Executive Summary / Key Takeaways

• Glacier Bancorp (GBCI) is executing a clear strategy centered on expanding net interest margin through asset repricing and lower funding costs, complemented by disciplined, relationship-based M&A to build scale in fast-growing Western markets.
• The Company reported strong Q1 2025 results, with net income increasing 67% year-over-year, driven by significant net interest margin expansion (up 45 bps YoY to 3.04%) and controlled expenses, despite a sequential decrease in net income and loan balances due to seasonal factors and accelerated payoffs.
• Management forecasts continued margin expansion throughout 2025, guiding to a full-year NIM of 3.20%-3.25% and a Q4 exit rate potentially reaching 3.40%-3.45% (including the recent Bank of Idaho acquisition), fueled by maturing lower-yielding securities, paydown of high-cost borrowings, and the repricing of approximately $2 billion in loans.
• Organic loan growth is projected in the low to mid-single digits for 2025, supported by pipeline strength and seasonal tailwinds, while the recently completed Bank of Idaho acquisition adds significant scale and strategic density in key markets.
• Credit quality remains strong, performing at near-record levels, with the recent increase in the allowance for credit losses (ACL to 1.22%) attributed to an "abundance of caution" rather than expected material deterioration, and management does not anticipate increasing the ACL further at this time.

Setting the Scene: A Regional Powerhouse Forging Growth in the American West

Glacier Bancorp, Inc. (NYSE: GBCI) stands as a prominent regional bank holding company, deeply rooted in the communities of the American West. Headquartered in Kalispell, Montana, GBCI operates through its wholly-owned subsidiary, Glacier Bank, which uniquely functions via seventeen distinct bank divisions. This decentralized model, with local management teams and advisory boards, is not merely an organizational structure; it is a foundational strategic pillar designed to foster deep community relationships, provide localized market expertise, and significantly mitigate credit risk through granular oversight.

GBCI's historical journey is largely defined by a consistent and disciplined approach to growth through acquisition. Since 2000, the Company has completed 26 bank acquisitions, with 12 announced in the last decade alone. This strategy has allowed GBCI to expand its footprint across eight states: Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona, and Nevada. Recent transactions, such as the 2024 acquisitions of Wheatland Bank and six Rocky Mountain Bank branches, totaling approximately $1.2 billion in assets, and the recently completed acquisition of Bank of Idaho Holding Co. in April 2025 (a $1.3 billion bank), exemplify this approach. These deals are strategically aimed at building scale and density in existing high-growth markets, often by integrating acquired operations into established Glacier Bank divisions, leveraging existing infrastructure and management expertise. The Bank of Idaho acquisition, for instance, will see its operations merge with three existing divisions, strategically bolstering GBCI's presence in Eastern Idaho, Boise, and Eastern Washington. This history of successful, relationship-based M&A is highlighted by management as a competitive advantage, particularly in the current environment where fewer potential buyers possess both a strong currency and the proven ability to navigate regulatory approvals and integration efficiently.

Within its single reportable banking segment, GBCI offers a comprehensive suite of services, including retail and business banking, a variety of loan products (real estate, commercial, agriculture, consumer), and mortgage origination and servicing. The Company's competitive landscape primarily consists of other regional and community banks operating within its footprint, such as Zions Bancorporation (ZION), U.S. Bancorp (USB), KeyCorp (KEY), and Huntington Bancshares (HBAN). While larger players like USB and ZION offer greater scale and broader national reach, GBCI differentiates itself through its localized, community-focused model and regional density. This allows GBCI to potentially set pricing in markets where it holds a leading share and maintain strong customer loyalty. However, it faces increased pricing competition in larger, more contested markets. Indirect competition comes from fintech firms and online banks, which can offer lower transaction costs but may lack the relationship-based service and local presence that define GBCI's model.

A key operational strength underpinning GBCI's strategy is its ongoing investment in technology. While the company does not appear to detail a single, unique technological differentiator in the vein of a proprietary material science, it emphasizes the strategic adoption of technology to drive efficiency. Management commentary highlights that technology adoption is enabling divisions to "do more with less," citing examples like cutting account opening time in half and achieving real-time loan closing instead of batch submissions. This focus on leveraging technology for operational gains is crucial for managing expenses and enhancing productivity across its decentralized network, contributing to the Company's ability to integrate acquisitions and maintain profitability. Furthermore, GBCI continues to invest in control functions, partly driven by heightened regulatory expectations, with technology playing a role in strengthening these areas.

Recent Performance: Margin Expansion Takes Center Stage

Glacier Bancorp's recent financial performance underscores the effectiveness of its strategic focus on margin expansion and expense control, even amidst a dynamic economic backdrop. The first quarter of 2025 saw net income reach $54.6 million, a significant 67% increase compared to $32.6 million in the prior year's first quarter. This strong year-over-year growth was primarily driven by a notable improvement in the net interest margin (NIM).

The NIM, on a tax-equivalent basis, expanded to 3.04% in Q1 2025, marking the fifth consecutive quarter of expansion and the first time the margin has exceeded 3% in two years. This represents a substantial 45 basis point increase from the 2.59% reported in Q1 2024 and a 7 basis point increase from 2.97% in Q4 2024. The primary drivers of this expansion were a rise in loan yields and a decrease in the total cost of funding. The loan yield in Q1 2025 increased to 5.77%, up 31 basis points from 5.46% in the prior year quarter and 5 basis points sequentially from 5.72%. Concurrently, the total cost of funding, including non-interest bearing deposits, decreased to 1.68% in Q1 2025, down 16 basis points from 1.84% in Q1 2024 and 3 basis points sequentially from 1.71%. Core deposit costs also saw a favorable trend, decreasing sequentially and year-over-year.

While the year-over-year comparison was robust, Q1 2025 net income decreased by $7.2 million, or 12%, from the prior quarter's $61.8 million. This sequential change was influenced by several factors. Interest income decreased sequentially, primarily due to fewer days in the quarter and lower average interest-bearing cash balances. The loan portfolio also saw a sequential decrease of $43 million, or 25 basis points, ending Q1 2025 at $17.22 billion, attributed by management to accelerated payoffs. However, the loan portfolio still showed a healthy 3% increase year-over-year, or 1% organically excluding the Rocky Mountain Bank acquisition.

Non-interest income totaled $32.6 million in Q1 2025, an increase of 9% year-over-year and 3% sequentially. This growth was supported by increases in miscellaneous loan fees, gain on sale of loans, and other income, which benefited from bank-owned life insurance proceeds and higher income from equity investments.

Non-interest expense in Q1 2025 was $151.3 million, a slight decrease of 35 basis points year-over-year but an increase of 7% sequentially. The sequential increase was primarily due to higher performance-related compensation, while the year-over-year decrease was driven by lower acquisition-related expenses and adjustments to FDIC special assessments. The efficiency ratio reflected these movements, increasing sequentially to 65.49% from 60.50% in Q4 2024 but improving significantly from 74.41% in Q1 2024. Management's commentary highlights ongoing efforts in expense control, partly enabled by technology-driven operational efficiencies.

The balance sheet remained stable overall, with total assets at $27.86 billion at March 31, 2025, slightly down from $27.90 billion at December 31, 2024. Total deposits increased $87.1 million, or 2% annualized, sequentially to $20.63 billion, and were up 1% year-over-year. Non-interest bearing deposits remained a consistent 30% of the total deposit base. Total debt securities decreased sequentially and year-over-year, representing 27% of total assets. FHLB advances decreased significantly both sequentially and year-over-year, while repurchase agreements increased. The Company's strong cash position increased sequentially and year-over-year, bolstering liquidity.

Capital levels remain robust, with tangible stockholders' equity increasing sequentially and year-over-year. This increase was primarily driven by a decrease in unrealized losses on available-for-sale debt securities and earnings retention, partially offset by intangibles from the Rocky Mountain Bank acquisition. The Company continues to meet all regulatory capital requirements, providing a solid foundation for future growth and M&A activity.

Credit Quality and Risk Management: Prudence Amidst Stability

Glacier Bancorp's credit portfolio continues to demonstrate stability, performing at levels management describes as near-record highs. Key credit quality indicators, while showing some slight normalization, do not suggest systemic deterioration. Non-performing assets (NPAs) totaled $39.3 million at March 31, 2025, an increase from $27.8 million at December 31, 2024, and $25.4 million at March 31, 2024. This increase in Q1 2025 was primarily attributable to a single commercial and industrial (C&I) credit relationship moving to non-accrual status. Management characterized this as a management issue with the borrower, not market or economic-based, and stated the credit is well secured with no expected loss, anticipating resolution by year-end. Early stage delinquencies (loans 30-89 days past due) increased sequentially in Q1 2025 to $46.5 million from $32.2 million but decreased year-over-year from $62.4 million. Net charge-offs in Q1 2025 were $1.8 million, lower than $5.2 million in Q4 2024 and $3.1 million in Q1 2024, and included deposit overdraft charge-offs and net loan recoveries.

The Allowance for Credit Losses (ACL) on loans stood at $210.4 million, or 1.22% of total loans, at March 31, 2025, an increase from 1.19% at both December 31, 2024, and March 31, 2024. Management explicitly stated that the decision to increase the ACL was made "out of an abundance of caution given the current uncertain economic environment," rather than in response to expected material credit deterioration. They do not expect to increase the ACL above the current 1.22% level. The ACL determination process involves a high degree of judgment, utilizing a model that categorizes loan pools by risk characteristics, adjusting historical loss rates for economic forecasts, and incorporating qualitative factors. Non-accrual loans are individually evaluated, with collateral-dependent loans assessed based on collateral value.

GBCI's loan portfolio is diversified across segments, with Commercial Real Estate (CRE) being the largest at 64% of the total. Within CRE, the portfolio is granular, with an average loan balance of $778 thousand and an average loan-to-value (LTV) of 58% at March 31, 2025. It is also geographically dispersed across GBCI's eight-state footprint. Management highlighted limited exposure to the office building sector in central business districts, noting their office portfolio is diversified in suburban and rural markets with strong occupancy. Regular loan reviews, stress tests, and sensitivity analyses are conducted to assess portfolio risk, and loan policies are updated to align with strategic and risk mitigation goals. The decentralized divisional model provides local oversight and multiple review layers for larger loans, further supporting credit risk management.

While the credit outlook remains positive, the Company acknowledges potential risks stemming from the macroeconomic and geopolitical environment, including inflation, capital markets volatility, and changes in trade policies, which could impact economic growth and customer performance. Interest rate risk is also a primary market risk exposure, potentially affecting net interest income and asset values. Regulatory changes, M&A integration challenges, and potential goodwill impairment are also noted risks. However, GBCI's disciplined underwriting, diversified portfolio, local market expertise, and proactive risk management practices are key mitigants against these potential headwinds.

Outlook: Structural Tailwinds Powering Margin Expansion and Growth

Management's outlook for Glacier Bancorp in 2025 is characterized by confidence in continued margin expansion and steady, disciplined growth, underpinned by structural tailwinds and strategic execution.

The central theme remains the positive trajectory of the net interest margin. Management explicitly expects the trend of margin expansion to continue throughout 2025, driven by factors independent of potential Federal Reserve rate cuts. Key drivers include the ongoing repricing of the asset base, particularly the loan portfolio. Approximately $2 billion of loans are expected to reprice in 2025, with management anticipating a significant pickup of 100 to 125 basis points on these repricing loans based on current market rates. Additionally, cash flow from the investment securities portfolio is expected to increase, with around $250 million to $275 million per quarter in principal and interest cash flow, accelerating in late 2025 and into 2026/2027 as treasury maturities occur. This liquidity, along with deposit inflows, is intended to be used to pay down higher-cost wholesale borrowings, including $1.36 billion of FHLB term advances maturing in 2025, further reducing funding costs.

The recently completed Bank of Idaho acquisition is also projected to contribute positively to the margin, adding approximately four basis points of lift to the overall organization. Based on these factors, management feels comfortable guiding to a full-year 2025 NIM in the range of 3.20% to 3.25%, with an anticipated Q4 2025 exit margin potentially reaching 3.40% to 3.45% including the Bank of Idaho impact.

For organic loan growth, management projects a low to mid-single-digit increase for 2025. While Q1 2025 saw a sequential decrease due to accelerated payoffs and seasonal slowness, management believes these headwinds are abating and expects seasonally stronger periods (Q2, Q3) to provide tailwinds. The loan pipeline remains strong, with early-stage opportunities developing, and customer optimism, while not yet fully translating into significant deal flow, is growing. The Bank of Idaho acquisition will provide additional, non-organic loan growth, contributing to a larger overall balance sheet size exiting 2025 compared to 2024. Organically, the balance sheet is expected to remain stable to flat, with liquidity from securities runoff and deposits potentially leading to some delevering through wholesale borrowing paydowns.

Expense management remains a focus. Management is maintaining its core organic non-interest expense guide of $151 million to $152 million per quarter for the remainder of 2025 (Q2-Q4), excluding acquisition impacts. The Bank of Idaho acquisition is expected to add $9 million to $10 million per quarter in non-interest expense after modeled cost savings, resulting in a combined expense guide of $157 million to $158 million for Q2 2025 (partial impact) and $160 million to $162 million for Q3 and Q4 2025. Efficiency gains from technology adoption are expected to continue contributing to expense control.

M&A remains a core part of the strategic trajectory, focused on building scale in GBCI's fast-growing Western markets. Management's disciplined, relationship-based approach and demonstrated ability to execute acquisitions efficiently are seen as key advantages in the current market, where increased activity is anticipated if regional bank stock prices remain elevated. The focus remains on identifying and partnering with "great banks and great markets with great people" within their target size range.

Conclusion

Glacier Bancorp is executing a clear and compelling investment thesis centered on leveraging its regional strength and disciplined M&A strategy to drive profitability through margin expansion. The Company's Q1 2025 results demonstrated significant year-over-year earnings growth, powered by a notable increase in net interest margin, a trend management confidently expects to continue throughout 2025, supported by structural tailwinds from asset repricing, securities cash flows, and wholesale funding optimization.

While organic loan growth is projected at a modest pace, the strategic acquisition of Bank of Idaho is set to enhance scale and market density in key growth regions. Credit quality remains a core strength, with management maintaining a prudent stance on reserves despite current low levels of non-performance. GBCI's decentralized model, local market expertise, and ongoing investment in operational technology provide foundational support for its strategy and risk management.

For investors, the core story lies in GBCI's ability to successfully realize the projected margin expansion, integrate recent acquisitions efficiently, and maintain its strong credit culture amidst potential economic uncertainties. The combination of structural NIM tailwinds, disciplined growth initiatives, and a proven M&A track record positions Glacier Bancorp to continue building value in the dynamic Western U.S. banking market.