Bank assets go up by a billion
Community focus helps Glacier Bancorp keep growing
For a company that took almost a half-century to accumulate its first billion in assets, Glacier Bancorp has been on quite a tear the last few years.
The Kalispell-based bank holding firm didn't surpass the billion-dollar mark until June 2000.
However, it has added almost $4 billion in assets since then. By the end of 2006, its total asset base could exceed $4.7 billion - up about a billion dollars this year alone.
"It's going to be real close," said President and CEO Mick Blodnick. "About half of that [this year's increase] came from acquisitions; the other half was internal growth."
Through the first three quarters of 2006, Glacier Bancorp's nine community banks collectively added more than $420 million in new loans. The company also recently purchased First National Bank of Morgan, Utah, and Citizens Development Co., a Billings-based bank holding firm that owned five independent banks, including First Citizens Bank in Columbia Falls and Kalispell. Together, the two acquisitions added about $500 million in assets.
Other highlights for 2006 include:
* Record quarterly and year-to-date net earnings through Sept. 30, with the strong likelihood of another consecutive annual earnings record;
* Quarterly dividends were increased for the 37th time since the company went public in 1984, and a 3-for-2 stock split was declared - the fourth split in as many years;
* Glacier Bancorp's stock is trading at $36 to $37 per share, at or near its all-time high;
* Its market capitalization (stock price times number of shares outstanding) topped $1 billion this year, bringing the company to the attention of more institutional investors;
* Six new bank branches were constructed, two more will be finished next year, and extensive renovations were undertaken at eight existing facilities - including a major expansion of Glacier Bank buildings in Kalispell.
Perhaps the most visible indicator of Glacier Bank's growth is the new sky bridge that now arches over Second Street West in downtown Kalispell. The bridge connecting two bank buildings is one of the final steps in the bank's $6 million expansion project that began two years ago.
For the second straight year, "Bank Director" magazine also ranked Glacier Bancorp third-best among the 150 largest banks and thrifts in the United States. The ranking was based on a combination of profitability, capital adequacy and asset quality measurements.
"I think what we're most proud of about that is the consistency it shows," Blodnick said. "It's a testament to the people we have in this company, and to the model we use. Fewer and fewer banks follow this model, but for well over 20 years, it's been very successful for us. It's who we are."
The model essentially relegates Glacier Bancorp, the holding company, to a supporting role. It provides resources, capital and technology, but its independent community banks - including Western Security Bank, Valley Bank of Helena, First Security Bank of Missoula and Mountain West Bank (of Idaho) - all make their own decisions about how to operate. They have separate identities, boards of directors and management teams; the authority to approve loans, create products and set prices also rests at the local level.
"The alternative would be a single-bank model, where you have multiple branch offices all operating under one brand, with standardized products and services," Blodnick said. "With a decentralized model like ours, the individual banks are making decisions for their communities. Brand isn't as important; what's critical to us is the closeness and knowledge each of our banks have to their markets."
The model allows Glacier Bancorp to maintain a local feel while still competing in five states and dozens of communities.
It's also one of the reasons why the company has been so successful acquiring other banks, Blodnick said. Given the increasing regulatory burden and cost of technology, smaller banks see it as an opportunity to join forces with a larger firm, without losing their own independence.
"I think we're probably one of the most active bank acquirers in the West, and the type of people and banks we've attracted are ones who want that independence for their staffs and communities and customers," he said.
Shareholders have benefited from the model as well. The company's stock price is up almost 600 percent since it broke the billion-dollar asset barrier in 2000, and it's been the largest publicly traded commercial bank in the Inland Northwest since 2001, when the WesterFed Financial acquisition was completed.
In an investor presentation earlier this year, Blodnick noted that $10,000 in Glacier Bancorp stock purchased when the company went public in 1984 would now be worth more than $600,000 - a compounded annual return of 21 percent. Another $100,000 or so would also have been paid out in dividends.
"It's been a good run," Blodnick said.
The company is now large enough, both in terms of assets and market capitalization, that it's attracting a number of institutional investors. Seven market analysts track the company's performance, so "our message and information are well-disseminated," Blodnick said, and large mutual funds and capital management firms currently hold 54 percent of Glacier Bancorp's stock, up from 15 percent in 2000.
Given its wider profile, it's possible a larger bank will someday make a buyout offer. However, that's not something company officials lose any sleep over.
"In this business, you're always just one phone call away [from a buyout offer]," Blodnick said. "But the model we follow really is pretty unique. Only a few other banks use it, so for all the great things it does for us in terms of acquiring other banks, I think it might also be a deterrent to anyone buying us. If someone just wants a geographic presence in the Intermountain West, other banks would be more likely candidates."
As Glacier Bancorp gets larger, it may be harder for the company to continue delivering record earnings and double-digit returns - but that's never been the primary focus.
"This was a simple, straightforward business when I started 30 years ago, and at a fundamental level, it still is," Blodnick said. "We gather funds and lend them out and try to help the commerce and vitality of our communities. We focus on doing what's right for our customers, communities, shareholders and employees - and if you do the right thing over and over again, good things usually happen."
Reporter Bill Spence may be reached at 758-4459 or by e-mail at bspence@dailyinterlake.com