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Executives

Michael J. Blodnick - Chief Executive Officer, President, Director and Member of Risk Oversight Committee

Analysts

Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division

Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division

Jeffrey Rulis - D.A. Davidson & Co., Research Division

Brett D. Rabatin - Sterne Agee & Leach Inc., Research Division

Timothy N. Coffey - FIG Partners, LLC, Research Division

Glacier Bancorp, Inc. (GBCI) Definitive Agreement to Acquire North Cascades National Bank Conference March 28, 2013 11:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Glacier Bancorp Investor Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Mick Blodnick, President and CEO of Glacier Bancorp. Sir, you may begin.

Michael J. Blodnick

Thank you, and I thank all of you this morning for joining us. We've got some more exciting news this morning. Last night, we announced the signing of a definitive agreement to acquire North Cascades National Bank, one of the leading community banks in North Central Washington. North Cascades National Bank, with assets of $346 million, marks the second transaction in 30 days that we have announced at Glacier Bancorp, that following last month's announcement of the pending acquisition of First State Bank in Wheatland, Wyoming. Last night, when we had made the formal announcement, we mentioned, and the press release includes some of the deal figures, we are planning on purchasing North Cascades National Bank with a total transaction value of $29.3 million. $15.7 million of that will be consisting of Glacier Bancorp stock, with the additional $13.55 million in cash. That's, of course, based on the collar arrangements that were structured into the transaction. North Cascades Bancshares, which is the holding company for North Cascades National Bank, will be merged into Glacier Bancorp and, of course, cease to exist. North Cascades National Bank will be merged into the Glacier Bank and operate as a separate banking division, continuing to do business with and under its current name. All of the management, employees of North Cascades National Bank will remain in place, which is typical of the way that most of our transactions are structured. And again, we are waiting and we will start to work on the formal regulatory approvals, making sure we get North Cascades shareholder approval and all the other customary closing conditions. And we hope to have this transaction closed by the third quarter of 2013.

So that is just a little bit about the transaction overview. Now, a little bit about North Cascades National Bank. This transaction did a number of things that we have talked to the investor community that we were going to try to accomplish going forward. One was to, obviously, geographically diversify ourselves as well as economically provide further diversification, and maybe most important is to further diversify our loan portfolio. We felt over the last 4 or 5 years that a heavier dependence in real estate is something that we wanted to try to adjust within our own balance sheet. And North Cascades National Bank's going to do a great job of that, just like First State Bank of Wheatland did last month. So we're really thrilled with the type of diversification the North Cascades brings to Glacier Bancorp, again, not just geographically and economically, but especially inside that loan portfolio.

North Cascades is founded in 1986. They operate out of 9 offices. All of those offices within fairly close proximity of North Central Washington. We've said and stated many times that the west side of this geographic footprint of ours would be the Cascades, and I think this transaction absolutely does that. It takes us right to the Cascades. The bank is headquartered in Chelan, Washington, a beautiful tourist area where I'm at currently as we speak, and really does a nice job of giving us that footprint in Central Washington, one that we really expect to be able to expand off of as we move forward. Population growth has been good. Population growth in the 4 counties served by North Cascades has been double the national average. Again, the diversification economically with heavy ties to agriculture, as you can imagine with the Columbia River and the cheap hydroelectric power. Much of this area is centered around the fruit growers especially the apple crops, and that's something is new to us and something that we're excited about because, again, it's going to give us that diversification that we're seeking.

18% of the bank's loan portfolio is in ag. However, there is a number of other commercial real estate loans and C&I loans that are -- one way or another are tied back to agriculture. One of the things that -- one that we should also mention is that we have really -- just in the last 3 or 4 months, we have really gotten excited about the trends in asset quality that the bank has been able to produce. At the end of the day, at closing, we should see further reduction in the company, Glacier Bancorp's overall asset quality numbers, with the addition of North Cascades. So both North Cascades and First State Bank have gone long ways to further lower our NPAs and further improve our asset quality.

And that was another thing that we were looking for as we look for partners moving forward. On a consolidated tax earnings basis, last year they made $1.4 million. That's somewhat misleading in the fact that at closing, we plan on paying off a $10 million trust preferred plus all the accrued in owing interest. With that payment at closing, we expect that pro forma earnings this year would be closer to -- or earnings last year would have been closer to $2.3 million, taking away the cost of that trust preferred. And again, we plan on paying off that trust preferred on the closing date. Some of the strategic rationale for the deal is that, boy, Glacier adds a sizable bank in a good and logical Glacier expansion market for us. As I said previously, we're looking to grow in areas as far west as the Cascades. They -- this will be, again, the far west border of that growth. But it gives us a really nice sizable bank in this market to further grow both in the existing area and as we move into South Central Washington.

North Cascade is one of only 2 banks headquartered in this 4-county region, so it's not an area that is heavily banked, and especially not heavily banked with community banks. Only one of 2 that are domiciled in this area, that was another definite attraction to us. Again, I've already mentioned the strong agricultural-based economy primarily tied to fruit-growing and processing, but I don't want to underestimate the economic development prospects that come with a very inexpensive and low-cost hydroelectric power source here.

I've already mentioned about the diversification and what that brings, what this transaction brings to the company not just geographically, economically, but also -- and again, I can't emphasize this enough because this was really one of the keys to us last year as we set up our strategy for the types of banks we were looking for and the locations of banks we were looking for. And with the type of loan portfolio that they have, that loan diversification for us going forward was critical. We have a great management team. It's a young management team. They're well respected in this part of Washington. And I think the management team is going to be another great addition to the company. Again, what we're going to be doing is combining the best of both worlds. We've got a great management team. They know these markets. These are going to be new markets to us, markets that we think we can definitely grow further as -- after we get the transaction completed. And yet, we're going to be offering to North Cascades some of the things that Glacier Bancorp brings to the table which is more ability to deal with larger customers, a broader array of services and offerings, and again, we just think that the combination of a great community bank along with the resources of Glacier Bancorp is just a real winning combination.

Some of the financial benefits. Again, I mentioned that when we closed the transaction, we will be repaying that $10 million trust preferred security in addition to earning about $3.7 million in accrued dividends. This, in and of itself, should add $1.3 million of additional pretax income to North Cascades' earnings stream.

Again, we like the long-term trends. Currently, they showed where in the last -- just in the last 10 years, their asset base has grown from just a little over $200 million to nearly $350 million. We believe with our resources and working together with the staff, the holding company, along with the talent that we're acquiring now, that we should be really able to accelerate that growth going forward. And that's obviously our plan. I already mentioned the very favorable asset quality trends, especially some of the things that Scott was -- and his staff was able to do in the most recent months. We're adding about $220 million worth of loans to our portfolio or our total companies' portfolio and about $297 million of deposits, which -- of that $297 million, about 48% are transactional. And another real positive for us was that the average cost of funds in the fourth quarter for the bank was 30 bps, so 30 basis points of costs. That, in and of itself, was a definite attraction to us.

As far as Glacier Bancorp, both with this transaction and with the First State transaction, it's not going to have a significant impact on our capital ratios. North Cascade alone would take our capital ratios only from -- and this, in the terms, what I'm referencing here is our leverage ratio -- would take from 11 -- our ratio from 11.6% down to 11%. If we add First State Bank and that pending acquisition, it only takes our pro forma leverage ratio down to 10.8% or just barely under 11%. So I think that even with these 2 transactions, the way we've structured and the way we built them, we're still going to have a lot of dry powder and we're still going to have rock-solid capital ratios after both transactions have been closed.

Another great thing about the deal is we calculate and anticipate the transaction to be about 2.3% accretive to first year earnings. That's obviously excluding onetime transaction costs, but we really like the additional accretion built into the transaction. There will be some dilution, about 0.9%, about [ph] net of tangible book dilution. But we calculate, and based on the very conservative way that we calculate the tangible book value or tangible book dilution payback, we expect that that would be paid back in less than 4 years.

So again, some of the key deal terms that we built in and that we announced yesterday was the transaction value, again, of $29.3 million. 54% of that will be in stock, 46% in cash. It was a fixed share structure with, obviously, collar arrangements on the bottom and the top. North Cascades will be delivering tangible equity of $23.1 million or at least that amount at closing. And again, our operating savings -- and this is something that I think many have come to expect from us -- the operating -- or the cost saves that we have built into this were very conservative. We came up with just about $1.1 million or a little under 11% cost saves. As you go through the list of those cost saves, these are absolutely cost saves that we know we will achieve. So I think we were very, very conservative like we have been on every one of our transactions and those are definitely achievable cost saves.

And then again, as I mentioned earlier, the funding cost saves by paying off the TRuPS; that would be about $1.3 million.

So some of the key assumptions and deal terms that were built into the transaction. As far as multiples now on the stated earnings basis, this was earning a little bit higher P/E multiple than we have announced in the past at 20.3x 2012 earnings. However, I really don't think that that really tells the whole story because once we adjust for the payment of that TRuPS, all of a sudden, the adjusted 2012 earnings was a 12.7x deal. And actually, the current year is running at a lower multiple than that. So we really like the fact that we priced this very conservatively. I think we continued to demonstrate what we have definitely prided ourselves in, for many, many years, and that's the disciplined approach that we take to doing transactions. From the price to tangible book basis, as of yesterday's price and now that the transaction's at the top end of the collar, that is priced as a multiple to tangible book at about 127%. When we were working on the transaction, it was a lower price to tangible book, but our stock has had a nice little run as of late and good for North Cascades, good for us, good for our shareholders. And so that tangible book multiple will be 127%, based on our calculations.

I already mentioned that we'll see earnings per share accretion in the first year of 2.3%. If we add both North Cascades and First State Bank, the first year's earnings per share accretion should be right at about 4%, mention the dilution and the payback period on that dilution.

So some of my concluding remarks, then we'll open it up for questions. But I think that this acquisition of North Cascades National Bank really continues Glacier's tradition of adding very high quality regional banks that really fit our Glacier community banking model, and that's key for us. I mean, these thanks have really got to be a good fit both culturally, again, as I said over and over this morning, geographically, economically. We absolutely believe that North Cascades fits every one of those requirements very, very nicely. Maybe what's most important to you as shareholders and investors is that we truly believe that the pricing metrics, the way we structured this deal and the very conservative assumptions that we use continue to reflect our disciplined approach to acquisitions. I mean, it's something that we will not waver on. It's something that we pride ourselves after 14 transactions since 2000. I think we've delivered that over and over again. And the North Cascades National Bank transaction is absolutely right in line with what we have always tried to do from a disciplined approach to doing M&A.

Central Washington, it really is -- it's an attractive market. We're excited to be here. I think that they're going to provide a platform to us. North Cascades National Bank is going to provide a platform for our company, that we're really going to be able to grow this franchise both organically and also through some potential additional acquisition growth in this region, so we're excited. We're excited for the possibilities and the opportunities that they bring. Again, I mentioned the young and talented staff that we are inheriting. It's a talent pool that runs really deep. There's a lot of market knowledge and that's obviously understanding that deep market knowledge of where they're doing business and the type of business that's available, we think we bring. And we get all of that from this management team and Board of Directors.

And then again, as usual, under our structure and under the Glacier model, they -- North Cascades National Bank will maintain their local identity. But really, they'll be able to focus even more attention on customers and communities because now, after we went through and reorganized a little bit in the way that our model works, we'll be providing more of the regulatory, operational and financial support and really give them the time and the resources to go out there and do what's important, do what these individuals like to do and that's grow their franchise, grow their customer base and definitely better serve their communities. At the end of the day, we only do this for one reason and that is to truly, hopefully enhance shareholder value. We think that this transaction's absolutely going to do this. We're excited about it. And with that, I will take questions. So we can open the lines.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Jacque Chimera of KBW.

Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division

As I look at these 2 deals, they seem to have a lot of similarity to me. Just the increase in agriculture and C&I and then just expanding into an area you're not currently in. Is that a coincidence or are these the type of deals that you are focusing on?

Michael J. Blodnick

These are focused transactions. I mean, we have -- and I've communicated this to all of you in the past, I mean, there are a group of banks throughout our 6 state regions that we have had on a list for a long time. I'm not going to necessarily mention how many that there are, but both First State Bank in Wheatland and even now with North Cascades, both of those were definitely on that list. And you're right, Jacque, there is a real purpose as to why because we are looking again for more geographic diversification, more loan diversification, economies that are not necessarily always tied to real estate or tourism. And so yes, there was a specific purpose as to where and who we were looking to partner up with. And we have just been so fortunate that in the early part of the 2013, we were able to put 2 of these partnerships together.

Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division

Now is it something where you were looking at them simultaneously and one just happened to work out before the other or are you looking to do a deal and then moving onto the next one?

Michael J. Blodnick

No, I think these were both -- these were done simultaneously. I think they never -- it's always kind of interesting the way transactions happen. But actually, we've probably been having even longer discussions with North Cascades than we do with First State and yet First State was announced earlier. It's just the way they work out sometimes and -- but yet, both of these were kind of going on similar paths and it just happened that 30 days apart, we were able to announce both of these transactions.

Now with that said, I think we're going to be very mindful and thoughtful of the fact that we want to do a great job of integrating these banks. And that's oftentimes where some of the heavy lifting really starts. So we're going to take a methodical approach to doing that. I don't think anybody should expect another conference call 30 days from now. We will sit back and we will be very, again, very thoughtful and mindful as to making sure we do it right. We've acquired 2 great banks, 2 great franchises, now we want to make sure that we can integrate them into Glacier Bancorp while we continue to focus on our existing 11 banks that have got some great things going in those markets too, so.

Operator

Our next question comes from the line of Brad Milsaps with Sandler O'Neill.

Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division

Mick, just a quick question. I guess historically, you guys have maybe shied away from expanding west into Seattle or -- excuse me, to Washington or Oregon. I'm just -- I think you've often said that at the time for these banks, the devaluation, you just couldn't get comfortable, maybe with the business models, et cetera. This seems to be a bit different and you touched on it a little bit with your comments. Do you feel just better about the pricing now? Now that a lot of the real estate in those markets has cleared and at lower levels. So did that sort of open the door for you to feel more comfortable expanding westward or as opposed to maybe more due south and east for your existing footprint?

Michael J. Blodnick

Well, I think that, Brad, we've always said -- and I've been on record a number of times for the last couple of years that I said that yes, we're just not interested in crossing over to Cascades. And that definitely is still the case. The Cascades were going to be our west end boundary, and we're there now. I think that the focus will still be on enhancing and further adding to this Rocky Mountain franchise. You can argue that Central Washington isn't necessarily a Rocky Mountain franchise, but we've always said that the Cascades were the west end of where we'd like to be. We -- the other thing about this particular bank in this particular area of the state, Brad, is it didn't get beat up as badly as other parts of Washington during the last 4- or 5-year real estate debacle. Obviously, I think banks all around the country had certain struggles, but one of the nice things about North Central Washington is some of the things I've already mentioned, the very, very cheap hydroelectric power which I think is a real attraction and it has been a big attraction, Brad, as far as economic growth. I think the fact that agriculturally, this is a mainstay of this economy, boy, that was just another catalyst for us to really want to continue that diversification process. And not only does this diversify into agriculture, further our loan balance sheet, but what it really does is it gives a type of additional diversification within agriculture. Even those banks of ours that have got a significant percentage of their loans or a larger percentage of their loans in ag, most of those had nothing to do with fruit growers, fruit producers. I mean those were primarily cattle operations, wheat farmers, sugar beet farmers, some of those types of row crops and various farms. But this is going to be a little bit different again. So we like that further diversification. And -- but I wouldn't expect, Brad, for us to be going any further west. This is it. I think there's some opportunities for us to move south and there are some opportunities to fill in some gaps between North Cascades and the Spokane area. Now obviously, we would, in the future, look to the some more of that, but that's probably as far west as we're going to be going.

Operator

Our next question comes from the line of Jeff Rulis with D.A. Davidson.

Jeffrey Rulis - D.A. Davidson & Co., Research Division

Question on -- and kind of a tough spot for you, I suppose, to ask this question. But in terms of North Cascades' reasons for selling, at least what they've communicated to you and we can read what it was in the release, but anything there that really prompted them to reach out to you?

Michael J. Blodnick

I think that it's just like so many other banks, I mean, especially the smaller community banks. I think that the regulatory burden, Jeff, is -- and these are some very, very smart people. I think they recognize that that was not going to get any better. I mean, they've seen as even the $350 million bank, the challenges that this regulatory environment creates, the expenses, the resources that it absorbs, and I think that was definitely one of the keys. I think the other one was that if we can partner with a company that gives us the best of both worlds, I mean, gives us that ability to still be a community bank, still be looked upon as a community bank but bring some resource to the table that we would not have had otherwise, especially like when it comes to lending limits, technology, the ability to reduce their regulatory [ph] -- those were the probably 3 key issues. Probably, as a secondary issue, don't think it affects this bank as much as most other community banks, and that is the interest rate environment. I mean, with where they're located and the types of business they've done, they've been able to maintain a very healthy margin in that. But to some degree, I think all banks, Jeff, are looking at the fact that if we're down here 2 or 3 more years in this rate environment, it's just going to continue to whittle away at that net interest income. I don't think that was the major issue for them, though, because -- again, because of where they are located, because of a lower level of local competition, they just don't have as many local competitors as other markets. Their ability to keep their margins intact has been very, very good, so I don't think that was the main driver. I think it was more just as they look at the tea leaves, Jeff, they saw that the regulatory environment was not going to get better. The fact that they had some real opportunities to grow and growing independently was going to be a much, much slower process, and bringing the types of technology and services to their customer base was going to be a slower, slower goal than if they partnered with us. So we're just thrilled they did and we really, really like the transaction and like the bank and like the people. So I think it's going to be good.

Jeffrey Rulis - D.A. Davidson & Co., Research Division

Okay. And then just a couple of quick housekeeping items. Of the $3.4 million transaction cost, what was the specific cost for the TRuPS repayment?

Michael J. Blodnick

The actual cost of the TRuPS repayment was -- there was a $420,000 penalty and about a $200,000 placement fee, so about $600,000 there. And again -- then the cost of -- we figured that it all totaled [ph] to bring the entire thing current was going to be about $4.8 million. We're expecting, we're feeling that that will -- to bring the TRuPS current with all the back dividends and that owing, the total cost is going to be somewhere around $4.8 million. And then at closing, we will pay off the remaining interest owed and the principal. Again, that trust preferred is currently in excess of 10% a year. So that was one of the key things that, right from the get-go, that we wanted to make sure was built into the structure, Jeff, that we were going to be able to pay that thing off.

Jeffrey Rulis - D.A. Davidson & Co., Research Division

Got it. And then on the -- I guess, the combined goodwill and CDI, you've got that close to $9 million. Is that in the ballpark?

Michael J. Blodnick

Yes, that's probably close. I don't have that number right in front of me but that sounds about reasonable.

Operator

Our next question comes from the line of Brett Rabatin of Sterne Agee.

Brett D. Rabatin - Sterne Agee & Leach Inc., Research Division

Was just curious, this deal obviously kind of takes you off or put you on the sideline for a little while anyway. I was just thinking about how you guys were like $3 billion in assets back in 2004 and now you're approaching $8 billion and are going to be a little bit over that with this transaction. Post this deal, I know there's not a lot of bigger banks in your market, but will the community bank acquisition model change as -- given your size going forward? Will you look out for more billion dollar-type of franchises or can you talk a little bit about size criteria going forward?

Michael J. Blodnick

I don't think we'd deviate -- I mean, obviously we would have the capability of doing much larger transactions. But as you know, Brett, over the last 10 years, I mean, our mode of operation has been finding good quality community banks. Banks that, once they joined the company, they can grow either organically or through bolt-on types of transactions. We don't feel like there's any need currently to change that strategy. I mean, one thing about doing transactions of this size, in the size of First State Bank and Wheatland is they're easily -- they're easy to control. I mean, we're not making a major, major bet. The other thing I've mentioned to all of you is I believe we've got a pretty significant lever in the fact that as time goes on -- and we're going to be very mindful of that $10 billion level because we know that there are implications crossing over that that have to definitely be considered as to when you make the decision to move beyond that $10 billion asset mark. But you've got to remember that we have got an outsized investment portfolio, something that we hope that we can continue to do these kinds of really nice transactions, that we would continue to be able to use that leverage to [ph] pull back on the investment portfolio and bring the company back to a balance sheet that is more of our core and not as reliant on securities. Now with that said, I would do it again, given the last 5 years, I think we did the right thing in leveraging our capital, building up that investment portfolio was the right thing to do. But right now, if we can continue to do more transactions like this and as we approach that $10 billion asset mark, we're going to be able to stay underneath that just by letting a fair number of those securities run off. And of course, there is a tremendous dollar amount as all of you know on the phone. I mean, there's a tremendous dollar amount that runs off every month. So holding that lever and adjusting that balance sheet, we got a lot more capability than a lot of other banks do that are approaching that size. But to get back to your original question, if we saw something so compelling out there and it was a little bit larger than the types we transact, we would certainly look at it. But we're not fixated on that, Brett, I mean, we like these $200 million, $300 million, $400 million, $500 million banks. I think, culturally, they make -- they're a great fit within our existing group of banks. And my guess is that's kind of the market that we have here, too. If you look at the footprint in the 6 states that we do business in -- and those states are more likely to have opportunities that are in that asset range of $200 million to $500 million, $600 million, than to have a multibillion dollar bank available to us.

Brett D. Rabatin - Sterne Agee & Leach Inc., Research Division

Okay, that's good color. Then the other question I was going to ask is this ag platform is a little different than First State Bank and Wheatland. But it was curious, I know that deal added some expertise to your platform on the ag side, does this transaction also add something that you might able to leverage across the rest of your platform in terms of what they bring to the table?

Michael J. Blodnick

I think it's unique enough that I'm not so sure that we're going to be able to leverage. I think that with Wheatland, we were definitely going to be able to leverage some of that expertise in some of our other markets because those markets and the type of agriculture are very, very similar. This is -- although there are some wheat farmers in that -- in this area of Washington, clearly, the main agricultural crops are the fruit growers and the orchards. And we're probably not -- we may be able to duplicate some of that expertise in other stuff, in other south -- areas south of here. But we're not probably going to be able to do -- or that expertise it just not going to do a lot of good in parts of Wyoming or Montana simply because you just don't have that same type of agricultural base. I mean, up and down the Columbia River where all of these orchards exist, I mean, it is absolutely made for this kind of production where you wouldn't be able to mimic this in other parts of our footprint. So it's somewhat unique in that respect and I don't necessarily -- and we didn't look at it that way that we would be able to leverage their knowledge base. Because they are very, very knowledgeable, this management group is very, very knowledgeable about this type of ag lending. But it's just not a opportunity that lends itself in a lot of other parts of our footprint.

Operator

[Operator Instructions] Our next question comes from the line of Tim Coffey with FIG Partners.

Timothy N. Coffey - FIG Partners, LLC, Research Division

Mick, I wonder if you can give me an idea what Glacier can bring to the table in terms of noninterest income, fee income that North Cascades doesn't already have?

Michael J. Blodnick

Probably in the area of fee income, and we've talked about this repeatedly, this is a very, very good market. It's got good demographic trends. And we pride ourselves in many of our other banks, Tim, of having a very successful mortgage origination operation. This bank doesn't -- I mean, they will freely admit they are an ag bank, but they have probably passed on many, many, many opportunities on the mortgage origination side, both on the refis as well as the purchase. We've got that level of expertise. I mean, we have got some of our banks do a wonderful, wonderful job in the area of mortgage origination. And I think that bringing that skill set of ours to this bank is going to be significant. I mean, when you think of the growth that a town like Wenatchee had seen, when you look at some of the tourist areas like Chelan and the ag -- and the stable ag areas like Omineca and Okanagan, I mean, I think that there are some real opportunities for us to bring that knowledge base and the resources also. Because I mean, we've got a very, very good mortgage origination platform, something that the bank just does not have. I think right off the bat; that is going to be one of the keys. And we talked about it even last night with the entire staff, that they're excited about the capabilities that we will bring of that mortgage origination front because it's something that they just have not focused on to this point. Then I think, as always, and we talked about this a little bit, too, and that is that our commitment to high-performance checking, where it's the one thing that every one of our banks implement and relentlessly pursue, that's something else that we will be bringing to the table here. And it's been our experience since 1993 that once one of our banks implements high-performance checking, that the fee income on the deposit side ramps up exponentially. So those are 2 thoughts right there that we've been given a great deal of consideration to, and absolutely, we'll be implementing those. And I think in -- on both those counts, Tim, it's going to add a nice amount of additional fee income to the North Cascades bank franchise.

Timothy N. Coffey - FIG Partners, LLC, Research Division

Got it. And then as kind of in general terms of looking out at potential M&A targets, do you find that some of the banks you look at don't quite have the opportunities to drive fee income like Glacier Bank does right now?

Michael J. Blodnick

Yes, there is no doubt that some of them don't. I mean, and some of it it's economic, some of it, it's geographic. And that's obviously one of the key considerations that we look at when we sit down with a management team. And we're trying to explore some of these things right off the bat to see if it's going to make sense or not. Again, the last 2 transactions in the last 30 days will be ran as separate divisions. They're in unique geographies that we have no other presence in. They absolutely need to be ran by that management team because it's that management team that's got expertise in the type of business and lending that they are doing. But at the same time, we're also out there and open to, as you and me have talked about before, bolt-on transactions where -- and we'll be looking at both in the Wheatland -- in the general Wheatland area of Wyoming as well as in the Chelan, Wenatchee area, we're going to be looking for potential bolt-on transactions for these 2 banks, too. And we believe there are those opportunities. The transactions, like you say, we are looking at the opportunities that a particular bank brings. What kind of fee income can we drive? Are they not taking advantage of certain things or are they fully taking advantage of everything the market gives them? Then we're not going to be able to add that much more value to it. I mean those are all key considerations for us. As I just said though, with just 2 examples, we think that there are some real opportunities to increase the fee income side. And I think that Scott and his staff are excited about that and excited about some of the resources that we're going to bring to the table that they're going not going to have to reinvent and they're not going to have to spend a lot of time and effort trying to figure some of these things out because like I said, those platforms are in place. We've got those skill sets at other banks and we're going to be able to help them ramp up pretty quickly.

Operator

And we have a follow-up from the line of Brett Rabatin with Sterne Agee.

Brett D. Rabatin - Sterne Agee & Leach Inc., Research Division

Mick, I just had one follow-up on buybacks. I think you're probably locked out in terms of doing them while these deals are going on. But was just curious in thinking about your community bank acquisition model, I'm not sure you're still able to deploy a lot of your capital at the pace if you're going to do 1 or 2 or 3 of these a year maybe. Have you guys given any more thought to a buyback to further deploy your capital base or other ways to, sort of, unlock your capital?

Michael J. Blodnick

Absolutely, Brett. I mean, it's a topic every month at the holding company board. I mean, we're constantly looking at do -- what do we do on the cash dividend side? How and what would be an appropriate use of a buyback strategy? I mentioned that there are still -- even after these 2 transactions in the last 30 days, there is still a tremendous amount of dry powder out there as far as capital in the company. And yet, you know, you've been covering us for a lot of years, I mean, we are a much more conservative shop. We like to have excess capital, maybe more capital than other banks. That's served us extremely well during the last 5 years of the downturn and the problems that this industry faced. So I mean, we're not one that's going to be testing the lower ends of capital levels. That's just not us. But with that said, I mean, we've got to be, again, mindful of the amount of capital that continues to be in the company. These 2 transactions, just based on the restructure, especially the Wheatland transaction, did not put a lot of additional stress or leverage on our capital, our capital out ratios. We knew that. And that was okay by us because we still structure these things to be very good transactions even though we were issuing more stock. When it comes to buybacks, I mean, that could, down the road, be a possibility that we'd look to do a buyback, if nothing else, to buy back the shares that have been issued doing transactions. I mean, that's always a possibility. But without going into a lot of detail, I mean, we're constantly reviewing that each month. It's a key topic at every meeting. And we're -- I'm sure, Brett, we're going to continue to discuss those options. It's definitely not off the table. And we haven't done a buyback in a number of years, and the last couple of times we attempted to do a buyback, the float wasn't that great, we were not all that successful. I think we got to pick the times when we want to do that too, because we were not the kind of company that just going to constantly have a buyback outstanding. I think we want a purpose and it's got to be a meaningful purpose as to why we do it. But it is topic of conversation every month.

Operator

As I'm not showing any further questions at this time, I'd like to turn the call back over to management for closing remarks.

Michael J. Blodnick

Okay. Well, thank you, all, very much for joining us today. Again, we are very, very excited. We will soon -- hopefully by the end of the third quarter, we will have the 13th bank as part of the family of Glacier Bancorp. Again, in the last 30 days, it's been an exciting time. It's been a lot of work but it's been the things, the kind of work that I think is fun for everyone. I think that these 2 transactions, both North Cascades and First State Bank, are going to create a tremendous amount of value for this company over the next 5 to 10 years. Again, I want to emphasize the fact that I think we did a very good job of providing our shareholders with a disciplined approach to doing these deals. And I believe that it's going to be a win-win, it's going to be a win-win for all the customers, for all communities that North Cascades serves. And I believe it's going to be a win-win for Glacier Bancorp too because with the potential and the opportunity that North Cascades brings to the table, our shareholders are going to benefit nicely, we believe, in the future.

So with that said, I'd like to thank again all of you for joining us this morning and have a great rest of the day. And we'll talk to you later. Bye now.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.

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