Glacier Bancorp, Inc. (GBCI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. And welcome to the Glacier Bancorp Annual Meeting of Stockholders Conference Call. [Operator Instructions] I would now like to hand the meeting over to your speaker today, Craig Langel. Thank you. Please go ahead, sir.

Thank you. The meeting will please come to order. My name is Craig Langel, Chairman of Glacier Bancorp, Inc. Good morning. And welcome to the 2020 Glacier Bancorp Annual Meeting. This is our 35th annual meeting and our first virtual meeting. We are conducting this virtual meeting because of the unprecedented circumstances created by the global coronavirus pandemic. We look forward to conducting this meeting in person next year as we have done for many years in Kalispell, Montana. For those shareholders listening in, you can vote and ask questions at this meeting, if you have logged in with the control number on your proxy card and by following the instructions on the website. I would like to welcome my fellow Glacier Bancorp Board members who have dialed into this call and are joining us today. Also in attendance are our 16 Glacier Bank division presidents, senior staff, our BKD auditors and our attorneys from Miller Nash Graham & Dunn. Before we go further, I would like to take a moment to recognize Dallas Herron, our Board Chairman, who retired this year. Dallas has served the company for over 20 years. He started off as a customer of Glacier Bank, and then joined the Glacier Bank Board in 1998. He served on this division Board for 10 years until 2008, when he joined the Glacier Bancorp Board. In 2013, he was unanimously elected to the role of Board Chairman. Our company has been fortunate to have been led by exceptional Board Chairmen, who all have left their mark on our company. Each of these Chairmen have led the company through good times and challenging times. Dallas took over Chair from Everit Sliter and led the company through the retirement of a number of long-time Board members, any recruitment and addition of new members. Dallas also guided the company through the search for a new CEO, viewed as generally one of the most challenging events a company can go through. Dallas took all of these challenges on with a spirit of candor, collaboration, class and a wonderful sense of humor. And the success of his leadership can be measured in many ways. One is the market value of Glacier Bancorp, which increased $1.3 billion or 60% under Dallas' leadership. Dallas, thank you for your strong commitment to the company, your hard work to get us through many challenges and your unwavering support for our employees. We will miss you and your guidance, and we wish you and you get the best as you move on to the next chapter in your life, one that we know you are excited to pursue. Thank you. At this time, I would like to introduce the GBCI directors: David Boyles, Randy Chesler, Sherry Cladouhos, Jim English, Annie Goodwin, Doug McBride, John Murdoch, George Sutton and myself. The records of Glacier Bancorp, Inc. show that 92,363,417 votes are entitled to be cast at this meeting, of which 46,181,709 represents the majority. The secretary reported that there were at least 80,690,000 shares of common stock represented in person or by proxy. This number represents 87.36% of the shares held by shareholders entitled to vote. Therefore, a quorum is present for the transaction of business. We will take a vote on the matters to be considered in a few minutes. Questions can be submitted via the "Ask a Question" text box on the meeting portal. At the end of the meeting, questions will be answered as time allows. We previously received confirmation that a notice of meeting, proxy statement and proxy card were mailed on or about March 16, 2020, to each stockholder entitled to vote at this meeting at the close of business on the record date of February 24, 2020. Copies of an affidavit to this effect will be attached to the minutes of this meeting. There are 3 items on our agenda to be acted upon at this meeting as stated in the notice of meeting, the first of which is the election of all directors to serve 1-year terms to expire in 2021. The nominees are David C. Boyles, Randall M. Chesler, Sherry L. Cladouhos, James M. English, Annie M. Goodwin, Craig A. Langel, Douglas J. McBride, John W. Murdoch and George R. Sutton. The second item is a vote on an advisory nonbinding resolution to approve the company's compensation of executive officers. The advisory resolution will approve the compensation of our named executive officers as described in the proxy statement. This vote, often called a Say-on-Pay vote is now required as a result of the Dodd-Frank Act. Previously, stockholders voted that their preference was to hold such a vote on an annual basis and the Board elected to do so. It is a nonbinding vote, although the compensation committee and the Board will certainly take the results of the vote into account when making future compensation decisions. And our third order of business is to ratify the appointment of our accounting firm, the appointment of BKD, LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. If any share -- stockholder would like to make a comment regarding any of the agenda items, please submit your comment through the web portal. Have any questions come through?

No.

Therefore, I'm going to call the polls open. Any shareholder who hasn't yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted via telephone or Internet and do not wish to change their vote do not need to take any further action at this time. I'm going to pause for voting. [Voting]

Thank you. Did that seem like an eternity? I would -- now that everyone has had the opportunity to vote, I will declare the polls closed. I would now like to invite our President and CEO, Randy Chesler, to report to you about the business of Glacier Bancorp. Randy?

Thank you, Craig, and I'd like to thank all of you for taking time to attend our annual meeting. We really appreciate our stockholders' interest in and support of Glacier Bancorp. Talented people are a key part of our business. And before I get started with the company performance report today, I would like to make some important introductions, starting with the following promotions to officer level that our Board just approved this morning: Chris Hippler, Warren Bauder, Meagen Foote, Justin Hauck, Tina O'Donnell, Terry Clemons, Blake Petersen, Sunny Guild. Congratulations to all of you on your promotions, and thank you. And we are very excited to have you on our team, and we look forward to your continued contributions to our company. Our company is a collection of community banks, and the bank presidents from each of our 16 banks have joined us this morning. These executives are the glue that holds our organization together. Each of them is a leader in our company as well as in their communities they serve, and I'd like to introduce them to you. First, it's Scott Anderson of Mountain West Bank in Coeur d'Alene, Idaho; Scott Burke of First Security Bank of Missoula; Art Chase of Bank of the San Juans Durango, Colorado; Dean Comes of First Bank of Lewistown, Montana; Ross Duncan, Valley Bank of Helena; Liam Girard, Collegiate Peaks Bank in Denver, Colorado; Charlie Guildner, North Cascades Bank in Chelan, Washington; Ty Nelson of First Bank of Wyoming in Cody, Wyoming; Jim Ness, First Security Bank in Bozeman; Bob Nystuen, Glacier Bank, right here in Kalispell; Amy Rhodes of Citizens Community Bank, Pocatello, Idaho; Brian Riley of Foothills Bank in Prescott, Arizona; Mike Seppala, Western Security Bank in Billings; Derrick Sisson of First State Bank of Wyoming in Wheatland, Wyoming; and Stan Wilmoth of Heritage Bank in Reno, Nevada. Thank you all for your strong leadership. And before we move on, I wanted to thank the past president of the Foothills Bank, Mary Lynn Lenz, Lens, for her leadership, commitment and drive to be the best. Mary Lynn worked tirelessly to build the Foothills Bank into the dominant community bank in Arizona. Mary Lynn decided to step back from her CEO role after she helped us complete the acquisition of State Bank of Arizona. It's been nonstop growth under Mary Lynn's leadership, and we will miss her contagious high energy, optimism as she takes a well-deserved pause. Next, I'd like to introduce Ron Copher, our Chief Financial Officer; and Don Chery, our Chief Administrative Officer. Don and Ron are very important to our organizations and to the divisions as well. They, along with me, represent the company's executive management team. And now our senior staff. These 12 executives are absolutely critical to helping each of our 16 bank presidents and their teams deliver exceptional service to our customers while maintaining a safe and sound bank. Tom Dolan, our Chief Credit Officer; Angela Dose, our Chief Accounting Officer; T.J. Frickle, our Enterprise Risk Manager; Lee Groom, our Chief Experience Officer; Marcia Johnson, our Chief Operating Officer; Barry Johnston, our Senior Credit Administrator; David Langston, our Director of Human Resources; Mark MacMillan, our Chief Information Officer; Paul Peterson, our Corporate Real Estate Manager; Byron Pollan, our Treasurer; Casey Ries, our Internal Audit Director; and Ryan Screnar, our Compliance Director. Thank you to all of you for your commitment to the company and the top-notch results for which you are all responsible. Before we move into reviewing the company's performance, I want to address the global COVID-19 pandemic. I want to first thank the people on the frontline and all our markets, the health care workers, first responders and other essential service providers, for they are all -- for all they are doing to help our communities get through this health crisis. I believe our company is navigating through the pandemic extremely well, and I'm exceptionally proud of the Glacier team, their commitment and leadership and their service to their communities during this time. Our divisions have taken many actions to help our employees, and most importantly, to ensure their safety. We have removed the caps on benefit time, so our people can take care of themselves or family members without having to worry about using up benefit time. And at the very beginnings of the worsening pandemic in the United States, we decided to proactively call our customers and let them know we were here to help get them through any difficulties. We wanted to talk to customers about any concerns they had about their circumstances and offer to work with them on business plans to help them get through the pandemic. We provided a number of tools for our commercial lenders to deploy if needed: forbearance, modifications, and later on, the SBA Paycheck Protection, or PPP, program. And now let's review 2019 and also take an early look at 2020 first quarter results. I'm extremely pleased to report that 2019 was another record year for the company. At the end of 2019, we had over 3,000 talented employees, who delivered exceptional results, serving customers in 8 western states from our 192 banking offices spanning almost 1,500 miles from the border of Canada all the way down to Mexico. We ended 2019 with a record level of assets, gross loans and deposits. 2019 was one of our biggest growth years in our history. And in addition to strong financial performance, giving back to the communities in which we operate remains a key priority for the company. And once again, the team did an outstanding job for the year by contributing a record 27,000 volunteer hours in our communities and making close to $200 million in community development loans. We remain committed to making the communities we serve better places to live. Three terrific acquisitions were announced in 2019, adding total assets of over $2.1 billion. This was a record acquisition year for the company. First Community Bank in Layton, Utah; Heritage Bank in Reno, Nevada; and State Bank of Arizona in Lake Havasu City, Arizona, were all announced. And I'm pleased to report that First Community and Heritage closed in 2019 as well. We were recognized by Forbes as one of the top 20 performing banks out of the 100 largest banks in the country. And Bank Director, a respected financial industry publication, rated us a top 20 performing bank in the United States for banks between $5 billion and $50 billion, based on similar factors used by Forbes. As you can see for both Forbes and Bank Director, we have been in the top 20 for a number of years. As you can see, we ended 2019 with over $13 billion in assets, reflecting growth of $1.6 billion or 13%, much of this growth coming from our acquisitions. Loans grew 15% in 2019, and this was primarily driven by our acquisitions and strong organic growth. Capital remains very important to our industry and a conservative approach is almost always rewarded over time. We continue to look to maintain capital levels at levels higher than our peers. This, along with taking a more conservative approach on credit, has been the company's approach for years. Deposits were up 14% or $1.3 billion due to our acquisitions and strong internal growth. We continue to think we have one of the premier, low cost and stable deposit franchises in the industry. The pie chart shows how our noninterest-bearing accounts grew again in 2019 to more than 34% of our deposit base, and credit quality continued the very positive improving trend we've seen over the last few years. The team has worked very hard to consistently reduce the level of nonperforming assets. We've been preparing for the next recession and for years. And while we didn't see a pandemic coming, we are entering this current economic downturn with a very strong loan portfolio. We declared and paid regular quarterly dividends of $1.11 per share for the full year of 2019. And our fourth quarter dividend was the 139th consecutive dividend declared by the company. In addition, we approved a special dividend of $0.20 per share in December, which was the 16th special dividend by -- the company has declared for a total annual dividend of $1.31 per share. And stock [Audio Gap] today. So while we're here to talk about 2019, since we just reported our first quarter 2020 earnings, let's take an early look at how we are doing. I talked about announcing State Bank of Arizona in 2019, and we closed that transaction in February of 2020 and converted it over to our core system a month later at the end of March. With this combined bank, our Foothills Bank and the resulting -- combining State Bank of Arizona with our Foothills Bank and the resulting bank is now a leading community bank in Arizona with over $1.3 million (sic) [ $1.3 billion ] in assets. Our 2019 announced acquisitions along with strong organic growth pushed our assets to over $15 billion in the first quarter of 2020, up $1.4 billion or 11% from the end of 2019. Organic loan growth, not including acquisitions, for the first quarter was 5% annualized. It's going to be tougher to continue to grow at this rate due to the pandemic, but we'll see how the year ends up. First quarter organic deposit growth was 5% annualized, and we continue to keep our eye on growing core deposits with a focus on relationships. As you can see, we had a very busy first quarter. We declared a dividend of $0.29 per share, and we approved over $1.1 billion in small business association payroll protection loans. Our team has worked night and day to take care of our customers, and we couldn't be more proud of their results. We booked a large credit provision of almost $23 million in the quarter, most of which was related to expected losses due to COVID-19. The full impact of the pandemic is still unclear, but we took a conservative approach for preparing for the worst. And our earnings per share were off due to the unexpected credit loss, but our analyst full year forecast for earnings are still $2.27 per share for the full year due to expected strong fee income that will offset the credit loss expense this quarter. Once again, our future success continues to be driven by our exceptional team as we could not have delivered the results covered in this letter without -- or in this presentation or as I went through this year without their unwavering dedication to serving our customers. I'm very confident under the guidance of our terrific Board of Directors that our bank presidents, senior staff and our employees will make 2020 another record year for Glacier Bancorp. So with that, Chairman, I end my comments and hand the meeting back over to you.

Thank you, Randy. At this time, if you have any questions, please enter them in the comment box now. And please note that we will attempt to answer as many questions as time allows. The final results of votes on the proposals are as follows: David C. Boyles, Randall M. Chesler, Sherry L. Cladouhos, James M. English, Annie M. Goodwin, Craig A. Langel, Douglas J. McBride, John W. Murdoch and George R. Sutton, each receiving a plurality of the votes cast and are the newly elected directors of the company. They will hold office until their successors are elected and qualified. Compensation final count. The consideration of an advisory nonbinding resolution on the company's executive compensation has been approved. BKD final count. BKD, LLP has been ratified as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. Now we will answer any questions submitted by shareholders to our web portal.

We have no questions at this time.

Thank you, Ron. If there is no further business to come before the meeting, I want to thank all of you for your attendance in these challenging times for our virtual meeting. And at this point, the meeting is adjourned. Thank you.

Ladies and gentlemen, thank you for joining on today's call. At this time, you may disconnect.