Glacier Widens Margin as Funding Costs Ease
Tax-equivalent net interest margin expanded 10 bps QoQ to 3.90%, its tenth consecutive quarterly increase.
Glacier Bancorp (GBCI), the western U.S. regional bank, expanded its tax-equivalent net interest margin 10 bps QoQ and 69 bps YoY to 3.90%, extending a run of quarterly gains as funding costs eased and the balance sheet shifted toward higher-yielding loans. Net interest income rose 3% QoQ and 33% YoY to $276.4 million.
Core NIM widened 13 bps QoQ to 3.86%. Reported loan yield declined 4 bps to 6.12% as discount accretion and nonaccrual-interest effects diminished, while core loan yield edged up 1 bp to 6.06%. Core deposit cost fell 2 bps QoQ to 1.18%, helping reduce total funding cost by 7 bps to 1.33%.
Commercial borrowing drove balance-sheet growth. Loans increased $330.1 million QoQ to $21.364 billion, a 6% annualized pace, and rose 15% YoY. Commercial real-estate balances grew $236.9 million QoQ and other commercial loans added $148.4 million, while residential real estate declined $56.2 million. Excluding the Guaranty acquisition, loans grew 4% YoY.
Fee revenue and lower acquisition costs added operating leverage. Noninterest income rose 8% QoQ to $41.1 million, supported by higher deposit-service and payment-services revenue. Noninterest expense declined 7% to $186.7 million as acquisition-related costs fell, improving the efficiency ratio 640 bps QoQ to 56.65%.
Credit costs moved higher as problem assets increased. Loan-loss provision rose to $10.1 million from $3.5 million QoQ, while net charge-offs increased to $5.9 million from $3.1 million. Nonperforming assets climbed 16% QoQ to $91.8 million, raising their ratio to 0.29% from 0.25%, though the allowance remained at 1.22% of loans.
Early-stage delinquencies provided a more favorable counterpoint, declining to $65.5 million, or 0.31% of loans, from $91.8 million, or 0.44%, QoQ. They remained above the year-earlier level of 0.29%.
Tangible capital strengthened through retained earnings. The tangible-equity-to-tangible-assets ratio increased to 9.42% from 9.15% QoQ, and tangible book value rose 2% QoQ and 10% YoY to $21.81 a share.
Average deposits grew $113 million QoQ, while period-end deposits slipped 35 bps to $24.654 billion. Non-interest-bearing balances held at 30% of deposits, preserving a low-cost funding base, though organic deposit growth of 1% YoY continued to trail organic loan growth of 4%.