Glacier Bancorp, Inc. Q4 FY2025 earnings call

Strategic Acquisitions

• Closed Bank of Idaho in April and Guaranty Bank & Trust in October, with over $4.7 billion acquired, the largest acquisition year in history.
• Converted Bank of Idaho business operating platform in September, plan to convert Guaranty Bank & Trust in February 2026.

Financial Performance

• Strong financial results in 2025 with growth in key metrics, including net interest margin expansion, loan growth, and deposit growth.
• Efficiency ratio dropped from 66.7% to 63% in 2025.
• Solid capital position with tangible stockholders' equity up $609 million and tangible book value per share $21 (up 12% YoY).
• Declared 163rd consecutive quarterly dividend of $0.33 per share.

In the fourth quarter, Glacier Bancorp's total assets exceeded $30 billion, ending the year at $32 billion. Net income for the quarter was $63.8 million, with full-year net income at $239 million (up 26% from prior year). Net interest income in Q4 was $266 million (+18% QoQ), full-year $889 million (+26% YoY). Loan portfolio was $21 billion at year-end, up $2 billion QoQ. Total deposits were $24.6 billion at end of Q4, up $2.7 billion QoQ. Net interest margin was 3.58% Q4, up 19bps QoQ. Loan yield was 6.09% Q4, up 12bps QoQ. Cost of funding was 1.52% Q4, down 6bps QoQ. Noninterest expense was $195 million Q4, up 16% QoQ. Noninterest income was $40 million Q4, up 14% QoQ. Credit quality remained strong with nonperforming assets at 22bps of total assets. Tangible stockholders' equity increased $609 million (29%), tangible book value per share $21 (up 12% YoY).

Loan Growth

• 2026 loan growth expected to be low to mid-single digits, with potential for higher end due to pipeline and construction season.

Net Interest Margin

• Expected to hit 4% in the second half of 2026.

Expenses

• Q1 2026 core noninterest expense guide: $189 million to $193 million. Q2-Q4 expected to be $187 million to $192 million. Full-year core operating expense guide: $750 million to $766 million.

Repricing Assets

• Expected to have north of $2 billion of assets reprice in 2026, contributing to margin expansion.

Seasonal Factors

• Q4 and early 2026 are seasonally slower for loan growth, with ag and construction seasons ending leading to line paydowns and lower utilization.

Credit and Market Dynamics

• Potential early term payoffs impacting loan growth. Need to monitor CRE market dynamics, including cap rates and NOI.

Q: I just wanted to start on the growth side. Obviously, it was a noisy quarter. We had the Guaranty deal. Organic growth you guys laid it out, it was about 1% annualized, a little bit slower than maybe we expected. It looks like it's actually pretty solid in the quarter. So I just wanted to get a sense of what you saw on the loan side that maybe kept things a little bit slower this quarter. And then just how you think about growth going forward? And when you'd expect Guaranty to maybe start contributing more meaningfully as all those bankers are trained on the new systems and fully ramped up?

A: Yes. Yes, a lot going on, and we actually feel good about the growth. But let me let Tom fill you in on some of the details there. Tom Dolan: Yes, David. Fourth quarter and even first quarter is seasonally slower for us. In the fourth quarter, we exited the ag season, the construction season. So the tailwinds provided by those draws earlier in the year, those ceased and for the ag growers as they end of their season, we saw a lot of line paydowns as they went to harvest. And then not unusual for us to see lower line utilization in the latter part of the year as well. Looking into 2026, we're looking at low to mid-single digits for the full year. But one thing I wanted to mention, we are now at a record level of our pipeline early this year. And it's too early to tell whether the increase in the pipeline that we've seen is a surge or if it's sustainable. In addition to that, a growing piece of the production is related to construction, and that's been evident for the last couple of quarters. And as you know, those don't fund at origination. So it should give us some decent tailwinds heading into the stronger seasonal quarters, second, third quarter. So we could be towards the higher end of that range for 2026. And then in terms of Guaranty, to answer your other question there, they've hit the ground running. I think they're going to add meaningful production for us, quite frankly, David, starting immediately.

Q: I just wanted to dig back into the margin trajectory going forward. I mean, thus far, it's kind of played out exactly how you've laid it out. I know you've laid out that kind of that 4% threshold by the end of this year. I just wanted to make sure that, that was still on track. And maybe if you could walk us through the NIM walk and what gives you confidence in your ability to achieve that? And how dependent is that 4% level on Fed cuts?

A: Yes, David, this is Byron. Yes, we've seen tremendous progress in our net interest margin. We've got great momentum, and we continue to see momentum ahead of us. We have a lot of programmatic structural repricing drivers in the balance sheet. That will, to your point, that will continue to lift margin regardless of the Fed. So, we're not in any way Fed dependent. And we continue to see growth ahead of us. We do expect to hit 4% at some point later this year, probably second half of '26. So, green lights ahead.

Q: If I could move over just to margin quickly. You guys buy to your credit, really spot on kind of with where we've talked about margin going. I'd just like to maybe better understand on the origination side and just as we think about the asset repricing potential, what are you seeing in terms of new origination yields and spreads right now? Have you seen any level of increased competition that's impacted that? Just hoping to get some more comfortability around the pace of loan yield expansion or earning asset yield expansion?

A: Yes. Let me -- I think Tom can answer part of that. And then, Byron, if you have things to add, that would be great. Tom Dolan: Yes. On the production, we're still seeing good spreads. We're at around 300 basis points over the index. We that we utilize. For the fourth quarter, we were a little over 6.8%. We've seen that come up a little bit towards the latter part of December and continuing into January. That's what we're seeing on the production side right now.

Q: I wanted to circle back to Guaranty and just kind of get a sense of how that integration has gone so far. Going into a new market can be very difficult in Texas isn't easy, but I know that's a market that you know well, Randy. I suspect it's pretty limited disruption just given this is a new division that you all are creating, no real brand changes or anything like that. And again, Tom, I appreciate the commentary that they're already starting to contribute. But just wanted to get an early read on the integration now that we're a few months in post close and kind of what you're most excited about with them at this point?

A: Sure. Yes. I mean to start with our model, we keep the name. It's a 100-year-old bank in terms of minimizing disruption. We keep the people. We have the same leadership in place. And so that is very, very helpful compared to some of the other transitions ongoing in the market down there. We think that we're extremely well positioned with customers and employees. So, that part, just setting the stage with the model is very, very helpful and positive from our standpoint. It's been a great fit. I think we've noticed that from the beginning and talked about that, the culture fit, certainly on the credit side, Tom has done a lot of work, and it's a very good fit. So it looks very much like a seamless handoff. They're integrated into the credit system right now. And we're very, very mindful of making sure that they have all the tools they need to succeed. In terms of being excited about it, I mean, it's -- the franchise has been and still is extremely well positioned in that market. They've got a great legacy base in East Texas with Mount Pleasant as the centerpiece there, but a lot of very, very good markets. And then they're exposed to some very strong growth markets with very good teams in place. So, Dallas-Fort Worth, College Station, Houston, Austin. And so I think the opportunity, and they really just have scratched the surface there. That's probably the most exciting thing is as we give them some sophisticated tools. So we're giving them our automated commercial loan processing system. That's going to create some productivity, some improvement in how we can serve customers there. And then a much bigger balance sheet, so an ability to take care of customers, bring back relationships that had to be handed off from a $3 billion bank to a $30 billion bank. So all those things, David, we think will be really, really nice tailwinds going forward.