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What changed in GLACIER BANCORP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GLACIER BANCORP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+275 added−269 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in GLACIER BANCORP, INC.'s 2023 10-K

275 paragraphs added · 269 removed · 212 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

49 edited+18 added−9 removed112 unchanged
Biggest changeThe bank divisions operate under separate names, management teams and advisory directors and include the following: • Glacier Bank (Kalispell, Montana) with operations in Montana; • First Security Bank of Missoula (Missoula, Montana) with operations in Montana; • Valley Bank of Helena (Helena, Montana) with operations in Montana; • First Security Bank (Bozeman, Montana) with operations in Montana; • Western Security Bank (Billings, Montana) with operations in Montana; • First Bank of Montana (Lewistown, Montana) with operations in Montana; • Mountain West Bank (Coeur d’Alene, Idaho) with operations in Idaho and Washington; • Citizens Community Bank (Pocatello, Idaho) with operations in Idaho; • First Bank (Powell, Wyoming) with operations in Wyoming; • First State Bank (Wheatland, Wyoming) with operations in Wyoming; • North Cascades Bank (Chelan, Washington) with operations in Washington; • Bank of the San Juans (Durango, Colorado) with operations in Colorado; • Collegiate Peaks Bank (Buena Vista, Colorado) with operations in Colorado; • The Foothills Bank (Yuma, Arizona) with operations in Arizona; • First Community Bank Utah (Layton, Utah) with operations in Utah; • Heritage Bank of Nevada (Reno, NV) with operations in Nevada; and • Altabank (American Fork, UT) with operations in Utah and Idaho.
Biggest changeThe bank divisions operate under separate names, management teams and advisory directors and include the following: • Glacier Bank (Kalispell, Montana) with operations in Montana; • First Security Bank of Missoula (Missoula, Montana) with operations in Montana; • Valley Bank of Helena (Helena, Montana) with operations in Montana; • First Security Bank (Bozeman, Montana) with operations in Montana; • Western Security Bank (Billings, Montana) with operations in Montana; • First Bank of Montana (Lewistown, Montana) with operations in Montana; • Mountain West Bank (Coeur d’Alene, Idaho) with operations in Idaho and Washington; • Citizens Community Bank (Pocatello, Idaho) with operations in Idaho; • First Bank (Powell, Wyoming) with operations in Wyoming; • First State Bank (Wheatland, Wyoming) with operations in Wyoming; • North Cascades Bank (Chelan, Washington) with operations in Washington; • First Community Bank Utah (Layton, Utah) with operations in Utah; • Altabank (American Fork, UT) with operations in Utah and Idaho; • Bank of the San Juans (Durango, Colorado) with operations in Colorado; • Collegiate Peaks Bank (Buena Vista, Colorado) with operations in Colorado; • The Foothills Bank (Yuma, Arizona) with operations in Arizona; and • Heritage Bank of Nevada (Reno, NV) with operations in Nevada.
The federal laws that apply to the Bank regulate, among other things, the scope of its business, its investments, its reserves against deposits, the timing of the availability of deposited funds, and the nature and amount of and collateral for loans. Federal laws also regulate community reinvestment and insider credit transactions and impose safety and soundness standards.
The federal laws that apply to the Bank regulate, among other things, the scope of its business, its investments, its reserves against deposits, the timing of the availability of deposited funds, and the nature, amount of, and collateral for loans. Federal laws also regulate community reinvestment and insider credit transactions and impose safety and soundness standards.
Recent history has demonstrated that new legislation or changes to existing laws or regulations typically result in a greater compliance burden (and therefore increase the general costs of doing business), and the new administration under President Biden has demonstrated a general intent to regulate the financial services industry more strictly than the administration of his predecessor, including with respect to its review of proposed change in control transactions.
Recent history has demonstrated that new legislation or changes to existing laws or regulations typically result in a greater compliance burden (and therefore increase the general costs of doing business), and the administration under President Biden has demonstrated a general intent to regulate the financial services industry more strictly than the administration of his predecessor, including with respect to its review of proposed change in control transactions.
As a result of the EGRRC Act and follow-up rules, we are not currently subject to several of those heightened requirements (e.g., stress testing and a dedicated risk committee), but we will remain subject to other requirements of the Dodd-Frank Act left unaffected by the EGRRC Act, such as the requirement that we be examined, primarily by the CFPB, for compliance with federal consumer protection laws.
As a result of the EGRRC Act and follow-up rules, we are not currently subject to several of those heightened requirements (e.g., stress testing and a dedicated risk committee), but we will remain subject to other requirements of the Dodd-Frank Act left unaffected by the EGRRC Act, such as the requirement that we be examined, primarily by the CFPB, for compliance with federal consumer protection 13 laws.
These regulations and restrictions may limit the Company’s ability to obtain funds from the Bank for its cash needs, including funds for payments of dividends, interest, and operational expenses. 7 Tying Arrangements . We are also prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, sale or lease of property, or furnishing of services.
These regulations and restrictions may limit the Company’s ability to obtain funds from the Bank for its cash needs, including funds for payments of dividends, interest, and operational expenses. Tying Arrangements . We are also prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, sale or lease of property, or furnishing of services.
The Dodd-Frank Act generally prohibits a depository institution from converting from a state to federal charter, or vice versa, while it is the subject to an enforcement action unless the depository 9 institution seeks prior approval from its primary regulator and complies with specified procedures to ensure compliance with the enforcement action. Repeal of Demand Deposit Interest Prohibition.
The Dodd-Frank Act generally prohibits a depository institution from converting from a state to a federal charter, or vice versa, while it is the subject to an enforcement action unless the depository institution seeks prior approval from its primary regulator and complies with specified procedures to ensure compliance with the enforcement action. Repeal of Demand Deposit Interest Prohibition.
Federal bank regulations prohibit banks from using their interstate branches primarily for deposit production and federal bank regulatory agencies have implemented a loan-to-deposit ratio screen to ensure compliance with this prohibition. Dividends A principal source of the Company’s cash is from dividends received from the Bank, which are subject to regulation and limitation.
Federal bank regulations also prohibit banks from using their interstate branches primarily for deposit production and federal bank regulatory agencies have implemented a loan-to-deposit ratio screen to ensure compliance with this prohibition. Dividends A principal source of the Company’s cash is from dividends received from the Bank, which are subject to regulation and limitation.
These minimum capital requirements became effective in January 2015 and were the result of Final Rules implementing regulatory changes based on the recommendation of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Act ("Final Rules"). The Final Rules also require a capital conservation buffer designed to absorb losses during periods of economic stress.
These minimum capital requirements became effective in January 2015 and were the result of Final Rules implementing regulatory changes based on the recommendation of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Act ("Final Rules"). 10 The Final Rules also require a capital conservation buffer designed to absorb losses during periods of economic stress.
Other regulatory initiatives by federal and state government agencies may also significantly impact our business, including, as an example, the Biden administration’s July 2021 executive order 12 encouraging more robust scrutiny of mergers and acquisitions and the related efforts of banking regulators to increase scrutiny of transactions.
Other regulatory initiatives by federal and state government agencies may also significantly impact our business, including, as an example, the Biden administration’s July 2021 executive order encouraging more robust scrutiny of mergers and acquisitions and the related efforts of banking regulators to increase scrutiny of transactions.
Copies can also be obtained by accessing the SEC’s website (www.sec.gov). Supervision and Regulation We are subject to extensive regulation under federal and state laws. This section provides a general overview of the federal and state regulatory framework applicable to us.
Copies can also be obtained by accessing the SEC’s website (www.sec.gov). 6 Supervision and Regulation We are subject to extensive regulation under federal and state laws. This section provides a general overview of the federal and state regulatory framework applicable to us.
Financial Statements and Supplementary Data.” 10 The Final Rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on an insured depository institution if its capital levels begin to show signs of weakness.
Financial Statements and Supplementary Data.” The Final Rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on an insured depository institution if its capital levels begin to show signs of weakness.
Subsequently, in March 2022, the FDIC published a Request for Information (“RFI”) seeking information and comments regarding the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions of one or more depository institutions.
In March 2022, the FDIC published a Request for Information (“RFI”) seeking information and comments regarding the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions of one or more depository institutions.
Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network, a bureau of the U.S.
Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S.
As of December 31, 2022, the Company and its subsidiaries were not engaged in any operations in foreign countries. 4 Recent Acquisitions Our strategy is to profitably grow our business through internal growth and selective acquisitions. We continue to look for profitable expansion opportunities primarily in existing and new markets in the Rocky Mountain and Western states.
As of December 31, 2023, the Company and its subsidiaries were not engaged in any operations in foreign countries. 4 Recent Acquisitions Our strategy is to profitably grow our business through internal growth and selective acquisitions. We continue to look for profitable expansion opportunities primarily in existing and new markets in the Rocky Mountain and Western states.
As a publicly reporting company with the SEC, the Company is subject to the requirements of the SOX Act and related rules and regulations issued by the SEC and the NYSE.
As a publicly 11 reporting company with the SEC, the Company is subject to the requirements of the SOX Act and related rules and regulations issued by the SEC and the NYSE.
The market area’s economic base primarily focuses on tourism, construction, mining, energy, manufacturing, agriculture, service industry, and health care. The tourism industry is highly influenced by national parks, ski resorts, significant lakes and rural scenic areas. Commercial banking is a highly competitive business and operates in a rapidly changing environment.
The market area’s diversified economic base primarily focuses on tourism, construction, mining, energy, manufacturing, agriculture, service industries, and health care. The tourism industry is highly influenced by national parks, ski resorts, significant lakes and rural scenic areas. Commercial banking is a highly competitive business and operates in a rapidly changing environment.
In addition, we are subject to the direct supervision of the Consumer Financial Protection Bureau (“CFPB”) which is empowered to exercise broad rulemaking, supervision, and enforcement authority for a wide range of consumer protection laws. Federal and State Bank Holding Company Regulation General.
In addition, we are also subject to regulation and direct supervision by the Consumer Financial Protection Bureau (“CFPB”) which is empowered to exercise broad rulemaking, supervision, and enforcement authority for a wide range of consumer protection laws. Federal and State Bank Holding Company Regulation General.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company includes the parent holding company and the Bank. As of December 31, 2022, the Bank consists of seventeen bank divisions and a corporate division.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company includes the parent holding company and the Bank. As of December 31, 2023, the Bank consists of seventeen bank divisions and a corporate division.
This means that the Company is required to commit, as necessary, capital and resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources or when it may not be in the Company's or its stockholders' best interests to do so.
This means that the Company is required to commit, as necessary, capital and resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources or 7 when it may not be in the Company's or its shareholders' best interests to do so.
Percent of deposits are based on the FDIC summary of deposits survey as of June 30, 2022 and does not include any bank division acquired after such date.
Percent of deposits are based on the FDIC summary of deposits survey as of June 30, 2023 and does not include any bank division acquired after such date.
The CFPB has issued and continues to issue numerous regulations under which we will continue to incur additional expense in connection with our ongoing compliance obligations.
The CFPB has issued and continues to issue numerous regulations under which we will continue to incur additional expenses in connection with our ongoing compliance obligations.
Additional information regarding Board 6 committees is set forth under the heading “Meetings and Committees of the Board of Directors - Committees and Committee Membership” in the Company’s 2023 Annual Meeting Proxy Statement (“Proxy Statement”) and is incorporated herein by reference.
Additional information regarding Board committees is set forth under the heading “Meetings and Committees of the Board of Directors - Committees and Committee Membership” in the Company’s 2024 Annual Meeting Proxy Statement (“Proxy Statement”) and is incorporated herein by reference.
The Bank is subject to FDIC regulations implementing the privacy provisions of the GLBA. These regulations require a bank to disclose its privacy policy, including informing consumers of the bank's information sharing practices and their right to opt out of certain practices. Deposit Insurance FDIC Insured Deposits.
The Bank is subject to FDIC regulations implementing the privacy provisions of the GLBA. Amont other requireemnts, these regulations require the Bank to disclose its privacy policy, including informing consumers of the Bank's information sharing practices and their right to opt out of certain practices. Deposit Insurance FDIC Insured Deposits.
Generally, the GLBA 1) repeals historical restrictions on preventing banks from affiliating with securities firms; 2) provides a uniform framework for the activities of banks, savings institutions, and their holding companies; 3) broadens the activities that may be conducted by national banks and banking subsidiaries of bank holding companies; 4) provides an enhanced framework for protecting the privacy of consumer information and requires notification to consumers of bank privacy policies; and 5) addresses a variety of other legal and regulatory issues affecting both day-to-day operations and long-term activities of financial institutions.
Generally, the GLBA 1) repealed historical restrictions on preventing banks from affiliating with securities firms; 2) provided a uniform framework for the activities of banks, savings institutions, and their holding companies; 3) broadened the activities that may be conducted by national banks and banking subsidiaries of bank holding companies; 4) provided an enhanced framework for protecting the privacy of consumer information and requires notification to consumers of bank privacy policies; and 5) addressesed a variety of other legal and regulatory issues affecting both day-to-day operations and long-term activities of financial institutions.
Significant recent CFPB developments that may affect operations and compliance costs include: • Positions taken by the CFPB on fair lending, including applying the disparate impact theory which could make it more difficult for lenders to charge different rates or to apply different terms to loans to different customers; • The CFPB's Final Rule amending Regulation C, which implements the Home Mortgage Disclosure Act, requiring most lenders to report expanded information in order for the CFPB to more effectively monitor fair lending concerns and other information shortcomings identified by the CFPB; • Positions taken by the CFPB regarding the Electronic Fund Transfer Act and Federal Reserve Regulation E, which require companies to obtain consumer authorizations before automatically debiting a consumer’s account for pre-authorized electronic funds transfers; • Focused efforts on enforcing certain compliance obligations the CFPB deems a priority, such as automobile and student loan servicing (including certain forbearance requirements related to the COVID-19 pandemic), debt collection, collateral repossession, mortgage origination and servicing, remittances, and fair lending, among others; and • Positions taken by the CFPB and focused efforts on enforcing compliance obligations related to deposit account fees including overdraft, non-sufficient funds, and returned deposit fees.
Significant recent CFPB developments that may affect operations and compliance costs include: • Positions taken by the CFPB on fair lending, including applying the disparate impact theory which could make it more difficult for lenders to charge different rates or to apply different terms to loans to different customers; • The CFPB's Final Rule amending Regulation C, which implements the Home Mortgage Disclosure Act, requiring most lenders to report expanded information in order for the CFPB to more effectively monitor fair lending concerns and other information shortcomings identified by the CFPB; • Positions taken by the CFPB regarding the Electronic Fund Transfer Act and Federal Reserve Regulation E, which require companies to obtain consumer authorizations before automatically debiting a consumer’s account for pre-authorized electronic funds transfers; • Focused efforts on enforcing certain compliance obligations the CFPB deems a priority, such as automobile and student loan servicing (including certain forbearance requirements related to the COVID-19 pandemic), debt collection, collateral repossession, mortgage origination and servicing, remittances, and fair lending, among others; and • Positions taken by the CFPB and continued focused efforts on enforcing compliance obligations related to deposit account fees including overdraft, non-sufficient funds, and returned deposit fees. • The CFPB’s Final Rule amending Regulation B, which implements changes to the Equal Credit Opportunity Act, requiring covered financial institutions to collect and report to the CFPB data on applications for small business, including those that are owned by women or minorities.
Retention strategies are woven into all our compensation and retirement programs, and even our efforts at expansion. We provide our qualifying employees with a comprehensive benefit program, including health, dental and vision insurance, life and accident insurance, short- and long-term disability coverage, vacation and sick leave.
Retention strategies are woven into all our compensation and retirement programs, and even our efforts at expansion. We provide our qualifying employees with a comprehensive benefit program, including health, dental and vision insurance, life and accident insurance, short- and long-term disability coverage, and paid time off.
The FDIC highlighted that significant changes over the past several decades in the banking industry and financial system necessitate a review of the regulatory framework. The FDIC expressed interest in receiving comments regarding the effectiveness of the existing frameworks and requirements under the Bank Merger Act. The RFI is intended to inform future FDIC policy on the matter.
The FDIC highlighted that significant changes over the past several decades in the banking industry and financial system necessitate a review of the regulatory framework. The FDIC expressed interest in receiving comments regarding the effectiveness of the existing frameworks and requirements under the Bank Merger Act.
Number of Locations Number of Counties Served Percent of Deposits Montana 70 18 26.3 % Idaho 30 11 8.5 % Utah 38 8 0.5 % Washington 15 6 5.8 % Wyoming 19 10 15.0 % Colorado 26 13 1.8 % Arizona 16 7 0.8 % Nevada 7 3 6.1 % Total 221 76 5 Human Capital As of December 31, 2022, we employed 3,552 persons, 3,235 of whom were employed full time.
Number of Locations Number of Counties Served Percent of Deposits Montana 70 18 27.1 % Idaho 30 11 8.5 % Utah 38 9 0.3 % Washington 13 6 5.7 % Wyoming 19 10 15.1 % Colorado 27 14 1.7 % Arizona 17 7 0.8 % Nevada 7 3 6.0 % Total 221 78 5 Human Capital As of December 31, 2023, we employed 3,358 persons, 3,095 of whom were employed full time.
Stress Testing In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRC Act”) was signed into law, rolling back certain provisions of the Dodd-Frank Act to provide regulatory relief to financial institutions.
Future changes to the interchange fee cap could have a negative effect on the Bank’s fee revenue. Stress Testing In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRC Act”) was signed into law, rolling back certain provisions of the Dodd-Frank Act to provide regulatory relief to financial institutions.
The FDIC also communicated that the new rate schedules will remain in effect unless and until the reserve ratio meets or exceeds two percent; progressively lower assessment rates can be expected when the reserve ratio goal is met. No institution may pay a dividend if it is in default on its federal deposit insurance assessment.
The FDIC also communicated that the new rate schedules will remain in effect unless and until the reserve ratio meets or exceeds two percent; progressively lower assessment rates can be expected when the reserve ratio goal is met.
Financial Statements and Supplementary Data” for additional information regarding the 2021 acquisition. Market Area and Competition We have 221 locations, which consists of 187 branches and 34 loan or administration offices, in 76 counties within 8 states including Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada.
For additional information on the acquisition and subsequent event, see Note 23 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” Market Area and Competition We have 221 locations, which consists of 187 branches and 34 loan or administration offices, in 78 counties within eight states including Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada.
We have completed the following acquisitions during the last five fiscal years: (Dollars in thousands) Date Total Assets Gross Loans Total Deposits Altabancorp and its wholly-owned subsidiary, Altabank (collectively, "Alta") October 1, 2021 $ 4,131,662 1,902,321 3,273,819 State Bank Corp. and its wholly-owned subsidiary, State Bank of Arizona (collectively, "SBAZ") February 29, 2020 745,420 451,702 603,289 Heritage Bancorp and its wholly-owned subsidiary, Heritage Bank of Nevada (collectively, "Heritage") July 31, 2019 977,944 615,279 722,220 FNB Bancorp and its wholly-owned subsidiary, The First National Bank of Layton (collectively, "FNB") April 30, 2019 379,155 245,485 274,646 Inter-Mountain Bancorp., Inc. and its wholly-owned subsidiary, First Security Bank (collectively, “FSB”) February 28, 2018 1,109,684 627,767 877,586 Columbine Capital Corp., and its wholly-owned subsidiary, Collegiate Peaks Bank (collectively, “Collegiate”) January 31, 2018 551,198 354,252 437,171 See Note 23 in the Consolidated Financial Statements in “Item 8.
We have completed the following acquisitions during the last five fiscal years: (Dollars in thousands) Date Total Assets Gross Loans Total Deposits Altabancorp and its wholly-owned subsidiary, Altabank (collectively, "Alta") October 1, 2021 $ 4,131,662 1,902,321 3,273,819 State Bank Corp. and its wholly-owned subsidiary, State Bank of Arizona (collectively, "SBAZ") February 29, 2020 745,420 451,702 603,289 Heritage Bancorp and its wholly-owned subsidiary, Heritage Bank of Nevada (collectively, "Heritage") July 31, 2019 977,944 615,279 722,220 FNB Bancorp and its wholly-owned subsidiary, The First National Bank of Layton (collectively, "FNB") April 30, 2019 379,155 245,485 274,646 On January 31, 2024, the Company completed its acquisition of Community Financial Group, Inc., the parent company of Wheatland Bank, headquartered in Spokane, Washington.
Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting, and other factors. The capital requirements are intended to ensure that institutions have adequate capital given the risk levels of assets and off-balance sheet financial instruments and are applied separately to the Company and the Bank.
The capital requirements are intended to ensure that institutions have adequate capital given the risk levels of assets and off-balance sheet financial instruments and are applied separately to the Company and the Bank.
Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.
Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing. In December 2023, FinCEN issued a Final Rule implementing the access and safeguard provisions of the Corporate Transparency Act (the “Access Rule”).
Heightened Requirements for Large Bank Holding Companies and Banks As mentioned above, the Dodd-Frank Act imposed heightened requirements on large bank holding companies and banks, and the EGRRC Act has rolled back certain provisions of the Dodd-Frank Act.
The nature and impact of future changes in monetary policies and their impact on us cannot be predicted with certainty. Heightened Requirements for Large Bank Holding Companies and Banks As mentioned above, the Dodd-Frank Act imposed heightened requirements on large bank holding companies and banks, and the EGRRC Act has rolled back certain provisions of the Dodd-Frank Act.
The Board has established, among others, an Audit Committee, a Compensation and Human Capital Committee, a Nominating/Corporate Governance Committee, a Compliance Committee, and a Risk Oversight Committee.
Some aspects of risk oversight are fulfilled at the Board level, and the Board delegates other aspects of its risk oversight function to its committees. The Board has established, among others, an Audit Committee, a Compensation and Human Capital Committee, a Nominating/Corporate Governance Committee, a Compliance Committee, and a Risk Oversight Committee.
The new rule requires banks to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” rising to the level of a “notification incident,” has occurred.
In November 2021, the federal banking agencies adopted a Final Rule, with compliance required by May 1, 2022, establishing new notification requirements for banking organizations. The rule requires banks to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” rising to the level of a “notification incident,” has occurred.
The SEC adopted a rule mandated by the Dodd-Frank Act that requires a public company to disclose the ratio of the compensation of its Chief Executive Officer (“CEO”) to the median compensation of its employees. This rule is intended to provide shareholders with information that they can use to evaluate a CEO’s compensation. Prohibition Against Charter Conversions of Financial Institutions.
The SEC adopted a rule mandated by the Dodd-Frank Act that requires a public company to disclose the ratio of the compensation of its Chief Executive Officer (“CEO”) to the median compensation of its employees.
Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers. 13 Environmental, Social and Governance Bank regulatory agencies and the SEC have shown increased interest in environmental, social and governance matters (“ESG”) and expressed an intent to increase related regulatory oversight of companies efforts to address how ESG issues may affect their business.
Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers.
Failure to comply with these laws and regulations may subject the Bank to various penalties, including but not limited to enforcement actions, injunctions, fines, civil monetary penalties, criminal penalties, punitive damages, and the loss of certain contractual rights. The Bank has established a comprehensive compliance system to ensure consumer protection. Community Reinvestment .
Failure to comply with these laws and regulations may subject the Bank to various penalties, including but not limited to enforcement actions, injunctions, fines, civil monetary penalties, criminal penalties, punitive damages, and the loss of certain contractual rights. Recently, the CFPB has been focusing its enforcement efforts on certain types of fees commonly charged by financial institutions.
As a result, we are not currently subject to the Dodd-Frank Act stress testing requirements. Capital Adequacy Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal regulatory agencies, which involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory guidelines.
Capital Adequacy Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal regulatory agencies, which involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory guidelines. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting, and other factors.
Banks are subject to certain restrictions on extensions of credit to executive officers, directors, principal shareholders, and their related interests.
The Bank received a “satisfactory” rating in its most recent CRA examination. Insider Credit Transactions . Banks are subject to certain restrictions on extensions of credit to executive officers, directors, principal shareholders, and their related interests.
The BSA also sets forth various recordkeeping and reporting requirements (such as reporting suspicious activities that might signal criminal activity) and certain due diligence and "know your customer" documentation requirements. 11 The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“Patriot Act”), intended to combat terrorism, was renewed with certain amendments in 2006.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“Patriot Act”), intended to combat terrorism, was renewed with certain amendments in 2006.
Notably, the Federal Reserve's rules set a maximum permissible interchange fee, among other requirements. We have been subject to the interchange fee cap since July 1, 2019.
Notably, the Federal Reserve's rules set a maximum permissible interchange fee, among other requirements. We have been subject to the interchange fee cap since July 1, 2019. In October 2023, the Federal Reserve requested comments on a proposed rule that would lower the interchange fee cap and establish a regular process for updating the cap every other year going forward.
The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes.
We have established a comprehensive compliance system to ensure compliance with these rules. Cybersecurity The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, intended to enhance cyber risk management among financial institutions.
Financial Services Modernization The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (“GLBA”) brought about significant changes to the laws affecting banks and bank holding companies.
The Access Rule allows FinCEN to disclose beneficial ownership information to financial institutions to facilitate compliance with customer due diligence requirements and anti-money laundering obligations under the BSA. Financial Services Modernization The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (“GLBA”) brought about significant changes to the laws affecting banks and bank holding companies.
A “notification incident” is one that materially affects, or is likely to affect, the viability of the banking organization’s operations and services resulting in material loss, or potential impact the stability of the United States. State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
Among other types of computer-security incidents, a “notification incident” includes one that has materially disrupted or degraded the banking organization’s ability to carry out banking operations to a material portion of its customer base in the ordinary course of business. State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
See Note 14 in the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” for detailed information regarding employee benefit plans and eligibility requirements. We have continued to adjust our operations as needed as the coronavirus disease of 2019 (“COVID-19”) has evolved and the federal, state and local response to the pandemic has changed.
See Note 14 in the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” for detailed information regarding employee benefit plans and eligibility requirements. Board of Directors and Committees The Board has the ultimate authority and responsibility for overseeing risk management at the Company.
Changes in monetary policy, including increases in the federal funds rate, can affect net interest income and margin, overall profitability, and stockholders’ equity. The nature and impact of future changes in monetary policies and their impact on us cannot be predicted with certainty.
The last rate increase was in July 2023, and the Federal Reserve has communicated that the economic outlook continues to be uncertain and inflation risks are present. Changes in monetary policy, including increases in the federal funds rate, can affect net interest income and margin, overall profitability, and shareholders’ equity.
Removed
While most of our employees have returned to physical locations, we have continued to make work from home options available to those who are able to do their jobs remotely.
Added
Effective January 31, 2024, the Company completed its acquisition of Community Financial Group, Inc. and its subsidiary, Wheatland Bank. The Wheatland Bank operations will be combined with the North Cascades Bank division, and the combined operations will begin to operate under the name Wheatland Bank in the second quarter of 2024.
Removed
In addition, we have continued to offer a special time off benefit to employees affected by the virus or exposure to the virus, and to make other adjustments to our benefit programs to address pandemic-related issues.
Added
These efforts have included requesting public input on fees charged for deposit accounts, credit cards, and other financial products, issuing advisory opinions, and various enforcement actions and penalties against a number of financial institutions for practices related to banking fees.
Removed
Throughout the COVID-19 pandemic, we have remained focused on the health and safety of our associates, especially our associates that have been required to work in person, including by continuing to implement various safety protocols in our facilities consistent with local regulatory requirements and providing support to employees who have been affected by COVID-19.
Added
For example, the CFPB issued an advisory opinion explaining how the CFPB may evaluate the premissibility of fees imposed on customers for making requests for information about their accounts. The Bank is closely monitoring changes to the rules related to banking fees and has established a comprehensive compliance system to ensure consumer protection. Community Reinvestment .
Removed
Board of Directors and Committees The Board has the ultimate authority and responsibility for overseeing risk management at the Company. Some aspects of risk oversight are fulfilled at the Board level, and the Board delegates other aspects of its risk oversight function to its committees.
Added
In October 2023, federal bank regulators issued a rule to strengthen and modernize the CRA in several ways (e.g., to encourage banks to expand access to banking services, adapt to internet and mobile banking usage, improve clarity and consistency in the application of the CRA regulations, and to tailor CRA evaluations to the size and type of the bank being evaluated.
Removed
The Bank received a “satisfactory” rating in its most recent CRA examination. In May 2022, federal bank regulators released a notice of proposed rule-making to “strengthen and modernize” CRA regulations and the related regulatory framework. Future changes in the evaluation process or requirements under CRA could impact the Bank’s costs of compliance and rating. Insider Credit Transactions .
Added
Most of these new requirements will be applicable beginning January 2026, and the remaining requirements, including data reporting requirements, will be applicable January 2027. These changes in the evaluation process and reporting requirements under the CRA could impact the Bank’s costs of compliance and rating during its next evaluation.
Removed
The guidance provides that the strength of an institution’s lending and risk management practices with respect to such concentrations will be taken into account in evaluating capital adequacy and does not specifically limit a bank’s commercial real estate lending to a specified concentration level.
Added
This rule is intended to provide shareholders with information that they can use to evaluate a CEO’s compensation. 9 Prohibition Against Charter Conversions of Financial Institutions.
Removed
Recently, the Federal Reserve shifted its focus from economic growth to addressing continued concerns with inflation. During 2022, the Federal Reserve increased the federal funds target rate seven times, an increase of 425 basis points for the year, and communicated that it anticipates ongoing increases.
Added
As a result, we are not currently subject to the Dodd-Frank Act stress testing requirements. However, federal banking regulators have recently issued updated guidance on liquidity risks and contingency planning even if stress testing is not required.
Removed
We have established a comprehensive compliance system to ensure compliance with these rules. Cybersecurity In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.
Added
In October 2023, the FDIC issued an advisory reemphasizing the importance of strong capital, appropriate credit loss allowance levels, and robust credit-risk management practices when managing commercial real estate concentrations.
Removed
If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties. In November 2021, the federal banking agencies adopted a Final Rule, with compliance required by May 1, 2022, establishing new notification requirements for banking organizations.
Added
The BSA also sets forth various recordkeeping and reporting requirements (such as reporting suspicious activities that might signal criminal activity) and certain due diligence and "know your customer" documentation requirements.
Added
Additionally, the FDIC has the authority to implement special assessments to recover losses to the DIF caused by systemic risks in the banking industry. The FDIC exercised this authority in connection with the systemic risk determination by federal bank regulators in March 2023 after the failures of Silicon Valley Bank and Signature Bank.
Added
In November 2023, the FDIC issued a Final Rule 12 implementing a special assessment to recover the loss to the DIF arising from the FDIC’s protection of uninsured depositors associated with these banks.
Added
The special assessment will be proportional to each bank’s uninsured deposits as of December 2022, with an annual rate of approximately 13.4 basis points to be paid over eight quarterly assessment periods. No institution may pay a dividend if it is in default on its federal deposit insurance assessment.
Added
In light of the failures of Silicon Valley Bank and Signature Bank in early 2023, the FDIC recently published a report outlining a number of options to reform the nation’s deposit insurance system. These options include so-called “limited coverage,” “unlimited coverage,” and “targeted coverage,” each of which, if pursued, could result in increased assessments on the banking system.
Added
While the FDIC has not yet made changes to the existing frameworks and requirements under the Bank Merger Act, the U.S. Department of Justice and the Federal Trade Commission issued updated Horizontal Merger Guidelines in December 2023 that may impact merger activity for many financial institutions.
Added
Recently, the Federal Reserve has reaffirmed that its strategy for monetary policy is focused on long-run goals and addressing continued concerns with inflation. After increasing the federal funds rate by 425 basis points in 2022, the Federal Reserve continued the trend, albeit at a slower pace, for a total increase in 2023 of 100 basis points.
Added
Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe such regulatory guidance or standards, we could be subject to various regulatory sanctions, including financial penalties.
Added
In addition to guidance and standards implemented by banking regulators, in July 2023, the SEC adopted final rules requiring an annual disclosure of registrants’ cybersecurity risk management, strategy, and governance. Additionally, registrants are required to disclose material cybersecurity incidents, including the nature, scope, timing, and impact, within four business days of the incident.
Added
The disclosure requirements went into effect in December of 2023. Environmental, Social and Governance Bank regulatory agencies and the SEC have shown increased interest in environmental, social and governance matters (“ESG”) and expressed an intent to increase related regulatory oversight of companies efforts to address how ESG issues may affect their businesses.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+7 added−11 removed68 unchanged
Biggest changeHowever, the ICE Benchmark Administration (“IBA”), the authorized and regulated administrator of LIBOR, expects to continue publishing some LIBOR tenors until June 2023 and may be compelled to continue publishing other tenors under a different methodology after the Financial Conduct Authority (“FCA”) completes a consultation and makes a final determination on the matter (expected in 2023).
Biggest changeSubsequently in December 2022, the Federal Reserve issued a Final Rule establishing “benchmark” replacements based on the Secured Overnight Financing Rate (“SOFR”). The ICE Benchmark Administration (“IBA”), the authorized and regulated administrator of LIBOR, is being compelled by the Financial Conduct Authority (the “FCA”) to continue publishing some LIBOR tenors under a synthetic methodology.
The occurrence of any of these events may result in a prolonged interruption of our business, which could have a material adverse effect on our financial condition and operations. Our future performance will depend on our ability to respond timely to technological change.
The occurrence of any of these events may result in a prolonged interruption of our business, which could have a material adverse effect on our business, financial condition, and operations. Our future performance will depend on our ability to respond timely to technological change.
These risks include, among other things, incorrectly assessing the asset quality of a financial institution being acquired, discovering compliance or regulatory issues after the acquisition, encountering greater than anticipated cost and use of management time associated with integrating acquired businesses into our operations, and being unable to 14 profitably deploy funds acquired in an acquisition.
These risks include, among other things, incorrectly assessing the asset quality of a financial institution being acquired, discovering compliance or regulatory issues after the acquisition, encountering greater than anticipated cost and use of management time associated with integrating acquired businesses into our operations, and being unable to profitably deploy funds acquired in an acquisition.
Current guidance from the Federal Reserve provides, among other things, that dividends per share should not exceed earnings per share measured over the previous four fiscal quarters. In certain circumstances, Montana law also places limits or restrictions on a bank’s ability to declare and pay dividends.
Current guidance from the Federal Reserve provides, among other things, that dividends per share should not exceed earnings per share 15 measured over the previous four fiscal quarters. In certain circumstances, Montana law also places limits or restrictions on a bank’s ability to declare and pay dividends.
Changes in laws and regulations may also increase expenses by imposing additional fees or taxes or restrictions on operations. Additional legislation and regulations that could significantly affect powers, authority and operations may be enacted or adopted in the future, which could have a material adverse effect on our financial condition and results of operations.
Changes in laws and regulations may also increase expenses by imposing additional fees or taxes or restrictions on operations. Additional legislation and regulations that could significantly affect powers, authority and operations may be enacted or adopted in the future, which could have a material adverse effect on our business, financial condition, and results of operations.
Further decreases in the value of these assets, or the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond the Bank’s control, could adversely affect our business, results of operations and financial condition, perhaps materially.
Further decreases in the value of these assets, or the underlying collateral, or in these borrowers’ performance or 16 financial condition, whether or not due to economic and market conditions beyond the Bank’s control, could adversely affect our business, results of operations and financial condition, perhaps materially.
Existing and proposed federal and state laws and regulations restrict, limit and govern all aspects of our activities and may affect our ability to expand our business over time, may result in an increase in our compliance costs, and may affect our ability to attract and 18 retain qualified executive officers and employees.
Existing and proposed federal and state laws and regulations restrict, limit, and govern all aspects of our activities and may affect our ability to expand our business over time, may result in an increase in our compliance costs, and may affect our ability to attract and retain qualified executive officers and employees.
An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for credit losses, or an increase in charge-offs, which could have a material adverse impact on our results of operations and financial condition.
An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for credit losses, or an increase in charge-offs, which could have a material adverse impact on our business, results of operations, and financial condition.
Non-performing assets (which includes OREO) adversely affect our financial condition and results of operations in various ways. The Bank does not record interest income on non-accrual loans or OREO, thereby adversely affecting its earnings.
Non-performing assets (which includes OREO) adversely affect our business, financial condition, and results of operations in various ways. The Bank does not record interest income on non-accrual loans or OREO, thereby adversely affecting its earnings.
Our future success will depend upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as create additional efficiencies in our 17 operations.
Our future success will depend upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as create additional efficiencies in our operations.
The Bank has a high concentration of loans secured by real estate, so any future deterioration in the real estate markets could require material increases in the ACL and adversely affect our financial condition and results of operations. The Bank has a high degree of concentration in loans secured by real estate.
The Bank has a high concentration of loans secured by real estate, so any future deterioration in the real estate markets could require material increases in the ACL and adversely affect our business, financial condition, and results of operations. The Bank has a high degree of concentration in loans secured by real estate.
Additionally, future significant additions to the ACL may be required based on changes in the mix of loans comprising the portfolio, changes in the financial condition of borrowers, which may result from changes in economic conditions, or changes in the assumptions used in determining the ACL.
Additionally, future significant additions to the ACL may be required based on changes in the mix of loans comprising the portfolio, and changes in the financial condition of borrowers, which may result from changes in economic conditions, or changes in the assumptions used in determining the ACL.
This, in turn, could require material increases in the ACL which would adversely affect our financial condition and results of operations. Non-performing assets could increase, which could adversely affect our results of operations and financial condition. The Bank may experience increases in non-performing assets in the future.
This, in turn, could require material increases in the ACL which would adversely affect our business, financial condition, and results of operations. Non-performing assets could increase, which could adversely affect our business, financial condition, and results of operations. The Bank may experience increases in non-performing assets in the future.
Interest Rates, Operations and Risk Management Fluctuating interest rates can adversely affect profitability and stockholders’ equity. The Bank’s profitability is dependent to a large extent upon net interest income, which is the difference (or “spread”) between the interest earned on loans, investment securities and other interest earning assets and interest paid on deposits, borrowings, and other interest-bearing liabilities.
Interest Rates, Operations and Risk Management Fluctuating interest rates can adversely affect profitability and shareholders’ equity. The Bank’s profitability is dependent to a large extent upon net interest income, which is the difference (or “spread”) between the interest earned on loans, investment securities and other interest earning assets and interest paid on deposits, borrowings, and other interest-bearing liabilities.
Some of its competitors are not subject to the same degree of regulation and restriction as the Bank while others have greater financial resources than the Bank. If the Bank is unable to effectively compete in its market areas, the Bank’s business, our results of operations and prospects could be adversely affected.
Some of its competitors are not subject to the same degree of regulation and restriction as the Bank while others have greater financial resources than the Bank. If the Bank is unable to effectively compete in its market areas, the Bank’s business, financial condition, results of operations, and prospects could be adversely affected.
The loss of key employees during acquisitions may also adversely affect our business. We anticipate that we might issue capital stock in connection with future acquisitions. Acquisitions and related issuances of stock may have a dilutive effect on earnings per share, book value per share, and the percentage ownership of current stockholders.
The loss of key employees during acquisitions may also adversely affect our business. We anticipate that we might issue capital stock in connection with future acquisitions. Acquisitions and related issuances of stock may have a dilutive effect on earnings per share, book value per share, and the percentage ownership of current shareholders.
Downturns in the stock market and the market price of our stock, changes in our capital position, and changes in our regulatory standing could each have a negative impact on our ability to complete future acquisitions. Growth through future acquisitions could, in some circumstances, adversely affect profitability or other performance measures.
Downturns in the stock market and the market price of our stock, changes in our capital position, heightened regulatory scrutiny, and changes in our regulatory standing could each have a negative impact on our ability to complete future acquisitions. Growth through future acquisitions could, in some circumstances, adversely affect profitability or other performance measures.
The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon-intensive activities. Among the impacts to the Company could be a drop in demand for our products and services, particularly in certain sectors.
The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon-intensive activities. Among the impacts to the Bank could be a drop in demand for our products and services, particularly in certain sectors.
Any increase in the ACL could have an adverse effect, which could be material, on our financial condition and results of operations. 15 The Bank’s loan portfolio mix increases the exposure to credit risks tied to deteriorating conditions.
Any increase in the ACL could have an adverse effect, which could be material, on our business, financial condition, and results of operations. The Bank’s loan portfolio mix increases the exposure to credit risks tied to deteriorating conditions.
Our goodwill was not considered impaired as of December 31, 2022 and 2021; however, there can be no assurance that future evaluations of goodwill will not result in findings of impairment and write-downs, which could be material.
Our goodwill was not considered impaired as of December 31, 2023 and 2022; however, there can be no assurance that future evaluations of goodwill will not result in findings of impairment and write-downs, which could be material.
The payment of dividends is subject to government regulation in that regulatory authorities may prohibit banks and bank holding companies from paying dividends that would constitute an unsafe or unsound banking practice. This is heavily based on our earnings and capital levels which currently are strong.
The payment of dividends is subject to government regulation in that regulatory authorities may prohibit banks and bank holding companies from paying dividends that would constitute an unsafe or unsound banking practice. Our ability to pay dividends is heavily based on our earnings and capital levels which currently are strong.
This could deprive our stockholders of opportunities to realize a premium for their common stock in the Company, even in circumstances where such action is favored by a majority of our stockholders.
This could deprive our shareholders of opportunities to realize a premium for their common stock in the Company, even in circumstances where such action is favored by a majority of our shareholders.
Since we have $985 million in goodwill, representing 35 percent of our stockholders' equity, impairment of goodwill could have a material adverse effect on our business, financial condition and results of operations. Furthermore, even though it is a non-cash item, significant impairment of goodwill could subject us to regulatory limitations, including the ability to pay dividends on our common stock.
Since we have $985 million in goodwill, representing 33 percent of our shareholders' equity, impairment of goodwill could have a material adverse effect on our business, financial condition and results of operations. Furthermore, even though it is a non-cash item, significant impairment of goodwill could subject us to regulatory limitations, including the ability to pay dividends on our common stock.
Additionally, our business is affected significantly by the fiscal and monetary policies of the federal government and its agencies, including the Federal Reserve. We cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted on the financial markets and on us.
Additionally, our business is affected significantly by the fiscal and monetary policies of the federal government and its agencies, including the Federal Reserve. We cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted.
The exercise of regulatory authority may have a negative impact on our financial condition and results of operations, including limiting the types of financial services and products we may offer or increasing the ability of non-banks to offer competing financial services and products.
The exercise of regulatory authority may have a negative impact on our business, financial condition and results of operations, including limiting the types of financial services and products we may offer or increasing the ability of non-banks to offer competing financial services and products at lower cost.
Continued increases in interest rates could negatively impact deposit growth, the value of our investments, stockholders’ equity, and the Bank’s profitability. We may be impacted by the retirement of London Interbank Offered Rate (“LIBOR”) as a reference rate. In July 2017, the United Kingdom Financial Conduct Authority announced that LIBOR may no longer be published after 2021.
Elevated interest rates could negatively impact deposit growth, the value of our investments, shareholders’ equity, and the Bank’s profitability. 17 We may be impacted by the retirement of London Interbank Offered Rate (“LIBOR”) as a reference rate. In July 2017, the United Kingdom Financial Conduct Authority announced that LIBOR may no longer be published after 2021.
While we believe that the terms of our debt securities have been kept relatively short, we are subject to elevated interest rate risk exposure in the current rising rate environment. Further, debt securities present a different type of asset quality risk than the loan portfolio.
While we believe that the terms of our debt securities have been kept relatively short, we are subject to elevated interest rate risk exposure in the current elevated rate environment as compared to recent years. Further, debt securities present a different type of asset quality risk than the loan portfolio.
The Company’s efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting the Company from the negative impact of new laws and regulations or changes in consumer or business behavior.
The Bank attemps to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, but the bank’s efforts may not be effective in protecting the Bank from the negative impact of new laws and regulations or changes in consumer or business behavior.
Substantially all of the Bank’s loans are to businesses and individuals in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada, and adverse economic conditions in these market areas could have a material adverse effect on our business, financial condition, results of operations and prospects.
Substantially all of the Bank’s loans are to businesses and individuals in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona and Nevada, and adverse economic conditions in these market areas could have a material adverse effect on our business, financial condition, results of operations and prospects. Deterioration in the national economy may also have an adverse effect in these markets.
Deterioration in the national economy as a result of continued inflation, the rising rate environment, and recurring supply chain issues may also have an adverse effect in these markets.Any future deterioration in economic conditions in the markets the Company serves could result in the following consequences, any of which could have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects: • loan delinquencies may increase; • problem assets and foreclosures may increase; • collateral for loans made may decline in value, in turn reducing customers’ borrowing power and the Bank’s security; • certain securities within the investment portfolio could become other-than-temporarily impaired, requiring a write-down through earnings to fair value, thereby reducing equity; • low cost or non-interest bearing deposits may decrease; and • demand for loan and other products and services may decrease.
Any future deterioration in economic conditions in the markets the Company serves could result in the following consequences, any of which could have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects: 14 • Loan delinquencies may increase; • Problem assets and foreclosures may increase; • Collateral for loans made may decline in value, in turn reducing customers’ borrowing power and the Bank’s security; • Certain securities within the investment portfolio could become other-than-temporarily impaired, requiring a write-down through earnings to fair value, thereby reducing equity; • Low cost or non-interest bearing deposits may decrease; and • Demand for loan and other products and services may decrease.
Regardless of the steps we take to ensure effective controls, governance, monitoring and testing, and implement new risk management tools, we could suffer operational, reputational and financial harm if our models and strategies and other risk management tools fail to properly anticipate and manage current and evolving risks. Changes in accounting standards could materially impact our financial statements.
Regardless of the steps we take to ensure effective controls, governance, monitoring and testing, and implement new risk management tools, we could suffer operational, reputational and financial harm if our models and strategies and other risk management tools fail to properly anticipate and manage the current and evolving risks we face.
Future economic conditions cannot be predicted, and any renewed deterioration in the economies of the nation as a whole or in our markets could have an adverse effect, which could be material, on our business, financial condition, results of operations and prospects, and could cause the market price of our stock to decline.
Future economic conditions cannot be predicted, and any renewed deterioration in the economies of the nation as a whole or in our markets could have an adverse effect, which could be material, on our business, financial condition, results of operations and prospects, and could cause the market price of our stock to decline. 19 Our business is heavily dependent on the services of members of the senior management team.
Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.
Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies, non-fungible tokens, and other digital assets.
National and global economies are constantly in flux, as evidenced by recent market volatility resulting from, among other things, disruptions in the global supply chain, the effects of inflation, and the ever-changing landscape of the energy and medical industries.
National and global economies are constantly in flux, as evidenced by recent market volatility resulting from, among other things, the bank failures involving Silicon Valley Bank and Signature Bank, the effects of inflation, and the ever-changing landscape of the energy and medical industries.
Periodically, the Financial Accounting Standards Board (“FASB”) and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations. For information regarding the impact of recently issued accounting standards, see “Item 7.
Changes in accounting standards could materially impact our financial statements. Periodically, the Financial Accounting Standards Board (“FASB”) and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations.
The Company and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. The Company and its customers may face cost increases, asset value reductions and operating process changes.
Consumers and businesses also may voluntarily change their behavior as a result of these concerns. Both the Bank and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. The Bank and its customers may face cost increases, asset value reductions and operating process changes.
Additionally, the Bank faces the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate its business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries. Such parties could also be the source of an attack on, or breach of, the Bank’s operational systems.
Additionally, the Bank faces the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate its business activities, including third-party service providers, exchanges, clearing agents, clearing houses or other financial intermediaries.
Although we have policies and procedures to perform an environmental review before initiating any foreclosure on nonresidential real property, these reviews may not be sufficient to detect all potential environmental hazards.
Although we have policies and procedures to perform an environmental review before initiating any foreclosure on nonresidential real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.
We could suffer operational, reputational and financial harm if we fail to properly anticipate and manage risk. We use models and strategies to forecast losses, project revenue, measure and assess capital requirements for credit, market, operational and strategic risks, and assess and control our operations and financial condition. These models require oversight, ongoing monitoring, and periodic reassessment.
We use models and strategies to forecast losses, project revenue, and measure and assess capital requirements for various credit, market, operational and strategic risks. These models require oversight, ongoing monitoring, and periodic reassessment.
Although the Bank employs detection and response mechanisms designed to contain and mitigate security incidents, early detection may be thwarted by sophisticated attacks and malware designed to avoid detection, which continue to evolve.
We are not able to anticipate or implement effective preventative measures against all security breaches of these types. Although the Bank employs detection and response mechanisms designed to contain and mitigate security incidents, early detection may be thwarted by sophisticated attacks and malware designed to avoid detection, which continue to evolve.
Any failures, interruptions or security breaches in the Company’s information systems could damage its reputation, result in a loss of customer business, result in a violation of privacy or other laws, or expose us to civil litigation, regulatory fines or losses not covered by insurance. We have various anti-takeover measures that could impede a takeover.
Such parties could also be the source of an attack on, or breach of, the Bank’s operational systems. 18 Any failures, interruptions or security breaches in our information systems could damage our reputation, result in a loss of customer business, result in a violation of privacy or other laws, or expose us to civil litigation, regulatory fines or losses not covered by insurance.
For debt securities in an unrealized loss position, the Company may be required to record an allowance for credit losses or write down the security depending on the type of security and the circumstances. Any such impairment charge would have an adverse effect, which could be material, on our results of operations and financial condition, including capital and stockholders’ equity.
For debt securities in an unrealized loss position, the Company may be required to record an allowance for credit losses or write down the security depending on the type of security and the circumstances.
In addition, our unique model relies upon the Presidents of our separate Bank divisions, particularly in light of our decentralized management structure in which such Bank divisions have significant local decision-making authority. The unexpected loss of any of these persons could have an adverse effect on our business and future growth prospects.
We believe our success to date has been substantially dependent on our executive management team. In addition, our unique model relies upon the Presidents of our separate Bank divisions, particularly in light of our decentralized management structure in which such Bank divisions have significant local decision-making authority.
Climate change may materially adversely affect the Company's business and results of operations. Concerns over the long-term effects of climate change have led governmental efforts around the world to mitigate those impacts. Consumers and businesses also may voluntarily change their behavior as a result of these concerns.
For information regarding the impact of recently issued accounting standards, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Climate change may materially adversely affect the Company's business, financial condition, and results of operations. Concerns over the long-term effects of climate change have led to governmental efforts around the world to mitigate those impacts.
Moreover, federal bank regulators recently highlighted the increased risk associated with commercial real estate loans as a result of the stress COVID-19 created for some industries, and the higher vulnerability of these credits to pressure from the current rising interest rate environment and overall inflationary pressure in the economy.
Moreover, federal bank regulators have highlighted the increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many large metropolitan areas continue to show signs of stress.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us. 16 We face competition from technologies used to support and enable banking and financial services.
We face competition from technologies used to support and enable banking and financial services.
Removed
While the federal funds target rate remained at or near historical lows as part of the fiscal response to the pandemic, the Federal Reserve increasee the federal funds target rate seven times in 2022 for a total annual increase of 425 basis points. Furthermore, the Federal Reserve has communicated that it anticipates ongoing increases until inflationary pressures subside.
Added
Any such impairment charge would have an adverse effect, which could be material, on our business, results of operations and financial condition, including capital and shareholders’ equity.
Removed
Subsequently in December 2022, the Federal Reserve issued a Final Rule establishing “benchmark” replacements based on SOFR.
Added
The Federal Reserve slowed its increases to the federal funds target rate in 2023, with the most recent increase occurring in July 2023.
Removed
Most recently, increasing inflation, unemployment, and military action in Ukraine have affected the volume of cyber threats. We are not able to anticipate or implement effective preventative measures against all security breaches of these types.
Added
The Federal Reserve has communicated that the economic outlook continues to be uncertain, and while it has stated that rates may decrease later in 2024, there can be no assurance of the timing or amount of any future rate adjustments.
Removed
Our business is heavily dependent on the services of members of the senior management team. We believe our success to date has been substantially dependent on our executive management team.
Added
Further, there can be no assurance regarding any forecasts or predictions about the effect that any future rate adjustments may have on our results of operations.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The continued economic effects of the COVID-19 pandemic could adversely impact our results of operations and/or the market price of our stock.
Added
The FCA intends to no longer require the publication of these synthetic tenors by September 2024, but may extend the timeline if needed.
Removed
The COVID-19 pandemic and related government actions caused significant economic turmoil in the U.S. and around the world, resulting in a slow-down in economic activity, increased unemployment levels, and disruptions in global supply chains and financial markets. Both the direct effects of the pandemic and the resulting U.S. and state level governmental responses were and are of an unprecedented scope.
Added
See “Item 1C. Cybersecurity” for additional information regarding our efforts to detect, identify, assess, manage, and respond to material risks from cybersecurity threats. We have various anti-takeover measures that could impede a takeover.
Removed
The long-term impact of the government actions in mitigating the health and economic effects of the pandemic cannot be accurately predicted, whether on our business or on the economy as a whole.
Added
The unexpected loss of any of these persons could have an adverse effect on our business, financial condition, results of operations, and future growth prospects. We could suffer operational, reputational and financial harm if we fail to properly anticipate and manage risk.
Removed
Despite improvement in the U.S. and global economies after the initial impact of the pandemic, some adverse consequences, including labor shortages, disruptions of the global supply chains, and increased inflation, continue to negatively impact the international, national, and local economic environment.
Removed
In addition, the Federal government's financial support of the economy and the governments effort's to control the virus and its effects has for the most part ended, and the effects on the national and local economy of ending that support are yet to be determined.
Removed
The Company believes it continues to be well positioned to mitigate the potential financial impact of the COVID-19 pandemic with a strong liquidity and capital position, and the various measures we have implemented to manage through the pandemic, including efforts to proactively react to, and work with customers to assess customer needs and provide funding, flexible repayment options or modifications as necessary, and increased monitoring of credit quality and portfolio risk for industries determined to have elevated risk 19 characteristics.
Removed
Nonetheless, any future deterioration in economic conditions in the markets the Bank serves as a consequence of the pandemic, or a failure of the economy to recover from pandemic-related disruptions as quickly as anticipated, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following schedule provides information on the Company’s 221 properties as of December 31, 2022: (Dollars in thousands) Properties Leased Properties Owned Net Book Value Montana 9 61 $ 114,423 Utah 6 32 60,464 Idaho 7 23 38,241 Colorado 5 21 29,822 Wyoming 4 15 16,100 Arizona 7 9 15,716 Nevada 1 6 10,641 Washington 5 10 4,787 Total 44 177 $ 290,194 We believe that all of our facilities are well maintained, generally adequate and suitable for the current operations of our business, as well as fully utilized.
Biggest changeProperties The following schedule provides information on the Company’s 221 properties as of December 31, 2023: (Dollars in thousands) Properties Leased Properties Owned Net Book Value Montana 9 61 $ 121,504 Utah 5 33 65,414 Idaho 7 23 37,206 Colorado 6 21 29,135 Wyoming 3 16 22,205 Arizona 8 9 16,357 Nevada 1 6 10,464 Washington 2 11 15,486 Total 41 180 $ 317,771 We believe that all of our facilities are well maintained, generally adequate and suitable for the current operations of our business, as well as fully utilized.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s stock trades on the NYSE under the symbol GBCI. Prior to the fourth quarter of 2021, the Company was traded on the NASDAQ Global Select Market under the same symbol.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s stock trades on the NYSE under the symbol GBCI. As of December 31, 2023, there were approximately 1,732 stockholders of record of the Company’s common stock. The closing price per share of common stock on December 31, 2023, was $41.32.
Total return includes appreciation in market value of the stock as well as the actual cash and stock dividends paid to stockholders. The graph assumes that the value of the each investment was $100 on December 31, 2017 and that all dividends were reinvested.
Total return includes appreciation in market value of the stock as well as the actual cash and stock dividends paid to stockholders. The graph assumes that the value of the each investment was $100 on December 31, 2018 and that all dividends were reinvested.
Future cash dividends will depend on a variety of factors, including earnings, capital, asset quality, general economic conditions and regulatory considerations. Information regarding the regulatory considerations is set forth under the heading “Supervision and Regulation” in “Item 1. Business.” Issuer Stock Purchases The Company made no stock repurchases during 2022.
In 2023, the Company declared total regular dividends in cash of $1.32 per share. Future cash dividends will depend on a variety of factors, including earnings, capital, asset quality, general economic conditions and regulatory considerations. Information regarding the regulatory considerations is set forth under the heading “Supervision and Regulation” in “Item 1.
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As of December 31, 2022, there were approximately 1,810 stockholders of record of the Company’s common stock. The closing price per share of common stock on December 31, 2022, was $49.42. In 2022, the Company declared total regular dividends in cash of $1.32 per share.
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Business.” Issuer Stock Purchases The Company made no stock repurchases during 2023.
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Period Ending 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Glacier Bancorp, Inc. 100.00 103.07 123.77 128.51 162.50 145.59 Russell 2000 Index 100.00 88.99 111.70 134.00 153.85 122.41 KBW Regional Banking Index 100.00 82.50 102.15 93.25 127.42 118.59 21
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Period Ending 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Glacier Bancorp, Inc. 100.00 120.08 124.68 157.66 141.25 122.87 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 KBW Regional Banking Index 100.00 123.81 113.03 154.45 143.75 143.17 23

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the Company’s loan portfolio by regulatory classification: (Dollars in thousands) December 31, 2022 December 31, 2021 $ Change % Change Custom and owner occupied construction $ 298,461 $ 263,758 $ 34,703 13 % Pre-sold and spec construction 297,895 257,568 40,327 16 % Total residential construction 596,356 521,326 75,030 14 % Land development 219,842 185,200 34,642 19 % Consumer land or lots 206,604 173,305 33,299 19 % Unimproved land 104,662 81,064 23,598 29 % Developed lots for operative builders 60,987 41,840 19,147 46 % Commercial lots 93,952 99,418 (5,466) (5 %) Other construction 938,406 762,970 175,436 23 % Total land, lot, and other construction 1,624,453 1,343,797 280,656 21 % Owner occupied 2,833,469 2,645,841 187,628 7 % Non-owner occupied 3,531,673 3,056,658 475,015 16 % Total commercial real estate 6,365,142 5,702,499 662,643 12 % Commercial and industrial 1,377,888 1,463,022 (85,134) (6 %) Agriculture 735,553 751,185 (15,632) (2 %) 1st lien 1,808,502 1,393,267 415,235 30 % Junior lien 40,445 34,830 5,615 16 % Total 1-4 family 1,848,947 1,428,097 420,850 29 % Multifamily residential 622,185 545,001 77,184 14 % Home equity lines of credit 872,899 761,990 110,909 15 % Other consumer 220,035 207,513 12,522 6 % Total consumer 1,092,934 969,503 123,431 13 % States and political subdivisions 797,656 615,251 182,405 30 % Other 198,012 153,147 44,865 29 % Total loans receivable, including loans held for sale 15,259,126 13,492,828 1,766,298 13 % Less loans held for sale 1 (12,314) (60,797) 48,483 (80 %) Total loans receivable $ 15,246,812 $ 13,432,031 $ 1,814,781 14 % ______________________________ 1 Loans held for sale are primarily 1st lien 1-4 family loans. 42 The following table summarizes the Company’s non-performing assets by regulatory classification: Non-performing Assets, by Loan Type Non- Accrual Loans Accruing Loans 90 Days or More Past Due OREO (Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2022 December 31, 2022 Custom and owner occupied construction $ 224 237 224 — — Pre-sold and spec construction 389 — 389 — — Total residential construction 613 237 613 — — Land development 138 250 138 — — Consumer land or lots 278 309 145 133 — Unimproved land 78 124 78 — — Developed lots for operative builders 251 — 251 — — Other construction 12,884 12,884 12,884 — — Total land, lot and other construction 13,629 13,567 13,496 133 — Owner occupied 2,076 3,918 1,763 313 — Non-owner occupied 805 6,063 805 — — Total commercial real estate 2,881 9,981 2,568 313 — Commercial and industrial 3,326 3,066 2,760 542 24 Agriculture 2,574 29,151 2,574 — — 1st lien 2,678 2,870 2,444 234 — Junior lien 166 136 159 7 — Total 1-4 family 2,844 3,006 2,603 241 — Multifamily residential 4,535 6,548 4,535 — — Home equity lines of credit 1,393 1,563 1,255 138 — Other consumer 911 460 747 156 8 Total consumer 2,304 2,023 2,002 294 8 Other 36 112 — 36 — Total $ 32,742 67,691 31,151 1,559 32 43 The following table summarizes the Company’s accruing loans 30-89 days past due by regulatory classification: Accruing 30-89 Days Delinquent Loans, by Loan Type (Dollars in thousands) December 31, 2022 December 31, 2021 $ Change % Change Custom and owner occupied construction $ 1,082 $ 1,243 $ (161) (13 %) Pre-sold and spec construction 1,712 443 1,269 286 % Total residential construction 2,794 1,686 1,108 66 % Consumer land or lots 442 149 293 197 % Unimproved land 120 305 (185) (61 %) Developed lots for operative builders 958 — 958 n/m Commercial lots 47 — 47 n/m Other construction 209 30,788 (30,579) (99 %) Total land, lot and other construction 1,776 31,242 (29,466) (94 %) Owner occupied 3,478 1,739 1,739 100 % Non-owner occupied 496 1,558 (1,062) (68 %) Total commercial real estate 3,974 3,297 677 21 % Commercial and industrial 3,439 4,732 (1,293) (27 %) Agriculture 1,367 459 908 198 % 1st lien 2,174 2,197 (23) (1 %) Junior lien 190 87 103 118 % Total 1-4 family 2,364 2,284 80 4 % Multifamily residential 492 — 492 n/m Home equity lines of credit 1,182 1,994 (812) (41 %) Other consumer 1,824 1,681 143 9 % Total consumer 3,006 3,675 (669) (18 %) States and political subdivisions 28 1,733 (1,705) (98 %) Other 1,727 1,458 269 18 % Total $ 20,967 $ 50,566 $ (29,599) (59 %) _________________ n/m - not measurable 44 The following table summarizes the Company’s charge-offs and recoveries by regulatory classification: Net Charge-Offs (Recoveries), Years ended, By Loan Type Charge-Offs Recoveries (Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2022 Custom and owner occupied construction $ 17 — 17 — Pre-sold and spec construction (15) (15) — 15 Total residential construction 2 (15) 17 15 Land development (34) (233) — 34 Consumer land or lots (46) (165) — 46 Unimproved land — (241) — — Total land, lot and other construction (80) (639) — 80 Owner occupied 555 (423) 1,968 1,413 Non-owner occupied (242) (357) — 242 Total commercial real estate 313 (780) 1,968 1,655 Commercial and industrial (70) 41 1,659 1,729 Agriculture (7) (20) — 7 1st lien (109) (331) — 109 Junior lien (302) (650) 6 308 Total 1-4 family (411) (981) 6 417 Multifamily residential 136 (40) 203 67 Home equity lines of credit (91) (621) 85 176 Other consumer 451 236 658 207 Total consumer 360 (385) 743 383 Other 7,572 5,148 10,374 2,802 Total $ 7,815 2,329 14,970 7,155 45 Sources of Funds The Company’s deposits have traditionally been the principal source of funds for use in lending and other business purposes.
Biggest changeThe following table summarizes the Company’s loan portfolio by regulatory classification: (Dollars in thousands) December 31, 2023 December 31, 2022 $ Change % Change Custom and owner occupied construction $ 290,572 $ 298,461 $ (7,889) (3 %) Pre-sold and spec construction 236,596 297,895 (61,299) (21 %) Total residential construction 527,168 596,356 (69,188) (12 %) Land development 232,966 219,842 13,124 6 % Consumer land or lots 187,545 206,604 (19,059) (9 %) Unimproved land 87,739 104,662 (16,923) (16 %) Developed lots for operative builders 56,142 60,987 (4,845) (8 %) Commercial lots 87,185 93,952 (6,767) (7 %) Other construction 900,547 938,406 (37,859) (4 %) Total land, lot, and other construction 1,552,124 1,624,453 (72,329) (4 %) Owner occupied 3,035,768 2,833,469 202,299 7 % Non-owner occupied 3,742,916 3,531,673 211,243 6 % Total commercial real estate 6,778,684 6,365,142 413,542 6 % Commercial and industrial 1,363,479 1,377,888 (14,409) (1 %) Agriculture 772,458 735,553 36,905 5 % 1st lien 2,127,989 1,808,502 319,487 18 % Junior lien 47,230 40,445 6,785 17 % Total 1-4 family 2,175,219 1,848,947 326,272 18 % Multifamily residential 796,538 622,185 174,353 28 % Home equity lines of credit 979,891 872,899 106,992 12 % Other consumer 229,154 220,035 9,119 4 % Total consumer 1,209,045 1,092,934 116,111 11 % States and political subdivisions 834,947 797,656 37,291 5 % Other 204,111 198,012 6,099 3 % Total loans receivable, including loans held for sale 16,213,773 15,259,126 954,647 6 % Less loans held for sale 1 (15,691) (12,314) (3,377) 27 % Total loans receivable $ 16,198,082 $ 15,246,812 $ 951,270 6 % ______________________________ 1 Loans held for sale are primarily 1st lien 1-4 family loans. 43 The following table summarizes the Company’s non-performing assets by regulatory classification: Non-performing Assets, by Loan Type Non- Accrual Loans Accruing Loans 90 Days or More Past Due OREO (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2023 December 31, 2023 Custom and owner occupied construction $ 214 224 214 — — Pre-sold and spec construction 763 389 — 763 — Total residential construction 977 613 214 763 — Land development 35 138 35 — — Consumer land or lots 96 278 96 — — Unimproved land — 78 — — — Developed lots for operative builders 608 251 — 608 — Commercial lots 47 — — 47 — Other construction — 12,884 — — — Total land, lot and other construction 786 13,629 131 655 — Owner occupied 1,838 2,076 821 — 1,017 Non-owner occupied 11,016 805 10,757 259 — Total commercial real estate 12,854 2,881 11,578 259 1,017 Commercial and industrial 1,971 3,326 1,245 575 151 Agriculture 2,558 2,574 2,557 1 — 1st lien 2,664 2,678 2,533 116 15 Junior lien 180 166 144 36 — Total 1-4 family 2,844 2,844 2,677 152 15 Multifamily residential 395 4,535 — 395 — Home equity lines of credit 2,043 1,393 1,778 265 — Other consumer 1,187 911 636 231 320 Total consumer 3,230 2,304 2,414 496 320 Other 16 36 — 16 — Total $ 25,631 32,742 20,816 3,312 1,503 44 The following table summarizes the Company’s accruing loans 30-89 days past due by regulatory classification: Accruing 30-89 Days Delinquent Loans, by Loan Type (Dollars in thousands) December 31, 2023 December 31, 2022 $ Change % Change Custom and owner occupied construction $ 2,549 $ 1,082 $ 1,467 136 % Pre-sold and spec construction 1,219 1,712 (493) (29 %) Total residential construction 3,768 2,794 974 35 % Land development 163 — 163 n/m Consumer land or lots 624 442 182 41 % Unimproved land — 120 (120) (100 %) Developed lots for operative builders — 958 (958) (100 %) Commercial lots 2,159 47 2,112 4,494 % Other construction — 209 (209) (100 %) Total land, lot and other construction 2,946 1,776 1,170 66 % Owner occupied 2,222 3,478 (1,256) (36 %) Non-owner occupied 14,471 496 13,975 2,818 % Total commercial real estate 16,693 3,974 12,719 320 % Commercial and industrial 12,905 3,439 9,466 275 % Agriculture 594 1,367 (773) (57 %) 1st lien 3,768 2,174 1,594 73 % Junior lien 1 190 (189) (99 %) Total 1-4 family 3,769 2,364 1,405 59 % Multifamily residential — 492 (492) (100 %) Home equity lines of credit 4,518 1,182 3,336 282 % Other consumer 3,264 1,824 1,440 79 % Total consumer 7,782 3,006 4,776 159 % States and political subdivisions — 28 (28) (100 %) Other 1,510 1,727 (217) (13 %) Total $ 49,967 $ 20,967 $ 29,000 138 % _________________ n/m - not measurable 45 The following table summarizes the Company’s charge-offs and recoveries by regulatory classification: Net Charge-Offs (Recoveries), Years ended, By Loan Type Charge-Offs Recoveries (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2023 Custom and owner occupied construction $ — 17 — — Pre-sold and spec construction (15) (15) — 15 Total residential construction (15) 2 — 15 Land development (135) (34) — 135 Consumer land or lots (19) (46) — 19 Other construction 889 — 889 — Total land, lot and other construction 735 (80) 889 154 Owner occupied (59) 555 66 125 Non-owner occupied 799 (242) 807 8 Total commercial real estate 740 313 873 133 Commercial and industrial 364 (70) 1,040 676 Agriculture — (7) — — 1st lien 66 (109) 110 44 Junior lien 24 (302) 49 25 Total 1-4 family 90 (411) 159 69 Multifamily residential (136) 136 — 136 Home equity lines of credit (6) (91) 129 135 Other consumer 1,097 451 1,368 271 Total consumer 1,091 360 1,497 406 Other 7,447 7,572 10,637 3,190 Total $ 10,316 7,815 15,095 4,779 46 Sources of Funds The Company’s deposits have traditionally been the principal source of funds for use in lending and other business purposes.
Evidence of the following real estate market conditions and trends is obtained from lending personnel and third party sources: 37 • demographic indicators, including employment and population trends; • foreclosures, vacancy, construction and absorption rates; • property sales prices, rental rates, and lease terms; • current tax assessments; • economic indicators, including trends within the lending areas; and • valuation trends, including discount and capitalization rates.
Evidence of the following real estate market conditions and trends is obtained from lending personnel and third party sources: • demographic indicators, including employment and population trends; • foreclosures, vacancy, construction and absorption rates; • property sales prices, rental rates, and lease terms; • current tax assessments; • economic indicators, including trends within the lending areas; and • valuation trends, including discount and capitalization rates.
The Company does not undertake any obligation to publicly correct, revise, or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement, except as may be required under federal securities laws.
The Company does not undertake any obligation to publicly correct, revise, or update any forward-looking 24 statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement, except as may be required under federal securities laws.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion is expected to provide investors an enhanced view of the Company from managements’ perspective.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion is expected to provide investors an enhanced view of the Company from management’s perspective.
These loans are typically made for a term of 18 months to two years and are secured by the developed property with a loan-to-value not to exceed the lesser of 75 percent of cost or 65 percent of the appraised discounted bulk sale value upon completion of the improvements.
These loans are typically made for a term of 18 months to two years and are secured by the developed property with a loan-to-value not to exceed the lesser of 75 percent of cost or 65 percent of the appraised discounted estimated bulk sale value upon completion of the improvements.
The ongoing accrual and recognition of uncollected interest as income continues only when facts and circumstances continue to reasonably support the contractual payment of principal or interest. Loans are typically designated as non-accrual when the collection 36 of the contractual principal or interest is unlikely and has remained unpaid for ninety days or more.
The ongoing accrual and recognition of uncollected interest as income continues only when facts and circumstances continue to reasonably support the contractual payment of principal or interest. Loans are typically designated as non-accrual when the collection of the contractual principal or interest is unlikely and has remained unpaid for ninety days or more.
The Company has also been very active in generating commercial SBA loans, and other commercial loans, with a portion of those loans sold to investors. The Company has not originated any type of subprime mortgages, either for the loan portfolio or for sale to investors. In addition, the Company has not purchased debt securities collateralized with subprime mortgages.
The Company has also been active in generating commercial SBA loans, and other commercial loans, with a portion of those loans sold to investors. The Company has not originated any type of subprime mortgages, either for the loan portfolio or for sale to investors. In addition, the Company has not purchased debt securities collateralized with subprime mortgages.
Through pro-active credit administration, 38 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.
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.
The Company employs detection and response mechanisms designed to contain and mitigate these risks. The Company maintains a robust information security program that is regularly reviewed, tested, and updated. This includes vulnerability and patch management programs, incident response planning, security monitoring, employee training, and security awareness testing.
The Company employs detection and response mechanisms designed to contain and mitigate these risks. The Company maintains a robust information security program that is regularly 53 reviewed, tested, and updated. This includes vulnerability and patch management programs, incident response planning, security monitoring, employee training, and security awareness testing.
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.
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 related federal income tax benefit.
Construction Loans During the construction loan term, all construction loan collateral properties are inspected at least monthly, or more frequently as needed, until completion. Draws on construction loans are predicated upon the results of the inspection and advanced based upon a percentage-of-completion basis versus original budget percentages.
Construction Loans During the construction loan term, all construction loan collateral properties are inspected at least monthly, or more frequently as needed, until completion. Draws on construction loans are predicated upon the results of the inspection and advanced on a percentage-of-completion basis versus original budget percentages.
The loans are generally long-term in nature and interest on many of these loans is tax-exempt for federal income tax purposes. Credit Risk Management The Company is committed to a conservative management of the credit risk within the loan portfolio, including the early recognition of problem loans.
The loans are generally long-term in nature and interest on many of these loans is tax-exempt for federal income tax purposes. 37 Credit Risk Management The Company is committed to a conservative management of the credit risk within the loan portfolio, including the early recognition of problem loans.
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, 31 they are not solely relied upon.
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.
During the draw period, the Company has home equity lines of credit where the borrowers pay interest only and home equity lines of credit where borrowers pay principal and interest. 35 Consumer Lending The majority of consumer loans are secured by real estate, automobiles, or other assets.
During the draw period, the Company has home equity lines of credit where the borrowers pay interest only and home equity lines of credit where borrowers pay principal and interest. Consumer Lending The majority of consumer loans are secured by real estate, automobiles, or other assets.
The time between ordering an appraisal or evaluation and receipt from third party vendors is typically two to six weeks for residential property depending on geographic market and four to six weeks for non-residential property.
The time between ordering an appraisal or evaluation and receipt from third party vendors is typically two to six weeks for residential property depending on geographic market and four to eight weeks for non-residential property.
Given the described uncertainties and risks, the 22 Company cannot guarantee its future performance or results of operations and you should not place undue reliance on these forward-looking statements.
Given the described uncertainties and risks, the Company cannot guarantee its future performance or results of operations and you should not place undue reliance on these forward-looking statements.
Financial Statements and Supplementary Data.” 33 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.).
Financial Statements and Supplementary Data.” 35 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.).
There were no changes to the Company’s assessment or reported amounts during 2022. For information on goodwill, see Notes 1 and 5 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” Fair Value Measurements Fair value measurement estimates are used for certain recorded and disclosed financial instruments on a recurring and non-recurring basis.
There were no changes to the Company’s assessment or reported amounts during 2023. For information on goodwill, see Notes 1 and 5 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” Fair Value Measurements Fair value measurement estimates are used for certain recorded and disclosed financial instruments on a recurring and non-recurring basis.
Based on an analysis of its available-for-sale debt securities with unrealized losses as of December 31, 2022, 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.
Based on an analysis of its available-for-sale debt securities with unrealized losses as of December 31, 2023, 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 December 31, 2022.
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 December 31, 2023.
As of December 31, 2022, 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.
As of December 31, 2023, 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.
These loans are supported by a term take-out commitment that may be subject to certain contingencies. 34 Consumer Land or Lot Loans The Company originates land and lot acquisition loans to borrowers who intend to construct their primary residence on the respective land or lot.
These loans are supported by a term take-out commitment that may be subject to certain contingencies. 36 Consumer Land or Lot Loans The Company originates land and lot acquisition loans to borrowers who intend to construct their primary residence on the respective land or lot.
For a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Loan fees generally are a percentage of the principal amount of the loan and are charged to the borrower, and are normally deducted from the proceeds of the loan. Loan origination fees are generally 1.0 to 1.5 percent on residential mortgages and 0.5 to 1.5 percent on commercial loans, excluding PPP loans. Consumer loans generally require a fixed fee amount.
Loan fees generally are a percentage of the principal amount of the loan and are charged to the borrower, and are normally deducted from the proceeds of the loan. Loan origination fees are generally 1.0 to 1.5 percent on residential mortgages and 0.5 to 1.5 percent on commercial loans. Consumer loans generally require a fixed fee amount.
Financial Statements and Supplementary Data.” 41 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.
Financial Statements and Supplementary Data.” 42 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.
The subordinated debentures outstanding as of December 31, 2022 were $133 million, including fair value adjustments from acquisitions. For additional information regarding the subordinated debentures, see Note 10 to the Consolidated Financial Statements in “Item 8.
The subordinated debentures outstanding as of December 31, 2023 were $133 million, including fair value adjustments from acquisitions. For additional information regarding the subordinated debentures, see Note 10 to the Consolidated Financial Statements in “Item 8.
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.
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, Federal Reserve facilities, 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.
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.
Short-term borrowings are accompanied by increased risks managed by the Bank’s Asset Liability Committee (“ALCO”) such as rate increases or unfavorable changes in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, BTFP, federal funds purchased and retail and wholesale repurchase agreements.
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 December 31, 2022.
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 December 31, 2023.
Financial Statements and Supplementary Data.” Liquidity Risk In the normal course of business, the Company has commitments that require material cash requirements for customer deposits outflows, repurchase agreements, borrowed funds, lease obligations, off-balance sheet obligations, operating expenses and other contractual obligations. The source of funding for such requirements includes loan repayments, customer deposit inflows, borrowings and capital resources.
Financial Statements and Supplementary Data.” 48 Liquidity Risk In the normal course of business, the Company has commitments that require significant cash availability for customer deposits outflows, repurchase agreements, borrowed funds, lease obligations, off-balance sheet obligations, operating expenses and other contractual obligations. The source of funding for such requirements includes loan repayments, customer deposit inflows, borrowings and capital resources.
Policies allow for higher loan-to-values with appropriate risk mitigation such as documented compensating factors, credit enhancement, etc. For loans held for sale, the Company complies with each investor’s loan-to-value guidelines. The Company also provides interim construction financing for single-family dwellings.
Policies allow for higher loan-to-values with appropriate risk mitigation such as documented compensating factors, credit enhancement, and other factors. For loans held for sale, the Company complies with each investor’s loan-to-value guidelines. The Company also provides interim construction financing for single-family dwellings.
The current and prior year’s low effective income tax rates were due to income from tax-exempt debt securities, municipal loans and leases and benefits from federal income tax credits. Income from tax-exempt debt securities, loans and leases was $80.1 million and $69.2 million for the years ended December 31, 2022 and 2021, respectively.
The current and prior year’s low effective income tax rates were due to income from tax-exempt debt securities, municipal loans and leases and benefits from federal income tax credits. Income from tax-exempt debt securities, loans and leases was $80.2 million and $80.1 million for the years ended December 31, 2023 and 2022, respectively.
The interest income for 2021 increased over the same period last year primarily from the acquisition of Alta, increased volume in commercial loans and investment securities.
The interest income for 2022 increased over the same period last year primarily from the acquisition of Alta, increased volume in commercial loans and investment securities.
The following table summarizes the estimated amounts outstanding at December 31, 2022 for uninsured time deposits according to the time remaining to maturity.
The following table summarizes the estimated amounts outstanding at December 31, 2023 for uninsured time deposits according to the time remaining to maturity.
The Company’s ACL of $182 million is considered by management to be adequate to absorb the estimated credit losses from any segment of its loan portfolio based upon managements’ best estimate of current expected credit losses within the existing portfolio of loans.
The Company’s ACL of $193 million is considered by management to be adequate to absorb the estimated credit losses from any segment of its loan portfolio based upon management’s best estimate of current expected credit losses within the existing portfolio of loans.
For information regarding the ACL for loans receivable, its relation to the provision for credit losses and risk related to asset quality, and the estimated change during the reported periods, see the section captioned “ Allowance for Credit Losses - Loans Receivable ” included in “Item 7.
For information regarding the ACL for loans receivable, its relation to the provision for credit losses and risk related to asset quality, and the estimated change during the reported periods, see the section captioned “Allowance for Credit Losses - Loans Receivable” included in “Item 7.
As of December 31, 2022, the Company had no construction loans with interest reserves that are currently non-performing or which are potential problem loans. Loan Purchases, Sales, and Servicing Fixed rate, long-term mortgage loans are generally sold in the secondary market.
As of December 31, 2023, the Company had no construction loans with interest reserves that are currently non-performing or that are designated potential problem loans. 38 Loan Purchases, Sales, and Servicing Fixed rate, long-term mortgage loans are generally sold in the secondary market.
The following table illustrates the Bank’s regulatory capital ratios and the Federal Reserve’s capital adequacy guidelines as of December 31, 2022: Total Capital (To Risk-Weighted Assets) Tier 1 Capital (To Risk-Weighted Assets) Common Equity Tier 1 (To Risk-Weighted Assets) Leverage Ratio/ Tier 1 Capital (To Average Assets) Glacier Bank actual regulatory ratios 13.58 % 12.60 % 12.60 % 8.97 % 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.
The following table illustrates the Bank’s regulatory capital ratios and the Federal Reserve’s capital adequacy guidelines as of December 31, 2023: Total Capital (To Risk-Weighted Assets) Tier 1 Capital (To Risk-Weighted Assets) Common Equity Tier 1 (To Risk-Weighted Assets) Leverage Ratio/ Tier 1 Capital (To Average Assets) Glacier Bank actual regulatory ratios 14.07 % 13.01 % 13.01 % 8.81 % 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.
The estimate is considered to have a low amount of uncertainty unless there is an event that significantly lowers the goodwill fair value estimate.
The estimate is considered to have a low amount of uncertainty unless there is an event that significantly lowers the fair value of a reporting unit estimate.
Unimproved Land and Land Development Loans Although the Company has originated very few unimproved land and land development loans since the economic downturn in 2008, the Company may originate such loans on properties intended for residential and commercial use where real estate market conditions have improved.
Unimproved Land and Land Development Loans Although the Company has originated very few unimproved land and land development loans since the economic downturn in 2008, the Company may originate such loans on properties intended for residential and commercial use where real estate market conditions show significant strength.
State taxes are incurred at the rate of 6.75 percent in Montana, 6.00 percent in Idaho, 4.85 percent in Utah, 4.55 percent in Colorado and 4.90 percent in Arizona. Washington, Wyoming and Nevada do not impose a corporate income tax. The Company is also required to file in states other than the eight states in which it has properties.
State taxes are incurred at the rate of 6.75 percent in Montana, 5.80 percent in Idaho, 4.65 percent in Utah, 4.40 percent in Colorado and 4.90 percent in Arizona. Washington, Wyoming and Nevada do not impose a corporate income tax. The Company is also required to file in states other than the eight states in which it has properties.
For the periods ended December 31, 2022 and 2021, 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. During 2022, provision for credit losses exceeded the charge-offs, net of recoveries, by $9.6 million.
For the periods ended December 31, 2023 and 2022, 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. During 2023, provision for credit losses exceeded the charge-offs, net of recoveries, by $10.5 million.
During the same period in 2021, the charge-offs, net of recoveries, exceeded provision for credit losses by $14.1 million. 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”).
During 2022, provision for credit losses exceeded the charge-offs, net of recoveries, by $9.6 million. 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”).
The Board is responsible for approval of related policies. 53 Critical Accounting Policies The preparation of consolidated financial statements in conformity with GAAP often requires management to use significant judgments as well as subjective and/or complex measurements in making estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
Critical Accounting Policies The preparation of consolidated financial statements in conformity with GAAP often requires management to use significant judgments as well as subjective and/or complex measurements in making estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the Federal Reserve Bank (“FRB”) as well as a line of credit with a large national banking institution.
The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the FRB as well as a line of credit with a large national banking institution.
Benefits from federal income tax credits were $15.4 million and $12.3 million for the years ended December 31, 2022 and 2021, respectively. 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.
Benefits from Low-Income Housing Tax Credits (“LIHTC”) federal income tax credits were $19.9 million and $15.4 million for the years ended December 31, 2023 and 2022, respectively. 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.
For such loans, the accrual of interest and its capitalization into the loan balance will be discontinued. The Company had $554 million and $374 million of loans with remaining interest reserves of $27.7 million and $17.6 million as of December 31, 2022 and 2021, respectively.
For such loans, the accrual of interest and its capitalization into the loan balance will be discontinued. The Company had $479 million and $554 million of loans with remaining interest reserves of $20.7 million and $27.7 million as of December 31, 2023 and 2022, respectively.
During 2022 and 2021, the Company extended, renewed or restructured 5 loans and 3 loans, respectively, with interest reserves. Such loans had an aggregate outstanding principal balance of $16.2 million and $3.7 million as of December 31, 2022 and 2021, respectively.
During 2023 and 2022, the Company extended, renewed or modified 7 loans and 5 loans, respectively, with interest reserves. Such loans had an aggregate outstanding principal balance of $56.0 million and $16.2 million as of December 31, 2023 and 2022, respectively.
Income tax expense for the years ended December 31, 2022 and 2021 was $67.1 million and $64.7 million, respectively. The Company’s effective income tax rate for the years ended December 31, 2022 and 2021 was 18.1 percent and 18.5 percent, respectively.
Income tax expense for the years ended December 31, 2023 and 2022 was $44.7 million and $67.1 million, respectively. The Company’s effective income tax rate for the years ended December 31, 2023 and 2022 was 16.7 percent and 18.1 percent, respectively.
ADDITIONAL MANAGEMENT’S DISCUSSION AND ANALYSIS Investment Activity The Company’s investment securities primarily consist of debt securities classified as either available-for-sale or held-to-maturity. Non-marketable equity securities consist of capital stock issued by the FHLB of Des Moines. 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.
Non-marketable equity securities consist of capital stock issued by the FHLB of Des Moines. 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.
December 31, Compounded Annual Growth Rate (Dollars in thousands, except per share data) 2022 2021 2020 2019 2018 1-Year 5-Year Selected Statements of Financial Condition Information Total assets $ 26,635,375 $ 25,940,645 $ 18,504,206 $ 13,683,999 $ 12,115,484 2.7 % 17.1 % Debt securities 9,022,359 10,370,013 5,527,650 2,799,863 2,869,578 (13.0) % 25.7 % Loans receivable, net 15,064,529 13,259,366 10,964,453 9,388,320 8,156,310 13.6 % 13.1 % Allowance for credit losses (182,283) (172,665) (158,243) (124,490) (131,239) 5.6 % 6.8 % Goodwill and intangibles 1,026,994 1,037,652 569,522 519,704 338,828 (1.0) % 24.8 % Deposits 20,606,555 21,337,249 14,797,529 10,776,457 9,493,767 (3.4) % 16.8 % Federal Home Loan Bank advances 1,800,000 — — 38,611 440,175 n/m 32.5 % Securities sold under agreements to repurchase and other borrowed funds 1,023,209 1,064,888 1,037,651 598,644 410,859 (3.9) % 20.0 % Stockholders’ equity 2,843,305 3,177,622 2,307,041 1,960,733 1,515,854 (10.5) % 13.4 % Equity per share 25.67 28.71 24.18 21.25 17.93 (10.6) % 7.4 % Equity as a percentage of total assets 10.7 % 12.3 % 12.5 % 14.3 % 12.5 % (12.9) % (3.1) % ________________________ n/m - not measurable Years ended December 31, Compounded Annual Growth Rate (Dollars in thousands, except per share data) 2022 2021 2020 2019 2018 1-Year 5-Year Summary Statements of Operations Interest income $ 829,640 $ 681,074 $ 627,064 $ 546,177 $ 468,996 21.8 % 12.1 % Interest expense 41,261 18,558 27,315 42,773 35,531 122.3 % 3.0 % Net interest income 788,379 662,516 599,749 503,404 433,465 19.0 % 12.7 % Provision for credit losses 19,963 23,076 39,765 57 9,953 (13.5) % 14.9 % Non-interest income 120,732 144,820 172,867 130,774 118,824 (16.6) % 0.3 % Non-interest expense 518,868 434,822 404,811 374,927 320,127 19.3 % 10.1 % Income before income taxes 370,280 349,438 328,040 259,194 222,209 6.0 % 10.8 % Federal and state income tax expense 67,078 64,681 61,640 48,650 40,331 3.7 % 10.7 % Net income $ 303,202 $ 284,757 $ 266,400 $ 210,544 $ 181,878 6.5 % 10.8 % Basic earnings per share $ 2.74 $ 2.87 $ 2.81 $ 2.39 $ 2.18 (4.5) % 4.7 % Diluted earnings per share $ 2.74 $ 2.86 $ 2.81 $ 2.38 $ 2.17 (4.2) % 4.8 % Dividends declared per share $ 1.32 $ 1.37 $ 1.33 $ 1.31 $ 1.31 (3.6) % 0.2 % 23 At or for the Years ended December 31, (Dollars in thousands) 2022 2021 2020 2019 2018 Selected Ratios and Other Data Return on average assets 1.15 % 1.33 % 1.62 % 1.64 % 1.59 % Return on average equity 10.43 % 11.08 % 12.15 % 12.01 % 12.56 % Dividend payout ratio 48.18 % 47.74 % 47.33 % 54.81 % 60.09 % Average equity to average asset ratio 11.01 % 11.99 % 13.35 % 13.69 % 12.67 % Total capital (to risk-weighted assets) 14.02 % 14.21 % 14.63 % 14.95 % 14.70 % Tier 1 capital (to risk-weighted assets) 12.34 % 12.49 % 12.42 % 13.76 % 13.37 % Common Equity Tier 1 (to risk-weighted assets) 12.34 % 12.49 % 12.42 % 12.58 % 12.10 % Tier 1 capital (to average assets) 8.79 % 8.64 % 9.12 % 11.65 % 11.35 % Net interest margin on average earning assets (tax-equivalent) 3.27 % 3.42 % 4.09 % 4.39 % 4.21 % Efficiency ratio 1 54.64 % 51.35 % 49.97 % 57.78 % 54.73 % Allowance for credit losses as a percent of loans 1.20 % 1.29 % 1.42 % 1.31 % 1.58 % Allowance for credit losses as a percent of nonperforming loans 557 % 255 % 470 % 385 % 266 % Non-performing assets as a percentage of subsidiary assets 0.12 % 0.26 % 0.19 % 0.27 % 0.47 % Non-performing assets $ 32,742 67,691 35,433 37,437 56,750 Loans originated and acquired $ 8,039,623 8,551,419 7,934,881 4,607,536 4,301,678 Number of full time equivalent employees 3,390 3,436 2,970 2,826 2,623 Number of locations 221 224 193 181 167 ______________________________ 1 Non-interest expense before OREO expenses, core deposit intangibles amortization, goodwill impairment charges, and non-recurring expense items as a percentage of tax-equivalent net interest income and non-interest income, excluding gains or losses on sale of investments, OREO income, and non-recurring income items. 24 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2022 COMPARED TO DECEMBER 31, 2021 Highlights and Overview The Company ended the year at $26.635 billion in assets, which was a $695 million, or 3 percent, increase over the prior year and was driven by the increase in the loan portfolio that more than offset the decreases in the debt securities.
December 31, Compounded Annual Growth Rate (Dollars in thousands, except per share data) 2023 2022 2021 2020 2019 1-Year 5-Year Selected Statements of Financial Condition Information Total assets $ 27,742,629 $ 26,635,375 $ 25,940,645 $ 18,504,206 $ 13,683,999 4.2 % 15.2 % Debt securities 8,288,130 9,022,359 10,370,013 5,527,650 2,799,863 (8.1) % 24.2 % Loans receivable, net 16,005,325 15,064,529 13,259,366 10,964,453 9,388,320 6.2 % 11.3 % Allowance for credit losses (192,757) (182,283) (172,665) (158,243) (124,490) 5.7 % 9.1 % Goodwill and intangibles 1,017,263 1,026,994 1,037,652 569,522 519,704 (0.9) % 14.4 % Deposits 19,929,167 20,606,555 21,337,249 14,797,529 10,776,457 (3.3) % 13.1 % Federal Home Loan Bank advances — 1,800,000 — — 38,611 (100.0) % (100.0) % FRB Bank Term Funding 2,740,000 — — — — n/m n/m Securities sold under agreements to repurchase and other borrowed funds 1,568,545 1,023,209 1,064,888 1,037,651 598,644 53.3 % 21.2 % Stockholders’ equity 3,020,281 2,843,305 3,177,622 2,307,041 1,960,733 6.2 % 9.0 % Equity per share 27.24 25.67 28.71 24.18 21.25 6.1 % 5.1 % Equity as a percentage of total assets 10.9 % 10.7 % 12.3 % 12.5 % 14.3 % 2.1 % (5.3) % ________________________ n/m - not measurable Years ended December 31, Compounded Annual Growth Rate (Dollars in thousands, except per share data) 2023 2022 2021 2020 2019 1-Year 5-Year Summary Statements of Operations Interest income $ 1,017,655 $ 829,640 $ 681,074 $ 627,064 $ 546,177 22.7 % 13.3 % Interest expense 325,973 41,261 18,558 27,315 42,773 690.0 % 50.1 % Net interest income 691,682 788,379 662,516 599,749 503,404 (12.3) % 6.6 % Provision for credit losses 14,795 19,963 23,076 39,765 57 (25.9) % 204.0 % Non-interest income 118,079 120,732 144,820 172,867 130,774 (2.2) % (2.0) % Non-interest expense 527,358 518,868 434,822 404,811 374,927 1.6 % 7.1 % Income before income taxes 267,608 370,280 349,438 328,040 259,194 (27.7) % 0.6 % Federal and state income tax expense 44,681 67,078 64,681 61,640 48,650 (33.4) % (1.7) % Net income $ 222,927 $ 303,202 $ 284,757 $ 266,400 $ 210,544 (26.5) % 1.1 % Basic earnings per share $ 2.01 $ 2.74 $ 2.87 $ 2.81 $ 2.39 (26.6) % (3.4) % Diluted earnings per share $ 2.01 $ 2.74 $ 2.86 $ 2.81 $ 2.38 (26.6) % (3.3) % Dividends declared per share $ 1.32 $ 1.32 $ 1.37 $ 1.33 $ 1.31 — % 0.2 % 25 At or for the Years ended December 31, (Dollars in thousands) 2023 2022 2021 2020 2019 Selected Ratios and Other Data Return on average assets 0.81 % 1.15 % 1.33 % 1.62 % 1.64 % Return on average equity 7.64 % 10.43 % 11.08 % 12.15 % 12.01 % Dividend payout ratio 65.67 % 48.18 % 47.74 % 47.33 % 54.81 % Average equity to average asset ratio 10.65 % 11.01 % 11.99 % 13.35 % 13.69 % Total capital (to risk-weighted assets) 14.61 % 14.02 % 14.21 % 14.63 % 14.95 % Tier 1 capital (to risk-weighted assets) 12.85 % 12.34 % 12.49 % 12.42 % 13.76 % Common Equity Tier 1 (to risk-weighted assets) 12.85 % 12.34 % 12.49 % 12.42 % 12.58 % Tier 1 capital (to average assets) 8.71 % 8.79 % 8.64 % 9.12 % 11.65 % Net interest margin on average earning assets (tax-equivalent) 2.73 % 3.27 % 3.42 % 4.09 % 4.39 % Efficiency ratio 1 62.85 % 54.64 % 51.35 % 49.97 % 57.78 % Allowance for credit losses as a percent of loans 1.19 % 1.20 % 1.29 % 1.42 % 1.31 % Allowance for credit losses as a percent of nonperforming loans 799 % 557 % 255 % 470 % 385 % Non-performing assets as a percentage of subsidiary assets 0.09 % 0.12 % 0.26 % 0.19 % 0.27 % Non-performing assets $ 25,631 32,742 67,691 35,433 37,437 Loans originated and acquired $ 4,449,350 8,039,623 8,551,419 7,934,881 4,607,536 Number of full time equivalent employees 3,294 3,390 3,436 2,970 2,826 Number of locations 221 221 224 193 181 ______________________________ 1 Non-interest expense before OREO expenses, core deposit intangibles amortization, goodwill impairment charges, and non-recurring expense items as a percentage of tax-equivalent net interest income and non-interest income, excluding gains or losses on sale of investments, OREO income, and non-recurring income items. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2023 COMPARED TO DECEMBER 31, 2022 Highlights and Overview The banking industry experienced significant pressures during the current year with historic increases in interest rates during the last eighteen months and three notable bank failures in 2023.
The Company has the capacity to issue 234,000,000 shares of common stock of which 110,777,780 have been issued as of December 31, 2022. The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none have been issued as of December 31, 2022.
The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none have been issued as of December 31, 2023.
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 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. During 2023, the amount of unencumbered securities decreased primarily as a result of pledging securities to collateralize borrowings.
The following factors, among others, could cause actual results to differ materially from the anticipated results (express or implied) or other expectations in the forward-looking statements, including those factors set forth under “Risk Factors” and in other sections in this Annual Report on Form 10-K, or the documents incorporated by reference: • the risks associated with lending and potential adverse changes in 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 Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and margin, overall profitability, and stockholders’ equity; • 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; • legislative or regulatory changes, as well as increased banking and consumer protection regulation, that may adversely affect the Company’s business; • our ability to negotiate and complete and successfully integrate any 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, whether as a result of changes in economic conditions, competition, or changes in customer behavior; • 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 could result in the creation of larger financial institutions with greater resources, changing the competitive landscape; • dependence on the Chief Executive Officer (“CEO”), the senior management team and the Presidents of Glacier Bank (the “Bank”) divisions; • natural disasters, including drought, fires, floods, earthquakes, and other unexpected events; • the effects from Russia’s ongoing military action in Ukraine, including the broader impacts to financial markets and economic conditions; • 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.
The following factors, among others, could cause actual results to differ materially from the anticipated results (express or implied) or other expectations in the forward-looking statements, including those factors set forth under “Risk Factors” and in other sections in this Annual Report on Form 10-K, or the documents incorporated by reference: • risks associated with lending and potential adverse changes in the credit quality of the Company’s loan portfolio; • changes in monetary and fiscal policies, including interest rate policies of the Federal Reserve Board, which may continue to adversely affect the Company’s net interest income and margin, the fair value of its financial instruments, profitability, and stockholders’ equity; • legislative or regulatory changes, including increased insurance rates and assessments or increased banking and consumer protection regulations, that may adversely affect the Company’s business; • risks related to overall economic conditions, including the impact on the economy of an elevated interest rate environment, inflationary pressures, and geopolitical instability, including the wars in Ukraine and the Middle East; • risks, costs and other difficulties associated with the Company’s ability to negotiate, complete, and successfully integrate any pending or future acquisitions; • costs or difficulties related to the completion and integration of pending or future acquisitions; • impairment of the goodwill recorded by the Company in connection with acquisitions, which may have an adverse impact on earnings and capital; • reduction in demand for banking products and services, whether as a result of changes in customer behavior, economic conditions, banking environment, or competition; • deterioration of the reputation of banks and the financial services industry, which could adversely affect the Company's ability to obtain and maintain customers; • changes in the competitive landscape, including as may result from new market entrants or further consolidation in the financial services industry, resulting in the creation of larger competitors with greater financial resources; • risks presented by 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 through acquisitions; • risks associated with dependence on the Chief Executive Officer (“CEO”), the senior management team and the Presidents of Glacier Bank (the “Bank”) divisions; • material failure, potential interruption or breach in security of the Company’s systems or changes in technologies which could expose the Company to cybersecurity risks, fraud, system failures, or direct liabilities; • risks related to natural disasters, including droughts, fires, floods, earthquakes, pandemics, and other unexpected events; • success in managing risks involved in the foregoing; and • effects of any reputational damage to the Company resulting from any of the foregoing.
In 2022, the Company’s debt securities were primarily comprised of U.S. government and federal agency 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.
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.
The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during 2022 was 3.27 percent, a 15 basis points decrease from the net interest margin of 3.42 percent for the same period in the prior year.
The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during 2023 was 2.73 percent, a 54 basis points decrease from the net interest margin of 3.27 percent for the prior year.
The Company has investments of $15.3 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.
The federal income tax credits are claimed over a ten-year credit allowance period. The Company has investments of $14.6 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.
The following table sets forth the changes in OREO for the periods indicated: Years ended (Dollars in thousands) December 31, 2022 December 31, 2021 Balance at beginning of period $ 18 1,744 Additions 907 1,482 Write-downs — (120) Sales (893) (3,088) Balance at end of period $ 32 18 Allowance for Credit Losses - Loans Receivable The following table summarizes the allocation of the ACL as of the dates indicated: December 31, 2022 December 31, 2021 (Dollars in thousands) ACL Percent of Loans in Category ACL Percent of Loans in Category Residential real estate $ 19,683 10 % $ 16,458 8 % Commercial real estate 125,816 65 % 117,901 64 % Other commercial 21,454 18 % 24,703 20 % Home equity 10,759 5 % 8,566 5 % Other consumer 4,571 2 % 5,037 3 % Total $ 182,283 100 % $ 172,665 100 % 39 The following table summarizes the ACL experience for the periods indicated: At or for the Years ended (Dollars in thousands) December 31, 2022 % of Average Loans December 31, 2021 % of Average Loans December 31, 2020 % of Average Loans Balance at beginning of period $ 172,665 158,243 124,490 Impact of adopting CECL — — 3,720 Acquisitions — 371 49 Provision for credit losses 17,433 16,380 37,637 Net (charge-offs) recoveries Residential real estate 63 — % 337 0.04 % 40 — % Commercial real estate 684 0.01 % 1,597 0.02 % (2,403) (0.04) % Other commercial (2,545) (0.10) % (1,048) (0.04) % (3,049) (0.10) % Home equity 250 0.03 % 198 0.03 % (128) (0.02) % Other consumer (6,267) (1.70) % (3,413) (1.03) % (2,113) (0.69) % Net Charge-offs (7,815) (0.05) % (2,329) (0.02) % (7,653) (0.07) % Balance at end of period $ 182,283 $ 172,665 $ 158,243 ACL as a percentage of total loans 1.20 % 1.29 % 1.42 % Non-accrual loans as a percentage of total loans 0.20 % 0.38 % 0.29 % ACL as a percentage of non-accrual loans 585.16 % 341.69 % 495.07 % The ACL as a percentage of total loans outstanding at December 31 2022 was 1.20 percent which was a 9 basis points decrease from the prior year end.
The following table sets forth the changes in OREO for the periods indicated: 40 Years ended (Dollars in thousands) December 31, 2023 December 31, 2022 Balance at beginning of period $ 32 18 Additions 1,563 907 Write-downs (8) — Sales (84) (893) Balance at end of period $ 1,503 32 Allowance for Credit Losses - Loans Receivable The following table summarizes the allocation of the ACL as of the dates indicated: December 31, 2023 December 31, 2022 (Dollars in thousands) ACL Percent of Loans in Category ACL Percent of Loans in Category Residential real estate $ 22,325 11 % $ 19,683 10 % Commercial real estate 130,924 64 % 125,816 65 % Other commercial 21,194 18 % 21,454 18 % Home equity 11,766 5 % 10,759 5 % Other consumer 6,548 2 % 4,571 2 % Total $ 192,757 100 % $ 182,283 100 % The following table summarizes the ACL experience for the periods indicated: At or for the Years ended (Dollars in thousands) December 31, 2023 % of Average Loans December 31, 2022 % of Average Loans December 31, 2021 % of Average Loans Balance at beginning of period $ 182,283 $ 172,665 $ 158,243 Acquisitions — — 371 Provision for credit losses 20,790 17,433 16,380 Net (charge-offs) recoveries Residential real estate (3) — % 63 — % 337 0.04 % Commercial real estate (1,640) (0.02) % 684 0.01 % 1,597 0.02 % Other commercial (2,256) (0.08) % (2,545) (0.10) % (1,048) (0.04) % Home equity 38 — % 250 0.03 % 198 0.03 % Other consumer (6,455) (1.64) % (6,267) (1.70) % (3,413) (1.03) % Net Charge-offs (10,316) (0.07) % (7,815) (0.05) % (2,329) (0.02) % Balance at end of period $ 192,757 $ 182,283 $ 172,665 ACL as a percentage of total loans 1.19 % 1.20 % 1.29 % Non-accrual loans as a percentage of total loans 0.13 % 0.20 % 0.38 % ACL as a percentage of non-accrual loans 926.01 % 585.16 % 341.69 % 41 The ACL as a percentage of total loans outstanding at December 31 2023 was 1.19 percent which was a 1 basis point decrease from the prior year end.
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.
Total unencumbered debt securities at December 31, 2022, included $3.1 billion classified as AFS, and $3.1 billion classified as HTM. 49 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.
During the first quarter of the current year, the Company transferred $2.2 billion of available-for-sale securities with an unrealized net loss of $55.7 million into the held-to-maturity portfolio after determining it had the intent and ability to hold such securities until maturity.
During the first quarter of 2022, the Company transferred $2.2 billion of available-for-sale securities with an unrealized net loss of $55.7 million into the held-to-maturity portfolio after determining it had the intent and ability to hold such securities until maturity. Unrealized gains or losses, net of tax, on available-for-sale debt securities are reflected as an adjustment to other comprehensive income.
Non-performing assets of $32.7 million at December 31, 2022 decreased $34.9 million, or 52 percent, over prior year end. Non-performing assets as a percentage of subsidiary assets at December 31, 2022 was 0.12 percent compared to 0.26 percent in the prior year end.
Non-performing assets of $25.6 million at December 31, 2023 decreased $7.1 million, or 22 percent, over the prior year end. Non-performing assets as a percentage of subsidiary assets at December 31, 2023 was 0.09 percent compared to 0.12 percent in the prior year end.
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.
Each modified loan 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 multiple loans when modifying loans regardless of whether or not the loans are designated an MBFD. The Company had MBFD loans of $60.6 million at December 31, 2023.
Authoritative accounting guidance that may possibly have a material impact on the Company that is pending adoption at December 31, 2022 includes amendments to: • FASB ASC Topic 326, Financial Instruments - Credit Losses Troubled Debt Restructurings and Vintage Disclosures • FASB ASC Topic 848, Reference Rate Reform For additional information on the topics and the impact on the Company see Note 1 to the Consolidated Financial Statements in “Item 8.
Financial Statements and Supplementary Data.” 54 Impact of Recently Issued Accounting Standards Authoritative accounting guidance that impacted the Company that became effective during 2023 or 2022 include amendments to: • FASB ASC Topic 326, Financial Instruments - Credit Losses Troubled Debt Restructurings and Vintage Disclosures • FASB ASC Topic 848, Reference Rate Reform Authoritative accounting guidance that may possibly have a material impact on the Company that is pending adoption at December 31, 2023 includes amendments to: • FASB ASC Topic 232, Investments Equity Method and Joint Ventures • FASB ASC Topic 740, Income Taxes For additional information on the topics and the impact on the Company see Note 1 to the Consolidated Financial Statements in “Item 8.
Financial Statements and Supplementary Data.” Short-term borrowings A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations.
For additional information concerning the Company’s borrowings, see Note 9 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” Short-term borrowings A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations.
Non-accrual loans were included in the average volume for the entire period. 3 Includes tax effect of $14.5 million, $12.2 million and $10.5 million on tax-exempt debt securities income for the years ended December 31, 2022, 2021 and 2020, respectively. 4 Includes tax effect of $901 thousand, $1.0 million and $1.1 million on federal income tax credits for the years ended December 31, 2022, 2021 and 2020, respectively. 5 Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts with contractual maturities. 52 Rate/Volume Analysis Net interest income can be evaluated from the perspective of relative dollars of change in each period.
Non-accrual loans were included in the average volume for the entire period. 3 Includes tax effect of $8.9 million, $14.5 million and $12.2 million on tax-exempt debt securities income for the years ended December 31, 2023, 2022 and 2021, respectively. 4 Includes tax effect of $859 thousand, $901 thousand and $1.0 million on federal income tax credits for the years ended December 31, 2023, 2022 and 2021, respectively. 5 Includes interest income of $42.2 million, $1.5 million and $915 thousand on average interest-bearing cash balances of $791.5 million, $120.3 million and $674.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. 6 Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts with contractual maturities.
Such reviews include the adequacy of the steps taken by the Company to ensure that the individuals who perform appraisals and evaluations (new or updated) are appropriately qualified and are not subject to conflicts of interest. If there are any deficiencies noted in the reviews, they are reported to Bank management and prompt corrective action is taken.
Such reviews include the adequacy of the steps taken by the Company to ensure that the individuals who perform appraisals and evaluations (new or updated) are appropriately qualified and are not subject to conflicts of interest.
Non-performing Assets The following table summarizes information regarding non-performing assets at the dates indicated: At or for the Years ended (Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2020 Other real estate owned and foreclosed assets $ 32 18 1,744 Accruing loans 90 days or more past due 1,559 17,141 1,725 Non-accrual loans 31,151 50,532 31,964 Total non-performing assets $ 32,742 67,691 35,433 Non-performing assets as a percentage of subsidiary assets 0.12 % 0.26 % 0.19 % ACL as a percentage of non-performing loans 557 % 255 % 470 % Accruing loans 30-89 days past due $ 20,967 50,566 22,721 Accruing troubled debt restructurings $ 35,220 34,591 42,003 Non-accrual troubled debt restructurings $ 2,355 2,627 3,507 U.S. government guarantees included in non-performing assets $ 2,312 4,028 3,011 Interest income 1 $ 1,450 2,422 1,545 ______________________________ 1 Amounts 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.
If there are any deficiencies noted in the reviews, they are reported to Bank management and prompt corrective action is taken. 39 Non-performing Assets The following table summarizes information regarding non-performing assets at the dates indicated: At or for the Years ended (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2021 Other real estate owned and foreclosed assets $ 1,503 32 18 Accruing loans 90 days or more past due 3,312 1,559 17,141 Non-accrual loans 20,816 31,151 50,532 Total non-performing assets $ 25,631 32,742 67,691 Non-performing assets as a percentage of subsidiary assets 0.09 % 0.12 % 0.26 % ACL as a percentage of non-performing loans 799 % 557 % 255 % Accruing loans 30-89 days past due $ 49,967 20,967 50,566 U.S. government guarantees included in non-performing assets $ 1,503 2,312 4,028 Interest income 1 $ 1,085 1,450 2,422 ______________________________ 1 Amounts 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.
For additional information regarding acquisitions, see Note 23 to the Consolidated Financial Statements in “Item 8.
For additional information on the acquisition and subsequent event, see Note 23 to the Consolidated Financial Statements in “Item 8.
The fair value of the loan collateral acquired in foreclosure during 2022 was $0.9 million.
The fair value of the loan collateral acquired in foreclosure during 2023 was $1.6 million.
Provision for Credit Losses The following table summarizes the provision for credit losses on the loan portfolio, net charge-offs and select ratios relating to the provision for credit losses on loans for the previous eight quarters: (Dollars in thousands) Provision for Credit Losses on Loans Net Charge-Offs (Recoveries) ACL as a Percent of Loans Accruing Loans 30-89 Days Past Due as a Percent of Loans Non-Performing Assets to Total Sub-sidiary Assets Fourth quarter 2022 $ 6,060 $ 1,968 1.20 % 0.14 % 0.12 % Third quarter 2022 8,382 3,154 1.20 % 0.07 % 0.13 % Second quarter 2022 (1,353) 1,843 1.20 % 0.12 % 0.16 % First quarter 2022 4,344 850 1.28 % 0.12 % 0.24 % Fourth quarter 2021 19,301 616 1.29 % 0.38 % 0.26 % 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 % The provision for credit loss expense was $19.9 million for 2022, including provision for credit loss expense of $17.4 million on the loan portfolio and credit loss expense of $2.5 million on unfunded loan commitments.
Provision for Credit Losses The following table summarizes the provision for credit losses on the loan portfolio, net charge-offs and select ratios relating to the provision for credit losses on loans for the previous eight quarters: (Dollars in thousands) Provision for Credit Losses on Loans Net Charge-Offs (Recoveries) ACL as a Percent of Loans Accruing Loans 30-89 Days Past Due as a Percent of Loans Non-Performing Assets to Total Sub-sidiary Assets Fourth quarter 2023 $ 4,181 $ 3,695 1.19 % 0.31 % 0.09 % Third quarter 2023 5,095 2,209 1.19 % 0.09 % 0.15 % Second quarter 2023 5,254 2,473 1.19 % 0.16 % 0.12 % First quarter 2023 6,260 1,939 1.20 % 0.16 % 0.12 % Fourth quarter 2022 6,060 1,968 1.20 % 0.14 % 0.12 % Third quarter 2022 8,382 3,154 1.20 % 0.07 % 0.13 % Second quarter 2022 (1,353) 1,843 1.20 % 0.12 % 0.16 % First quarter 2022 4,344 850 1.28 % 0.12 % 0.24 % The provision for credit loss expense was $14.8 million for 2023, a decrease of $5.2 million, or 26 percent, over the same period in the prior year.
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.
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 LIHTC’s which are indirect federal subsidies used to finance the development of affordable rental housing for low-income households.
A second round of the program opened up January 11, 2021, and ran through May 31, 2021. Home Equity Loans Home equity lines of credit are generally originated with maturity terms of 15 years. At origination, borrowers can choose a variable interest rate that changes quarterly, or after the first 3 or 5 years from the origination date.
Home Equity Loans Home equity lines of credit are generally originated with maturity terms of 15 years. At origination, borrowers can choose a variable interest rate that changes quarterly, or after the first 3 or 5 years from the origination date. The draw period for home equity lines of credit usually exists from origination to maturity.
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). 51 Years ended December 31, 2022 December 31, 2021 December 31, 2020 (Dollars in thousands) Average Balance Interest and Dividends Average Yield/ Rate Average Balance Interest and Dividends Average Yield/ Rate Average Balance Interest and Dividends Average Yield/ Rate Assets Residential real estate loans $ 1,284,029 $ 57,243 4.46 % $ 910,300 $ 43,300 4.76 % $ 1,006,001 $ 46,392 4.61 % Commercial loans 1 11,902,971 555,244 4.66 % 9,900,056 476,678 4.81 % 9,057,210 441,762 4.88 % Consumer and other loans 1,131,000 54,393 4.81 % 993,082 44,614 4.49 % 948,379 44,559 4.70 % Total loans 2 14,318,000 666,880 4.66 % 11,803,438 564,592 4.78 % 11,011,590 532,713 4.84 % Tax-exempt investment securities 3 1,916,731 70,438 3.67 % 1,584,313 59,713 3.77 % 1,306,640 52,201 4.00 % Taxable investment securities 4 8,546,792 113,952 1.33 % 6,512,202 75,553 1.16 % 2,746,855 59,027 2.15 % Total earning assets 24,781,523 851,270 3.44 % 19,899,953 699,858 3.52 % 15,065,085 643,941 4.27 % Goodwill and intangibles 1,032,263 683,000 564,603 Non-earning assets 603,401 850,742 784,075 Total assets $ 26,417,187 $ 21,433,695 $ 16,413,763 Liabilities Non-interest bearing deposits $ 8,005,821 $ — — % $ 6,544,843 $ — — % $ 4,772,386 $ — — % NOW and DDA accounts 5,387,277 3,439 0.06 % 4,325,071 2,737 0.06 % 3,094,675 2,849 0.09 % Savings accounts 3,270,799 1,191 0.04 % 2,493,174 771 0.03 % 1,737,272 742 0.04 % Money market deposit accounts 3,926,737 6,401 0.16 % 3,144,507 3,914 0.12 % 2,356,508 5,077 0.22 % Certificate accounts 955,829 3,249 0.34 % 976,894 4,643 0.48 % 986,126 8,568 0.87 % Wholesale deposits 5 11,862 246 2.07 % 31,103 70 0.22 % 78,283 384 0.49 % Repurchase agreements 920,955 3,200 0.35 % 994,968 2,302 0.23 % 783,101 3,601 0.94 % FHLB advances 584,562 17,317 2.92 % — — — % 79,277 733 0.91 % Subordinated debentures and other borrowed funds 196,139 6,218 3.17 % 166,386 4,121 2.48 % 172,104 5,361 3.11 % Total interest bearing liabilities 23,259,981 41,261 0.18 % 18,676,946 18,558 0.10 % 14,059,732 27,315 0.19 % Other liabilities 249,832 186,068 162,079 Total liabilities 23,509,813 18,863,014 14,221,811 Stockholders’ Equity Common stock 1,107 993 949 Paid-in capital 2,340,952 1,708,271 1,474,359 Retained earnings 897,587 772,300 604,796 Accumulated other comprehensive income (loss) (332,272) 89,117 111,848 Total stockholders’ equity 2,907,374 2,570,681 2,191,952 Total liabilities and stockholders’ equity $ 26,417,187 $ 21,433,695 $ 16,413,763 Net interest income (tax-equivalent) $ 810,009 $ 681,300 $ 616,626 Net interest spread (tax-equivalent) 3.26 % 3.42 % 4.08 % Net interest margin (tax-equivalent) 3.27 % 3.42 % 4.09 % ______________________________ 1 Includes tax effect of $6.3 million, $5.6 million and $5.3 million on tax-exempt municipal loan and lease income for the years ended December 31, 2022, 2021 and 2020, respectively. 2 Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale.
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). 51 Years ended December 31, 2023 December 31, 2022 December 31, 2021 (Dollars in thousands) Average Balance Interest and Dividends Average Yield/ Rate Average Balance Interest and Dividends Average Yield/ Rate Average Balance Interest and Dividends Average Yield/ Rate Assets Residential real estate loans $ 1,603,600 $ 71,328 4.45 % $ 1,284,029 $ 57,243 4.46 % $ 910,300 $ 43,300 4.76 % Commercial loans 1 12,982,708 675,549 5.20 % 11,902,971 555,244 4.66 % 9,900,056 476,678 4.81 % Consumer and other loans 1,247,114 74,734 5.99 % 1,131,000 54,393 4.81 % 993,082 44,614 4.49 % Total loans 2 15,833,422 821,611 5.19 % 14,318,000 666,880 4.66 % 11,803,438 564,592 4.78 % Tax-exempt investment securities 3 1,740,746 59,716 3.43 % 1,916,731 70,438 3.67 % 1,584,313 59,713 3.77 % Taxable investment securities 4,5 8,297,203 152,003 1.83 % 8,546,792 113,952 1.33 % 6,512,202 75,553 1.16 % Total earning assets 25,871,371 1,033,330 3.99 % 24,781,523 851,270 3.44 % 19,899,953 699,858 3.52 % Goodwill and intangibles 1,022,052 1,032,263 683,000 Non-earning assets 504,698 603,401 850,742 Total assets $ 27,398,121 $ 26,417,187 $ 21,433,695 Liabilities Non-interest bearing deposits $ 6,642,339 $ — — % $ 8,005,821 $ — — % $ 6,544,843 $ — — % NOW and DDA accounts 5,167,117 37,357 0.72 % 5,387,277 3,439 0.06 % 4,325,071 2,737 0.06 % Savings accounts 2,908,584 9,918 0.34 % 3,270,799 1,191 0.04 % 2,493,174 771 0.03 % Money market deposit accounts 3,166,914 42,254 1.33 % 3,926,737 6,401 0.16 % 3,144,507 3,914 0.12 % Certificate accounts 1,949,206 64,176 3.29 % 955,829 3,249 0.34 % 976,894 4,643 0.48 % Total core deposits 19,834,160 153,705 0.77 % 21,546,463 14,280 0.07 % 17,484,489 12,065 0.07 % Short-term borrowings Wholesale deposits 6 173,231 8,721 5.03 % 11,862 246 2.07 % 31,103 70 0.22 % Repurchase agreements 1,301,223 36,414 2.80 % 920,955 3,200 0.35 % 994,968 2,302 0.23 % FHLB advances 551,986 26,910 4.81 % 584,562 17,317 2.92 % — — — % FRB Bank Term Funding 2,133,658 93,388 4.38 % — — — % — — — % Total short-term borrowings 4,160,098 165,433 3.92 % 1,517,379 20,763 1.35 % 1,026,071 2,372 0.23 % Long-term borrowings Subordinated debentures and other borrowed funds 209,567 6,835 3.26 % 196,139 6,218 3.17 % 166,386 4,121 2.48 % Total interest bearing liabilities 24,203,825 325,973 1.35 % 23,259,981 41,261 0.18 % 18,676,946 18,558 0.10 % Other liabilities 275,359 249,832 186,068 Total liabilities 24,479,184 23,509,813 18,863,014 Stockholders’ Equity Common stock 1,109 1,107 993 Paid-in capital 2,346,575 2,340,952 1,708,271 Retained earnings 1,021,469 897,587 772,300 Accumulated other comprehensive (loss) income (450,216) (332,272) 89,117 Total stockholders’ equity 2,918,937 2,907,374 2,570,681 Total liabilities and stockholders’ equity $ 27,398,121 $ 26,417,187 $ 21,433,695 Net interest income (tax-equivalent) $ 707,357 $ 810,009 $ 681,300 Net interest spread (tax-equivalent) 2.64 % 3.26 % 3.42 % Net interest margin (tax-equivalent) 2.73 % 3.27 % 3.42 % ______________________________ 1 Includes tax effect of $5.9 million, $6.3 million and $5.6 million on tax-exempt municipal loan and lease income for the years ended December 31, 2023, 2022 and 2021, respectively. 52 2 Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale.
The core net interest margin, excluding discount accretion, the impact from non-accrual interest and the impact from the PPP loans, was 3.20 percent which was a 4 basis point decrease from the core margin of 3.24 percent in the prior year.
The core net interest margin, excluding discount accretion, the impact from non-accrual interest and the impact from the Paycheck Protection Program loans, was 2.71 percent for 2023, which was a 49 basis points decrease from the core margin of 3.20 percent in the same period of the prior year.
The Company's net interest margin for 2022 was 3.27 percent, a 15 basis points decrease from the net interest margin of 3.42 percent from 2021, which was primarily driven by the volatile interest rate environment and the increase in higher rate borrowings to fund earning assets.
The Company's net interest margin for 2023 was 2.73 percent, a 54 basis points decrease from the net interest margin of 3.27 percent from 2022, which was primarily driven by the volatile interest rate environment and the higher cost of funds.
The Company’s debt securities are summarized below: December 31, 2022 December 31, 2021 (Dollars in thousands) Carrying Amount Percent Carrying Amount Percent Available-for-sale U.S. government and federal agency $ 444,727 5 % $ 1,346,749 13 % U.S. government sponsored enterprises 287,364 3 % 240,693 2 % State and local governments 132,993 1 % 488,858 5 % Corporate bonds 26,109 1 % 180,752 2 % Residential mortgage-backed securities 3,267,341 36 % 5,699,659 55 % Commercial mortgage-backed securities 1,148,773 13 % 1,214,138 12 % Total available-for-sale 5,307,307 59 % 9,170,849 89 % Held-to-maturity U.S. government and federal agency 846,046 9 % — — % State and local governments 1,682,640 19 % 1,199,164 11 % Residential mortgage-backed securities 1,186,366 13 % — — % Total held-to-maturity 3,715,052 41 % 1,199,164 11 % Total debt securities $ 9,022,359 100 % $ 10,370,013 100 % The Company’s debt securities are primarily comprised of state and local government securities and mortgage-backed securities.
The Company’s debt securities are summarized below: December 31, 2023 December 31, 2022 (Dollars in thousands) Carrying Amount Percent Carrying Amount Percent Available-for-sale U.S. government and federal agency $ 455,347 5 % $ 444,727 5 % U.S. government sponsored enterprises 299,219 4 % 287,364 3 % State and local governments 98,932 1 % 132,993 1 % Corporate bonds 26,253 1 % 26,109 1 % Residential mortgage-backed securities 2,811,263 34 % 3,267,341 36 % Commercial mortgage-backed securities 1,094,705 13 % 1,148,773 13 % Total available-for-sale 4,785,719 58 % 5,307,307 59 % Held-to-maturity U.S. government and federal agency 853,273 10 % 846,046 9 % State and local governments 1,650,000 20 % 1,682,640 19 % Residential mortgage-backed securities 999,138 12 % 1,186,366 13 % Total held-to-maturity 3,502,411 42 % 3,715,052 41 % Total debt securities $ 8,288,130 100 % $ 9,022,359 100 % The Company’s debt securities were primarily comprised of U.S. government and federal agency and mortgage-backed securities.
The Company also receives other fees and charges relating to existing loans, which include charges and fees collected in connection with loan modifications. As enticement to financial institutions to administer the program, the SBA reimburses PPP lenders for processing a PPP loan via loan fees.
The Company also receives other fees and charges relating to existing loans, which include charges and fees collected in connection with loan modifications.
December 31, 2022 December 31, 2021 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value General obligation - unlimited $ 421,698 389,762 606,873 637,431 General obligation - limited 186,401 162,096 108,487 113,320 Revenue 1,171,971 981,486 929,166 941,894 Certificate of participation 36,864 32,464 12,316 13,254 Other 2,739 2,637 3,736 3,842 Total $ 1,819,673 1,568,445 1,660,578 1,709,741 The following table outlines the five states in which the Company owns the highest concentrations of state and local government securities.
December 31, 2023 December 31, 2022 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value General obligation - unlimited $ 383,400 361,728 421,698 389,762 General obligation - limited 183,078 165,993 186,401 162,096 Revenue 1,146,341 1,006,088 1,171,971 981,486 Certificate of participation 36,396 34,144 36,864 32,464 Other 2,688 2,630 2,739 2,637 Total $ 1,751,903 1,570,583 1,819,673 1,568,445 The following table outlines the five states in which the Company owns the highest concentrations of state and local government securities.
December 31, 2022 December 31, 2021 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value New York $ 382,529 324,651 260,471 264,776 California 117,284 102,804 151,137 160,023 Texas 128,590 113,444 157,917 161,706 Michigan 89,372 82,649 134,903 139,704 Washington 103,106 92,411 115,834 119,806 All other states 998,792 852,486 840,316 863,726 Total $ 1,819,673 1,568,445 1,660,578 1,709,741 32 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 December 31, 2022.
December 31, 2023 December 31, 2022 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value New York $ 372,926 334,583 382,529 324,651 California 113,983 104,960 117,284 102,804 Texas 125,906 114,753 128,590 113,444 Michigan 82,575 79,012 89,372 82,649 Washington 98,239 90,413 103,106 92,411 All other states 958,274 846,862 998,792 852,486 Total $ 1,751,903 1,570,583 1,819,673 1,568,445 34 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 December 31, 2023.
The Company’s deposits are summarized below: December 31, 2022 December 31, 2021 (Dollars in thousands) Amount Percent Amount Percent Non-interest bearing deposits $ 7,690,751 37 % $ 7,779,288 36 % NOW and DDA accounts 5,330,614 26 % 5,301,832 25 % Savings accounts 3,200,321 16 % 3,180,046 15 % Money market deposit accounts 3,472,281 17 % 4,014,128 19 % Certificate accounts 880,589 4 % 1,036,077 5 % Wholesale deposits 31,999 — % 25,878 — % Total interest bearing deposits 12,915,804 63 % 13,557,961 64 % Total deposits $ 20,606,555 100 % $ 21,337,249 100 % Total estimated uninsured deposits were $6,225,443,000 and $6,907,608,000 at December 31, 2022 and December 31, 2021, respectively.
The Company’s deposits are summarized below: December 31, 2023 December 31, 2022 (Dollars in thousands) Amount Percent Amount Percent Non-interest bearing deposits $ 6,022,980 30 % $ 7,690,751 37 % NOW and DDA accounts 5,321,257 27 % 5,330,614 26 % Savings accounts 2,833,887 14 % 3,200,321 16 % Money market deposit accounts 2,831,624 14 % 3,472,281 17 % Certificate accounts 2,915,393 15 % 880,589 4 % Wholesale deposits 4,026 — % 31,999 — % Total interest bearing deposits 13,906,187 70 % 12,915,804 63 % Total deposits $ 19,929,167 100 % $ 20,606,555 100 % Total estimated uninsured deposits were $6.081 billion and $7.234 billion at December 31, 2023 and December 31, 2022, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−3 removed13 unchanged
Biggest changeEstimated Sensitivity Rate Scenarios One Year Two Years -100 bps Rate shock (0.31 %) (2.07 %) +100 bps Rate shock 0.08 % 1.65 % +200 bps Rate shock (2.00 %) 1.31 % +200 bps Rate ramp (1.02 %) 0.79 % +300 bps Rate shock (7.19 %) (2.09 %) +400 bps Rate shock (12.39 %) (5.54 %) +400 bps Rate ramp (1.06 %) (0.61 %) The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results.
Biggest changeEstimated Sensitivity Rate Scenarios One Year Two Years -400 bp Rate ramp 1.19 % 3.33 % -200 bp Rate ramp 1.45 % 3.25 % -200 bp Rate shock 0.85 % 2.19 % -100 bp Rate shock 1.80 % 5.77 % +100 bp Rate shock (4.94 %) (3.55 %) +200 bp Rate shock (9.42 %) (6.49 %) +200 bp Rate ramp (6.18 %) (6.86 %) +400 bp Rate ramp (6.21 %) (10.67 %) The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results.
While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might 55 change.
While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company’s primary market risk exposure is interest rate risk.
Interest rate risk results from many factors and could have a significant impact on the Company’s net interest income, which is the Company’s primary source of net income.
Interest Rate Risk Interest rate risk is the potential for loss of future earnings resulting from adverse changes in the level of interest rates. Interest rate risk results from many factors and could have a significant impact on the Company’s net interest income, which is the Company’s primary source of net income.
The additional scenarios are adjusted as the economic environment changes and provide ALCO additional interest rate risk monitoring tools to evaluate current market conditions. The following is indicative of the Company’s overall NII sensitivity analysis as of December 31, 2022. The Company’s NII sensitivity remained within policy limits at December 31, 2022.
Other non-parallel rate movement scenarios are also modeled to determine the potential impact on net interest income. The additional scenarios are adjusted as the economic environment changes and provide ALCO additional interest rate risk monitoring tools to evaluate current market conditions. 55 The following is indicative of the Company’s overall NII sensitivity analysis as of December 31, 2023.
It is important to note that these hypothetical estimates are based upon numerous assumptions that are specific to our Company and thus may not be directly comparable to other institutions.
Changes in the Company’s core deposit base, updated deposit pricing assumptions, and other balance sheet changes have increased the degree of measured liability sensitivity. It is important to note that these hypothetical estimates are based upon numerous assumptions that are specific to our Company and thus may not be directly comparable to other institutions.
Removed
The Company’s primary market risk exposure is interest rate risk. 54 Interest Rate Risk Interest rate risk is the potential for loss of future earnings resulting from adverse changes in the level of interest rates.
Added
The Company’s NII sensitivity remained within policy limits at December 31, 2023.
Removed
Given the historically low rate environment, the Company only models and reports for a downward shift in interest rates of 100 bps. Other non-parallel rate movement scenarios are also modeled to determine the potential impact on net interest income.
Removed
Growth in the Company’s core deposit franchise, updated deposit pricing assumptions, and other balance sheet changes including the acquisition of Alta over the past year have increased the degree of measured asset sensitivity and thus well positioned the Company for a higher interest rate environment.

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