Glacier Bancorp (NYSE:GBCI) reported record third-quarter net income of $105 million, surpassing $100 million in quarterly earnings for the first time, as the company benefited from continued net interest margin expansion, deposit growth and stable credit quality.
Net income rose 7% from the prior quarter and 54% from the year-earlier period. Diluted earnings per share were $0.80, up 7% sequentially and 40% year over year, while operating diluted EPS was $0.81.
President and CEO Randy Chesler said the quarter marked the company’s 11th consecutive period of net interest margin expansion. Tax-equivalent net interest margin reached 4.01%, increasing 11 basis points from the second quarter and 62 basis points from the third quarter of the prior year.
“We have now crossed the 4% mark with a strong tailwind driving momentum for further growth in the fourth quarter and into 2027,” Chesler said.
Net Interest Income and Repricing Tailwinds
Net interest income totaled $290 million, up 5% from the previous quarter and 29% from a year earlier. Pre-tax, pre-provision net revenue was $138 million, an increase of 6% sequentially.
Treasurer and Senior Vice President Byron Pollan said the company expects asset repricing to remain a contributor to margin expansion. Approximately $3.5 billion of loans in the portfolio are expected to reprice 125 to 150 basis points higher over the next 12 months, he said. In addition, investment cash flows are being reinvested at yields roughly 350 basis points above the current runoff yield.
New loan production yields were 6.74% during the third quarter, according to Tom Dolan. Pollan said new deposit accounts are being opened at interest costs ranging from 2.25% to 2.5%.
Pollan characterized Glacier as modestly asset-sensitive and said anticipated benefits from loan and securities repricing should more than offset any rise in funding costs if rates continue to increase. He said the company’s historical net interest margin range has generally been 4% to 4.5%, adding that the current market environment could support movement toward the higher end of that range over time.
For deposits, the spot rate at Sept. 30 was 1.20%. Pollan estimated total deposit beta could be in a 20% to 25% range, initially closer to the lower end.
Loan and Deposit Growth
Total loans ended the quarter at $21.6 billion, rising $256 million from the second quarter, or 5% on an annualized basis. The average loan yield increased 10 basis points sequentially to 6.22%.
Dolan said Glacier’s Southwest division, which includes its Texas footprint, grew loans at an annualized rate of about 8% during the quarter, outpacing the company overall. He said both the Southwest and Mountain regions continued to have healthy pipelines and deal flow, particularly in commercial real estate and construction lending.
While acknowledging a seasonally slower period ahead, Dolan said the company remains comfortable with a low- to mid-single-digit loan growth outlook. He added that Glacier had not seen material deals fall out of its pipeline because of interest rates, though borrowers have shown caution and may pursue smaller projects or contribute additional equity.
Total deposits were $25.3 billion at quarter-end, up $619 million from the prior quarter, or 10% annualized, and up $3.4 billion from a year earlier. Non-interest-bearing deposits increased $279 million, or 15% annualized, to $7.7 billion and accounted for 30% of total deposits.
Pollan said deposit growth was broad-based across products, divisions and geographies. Total funding costs declined one basis point from the previous quarter to 1.32%, while core deposit costs, including non-interest-bearing deposits, declined to 1.17%.
The loan-to-deposit ratio improved to 85.7% from 86.8% in the second quarter.
Credit, Expenses and Capital
Credit quality remained stable. Early-stage delinquencies declined to 0.27% of loans from 0.31% in the prior quarter, while non-performing assets fell $1.2 million to $90.6 million, or 0.28% of subsidiary assets. Net charge-offs were $6 million, including $3.5 million in deposit overdraft charge-offs.
Non-interest expense was $191.9 million on a reported basis and $190.8 million on an operating basis, Chief Financial Officer Ron Copher said. The company’s efficiency ratio improved to 56.08% from 56.65% in the second quarter.
Copher maintained Glacier’s fourth-quarter operating expense guidance of $187 million to $192 million, though he said results are likely to be toward the high end of that range. He expects full-year expenses to be near $757 million within the company’s $750 million to $760 million guidance range.
Glacier expects its efficiency ratio to reach 54% to 55% in the fourth quarter, Copher said. Year-to-date operating efficiency improved by nearly five percentage points, from 62% to 57%, he added.
Return on average assets increased to 1.31%, compared with 1.25% in the second quarter and 0.93% a year earlier. Tangible book value per share rose to $22.05, up 1% sequentially and 8% from the prior-year quarter.
The board increased the quarterly dividend by 2 cents, or 6%, to $0.35 per share. Chesler said it was the company’s 166th consecutive quarterly dividend and its 50th dividend increase.
Chesler also said management is evaluating capital deployment alternatives as earnings drive capital accumulation, including special dividends and share repurchases. No specific authorization or timing was announced.
About Glacier Bancorp (NYSE:GBCI)
Glacier Bancorp, Inc is a regional bank holding company headquartered in Kalispell, Montana. Through its banking subsidiaries, including Glacier Bank, the company provides financial services to individuals, families, businesses and community organizations across the Mountain West and Inland Northwest.
The company’s products and services include checking and savings accounts, certificates of deposit, consumer and residential mortgages, commercial and real estate lending, agricultural loans, cash-management services and online and mobile banking.
