Glacier Bancorp, Inc. (NASDAQ:GBCI) Q3 2019 Earnings Conference Call - Final Transcript

Oct 18, 2019 • 11:00 am ET

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Glacier Bancorp, Inc. (NASDAQ:GBCI) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Randy Chesler

the prior-year third quarter.

As I noted last quarter, there have been a lot of talk about margin. And now fast forward to this earning season and the conversation about margin is still continuing. Going forward in 2019, we continue to believe we'll see a generally stable core margin, operating in a tight band around current levels. Now the impact on the margin in '20 will depend on the steepness of the interest rate curve at that time. But overall, we feel very well positioned to navigate through this environment.

In early September, the Company implemented balance sheet strategy to increase its net interest income and net interest margin. The strategy included early termination of the Company's $260 million notional pay-fixed interest rate swaps and corresponding debt at 3.73%, along with the sale of $308 million of available-for-sale debt securities. Sale of the investment securities during the quarter resulted in a gain of $13.8 million. Offsetting the gain was a $10 million loss recognized on the early termination of the swaps and a $3.5 million write-down of deferred penalty payments on Federal Home Loan Bank borrowings.

So the net here is, we believe this strategy will mitigate the 5 basis points to 7 basis points of margin headwinds that we talked about for the rest of 2019 on our last quarter's call and continue to provide a bit of support under our margin going forward. Non-interest income for the quarter totaled $43 million. That was up 40% or $12 million from the prior quarter and increased $10.6 million or 33% over the same quarter last year. These increase is primarily attributable to the sale of securities and related to the balance sheet strategy.

Service charges and other fees of $15.1 million decreased $4.9 million or 24% from the prior quarter. And this was due to the decrease in interchange fees as a result of the Durbin Amendment. Notably, gain on sale of loans of $10.4 million increased $2.6 million or 34% over the prior quarter and $3.1 million or 43% over the prior-year third quarter. This was due to increased purchase in refinance activity at very, very strong levels. The Company sold $308 million of securities and recognize a gain of $13.8 million, an increase of $13.7 million from the prior quarter. Other income was down $2.3 million from the prior year's third quarter. And this was a result of a gain of $2.3 million on the sale of a former branch building in the prior-year third quarter.

Non-interest expense for the quarter was $111 million and this increased $24.5 million or 28% from the prior quarter and $27.8 million or 34% over the prior-year third quarter. Compensation and employee benefits increased $10.5 million or 20%. And this was primarily due to the $5.4 million stock comp expense related to the acquisition and -- organic and acquisition growth, which required more employees. Regulatory assessment insurance decreased $1.3 million or 68% from the prior quarter as a result of the $1.3