Good day, and thank you for standing by. Welcome to the Glacier Bancorp investor conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Randy Chesler, President and CEO of Glacier Bancorp. Sir, please go ahead. All right. Thank you, Chris, and good morning to everybody. Thank you for joining us. I'm here in beautiful Spokane, Washington, and very excited to talk to you today about our latest acquisition. Last night, after the close of business, we announced our agreement to acquire Community Financial Group, the holding company for Wheatland Bank, a community bank based right here in Spokane, with a presence across Eastern Washington. Joining me on the phone from Kalispell is Ron Copher, our Chief Financial Officer, and Tom Dolan, our Chief Credit Administrator. Wheatland, a nearly five-decade-old institution, has great relationships with its customers as a long-standing community bank in Eastern Washington. When combined with our North Cascades Bank division, the new division will become the seventh largest in our eight-state footprint and a leading community bank in Eastern Washington. We couldn't be more excited to welcome Susan Horton, the long-standing Chairwoman, President, and CEO of Wheatland, as the new president of this combined division. To jump right into the investor presentation, which was posted to our website, page three outlines the transaction. This will be our 25th announced acquisition since 2000, our 13th in the last 10 years. Upon closing, North Cascades will be combined into the new Wheatland Bank division, and Glacier will remain with 17 divisions. The transaction is 100% stock, with Wheatland shareholders receiving 1.0931 shares of Glacier common stock for each share outstanding. Based on the GBCI closing price of August 7th of $33.97, that results in an aggregate deal value of $80.6 million, inclusive of consideration to Wheatland option holders. Turning to page four, this is consistent with our strategy of buying good banks in good markets with good people, Wheatland checks all three of these boxes. This transaction represents an opportunity to increase market share in one of the most attractive and growing markets in the U.S. Throughout our diligence, we've been exceedingly impressed with the people at Wheatland Bank and look forward to welcoming them. With Glacier's unique operating model, we keep most of the people and help our acquired banks better serve their customers with expanded products and services. We also offer employees a terrific opportunity to grow their career in banking. Page five gives a snapshot of view of Wheatland Bank. They have extensive history and experience in the agricultural lending business, which is one of the largest industries in Eastern Washington. Their financial performance has been admirable, having maintained quarterly profitability for the last four decades. They've also been recognized by Bauer as a superior five-star bank every quarter for 15 years running, one of the few banks in Washington to accomplish this. One of the hallmarks of Wheatland has been its conservative and effective credit quality management. You can see on page six that net charge-offs have consistently run below peers and have posted impressive results over a long period of time. If you sum charge-off in recoveries over the last decade, they are in a net recovery position, and since 2000, their cumulative net charge-offs were only $5.3 million. As I'll discuss later in the presentation, our loan diligence covered 100% of the portfolio, and we are extremely impressed with the credit management and the quality of the portfolio. Additionally, the deposit base, as you can see on page seven, is top-notch. Wheatland has consistently had non-interest-bearing deposits, well in excess of peers in the industry overall. There's a lot of granularity to the deposit base. With 17,000 total accounts, the deposits also contain a good mix of consumer versus business, with 45% of the balances in consumer accounts and 55% in business accounts, both with low average balances. While they haven't been immune to cost pressures due to recent interest rate moves, they've held in very well, and we expect that to continue. Turning to page eight, you can see that the new Wheatland Bank division will have a top five deposit market share in Eastern Washington. This is a very dynamic and growing market. It is a significant agricultural epicenter with top four production in the U.S. of 18 different crops. The region is also home to numerous colleges and universities, is a key transportation hub in the Pacific Northwest and is benefiting from large investment and national firms such as Amazon and many others. We are excited to be able to grow our market share in such a dynamic region. Pages nine and 10 of the investor deck outline the transaction and our assumptions, which, as I mentioned earlier, are very consistent with our historic acquisition approach, where we are very happy with the financial metrics of this transaction. Our cost savings are conservative at 20%, and our credit mark at over 1.3 of the loan portfolio is well informed by loan due diligence of 100% of the portfolio. The resulting transaction metrics are very attractive, with minimal tangible book value dilution earned back in less than a year. Additionally, we expect over 4% EPS dilution and a 15% internal rate of return. EPS accretion, that is. We believe this transaction will build great long-term franchise value. The financial pro formas are very attractive, and it's very consistent with our history of buying good banks in good markets with good people. We're very excited to have this exceptional community bank join our team, and we welcome the talented Wheatland team to our family of banks. At this point, I'll end my comments, and I will turn the call back over to Chris, the operator, for any questions from our analysts. Thank you, sir. As a reminder, to ask a question, please press star one, one on your phone and wait for your name to be announced. To withdraw your question, please press star one, one again. Stand by as we compile the Q&A roster. One moment, please, for our first question. Our first question will come from David Feaster of Raymond James. Your line is open. Hey, good morning, everybody. Morning, David. Maybe first, if we could touch on the balance sheet. Obviously, we've got, you know, healthy rate marks on both the loans and securities. I'm just curious whether embedded in your, your EPS accretion expectations, whether there's any plans for the securities book when you close, since those are going to be marked or, or loan sales or anything to maybe accelerate the pace of borrowings, just as we think about the broader balance sheet and any restructuring or anything, any type of opportunities like that. Sure. Ron, do you want to take that? Yes. Good morning, David. With respect to the securities portfolio, we understand that they'll be selling that portfolio, possibly, you know, still has to be worked out, but we're hopeful that they will be able to sell the portfolio prior to close, but that remains to be seen. That'll give us an opportunity to pick up, after pay downs that I expect, through November 30, we would be able to pick up, say, $210 million of cash from their portfolio. Then we'll have the options to, you know, pay down more expensive debt. We're examining the opportunities, but pleased to, to have that happen. Just one other thing I want you to be aware of in terms of the marks. They have $4.1 million of Trust Preferred, they will redeem those out prior to close. We won't have to mark that to market after the close. Okay, that's helpful. Maybe just touching on, on the AG B ook, and, and your thoughts on that segment. Obviously, this is something that y'all have done in the past, but this is a, a real core competency for them. Is this a segment that you see opportunity to, to expand further and maybe deepen across, you know, the rest of the footprint? Just maybe any color on the specific types of, of ag loans that they specialize in. It seems like they're, they're mostly focused on the ag production side. Is that, is that a fair characterization? Yeah, I'm going to have Tom in a minute here, take that. Let me just first say, you know, ag, it's, we've been in a ag business overall. It's a little less than just about 10% of our portfolio. We've been in the Washington ag business for quite a while with our North Cascades acquisition. That's mainly tree fruit over along the Cascades. This really broadens us out into a much different set of crops that we're familiar with, most of them. We really like the ag business. We like the ag business we have. Certainly right now, those yields on ag loans are very attractive. They tend to have a few more non-interest-bearing deposits with us. That particular segment is a very good fit for what we're already doing, but also we, we really like the dynamics of the pricing and the deposit characteristics of that business. It tends to be very long-term, loyal relationships that are established, and we also, we also like that. Tom has been out here, obviously, and spent a lot of time looking at it. You know, Tom, do you want to give some of your insights into the ag, ag portfolio? Yeah, sure. As Randy said, you know, this has been a competency for us for, for decades. You know, several of our divisions are focused on, on agriculture lending and the types of crops, you know, produced by Wheatland are, are crops that we're familiar with, and, you know, that have shown some considerable strength, especially for the last couple of years. You know, through the due diligence process, as you would imagine, agriculture was a focus to that. Good, strong borrowers, strong balance sheets, long-time growers within their markets, and, you know, with continued forward-looking budgets that certainly support the, the level of financing received. Very comfortable with the AG Book. Okay, that's helpful. Then last one for me. You know, the deal timeline is pretty quick with the fourth quarter close. It's terrific. I'm just curious, what gives you confidence in that swift of a timeline? Obviously, you've been in close contact with the regulators. You've got a great track record with M&A. I'm just curious, maybe what gives you that confidence, whether your sense is that the regulatory landscape is maybe a bit more accommodative to M&A here? Then just any thoughts on the timing of the consolidation of these two divisions into one another and the conversion. Sure. Yeah, we've had a lot of discussions about that, obviously. Feel good about it, have good open lines of communication with our regulators and really respect their opinion on things. We feel good about this transaction, having had some discussions, obviously, before we made the announcement. maybe more importantly, you know, this is for a $28 billion bank, a very manageable acquisition. I think across, there's not a lot of displacement. We're actually feeling that we'll be able to better serve these communities with a bigger balance sheet and broader set of products. There's very little cost reduction across, you know, the franchise that we envision, and we, we bring these two banks together. I think they'll be able to serve the communities in Eastern Washington really, really well. That particular part, and, you know, I think if you look at this, if you look at the transaction, and if you look at the makeup of this bank, it's very much right down the middle of the fairway. Just a very, very well-run bank, extremely good credit, very highly rated, with CRA, a very solid deposit franchise. We think, you know, all those things together, David, is we feel good about, you know, getting this through the process. All right. That's helpful. Thank you. Thank you. One moment, please, for our next question. Our next question will be from Andrew Terrell of Stephens Inc. Your line is open. Hey, good morning. Morning, Andrew. Congratulations on the, on the deal. If I could start, maybe just Randy, if you could characterize or share some color on what Wheatland's historical kind of growth rate has looked like for the balance sheet, and then just on a go-forward basis, what, what kind of sustainable growth do you think this specific piece of the franchise can deliver? Yeah, well, I could just, you know, tell you about this year. They're growing, you know, close to loans close to 20% this year. They've got, you know, very good relationships, solid long-term relationships across this footprint. So we're, you know, we modeled about 9%, just to give ourselves some room. You know, they've experiencing very positive growth, and that's a function of both the relationships and the, the strength of the markets as well. Yep. Okay. Then on the, the investor, the non-owner occupied CRE portfolio, I think off memory, it was maybe 49% of the overall loan portfolio. Can you just give us some, some color on, are there any specific kind of dominant underlying collateral types within that book? Then just, I know you gave some, some good color on, the credit review, reviewing 100% of the loans, but specifics, specific color or comfort around the, the investor commercial real estate? Yeah, Tom, Tom did the 100% review, so we'll let him give you a little more detail about the makeup of the portfolio. Yeah, Andrew, the non-owner CRE portfolio, incredible level of comfort with it. We, what we saw through that review is significant cash equity into their deals, strong debt service coverage ratio, diversification amongst repayment sources, not only from the tenants, but also good, strong guarantors standing behind these deals. In terms of industry concentration, there's not any really one that stands out significantly. It's, it's very diverse among the CRE. No exposure to large, you know, downtown office or other types that have gathered a lot of news recently. You know, very similar to the GBCI book, low average loan balances, good, strong repayment with good secondary support. Yep, understood. Okay. Then maybe one for, for Ron. I appreciate the, the, the color at the start of the call around the securities portfolio, and it seems like maybe some repositioning there could be a decent earnings lift, maybe relative to expectations. I guess I was just curious, do you assume any securities repositioning on the Wheatland side within the stated 4.2% EPS accretion? Then maybe, as a follow-up to that, can you also talk about just, I think their deposit costs for 86 basis points in the second quarter, can you talk about where you anticipate that to go in your, in your kind of EPS accretion assumptions? Yeah. Andrew, let me take the, the last part. They've, you know, they've increased assets. Really, all banks, they've increased their deposit costs, but it's, most of that lift has, has happened, you know, as the rates, particularly in the second quarter, they were able to lift rates to keep their balances intact. It will drift up, is what I'm saying to you. You know, maybe it gets to 90 basis points, 95 basis points at the worst, certainly in the third quarter through the rest of the year. Of course, that's dependent upon, is there going to be another Fed hike or two? We can all have our opinions around that, but very stable, just like, sticky deposits, particularly when we looked at their non-interest-bearing, just very, very, very good deposit base and relatively low cost, compared to many. On the, the question about the securities book, we don't see any repositioning. Again, as I said at the top, it's very likely, you know, if they don't liquidate it, right after we acquire it, we will liquidate it, you know, and consider what could I do with that cash. Right now, we could just park it at the Fed. Right now, we're getting 5.40% on any cash we have there. You know, if there's another rate hike, that could go to, you know, 5.60%, 5.65%. The, the, the beauty of this is that it gives us the option to look at it, certainly to fund loan growth. They've got a great, loan book from a credit quality perspective, as Tom talked about. Even on their rates, you saw in the deck that their margins at 3.23%, and, you know, they've got a variable book for the most part, certainly in the ag side. It's, it's not a repositioning, it's just, you know, having the optionality. Yeah, okay. I appreciate the color, but that's not embedded, no repositioning or anything is embedded in the EPS accretion assumptions? Correct. Okay. Perfect. Thank you, guys, for taking the questions, and congrats on the deal. Thank you. Thank you. Thank you. One moment, please, for our next question. Our next question will come from Kelly Motta of KBW. Your line is open. Hey, guys, congrats on the deal. Thank you, Kelly. It seems straight out of the Glacier playbook. It seems like you found a great partner in Wheatland. I'm just wondering, in terms of their decision to sell, is there anything you can offer as to, you know, their decision to partner with, another bank at this stage? If there, there was a competitive process run as, as part of, finding you guys as a partner? Sure. You know, like a lot of the transactions, we do, this, this started years ago. I've been talking with Sue for five years. I think, the timing was just right for Sue and Wheatland, the Wheatland board. I think that they were very, very careful in evaluating who the best long-term partner would be for them. You know, we're very happy that, they viewed us as that partner. I think, you know, when, they reached a point that they felt it was the right transition time for them, that's when we started to have a discussion, and, we're able to do this in a, you know, in a, very, I think, good process. You know, between the two companies, we're able to put this together. That's, that's super helpful. I, I appreciate it seems like this is very minimally dilutive to tangible book. Is there any, any color on how this impacts your regulatory capital ratios? Very minimal. you know, given the size of the deal, it's a well-capitalized bank to begin with, and the assets are good quality. When we put the two together, it's a very minimal impact on the, on the key regulatory ratios. Thanks. Got it. In terms of what you guys bring to Wheatland, what, what, what gets, you know, them most excited and you guys most excited? Is it a function of, higher lending limits, greater product availability? Where do you think the greatest opportunity is to bring the power of Glacier to what Wheatland is doing out in Eastern Washington? Sure. Yep, well, you hit a number of them. I mean, first of all, what we always tell, banks right up front is, you know, we're buying you for the great, bank that you are, so don't run out. You don't need to run out and do anything different just because you have a $28 billion balance sheet. But I, so we want them to just keep doing what they're doing, serving their customers, doing a really great job. They have a number of customers that outgrew the bank at its current size, $750 million. I think they're excited about going back to those customers and being able to bring them back into the bank. I think the technology platform that we've built over the last three years is very exciting to the company. Our ability to, you know, automated commercial loan processing system, quicker account opening, digital tools, a new construction software program. Those are all things that had on their roadmap, but feel like this is a great way to bring those products together, and they feel like their customers are really going to be excited about seeing some of this, as well as in the mortgage business, some new technology that will serve the customers well. I think that I, you know, met with many of the people yesterday. We're gonna have some more meetings with them today. One of the things that people get excited about is being part of Glacier, opens up a lot of personal opportunities, so they can keep doing what they're doing, if they like that. If they are relocating within our eight states, it's a great opportunity to keep doing what they're doing in Arizona, Nevada, Montana, wherever they may be moving. I think that's opens up careers for people. They're excited about that as well. Great. Last question from me, if I can sneak it in. It's just, maybe a two-parter, more generally on M&A. This is a relatively small deal relative to your size. Does this, keep you out of the, the market for any specific time? One, and two, it just-- it seems like we have, we have this announcement and a couple of other announcements across the space. It, it feels like, the M&A environment might be thawing a bit. Any, any comments on that and the, the pace of conversations? Yeah. The size of the deal, I think is, you know, very, very much outstripped by the strategic significance. This really puts us in all the markets we want to be in, in Eastern Washington. When you combine it with North Cascades, it creates some excellent scale. I think, you know, we view this as part of our strategic vision to continue to dig a deeper moat around the markets we're in. This puts us in the top five, and, you know, I think over the years gives us some great opportunity to grow in some of these markets. Between Spokane, the Tri-Cities, and Yakima, that's an over million population that we can now serve. I think that's what we see as the bigger picture over, over a number of years here. In terms of the M&A environment, you know, we have other, we've got multiple conversations. I think that. I'm not sure if I would call it a thaw. I think, though, that people are, we are having discussions. For us, you know, it's driven more by not how many phone calls we get, but strategically, what transactions can help us do very much what you see happening here. Appreciate all the color. I'll step back. Congrats again. Thank you. Great. One moment, please, for our next question. Our next question come from the line of Adam Butler of Piper Sandler. Your line is open. Hey, good morning, everybody. This is Adam, on for Matthew Clark. Morning. Just, just stepping back into Kelly's question on M&A and how this acquisition kind of bolsters your footprint in Eastern Washington. Is there any region in particular you would like to increase market share in, in the future? Yeah. Again, back to, you know, strategically, what we try to do is we look at all our markets in the eight states and look at areas that we think we can increase our presence. A cross the eight states, you know, I think there's some very good opportunity to, to continue to do that. I think, we continue to be interested in Utah. We continue to be interested in Colorado. We think that's a, a great market over the long haul. I think our optionality is good across all those markets, with eight states to, to kind of look at. I wouldn't put one state above the other, other than to say, you know, we'll, we'll look at those areas where we think we can build further market presence, where we're not in the top five, and look at good partners to help us get there. Okay, great. That's, that's very helpful. In your prepared remarks, I believe you said that the 20% expense save target is relatively conservative. I was wondering if you could provide some color with what's included in your expectations and, the timing as well, if, if you could see that maybe completing further, more quickly or not? Thank you. Sure. Yeah, the 20%'s conservative. The reason I say that, I think we've, you know, we've already identified, you know, in excess of 20%. We don't, these don't, for us, we don't cut our way to success. We invest our way into success. We'll see where the cost saves. Very, very confident that pro forma 20% will be achieved very easily. It's a makeup of a number of things in those cost saves. A lot, there's a fair amount that's just the advantage of our scale. The operating contracts that we bring, some of the back office functions that we have, we could do at, you know, less cost. It's really a combination of some of the vendor saves as well as less so, some people saves. You put that together, that's the 20%, and based on what we're seeing already, we, we feel very good that that will be achieved in the timeframe outlined here. Okay, great. Those are all my questions, and congratulations on the deal. Thank you. Thank you. To ask a question, please press star one, one on your phone and wait for your name to be announced. To withdraw your question, please press star one, one again. One moment, please, for our next question. Our next question will come from Jeff Rulis of D.A. Davidson. Your line is open. Thanks. good morning. Randy, you've covered- Morning. quite a ground. I, maybe just kind of circling back again, not to, to beat it up, but just on the M&A side, understand that, that, you know, it's not led by calls that you get more about if it fits your strategy. I, I guess I'm more interested as an industry question, about those calls. I mean, do you, do you get the sense... I think you cautioned against the thawing, but the inbound, rate, has that, has that changed in your view over the course of the year? Again, not that you're going to jump on every opportunity, but just want to get a sense for what that inbound flow is like. Yeah. Good morning, Jeff. You know, it's certainly not where it's been, you know, two years ago. I think that there are good discussions to be had. I guess the way to kind of frame it for you is, I think the discussions now are with what I would view as longer horizon sellers, and that people who can see the value of our currency, at least from our perspective. You know, the conversations we have right now are more with people who see the long-term value of the currency and maybe less concerned about a multiple today, but more what that looks like over a longer horizon. Not all sellers have that frame of mind, but there are a number that do. Those are the conversations that we're having, there's a number of, you know, people that, sellers that are looking at the, the world that way. I think when you kind of take, look at, look at it, the future of banks, for banks, you know, they have to weigh that, whether it's worth, waiting, if they decide to sell or are thinking about selling, for the environment to improve, which it, it will, or look at something now, and ride it up as those things happen. Probably, again, the best way to frame it is that the people we're having discussions with, I think, are looking at the longer term, looking at the currency today, but also where they believe it will be over time. Those are the folks having, you know, some interest in having some discussion. Okay. That's, that's good detail. Thank you. maybe just a last housekeeping, I guess, two questions, perhaps for Ron. just want to get a sense for the conversion timing, if indeed this is a fourth quarter close. secondly, you have a, a goodwill estimate, I'm guessing around $30 million, but if you could touch on both of that, thanks. Yeah, so the closing November 30th, as Randy said, we think that'll happen, and then the conversion, we anticipate being mid-March 2024. Jeff, I don't have that number, but I will call you right after this call here. I don't have it in front of me, but feel good about, you know, where that ended up, given, really, because we focused on the fair value mark and feel good about that, and then obviously, the difference is the goodwill. Okay. All right. That's it for me. Thank you. Great. Thank you. To ask a question, please press star one, one on your phone and wait for your name to be announced. Stand by as we compile the Q&A roster. I am seeing no further questions in the queue. I would now like to turn the conference back to Randy Chesler for closing remarks. All right. Thank you, Chris, and thank you, everybody, for joining us today. Exciting opportunity here in Eastern Washington. Sue and I are about to hit the road and visit with people, talk to them about this transaction. We're very excited about that, and wish everyone a great rest of the week and enjoy the rest of this summer. Thank you for joining us today. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.