised, using the treasury stock method.

Basic and diluted earnings per share has been computed based on the following:
 Three Months endedNine Months ended
(Dollars in thousands, except per share data)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Net income available to common stockholders, basic and diluted
$51,055 52,445 $128,390 168,611 
Average outstanding shares - basic113,394,758 110,877,534 113,093,583 110,857,788 
Add: dilutive restricted stock units and stock options
78,349 9,425 44,278 24,930 
Average outstanding shares - diluted113,473,107 110,886,959 113,137,861 110,882,718 
Basic earnings per share$0.45 0.47 $1.14 1.52 
Diluted earnings per share$0.45 0.47 $1.13 1.52 
Restricted stock units and stock options excluded from the diluted average outstanding share calculation 1
817 247,104 95,198 222,710 
______________________________
1 Anti-dilution occurs when the unrecognized compensation cost per share of a restricted stock unit or the exercise price of a stock option exceeds the market price of the Company’s stock.

43


Note 13. Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

Level 1    Quoted prices in active markets for identical assets or liabilities
Level 2    Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3    Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Transfers in and out of Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) are recognized on the actual transfer date. There were no transfers between fair value hierarchy levels during the nine month periods ended September 30, 2024 and 2023.

Recurring Measurements
The following is a description of the inputs and valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended September 30, 2024.

Debt securities, available-for-sale. The fair value for available-for-sale debt securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, market spreads, prepayments, defaults, recoveries, cumulative loss projections, and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. Where Level 1 or Level 2 inputs are not available, such securities are classified as Level 3 within the hierarchy.

Fair value determinations of available-for-sale debt securities are the responsibility of the Company’s corporate accounting and treasury departments. The Company obtains fair value estimates from independent third party vendors on a monthly basis. The vendors’ pricing system methodologies, procedures and system controls are reviewed to ensure they are appropriately designed and operating effectively. The Company reviews the vendors’ inputs for fair value estimates and the recommended assignments of levels within the fair value hierarchy. The review includes the extent to which markets for debt securities are determined to have limited or no activity, or are judged to be active markets. The Company reviews the extent to which observable and unobservable inputs are used as well as the appropriateness of the underlying assumptions about risk that a market participant would use in active markets, with adjustments for limited or inactive markets. In considering the inputs to the fair value estimates, the Company places less reliance on quotes that are judged to not reflect orderly transactions, or are non-binding indications. In assessing credit risk, the Company reviews payment performance, collateral adequacy, third party research and analyses, credit rating histories and issuers’ financial statements. For those markets determined to be inactive or limited, the valuation techniques used are models for which management has verified that discount rates are appropriately adjusted to reflect illiquidity and credit risk.

Loans held for sale, at fair value. Loans held for sale measured at fair value, for which an active secondary market and readily available market prices exist, are initially valued at the transaction price and are subsequently valued by using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors. Loans held for sale measured at fair value are classified within Level 2. Included in gain on sale of loans were net gains of $964,000 and $370,000 for the nine month periods ended September 30, 2024 and 2023, respectively, from the changes in fair value of loans held for sale measured at fair value. Electing to measure loans held for sale at fair value reduces certain timing differences and better matches changes in fair value of these assets with changes in the value of the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting.

44

Loan interest rate lock commitments. Fair value estimates for loan interest rate lock commitments were based upon the estimated sales price, origination fees, direct costs, interest rate changes, etc. and were obtained from an independent third party. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy.

Forward commitments to sell TBA securities. Forward commitments to sell TBA securities are used to economically hedge the interest rate risk associated with certain loan commitments. The fair value estimates for the TBA commitments were based upon the estimated sale of the TBA hedge obtained from an independent third party. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy.

Interest rate cap derivative financial instruments. Fair value estimates for interest rate cap derivative financial instruments were based upon the discounted cash flows of known payments plus the option value of each caplet which incorporates market rate forecasts and implied market volatilities. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy. The Company also obtained and compared the reasonableness of the pricing from independent third party valuations.

Interest rate swap derivative financial instruments. Fair value estimates for interest rate swap derivative financial instruments were based upon the estimated amounts to settle the contracts considering current interest rates and were calculated using discounted cash flows. The inputs used to determine fair value included the compounded overnight SOFR rate to estimate variable rate cash inflows and the overnight SOFR swap rate to estimate the discount rate. The estimated variable rate cash inflows were compared to the fixed rate outflows and such difference was discounted to a present value to estimate the fair value of the interest rate swaps. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy. The Company also obtained and compared the reasonableness of the pricing from independent third party valuations.

The following tables disclose the fair value measurement of assets and liabilities measured at fair value on a recurring basis:
  
  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)
Fair Value
September 30, 2024
Quoted Prices
in Active  Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Debt securities, available-for-sale
U.S. government and federal agency$467,606 — 467,606 — 
U.S. government sponsored enterprises310,069 — 310,069 — 
State and local governments72,370 — 72,370 — 
Corporate bonds14,542 — 14,542 — 
Residential mortgage-backed securities2,524,204 — 2,524,204 — 
Commercial mortgage-backed securities1,047,787 — 1,047,787 — 
Loans held for sale, at fair value46,126 — 46,126 — 
Interest rate caps1,883 — 1,883 — 
Interest rate locks985 — 985 — 
Total assets measured at fair value
  on a recurring basis
$4,485,572 — 4,485,572 — 
TBA hedge$311 — 311 — 
Interest rate swap19,839 — 19,839 — 
Total liabilities measured at fair value on a recurring basis
$20,150 — 20,150 — 

45

  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)Fair Value December 31, 2023Quoted Prices
in Active  Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Debt securities, available-for-sale
U.S. government and federal agency$455,347 — 455,347 — 
U.S. government sponsored enterprises299,219 — 299,219 — 
State and local governments98,932 — 98,932 — 
Corporate bonds26,253 — 26,253 — 
Residential mortgage-backed securities2,811,263 — 2,811,263 — 
Commercial mortgage-backed securities1,094,705 — 1,094,705 — 
Loans held for sale, at fair value
15,691 — 15,691 — 
Interest rate caps4,990 — 4,990 — 
Interest rate locks
604 — 604 — 
Total assets measured at fair value on a recurring basis
$4,807,004 — 4,807,004 — 
TBA hedge$350 — 350 — 
Interest rate swap17,988 — 17,988 — 
Total liabilities measured at fair value on a recurring basis
$18,338 — 18,338 — 

Non-recurring Measurements
The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended September 30, 2024.

Other real estate owned. OREO is initially recorded at fair value less estimated cost to sell, establishing a new cost basis. OREO is subsequently accounted for at lower of cost or fair value less estimated cost to sell. Estimated fair value of OREO is based on appraisals or evaluations (new or updated). OREO is classified within Level 3 of the fair value hierarchy.

Collateral-dependent loans, net of ACL. Fair value estimates of collateral-dependent loans that are individually reviewed are based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent individually reviewed loans are classified within Level 3 of the fair value hierarchy.

The Company’s credit department reviews appraisals for OREO and collateral-dependent loans, giving consideration to the highest and best use of the collateral. The appraisal or evaluation (new or updated) is considered the starting point for determining fair value. The valuation techniques used in preparing appraisals or evaluations (new or updated) include the cost approach, income approach, sales comparison approach, or a combination of the preceding valuation techniques. The key inputs used to determine the fair value of the collateral-dependent loans and OREO include selling costs, discounted cash flow rate or capitalization rate, and adjustment to comparables. Valuations and significant inputs obtained by independent sources are reviewed by the Company for accuracy and reasonableness. The Company also considers other factors and events in the environment that may affect the fair value. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to the impaired loan or OREO may occur. The Company generally obtains appraisals or evaluations (new or updated) annually.

46

The following tables disclose the fair value measurement of assets with a recorded change during the period resulting from re-measuring the assets at fair value on a non-recurring basis:
  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)
Fair Value
September 30, 2024
Quoted Prices
in Active  Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Other real estate owned$120 — — 120 
Collateral-dependent impaired loans, net of ACL$2,854 — — 2,854 
Total assets measured at fair value
  on a non-recurring basis
$2,974 — — 2,974 

  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)Fair Value December 31, 2023Quoted Prices
in Active  Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Other real estate owned$166 — — 166 
Collateral-dependent impaired loans, net of ACL1,332 — — 1,332 
Total assets measured at fair value
  on a non-recurring basis
$1,498 — — 1,498 

Non-recurring Measurements Using Significant Unobservable Inputs (Level 3)
The following tables present additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

 
Fair Value
September 30, 2024
Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)Valuation TechniqueUnobservable Input
Range
(Weighted-Average) 1
Other real estate owned
$120 Sales comparison approachSelling costs
10.0% - 10.0% (10.0%)
Collateral-dependent
  impaired loans, net of ACL
$1,490 Cost approachSelling costs
10.0% - 10.0% (10.0%)
1,103 Sales comparison approachSelling costs
10.0% - 20.0% (10.8%)
Adjustment to comparables
0.0% - 0.0% (0.0%)
261 Combined approachSelling costs
10.0% - 10.0% (10.0%)
$2,854 

47

 Fair Value December 31, 2023Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)Valuation TechniqueUnobservable Input
Range
(Weighted-Average) 1
Other real estate owned
$166 Sales comparison approachSelling costs
0.0% - 10.0% (8.1%)
Collateral-dependent impaired loans, net of ACL
$1,258 Cost approachSelling costs
10.0% - 10.0% (10.0%)
74 Sales comparison approachSelling Costs
10.0% - 10.0% (10.0%)
$1,332 
______________________________
1 The range for selling cost inputs represents reductions to the fair value of the assets.

Fair Value of Financial Instruments
The following tables present the carrying amounts, estimated fair values and the level within the fair value hierarchy of the Company’s financial instruments not carried at fair value. Receivables and payables due in one year or less, equity securities without readily determinable fair values and deposits with no defined or contractual maturities are excluded. There have been no significant changes in the valuation techniques during the period ended September 30, 2024.

Cash and cash equivalents: fair value is estimated at book value.

Debt securities, held-to-maturity: fair value for held-to-maturity debt securities is estimated in the same manner as available-for sale debt securities, which is described above.

Loans receivable, net of ACL: the loans were fair valued on an individual basis, with consideration given to the loans' underlying characteristics, including account types, remaining terms and balance, interest rates, past delinquencies, current market rates, etc. The model utilizes a discounted cash flow approach to estimate the fair value of the loans using various assumptions such as prepayment speeds, projected default probabilities, losses given defaults, etc. The discounted cash flow approach models the credit losses directly in the projected cash flows. The model applies various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications.

Term Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The market rates used were obtained from an independent third party based on current rates offered by the Company’s regional competitors.

FHLB advances: fair value of advances is estimated based on borrowing rates currently available to the Company for advances with similar terms and maturities.

FRB borrowing: fair value of borrowings through the FRB is estimated based on borrowing rates currently available to the Company through the Bank Term Funding Program (“BTFP”) with similar terms and maturities.

Repurchase agreements and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value.

Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates obtained from an independent third party.

Off-balance sheet financial instruments: unused lines of credit and letters of credit represent the principal categories of off-balance sheet financial instruments. The fair value of commitments is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of unused lines of credit and letters of credit is not material; therefore, such commitments are not included in the following tables.
48

  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)
Carrying Amount
September 30, 2024
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Financial assets
Cash and cash equivalents$987,833 987,833 — — 
Debt securities, held-to-maturity3,348,698 — 3,080,549 — 
Loans receivable, net of ACL16,976,017 — — 17,089,754 
Total financial assets$21,312,548 987,833 3,080,549 17,089,754 
Financial liabilities
Term deposits$3,284,609 — 3,329,142 — 
FHLB advances1,800,000 — 1,796,520 — 
Repurchase agreements and
  other borrowed funds
1,915,669 — 1,915,669 — 
Subordinated debentures133,065 — 121,219 — 
Total financial liabilities$7,133,343 — 7,162,550 — 

  Fair Value Measurements
At the End of the Reporting Period Using
(Dollars in thousands)Carrying Amount December 31, 2023Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Financial assets
Cash and cash equivalents$1,354,342 1,354,342 — — 
Debt securities, held-to-maturity3,502,411 — 3,180,194 — 
Loans receivable, net of ACL16,005,325 — — 16,133,681 
Total financial assets$20,862,078 1,354,342 3,180,194 16,133,681 
Financial liabilities
Term deposits$2,915,393 — 2,955,521 — 
FRB Bank Term Funding2,740,000 — 2,738,031 — 
Repurchase agreements and
  other borrowed funds
1,568,545 — 1,568,545 — 
Subordinated debentures132,943 — 119,768 — 
Total financial liabilities$7,356,881 — 7,381,865 — 


49


Note 14. Mergers and Acquisitions

On January 31, 2024, the Company acquired 100% percent of the outstanding common stock of Community Financial Group, Inc. (“CFGW”) and its wholly-owned subsidiary, Wheatland Bank (“Wheatland”), a community bank based in Spokane, Washington. Wheatland provides banking services to individuals and businesses in Washington with locations in Chelan, Wenatchee, Ellensburg, Yakima, Quincy, Moses Lake, Pasco, Odessa, Davenport, Ritzville, and Spokane. Wheatland merged into the Bank and became a new bank division headquartered in Spokane and the Bank’s existing Washington-based division, North Cascades Bank, combined with the new Wheatland division. The preliminary value of the Wheatland acquisition was $93,156,000 and as part of the transaction, the Company issued 2,389,684 shares of its common stock and paid $771,000 in cash in exchange for all of Wheatland’s outstanding shares of common stock and options to purchase common stock. The fair value of the Company shares issued was determined on the basis of the closing market price of the Company’s common stock on the January 31, 2024 acquisition date. The excess of the preliminary fair value of consideration transferred over total identifiable net assets was recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Bank and Wheatland. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

On July 19, 2024, the Bank completed its acquisition of six Montana branch banking offices of Rocky Mountain Bank (“RMB”) from HTLF Bank (”HTLF”), a wholly owned subsidiary of Heartland Financial USA, Inc. The RMB branches are located in Billings, Bozeman, Plentywood, Stevensville, and Whitehall. The RMB branches have joined Glacier Bank divisions operating in Montana. The Bank paid a premium of $25,238,000 for deposit relationships with balances of $396,690,000 and loans with balances of $271,569,000, and received cash of $102,019,000 from HTLF. The excess of the fair value of consideration transferred over total identified net assets was recorded as goodwill. The goodwill arising from the acquisition consist largely of the synergies and economies of scale expected from combining the operations of the Company and the acquired branches. The goodwill is deductible for income tax purposes because the acquisition was accounted for as a purchase of assets and assumption of liabilities for tax purposes.

The assets and liabilities of Wheatland and RMB were recorded on the Company’s consolidated statements of financial condition at their preliminary estimated fair values as of the respective acquisition dates and the results of operations have been included in the Company’s consolidated statements of operations since that date.

The following table discloses the preliminary fair value estimates of the consideration transferred, the total identifiable net assets acquired and the resulting goodwill arising from the Wheatland and RMB branch acquisitions. The Company is continuing to obtain information to determine the fair values of assets acquired and liabilities assumed.
50

(Dollars in thousands)Wheatland
January 31,
2024		RMB Branches
July 19, 2024
Fair value of consideration transferred
Fair value of Company shares issued$92,385 $— 
Cash consideration or deposit premium paid771 25,238 
Total fair value of consideration transferred93,156 25,238 
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents31,674 102,019 
Debt securities187,183 — 
Loans receivable, net of ACL452,737 271,569 
Core deposit intangible 1
16,936 9,794 
Accrued income and other assets50,760 15,114 
Total identifiable assets acquired739,290 398,496 
Liabilities assumed
Deposits616,955 396,690 
Borrowings
58,500 4,305 
Accrued expenses and other liabilities9,048 2,057 
Total liabilities assumed684,503 403,052 
Total identifiable net assets (liabilities)54,787 (4,556)
Goodwill recognized$38,369 $29,794 
______________________________
1 The core deposit intangible for the acquisition was determined to have an estimated life of 10 years.

The preliminary fair values of the Wheatland and the RMB branch assets acquired include loans with preliminary fair values of $452,740,000 and $271,569,000, respectively. The gross principal and contractual interest due under the loans acquired in Wheatland and RMB transactions were $468,882,000 and $288,920,000, respectively. The Company evaluated the loans at each respective acquisition date and determined there were PCD loans of $1,655,000 with an ACL of $3,000 related to the Wheatland acquisition, and no PCD loans from the RMB branch acquisition.

The Company incurred $7,664,000 and $1,744,000 of expenses in connection with the Wheatland and RMB branch acquisitions during the nine months ended September 30, 2024, respectively. Mergers and acquisition expenses are included in other expense in the Company's consolidated statements of operations and consist of third-party costs and employee severance expenses.

Total income consisting of net interest income and non-interest income of the acquired operations of Wheatland was approximately $22,111,000 and net loss was approximately $6,416,000 from January 31, 2024 to September 30, 2024. Total income consisting of net interest income and non-interest income of the acquired branches of RMB was approximately $3,072,000 and net loss was approximately $2,606,000 from July 19, 2024 to September 30, 2024. The following unaudited pro forma summary presents consolidated information of the Company as if the Wheatland and RMB branch acquisitions had occurred on January 1, 2023:
Three Months endedNine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
Net interest income and non-interest income$215,420 208,217 618,039 644,285 
Net income51,512 56,755 131,407 181,103 


51


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in “Part I. Item 1. Financial Statements.”

FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are based on assumptions that are subject to change. The following factors, among others, including additional factors identified in the sections titled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as applicable, in this report and in the Company’s 2023 Annual Report on Form 10-K, could cause actual results to differ materially from the anticipated results:

•risks associated with lending and potential adverse changes in the credit quality of the Company’s loan portfolio;
•changes in monetary and fiscal policies, including interest rate policies of the Federal Reserve Board, which could adversely affect the Company’s net interest income and margin, the fair value of its financial instruments, profitability, and stockholders’ equity;
•legislative or regulatory changes, including increased FDIC insurance rates and assessments, changes in the review and regulation of bank mergers, or increased banking and consumer protection regulations, that may adversely affect the Company’s business and strategies;
•risks related to overall economic conditions, including the impact on the economy of a uncertain interest rate environment, inflationary pressures, and geopolitical instability, including the wars in Ukraine and the Middle East;
•risks associated with the Company’s ability to negotiate, complete, and successfully integrate any future acquisitions;
•costs or difficulties related to the completion and integration of pending or future acquisitions;
•impairment of the goodwill recorded by the Company in connection with acquisitions, which may have an adverse impact on earnings and capital;
•reduction in demand for banking products and services, whether as a result of changes in customer behavior, economic conditions, banking environment, or competition;
•deterioration of the reputation of banks and the financial services industry, which could adversely affect the Company's ability to obtain and maintain customers;
•changes in the competitive landscape, including as may result from new market entrants or further consolidation in the financial services industry, resulting in the creation of larger competitors with greater financial resources;
•risks presented by public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow through acquisitions;
•risks associated with dependence on the Chief Executive Officer (“CEO), the senior management team and the Presidents of Glacier Bank’s (the “Bank”) divisions;
•material failure, potential interruption or breach in security of the Company’s systems or changes in technological which could expose the Company to cybersecurity risks, fraud, system failures, or direct liabilities;
•risks related to natural disasters, including droughts, fires, floods, earthquakes, pandemics, and other unexpected events;
•success in managing risks involved in the foregoing; and
•effects of any reputational damage to the Company resulting from any of the foregoing.

Forward-looking statements speak only as of the date of this Form 10-Q. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

52


MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Highlights
 At or for the Three Months endedAt or for the Nine Months ended
(Dollars in thousands, except per share and market data)
Sep 30,
2024		Jun 30,
2024		Mar 31,
2024		Sep 30,
2023		Sep 30,
2024		Sep 30,
2023
Operating results
Net income$51,055 44,708 32,627 52,445 128,390 168,611 
Basic earnings per share$0.45 0.39 0.29 0.47 1.14 1.52 
Diluted earnings per share$0.45 0.39 0.29 0.47 1.13 1.52 
Dividends declared per share$0.33 0.33 0.33 0.33 0.99 0.99 
Market value per share
Closing$45.70 37.32 40.28 28.50 45.70 28.50 
High$47.71 40.18 42.75 36.45 47.71 50.03 
Low$35.57 34.35 34.74 26.84 34.35 26.77 
Selected ratios and other data
Number of common stock shares outstanding
113,394,786113,394,092113,388,590110,879,365113,394,786110,879,365
Average outstanding shares - basic113,394,758113,390,539112,492,142110,877,534113,093,583110,857,788
Average outstanding shares - diluted113,473,107113,405,491112,554,402110,886,959113,137,861110,882,718
Return on average assets
  (annualized)		0.73 %0.66 %0.47 %0.75 %0.62 %0.83 %
Return on average equity
  (annualized)		6.34 %5.77 %4.25 %7.12 %5.47 %7.72 %
Efficiency ratio64.92 %67.97 %74.41 %63.31 %68.98 %62.10 %
Loan to deposit ratio83.16 %84.03 %82.04 %79.25 %83.16 %79.25 %
Number of full time equivalent employees
3,4343,3993,4383,3143,4343,314
Number of locations232231232221232221
Number of ATMs279286285274279274

The Company reported net income of $51.1 million for the current quarter, an increase of $6.3 million, or 14 percent from the prior quarter net income of $44.7 million and a decrease of $1.4 million, or 3 percent, from the $52.4 million of net income for the prior year third quarter. Diluted earnings per share for the current quarter was $0.45 per share, an increase of 15 percent from the prior quarter diluted earnings per share of $0.39 per share and a decrease of 4 percent from the prior year third quarter diluted earnings per share of $0.47. The decrease in net income compared to the prior year third quarter was due to the increase in funding costs and the increased costs associated with the acquisitions of Wheatland and Rocky Mountain Bank (“RMB”) over the prior year third quarter.

Net income for the nine months ended September 30, 2024 was $128 million, a decrease of $40.2 million, or 24 percent, from the $169 million net income for the first nine months of the prior year. Diluted earnings per share for the first nine months of 2024 was $1.13 per share, a decrease of $0.39 per share from the prior year first nine months diluted earnings per share of $1.52. The decrease in net income for the first nine months of the current year compared to the prior year first nine months was primarily due to the significant increase in funding costs. In addition, the current year-to-date results included increased operating costs and a $9.7 million provision for credit losses associated with the acquisitions of Wheatland and RMB.
53

On July 19, 2024, the Company completed the acquisition of six RMB branches in Montana. The branches have been combined with Glacier Bank divisions operating in Montana, including First Bank of Montana, First Security Bank of Bozeman, First Security Bank of Missoula, Valley Bank, and Western Security Bank. On January 31, 2024, the Company completed the acquisition of Wheatland, headquartered in Spokane, Washington. Wheatland had 14 branches in eastern Washington and was combined with the North Cascades Bank division under the name Wheatland Bank, Division of Glacier Bank. The Wheatland Bank division now operates with a combined 23 branches in Central and Eastern Washington and is a Top 5 community bank by deposit share in Eastern Washington. The Company’s results of operations and financial condition include the Wheatland and RMB acquisitions beginning on the respective acquisition date. The following table discloses the preliminary fair value estimates of select classifications of assets and liabilities acquired:

WheatlandRMB Branches
(Dollars in thousands)January 31, 2024July 19, 2024Total
Total assets$777,659 $403,052 $1,180,711 
Cash and cash equivalents12,926 76,781 89,707 
Debt securities187,183 — 187,183 
Loans receivable 1
452,740 271,569 724,309 
Non-interest bearing deposits277,651 93,534 371,185 
Interest bearing deposits339,304 303,156 642,460 
Borrowings58,500 4,305 62,805 
Core deposit intangible16,936 9,794 26,730 
Goodwill38,369 29,794 68,163 
______________________________
1 Includes loans held for sale.

54

Financial Condition Analysis

Assets
The following table summarizes the Company’s assets as of the dates indicated:
$ Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023
Cash and cash equivalents$987,833 800,779 1,354,342 1,672,094 187,054 (366,509)(684,261)
Debt securities, available-for-sale
4,436,578 4,499,541 4,785,719 4,741,738 (62,963)(349,141)(305,160)
Debt securities, held-to-maturity
3,348,698 3,400,403 3,502,411 3,553,805 (51,705)(153,713)(205,107)
Total debt securities
7,785,276 7,899,944 8,288,130 8,295,543 (114,668)(502,854)(510,267)
Loans receivable
Residential real estate1,837,697 1,771,528 1,704,544 1,653,777 66,169 133,153 183,920 
Commercial real estate
10,833,841 10,713,964 10,303,306 10,292,446 119,877 530,535 541,395 
Other commercial3,177,051 3,066,028 2,901,863 2,916,785 111,023 275,188 260,266 
Home equity931,440 905,884 888,013 869,963 25,556 43,427 61,477 
Other consumer401,158 394,587 400,356 402,075 6,571 802 (917)
Loans receivable17,181,187 16,851,991 16,198,082 16,135,046 329,196 983,105 1,046,141 
Allowance for credit losses
(205,170)(200,955)(192,757)(192,271)(4,215)(12,413)(12,899)
Loans receivable, net
16,976,017 16,651,036 16,005,325 15,942,775 324,981 970,692 1,033,242 
Other assets2,456,643 2,453,581 2,094,832 2,153,149 3,062 361,811 303,494 
Total assets$28,205,769 27,805,340 27,742,629 28,063,561 400,429 463,140 142,208 

Total debt securities of $7.785 billion at September 30, 2024 decreased $115 million, or 1 percent, during the current quarter and decreased $510 million, or 6 percent, from the prior year third quarter. Debt securities represented 28 percent of total assets at September 30, 2024 compared to 30 percent at December 31, 2023 and 30 percent at September 30, 2023.

The loan portfolio of $17.181 billion at September 30, 2024 increased $329 million, or 2 percent, during the current quarter. Excluding the RMB acquisition, the loan portfolio organically increased $57.6 million, or 1 percent annualized, during the current quarter. Excluding the RMB and Wheatland acquisitions, the loan portfolio organically increased $261 million, or 2 percent, during the first nine months of 2024 and increased $324 million, or 2 percent, from the prior year third quarter.

55

Liabilities
The following table summarizes the Company’s liabilities as of the dates indicated:
$ Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023
Deposits
Non-interest bearing deposits
$6,407,728 6,093,430 6,022,980 6,465,353 314,298 384,748 (57,625)
NOW and DDA accounts
5,363,476 5,219,838 5,321,257 5,253,367 143,638 42,219 110,109 
Savings accounts
2,801,077 2,862,034 2,833,887 2,872,362 (60,957)(32,810)(71,285)
Money market deposit accounts
2,854,540 2,858,850 2,831,624 2,994,631 (4,310)22,916 (140,091)
Certificate accounts
3,284,609 3,064,613 2,915,393 2,742,017 219,996 369,216 542,592 
Core deposits, total
20,711,430 20,098,765 19,925,141 20,327,730 612,665 786,289 383,700 
Wholesale deposits
3,334 2,994 4,026 67,434 340 (692)(64,100)
Deposits, total
20,714,764 20,101,759 19,929,167 20,395,164 613,005 785,597 319,600 
Securities sold under agreements to repurchase
1,831,501 1,629,504 1,486,850 1,499,696 201,997 344,651 331,805 
Federal Home Loan Bank advances
1,800,000 2,350,000 — — (550,000)1,800,000 1,800,000 
FRB Bank Term Funding— — 2,740,000 2,740,000 — (2,740,000)(2,740,000)
Other borrowed funds84,168 88,149 81,695 73,752 (3,981)2,473 10,416 
Subordinated debentures133,065 133,024 132,943 132,903 41 122 162 
Other liabilities397,221 365,459 351,693 347,452 31,762 45,528 49,769 
Total liabilities$24,960,719 24,667,895 24,722,348 25,188,967 292,824 238,371 (228,248)

Total core deposits of $20.711 billion at September 30, 2024 increased $613 million, or 3 percent, from the prior quarter and increased $786 million, or 4 percent, from the prior year end. Total core deposits organically increased $217 million, or 4 percent annualized, during the current quarter and decreased $227 million, or 1 percent, from the prior year end.

Total non-interest bearing deposits of $6.408 billion, increased $314 million, or 5 percent, from the prior quarter and increased $385 million, or 6 percent, from the prior year end. Non-interest bearing deposits organically increased $221 million, or 14 percent annualized, during the current quarter and increased $13.6 million, or 23 basis points, from the prior year end. Non-interest bearing deposits represented 31 percent of total deposits at September 30, 2024, compared to 30 percent at December 31, 2023 and 32 percent at September 30, 2023.

FHLB borrowings of $1.800 billion decreased $550 million, or 23 percent, during the current quarter. Upon maturity in the first quarter of 2024, the Company paid off its $2.740 billion BTFP borrowings with a combination of $2.140 billion in FHLB borrowings and cash. See “Additional Management’s Discussion and Analysis - Source of Funds - Borrowers” for additional information regarding borrowings.

56

Stockholders’ Equity
The following table summarizes the stockholders’ equity balances as of the dates indicated:
$ Change from
(Dollars in thousands, except per share data)
Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023
Common equity$3,507,356 3,492,096 3,394,394 3,374,961 15,260 112,962 132,395 
Accumulated other comprehensive loss
(262,306)(354,651)(374,113)(500,367)92,345 111,807 238,061 
Total stockholders’ equity
3,245,050 3,137,445 3,020,281 2,874,594 107,605 224,769 370,456 
Goodwill and core deposit intangible, net
(1,106,336)(1,066,790)(1,017,263)(1,019,690)(39,546)(89,073)(86,646)
Tangible stockholders’ equity
$2,138,714 2,070,655 2,003,018 1,854,904 68,059 135,696 283,810 
Stockholders’ equity to total assets
11.50 %11.28 %10.89 %10.24 %
Tangible stockholders’ equity to total tangible assets
7.89 %7.74 %7.49 %6.86 %
Book value per common share
$28.62 27.67 27.24 25.93 0.95 1.38 2.69 
Tangible book value per common share
$18.86 18.26 18.06 16.73 0.60 0.80 2.13 

Tangible stockholders’ equity of $2.139 billion at September 30, 2024 increased $68.1 million, or 3 percent, compared to the prior quarter and was primarily the result of a decrease in unrealized loss on the available-for-sale debt securities which was partially offset by the increase in goodwill and core deposit intangibles associated with the acquisition of RMB. Tangible stockholders’ equity at September 30, 2024 increased $136 million, or 7 percent, compared to the prior year end and was primarily due to $92.4 million of Company common stock issued for the acquisition of Wheatland and the decrease in the unrealized loss on the available-for-sale securities. The increase was partially offset by the increase in goodwill and core deposits associated with the acquisitions of Wheatland and RMB. Tangible book value per common share of $18.86 at the current quarter end increased $0.80 per share, or 4 percent, from the prior year end and increased $2.13 per share, or 13 percent, from the prior year third quarter.

Cash Dividend
On September 24, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share. The dividend was payable October 17, 2024 to shareholders of record on October 8, 2024. The dividend was the Company’s 158th consecutive regular dividend. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.
57

Operating Results for Three Months Ended September 30, 2024 
Compared to June 30, 2024, March 31, 2024, and September 30, 2023

Income Summary
The following table summarizes income for the periods indicated: 
 Three Months ended$ Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Mar 31,
2024		Sep 30,
2023		Jun 30,
2024		Mar 31,
2024		Sep 30,
2023
Net interest income
Interest income$289,578273,834279,402264,90615,744 10,176 24,672 
Interest expense109,347107,356112,92297,8521,991 (3,575)11,495 
Total net interest income180,231166,478166,480167,05413,753 13,751 13,177 
Non-interest income
Service charges and other fees
20,58719,42218,56319,3041,165 2,024 1,283 
Miscellaneous loan fees and charges
4,9704,8214,3624,322149 608 648 
Gain on sale of loans4,8984,6693,3624,046229 1,536 852 
Gain (loss) on sale of investments26(12)16(65)38 10 91 
Other income4,2233,3043,6862,633919 537 1,590 
Total non-interest income
34,70432,20429,98930,2402,500 4,715 4,464 
Total income$214,935198,682196,469197,29416,253 18,466 17,641 
Net interest margin (tax-equivalent)
2.83 %2.68 %2.59 %2.58 %

Net Interest Income
The current quarter interest income of $290 million increased $15.7 million, or 6 percent, over the prior quarter and increased $24.7 million, or 9 percent, over the prior year third quarter, with both increases being primarily due to the increase in the loan yields and the increase in average balances of the loan portfolio. The loan yield of 5.69 percent in the current quarter increased 11 basis points from the prior quarter loan yield of 5.58 percent and increased 42 basis points from the prior year third quarter loan yield of 5.27 percent.

The current quarter interest expense of $109 million increased $2.0 million, or 2 percent, over the prior quarter and was primarily attributable to the increase in average deposit balances. The current quarter interest expense increased $11.5 million, or 12 percent, over the prior year third quarter and was primarily the result of an increase in rates on deposits and borrowings. Core deposit cost (including non-interest bearing deposits) was 1.37 percent for the current quarter compared to 1.36 percent in the prior quarter and 1.03 percent for the prior year third quarter. The total cost of funding (including non-interest bearing deposits) of 1.79 percent in the current quarter decreased 1 basis point from the prior quarter. The current quarter cost of funds increased 21 basis points from the prior year third quarter which was primarily the result of the increased deposit rates.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 2.83 percent, an increase of 15 basis points from the prior quarter net interest margin of 2.68 percent and was primarily driven by an increase in loan yields. The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was an increase of 25 basis points from the prior year third quarter net interest margin of 2.58 percent and was primarily driven by an increase in loan yields which more than offset the total cost of funding. Core net interest margin excludes the impact from discount accretion and non-accrual interest. Excluding the 4 basis points from discount accretion, the core net interest margin was 2.79 percent in the current quarter compared to 2.63 percent in the prior quarter and 2.55 in the prior year third quarter.
58

Non-interest Income
Non-interest income for the current quarter totaled $34.7 million, which was an increase of $2.5 million, or 8 percent, over the prior quarter and an increase of $4.5 million, or 15 percent, over the prior year third quarter. Service charges and other fees of $20.6 million for the current quarter increased $1.2 million, or 6 percent, compared to the prior quarter and increased $1.3 million, or 7 percent, compared to the prior year third quarter. Gain on the sale of residential loans of $4.9 million for the current quarter increased $229 thousand, or 5 percent, compared to the prior quarter and increased $852 thousand, or 21 percent, from the prior year third quarter. Other income of $4.2 million increased $919 thousand, or 28 percent, over the prior quarter and increased $1.6 million, or 60 percent, over the prior year third quarter, with both increases being driven by a $1.2 million gain on the sale of repossessed property during the current quarter.

Non-interest Expense
The following table summarizes non-interest expense for the periods indicated:
 
 Three Months ended$ Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Mar 31,
2024		Sep 30,
2023		Jun 30,
2024		Mar 31,
2024		Sep 30,
2023
Compensation and employee benefits
$85,083 84,434 85,789 77,387 649 (706)7,696 
Occupancy and equipment11,989 11,594 11,883 10,553 395 106 1,436 
Advertising and promotions4,062 4,362 3,983 4,052 (300)79 10 
Data processing9,196 9,387 9,159 8,730 (191)37 466 
Other real estate owned13 149 25 15 (136)(12)(2)
Regulatory assessments and insurance
5,150 5,393 7,761 6,060 (243)(2,611)(910)
Intangibles amortization
3,367 3,017 2,760 2,428 350 607 939 
Other expenses25,848 22,616 30,483 20,351 3,232 (4,635)5,497 
Total non-interest expense$144,708 140,952 151,843 129,576 3,756 (7,135)15,132 

Total non-interest expense of $145 million for the current quarter increased $3.8 million, or 3 percent, over the prior quarter and increased $15.1 million, or 12 percent, over the prior year third quarter. Compensation and employee benefits increased $7.7 million, or 10 percent, from the prior year third quarter and was driven by annual salary increases, increased performance-related compensation and increases from the acquisitions of Wheatland and RMB.

Other expenses of $25.8 million increased $3.2 million, or 14 percent, from the prior quarter, which was attributable to several miscellaneous category increases including an increase of $1.2 million in outside consulting services. In addition, the current quarter other expenses included $586 thousand of gains from the sale of former branch facilities and disposal of fixed assets compared to $1.5 million in the prior quarter. Other expenses increased $5.5 million, or 27 percent, from the prior year third quarter as a result of several miscellaneous category increases including an increase of $2.7 million in outside consulting services and an increase of $1.6 million in acquisition-related expenses. Acquisition-related expense was $1.9 million in the current quarter compared to $1.8 million in the prior quarter and $279 thousand in the prior year third quarter.

Efficiency Ratio
The efficiency ratio was 64.92 percent in the current quarter compared to 67.97 percent in the prior quarter and 63.31 percent in the prior year third quarter. The decrease from the prior quarter was principally driven by the increase in net interest income that more than offset the increase in non-interest expense.
59

Provision for Credit Losses for Loans
The following table summarizes provision for credit losses for loans, net charge-offs and select ratios relating to provision for credit losses for the previous eight quarters:
(Dollars in thousands)Provision for Credit Losses on LoansNet Charge-Offs
(Recoveries)		Allowance for
Credit Losses
as a Percent
of Loans		Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans		Non-Performing
Assets to
Total Sub-sidiary Assets
Third quarter 2024$6,981 $2,766 1.19 %0.33 %0.10 %
Second quarter 20245,066 2,890 1.19 %0.29 %0.06 %
First quarter 20249,091 3,072 1.19 %0.37 %0.09 %
Fourth quarter 20234,181 3,695 1.19 %0.31 %0.09 %
Third quarter 20235,095 2,209 1.19 %0.09 %0.15 %
Second quarter 20235,254 2,473 1.19 %0.16 %0.12 %
First quarter 20236,260 1,939 1.20 %0.16 %0.12 %
Fourth quarter 20226,060 1,968 1.20 %0.14 %0.12 %

Net charge-offs for the current quarter were $2.8 million compared to $2.9 million in the prior quarter and $2.2 million for the prior year third quarter. Net charge-offs of $2.8 million included $1.9 million in deposit overdraft net charge-offs and $815 thousand of net loan charge-offs.

The current quarter credit loss expense of $8.0 million included $2.8 million of provision for credit losses on loans and $799 thousand of provision for credit losses on unfunded commitments from the acquisition of RMB. Excluding the acquisition of RMB, the current quarter credit loss expense was $4.4 million, including $4.2 million of credit loss expense from loans and $225 thousand of credit loss expense from unfunded loan commitments.

The determination of the allowance for credit losses (“ACL” or “allowance”) on loans and the related provision for credit losses is a critical accounting estimate that involves management’s judgments about the loan portfolio that impact credit losses. For additional information on the allowance, see the Allowance For Credit Losses section under “Additional Management’s Discussion and Analysis.”



60


Operating Results for Nine Months Ended September 30, 2024 
Compared to September 30, 2023

Income Summary
The following table summarizes income for the periods indicated: 
 Nine Months ended
(Dollars in thousands)Sep 30,
2024		Sep 30,
2023		$ Change% Change
Net interest income
Interest income$842,814744,15998,655 13 %
Interest expense329,625218,933110,692 51 %
Total net interest income513,189525,226(12,037)(2)%
Non-interest income
Service charges and other fees
58,57256,0422,530 5 %
Miscellaneous loan fees and charges
14,15312,4511,702 14 %
Gain on sale of loans12,9299,9742,955 30 %
Gain (loss) on sale of debt securities30(202)232 (115)%
Other income11,2138,9492,264 25 %
Total non-interest income
96,89787,2149,683 11 %
Total income$610,086612,440(2,354)— %
Net interest margin (tax-equivalent)
2.70 %2.79 %

Net Interest Income
Net-interest income of $513 million for the first nine months of 2024 decreased $12.0 million, or 2 percent, over 2023 and was primarily driven by increased interest expense which outpaced the increase in interest income. Interest income of $843 million for 2024 increased $98.7 million, or 13 percent, from the prior year and was primarily attributable to the increase in the loan portfolio and an increase in loan yields. The loan yield was 5.58 percent during the first nine months of 2024, an increase of 44 basis points from the prior year first nine months loan yield of 5.14 percent.

Interest expense of $330 million for the first nine months of 2024 increased $111 million, or 51 percent, over the same period in the prior year and was primarily the result of higher interest rates on deposits. Core deposit cost (including non-interest bearing deposits) was 1.36 percent for the first nine months of 2024 compared to 0.62 percent for the same period in the prior year. The total funding cost (including non-interest bearing deposits) for the first nine months of 2024 was 1.81 percent, which was an increase of 59 basis points over the first nine months of the prior year funding cost of 1.22 percent.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during the first nine months of 2024 was 2.70 percent, a 9 basis points decrease from the net interest margin of 2.79 percent for the first nine months of the prior year. Excluding the 4 basis points from discount accretion and the 1 basis point from non-accrual interest, the core net interest margin was 2.65 percent in the first nine months of the current year compared to 2.77 percent in the prior year first nine months.

Non-interest Income
Non-interest income of $96.9 million for the first nine months of 2024 increased $9.7 million, or 11 percent, over the same period last year. Gain on sale of residential loans of $12.9 million for the first nine months of 2024 increased by $3.0 million, or 30 percent, over the first nine months of the prior year. Other income of $11.2 million for the first nine months of 2024 increased $2.3 million, or 25 percent, over the same period last year and was primarily driven by a $1.2 million gain on the sale of repossessed property during the current quarter.
61

Non-interest Expense
The following table summarizes non-interest expense for the periods indicated:
 
 Six Months ended
(Dollars in thousands)Sep 30,
2024		Sep 30,
2023		$ Change% Change
Compensation and employee benefits
$255,306 $237,628 $17,678 7 %
Occupancy and equipment35,466 33,045 2,421 7 %
Advertising and promotions12,407 12,020 387 3 %
Data processing27,742 25,241 2,501 10 %
Other real estate owned187 41 146 356 %
Regulatory assessments and insurance
18,304 16,277 2,027 12 %
Intangibles amortization
9,144 7,304 1,840 25 %
Other expenses78,947 63,606 15,341 24 %
Total non-interest expense$437,503 $395,162 $42,341 11 %

Total non-interest expense of $438 million for the first nine months of 2024 increased $42.3 million, or 11 percent, over the same period in the prior year. Compensation and employee benefits expense of $255 million in the first nine months of 2024 increased $17.7 million, or 7 percent, over the same period in the prior year and was driven by annual salary increases and the acquisitions of Wheatland and RMB. Data processing expenses of $27.7 million for the first nine months of 2024 increased $2.5 million, or 10 percent, from the same period in the prior year. Regulatory assessments and insurance expense of $18.3 million for the first nine months of 2024 increased $2.0 million, or 12 percent, over the same period in the prior year which was principally due to the accrual adjustment for the FDIC special assessment. Other expenses of $78.9 million for the first nine months of 2024 increased $15.3 million, or 24 percent, from the first nine months of the prior year and was primarily driven by an increase of $8.6 million of acquisition-related expenses, which was partially offset by gains of $3.1 million from the sale of former branch facilities and disposal of fixed assets.

Efficiency Ratio
The efficiency ratio was 68.98 percent for the first nine months of 2024 compared to 62.10 percent for the same period of 2023. The increase from the prior year was primarily attributable to the increase in interest expense in the current year that outpaced the increase in interest income and increased non-interest expense.

Provision for Credit Losses
The provision for credit loss expense was $19.8 million for the first nine months of 2024, an increase of $8.0 million, or 68 percent, over the same period in the prior year and was primarily attributable to $9.7 million from the acquisitions of Wheatland and RMB. Net charge-offs for the first nine months of 2024 were $8.7 million compared to $6.6 million in the first nine months of 2023.
62

ADDITIONAL MANAGEMENT’S DISCUSSION AND ANALYSIS

Investment Activity
The Company’s investment securities primarily consist of debt securities classified as either available-for-sale or held-to-maturity. Non-marketable equity securities primarily consist of capital stock issued by the FHLB of Des Moines.

Debt Securities
Debt securities classified as available-for-sale are carried at estimated fair value and debt securities classified as held-to-maturity are carried at amortized cost. Unrealized gains or losses, net of tax, on available-for-sale debt securities are reflected as an adjustment to other comprehensive income. The Company’s debt securities are summarized below:
September 30, 2024December 31, 2023September 30, 2023
(Dollars in thousands)Carrying AmountPercentCarrying AmountPercentCarrying AmountPercent
Available-for-sale
U.S. government and federal agency$467,606 6 %$455,347 5 %$444,145 5 %
U.S. government sponsored enterprises310,069 4 %299,219 4 %289,831 3 %
State and local governments72,370 1 %98,932 1 %96,713 1 %
Corporate bonds14,542 1 %26,253 1 %25,904 1 %
Residential mortgage-backed securities2,524,204 32 %2,811,263 34 %2,810,894 34 %
Commercial mortgage-backed securities1,047,787 14 %1,094,705 13 %1,074,251 13 %
Total available-for-sale
4,436,578 58 %4,785,719 58 %4,741,738 57 %
Held-to-maturity
U.S. government and federal agency857,858 11 %853,273 10 %851,751 10 %
State and local governments1,630,264 20 %1,650,000 20 %1,657,628 20 %
Residential mortgage-backed securities860,576 11 %999,138 12 %1,044,426 13 %
Total held-to-maturity3,348,698 42 %3,502,411 42 %3,553,805 43 %
Total debt securities$7,785,276 100 %$8,288,130 100 %$8,295,543 100 %

The Company’s debt securities were primarily comprised of U.S. government and federal agency and mortgage-backed securities. State and local government securities are largely exempt from federal income tax and the Company’s federal statutory income tax rate of 21 percent is used in calculating the tax-equivalent yields on the tax-exempt securities. Mortgage-backed securities largely consists of short, weighted-average life U.S. agency guaranteed residential and commercial mortgage pass-through securities and to a lesser extent, short, weighted-average life U.S. agency guaranteed residential collateralized mortgage obligations. Combined, the mortgage-backed securities provide the Company with ongoing liquidity as scheduled and pre-paid principal is received on the securities.

State and local government securities carry different risks that are not as prevalent in other security types. The Company evaluates the investment grade quality of its securities in accordance with regulatory guidance. Investment grade securities are those where the issuer has an adequate capacity to meet the financial commitments under the security for the projected life of the investment. An issuer has an adequate capacity to meet financial commitments if the risk of default by the obligor is low and the full and timely payment of principal and interest are expected. In assessing credit risk, the Company may use credit ratings from Nationally Recognized Statistical Rating Organizations (“NRSRO” entities such as S&P and Moody’s) as support for the evaluation; however, they are not solely relied upon. There have been no significant differences in the Company’s internal evaluation of the creditworthiness of any issuer when compared with the ratings assigned by the NRSROs.

63

The following table stratifies the state and local government securities by the associated NRSRO ratings. The highest issued rating was used to categorize the securities in the table for those securities where the NRSRO ratings were not at the same level.
September 30, 2024December 31, 2023
(Dollars in thousands)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
S&P: AAA / Moody’s: Aaa
$436,652 397,367 446,206 402,932 
S&P: AA+, AA, AA- / Moody’s: Aa1, Aa2, Aa3
1,212,254 1,078,634 1,244,344 1,107,064 
S&P: A+, A, A- / Moody’s: A1, A2, A3
48,851 48,591 55,511 55,101 
Not rated by either entity
7,198 7,013 5,842 5,486 
Total
$1,704,955 1,531,605 1,751,903 1,570,583 

State and local government securities largely consist of both taxable and tax-exempt general obligation and revenue bonds. The following table stratifies the state and local government securities by the associated security type.
September 30, 2024December 31, 2023
(Dollars in thousands)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
General obligation - unlimited
$353,465 333,795 383,400 361,728 
General obligation - limited
176,751 159,528 183,078 165,993 
Revenue1,139,012 1,004,901 1,146,341 1,006,088 
Certificate of participation
35,664 33,317 36,396 34,144 
Other
63 64 2,688 2,630 
Total
$1,704,955 1,531,605 1,751,903 1,570,583 

The following table outlines the five states in which the Company owns the highest concentrations of state and local government securities.
September 30, 2024December 31, 2023
(Dollars in thousands)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
New York$370,495 338,948 372,926 334,583 
Texas118,602 107,401 125,906 114,753 
Michigan80,731 72,576 82,575 79,012 
California111,680 103,750 113,983 104,960 
Washington95,589 87,073 98,239 90,413 
All other states
927,858 821,857 958,274 846,862 
Total
$1,704,955 1,531,605 1,751,903 1,570,583 

64

The following table presents the carrying amount and weighted-average yield of available-for-sale and held-to-maturity debt securities by contractual maturity at September 30, 2024. Weighted-average yields are based upon the amortized cost of securities and are calculated using the interest method which takes into consideration premium amortization, discount accretion and mortgage-backed securities’ prepayment provisions. Weighted-average yields on tax-exempt debt securities exclude the federal income tax benefit.
One Year or LessAfter One through Five YearsAfter Five through Ten YearsAfter Ten Years
Mortgage-Backed Securities 1
Total
(Dollars in thousands)AmountYieldAmountYieldAmountYieldAmountYieldAmountYieldAmountYield
Available-for-sale
U.S. government and federal agency
$48,824 0.79 %$408,866 1.10 %$2,094 5.47 %$7,822 4.30 %$— — %$467,606 1.14 %
U.S. government sponsored enterprises
— — %310,069 1.29 %— — %— — %— — %310,069 1.29 %
State and local governments
6,249 1.58 %29,678 1.74 %9,856 2.44 %26,587 2.50 %— — %72,370 2.11 %
Corporate bonds
— — %9,949 3.66 %3,782 4.00 %811 0.46 %— — %14,542 3.58 %
Residential mortgage-backed securities
— — %— — %— — %— — %2,524,204 1.20 %2,524,204 1.19 %
Commercial mortgage-backed securities
— — %— — %— — %— — %1,047,787 2.65 %1,047,787 2.64 %
Total available-for-sale
55,073 0.88 %758,562 1.23 %15,732 3.22 %35,220 2.85 %3,571,991 1.61 %4,436,578 1.55 %
Held-to-maturity
U.S. government and federal agency
— — %857,858 1.16 %— — %— — %— — %857,858 1.16 %
State and local governments
9,139 2.61 %80,339 3.08 %189,027 3.24 %1,351,759 3.01 %— — %1,630,264 3.03 %
Residential mortgage-backed securities
— — %— — %— — %— — %860,576 1.47 %860,576 1.47 %
Total held-to-maturity
9,139 2.61 %938,197 1.33 %189,027 3.24 %1,351,759 3.01 %860,576 1.47 %3,348,698 2.15 %
Total debt
  securities
$64,212 1.12 %$1,696,759 1.28 %$204,759 3.24 %$1,386,979 3.00 %$4,432,567 1.58 %$7,785,276 1.80 %
______________________________
1 Mortgage-backed securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds.

Based on an analysis of its available-for-sale debt securities with unrealized losses as of September 30, 2024, the Company determined their decline in value was unrelated to credit loss and was primarily the result of interest rate changes and market spreads subsequent to acquisition. The fair value of the debt securities is expected to recover as payments are received and the debt securities approach maturity. In addition, the Company determined an insignificant amount of credit losses is expected on the held-to-maturity debt securities portfolio; therefore, no ACL has been recognized at September 30, 2024.

For additional information on the Company’s debt securities, see Note 2 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

Equity securities
Non-marketable equity securities primarily consist of capital stock issued by the FHLB of Des Moines and are carried at cost less impairment. The Company also has an insignificant amount of equity securities that are included in other assets on the Company’s statements of financial condition.

Non-marketable equity securities and equity securities without readily determinable fair values are evaluated for impairment whenever events or circumstances suggest the carrying value may not be recoverable. Based on the Company’s evaluation of its investments in non-marketable equity securities and equity securities without readily determinable fair values as of September 30, 2024, the Company determined that none of such securities were impaired.

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Lending Activity
The Company focuses its lending activities primarily on the following types of loans: 1) first-mortgage, conventional loans secured by residential properties, particularly single-family; 2) commercial lending, including agriculture and public entities; and 3) installment lending for consumer purposes (e.g., home equity, automobile, etc.). Supplemental information regarding the Company’s loan portfolio and credit quality based on regulatory classification is provided in the section captioned “Loans by Regulatory Classification” included in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The regulatory classification of loans is based primarily on the type of collateral for the loans. Loan information included in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on the Company’s loan segments, which are based on the purpose of the loan, unless otherwise noted as a regulatory classification. The following table summarizes the Company’s loan portfolio as of the dates indicated:

 September 30, 2024December 31, 2023September 30, 2023
(Dollars in thousands)AmountPercentAmountPercentAmountPercent
Residential real estate$1,837,697 11 %$1,704,544 11 %$1,653,777 10 %
Commercial real estate10,833,841 64 %10,303,306 64 %10,292,446 65 %
Other commercial3,177,051 19 %2,901,863 18 %2,916,785 18 %
Home equity931,440 5 %888,013 6 %869,963 5 %
Other consumer401,158 2 %400,356 2 %402,075 3 %
Loans receivable17,181,187 101 %16,198,082 101 %16,135,046 101 %
Allowance for credit losses(205,170)(1)%(192,757)(1)%(192,271)(1)%
Loans receivable, net$16,976,017 100 %$16,005,325 100 %$15,942,775 100 %

The largest category of the Company’s loan portfolio is Commercial Real Estate (“CRE”). An additional breakdown of the Company’s CRE portfolio follows.
September 30, 2024
(Dollars in thousands)Owner OccupiedNon-Owner OccupiedTotalPercent of total CRE
Office$696,119 $757,484 $1,453,603 13.4 %
Multi-family— 1,212,053 1,212,05311.2 %
Industrial and warehouse774,670 431,559 1,206,22911.1 %
Retail392,935 761,304 1,154,23910.7 %
Medical and nursing256,801 317,506 574,3075.3 %
Mini and RV Storage11,213 560,061 571,2745.3 %
Agriculture real estate556,990 — 556,9905.1 %
Hotel— 552,382 552,3825.1 %
Land85,300 406,903 492,2034.5 %
Restaurant and entertainment229,838 88,118 317,9562.9 %
Automotive and transportation247,030 40,356 287,3862.7 %
Other commercial real estate2,019,124 436,095 2,455,21922.7 %
Total commercial real estate$5,270,020 $5,563,821 $10,833,841 100 %


66

The following table summarizes the Company’s CRE portfolio by geographic location, including occupancy as of the dates indicated:
(Dollars in thousands)September 30, 2024
AmountPercent of total CRE
Montana$2,944,722 27.2 %
Utah1,906,141 17.6 %
Idaho1,531,379 14.1 %
Arizona1,265,135 11.7 %
Colorado1,113,439 10.3 %
Wyoming770,381 7.1 %
Nevada737,826 6.8 %
Washington564,818 5.2 %
Total commercial real estate$10,833,841 100 %

The CRE portfolio is comprised of loans made to purchase, construct and finance commercial real estate properties. On average, the balances are small and geographically disbursed across our eight-state footprint. Specifically, our CRE portfolio has an average loan balance of $773 thousand with an average loan-to-value ratio (“LTV”) of 59% as of September 30, 2024.

Due to the recent trends in the banking industry, there has been increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many large metropolitan areas continue to show signs of stress. The Company has limited exposure to the office building sector in central business districts as the office portfolio is generally diversified in suburban and rural markets with strong occupancy levels. The Company maintains a practice of regular and ongoing loan reviews, stress tests, and sensitivity analyses to assess the level of risk in the loan portfolio. Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTV’s, among other qualitative factors. Loan policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company.
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Non-performing Assets
The following table summarizes information regarding non-performing assets at the dates indicated:
 
At or for the Nine Months endedAt or for the Six Months endedAt or for the Year endedAt or for the Nine Months ended
(Dollars in thousands)September 30,
2024		June 30,
2024		December 31,
2023		September 30,
2023
Other real estate owned and foreclosed assets$633 630 1,503 48 
Accruing loans 90 days or more past due11,551 4,692 3,312 3,855 
Non-accrual loans15,937 12,686 20,816 38,380 
Total non-performing assets$28,121 18,008 25,631 42,283 
Non-performing assets as a percentage of subsidiary assets
0.10 %0.06 %0.09 %0.15 %
ACL as a percentage of non-performing loans
730 %1,116 %799 %455 %
Accruing loans 30-89 days past due$56,213 49,678 49,967 15,253 
U.S. government guarantees included in non-performing assets
$1,802 1,228 1,503 1,057 
Interest income 1
$672 354 1,085 1,479 
______________________________
1Amounts represent estimated interest income that would have been recognized on loans accounted for on a non-accrual basis as of the end of each period had such loans performed pursuant to contractual terms.

Non-performing assets as a percentage of subsidiary assets at September 30, 2024 was 0.10 percent compared to 0.06 percent in the prior quarter and 0.15 percent in the prior year third quarter. Non-performing assets of $28.1 million at September 30, 2024 increased $10.1 million, or 56 percent, over the prior quarter and decreased $14.2 million, or 33 percent, over the prior year third quarter.

Early stage delinquencies (accruing loans 30-89 days past due) as a percentage of loans at September 30, 2024 were 0.33 percent compared to 0.29 percent for the prior quarter end and 0.09 percent for the prior year third quarter. Early stage delinquencies of $56.2 million at September 30, 2024 increased $6.5 million from the prior quarter and increased $41.0 million from prior year third quarter.
Most of the Company’s non-performing assets are secured by real estate, and based on the most current information available to management, including updated appraisals or evaluations (new or updated), the Company believes the value of the underlying real estate collateral is adequate to minimize significant charge-offs or losses to the Company. Through pro-active credit administration, the Company works closely with its borrowers to seek favorable resolution to the extent possible, thereby attempting to minimize net charge-offs or losses to the Company. With very limited exceptions, the Company does not disburse additional funds on non-performing loans. Instead, the Company proceeds to collection and foreclosure actions in order to reduce the Company’s exposure to loss on such loans.

For additional information on accounting policies relating to non-performing assets, see Note 1 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

Modifications to Borrowers Experiencing Financial Difficulty
The company identifies modifications to borrowers experiencing financial difficulty (“MBFD”) as a loan that has been modified for the borrower that is experiencing financial difficulties. The Company considers some of the indicators that a borrower is experiencing financial difficulty to be: currently in payment default on any of their debt, declaring bankruptcy, going concern, borrower’s securities have been delisted, and other indicators of inability to meet obligations. Each debt modification is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service their obligations as modified. Such loans at September 30, 2024 had an amortized cost of $53.6 million.


68

Other Real Estate Owned and Foreclosed Assets
The book value of loans prior to the acquisition of collateral and transfer of the loans into other real estate owned (“OREO”) and other foreclosed assets during 2024 was $365 thousand. The fair value of the loan collateral acquired in foreclosure during 2024 was $171 thousand. The following table sets forth the changes in OREO for the periods indicated:

At or for the Nine Months endedAt or for the Six Months endedAt or for the Year endedAt or for the Nine Months ended
(Dollars in thousands)September 30,
2024		June 30,
2024		December 31,
2023		September 30,
2023
Balance at beginning of period$1,503 1,503 32 32 
Additions171 104 1,563 100 
Capital improvements1 1 — — 
Write-downs(16)(16)(8)— 
Sales(1,026)(962)(84)(84)
Balance at end of period$633 630 1,503 48 


Allowance for Credit Losses - Loans Receivable
The following table summarizes the allocation of the ACL as of the dates indicated:
 September 30, 2024December 31, 2023September 30, 2023
(Dollars in thousands)ACLPercent of ACL in
Category		Percent
of Loans in
Category		ACLPercent of ACL in
Category		Percent
of Loans in
Category		ACLPercent of ACL in
Category		Percent
of Loans in
Category
Residential real estate
$25,289 12 %11 %$22,325 12 %11 %$21,697 11 %10 %
Commercial real estate
138,547 68 %63 %130,924 68 %64 %130,852 68 %65 %
Other commercial23,169 11 %19 %21,194 11 %18 %21,771 12 %18 %
Home equity11,458 6 %5 %11,766 6 %5 %11,624 6 %5 %
Other consumer6,707 3 %2 %6,548 3 %2 %6,327 3 %2 %
Total$205,170 100 %100 %$192,757 100 %100 %$192,271 100 %100 %

69

The following table summarizes the ACL experience for the periods indicated:
At or for the Nine Months endedAt or for the Six Months endedAt or for the Year endedAt or for the Nine Months ended
(Dollars in thousands)September 30,
2024		June 30,
2024		December 31,
2023		September 30,
2023
Balance at beginning of period$192,757 192,757 182,283 182,283 
Acquisitions3 3 — — 
Provision for credit losses21,138 14,157 20,790 16,609 
Net (charge-offs) recoveries
Residential real estate30 20 (3)(7)
Commercial real estate(345)(370)(1,640)(333)
Other commercial(3,346)(2,349)(2,256)(1,528)
Home equity101 49 38 (16)
Other consumer(5,168)(3,312)(6,455)(4,737)
Net charge-offs(8,728)(5,962)(10,316)(6,621)
Balance at end of period$205,170 200,955 192,757 192,271 
ACL as a percentage of total loans
1.19 %1.19 %1.19 %1.19 %
Non-accrual loans as a percentage of total loans0.09 %0.08 %0.13 %0.24 %
ACL as a percentage of non-accrual loans1,287.38 %1,584.07 %926.01 %500.97 %

The following table summarizes net (charge-offs) recoveries as a percentage of average loans for the periods indicated:
September 30,
2024		June 30,
2024		December 31,
2023		September 30,
2023
Residential real estate— %— %— %— %
Commercial real estate— %— %(0.02)%— %
Other commercial(0.11)%(0.08)%(0.08)%(0.05)%
Home equity0.01 %0.01 %— %— %
Other consumer(1.30)%(0.84)%(1.64)%1.21 %
Total net (charge-offs) recoveries(0.05)%(0.04)%(0.07)%0.04 %

The current quarter credit loss expense of $8.0 million included $2.8 million of provision for credit losses on loans and $799 thousand of provision for credit losses on unfunded commitments from the branch acquisition of RMB. Excluding the branch acquisition of RMB, the current quarter credit loss expense was $4.4 million including $4.2 million credit loss expense from loans and $225 thousand of credit loss expense from unfunded loan commitments.

For the first nine months of the current year, the provision for credit losses of $19.8 million included $8.1 million of provision for credit losses on loans and $1.6 million of provision for credit losses on unfunded loan commitments from the acquisitions of Wheatland and RMB.

The ACL as a percentage of total loans outstanding at September 30, 2024 was 1.19 percent and remained unchanged from the prior year end and the prior year third quarter. The Company’s ACL of $205 million is considered adequate to absorb the estimated credit losses from any segment of its loan portfolio. For the periods ended September 30, 2024 and 2023, the Company believes the ACL is commensurate with the risk in the Company’s loan portfolio and is directionally consistent with the change in the quality of the Company’s loan portfolio.

70

At the end of each quarter, the Company analyzes its loan portfolio and maintains an ACL at a level that is appropriate and determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Determining the adequacy of the ACL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The ACL methodology is designed to reasonably estimate the probable credit losses within the Company’s loan portfolio. Accordingly, the ACL is maintained within a range of estimated losses. The determination of the ACL on loans, including credit loss expense and net charge-offs, is a critical accounting estimate that involves management’s judgments about the loan portfolio that impact credit losses, including the credit risk inherent in the loan portfolio, economic forecasts nationally and in the local markets in which the Company operates, trends and changes in collateral values, delinquencies, non-performing assets, net charge-offs, credit-related policies and personnel, and other environmental factors.

In determining the allowance, the loan portfolio is separated into pools of loans that share similar risk characteristics which are the Company’s loan segments. The Company then derives estimated loss assumptions from its model by loan segment. The loss assumptions are then applied to each segment of loan to estimate the ACL on the pooled loans. For any loans that do not share similar risk characteristics, the estimated credit losses are determined on an individual loan basis and such loans primarily consist of non-accrual loans. An estimated credit loss is recorded on individually reviewed loans when the fair value of a collateral-dependent loan or the present value of the loan’s expected future cash flows (discounted at the loans original effective interest rate) is less than the amortized cost of the loan.

The Company provides commercial banking services to individuals, small to medium-sized businesses, community organizations and public entities from 232 locations, including 197 branches, across Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada. The states in which the Company operates have diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the changes in the global, national, and local economies are not uniform across the Company’s geographic locations. The geographic dispersion of these market areas helps to mitigate the risk of credit loss. The Company’s model of seventeen bank divisions with separate management teams is also a significant benefit in mitigating and managing the Company’s credit risk. This model provides substantial local oversight to the lending and credit management function and requires multiple reviews of larger loans before credit is extended.

The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process of identifying non-performing loans is necessary to support management’s evaluation of the ACL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer’s and management’s evaluation of the loan portfolio credit quality. The ACL evaluation is well documented and approved by the Company’s Board. In addition, the policy and procedures for determining the balance of the ACL are reviewed annually by the Company’s Board, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.

Although the Company continues to actively monitor economic trends and regulatory developments, no assurance can be given that the Company will not, in any particular period, sustain losses that are significant relative to the ACL amount, or that subsequent evaluations of the loan portfolio applying management’s judgment about then current factors will not require significant changes in the ACL. Under such circumstances, additional credit loss expense could result.

For additional information regarding the ACL, its relation to credit loss expense and risks related to asset quality, see Note 3 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”
71

Loans by Regulatory Classification
Supplemental information regarding identification of the Company’s loan portfolio and credit quality based on regulatory classification is provided in the following tables. The regulatory classification of loans is based primarily on the type of collateral for the loans. There may be differences when compared to loan tables and loan amounts appearing elsewhere which reflect the Company’s internal loan segments which are based on the purpose of the loan.

The following table summarizes the Company’s loan portfolio by regulatory classification:
 Loans Receivable, by Loan Type% Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023
Custom and owner occupied construction
$235,915 $233,978 $290,572 $306,106 1 %(19)%(23)%
Pre-sold and spec construction
203,610 198,219 236,596 287,048 3 %(14)%(29)%
Total residential construction
439,525 432,197 527,168 593,154 2 %(17)%(26)%
Land development205,704 209,794 232,966 234,995 (2)%(12)%(12)%
Consumer land or lots189,705 190,781 187,545 184,685 (1)%1 %3 %
Unimproved land109,237 108,763 87,739 87,089 — %25 %25 %
Developed lots for operative builders
67,140 57,140 56,142 62,485 18 %20 %7 %
Commercial lots98,644 99,036 87,185 84,194 — %13 %17 %
Other construction689,638 810,536 900,547 982,384 (15)%(23)%(30)%
Total land, lot, and other construction
1,360,068 1,476,050 1,552,124 1,635,832 (8)%(12)%(17)%
Owner occupied3,121,900 3,087,814 3,035,768 2,976,821 1 %3 %5 %
Non-owner occupied4,001,430 3,941,786 3,742,916 3,765,266 2 %7 %6 %
Total commercial real estate
7,123,330 7,029,600 6,778,684 6,742,087 1 %5 %6 %
Commercial and industrial1,387,538 1,400,896 1,363,479 1,363,198 (1)%2 %2 %
Agriculture1,047,320 962,384 772,458 785,208 9 %36 %33 %
1st lien2,462,885 2,353,912 2,127,989 2,054,497 5 %16 %20 %
Junior lien77,029 56,049 47,230 47,490 37 %63 %62 %
Total 1-4 family2,539,914 2,409,961 2,175,219 2,101,987 5 %17 %21 %
Multifamily residential921,138 1,027,962 796,538 714,822 (10)%16 %29 %
Home equity lines of credit1,004,300 974,000 979,891 950,204 3 %2 %6 %
Other consumer221,517 220,755 229,154 233,980 — %(3)%(5)%
Total consumer1,225,817 1,194,755 1,209,045 1,184,184 3 %1 %4 %
States and political subdivisions993,871 777,426 834,947 833,618 28 %19 %19 %
Other188,792 180,505 204,111 209,983 5 %(8)%(10)%
Total loans receivable, including loans held for sale
17,227,313 16,891,736 16,213,773 16,164,073 2 %6 %7 %
Less loans held for sale 1
(46,126)(39,745)(15,691)(29,027)16 %194 %59 %
Total loans receivable$17,181,187 $16,851,991 $16,198,082 $16,135,046 2 %6 %6 %
______________________________
1 Loans held for sale are primarily 1st lien 1-4 family loans.
72

The following table summarizes the Company’s non-performing assets by regulatory classification:
 
Non-performing Assets,
by Loan Type		Non-
Accrual
Loans		Accruing
Loans 90  Days or
More Past Due		OREO
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Sep 30,
2024		Sep 30,
2024		Sep 30,
2024
Custom and owner occupied construction
$202 206 214 219 202 — — 
Pre-sold and spec construction3,705 2,908 763 763 2,942 763 — 
Total residential construction
3,907 3,114 977 982 3,144 763 — 
Land development583 — 35 80 22 561 — 
Consumer land or lots458 429 96 314 241 217 — 
Unimproved land— — — 36 — — — 
Developed lots for operative builders
531 608 608 608 — 531 — 
Commercial lots47 47 47 188 — 47 — 
Other construction— 25 — 12,884 — — — 
Total land, lot and other construction
1,619 1,109 786 14,110 263 1,356 — 
Owner occupied1,903 1,992 1,838 1,445 662 809 432 
Non-owner occupied1,335 257 11,016 15,105 1,335 — — 
Total commercial real estate
3,238 2,249 12,854 16,550 1,997 809 432 
Commercial and industrial2,455 2,044 1,971 1,367 1,408 1,047 — 
Agriculture6,040 2,442 2,558 2,450 2,164 3,876 — 
1st lien6,065 2,923 2,664 2,766 3,724 2,341 — 
Junior lien279 492 180 363 279 — — 
Total 1-4 family6,344 3,415 2,844 3,129 4,003 2,341 — 
Multifamily residential392 385 395 — 392 — — 
Home equity lines of credit2,867 2,145 2,043 1,612 1,903 964 — 
Other consumer1,111 1,089 1,187 942 663 247 201 
Total consumer3,978 3,234 3,230 2,554 2,566 1,211 201 
Other148 16 16 1,141 — 148 — 
Total$28,121 18,008 25,631 42,283 15,937 11,551 633 


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The following table summarizes the Company’s accruing loans 30-89 days past due by regulatory classification:
 Accruing 30-89 Days Delinquent 
Loans, by Loan Type		% Change from
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023
Custom and owner occupied construction
$13 $1,323 $2,549 $— (99)%(99)%n/m
Pre-sold and spec construction1,250 816 1,219 599 53 %3 %109 %
Total residential construction
1,263 2,139 3,768 599 (41)%(66)%111 %
Land development157 — 163 44 n/m(4)%257 %
Consumer land or lots747 411 624 528 82 %20 %41 %
Unimproved land39 158 — 87 (75)%n/m(55)%
Commercial lots— — 2,159 1,245 n/m(100)%(100)%
Other construction— 21 — — (100)%n/mn/m
Total land, lot and other construction
943 590 2,946 1,904 60 %(68)%(50)%
Owner occupied5,641 4,326 2,222 652 30 %154 %765 %
Non-owner occupied13,785 8,119 14,471 213 70 %(5)%6,372 %
Total commercial real estate
19,426 12,445 16,693 865 56 %16 %2,146 %
Commercial and industrial3,125 17,591 12,905 2,946 (82)%(76)%6 %
Agriculture16,932 5,288 594 604 220 %2,751 %2,703 %
1st lien6,275 2,637 3,768 1,006 138 %67 %524 %
Junior lien13 17 1 355 (24)%1,200 %(96)%
Total 1-4 family6,288 2,654 3,769 1,361 137 %67 %362 %
Home equity lines of credit4,567 5,432 4,518 3,638 (16)%1 %26 %
Other consumer2,227 2,192 3,264 1,821 2 %(32)%22 %
Total consumer6,794 7,624 7,782 5,459 (11)%(13)%24 %
Other1,442 1,347 1,510 1,515 7 %(5)%(5)%
Total$56,213 $49,678 $49,967 $15,253 13 %13 %269 %
______________________________
n/m - not measurable


74

The following table summarizes the Company’s charge-offs and recoveries by regulatory classification:
 Net Charge-Offs (Recoveries),
Year-to-Date Period Ending,
By Loan Type		Charge-OffsRecoveries
(Dollars in thousands)Sep 30,
2024		Jun 30,
2024		Dec 31,
2023		Sep 30,
2023		Sep 30,
2024		Sep 30,
2024
Pre-sold and spec construction$(4)(4)(15)(12)— 4 
Land development(21)(1)(135)(134)— 21 
Consumer land or lots(21)(22)(19)(14)— 21 
Unimproved land5 5 — — 5 — 
Commercial lots319 319 — — 319 — 
Other construction— — 889 — — — 
Total land, lot and other construction
282 301 735 (148)324 42 
Owner occupied(73)(73)(59)(104)— 73 
Non-owner occupied(3)(2)799 500 — 3 
Total commercial real estate(76)(75)740 396 — 76 
Commercial and industrial1,272 644 364 (11)1,839 567 
Agriculture65 68 — — 68 3 
1st lien(34)(22)66 98 — 34 
Junior lien(60)(55)24 32 10 70 
Total 1-4 family(94)(77)90 130 10 104 
Multifamily residential— — (136)— — — 
Home equity lines of credit(31)1 (6)20 35 66 
Other consumer753 493 1,097 816 1,056 303 
Total consumer722 494 1,091 836 1,091 369 
Other6,561 4,611 7,447 5,430 9,074 2,513 
Total$8,728 5,962 10,316 6,621 12,406 3,678 


Sources of Funds
The Company’s deposits have traditionally been the principal source of funds for use in lending and other business purposes. The Company also obtains funds from repayment of loans and debt securities, securities sold under agreements to repurchase (“repurchase agreements”), wholesale deposits, advances from FHLB, Federal Reserve facilities, and other borrowings. Loan repayments are a relatively stable source of funds, while interest bearing deposit inflows and outflows are significantly influenced by general interest rate levels and market conditions. Borrowings and advances may be used on a short-term basis to compensate for reductions in normal sources of funds such as deposit inflows at less than projected levels. Borrowings also may be used on a long-term basis to support expanded activities, match maturities of longer-term assets or manage interest rate risk.

Deposits
The Company has several deposit programs designed to attract both short-term and long-term deposits from the general public by providing a wide selection of accounts and rates. These programs include non-interest bearing deposit accounts and interest bearing deposit accounts such as NOW, DDA, savings, money market deposits, fixed rate certificates of deposit with maturities ranging from three months to five years, negotiated-rate jumbo certificates, and individual retirement accounts. These deposits are obtained primarily from individual and business residents in the Bank’s geographic market areas. Wholesale deposits are
75

obtained through various programs and include brokered deposits classified as NOW, DDA, money market deposits and certificate accounts. The Company’s deposits are summarized below:
September 30, 2024December 31, 2023September 30, 2023
(Dollars in thousands)AmountPercentAmountPercentAmountPercent
Non-interest bearing deposits$6,407,728 31 %$6,022,980 30 %$6,465,353 32 %
NOW and DDA accounts5,363,476 26 %5,321,257 27 %5,253,367 26 %
Savings accounts2,801,077 13 %2,833,887 14 %2,872,362 14 %
Money market deposit accounts2,854,540 14 %2,831,624 14 %2,994,631 15 %
Certificate accounts3,284,609 16 %2,915,393 15 %2,742,017 13 %
Wholesale deposits3,334 — %4,026 — %67,434 — %
Total interest bearing deposits14,307,036 69 %13,906,187 70 %13,929,811 68 %
Total deposits$20,714,764 100 %$19,929,167 100 %$20,395,164 100 %

Borrowings
The Company borrows money through repurchase agreements. This process involves the selling of one or more of the securities in the Company’s investment portfolio and simultaneously entering into an agreement to repurchase the same securities at an agreed upon later date, typically overnight. A rate of interest is paid for the agreed period of time. The Bank enters into repurchase agreements with local municipalities, and certain customers, and has adopted procedures designed to ensure proper transfer of title and safekeeping of the underlying securities. In addition to retail repurchase agreements, the Company periodically enters into wholesale repurchase agreements as additional funding sources. The Company has not entered into reverse repurchase agreements.

The Bank is a member of the FHLB of Des Moines, which is one of eleven banks that comprise the FHLB system. The Bank is required to maintain a certain level of activity-based stock in order to borrow or to engage in other transactions with the FHLB of Des Moines. Additionally, the Bank is subject to a membership capital stock requirement that is based upon an annual calibration tied to the total assets of the Bank. The borrowings are collateralized by eligible categories of loans and debt securities (principally, securities which are obligations of, or guaranteed by, the U.S. government and its agencies), provided certain standards related to credit-worthiness have been met. Advances are made pursuant to several different credit programs, each of which has its own interest rates and range of maturities. The Bank’s maximum amount of FHLB advances is limited to the lesser of a fixed percentage of the Bank’s total assets or the discounted value of eligible collateral. FHLB advances fluctuate to meet seasonal and other withdrawals of deposits and to expand lending or investment opportunities of the Company.

During the first quarter 2023, the Federal Reserve Bank (“FRB”) offered a new Bank Term Funding Program (“BTFP”) to eligible depository institutions. The BTFP offered loans of up to one year in length to institutions pledging collateral eligible for purchase by the FRB in open market operations such as U.S. Treasuries, U.S. Agency securities, and U.S. agency mortgage-backed securities. These assets were valued at par value. During 2023 the Company borrowed $2.740 billion from the BTFP which enabled the Company to pay off higher rate FHLB advances and support its liquidity position. In the first quarter of 2024, the Company paid-off all of the BTFP borrowings through a combination of the FHLB borrowings and additional sources of liquidity.

Additionally, the Company has other sources of secured and unsecured borrowing lines from various sources that may be used from time to time.

Short-term borrowings
A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by the Bank’s Asset Liability Committee (“ALCO”) such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, federal funds purchased and retail and wholesale repurchase agreements. The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the FRB as well as a line of credit with a large national banking institution. FHLB advances and certain other short-term borrowings may be renewed as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased cost of funds and other risks.
76


Subordinated Debentures
In addition to funds obtained in the ordinary course of business, the Company formed or acquired financing subsidiaries for the purpose of issuing or holding trust preferred securities that entitle the investor to receive cumulative cash distributions thereon. Subordinated debentures were issued in conjunction with the trust preferred securities and the terms of the subordinated debentures and trust preferred securities are the same. For regulatory capital purposes, the trust preferred securities are included in Tier 2 capital at September 30, 2024. The subordinated debentures outstanding as of September 30, 2024 were $133 million, including fair value adjustments from acquisitions.

Contractual Obligations and Off-Balance Sheet Arrangements
In the normal course of business, there may be various outstanding commitments to obtain funding and to extend credit, such as letters of credit and unfunded loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. The Company assessed the off-balance sheet credit exposures as of September 30, 2024 and determined its ACL of $17.9 million was adequate to absorb the estimated credit losses.

Off-balance sheet arrangements also include any obligation related to a variable interest held in an unconsolidated entity. The Company does not anticipate any material losses as a result of these transactions. For additional information regarding the Company’s interests in unconsolidated variable interest entities (“VIE”), see Note 7 to the Unaudited Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

77

Liquidity Risk
In the normal course of business, the Company has commitments that require material cash requirements for customer deposits outflows, repurchase agreements, borrowed funds, lease obligations, off-balance sheet obligations, operating expenses and other contractual obligations. The source of funding for such requirements includes loan repayments, customer deposit inflows, borrowings, revenue from operations, and capital resources. Liquidity risk is the possibility that the Company will not be able to fund present and future obligations as they come due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost. The objective of liquidity management is to maintain cash flows adequate to meet current and future needs for credit demand, deposit withdrawals, maturing liabilities and corporate operating expenses. Effective liquidity management entails three elements:
1.assessing on an ongoing basis, the current and expected future needs for funds, and ensuring that sufficient funds or access to funds exist to meet those needs at the appropriate time;
2.providing for an adequate cushion of liquidity to meet unanticipated cash flow needs that may arise from potential adverse circumstances ranging from high probability/low severity events to low probability/high severity; and
3.balancing the benefits between providing for adequate liquidity to mitigate potential adverse events and the cost of that liquidity.

The Company has a wide range of versatility in managing the liquidity and asset/liability mix. The Bank’s ALCO meets regularly to assess liquidity risk, among other matters. The Company monitors liquidity and contingency funding alternatives through management reports of liquid assets (e.g., debt securities), both unencumbered and pledged, as well as borrowing capacity, both secured and unsecured, including off-balance sheet funding sources. The Company evaluates its potential funding needs across alternative scenarios and maintains contingency funding plans consistent with the Company’s access to diversified sources of contingent funding.

The following table identifies certain liquidity sources and capacity available to the Company as of the dates indicated:
(Dollars in thousands)September 30,
2024		December 31,
2023
FHLB advances
Borrowing capacity$4,518,827 4,444,588 
Amount utilized(1,800,000)— 
Letters of credit and other pledged collateral(5,704)(2,327)
Amount available$2,713,123 4,442,261 
FRB discount window
Borrowing capacity$1,899,796 1,916,312 
Amount utilized— — 
Amount available$1,899,796 1,916,312 
FRB Bank Term Funding Program
Borrowing capacity$— 2,853,209 
Amount utilized— (2,740,000)
Amount available$— $113,209 
Unsecured lines of credit available$575,000 565,000 
Unencumbered debt securities
U.S. government and federal agency$608,833 473,084 
U.S. government sponsored enterprises301,929 — 
State and local governments947,022 998,923 
Corporate bonds14,543 26,253 
Residential mortgage-backed securities752,310 127,328 
Commercial mortgage-backed securities855,656 183,048 
Total unencumbered debt securities 1
$3,480,293 1,808,636 
____________________________
1 Total unencumbered debt securities at September 30, 2024, included $1.8 billion classified as AFS and $1.7 billion classified as HTM. Total unencumbered debt securities at December 31, 2023, included $441.5 million classified as AFS, and $1.4 billion classified as HTM.
78

Capital Resources
Maintaining capital strength continues to be a long-term objective of the Company. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. The Company has the capacity to issue 234,000,000 shares of common stock of which 113,394,786 have been issued as of September 30, 2024. The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none have been issued as of September 30, 2024. Conversely, the Company may decide to utilize a portion of its strong capital position, as it has done in the past, to repurchase shares of its outstanding common stock, depending on market price and other relevant considerations.

The Federal Reserve has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. The federal banking agencies issued final rules (“Final Rules”) that established a comprehensive regulatory capital framework based on the recommendation of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Final Rules require the Company to hold a 2.5 percent capital conservation buffer designed to absorb losses during periods of economic stress. As of September 30, 2024, management believes the Company and Bank meet all capital adequacy requirements to which they are subject and there are no conditions or events subsequent to this date that management believes have changed the Company’s or Bank’s risk-based capital category.

The following table illustrates the Bank’s regulatory capital ratios and the Federal Reserve’s capital adequacy guidelines as of September 30, 2024:
Total Capital (To Risk-Weighted Assets)Tier 1 Capital (To Risk-Weighted Assets)Common Equity Tier 1 (To Risk-Weighted Assets)Leverage Ratio/
Tier 1 Capital (To Average Assets)
Glacier Bank actual regulatory ratios
13.61 %12.50 %12.50 %8.90 %
Minimum capital requirements
8.00 %6.00 %4.50 %4.00 %
Minimum capital requirements plus capital conservation buffer
10.50 %8.50 %7.00 %N/A
Well capitalized requirements
10.00 %8.00 %6.50 %5.00 %


Federal and State Income Taxes
The Company files a consolidated federal income tax return using the accrual method of accounting. All required tax returns have been timely filed. Financial institutions are subject to the provisions of the Internal Revenue Code of 1986, as amended, in the same general manner as other corporations. The federal statutory corporate income tax rate is 21 percent.

Within the Company’s geographic footprint under Montana, Idaho, Utah, Colorado and Arizona law, financial institutions are subject to a corporation income tax, which incorporates or is substantially similar to applicable provisions of the Internal Revenue Code. The corporation income tax is imposed on federal taxable income, subject to certain adjustments. State taxes are incurred at the rate of 6.75 percent in Montana, 5.70 percent in Idaho, 4.55 percent in Utah, 4.25 percent in Colorado and 4.90 percent in Arizona. Washington, Wyoming and Nevada do not impose a corporate income tax. The Company is also required to file in states other than the eight states in which it has properties.

79

The following table summarizes information relevant to the Company’s federal and state income taxes:
 Nine Months ended
(Dollars in thousands)September 30,
2024		September 30,
2023
Income Before Income Taxes$152,811 205,496 
Federal and state income tax expense24,421 36,885 
Net Income$128,390 168,611 
Effective tax rate 1
16.0 %17.9 %
Income from tax-exempt debt securities, municipal loans and leases$63,160 59,588 
Benefits from federal income tax credits$20,422 15,552 
______________________________
1The current and prior year’s low effective income tax rates are due to income from tax-exempt debt securities, municipal loans and leases and benefits from federal income tax credits.

Tax expense of $24.4 million for the first nine months of 2024 decreased $12.5 million, or 34 percent, over the prior year. The effective tax rate for the first nine months of 2024 was 16.0 percent compared to 17.9 percent for the same period in the prior year. The decrease in tax expense and the resulting effective tax rate was the result of a combination of increased federal tax credits and a decrease in the pre-tax income.

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). Administered by the Community Development Financial Institutions Fund (“CDFI Fund”) of the U.S. Department of the Treasury, the NMTC program is aimed at stimulating economic and community development and job creation in low-income communities. The federal income tax credits received are claimed over a seven-year credit allowance period. The Company also has equity investments in Low-Income Housing Tax Credits (“LIHTC”) which are indirect federal subsidies used to finance the development of affordable rental housing for low-income households. The federal income tax credits are claimed over a ten-year credit allowance period. The Company has investments of $14.0 million in Qualified School Construction bonds whereby the Company receives quarterly federal income tax credits in lieu of taxable interest income. The federal income tax credits on these debt securities are subject to federal and state income tax.

Following is a list of expected federal income tax credits to be received in the years indicated.
 
(Dollars in thousands)New
Markets
Tax Credits		Low-Income
Housing
Tax Credits		Debt
Securities
Tax Credits		Total
2024$7,277 22,036 610 29,923 
20255,797 26,732 452 32,981 
20265,192 27,625 220 33,037 
20275,370 25,830 42 31,242 
20283,354 23,481 42 26,877 
Thereafter2,826 95,138 149 98,113 
$29,816 220,842 1,515 252,173 

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Average Balance Sheet
The following schedule provides 1) the total dollar amount of interest and dividend income of the Company for earning assets and the average yields; 2) the total dollar amount of interest expense on interest bearing liabilities and the average rates; 3) net interest and dividend income and interest rate spread; and 4) net interest margin (tax-equivalent).
Three Months ended Nine Months ended
 September 30, 2024September 30, 2024
(Dollars in thousands)Average
Balance		Interest and
Dividends		Average
Yield/
Rate		Average
Balance		Interest and
Dividends		Average
Yield/
Rate
Assets
Residential real estate loans$1,850,066 $23,118 5.00 %$1,798,202 $65,636 4.87 %
Commercial loans 1
13,957,304 198,556 5.66 %13,737,866 571,540 5.56 %
Consumer and other loans1,324,142 23,188 6.97 %1,299,463 65,725 6.76 %
Total loans 2
17,131,512 244,862 5.69 %16,835,531 702,901 5.58 %
Tax-exempt investment securities 3
1,660,643 14,710 3.54 %1,695,965 44,978 3.54 %
Taxable investment securities 4, 5
7,073,967 34,001 1.92 %7,429,971 106,939 1.92 %
Total earning assets25,866,122 293,573 4.52 %25,961,467 854,818 4.40 %
Goodwill and intangibles1,092,632 1,071,024 
Non-earning assets836,878 734,681 
Total assets$27,795,632 $27,767,172 
Liabilities
Non-interest bearing deposits$6,237,166 $— — %$6,077,392 $— — %
NOW and DDA accounts5,314,459 16,221 1.21 %5,270,842 47,866 1.21 %
Savings accounts2,829,203 5,699 0.80 %2,881,273 17,368 0.81 %
Money market deposit accounts2,887,173 15,048 2.07 %2,913,206 43,907 2.01 %
Certificate accounts3,211,842 33,597 4.16 %3,083,866 96,365 4.17 %
Total core deposits20,479,843 70,565 1.37 %20,226,579 205,506 1.36 %
Short-term borrowings
Wholesale deposits 6
3,122 42 5.47 %3,603 149 5.49 %
Repurchase agreements1,723,553 14,738 3.40 %1,612,021 40,901 3.39 %
FHLB advances968,533 12,126 4.90 %769,521 28,560 4.88 %
FRB Bank Term Funding— — — %824,672 27,097 4.39 %
Total short-term borrowings2,695,208 26,906 3.91 %3,209,817 96,707 3.96 %
Long-term borrowings
FHLB advances860,000 10,218 4.65 %627,737 22,212 4.65 %
Subordinated debentures and other borrowed funds
219,472 1,658 3.01 %220,835 5,200 3.15 %
Total interest bearing liabilities
24,254,523 109,347 1.79 %24,284,968 329,625 1.81 %
Other liabilities336,906 345,822 
Total liabilities24,591,429 24,630,790 
Stockholders’ Equity
Stockholders’ equity3,204,203 3,136,382 
Total liabilities and stockholders’ equity
$27,795,632 $27,767,172 
Net interest income (tax-equivalent)$184,226 $525,193 
Net interest spread (tax-equivalent)2.73 %2.59 %
Net interest margin (tax-equivalent)2.83 %2.70 %

81

Average Balance Sheet - continued
______________________________
1Includes tax effect of $1.7 million and $4.8 million on tax-exempt municipal loan and lease income for the three and nine months ended September 30, 2024, respectively.
2Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
3Includes tax effect of $2.1 million and $6.5 million on tax-exempt debt securities income for the three and nine months ended September 30, 2024, respectively.
4Includes interest income of $4.8 million and $17.2 million on average interest-bearing cash balances of $357.0 million and $631.7 million for the three and nine months ended September 30, 2024, respectively.
5Includes tax effect of $203 thousand and $629 thousand on federal income tax credits for the three and nine months ended September 30, 2024, respectively.
6Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts with contractual maturities.

Rate/Volume Analysis
Net interest income can be evaluated from the perspective of relative dollars of change in each period. Interest income and interest expense, which are the components of net interest income, are shown in the following table on the basis of the amount of any increases (or decreases) attributable to changes in the dollar levels of the Company’s interest earning assets and interest bearing liabilities (“volume”) and the yields earned and paid on such assets and liabilities (“rate”). The change in interest income and interest expense attributable to changes in both volume and rates has been allocated proportionately to the change due to volume and the change due to rate.
Nine Months ended September 30, 2024
2024 vs. 2023
 Increase (Decrease) Due to:
(Dollars in thousands)VolumeRateNet
Interest income
Residential real estate loans$7,453 6,675 14,128 
Commercial loans (tax-equivalent)33,858 39,530 73,388 
Consumer and other loans2,987 8,490 11,477 
Investment securities (tax-equivalent)(13,116)12,717 (399)
Total interest income31,182 67,412 98,594 
Interest expense
NOW and DDA accounts657 24,603 25,260 
Savings accounts(67)12,365 12,298 
Money market deposit accounts(2,900)18,153 15,253 
Certificate accounts30,785 30,967 61,752 
Wholesale deposits(7,863)13 (7,850)
Repurchase agreements7,419 9,297 16,716 
FHLB advances24,225 (363)23,862 
FRB Bank Term Funding(36,064)1 (36,063)
Subordinated debentures and other borrowed funds
351 (887)(536)
Total interest expense16,543 94,149 110,692 
Net interest income (tax-equivalent)$14,639 (26,737)(12,098)

Net interest income (tax-equivalent) decreased $12.1 million for the nine months ended September 30, 2024 compared to the same period in 2023. The interest income for the first nine months of 2024 increased over the same period last year primarily from loan growth and increased loan yields. The increase in interest expense for the first nine months of 2023 was primarily the result of an increase in interest rates.

82

Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company’s primary market risk exposure is interest rate risk.

Interest Rate Risk
Interest rate risk is the potential for loss of future earnings resulting from adverse changes in the level of interest rates. Interest rate risk results from many factors and could have a significant impact on the Company’s net interest income, which is the Company’s primary source of net income. Net interest income is affected by a myriad of variables, including changes in interest rates, the relationship between rates on interest bearing assets and liabilities, the impact of the interest fluctuations on asset prepayments and the mix of interest bearing assets and liabilities.
Although interest rate risk is inherent in the banking industry, banks are expected to have sound risk management practices in place to measure, monitor and control interest rate exposures. The objective of interest rate risk management is to appropriately manage the risks associated with interest rate fluctuations. The process includes identification and management of the sensitivity of net interest income to changing interest rates.
Net interest income simulation
The Company uses a detailed and dynamic simulation model to quantify the estimated exposure of net interest income (“NII”) to sustained interest rate changes. While ALCO routinely monitors simulated NII sensitivity over rolling two-year and five-year horizons, it also utilizes additional tools to monitor potential longer-term interest rate risk. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all assets and liabilities reflected on the Company’s statements of financial condition. This sensitivity analysis is compared to ALCO policy limits which specify a maximum tolerance level for NII exposure over a one year and two year horizon, assuming no balance sheet growth. The ALCO policy rate scenarios include upward and downward shifts in interest rates for 100 bps, 200 bps, 300 bps, and 400 bps scenarios with instantaneous and parallel changes in current market yield curves. The ALCO policy also includes 200 bps and 400 bps rate scenarios with gradual parallel shifts in interest rates over 12-month and 24-month periods, respectively. Other non-parallel rate movement scenarios are also modeled to determine the potential impact on net interest income. The additional scenarios are adjusted as the economic environment changes and provide ALCO additional interest rate risk monitoring tools to evaluate current market conditions. The following is indicative of the Company’s overall NII sensitivity analysis as of September 30, 2024.
 Estimated Sensitivity
Rate ScenariosOne YearTwo Years
-400 bp Rate ramp(1.58 %)(1.34 %)
-200 bp Rate ramp(1.12 %)(2.83 %)
-200 bp Rate shock(2.43 %)(5.65 %)
-100 bp Rate shock(1.01 %)(1.78 %)
+100 bp Rate shock(0.75 %)0.59 %
+200 bp Rate shock(1.86 %)0.61 %
+200 bp Rate ramp(1.48 %)(1.00 %)
+400 bp Rate shock(3.60 %)(1.36 %)
The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results. Growth in the Company’s core deposit franchise, updated deposit pricing assumptions, and other balance sheet changes It is important to note that these hypothetical estimates are based upon numerous assumptions that are specific to our Company and thus may not be directly comparable to other institutions. These assumptions include: the nature and timing of interest rate levels including, but not limited to, yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits and reinvestment/replacement of asset and liability cash flows. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to prepayment/refinancing levels likely deviating from those assumed, the varying impact of interest rate caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other internal and external variables. Furthermore, the sensitivity analysis does not reflect actions that ALCO might take in responding to or anticipating changes in interest rates.
83

Item 3. Quantitative and Qualitative Disclosure about Market Risk

See “Market Risk” of this Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(c)) as of September 30, 2024. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

Changes in Internal Controls
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of 2024, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings

The Company is involved in various claims, legal actions and complaints which arise in the ordinary course of business. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial condition or results of operations of the Company.


Item 1A. Risk Factors

The Company believes there have been no material changes from the risk factors previously disclosed in the Company’s 2023 Annual Report on Form 10-K. The risks and uncertainties described in the 2023 Annual Report on Form 10-K should be carefully reviewed. These are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties that the Company does not currently know about or that we currently believe are immaterial, or that the Company has not predicted, may also harm our business operations or adversely affect the Company. If any of these risks or uncertainties actually occurs, the Company’s business, financial condition, operating results or liquidity could be adversely affected.
84


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)Not Applicable

(b)Not Applicable

(c)Not Applicable


Item 3. Defaults upon Senior Securities

(a)Not Applicable

(b)Not Applicable


Item 4. Mine Safety Disclosures

Not Applicable


Item 5. Other Information

(a)Not Applicable

(b)Not Applicable

(c)None

85

Item 6. Exhibits
 

31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

32    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

101.INS    XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH    XBRL Taxonomy Extension Schema Document

101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF    XBRL Taxonomy Extension Definition Linkbase Document

101.LAB    XBRL Taxonomy Extension Labels Linkbase Document

101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
86

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 GLACIER BANCORP, INC.
October 31, 2024/s/ Randall M. Chesler
Randall M. Chesler
President and CEO
October 31, 2024/s/ Ron J. Copher
Ron J. Copher
Executive Vice President and CFO


87