Glacier Bancorp, Inc. (NASDAQ:GBCI) Q3 2020 Earnings Conference Call - Final Transcript

Oct 23, 2020 • 11:00 am ET

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Glacier Bancorp, Inc. (NASDAQ:GBCI) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Randall M. Chesler

quarter. Highlighting the Company's core earnings stream, the pre-tax pre-provision net revenue for the quarter was $99.4 million, which was up 56% from the prior year third quarter.

Core deposits increased $868 million or 6.5% over the prior quarter, with non-interest bearing deposit growth of $436 million or 8.6%. Non-interest bearing deposits were 39% of total core deposits at the end of this quarter compared to 35% at the quarter a year ago. Deposits continue to flow on to the balance sheet as a result of customers reduced spending and unprecedented government fiscal stimulus and monetary policy. We're pleased to see our cost of core deposits decline 11 basis points from 14 basis points in the prior quarter to 21 basis points in the third quarter a year ago.

Total debt securities increased $582 million or 16% during the quarter, and increased $1.6 billion or 60% from the prior year third quarter. The return on our debt securities reflected the impact of lower-for-longer interest rates, ending the quarter at 2.72%, down 45 basis points from the prior quarter due to purchasing new securities at current lower market rates. That security income was $25 million, which was materially unchanged from the prior quarter and an increase of 19% over the prior year third quarter.

We're taking a cautious approach to new investments, given current low rates and risk at some point of deposit outflows, and we're targeting a short average life while maintaining higher levels of liquidity. The loan portfolio organically increased $165 million or 1% in the quarter, as we saw an increase of activity to our markets that was driven by pent-up demand from the first half of the year. The growth was well distributed across our footprint and the quality was reflective of our conservative approach to credit.

At the end of this quarter, we had made over 16,000 PPP loans for $1.472 billion. As part of this effort, we acquired over 3,000 new customers who received PPP loans from us, totaling close to $298 million in loans due to several competitors that were struggling with offering this program. Expanding these new high quality relationships helped drive some of our growth in loans this quarter. At the end of the quarter, we had $36.1 million in net deferred fees remaining on these PPP loans. Net income was $151 million, which was an increase of 3.2% or 2% over the prior quarter and increased $20 million or 15% from the prior year third quarter.

While the industry is dealing with the impact of lower-for-longer interest rates, we are encouraged by our ability to grow our balance sheet, even if at a slower pace to offset declining NIM with more net interest income, we feel our strong geographic footprint and the economic and growth advantage to our market areas will enable us to weather the lower-for-longer, for a longer period of time. Net interest margin was tough to hold on to due primarily to the interest rate environment as we