GBCI
#That will certainly be contemplated, you bet.
To the margin this quarter, purchase accounting was four bips.
You know, last quarter it was eight.
So it was about half of what we experienced in the second quarter.
I would think we have consistently told the Street, <UNK>, that we expect a pretax hit of somewhere in that $10 million range, so call it $6 million after-tax.
I don't see anything right now that would change our analysis.
Certainly, <UNK> always says that hope is not a strategy, but we could certainly hope that something would get done there and that atrocity would get removed.
But, you know, that's ---+ you can't plan on that and you can't design a strategy around that.
So right now, we're assuming that, yes, you're right; if we cross over by December of 2017, then we're going to ---+ July 1, 2018, that would be impactful for us.
But, you know, <UNK>, you bring up non-accruals and I wanted to make sure that ---+ and <UNK> and myself talked about this this morning, we want to make sure that, you know, as you look at our non-accruals for the quarter, and our NPAs, our NPAs were up a total of a little bit over $2.6 million, call it $2.7 million for the quarter.
But during the quarter, we brought on one large credit and moved it to nonaccrual.
That one credit was approximately $9.6 million, $9.7 million.
So, on the one hand, without moving that one credit to NPA and nonaccrual status, we would have had a heckuva quarter for reducing our NPAs of almost $7 million, and getting back to what <UNK> said earlier, we would have really started to make an assault at that goal of ours of 65.
But that's neither here nor there; that wasn't the case.
This large credit was moved to nonaccrual.
Now, that large credit was an OREO property that we had during the credit crisis.
We sold that OREO to a group, and this is maybe one of the first times where the Canadian dollar and what's gone on in the slowdown in Canada has obviously caused some impact to our credit quality.
That was a group that took that OREO property over, and with what's gone on up in Canada over the last 18 months or so, we felt it prudent to move that credit to nonaccrual status, because they are experiencing some slowdown and some issues up there, and as a result this credit, we felt, needed to be moved to nonaccrual.
The good news is, again ---+ now, that's not what we like to see, and we certainly hope that over time that we can work through this one, too.
But the good news on even that credit is the condition of this collateral and the amenities that have been added to that project in the last five or six years since we originally sold that OREO and it was been taken over by this group are far, far superior to what we sold back five or six years ago.
So, we are ---+ and we feel we are in much, much better shape collateral wise.
The property is in much, much better shape.
There are far more amenities that exist today that did not exist back then.
And so as a result, it's one of those good news/bad news things.
You know, the good news is the property is in really good shape; the loan-to-value, we believe, is far below what it was five, six years ago.
The bad news is, you know, there is a slowdown and there is some stress on this particular project, and we did decide to move it into a nonaccrual status.
With that said, as I mentioned earlier, without that one credit coming on, we would have this quarter seen approximately about a $7 million reduction in NPAs.
So, there's again a full disclosure.
I wanted to make sure that that small increase in NPAs this quarter was not camouflaging what was a large credit that got moved to nonaccrual status, and I just wanted to make sure that everybody understood that.
Well, just a clarification; it wasn't $4 million in the quarter.
It's been $4 million so far this year, for the nine months (multiple speakers)
(multiple speakers) for this quarter, yes.
You know, again, we have ---+ we're complete right now, but we had one more roll this quarter.
So, with that roll obviously came a lot of the CCP expenses that we've seen every quarter during the first three quarters of the year.
And this was a roll that once again had another relatively large bank of ours that rolled.
Now it was only three, but in addition we are converting Treasure State here this weekend.
So, you know, call it four conversions, anyway you want to slice or dice it.
There's still a lot of work and effort and expense that's going to have to go into that.
So, I don't know.
I would suspect that it's not going to be too different.
I just think that what we've seen in the first, second, and third quarter and what we know has taken place and will take place this weekend, we should still be right in that ballpark.
<UNK>, do you want to comment on what you see for next year.
I mean, these ---+
---+ should be done, pretty much.
Should be, I think you're right, you know, that you think four is kind of the pace we've been on for the year, so the expense should be consistent with what you've seen in the past.
And then, we're going to do everything we can to make sure there's no trailing expenses, and we don't see it in 2017.
But, you know, knowing how these things work, there's probably going to be a little bleed-over in the first quarter, and then I hope we've seen the end of it.
On the new production, well, sitting here we know we probably have that number here, <UNK>.
We're all kind of scrambling to see, but it looks like for the third quarter it was new production was right around [456].
Thank you.
I'll let <UNK> chime in here, too, but going forward we've done ---+ I think we've done a remarkable job, truly, of maintaining this margin through this entire time period.
I mean, if you go back, we had a 4% margin for the quarter, but so far for the first nine months, our margin has been at 4.02%.
And that compares to, like, 3.99% for the first nine months of 2015.
So, rather than our margin actually decreasing, we've actually been able to step it up by three bips over the last ---+ over the course of 2016 versus the same period in 2015.
I think, again ---+ in my mind, that's been pretty remarkable.
You know, I think there's some things that we continue to do that certainly support the margin.
Our banks aggressively go out and try to generate checking accounts.
Zero cost dollars into this company, and they've done a really, really good job of doing that.
The numbers through nine months are as good as any we've seen in the last three or four years, as far as number of new accounts.
That's helping because, on average, all these new accounts truly maintain about the same average balances.
So you get some growth, and <UNK> alluded to that.
Just by increasing your customer base, you're going to get some level of additional non-interest-bearing deposits, and we're certainly seeing that.
That has helped.
The remix has probably been one of the biggest things, though, because when you're taking lower yielding securities ---+ as I mentioned earlier, we've gone from 36% to 32% of total assets, and when you take and remix that balance sheet and put on yields that are arguably about double what is paying off and what's paying down, or what's moving off of the books, that certainly lends a great deal of support to that margin also.
There's no doubt in my mind that those two issues are the main reason why we've been able to maintain this margin.
Will that continue going forward into 2017.
Who knows.
I mean, I'm not that smart to figure that out.
But if we stay somewhere in this tight range, I can probably assure you that we are going to be out there wrestling for every new checking account.
And I think we'll continue to be successful in that arena, like we have been in the past.
We still do have another ---+ I believe we've got easily another $500 million, $600 million that could move out of the investment portfolio and move into the loan portfolio.
Or we could use that cash flow out of the investment portfolio to fund our loans.
That, next year, will go a long ways.
In my mind, <UNK>, those are going to be the drivers.
And if those drivers stay intact and in place, our goal is to try to keep that margin in or around that at 4% level.
And we've been able to do that pretty consistently for a number of years.
Now, the wildcard is, do we get a rate increase.
We don't know.
I mean, speculation is that if you're betting right now, you're betting that probably in 2017 you are going to see higher interest rates, to some level.
But we thought that same thing this time last year and look at what we've got.
So, we don't bet the bank.
We don't try to change the balance sheet or we don't try to formulate strategy based on speculation of where interest rates are going.
We try to deal with the reality at hand, and right now I think we're all preparing for a tight band of interest rates and us doing much the same as what we've been able to do these last two or three years to maintain that margin where it is.
For the most part, we are neutral.
I mean, we've always managed the balance sheet to more of a neutral position.
With that said, the latest numbers we have at our disposal show us slightly asset sensitive.
But it's ---+ we're not one of those banks, <UNK>, that an increase in rate is going to move the needle dramatically.
You know, like day one we're going to have hundreds of millions of dollars of assets that are going to move higher like other banks are positioned.
That's not us; it's never been us.
But we should ---+ over a 12-month, 18-month period of higher rates, we will benefit, simply because ---+ and I've said this for many, many, many, many years, we've built this very, very valuable DDA base of customers and that's where we'll get the benefit.
<UNK>.
Yes, I would add, you know, if you look back in the fourth quarter last year, December rate increase, our bank ---+ our division presidents did a great job of not passing on those rates to our depositors.
So we'll benefit on the asset side, to <UNK>'s point, but equally as important is to control the rates on those interest-bearing deposits in combination with growing the non-interest-bearing.
So it will help, but, as <UNK> said, it won't move the needle real dramatically.
But if all taken together, it's very helpful.
Well, that's very kind and thank you very much, <UNK>, and it's been a pleasure working with you over the years, too.
I would say that given what we've seen come out of that market as far as the size of some of the transactions and the respective underwriting and credit quality characteristics, it's been a positive.
I wouldn't say I'm totally surprised, because that same scenario happens with most of our acquisitions, where you have a small community bank limited by the legal lending limit, and there's really two benefits.
They can go out and solicit larger transactions, more complicated transactions; and the second thing is we can repurchase some of the participations they've sold over the years.
We can bring those back into the portfolio, so we can get that little benefit.
But in the case of the Colorado acquisition, it truly has been on the growth side, some very large transactions that they've been able to generate some volume out of, through either some quasi-public entities, some municipal financing.
We've had some success there that they just haven't been able to source at those borrowers before, so I anticipate that's going to continue as that franchise down there continues to grow.
The lenders we have brought across, top-notch, good-quality lenders.
And we're really kind of pleased with their performance.
They've done a good job down there.
You know, I think, <UNK>, if there's one addition to what <UNK> said is we do have great lenders down there, very talented.
We may be probably, over the course of the next year, may look to add to our resources down there.
That's a very, very, very big market.
There's a lot of things going on, and I suspect that with us we'd like to maybe capture even a little bit bigger share of that market.
And that's probably only going to get done if we probably can find a couple of additional lenders.
Because I think the talent and the people we've got down there are doing a great job, but they can only handle so much volume, too.
So, I think if we're going to really continue to take advantage of what <UNK> just said, the things that we bring to the table, we may need one or two more lenders in that market.
Yes, <UNK>, I think the ---+ you know, one of the things that the acquisition did I think with Canyon has really got us into the Springs market.
I mean, they were in the market, but much less so than they are right now, and that's a 600,000-population market, so I think a lot of opportunity there.
And that's ---+ a fair aspect of the incremental growth we're seeing is the products and the approach has opened up some new opportunities down there.
That's a great question (laughter).
That's kind of a double-edged sword, too, though.
You know, on the one hand, <UNK>, as you know, we've always kind of wanted to play around the edges of the bigger markets.
And you're absolutely right.
It is the biggest market.
I believe the Colorado Springs market is even bigger than Boise and Spokane, the other two larger markets that we operate within.
And we've had great success there, so it probably does beg the question you just asked, well, why not ---+ if you've had success, why not go after more of those.
There are a couple of other markets that we think are similar to a Colorado Springs, a Boise, and that that certainly we would be interested in.
And if those opportunities arise, I think you're going to see us ---+ and we have already attempted, in a couple of cases, to move into a few of those markets; just haven't been successful.
So, it's not for lack of trying, but just more of the fact that we do what we do and we are willing to pay what we're willing to pay.
And in some cases, it doesn't always work out totally in our favor.
But I think there are some other markets like that that if we do get those opportunities down the road, they could have a similar outcome as to what we're seeing currently in the Colorado Springs market.
You know, I don't think our philosophy or our strategy about going into metropolitan markets has changed much.
Over my 40-plus ---+ or close to 40 years, I have learned never say never because you'll always be proven to be a liar.
But, you know, it's still ---+ those metropolitan markets, we realize that maybe the model that we have, the things that we rely on to make this company a very good company, you need different attributes, and maybe this model doesn't play as well in metropolitan areas where scale, presence, things like that are more important, a wide breadth of product offerings and different types of financial services.
That's not us.
I mean, we know that.
We know who we are and we accept who we are, and we've been very good at what we are.
Going into the metropolitan areas, I don't know if that's necessarily in our best interest, but certainly playing around the edges.
Markets, <UNK>, the size of Colorado Springs, I don't think we're a bit afraid of moving into those markets because I think down the road they could be good for us.
Well, you know, 51% of our portfolio is centered in Montana, with the bulk of that at Glacier Bank is about $1.8 billion.
So, you know, that would be probably ---+ that portfolio is probably influenced more than any other in our organization.
Now there's always some drifts out.
There's some snowbirds that come out of Canada and would impact some of our other markets, but that would be the bulk of it.
It's about ---+ a little over $1 billion would be my best guess.
(multiple speakers).
That's just at Glacier; that's not Canadian influenced.
Right.
Tourism was an absolute blowout this year.
It was fantastic.
I think we're going to see where Glacier, Yellowstone, just about every national park in the western United States, Dan, is going to crank out all-time attendance figures.
I know that Glacier and Yellowstone are.
I mean, that was almost baked in at the end of September, and in fact in one case was already baked in.
So, it was a wonderful, wonderful tourist season, and I think that some of the numbers that we went through earlier with the growth in (multiple speakers) and some of that that we've seen through the third quarter, that's all part of what we saw from the tourists coming in.
There was just so many individuals, and I've heard countless stories from those people in that industry that it was just a really, really solid, great year.
And I think you could see that from here; you can see that into Yellowstone, Grand Teton.
You know, a lot of the other parks and tourist destinations that make up the six states that we operate within, I think they all experienced the same thing.
We were a little bit concerned last year that maybe Glacier, with the reduction in the Canadian dollar, maybe fewer Canadians coming down in the Glacier Park and into the Flathead Valley was going to really hurt tourism.
And I do believe that there was some of that and I do believe that they did come down in probably smaller numbers, although we saw a lot of Canadians still down here all summer long.
But they were more than, and that slowdown, if it really was much of a slowdown, was so far made up by people coming from other countries and other parts of the United States to these destinations.
And it really, really was a nice, nice benefit for us.
And not just Glacier, but a number of our banks throughout the Rockies.
No, I think we've been pretty consistent about saying that we know, Dan, who we are.
We know the type of deals that we are good at doing and the type of deals that we have historically done.
I think in the prior calls we have mentioned that, could we do a bigger deal.
Well, of course, we could.
And yet, not so sure that a lot of those deals necessarily exist in our part of the world.
But we certainly believe that there is still a lot of opportunities to do deals, but they probably are going to continue to be of the smaller variety, and as we have said countless times, if those are the types of deals that present themselves, and in our minds strategically, those are the deals that we have historically done and have built this <UNK> on, we're willing to continue to keep doing things the way we've always done it.
I don't believe that any of us on the management team, any of the bank presidents or the Board feel that there's an urgent need as we approach $10 billion to change strategies and to move in an entirely different direction.
The fact is we have got to go out there and do something transformational.
That's not us.
That's not probably the way we see this playing out.
And we're certainly not ---+ we're not expecting that that's the way it's going to be.
You know, Dan, I think ---+ <UNK> and I have talked a lot about that.
I think we are very much on the same page there and we have a very disciplined approach to acquisitions.
And we don't think it's in our best interest of the <UNK> to change that just to leap over an artificial number.
So, we'll continue to do what we do, and certainly if something big comes along, we'll look at it, but it's got to fit what our typical approach has been and our metrics, to make sense for us.
<UNK> and myself talked a lot about this.
You know, I'm going to stay on the Board, and you don't work in all these states and in this market for 40 years and not build up a lot of relationships with a lot of banks, a lot of ownerships, a lot of Board members.
And I've mentioned to <UNK>, I've mentioned to the Board, that I'm more than willing to do whatever I can on the M&A front.
Again, I know a lot of people.
I've been doing deals for 25 years now, and there's a lot of deals that we haven't done, but those deals haven't gotten done yet, either.
So those things are still out there potentially down the road, and these are many times deals that I've had lengthy and detailed conversations with these people before.
And so, I would hope that whatever value I can bring on the M&A front, I'm more than willing to do that.
And I would just work at the pleasure of the Board and of <UNK> and the rest of the management team to do whatever I can to do to help add some of these great franchises down the road to the GBCI family.
Well, very good.
And again, thank you all very much for the time that you've spent today.
I just have a few final thoughts that I wanted to go through with everyone on the phone.
You know, like we've said, after 20 years, this is my final earnings call, but before we close today, I wanted to thank a few groups.
First of all, I'd like to thank the investors.
And I know we have a number of investors on the line today.
I'd just like to thank you for the faith and support that you've given us in the past.
Some of you have been invested in this <UNK> for many, many years, and we can't thank you enough, and hope that we have provided you in some small way with the growth and the returns that you expected.
So to all of you investors out there, thank you very, very much.
Next, to the analysts, and you heard on the call today a number of them.
These are analysts that some of them have covered us for many years, some of them are newer to the <UNK>.
But I also want to extend this remark to all those analysts that covered us in the past, because over the last two decades or longer, we've had a number of other analysts that have taken the time and resources to cover Glacier Bancorp.
I'd like to thank all of you for the time and the energy that you've put in to getting to know our Bank, our markets, and our community bank approach to doing business.
You know, I've enjoyed the many road shows and conferences that we've had together, and through good times and those that were more challenging, I always thought that we were treated very fair by all of you.
When we messed up, you called us out on it.
And when things went well, you were also there to congratulate us, and that's all we could ever ask for.
And then, finally, to the 2,300 individuals who make up Glacier Bancorp, I've said it hundreds of times and I'll say it again.
You're simply the best.
You can't produce the type of results this <UNK> has produced the past 32 years without talented and committed people, and we certainly have that.
This point was never more evident, and we certainly ---+ this point was never more evident and we certainly saw this the past two years during this massive core consolidation project.
To achieve this level of performance, while planning and completing what turned out to be 15 ---+ if you add Treasure State and Canyon ---+ 15 data conversions, is absolutely remarkable.
And although we had some challenges along the way, we learned from them and we moved forward.
But what we really learned was the character and commitment we have from this terrific group of people.
So with that, I'd like to say goodbye, thank you for your support, have a wonderful weekend, and go Griz! Thank you all very much, and, again, have a terrific weekend.
Bye now.
