GLACIER BANCORP, INC. Management report and analysis of the financial position and operating results (Form 10-Q)


The following discussion is intended to provide a more comprehensive review of
the Glacier Bancorp, Inc.'s ("Company") operating results and financial
condition than can be obtained from reading the Consolidated Financial
Statements alone. The discussion should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included in "Part I.
Item 1. Financial Statements."

                           FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, statements about management's plans,
objectives, expectations and intentions that are not historical facts, and other
statements identified by words such as "expects," "anticipates," "intends,"
"plans," "believes," "should," "projects," "seeks," "estimates" or words of
similar meaning. These forward-looking statements are based on current beliefs
and expectations of management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond the Company's control. In addition, these forward-looking
statements are subject to assumptions with respect to future business strategies
and decisions that are subject to change. In addition to the factors set forth
in the sections titled "Risk Factors," "Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations", as applicable,
in this report and the Company's 2020 Annual Report on Form 10-K, the following
factors, among others, could cause actual results to differ materially from the
anticipated results:
•the risks associated with lending and potential adverse changes of the credit
quality of loans in the Company's portfolio;
•changes in trade, monetary and fiscal policies and laws, including interest
rate policies of the Board of Governors of the Federal Reserve System or the
Federal Reserve Board, which could adversely affect the Company's net interest
income and profitability;
•changes in the cost and scope of insurance from the Federal Deposit Insurance
Corporation ("FDIC") and other third parties;
•legislative or regulatory changes, such as the those signaled by the Biden
Administration, as well as increased banking and consumer protection regulation
that adversely affect the Company's business, both generally and as a result of
the Company exceeding $10 billion in total consolidated assets;
•ability to complete pending or prospective future acquisitions;
•costs or difficulties related to the completion and integration of
acquisitions;
•the goodwill the Company has recorded in connection with acquisitions could
become impaired, which may have an adverse impact on earnings and capital;
•reduced demand for banking products and services;
•the reputation of banks and the financial services industry could deteriorate,
which could adversely affect the Company's ability to obtain and maintain
customers;
•competition among financial institutions in the Company's markets may increase
significantly;
•the risks presented by continued public stock market volatility, which could
adversely affect the market price of the Company's common stock and the ability
to raise additional capital or grow the Company through acquisitions;
•the projected business and profitability of an expansion or the opening of a
new branch could be lower than expected;
•consolidation in the financial services industry in the Company's markets
resulting in the creation of larger financial institutions who may have greater
resources could change the competitive landscape;
•dependence on the Chief Executive Officer ("CEO"), the senior management team
and the Presidents of Glacier Bank ("Bank") divisions;
•material failure, potential interruption or breach in security of the Company's
systems and technological changes which could expose us to new risks (e.g.,
cybersecurity), fraud or system failures;
•natural disasters, including fires, floods, earthquakes, and other unexpected
events;
•the Company's success in managing risks involved in the foregoing; and
•the effects of any reputational damage to the Company resulting from any of the
foregoing.

Forward-looking statements speak only as of the date of this Form 10-Q. The Company assumes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Highlights

                                                                    At or for the Three Months ended                                          At or for the Nine Months ended
(Dollars in thousands, except per          Sep 30,                Jun 30,                  Mar 31,                  Sep 30,                  Sep 30,                  Sep 30,
share and market data)                      2021                    2021                     2021                     2020                     2021                     2020
Operating results
Net income                             $   75,619                     77,627                   80,802                   77,757                  234,048                  184,540
Basic earnings per share               $     0.79                       0.81                     0.85                     0.81                     2.45                     1.95
Diluted earnings per share             $     0.79                       0.81                     0.85                     0.81                     2.45                     1.95
Dividends declared per share           $     0.32                       0.32                     0.31                     0.30                     0.95                     0.88
Market value per share
Closing                                $    55.35                      55.08                    57.08                    32.05                    55.35                    32.05
High                                   $    56.84                      63.05                    67.35                    38.13                    67.35                    46.54
Low                                    $    48.62                      52.99                    44.55                    30.05                    44.55                    26.66
Selected ratios and other data
Number of common stock shares
outstanding                                 95,512,659               95,507,234               95,501,819               95,413,743               95,512,659               95,413,743
Average outstanding shares - basic          95,510,772               95,505,877               95,465,801               95,411,656               95,494,211               94,704,198
Average outstanding shares - diluted        95,586,202               95,580,904               95,546,922               95,442,576               95,573,519               94,747,894
Return on average assets (annualized)        1.43    %                  1.55  %                  1.73  %                  1.80  %                  1.57  %                  1.56  %
Return on average equity (annualized)       12.49    %                 13.25  %                 14.12  %                 13.73  %                 13.27  %                 11.40  %
Efficiency ratio                            50.17    %                 49.92  %                 46.75  %                 48.05  %                 48.94  %                 49.83  %
Dividend payout ratio                       40.51    %                 39.51  %                 36.47  %                 37.04  %                 38.78  %                 45.13  %
Loan to deposit ratio                       65.06    %                 67.64  %                 70.72  %                 82.29  %                 65.06  %                 82.29  %
Number of full time equivalent
employees                                        2,978                    2,987                    2,994                    2,946                    2,978                    2,946
Number of locations                                194                      194                      193                      193                      194                      193
Number of ATMs                                     250                      250                      250                      250                      250                      250




The Company reported net income of $75.6 million for the current quarter, a
decrease of $2.2 million, or 3 percent, from the $77.8 million of net income for
the prior year third quarter. Diluted earnings per share for the current quarter
was $0.79 per share, a decrease of 2 percent from the prior year third quarter
diluted earnings per share of $0.81. The decrease in third quarter earnings over
the prior year was driven by a $21.6 million reduction in the gain on sale of
residential mortgage loans due to record gains in the prior year.

Acquisition

On October 1, 2021, the Company acquired the outstanding common stock of
Altabancorp, the parent company of Altabank, based in American Fork, Utah
(collectively, "Alta") and the largest community bank in Utah. Alta provides
banking services to individuals and businesses in Utah with twenty-five banking
offices from Preston, Idaho to St. George, Utah. As of September 30, 2021, Alta
had total assets of $3.648 billion, total loans of $1.901 billion and total
deposits of $3.279 billion. Upon closing of the transaction, Alta became the
Company's seventeenth Bank division.


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                          Financial Condition Analysis

Assets

The following table summarizes the Company's assets as of the dates indicated:
                                                                                                                                                              $ Change from
                                    Sep 30,                 Jun 30,                   Dec 31,                   Sep 30,                  Jun 30,                Dec 31,                 Sep 30,
(Dollars in thousands)               2021                    2021                      2020                      2020                     2021                   2020                     2020
Cash and cash equivalents       $    348,888                 921,207                   633,142                   769,879                  (572,319)             (284,254)                  (420,991)
Debt securities,
available-for-sale                 7,390,580               6,147,143                 5,337,814                 4,125,548                 1,243,437             2,052,766                  3,265,032
Debt securities,
held-to-maturity                   1,128,299               1,024,730                   189,836                   193,509                   103,569               938,463                    934,790
Total debt securities              8,518,879               7,171,873                 5,527,650                 4,319,057                 1,347,006             2,991,229                  4,199,822
Loans receivable
Residential real estate              781,538                 734,838                   802,508                   862,614                    46,700               (20,970)                   (81,076)
Commercial real estate             6,912,569               6,584,322                 6,315,895                 6,201,817                   328,247               596,674                    710,752
Other commercial                   2,598,616               2,932,419                 3,054,817                 3,593,322                  (333,803)             (456,201)                  (994,706)
Home equity                          660,920                 648,800                   636,405                   646,850                    12,120                24,515                     14,070
Other consumer                       340,248                 337,669                   313,071                   314,128                     2,579                27,177                     26,120
Loans receivable                  11,293,891              11,238,048                11,122,696                11,618,731                    55,843               171,195                   (324,840)
Allowance for credit losses         (153,609)               (151,448)                 (158,243)                 (164,552)                   (2,161)                4,634                     10,943
Loans receivable, net             11,140,282              11,086,600                10,964,453                11,454,179                    53,682               175,829                   (313,897)
Other assets                       1,305,970               1,308,353                 1,378,961                 1,382,952                    (2,383)              (72,991)                   (76,982)
Total assets                    $ 21,314,019              20,488,033                18,504,206                17,926,067                   825,986             2,809,813                  3,387,952



Total debt securities of $8.519 billion at September 30, 2021 increased $1.347
billion, or 19 percent, during the current quarter and increased $4.200 billion,
or 97 percent, from the prior year third quarter. The Company continues to
selectively purchase debt securities with excess liquidity from the increase in
core deposits and SBA forgiveness of PPP loans. Debt securities represented 40
percent of total assets at September 30, 2021 compared to 30 percent of total
assets at December 30, 2020 and 24 percent of total assets at September 30,
2020.

The loan portfolio of $11.294 billion at September 30, 2021 increased $55.8
million, or 50 basis points, in the current quarter. Excluding the PPP loans,
the loan portfolio increased $382 million, or 14 percent annualized, during the
current quarter with the largest increase in commercial real estate which
increased $328 million.

The loan portfolio decreased $325 million, or 3 percent, from the prior year
third quarter. Excluding the PPP loans, the loan portfolio increased $755
million, or 7 percent, from the prior year third quarter with the largest
increase in commercial real estate loans which increased $711 million, or 11
percent.
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Liabilities

The following table summarizes the Company's liabilities as of the dates
indicated:
                                                                                                                                                    $ Change from
                               Sep 30,                Jun 30,                  Dec 31,                  Sep 30,                 Jun 30,              Dec 31,                 Sep 30,
(Dollars in thousands)          2021                    2021                     2020                     2020                   2021                  2020                   2020
Deposits
Non-interest bearing
deposits                   $  6,632,402              6,307,794                5,454,539                5,479,311                 324,608            1,177,863                 1,153,091
NOW and DDA accounts          4,299,244              4,151,264                3,698,559                3,300,152                 147,980              600,685                   999,092
Savings accounts              2,502,268              2,346,129                2,000,174                1,864,143                 156,139              502,094                   638,125
Money market deposit
accounts                      3,123,425              2,990,021                2,627,336                2,557,294                 133,404              496,089                   566,131
Certificate accounts            919,852                939,563                  978,779                  979,857                 (19,711)             (58,927)                  (60,005)
Core deposits, total         17,477,191             16,734,771               14,759,387               14,180,757                 742,420            2,717,804                 3,296,434
Wholesale deposits               26,123                 26,121                   38,142                  119,131                       2              (12,019)                  (93,008)
Deposits, total              17,503,314             16,760,892               14,797,529               14,299,888                 742,422            2,705,785                 3,203,426
Securities sold under
agreements to repurchase      1,040,939                995,201                1,004,583                  965,668                  45,738               36,356                    75,271
Federal Home Loan Bank
advances                              -                      -                        -                    7,318                       -                    -                    (7,318)
Other borrowed funds             33,671                 33,556                   33,068                   32,967                     115                  603                       704
Subordinated debentures         132,580                132,540                  139,959                  139,918                      40               (7,379)                   (7,338)
Other liabilities               215,899                211,889                  222,026                  225,219                   4,010               (6,127)                   (9,320)
Total liabilities          $ 18,926,403             18,134,078               16,197,165               15,670,978                 792,325            2,729,238                 3,255,425



Core deposits of $17.477 billion as of September 30, 2021 increased $742
million, or 18 percent annualized, from the prior quarter and increased $3.296
billion, or 23 percent, from the prior year third quarter. Non-interest bearing
deposits of $6.632 billion as of September 30, 2021 increased $325 million, or 5
percent, from the prior quarter and increased $1.153 billion, or 21 percent,
from the prior year third quarter. The unprecedented increase in deposits over
the prior eighteen months resulted from a number of factors including the PPP
loan proceeds deposited by customers, federal stimulus deposits and the increase
in customer savings. Non-interest bearing deposits were 38 percent of total core
deposits at September 30, 2021 compared to 37 percent of total core deposits at
December 31, 2020 and 39 percent at September 30, 2020.

Low levels of borrowing, including wholesale deposits and Federal mortgage bank (“FHLB”), reflecting the significant increase in core deposits that funded asset growth.

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Stockholders' Equity
The following table summarizes the stockholders' equity balances as of the dates
indicated:
                                                                                                                                           $ Change from
(Dollars in thousands,        Sep 30,               Jun 30,                Dec 31,                Sep 30,               Jun 30,              Dec 31,               Sep 30,
except per share data)          2021                  2021                   2020                   2020                  2021                2020                  2020
Common equity              $ 2,309,957            2,263,513              2,163,951              2,123,991                 46,444             146,006                 185,966
Accumulated other
comprehensive income            77,659               90,442                143,090                131,098                (12,783)            (65,431)                (53,439)
Total stockholders' equity   2,387,616            2,353,955              2,307,041              2,255,089                 33,661              80,575                 132,527
Goodwill and core deposit
intangible, net               (562,058)            (564,546)              (569,522)              (572,134)                 2,488               7,464                  10,076
Tangible stockholders'
equity                     $ 1,825,558            1,789,409              1,737,519              1,682,955                 36,149              88,039                 142,603


Stockholders' equity to total
assets                           11.20  %           11.49  %           12.47  %           12.58  %
Tangible stockholders' equity
to total tangible assets          8.80  %            8.98  %            9.69  %            9.70  %
Book value per common share    $ 25.00              24.65              24.18              23.63              0.35              0.82              1.37
Tangible book value per common
share                          $ 19.11              18.74              18.21              17.64              0.37              0.90              1.47



Tangible stockholders' equity of $1.826 billion at September 30, 2021 increased
$36.1 million, or 2 percent, from the prior quarter and increased $143 million,
or 8 percent, from the prior year third quarter and was due to earnings
retention that more than offset the decrease in other comprehensive income. The
current year decrease in both the stockholders' equity to total assets ratio and
the tangible stockholders' equity to tangible assets was the result of the
$2.991 billion increase in debt securities driven primarily by the significant
influx of deposits during the current year. Tangible book value per common share
of $19.11 at the current quarter end increased $0.37 per share, or 2 percent,
from the prior quarter and increased $1.47 per share, or 8 percent, from a year
ago.

Cash Dividend
On September 30, 2021, the Company's Board of Directors declared a quarterly
cash dividend of $0.32 per share. The dividend was payable October 21, 2021 to
shareholders of record on October 12, 2021. The dividend was the 146th
consecutive dividend. Future cash dividends will depend on a variety of factors,
including net income, capital, asset quality, general economic conditions and
regulatory considerations.


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Operating results for the three months ended September 30, 2021

Compared to June 30, 2021, March 31, 2021, and September 30, 2020

Income Summary
The following table summarizes income for the periods indicated:
                                                                     Three Months ended                                                         $ Change from
                                           Sep 30,             Jun 30,              Mar 31,              Sep 30,              Jun 30,            Mar 31,              Sep 30,
(Dollars in thousands)                      2021                 2021                 2021                 2020                2021                2021                 2020
Net interest income
Interest income                         $     166,741              159,956              161,552              157,487            6,785              5,189                  9,254
Interest expense                                4,128                4,487                4,740                6,084             (359)              (612)                (1,956)
Total net interest income                     162,613              155,469              156,812              151,403            7,144              5,801                 11,210
Non-interest income
Service charges and other fees                 15,154               13,795               12,792               13,404            1,359              2,362                  1,750
Miscellaneous loan fees and charges             2,592                2,923                2,778                2,084             (331)              (186)                   508
Gain on sale of loans                          13,902               16,106               21,624               35,516           (2,204)            (7,722)               (21,614)
(Loss) gain on sale of investments              (168)                 (61)                  284                   24             (107)              (452)                  (192)
Other income                                    3,335                2,759                2,643                2,639              576                692                    696
Total non-interest income                      34,815               35,522               40,121               53,667             (707)            (5,306)               (18,852)
Total income                            $     197,428              190,991              196,933              205,070            6,437                495                 (7,642)
Net interest margin (tax-equivalent)          3.39  %              3.44  %              3.74  %              3.92  %



Net Interest Income
The current quarter net interest income of $163 million increased $7.1 million,
or 5 percent, over the prior quarter and increased $11.2 million, or 7 percent,
from the prior year third quarter. The current quarter interest income of $167
million increased $6.8 million, or 4 percent, compared to the prior quarter and
increased $9.3 million, or 6 percent, over the prior year third quarter due to
an increase in interest income from the PPP loans and debt securities. The
interest income (which included deferred fees and deferred costs) from the PPP
loans was $12.9 million in the current quarter and $10.3 million in the prior
quarter and $9.3 million in the prior year third quarter. Excluding the PPP
loans, net interest income was $150 million in the current quarter compared to
$145 million in the prior quarter and $142 million in the prior year third
quarter.

The current quarter interest expense of $4.1 million decreased $359 thousand, or
8 percent, over the prior quarter and decreased $2.0 million, or 32 percent,
over the prior year third quarter primarily as result of a decrease in deposit
rates. During the current quarter, the total cost of funding (including
non-interest bearing deposits) of 9 basis points declined 1 basis points from
the prior quarter and declined 7 basis points from the prior year third quarter
with both decreases driven by a decrease in rates in deposits and borrowings.

The Company's net interest margin as a percentage of earning assets, on a
tax-equivalent basis, for the current quarter was 3.39 percent compared to 3.44
percent in the prior quarter and 3.92 in the prior year third quarter. The core
net interest margin, excluding 2 basis points of discount accretion, 2 basis
point from non-accrual interest and 18 basis points increase from the PPP loans,
was 3.17 percent compared to 3.33 in the prior quarter and 4.02 percent in the
prior year third quarter. The core net interest margin decreased 16 basis points
in the current quarter and decreased 85 basis points from the prior third
quarter due to a decrease in earning asset yields. Earning asset yields have
decreased due to the combined impact of the significant increase in the debt
securities and the lower yields on both core loans and debt securities. Debt
securities comprised 42.5 percent of the earning assets during the current
quarter compared to 39.4 percent in the prior quarter and 26.5 percent in the
prior year third quarter.

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Non-interest Income
Non-interest income for the current quarter totaled $34.8 million which was a
decrease of $707 thousand, or 2 percent, over the prior quarter and a decrease
of $18.9 million, or 35 percent, over the same quarter last year. Service
charges and other fees increased $1.4 million from the prior quarter and
increased $1.8 million from the prior year third quarter as a result of
increased customer accounts and transaction activity.

Gain on the sale of loans of $13.9 million for the current quarter decreased
$2.2 million, or 14 percent, compared to the prior quarter and decreased $21.6
million, or 61 percent, from the prior year third quarter. The current quarter
mortgage activity was lower than prior periods, but still remained at
historically strong levels.

Non-interest Expense
The following table summarizes non-interest expense for the periods indicated:

                                                                  Three Months ended                                                        $ Change from
                                       Sep 30,              Jun 30,              Mar 31,               Sep 30,             Jun 30,            Mar 31,             Sep 30,
(Dollars in thousands)                  2021                 2021                  2021                 2020                 2021              2021                2020
Compensation and employee benefits  $   66,364              64,109               62,468                64,866                2,255             3,896                 1,498
Occupancy and equipment                  9,412               9,208                9,515                 9,369                  204              (103)                   43
Advertising and promotions               3,236               2,906                2,371                 2,779                  330               865                   457
Data processing                          5,135               5,661                5,206                 5,597                 (526)              (71)                 (462)
Other real estate owned                    142                  48                   12                   186                   94               130                   (44)
Regulatory assessments and
insurance                                2,011               1,702                1,879                 1,495                  309               132                   516

Core deposit intangibles
amortization                             2,488               2,488                2,488                 2,612                    -                 -                  (124)
Other expenses                          15,320              13,960               12,646                16,469                1,360             2,674                (1,149)
Total non-interest expense          $  104,108             100,082               96,585               103,373                4,026             7,523                   735



Total non-interest expense of $104 million for the current quarter increased
$4.0 million, or 4 percent, over the prior quarter and increased $735 thousand,
or 71 basis points, over the prior year third quarter. Compensation and employee
benefits increased $2.3 million, or 4 percent, from the prior quarter and
increased $1.5 million from the prior year third quarter.

Other expenses of $15.3 million, increased $1.4 million, or 10 percent, from the
prior quarter and decreased $1.1 million, or 7 percent, from the prior year
third quarter. Current quarter other expenses included acquisition-related
expenses of $472 thousand compared to $1.1 million in the prior quarter and $793
thousand in the prior year third quarter.

Efficiency Ratio
The efficiency ratio was 50.17 percent in the current quarter and 49.92 percent
in the prior quarter and 48.05 in the prior year third quarter. Excluding the
impact from the PPP loans, the efficiency ratio would have been 53.59 percent in
the current quarter compared to 53.53 percent in the prior quarter. Excluding
the impact of PPP loans, the current quarter efficiency ratio was an increase of
308 basis points from the prior year third quarter efficiency ratio of 50.51
percent which was primarily driven by the decrease in the gain on sale of loans
in the current quarter.
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Provision for Credit Losses for Loans
The following table summarizes provision for credit losses for loans, net
charge-offs and select ratios relating to provision for credit losses for the
previous eight quarters:
                                                                                                                               Accruing
                                                                                              Allowance for                   Loans 30-89
                                          Provision for                                       Credit Losses                  Days Past Due                   Non-Performing
                                        Credit Losses on         Net Charge-Offs              as a Percent                  as a Percent of                     Assets to
(Dollars in thousands)                        Loans                (Recoveries)                 of Loans                         Loans                  Total Sub-sidiary Assets
Third quarter 2021                      $        2,313          $           152                          1.36  %                         0.23  %                           0.24  %
Second quarter 2021                             (5,723)                    (725)                         1.35  %                         0.11  %                           0.26  %
First quarter 2021                                 489                    2,286                          1.39  %                         0.40  %                           0.19  %
Fourth quarter 2020                             (1,528)                   4,781                          1.42  %                         0.20  %                           0.19  %
Third quarter 2020                               2,869                      826                          1.42  %                         0.15  %                           0.25  %
Second quarter 2020                             13,552                    1,233                          1.42  %                         0.22  %                           0.27  %
First quarter 2020                              22,744                      813                          1.49  %                         0.41  %                           0.26  %
Fourth quarter 2019                                  -                    1,045                          1.31  %                         0.24  %                           0.27  %



The current quarter provision for credit loss expense for loans was $2.3 million
which was an increase of $8.0 million from the prior quarter provision for
credit loss benefit of $5.7 million and a $556 thousand decrease from the prior
year third quarter provision for credit loss expense of $2.9 million. The
increase in provision for credit losses for loans in the current quarter
compared to the prior quarter was primarily driven by organic loan growth in the
current quarter.

Net charge-offs for the current quarter were $152 thousand compared to net
recoveries of $725 thousand for the prior quarter and net charge-offs $826
thousand from the same quarter last year. Loan portfolio growth, composition,
average loan size, credit quality considerations, economic forecasts and other
environmental factors will continue to determine the level of the provision for
credit losses for loans.

The determination of the allowance for credit losses ("ACL" or "allowance") on
loans and the related provision for credit losses is a critical accounting
estimate that involves management's judgments about the loan portfolio that
impact credit losses. For additional information on the allowance, see the
Allowance For Credit Losses section under "Additional Management's Discussion
and Analysis."

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          Operating Results for Nine Months Ended September 30, 2021
                         Compared to September 30, 2020

Income Summary
The following table summarizes income for the periods indicated:
                                                                Nine Months ended
                                                         Sep 30,                 Sep 30,
(Dollars in thousands)                                    2021                    2020                         $ Change                 % Change
Net interest income
Interest income                                     $         488,249                 455,756                    32,493                          7  %
Interest expense                                               13,355                  21,765                    (8,410)                       (39) %
Total net interest income                                     474,894                 433,991                    40,903                          9  %
Non-interest income
Service charges and other fees                                 41,741                  38,790                     2,951                          8  %
Miscellaneous loan fees and charges                             8,293                   5,051                     3,242                         64  %
Gain on sale of loans                                          51,632                  73,236                   (21,604)                       (29) %
Gain on sale of debt securities                                    55                   1,015                      (960)                       (95) %
Other income                                                    8,737                  10,071                    (1,334)                       (13) %
Total non-interest income                                     110,458                 128,163                   (17,705)                       (14) %
Total income                                        $         585,352                 562,154                    23,198                          4  %
Net interest margin (tax-equivalent)                          3.52  %                 4.12  %



Net Interest Income
Net-interest income of $475 million for the first nine months of 2021 increased
$40.9 million, or 9 percent, over the same period in 2020. Interest income of
$488 million for the first nine months of the current year increased $32.5
million, or 7 percent, from the prior year and was primarily attributable to a
$25.4 million increase in income from commercial loans, including $20.1 million
from the PPP loans. Additionally, interest income on debt securities increased
$14.2 million, or 20 percent, over the prior year which resulted from the
increased volume of debt securities. Interest expense of $13.4 million for the
first nine months of 2021 decreased $8.4 million, or 39 percent over the prior
year primarily as a result of a decrease in the cost of deposits. The total
funding cost (including non-interest bearing deposits) for the first nine months
of 2021 was 10 basis points, which decreased 12 basis points compared to 22
basis points in first nine months of 2020.

The net interest margin as a percentage of earning assets, on a tax-equivalent
basis, during the first nine months of 2021 was 3.52 percent, a 60 basis points
decrease from the net interest margin of 4.12 percent for the same period in the
prior year. The core net interest margin, excluding 3 basis points of discount
accretion, 1 basis point of non-accrual interest and 13 basis points increase
from the PPP loans, was 3.35 which was an 85 basis point decrease from the core
margin of 4.20 percent in the prior year. Although the Company was successful in
reducing the total cost of funding, it was not enough to outpace the lower
yields on core loans and debt securities driven by the current interest rate
environment and the shift in the earning asset mix to lower yielding debt
securities.

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Non-interest Income
Non-interest income of $110 million for the first nine months of 2021 decreased
$17.7 million, or 14 percent, over the same period last year. Service charges
and other fees of $41.7 million for the first nine months of 2021 increased $3.0
million, or 8 percent, from prior year as a result of additional fees from
increased customer accounts and transaction activity. Miscellaneous loan fees
and charges of $8.3 million increased $3.2 million, or 64 percent, driven by
increases in loan servicing income and credit card interchange fees due to
increased activity. Gain on the sale of loans of $51.6 million for the first
nine months of 2021 decreased $21.6 million, or 29 percent, compared to the same
period last year which was the result of the anticipated slowing of purchase and
refinance activity after the historically high levels in the prior year. Other
income of $8.7 million decreased $1.3 million from the prior year and was
primarily the result of a gain of $2.4 million on the sale of a former branch
building in the first quarter of 2020.

Non-interest Expense
The following table summarizes non-interest expense for the periods indicated:

                                              Nine Months ended
                                          Sep 30,        Sep 30,
(Dollars in thousands)                     2021           2020               $ Change      % Change
Compensation and employee benefits      $ 192,941      $ 182,507            $ 10,434            6  %
Occupancy and equipment                    28,135         27,945                 190            1  %
Advertising and promotions                  8,513          7,404               1,109           15  %
Data processing                            16,002         15,921                  81            1  %
Other real estate owned                       202            373                (171)         (46) %
Regulatory assessments and insurance        5,592          3,622               1,970           54  %

Core deposit intangibles amortization       7,464          7,758                (294)          (4) %
Other expenses                             41,926         48,094              (6,168)         (13) %
Total non-interest expense              $ 300,775      $ 293,624            $  7,151            2  %



Total non-interest expense of $301 million for the first nine months of 2021
increased $7.2 million, or 2 percent, over the prior year same period.
Compensation and employee benefits for the first nine months of 2021 increased
$10.4 million, or 6 percent, from last year due to the increased number of
employees from organic growth, increased performance-related compensation and
annual salary increases. Advertising and promotions for the first nine months of
2021 increased $1.1 million, or 15 percent, from the prior year. Regulatory
assessment and insurance for the first nine months of 2021 increased $2.0
million from the prior year same period primarily as a result of the State of
Montana waiving the first semi-annual regulatory assessment of 2020 and Small
Bank assessment credits applied by the FDIC in the first quarter of 2020. Other
expenses of $41.9 million, decreased $6.2 million, or 13 percent, from the prior
year, primarily from a decrease in acquisition-related expenses.
Acquisition-related expenses were $1.7 million in the current year compared to
$7.3 million in the prior year.

Efficiency Ratio
The efficiency ratio was 48.94 percent for the first nine months of 2021
compared to 49.83 percent for the same period last year. Excluding the impact
from the PPP loans, the efficiency ratio was 53.34 in 2021 compared to 53.30 in
2020.

Provision for Credit Losses
The provision for credit loss benefit was $4.9 million for the first nine months
of 2021, including provision for credit loss benefit of $2.9 million on the loan
portfolio and credit loss benefit of $2.0 million on unfunded loan commitments.
The provision for credit loss benefit of $2.9 million on the loan portfolio in
the current year decreased $42.1 million over the provision for credit loss
expense of $39.2 million in the prior year which was primarily attributable to
changes in the economic forecast related to COVID-19. Net charge-offs during the
current year were $1.7 million compared to $2.9 million during the prior year.
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                ADDITIONAL MANAGEMENT'S DISCUSSION AND ANALYSIS

Investment activity
Of the society marketable securities mainly consist of debt securities classified as available for sale or held to maturity. Non-negotiable equity securities consist of the share capital issued by the FHLB of monks.

Debt Securities
Debt securities classified as available-for-sale are carried at estimated fair
value and debt securities classified as held-to-maturity are carried at
amortized cost. During the first quarter of the current year, the Company
transferred $404 million of available-for-sale securities with an unrealized net
gain of $3.8 million into the held-to-maturity portfolio after determining it
had the intent and ability to hold such securities until maturity. The Company
transferred an additional $440 million of available-for-sale securities with an
unrealized net gain of $40.6 million into held-to-maturity portfolio during the
second quarter of the current year. Unrealized gains or losses, net of tax, on
available-for-sale debt securities are reflected as an adjustment to other
comprehensive income. The Company's debt securities are summarized below:
                                                September 30, 2021                               December 31, 2020                              September 30, 2020
(Dollars in thousands)                 Carrying Amount             Percent             Carrying Amount             Percent             Carrying Amount             Percent

Available for sale

U.S. government and federal agency   $          31,373                    1  %       $          38,588                    1  %       $          40,140                    1  %
U.S. government sponsored
enterprises                                     47,051                    1  %                   9,781                    1  %                   9,825                    1  %
State and local governments                    508,691                    6  %               1,416,683                   26  %               1,275,376                   29  %
Corporate bonds                                198,119                    2  %                 349,098                    6  %                 361,024                    8  %
Residential mortgage-backed
securities                                   5,491,345                   64  %               2,289,090                   41  %               1,275,858                   30  %
Commercial mortgage-backed
securities                                   1,114,001                   13  %               1,234,574                   22  %               1,163,325                   26  %
Total available-for-sale                     7,390,580                   87  %               5,337,814                   97  %               4,125,548                   95  %

Held to maturity

State and local governments                  1,128,299                   13  %                 189,836                    3  %                 193,509                    5  %
Total held-to-maturity                       1,128,299                   13  %                 189,836                    3  %                 193,509                    5  %
Total debt securities                $       8,518,879                  100  %       $       5,527,650                  100  %       $       4,319,057                  100  %



The Company's debt securities are primarily comprised of state and local
government securities and mortgage-backed securities. State and local government
securities are largely exempt from federal income tax and the Company's federal
statutory income tax rate of 21 percent is used in calculating the
tax-equivalent yields on the tax-exempt securities. Mortgage-backed securities
largely consists of short, weighted-average life U.S. agency guaranteed
residential and commercial mortgage pass-through securities and to a lesser
extent, short, weighted-average life U.S. agency guaranteed residential
collateralized mortgage obligations. Combined, the mortgage-backed securities
provide the Company with ongoing liquidity as scheduled and pre-paid principal
is received on the securities.

State and local government securities carry different risks that are not as
prevalent in other security types. The Company evaluates the investment grade
quality of its securities in accordance with regulatory guidance. Investment
grade securities are those where the issuer has an adequate capacity to meet the
financial commitments under the security for the projected life of the
investment. An issuer has an adequate capacity to meet financial commitments if
the risk of default by the obligor is low and the full and timely payment of
principal and interest are expected. In assessing credit risk, the Company may
use credit ratings from Nationally Recognized Statistical Rating Organizations
("NRSRO" entities such as S&P and Moody's) as support for the evaluation;
however, they are not solely relied upon. There have been no significant
differences in the Company's internal evaluation of the creditworthiness of any
issuer when compared with the ratings assigned by the NRSROs.

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The following table stratifies the state and local government securities by the
associated NRSRO ratings. The highest issued rating was used to categorize the
securities in the table for those securities where the NRSRO ratings were not at
the same level.
                                                     September 30, 2021                                December 31, 2020
                                              Amortized                Fair                  Amortized                     Fair
(Dollars in thousands)                          Cost                   Value                    Cost                       Value
S&P: AAA / Moody's: Aaa                    $    389,559                398,464                 385,773                     420,646
S&P: AA+, AA, AA- / Moody's: Aa1, Aa2, Aa3    1,122,979              1,156,558               1,015,634                   1,080,972
S&P: A+, A, A- / Moody's: A1, A2, A3             87,099                 92,155                 101,494                     109,504
S&P: BBB+, BBB, BBB- / Moody's: Baa1,
Baa2, Baa3                                           92                     95                   3,217                       3,230
Not rated by either entity                        7,686                  7,872                   5,481                       5,547
Below investment grade                                -                      -                       -                           -
Total                                      $  1,607,415              1,655,144               1,511,599                   1,619,899



Government and local government securities largely consist of taxable and tax-exempt general bonds and fiscal obligations. The following table stratifies state and local government titles by type of associated title.

                                                           September 30, 2021                                December 31, 2020
                                                    Amortized                Fair                  Amortized                     Fair
(Dollars in thousands)                                Cost                   Value                    Cost                       Value
General obligation - unlimited                   $    604,104                636,992                 625,660                     672,610
General obligation - limited                          110,796                115,556                 121,886                     129,250
Revenue                                               876,246                885,218                 745,908                     798,188
Certificate of participation                           12,515                 13,501                  14,098                      15,636
Other                                                   3,754                  3,877                   4,047                       4,215
Total                                            $  1,607,415              1,655,144               1,511,599                   1,619,899


The following table shows the five states in which the Company holds the highest concentrations of state and local government securities.

                                                             September 30, 2021                                December 31, 2020
                                                      Amortized                Fair                  Amortized                     Fair
(Dollars in thousands)                                  Cost                   Value                    Cost                       Value
New York                                           $    252,005                254,874                 235,036                     254,976
Texas                                                   138,057                141,867                 143,421                     154,511
Michigan                                                133,529                138,607                 139,836                     148,544
California                                              151,512                161,174                 148,564                     166,311
Washington                                              111,987                116,269                  99,699                     106,012
All other states                                        820,325                842,353                 745,043                     789,545
Total                                              $  1,607,415              1,655,144               1,511,599                   1,619,899



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The following table presents the carrying amount and weighted-average yield of
available-for-sale and held-to-maturity debt securities by contractual maturity
at September 30, 2021. Weighted-average yields are based upon the amortized cost
of securities and are calculated using the interest method which takes into
consideration premium amortization, discount accretion and mortgage-backed
securities' prepayment provisions. Weighted-average yields on tax-exempt debt
securities exclude the federal income tax benefit.
                                     One Year or Less                After One through Five Years           After Five through Ten Years                   After Ten Years                      Mortgage-Backed Securities 1                         Total
(Dollars in thousands)           Amount             Yield              Amount              Yield              Amount              Yield           
    Amount                Yield                Amount                 Yield
             Amount              Yield
Available-for-sale
U.S. government and federal
agency                        $       -                 -  %       $     1,719              1.57  %       $    10,544              1.46  %       $  
     19,110              1.43  %       $              -                 - 
%       $    31,373              1.45  %
U.S. government sponsored
enterprises                       1,507              0.96  %               265              0.93  %            45,279              1.08  %                     -                 -  %                      -                 -  %            47,051              1.08  %
State and local governments       5,983              2.10  %            61,729              2.61  %           199,196              3.63  %         
     241,783              3.20  %                      -                 -  %           508,691              3.28  %
Corporate bonds                  61,387              3.28  %           131,623              3.25  %             4,066              4.00  %                 1,043              0.46  %                      -                 -  %           198,119              3.26  %
Residential mortgage-backed
securities                            -                 -  %                 -                 -  %                 -                 -  %                     -                 -  %              5,491,345              0.97  %         5,491,345              0.97  %
Commercial mortgage-backed
securities                            -                 -  %                 -                 -  %                 -                 -  %                     -                 -  %              1,114,001              2.33  %         1,114,001              2.33  %
Total available-for-sale         68,877              3.13  %           195,336              3.03  %           259,085              3.08  %               261,936              3.05  %              6,605,346              1.19  %         7,390,580              1.38  %

Held to maturity

State and local governments       1,529              2.29  %            27,382              2.46  %            89,010              2.64  %             1,010,378              2.78  %                      -                 -  %         1,128,299              2.76  %
Total held-to-maturity            1,529              2.29  %            27,382              2.46  %            89,010              2.64  %             1,010,378              2.78  %                      -                 -  %         1,128,299              2.76  %

Total debt

 securities                   $  70,406              3.11  %       $   222,718              2.96  %       $   348,095              2.96  %       $     1,272,314              2.84  %       $      6,605,346              1.19  %       $ 8,518,879              1.56  %


______________________________

1 Mortgage-backed securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds.

Based on an analysis of its available-for-sale debt securities with unrealized
losses as of September 30, 2021, the Company determined their decline in value
was unrelated to credit loss and was primarily the result of interest rate
changes and market spreads subsequent to acquisition. The fair value of the debt
securities is expected to recover as payments are received and the debt
securities approach maturity. In addition, the Company determined an
insignificant amount of credit losses is expected on the held-to-maturity debt
securities portfolio; therefore, no ACL has been recognized at September 30,
2021.

For more information on debt securities, see note 2 of the consolidated financial statements in “Part I. Item 1. Financial statements”.

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Equity securities
Non-marketable equity securities primarily consist of capital stock issued by
the FHLB of Des Moines and are carried at cost less impairment. The Company also
has an insignificant amount of marketable equity securities that are included in
other assets on the Company's statements of financial condition.

Non-marketable equity securities and marketable equity securities without
readily determinable fair values are evaluated for impairment whenever events or
circumstances suggest the carrying value may not be recoverable. Based on the
Company's evaluation of its investments in non-marketable equity securities and
marketable equity securities without readily determinable fair values as of
September 30, 2021, the Company determined that none of such securities were
impaired.

Lending Activity
The Company focuses its lending activities primarily on the following types of
loans: 1) first-mortgage, conventional loans secured by residential properties,
particularly single-family; 2) commercial lending, including agriculture and
public entities; and 3) installment lending for consumer purposes (e.g., home
equity, automobile, etc.). Supplemental information regarding the Company's loan
portfolio and credit quality based on regulatory classification is provided in
the section captioned "Loans by Regulatory Classification" included in "Part I.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations." The regulatory classification of loans is based primarily on the
type of collateral for the loans. Loan information included in "Part I. Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" is based on the Company's loan segments, which are based on the
purpose of the loan, unless otherwise noted as a regulatory classification. The
following table summarizes the Company's loan portfolio as of the dates
indicated:

                                               September 30, 2021                                December 31, 2020                                September 30, 2020
(Dollars in thousands)                    Amount                   Percent                  Amount                  Percent                  Amount                   Percent
Residential real estate            $          781,538                     7  %       $         802,508                     7  %       $          862,614                     8  %
Commercial real estate                      6,912,569                    62  %               6,315,895                    58  %                6,201,817                    54  %
Other commercial                            2,598,616                    23  %               3,054,817                    28  %                3,593,322                    31  %
Home equity                                   660,920                     6  %                 636,405                     6  %                  646,850                     6  %
Other consumer                                340,248                     3  %                 313,071                     3  %                  314,128                     3  %
Loans receivable                           11,293,891                   101  %              11,122,696                   102  %               11,618,731                   102  %
Allowance for credit losses                  (153,609)                   (1) %                (158,243)                   (2) %                 (164,552)                   (2) %
Loans receivable, net              $       11,140,282                   100  %       $      10,964,453                   100  %       $       11,454,179                   100  %



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Non-performing Assets
The following table summarizes information regarding non-performing assets at
the dates indicated:

                                            At or for the Nine       At or for the Six        At or for the Year       At or for the Nine
                                               Months ended             Months ended                ended                 Months ended
                                              September 30,               June 30,               December 31,             September 30,
(Dollars in thousands)                             2021                     2021                     2020                     2020
Other real estate owned and foreclosed
assets                                      $        106                         771                    1,744                     5,361
Accruing loans 90 days or more past due
Residential real estate                               52                         338                      934                       217
Commercial real estate                             2,785                       2,349                      231                     1,426
Other commercial                                   2,083                       1,234                      293                     1,102
Home equity                                           98                         155                      135                        80
Other consumer                                       154                         144                      132                       127
Total                                              5,172                       4,220                    1,725                     2,952
Non-accrual loans
Residential real estate                            2,465                       3,183                    3,403                     3,488
Commercial real estate                            10,618                      11,110                   15,817                    18,298
Other commercial                                  29,794                      30,507                    9,509                    11,371
Home equity                                        2,457                       2,667                    2,713                     2,891
Other consumer                                       567                         583                      522                       302
Total                                             45,901                      48,050                   31,964                    36,350
Total non-performing assets                 $     51,179                      53,041                   35,433                    44,663
Non-performing assets as a percentage of
subsidiary assets                                   0.24     %                  0.26  %                  0.19  %                   0.25  %
ACL as a percentage of non-performing loans          301     %                   290  %                   470  %                    419  %
Accruing loans 30-89 days past due          $     26,002                      12,076                   22,721                    17,631
Accruing troubled debt restructurings       $     36,666                      37,667                   42,003                    39,999
Non-accrual troubled debt restructurings    $      2,820                       3,179                    3,507                     7,579
U.S. government guarantees included in
non-performing assets                       $      4,116                       4,186                    3,011                     4,411
Interest income 1                           $      1,657                       1,144                    1,545                     1,296

______________________________

1Amounts represent estimated interest income that would have been recognized on
loans accounted for on a non-accrual basis as of the end of each period had such
loans performed pursuant to contractual terms.

Non-performing assets of $51.2 million at September 30, 2021 decreased $1.9
million, or 4 percent, over the prior quarter. Non-performing assets increased
$6.5 million, or 15 percent, over the prior year third quarter. Non-performing
assets as a percentage of subsidiary assets at September 30, 2021 was 0.24
percent compared to 0.26 percent in the prior quarter and 0.25 percent in the
prior year third quarter.

Early stage delinquencies (accruing loans 30-89 days past due) of $26.0 million
at September 30, 2021 increased $13.9 million from the prior quarter with a
large portion of the increase primarily isolated to one credit relationship.
Early stage delinquencies increased $8.4 million from the prior year third
quarter. Early stage delinquencies as a percentage of loans at September 30,
2021 was 0.23 percent, which was an increase of 12 basis points from prior
quarter and an 8 basis points increase from prior year third quarter.
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Most of the Company's non-performing assets are secured by real estate, and
based on the most current information available to management, including updated
appraisals or evaluations (new or updated), the Company believes the value of
the underlying real estate collateral is adequate to minimize significant
charge-offs or losses to the Company. Through pro-active credit administration,
the Company works closely with its borrowers to seek favorable resolution to the
extent possible, thereby attempting to minimize net charge-offs or losses to the
Company. With very limited exceptions, the Company does not disburse additional
funds on non-performing loans. Instead, the Company proceeds to collection and
foreclosure actions in order to reduce the Company's exposure to loss on such
loans.

For additional information on accounting policies relating to non-performing
assets, see Note 1 to the Consolidated Financial Statements in "Part I. Item 1.
Financial Statements."

Restructured Loans
A restructured loan is considered a troubled debt restructuring ("TDR") if the
creditor, for economic or legal reasons related to the debtor's financial
difficulties, grants a concession to the debtor that it would not otherwise
consider. Each restructured debt is separately negotiated with the borrower and
includes terms and conditions that reflect the borrower's prospective ability to
service their obligations as modified. The Company discourages the use of the
multiple loan strategy when restructuring loans regardless of whether or not the
loans are designated as TDRs. The Company has TDR loans of $39.5 million and
$45.5 million at September 30, 2021 and December 31, 2020, respectively.

On March 27, 2020, the CARES Act was signed into law which includes many
provisions that impact the Company and its customers. The banking regulatory
agencies have encouraged banks to work with borrowers who have been impacted by
the COVID-19 pandemic, and the CARES Act, along with related regulatory
guidance, allows the Bank to not designate certain modifications as TDRs that
otherwise may have been classified as TDRs. For additional information on
modifications related to the COVID-19 pandemic, see the PPP section under
"Additional Management's Discussion and Analysis."

Other Real Estate Owned and Foreclosed Assets
The book value of loans prior to the acquisition of collateral and transfer of
the loans into other real estate owned ("OREO") during 2021 was $1.6 million.
The fair value of the loan collateral acquired in foreclosure during 2021 was
$1.5 million. The following table sets forth the changes in OREO for the periods
indicated:

                                            At or for the
                                             Nine Months          At or for the Six         At or for the Year         At or for the Nine
                                                ended                Months ended                 ended                   Months ended
                                            September 30,              June 30,                December 31,              September 30,
(Dollars in thousands)                           2021                    2021                      2020                       2020
Balance at beginning of period             $       1,744                   1,744                      5,142                     5,142
Acquisitions                                           -                       -                        307                       307
Additions                                          1,481                   1,459                      2,076                     2,062
Capital improvements                                   -                       -                        145                       141
Write-downs                                         (120)                      -                       (451)                     (189)
Sales                                             (2,999)                 (2,432)                    (5,475)                   (2,102)
Balance at end of period                   $         106                     771                      1,744                     5,361



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PPP Loans

                                                              Three Months ended                                              Nine Months ended
                                        September 30,
(Dollars in thousands)                      2021              June 30, 2021            March 31, 2021          September 30, 2021            September 30, 2020
PPP interest income                     $   12,894               10,328                   13,523                    36,745                        16,646
Deferred compensation on originating
PPP loans                                        -                1,522                    5,213                     6,735                         8,850
    Total PPP income impact             $   12,894               11,850                   18,736                    43,480                        25,496



                                                     September 30,
(Dollars in thousands)                                   2021              June 30, 2021           December 31, 2020          September 30, 2020
PPP Round 1 loans                                    $   56,048              176,498                   909,173                  1,448,417
PPP Round 2 loans                                       312,865              518,107                         -                          -
    Total PPP loans                                  $  368,913              694,605                   909,173                  1,448,417

Net remaining fees - Round 1                         $      485                1,313                    17,605                     36,099
Net remaining fees - Round 2                             12,501               22,694                         -                          -
    Total net remaining fees                         $   12,986               24,007                    17,605                     36,099



The United States Small Business Administration ("SBA") Round 2 PPP program
ended in early May after the available funds were fully drawn upon. During the
first half of 2021, the Company originated $555 million of Round 2 PPP loans
which generated $33.2 million of SBA deferred processing fees and $6.7 million
of deferred compensation costs for total net deferred fees of $26.5 million.

During the current year, the SBA processing fees received on Round 2 averaged
5.99 percent which compared to the average of 3.75 percent received on Round 1
in the prior year. The increase in the fee percentage received on Round 2 was
the result of an increase in the number of smaller loans which receive a higher
percentage fee.

The Company received $327 million in PPP loan forgiveness during the current
quarter and received $1.103 billion in the first nine months of 2021. As of
September 30, 2021, the Company had $56 million, or 4 percent of the $1.472
billion of Round 1 PPP loans originated in the prior year and had $313 million,
or 56 percent of the $555 million of Round 2 PPP loans originated in the current
year.

The Company recognized $12.9 million of interest income (including deferred fees
and costs) from the Round 1 and Round 2 PPP loans in the current quarter. The
income recognized in the current quarter included $10.5 million acceleration of
net deferred fees in interest income resulting from the SBA forgiveness of
loans. Net deferred fees remaining on the balance of the PPP loans at September
30, 2021 were $13.0 million, which will be recognized into interest income over
the remaining life of the loans or when the loans are forgiven in whole or in
part by the SBA.

Supplemental information regarding credit quality and identification of the
Company's loan portfolio based on regulatory classification is provided in the
exhibits at the end of this press release. The regulatory classification of
loans is based primarily on collateral type while the Company's loan segments
presented herein are based on the purpose of the loan.
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Allowance for Credit Losses - Loans Receivable
On January 1, 2020, the Company adopted Financial Accounting Standards Board
("FASB") Accounting Standards Updates ("ASU") 2016-13, Financial Instruments -
Credit Losses, which significantly changed the allowance for credit loss
accounting policies. The following allowance for credit loss discussion was
presented under Accounting Standards Codificationâ„¢ ("ASC") Topic 326.

The following table summarizes the allocation of the ACL as of the dates
indicated:
                                              September 30, 2021                                                    December 31, 2020                                                    September 30, 2020
                                                Percent of             Percent of                                      Percent of               Percent                                   Percent of               Percent
                                                  ACL in                Loans in                                         ACL in               of Loans in                                   ACL in               of Loans in
(Dollars in thousands)         ACL               Category               Category                   ACL                  Category                Category                 ACL               Category                Category
Residential real estate   $   11,859                     8  %                    7  %       $         9,604                     6  %                     7  %       $    9,805                     6  %                     7  %
Commercial real estate       100,038                    65  %                   62  %                86,999                    55  %                    57  %           94,397                    57  %                    53  %
Other commercial              28,845                    19  %                   23  %                49,133                    31  %                    27  %           48,753                    30  %                    31  %
Home equity                    7,865                     5  %                    5  %                 8,182                     5  %                     6  %            7,430                     5  %                     6  %
Other consumer                 5,002                     3  %                    3  %                 4,325                     3  %                     3  %            4,167                     2  %                     3  %
Total                     $  153,609                   100  %                  100  %       $       158,243                   100  %                   100  %       $  164,552                   100  %                   100  %



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The following table summarizes the ACL experience for the periods indicated:
                                           At or for the Nine        At or for the Six        At or for the Year        At or for the Nine
                                              Months ended             Months ended                  ended                 Months ended
                                             September 30,               June 30,                December 31,              September 30,
(Dollars in thousands)                            2021                     2021                      2020                      2020
Balance at beginning of period             $    158,243                      158,243                   124,490                   124,490
Impact of adopting CECL                               -                            -                     3,720                     3,720
Acquisitions                                          -                            -                        49                        49
Provision for credit losses                      (2,921)                      (5,234)                   37,637                    39,165
Charge-offs
Residential real estate                             (38)                         (38)                      (21)                      (21)
Commercial real estate                             (203)                         (41)                   (3,497)                     (625)
Other commercial                                 (3,790)                      (3,113)                   (4,860)                   (3,471)
Home equity                                         (45)                         (45)                     (384)                     (293)
Other consumer                                   (4,490)                      (2,709)                   (5,046)                   (3,455)
Total charge-offs                                (8,566)                      (5,946)                  (13,808)                   (7,865)
Recoveries
Residential real estate                             288                          275                        61                        54
Commercial real estate                            1,579                          907                     1,094                       860
Other commercial                                  2,407                        1,547                     1,811                     1,496
Home equity                                         219                           67                       256                       246
Other consumer                                    2,360                        1,589                     2,933                     2,337
Total recoveries                                  6,853                        4,385                     6,155                     4,993
Net charge-offs                                  (1,713)                      (1,561)                   (7,653)                   (2,872)
Balance at end of period                   $    153,609                      151,448                   158,243                   164,552
ACL as a percentage of total loans                 1.36     %                   1.35  %                   1.42  %                   1.42  %
Net charge-offs as a percentage of total
loans                                              0.02     %                   0.01  %                   0.07  %                   0.03  %



The current quarter provision for credit loss expense for loans was $2.3 million
which was an increase of $8.0 million from the prior quarter provision for
credit loss benefit of $5.7 million and a $556 thousand decrease from the prior
year third quarter provision for credit loss expense of $2.9 million. The
increase in provision for credit losses for loans in the current quarter
compared to the prior quarter was primarily driven by organic loan growth in the
current quarter.

The allowance for credit losses on loans ("ACL") as a percentage of total loans
outstanding at September 30, 2021 was 1.36 percent which was a 1 basis point
increase compared to the prior quarter and a 6 basis point decrease from the
prior year third quarter. Excluding the PPP loans, the ACL as percentage of
loans was 1.40 percent compared to 1.43 percent in the prior quarter and 1.62
percent in the prior year third quarter. The Company's ACL of $154 million is
considered adequate to absorb the estimated credit losses from any segment of
its loan portfolio. For the periods ended September 30, 2021 and 2020, the
Company believes the ACL is commensurate with the risk in the Company's loan
portfolio and is directionally consistent with the change in the quality of the
Company's loan portfolio.

While the Company has incorporated its estimate of the impact of the COVID-19
pandemic into its calculation of the allowance based on assumptions and
forecasts that existed as of the reporting period end, the uncertainty of the
current economic environment remains volatile and the Company cannot predict
whether additional credit losses will be sustained as a result of the COVID-19
pandemic if assumptions and forecasts change in the future.
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At the end of each quarter, the Company analyzes its loan portfolio and
maintains an ACL at a level that is appropriate and determined in accordance
with accounting principles generally accepted in the United States of America
("GAAP"). Determining the adequacy of the ACL involves a high degree of judgment
and is inevitably imprecise as the risk of loss is difficult to quantify. The
ACL methodology is designed to reasonably estimate the probable credit losses
within the Company's loan portfolio. Accordingly, the ACL is maintained within a
range of estimated losses. The determination of the ACL on loans, including
credit loss expense and net charge-offs, is a critical accounting estimate that
involves management's judgments about the loan portfolio that impact credit
losses, including the credit risk inherent in the loan portfolio, economic
forecasts nationally and in the local markets in which the Company operates,
trends and changes in collateral values, delinquencies, non-performing assets,
net charge-offs, credit-related policies and personnel, and other environmental
factors.

In determining the allowance, the loan portfolio is separated into pools of
loans that share similar risk characteristics which are the Company's loan
segments. The Company then derives estimated loss assumptions from its model by
loan segment which is further segregated by the credit quality indicators. The
loss assumptions are then applied to each segment of loan to estimate the ACL on
the pooled loans. For any loans that do not share similar risk characteristics,
the estimated credit losses are determined on an individual loan basis and such
loans primarily consist of non-accrual loans. An estimated credit loss is
recorded on individually reviewed loans when the fair value of a
collateral-dependent loan or the present value of the loan's expected future
cash flows (discounted at the loans original effective interest rate) is less
than the amortized cost of the loan.

The Company provides commercial banking services to individuals, small to
medium-sized businesses, community organizations and public entities from 194
locations, including 173 branches, across Montana, Idaho, Utah, Washington,
Wyoming, Colorado, Arizona and Nevada. The states in which the Company operates
have diverse economies and markets that are tied to commodities (crops,
livestock, minerals, oil and natural gas), tourism, real estate and land
development and an assortment of industries, both manufacturing and
service-related. Thus, the changes in the global, national, and local economies
are not uniform across the Company's geographic locations. The geographic
dispersion of these market areas helps to mitigate the risk of credit loss. The
Company's model of sixteen bank divisions with separate management teams is also
a significant benefit in mitigating and managing the Company's credit risk. This
model provides substantial local oversight to the lending and credit management
function and requires multiple reviews of larger loans before credit is
extended.

The primary responsibility for credit risk assessment and identification of
problem loans rests with the loan officer of the account. This continuous
process of identifying non-performing loans is necessary to support management's
evaluation of the ACL adequacy. An independent loan review function verifying
credit risk ratings evaluates the loan officer and management's evaluation of
the loan portfolio credit quality. The ACL evaluation is well documented and
approved by the Company's Board. In addition, the policy and procedures for
determining the balance of the ACL are reviewed annually by the Company's Board,
the internal audit department, independent credit reviewers and state and
federal bank regulatory agencies.

Although the Company continues to actively monitor economic trends and
regulatory developments, no assurance can be given that the Company will not, in
any particular period, sustain losses that are significant relative to the ACL
amount, or that subsequent evaluations of the loan portfolio applying
management's judgment about then current factors will not require significant
changes in the ACL. Under such circumstances, additional credit loss expense
could result.

For more information on ACL, its relationship to credit loss charges and asset quality risk, see note 3 to the consolidated financial statements in “Part I. Section 1. Financial statements”.

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Loans by Regulatory Classification
Supplemental information regarding identification of the Company's loan
portfolio and credit quality based on regulatory classification is provided in
the following tables. The regulatory classification of loans is based primarily
on the type of collateral for the loans. There may be differences when compared
to loan tables and loan amounts appearing elsewhere which reflect the Company's
internal loan segments which are based on the purpose of the loan.

The following table summarizes the Company's loan portfolio by regulatory
classification:
                                                          Loans Receivable, by Loan Type                                                    % Change from
                                     Sep 30,               Jun 30,               Dec 31,               Sep 30,             Jun 30,            Dec 31,             Sep 30,
(Dollars in thousands)                2021                  2021                  2020                  2020                2021               2020                2020
Custom and owner occupied
construction                     $    170,489          $    158,405          $    157,529          $    166,195                 8  %                8  %                3  %
Pre-sold and spec construction        188,668               163,740               148,845               157,242                15  %               27  %               20  %
Total residential construction        359,157               322,145               306,374               323,437                11  %               17  %               11  %
Land development                      151,640               111,736               102,930                96,814                36  %               47  %               57  %
Consumer land or lots                 143,977               138,292               123,747               122,019                 4  %               16  %               18  %
Unimproved land                        68,805                63,469                59,500                64,770                 8  %               16  %                6  %
Developed lots for operative
builders                               33,487                27,143                30,449                30,871                23  %               10  %                8  %
Commercial lots                        76,382                64,664                60,499                62,445                18  %               26  %               22  %
Other construction                    562,223               554,548               555,375               537,105                 1  %                1  %                5  %
Total land, lot, and other
construction                        1,036,514               959,852               932,500               914,024                 8  %               11  %               13  %
Owner occupied                      2,069,551             2,019,860             1,945,686             1,889,512                 2  %                6  %               10  %
Non-owner occupied                  2,561,777             2,436,672             2,290,512             2,259,062                 5  %               12  %               13  %
Total commercial real estate        4,631,328             4,456,532             4,236,198             4,148,574                 4  %                9  %               12  %
Commercial and industrial           1,407,353             1,654,237             1,850,197             2,308,710               (15) %              (24) %              (39) %
Agriculture                           748,548               746,678               721,490               747,145                 -  %                4  %                -  %
1st lien                            1,159,265             1,105,579             1,228,867             1,256,111                 5  %               (6) %               (8) %
Junior lien                            36,942                38,029                41,641                43,355                (3) %              (11) %              (15) %
Total 1-4 family                    1,196,207             1,143,608             1,270,508             1,299,466                 5  %               (6) %               (8) %
Multifamily residential               373,022               398,499               391,895               359,030                (6) %               (5) %                4  %
Home equity lines of credit           709,828               693,135               657,626               651,546                 2  %                8  %                9  %
Other consumer                        198,763               201,336               190,186               191,761                (1) %                5  %                4  %
Total consumer                        908,591               894,471               847,812               843,307                 2  %                7  %                8  %
States and political
subdivisions                          612,882               631,199               575,647               617,624                (3) %                6  %               (1) %
Other                                 114,427               129,237               156,647               205,351               (11) %              (27) %              (44) %
Total loans receivable,
including loans held for sale      11,388,029            11,336,458            11,289,268            11,766,668                 -  %                1  %               (3) %
Less loans held for sale 1            (94,138)              (98,410)             (166,572)             (147,937)               (4) %              (43) %              (36) %
Total loans receivable           $ 11,293,891          $ 11,238,048          $ 11,122,696          $ 11,618,731                 -  %                2  %               (3) %


______________________________

1 Loans held for sale are primarily 1st tier 1-4 family loans.

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The following table summarizes the Company's non-performing assets by regulatory
classification:
                                                                                                                                     Non-                   Accruing
                                                                Non-performing Assets,                                              Accrual            Loans 90  Days or
                                                                     by Loan Type                                                    Loans               More Past Due               OREO
                                      Sep 30,                     Jun 30,               Dec 31,               Sep 30,               Sep 30,                 Sep 30,                 Sep 30,
(Dollars in thousands)                  2021                       2021                  2020                  2020                  2021                     2021                   2021
Custom and owner occupied
construction                 $                   240                 243                   247                   249                   240                       -                        -
Pre-sold and spec
construction                                       -                   -                     -                     -                     -                       -                        -
Total residential
construction                                     240                 243                   247                   249                   240                       -                        -
Land development                                  31                 279                   342                   450                    31                       -                        -
Consumer land or lots                            186                 190                   201                   223                   186                       -                        -
Unimproved land                                  166                 178                   294                   417                   166                       -                        -
Developed lots for operative
builders                                           -                   -                     -                     -                     -                       -                        -
Commercial lots                                    -                 368                   368                   682                     -                       -                        -
Other construction                               276                   -                     -                     -                   276                       -                        -
Total land, lot and other
construction                                     659               1,015                 1,205                 1,772                   659                       -                        -
Owner occupied                                 3,323               3,747                 6,725                 9,077                 3,323                       -                        -
Non-owner occupied                             2,089               1,892                 4,796                 4,879                 1,716                     373                        -
Total commercial real estate                   5,412               5,639                11,521                13,956                 5,039                     373                        -
Commercial and industrial                      5,621               6,046                 6,689                 8,571                 5,444                     177                        -
Agriculture                                   32,712              31,742                 6,313                 8,972                28,412                   4,300                        -
1st lien                                       3,178               4,186                 5,353                 6,559                 3,091                      87                        -
Junior lien                                      166                 272                   301                   986                   166                       -                        -
Total 1-4 family                               3,344               4,458                 5,654                 7,545                 3,257                      87                        -
Multifamily residential                            -                   -                     -                     -                     -                       -                        -
Home equity lines of credit                    2,393               2,653                 2,939                 2,903                 2,224                      81                       88
Other consumer                                   539                 542                   572                   407                   392                     129                       18
Total consumer                                 2,932               3,195                 3,511                 3,310                 2,616                     210                      106
States and political
subdivisions                                       -                   -                     -                     -                     -                       -                        -
Other                                            259                 703                   293                   288                   234                      25                        -
Total                        $                51,179              53,041                35,433                44,663                45,901                   5,172                      106




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The following table summarizes the Company’s accumulated loans 30 to 89 days past due by regulatory classification:

                                                     Accruing 30-89 Days Delinquent
                                                           Loans, by Loan Type                                                     % Change from
                                      Sep 30,           Jun 30,           Dec 31,           Sep 30,              Jun 30,                Dec 31,              Sep 30,
(Dollars in thousands)                 2021              2021              2020              2020                  2021                   2020                 2020
Custom and owner occupied
construction                        $    892          $      -          $    788          $    448                         n/m                13  %                99  %
Pre-sold and spec construction           325                70                 -                 -                      364  %                  n/m                  n/m
Total residential construction         1,217                70               788               448                    1,639  %                54  %               172  %
Land development                         276                 -               202                 -                         n/m                37  %                  n/m
Consumer land or lots                    325                 -                71               220                         n/m               358  %                48  %
Unimproved land                          181               307               357               381                      (41) %               (49) %               (52) %
Developed lots for operative
builders                                  59                 -               306                 -                         n/m               (81) %                  n/m

Other construction                    12,884                 -                 -                 -                         n/m                  n/m                  n/m
Total land, lot and other
construction                          13,725               307               936               601                    4,371  %             1,366  %             2,184  %
Owner occupied                         1,933             2,243             3,432             3,163                      (14) %               (44) %               (39) %
Non-owner occupied                       443               574               149             1,157                      (23) %               197  %               (62) %
Total commercial real estate           2,376             2,817             3,581             4,320                      (16) %               (34) %               (45) %
Commercial and industrial              1,581             2,947             1,814             2,354                      (46) %               (13) %               (33) %
Agriculture                            1,032               837             1,553             2,795                       23  %               (34) %               (63) %
1st lien                                 350               736             6,677             2,589                      (52) %               (95) %               (86) %
Junior lien                              167               106                55               738                       58  %               204  %               (77) %
Total 1-4 family                         517               842             6,732             3,327                      (39) %               (92) %               (84) %

Home equity lines of credit            3,023             1,942             2,840             2,200                       56  %                 6  %                37  %
Other consumer                         1,361               919             1,054               789                       48  %                29  %                72  %
Total consumer                         4,384             2,861             3,894             2,989                       53  %                13  %                47  %
States and political subdivisions          -                 -             2,358                 -                         n/m              (100) %                  n/m
Other                                  1,170             1,395             1,065               797                      (16) %                10  %                47  %
Total                               $ 26,002          $ 12,076          $ 22,721          $ 17,631                      115  %                14  %                47  %

______________________________

n / m – not measurable

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The following table summarizes the Company’s write-offs and recoveries by regulatory classification:

Net expenses (recoveries),

End of the cumulative period,

                                                                                  By Loan Type                                                       Charge-Offs             Recoveries
                                                  Sep 30,                        Jun 30,                Dec 31,                Sep 30,                 Sep 30,                 Sep 30,
(Dollars in thousands)                             2021                            2021                   2020                   2020                   2021                    2021
Custom and owner occupied
construction                         $                            -                    -                     (9)                    (9)                     -                       -
Pre-sold and spec construction                                  (12)                  (8)                   (24)                   (19)                     -                      12
Total residential construction                                  (12)                  (8)                   (33)                   (28)                     -                      12
Land development                                               (163)                 (77)                  (106)                   (63)                     -                     163
Consumer land or lots                                          (164)                (164)                  (221)                  (217)                     3                     167
Unimproved land                                                (241)                 (21)                  (489)                  (489)                     -                     241

Commercial lots                                                   -                    -                    (55)                    (5)                     -                       -

Total land, lot and other
construction                                                   (568)                (262)                  (871)                  (774)                     3                     571
Owner occupied                                                 (410)                 (70)                  (168)                   (82)                    41                     451
Non-owner occupied                                             (356)                (503)                 3,030                    246                    148                     504
Total commercial real estate                                   (766)                (573)                 2,862                    164                    189                     955
Commercial and industrial                                       (87)                (218)                 1,533                    740                    481                     568
Agriculture                                                       -                   (6)                   337                    309                     12                      12
1st lien                                                       (250)                (237)                    69                    (27)                    42                     292
Junior lien                                                    (511)                (475)                  (211)                  (169)                     -                     511
Total 1-4 family                                               (761)                (712)                  (142)                  (196)                    42                     803
Multifamily residential                                         (40)                 (40)                  (244)                  (244)                     -                      40
Home equity lines of credit                                    (601)                 (23)                   101                     79                     41                     642
Other consumer                                                  145                   74                    307                    233                    369                     224
Total consumer                                                 (456)                  51                    408                    312                    410                     866

Other                                                         4,403                3,329                  3,803                  2,589                  7,429                   3,026
Total                                $                        1,713                1,561                  7,653                  2,872                  8,566                   6,853





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Sources of Funds
The Company's deposits have traditionally been the principal source of funds for
use in lending and other business purposes. The Company also obtains funds from
repayment of loans and debt securities, securities sold under agreements to
repurchase ("repurchase agreements"), wholesale deposits, advances from FHLB and
other borrowings. Loan repayments are a relatively stable source of funds, while
interest bearing deposit inflows and outflows are significantly influenced by
general interest rate levels and market conditions. Borrowings and advances may
be used on a short-term basis to compensate for reductions in normal sources of
funds such as deposit inflows at less than projected levels. Borrowings also may
be used on a long-term basis to support expanded activities, match maturities of
longer-term assets or manage interest rate risk.

Deposits

The Company has several deposit programs designed to attract both short-term and
long-term deposits from the general public by providing a wide selection of
accounts and rates. These programs include non-interest bearing deposit accounts
and interest bearing deposit accounts such as NOW, DDA, savings, money market
deposits, fixed rate certificates of deposit with maturities ranging from three
months to five years, negotiated-rate jumbo certificates, and individual
retirement accounts. These deposits are obtained primarily from individual and
business residents in the Bank's geographic market areas. Wholesale deposits are
obtained through various programs and include brokered deposits classified as
NOW, DDA, money market deposits and certificate accounts. The Company's deposits
are summarized below:
                                           September 30, 2021                                December 31, 2020                                September 30, 2020
(Dollars in thousands)                Amount                   Percent                  Amount                  Percent                  Amount         

Percent

Non-interest bearing deposits  $        6,632,402                    38  %       $       5,454,539                    37  %       $        5,479,311                    38  %
NOW and DDA accounts                    4,299,244                    25  %               3,698,559                    25  %                3,300,152                    23  %
Savings accounts                        2,502,268                    14  %               2,000,174                    13  %                1,864,143                    13  %
Money market deposit accounts           3,123,425                    18  %               2,627,336                    18  %                2,557,294                    18  %
Certificate accounts                      919,852                     5  %                 978,779                     7  %                  979,857                     7  %
Wholesale deposits                         26,123                     -  %                  38,142                     -  %                  119,131                     1  %
Total interest bearing
deposits                               10,870,912                    62  %               9,342,990                    63  %                8,820,577                    62  %
Total deposits                 $       17,503,314                   100  %       $      14,797,529                   100  %       $       14,299,888                   100  %



Securities Sold Under Agreements to Repurchase, Federal Home Loan Bank Advances
and Other Borrowings
The Company borrows money through repurchase agreements. This process involves
the selling of one or more of the securities in the Company's investment
portfolio and simultaneously entering into an agreement to repurchase the same
securities at an agreed upon later date, typically overnight. A rate of interest
is paid for the agreed period of time. The Bank enters into repurchase
agreements with local municipalities, and certain customers, and has adopted
procedures designed to ensure proper transfer of title and safekeeping of the
underlying securities. In addition to retail repurchase agreements, the Company
periodically enters into wholesale repurchase agreements as additional funding
sources. The Company has not entered into reverse repurchase agreements.

The Bank is a member of the FHLB of Des Moines, which is one of eleven banks
that comprise the FHLB system.  The Bank is required to maintain a certain level
of activity-based stock in order to borrow or to engage in other transactions
with the FHLB of Des Moines. Additionally, the Bank is subject to a membership
capital stock requirement that is based upon an annual calibration tied to the
total assets of the Bank. The borrowings are collateralized by eligible
categories of loans and debt securities (principally, securities which are
obligations of, or guaranteed by, the U.S. government and its agencies),
provided certain standards related to credit-worthiness have been met. Advances
are made pursuant to several different credit programs, each of which has its
own interest rates and range of maturities. The Bank's maximum amount of FHLB
advances is limited to the lesser of a fixed percentage of the Bank's total
assets or the discounted value of eligible collateral. FHLB advances fluctuate
to meet seasonal and other withdrawals of deposits and to expand lending or
investment opportunities of the Company.

In addition, the Company has other sources of secured and unsecured lines of debt from various sources which may be used from time to time.

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Short-term borrowings
A critical component of the Company's liquidity and capital resources is access
to short-term borrowings to fund its operations. Short-term borrowings are
accompanied by increased risks managed by the Bank's Asset Liability Committee
("ALCO") such as rate increases or unfavorable change in terms which would make
it more costly to obtain future short-term borrowings. The Company's short-term
borrowing sources include FHLB advances, federal funds purchased and retail and
wholesale repurchase agreements. The Company also has access to the short-term
discount window borrowing programs (i.e., primary credit) of the Federal Reserve
Bank ("FRB"). FHLB advances and certain other short-term borrowings may be
renewed as long-term borrowings to decrease certain risks such as liquidity or
interest rate risk; however, the reduction in risks are weighed against the
increased cost of funds and other risks.

The following table provides information relating to significant short-term
borrowings, which consists of borrowings that mature within one year of period
end:
                                                                 At or for the Nine         At or for the Year
                                                                    Months ended                   ended
                                                                   September 30,               December 31,
(Dollars in thousands)                                                  2021                       2020
Repurchase agreements
Amount outstanding at end of period                              $   1,040,939                       1,004,583
Weighted interest rate on outstanding amount                              0.19    %                       0.33  %
Maximum outstanding at any month-end                             $   1,040,939                       1,004,583
Average balance                                                  $     988,092                         783,100
Weighted-average interest rate                                            0.25    %                       0.46  %



Subordinated Debentures
In addition to funds obtained in the ordinary course of business, the Company
formed or acquired financing subsidiaries for the purpose of issuing trust
preferred securities that entitle the investor to receive cumulative cash
distributions thereon. Subordinated debentures were issued in conjunction with
the trust preferred securities and the terms of the subordinated debentures and
trust preferred securities are the same. For regulatory capital purposes, the
trust preferred securities are included in Tier 2 capital at September 30, 2021.
The subordinated debentures outstanding as of September 30, 2021 were $133
million, including fair value adjustments from acquisitions.

Contractual Obligations and Off-Balance Sheet Arrangements
In the normal course of business, there may be various outstanding commitments
to obtain funding and to extend credit, such as letters of credit and unfunded
loan commitments, which are not reflected in the accompanying condensed
consolidated financial statements. The Company assessed the off-balance sheet
credit exposures as of September 30, 2021 and determined its ACL of $14.1
million was adequate to absorb the estimated credit losses.

Off-balance sheet arrangements also include any obligation related to a variable
interest held in an unconsolidated entity. The Company does not anticipate any
material losses as a result of these transactions. For additional information
regarding the Company's interests in unconsolidated variable interest entities
("VIE"), see Note 7 to the Unaudited Consolidated Financial Statements in "Part
I. Item 1. Financial Statements."

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Liquidity Risk
Liquidity risk is the possibility that the Company will not be able to fund
present and future obligations as they come due because of an inability to
liquidate assets or obtain adequate funding at a reasonable cost. The objective
of liquidity management is to maintain cash flows adequate to meet current and
future needs for credit demand, deposit withdrawals, maturing liabilities and
corporate operating expenses. Effective liquidity management entails three
elements:
1.assessing on an ongoing basis, the current and expected future needs for
funds, and ensuring that sufficient funds or access to funds exist to meet those
needs at the appropriate time;
2.providing for an adequate cushion of liquidity to meet unanticipated cash flow
needs that may arise from potential adverse circumstances ranging from high
probability/low severity events to low probability/high severity; and
3.balancing the benefits between providing for adequate liquidity to mitigate
potential adverse events and the cost of that liquidity.

The Company has a wide range of versatility in managing the liquidity and
asset/liability mix. The Bank's ALCO meets regularly to assess liquidity risk,
among other matters. The Company monitors liquidity and contingency funding
alternatives through management reports of liquid assets (e.g., debt
securities), both unencumbered and pledged, as well as borrowing capacity, both
secured and unsecured, including off-balance sheet funding sources. The Company
evaluates its potential funding needs across alternative scenarios and maintains
contingency funding plans consistent with the Company's access to diversified
sources of contingent funding.

The following table identifies certain sources of liquidity and capacities available to the Company on the dates indicated:

                                                 September 30,        

the 31st of December,

       (Dollars in thousands)                         2021               
2020
       FHLB advances
       Borrowing capacity                       $    2,822,024       2,446,759
       Amount utilized                                       -               -
       Letters of credit                                (1,631)         (1,498)
       Amount available                         $    2,820,393       2,445,261
       FRB discount window
       Borrowing capacity                       $    1,422,290       1,269,778
       Amount utilized                                       -               -
       Amount available                         $    1,422,290       1,269,778

Available unsecured lines of credit $ 635,000 635,000

Unencumbered debt securities

we government and federal agency $ 31,373 38,588

       U.S. government sponsored enterprises            47,051          

9,781

       State and local governments                     656,611         

185,680

       Corporate bonds                                  39,986          

99 764

Residential Mortgage Backed Securities 4,261,048 1,994,927

       Commercial mortgage-backed securities           922,366       

1,028,944

Total unencumbered debt securities $ 5,958,435 3,357,684



                                       74
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Capital Resources
Maintaining capital strength continues to be a long-term objective of the
Company. Abundant capital is necessary to sustain growth, provide protection
against unanticipated declines in asset values, and to safeguard the funds of
depositors. Capital is also a source of funds for loan demand and enables the
Company to effectively manage its assets and liabilities. The Company has the
capacity to issue 117,187,500 shares of common stock of which 95,512,659 have
been issued as of September 30, 2021. The Company also has the capacity to issue
1,000,000 shares of preferred stock of which none have been issued as of
September 30, 2021. Conversely, the Company may decide to utilize a portion of
its strong capital position, as it has done in the past, to repurchase shares of
its outstanding common stock, depending on market price and other relevant
considerations.

The Federal Reserve has adopted capital adequacy guidelines that are used to
assess the adequacy of capital in supervising a bank holding company. The
federal banking agencies issued final rules ("Final Rules") that established a
comprehensive regulatory capital framework based on the recommendation of the
Basel Committee on Banking Supervision and certain requirements of the
Dodd-Frank Wall Street Reform and Consumer Protection Act. The Final Rules
require the Company to hold a 2.5 percent capital conservation buffer designed
to absorb losses during periods of economic stress. As of September 30, 2021,
management believes the Company and Bank meet all capital adequacy requirements
to which they are subject and there are no conditions or events subsequent to
this date that management believes have changed the Company's or Bank's
risk-based capital category.

The following table illustrates the Bank’s regulatory capital ratios and the
of the Federal Reserve capital adequacy guidelines from September 30, 2021:

                                                                                                                                       Leverage Ratio/
                                           Total Capital (To              Tier 1 Capital (To          Common Equity Tier 1 (To       Tier 1 Capital (To
                                         Risk-Weighted Assets)          Risk-Weighted Assets)          Risk-Weighted Assets)           Average Assets)

Glacier Bank                                            13.32  %                       12.32  %                       12.32  %                   8.75  %
Minimum capital requirements                             8.00  %                        6.00  %                        4.50  %                   4.00  %
Minimum capital requirements plus
capital conservation buffer                             10.50  %                        8.50  %                        7.00  %                       N/A
Well capitalized requirements                           10.00  %                        8.00  %                        6.50  %                   5.00  %



On January 1, 2020, the Company adopted the current expected credit losses
("CECL") accounting standard that requires management's estimate of credit
losses over the expected contractual lives of the Company's relevant financial
assets. On March 27, 2020, in response to the COVID-19 pandemic, federal banking
regulators issued an interim final rule to delay for two years the initial
adoption impact of CECL on regulatory capital, followed by a three-year
transition period to phase out the aggregate amount of the capital benefit
provided during 2020 and 2021 (i.e., a five-year transition period). The Company
has elected to utilize the five-year transition period. During the two-year
delay, the Company will add back to Common Tier 1 capital 100 percent of the
initial adoption impact of CECL plus 25 percent of the cumulative quarterly
changes in ACL (i.e., quarterly transitional amounts). Starting on January 1,
2022, the quarterly transitional amounts along with the initial adoption impact
of CECL will be phased out of Common Tier 1 capital evenly over the three-year
period.

Federal and State Income Taxes
The Company files a consolidated federal income tax return using the accrual
method of accounting. All required tax returns have been timely filed. Financial
institutions are subject to the provisions of the Internal Revenue Code of 1986,
as amended, in the same general manner as other corporations. The federal
statutory corporate income tax rate is 21 percent.

Within the Company's geographic footprint, Montana, Idaho, Utah, Colorado and
Arizona law, financial institutions are subject to a corporation income tax,
which incorporates or is substantially similar to applicable provisions of the
Internal Revenue Code. The corporation income tax is imposed on federal taxable
income, subject to certain adjustments. State taxes are incurred at the rate of
6.75 percent in Montana, 6.925 percent in Idaho, 4.95 percent in Utah, 4.6
percent in Colorado and 4.9 percent in Arizona. Washington, Wyoming and Nevada
do not impose a corporate income tax. The Company is also required to file in
the states other than the eight states in which it has properties.

                                       75
--------------------------------------------------------------------------------


The following table summarizes information relevant to the Company's federal and
state income taxes:
                                                                                   Nine Months ended
                                                                     September 30,                September 30,
(Dollars in thousands)                                                    2021                        2020
Income Before Income Taxes                                         $       289,457                         227,230
Federal and state income tax expense                                        55,409                          42,690
Net Income                                                         $       234,048                         184,540
Effective tax rate 1                                                          19.1  %                         18.8  %

Income from tax-exempt debt securities, municipal loans and leases $ 51,377

                          45,378
Benefits from federal income tax credits                           $         9,260                           9,626


______________________________

1The current and prior year's low effective income tax rates are due to income
from tax-exempt debt securities, municipal loans and leases and benefits from
federal income tax credits.

The Company has equity investments in Certified Development Entities ("CDE")
which have received allocations of New Markets Tax Credits ("NMTC").
Administered by the Community Development Financial Institutions Fund ("CDFI
Fund") of the U.S. Department of the Treasury, the NMTC program is aimed at
stimulating economic and community development and job creation in low-income
communities. The federal income tax credits received are claimed over a
seven-year credit allowance period. The Company also has equity investments in
Low-Income Housing Tax Credits ("LIHTC") which are indirect federal subsidies
used to finance the development of affordable rental housing for low-income
households. The federal income tax credits are claimed over a ten-year credit
allowance period. The Company has investments of $16.2 million in Qualified
School Construction bonds whereby the Company receives quarterly federal income
tax credits in lieu of taxable interest income. The federal income tax credits
on these debt securities are subject to federal and state income tax.

Following is a list of expected federal income tax credits to be received in the
years indicated.

                                New            Low-Income           Debt
                              Markets           Housing          Securities
(Dollars in thousands)      Tax Credits       Tax Credits       Tax Credits         Total
2021                       $      6,617        10,049               727            17,393
2022                              5,969        12,926               664            19,559
2023                              5,373        15,652               631            21,656
2024                              3,636        15,878               594            20,108
2025                              1,890        15,760               451            18,101
Thereafter                        2,340        69,545               452            72,337
                           $     25,825       139,810             3,519           169,154



                                       76
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Average Balance Sheet
The following schedule provides 1) the total dollar amount of interest and
dividend income of the Company for earning assets and the average yields; 2) the
total dollar amount of interest expense on interest bearing liabilities and the
average rates; 3) net interest and dividend income and interest rate spread; and
4) net interest margin (tax-equivalent).
                                                            Three Months ended                                                 Nine Months ended
                                                            September 30, 2021                                                September 30, 2021
                                                                                        Average                                                           Average
                                            Average             Interest and             Yield/               Average             Interest and             Yield/
(Dollars in thousands)                      Balance              Dividends                Rate                Balance              Dividends                Rate
Assets
Residential real estate loans           $    817,150          $       9,885                 4.84  %       $    844,945          $      29,572                 4.67  %
Commercial loans 1                         9,468,440                116,963                 4.90  %          9,467,329                344,117                 4.86  %
Consumer and other loans                     974,582                 10,971                 4.47  %            963,002                 32,386                 4.50  %
Total loans 2                             11,260,172                137,819                 4.86  %         11,275,276                406,075                 4.82  %
Tax-exempt investment securities 3         1,548,447                 14,711                 3.80  %          1,547,429                 44,162                 3.81  %
Taxable investment securities 4            6,767,418                 18,896                 1.12  %          5,771,573                 51,998                 1.20  %
Total earning assets                      19,576,037                171,426                 3.47  %         18,594,278                502,235                 3.61  %
Goodwill and intangibles                     563,257                                                           565,724
Non-earning assets                           803,226                                                           816,982
Total assets                            $ 20,942,520                                                      $ 19,976,984
Liabilities
Non-interest bearing deposits           $  6,505,530          $           -                    -  %       $  6,069,326          $           -                    -  %
NOW and DDA accounts                       4,261,648                    597                 0.06  %          4,057,019                  1,768                 0.06  %
Savings accounts                           2,440,332                    146                 0.02  %          2,277,335                    425                 0.02  %
Money market deposit accounts              3,041,634                    814                 0.11  %          2,895,362                  2,540                 0.12  %
Certificate accounts                         928,165                  1,036                 0.44  %            951,655                  3,640                 0.51  %
Total core deposits                       17,177,309                  2,593                 0.06  %         16,250,697                  8,373                 0.07  %
Wholesale deposits 5                          26,117                     16                 0.24  %             32,787                     55                 0.22  %
Repurchase agreements                        988,283                    495                 0.20  %            988,092                  1,835                 0.25  %

Subordinated debentures and other
borrowed funds                               166,151                  1,024                 2.44  %            165,996                  3,092                 2.49  %
Total interest bearing liabilities        18,357,860                  4,128                 0.09  %         17,437,572                 13,355                 0.10  %
Other liabilities                            182,573                                                           181,640
Total liabilities                         18,540,433                                                        17,619,212
Stockholders' Equity
Common stock                                     955                                                               955
Paid-in capital                            1,497,107                                                         1,496,051
Retained earnings                            805,253                                                           757,666
Accumulated other comprehensive income        98,772                                                           103,100
Total stockholders' equity                 2,402,087                                                         2,357,772
Total liabilities and stockholders'
equity                                  $ 20,942,520                                                      $ 19,976,984
Net interest income (tax-equivalent)                          $     167,298                                                     $     488,880
Net interest spread (tax-equivalent)                                                        3.38  %                                                           3.51  %
Net interest margin (tax-equivalent)                                                        3.39  %                                                     

3.52%

______________________________

1Includes tax effect of $1.4 million and $4.2 million on tax-exempt municipal
loan and lease income for the three and nine months ended September 30, 2021,
respectively.
2Total loans are gross of the allowance for credit losses, net of unearned
income and include loans held for sale. Non-accrual loans were included in the
average volume for the entire period.
3Includes tax effect of $3.0 million and $9.0 million on tax-exempt debt
securities income for the three and nine months ended September 30, 2021,
respectively.
4Includes tax effect of $255 thousand and $766 thousand on federal income tax
credits for the three and nine months ended September 30, 2021, respectively.
5Wholesale deposits include brokered deposits classified as NOW, DDA, money
market deposit and certificate accounts with contractual maturities.
                                       77
--------------------------------------------------------------------------------


Rate/Volume Analysis
Net interest income can be evaluated from the perspective of relative dollars of
change in each period. Interest income and interest expense, which are the
components of net interest income, are shown in the following table on the basis
of the amount of any increases (or decreases) attributable to changes in the
dollar levels of the Company's interest earning assets and interest bearing
liabilities ("volume") and the yields earned and paid on such assets and
liabilities ("rate"). The change in interest income and interest expense
attributable to changes in both volume and rates has been allocated
proportionately to the change due to volume and the change due to rate.
                                                                                   Nine Months ended
                                                                                     2021 vs. 2020
                                                                              Increase (Decrease) Due to:
(Dollars in thousands)                                           Volume                   Rate                    Net
Interest income
Residential real estate loans                               $       (5,844)                    200                 (5,644)
Commercial loans (tax-equivalent)                                   19,187                   6,495                 25,682
Consumer and other loans                                               431                  (1,816)                (1,385)
Investment securities (tax-equivalent)                              82,463                 (66,915)                15,548
Total interest income                                               96,237                 (62,036)                34,201
Interest expense
NOW and DDA accounts                                                   808                  (1,284)                  (476)
Savings accounts                                                       208                    (362)                  (154)
Money market deposit accounts                                        1,106                  (2,591)                (1,485)
Certificate accounts                                                  (272)                 (3,029)                (3,301)
Wholesale deposits                                                    (179)                    (98)                  (277)
Repurchase agreements                                                1,019                  (1,966)                  (947)
FHLB advances                                                         (684)                      -                   (684)
Subordinated debentures and other borrowed funds                      (157)                   (929)                (1,086)
Total interest expense                                               1,849                 (10,259)                (8,410)
Net interest income (tax-equivalent)                        $       94,388                 (51,777)                42,611



Net interest income (tax-equivalent) increased $42.6 million for the nine months
ended September 30, 2021 compared to the same period in 2020. The interest
income for the first nine months of 2021 increased over the same period last
year primarily from income associated with the PPP loans and increased volume of
debt securities. Total interest expense decreased from the prior year primarily
from a decrease in rates on deposits.

Effect of inflation and changing prices
GAAP often requires the measurement of financial position and operating results
in terms of historical dollars, without consideration for change in relative
purchasing power over time due to inflation. Virtually all assets of the Company
are monetary in nature; therefore, interest rates generally have a more
significant impact on a company's performance than does the effect of inflation.

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