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Glacier Bancorp Inc. (NASDAQ:GBCI)

Q4 2009 Earnings Call

January 29, 2010 11:00 am ET

Executives

Mick Blodnick - President and CEO

Ron Copher - CFO

Barry Johnston - CCA

Analysts

Matthew Clark

Brett Rabatin

Jeff Rulis

Brad Milsaps

Jennifer Demba

Operator

Good day, everyone and welcome to today's program, Glacier Bancorp quarterly earnings call. At this time all participants are in a listen-only mode. Later you may have the opportunity to ask questions during the question-and-answer session. Please not this call may be recorded. I will be standing by if you should need assistance. And it is now my pleasure to turn the call over to Mr. Mick Blodnick. Please go ahead sir.

Mick Blodnick

Thank you. Welcome and thank you for joining us. With me this morning is Ron Copher, our Chief Financial Officer, Don Chery, our Chief Administrative Officer, Barry Johnston, our Chief Credit Administrator and Angela Dose, our Principal Accounting Officer.

Last night we reported earnings for the fourth quarter of 2009. Earnings for the quarter were $9.474 million compared to $17.14 million in last year’s quarter. That calculates to a decrease of $7.5 million or 44%. Our diluted earnings per share for the quarter were $0.15 compared to $0.29 in the prior year’s quarter, a decrease of 48%. The quarters numbers had more noise than usual as we booked an after tax bargain purchase gain of $3.5 million. And in addition we had a pre-tax gain on the sale of investments during the quarter of $3.3 million.

The investment gains came from the sale of some [Z tranches] that we purchased back in the summer of 2009; we held them on our books at very low basis. Not expecting there to be much value in those [Z tranches] for the next couple of years. However in October those [Z tranches] became far more valuable than what we ever had expected so we sold those and that was a big part of the gain on sale of investments that we recorded during the quarter.

However we did also have some positive gain in the sale of some of our municipal bonds as we chose to sell some municipals that were getting close to their call date and we did not want to loose the premium on those. So we chose to sell a few of them but at the same time we also sold some municipals that we have losses in.

So, overall we were little bit more active than we usually are but the primary reason for the gain again on the investment portfolio came from those [Z tranches]. Earnings for the year were $34.374 million versus $65.657 million that’s a decrease of $31.3 million or 48%. Diluted earnings per share for the year were $0.56 down from $1.19 last year or decrease of 53%.

From our earnings perspective this is a year we will not soon forget. Disappointing doesn’t begin to describe how we feel about our 2009 earnings. There are no excuses and we're not going to make any. For us the level of earnings we've produced is unacceptable. We have to do better and it's imperative for us and for our shareholders that we get back to a more reasonable earnings performance going forward. I believe we can and I believe we will.

Our return on assets for the quarter was 0.62% and our return on average equity was 5.43%. For the year our return on average assets was 0.60% and our return on average equity was 4.97%.

The quarterly earnings numbers include the completion of the transaction with First Company and there is subsidiary First National Bank & Trust in Powell Wyoming. We're excited to add the staff and customers of First National to GBCI. The addition is already demonstrating positive results above our expectations and going forward we feel First National is going to be an excellent addition to the company.

Although our earnings for the quarter and year were not close to what we had hoped for, there was some underlying strength in our 2009 earnings. Our pre-tax, pre-provision earnings for the fourth quarter and full year were at record levels. The core earnings that company generated throughout the year allowed us to not only deal with much higher levels of problem assets. Again it’s the capacity that maintains strong capital levels throughout the year.

Total assets for the year grew 11%, which exceeded our expectations. Our asset growth was not only due to the additional of First National but also the result of increases to our investment portfolio during the year but especially in the fourth quarter. If we exclude First National organic loan growth for the year was flat as demand dropped off precipitously especially as the year progressed. Currently the outlook for loan growth in 2010 looks to be a continuation of last year's trend of little to no loan growth.

2010 was one of the best years we've had this decade for deposit growth. Excluding again the addition of First National, our organic deposits increased significantly last year. Non-interest bearing deposits which as many of you know we continually strive to grow and generate more and more of, grew by 8% and interest bearing deposits grew by 31%. This growth in deposits allowed us to not only lower our overall borrowings but still allowed us to fund the asset growth that we did have during the past year.

Throughout 2009, we maintained capital and equity ratios well above regulatory guidelines and at historically high levels. Tangible common equity ratio ended the quarter at 8.72% this compares to 9.59% in last year's fourth quarter. Reduction that we saw in tangible common equity ratio was primarily the result of the addition of First National Bank and on October 2nd of 2009. Tangible common equity in dollars also actually increased by $8.5 million during 2009.

We continue to believe that tangible common equity is the highest form of capital and amount of TCE has served us well during this difficult time. In addition our regulatory capital levels also ended the year at or near all time highs. I don’t have those numbers today we're still formulating the exact numbers but preliminary numbers our regulatory capital looks to continue to be very strong and at our near all time highs.

For the first time in three quarters the growth in problem assets showed some signs of stabilizing. However it's far too early to predict if this trend will continue. Economically many of our markets have performed much better than a country as a whole yet the Boise market we're on with parts of Northern Idaho and Western Montana have struggled mightily due to excessive inventories that developed lots and residential construction loans.

As the base continue to work through these credit issues the overall dollars in these two loan categories have decreased significantly. For example during 2009 our residential construction portfolio decreased from $309 million to $209 million. With spec constructions down to a $131 million of that $209 million total. We have been mentioning this, the last couple of quarters that we are seeing lower balances in some of these most troublesome areas and that’s just a good example of what we have seen on the resi construction front.

Land development loans have gone from $300 million early in 2009 to $229 million at year end. NPAs increased in the fourth quarter by $18 million to $261 million or 4.13% of assets. That compares to 4.10% to prior quarter and 1.46% a year ago. Most of the increase this quarter came from commercial real estate and one to four family residential loans.

Although that’s discouraging and we don’t like to see any increases, we felt there was one positive during the past quarter. It was encouraging to see the non-performing spec residential construction loans decreased by $10 million during the quarter and now we are down to $30 million in NPA spec construction. And non-performing land development loans only increased $3.5 million to $88.5 million during the quarter. Both of these loan categories have been the main cause of much of the increase in NPAs to prior two quarters, so we are starting to see hopefully some better signs there.

For the second quarter in a row we had net charge-offs of $19 million and for the year, we charged off $58 million which for us is an absolute unprecedented level. That $58 million represents 1.4% of total loans, this compares to only 0.2% net charge-offs in 2008. In the near-term as we continue aggressively working through these problem assets, we expect net charge-offs to remain elevated that hopefully we will not have to charge-off higher percentage of loans than what we did in 2010.

Our ALLL, our Allowance for Loan and Lease Loss ended the year at 3.46% that compares to 3.10% the prior quarter and 1.86% at the end of 2008. We provisioned $37 million to the ALLL in the fourth quarter compared to $12 million in the same quarter last year but that was down $10 million from the $47 million provision we made in the prior quarter. In the quarter we covered our net charge-offs two times and for the year we provisioned a $125 million to the loan loss reserve. That compares to $28 million the prior year and with net-charge offs of $58 million a loan loss provision for 2009 covered our net charge-offs over two times.

We did see our 30 to 89 day early stage delinquencies in the year to $87 million that was an increase of $44 million for the quarter something we did not want to see especially it was disappointing to see these delinquencies move up by that amount especially since the prior quarter we saw a pretty significant reduction.

However if there is any good news to that increase its that since the end of the year $25 million of the $44 million has been brought current, so, it's still $19 million that’s going to be potentially flowing through to problem assets down the road but again its at least comforting to know that a big chunk of the $44 million increase has been brought current.

Clearly there is still credit issues that will continue requiring our full attention in order to keep the delinquencies and NPAs from moving higher. We expect credit quality to continue to be a challenge for the foreseeable future and are not expecting any turnaround in the near-term. So all of our banks are going to have to continue to be diligent and working through these credits and maintain adequate reserves for their problem loans and assets.

One area that has been a bright spot for us this year has been the net interest margin. Although we have three consecutive quarters of some net interest margin compression, those reductions were off for a decade high net interest margin achieved in the first quarter of 4.92%. Our net interest margin for the fourth quarter was 4.70%, that’s down from 4.80% the previous quarter.

Higher levels of non-accruing loans and a significant increase in lower yielding securities were the main cause for the drop in the margin. Loans added to non accrual status cost us 8 basis points of net interest margins for the quarter. For the year our net interest margin averaged 4.82% versus 4.7% in 2008. Our expectations going into the year was for a much lower margin, actually our plan was calling for a margin of around 4.25% to 4.30% for the year 2009.

However if loan volume remain subdued it we will continue to have a negative impact on the margin as we replace those assets with lower yielding securities. In addition because our funding cost can't go much lower its hard to imagine how we will see any noticeable improvement in the net interest margin in the near-term.

The banks did a great job throughout the year of expanding their net interest income. They protected the yields on their earning assets in a very difficult environment and recorded less than $500,000 reduction in interest income for the year. And at the same time we are very proactive in adjusting to the lower interest rates on the funding side and as a result our interest expense decreased $33 million or 37%.

Our efficiency ratio decreased a 51% for 2009 from 52% the prior year. Even with the dramatic increase in FDIC insurance premiums and much higher OREO expense. But banks demonstrated the ability to overcome these higher expenses with even greater revenue growth. Although the increased revenues, especially net interest income played a big part in improving efficiency, I thought the 11 banks did a stellar job of controlling their expenses.

Non-interest income was $26 million for the quarter that's an increase of $4 million or 20%. However, excluding the one time bargain purchase gain, non-interest income was up $900,000 or 4% with $660,000 attributable to the increase on the gain on sale of investments during the quarter.

For the year non-interest income was $86 million and that's an increase of $25 million over the prior year. The gain on the sale of loans accounted for nearly half of the increase as 2009 was a strong year for mortgage refinances and purchases.

By now you have all heard hundreds of times how bad the economy is and the struggles that banking industry is going through. And there is no argument that these are tough times and we also face our fare of challenges here at GBCI.

Nevertheless we continue to move forward trying not to glow on the past and instead focus on the issues at hand and what we can do to fix the problems and get better. However we have achieved a number of positive things this past year. We have maintained a strong capital base. We have been one of a minority of banks nationwide that kept their dividend in place. We did not rely on TARP for other programs to show off our balance sheet and we are able to continue to generate significant operating earnings.

Although we did not achieve the level of earnings per share we had planned or hoped for we are still thankful to be in the position we are in. I've said it countless times we have over 1700 very smart and dedicated bankers and directors that give their all for the continued success of GBCI and are proud of every one of them and what they have accomplished. This was never more evident than this past year and in the situation and the struggles that not only we but the industry had to face.

We don’t expect it to get any easier any time soon but we are committed to keep grinding and persevere until things start to get better. And with that I would like the operator to open up the phones for questions and we will be more than happy to answer questions regarding the fourth quarter and full year 2009.

Question-and-Answer Session

Operator

(Operator Instructions). And we will take our first question from the line of Matthew Clark.

Matthew Clark

Can you may be start with your loan growth comment related to your expectation to see little to no longer, I mean is it fair to assume that we are going to see construction loan [battles] continue to shrink, that’s going to cause the overall portfolio that shrink this year?

Mick Blodnick

Yes. If you look at our loan portfolio from December to December, the loan portfolio ended 2009 exactly where it started at $4.130 billion. However you got to take into consideration that we had $153 million in the form of loans coming up from First National in total. So, from an organic perspective we were down about that $153 million, it took the acquisition of the bank to bring us back to even and as we continue to push out and have pay downs or do everything we can in the land development section.

As we said last quarter, we continue to make residential construction loans but nowhere near the pace that we were in prior years and you can see that even that balance has decreased dramatically over the last year and we are not seeing a lot of signs if that’s going to necessary pickup steam in the near term at least.

So, our expectations that we will some growth and I’m sure we will especially in some markets we will take advantage of our strength and the ability to lend money but at best I think its going to be an offset to some of the runoff. So, our expectations are not much if any loan growth and we actually could see loans shrink somewhat during the course of 2010.

Matthew Clark

Okay, and then in the construction book problem seemed to be in the land development area and raw land and pre-sold spec construction. Can you give us a sense in terms of the what the new disclosure the $228 million of land development $192 million of consumer land lot and the $114 million of unimproved land we got the non-accruals there, can you just give us I guess better visibility as to maybe what’s in criticized classified and just trying to cast a wider net.

Mick Blodnick

What now, as far as what seems criticized classified?

Matthew Clark

Yes, within those categories, maybe on a percentage basis of each of those portfolios.

Barry Johnston

Matthew this is Barry. The planned acquisition and development portfolio, frankly, all of its stressed when you haven’t sold a lot for 2.5 years at least from its stress from the lack of sales, some of those developers and builders that if you want to improve the spec construction are suffering given the lack of sales. So we consider that whole portfolio to be, we have concerns with it. The thing that we are fortunate is that on the acquisition and development side of what we have some of those guys that have deep pockets they are going into basically latency mode they continue to carry the projects from outside resources.

And fortunately we just had a huge amounts of new additions this quarter, we did have the $18 million increase and primarily that came from not only line acquisition development but we are starting to see some spill over and into the commercial real estate in a single family residential. So, we don’t like the totals, our new concern is if you will, it’s the other portfolios that we're seeing some increases in NPA, so.

Mick Blodnick

Let me add one thing though Matthew, one of our concerns all along to the land development component was the marks that we were going to take from that. We did this last quarter, as I said most of our increase in NPAs actually came from commercial real estate in one to four family and a little bit in CNI, and that’s troublesome, nobody likes to see those increases. But so far we haven’t seen the marks on those kinds of loans that we saw in land development and in some of the raw land that we have seen in those particular loan categories.

Not to say that there is still not so potential charge offs now but we were talking yesterday Barry and myself and if a lot of those if most of our NPAs were in one to four family residential rather than that makeup of where they are we probably feel a lot better about what the net charge-off and what those marks are coming on with that portfolio. So it was somewhat encouraging that the increase didn’t come from those loan types and those loan categories that have really been stressed and that we feel you are going to subject to greater losses.

Matthew Clark

Okay and then the incremental increase and delinquencies even on just prior to that portion that became current can you give us a better sense for the nature of those types of situations that deteriorated in the delinquency bucket and then as a follow on same thing in CRE the types of properties that are seeing some stress.

Barry Johnston

We were disappointed to see about $45 million increase in what we call was early stage delinquencies. Its about a third of it was in speck and land of element we continue to see some delinquencies there especially there were 2 large projects in our Idaho market that came on in that land development. One of them as to which as Mick mentioned in his announcement that has sense been cured about $25 million of that but another part of that was in the commercial real estate side and a large part of that was in single family residential. So that's where those increases were centered and then the second part of your question had to with

Matthew Clark

The property types within few area that we are seeing weakness.

Barry Johnston

Yeah and it comes right down in kind of falls the first set its three sections in there that we are seeing. One is anything that was related to the single family residential construction industry. We are seeing some past dues there we are seeing some stress, we are seeing some recreational property type of entities and we feel that's probably has something to do with discretionary income and that end of it. And then the last part is just some commercial real estate properties just across the board. We only have one large credit that would consider large about $4 million credit to rest of which is juts smaller balances that are just having some difficulty due to the challenges which we are facing so.

Matthew Clark

Okay and then sorry, last one just can you give us the TDR number, TRs on accrual?

Barry Johnston

Yes we do its $14.9 million.

Operator

(Operator Instructions). We will go now to the line of Brett Rabatin. Please go ahead.

Brett Rabatin

Wanted to ask first on the other real-estate, ORE obviously you had some inflows and outflows to that bucket this quarter but it didn't really change a whole lot. Can you talk about what you have in there now in terms of have those properties undergoing appraisals where you are selling are you on a six month type cycle on the ORE or can you give us some more color on generally what's going on that bucket.

Mick Blodnick

Well obviously everything that's placed in there has got a current appraisal on it if it going new into OREO and we have got some properties that have been in there for a while now but even some of those properties have had additional appraisals done if the particular bank was coming into an exam or felt they needed to, if there are some interest in the property.

The one thing we are seeing and we have mentioned this to a number of investors over the last quarter and that is prior to the fourth quarter of the year especially the prior two quarters, three quarters, four quarters for that matter we were just basically seeing nothing. I mean there was just no way interest.

I think it's a fact nationwide that when credits go into OREO maybe the interest level gets a little greater because potential investors, private equity firms whoever feel they can now deal directly with the bank. But we did and I think Barry would concur with this. We definitely saw a higher level of tier tickers if nothing else. I am not saying that there was strong interest but there was a lot more people snooping around and asking and looking into some of the OREO properties that we have had.

Now again it didn't as you could see from the numbers it didn't spillover into a significant reduction but we do feel that for the most part the OREO lease coming in has been valued properly based on appraisals. We also though we are not naïve and we did see during the course of 2009 as I said.

We saw higher OREO expense we saw even though we did what we thought as a very good job upfront still when it came down to moving properties we did see some further write-downs and charge-offs on a OREO but it was more based on a lot of volume, it was a lot of wonderful family residential construction loans and not so much major projects that we added in OREO.

So I mean the good news there Brett I think looks like maybe the activity or the interest level out there is picking up a little bit of strength. We were right in the middle of winner, if you look outside and there is snow on the ground so maybe it's going to take until March or April of the year to start getting more excitement along that line but its been somewhat encouraging to us to see a little bit heightened level of activity, Barry you got anything to add in here.

Barry Johnston

No, definitely we have seen the trend and we have had some success as soon as the bank takes ownership, that’s when the phone starts ringing. And up until that point would acquire and we have had some small success in liquidating some of these properties that we thought we were just going to have to hold to on to for a while so, its [panacea] out there by any means and I don’t want to give anybody that impression. But at least it’s a mix that there are a few people in making them acquire reserves to the status of our properties and another thing we did is we listed all our properties that on our website and that has generated quite bit of activity and we have had some success there too from that communication venue.

Brett Rabatin

Yes, I saw that on the website the other day and there was a couple of properties there that looked pretty interesting

Barry Johnston

Get your checkbook out.

Brett Rabatin

Anyway and then I wanted to just talk about the current NPAs a little bit, it sounds like, I guess one is can you give us a number for what you have charged down the current non-performers I don’t know if you have been able to disclose that in the past or I was just curious if you might have that number Barry?

Barry Johnston

I do not. But lets see I think I could put it together take some doing because we have quite a list of loans but if you need that well I can put it together e-mail it to you.

Brett Rabatin

Okay, I appreciate it. And then all this skipper as a quality questions I have maybe we can talk offline on that, but I do want ask really quick, it sounds like if the balance sheet growth maybe balance sheet abatement would be a better word in 2010. So this gives you an opportunity to pay down some of the borrowings and maybe position yourself for more asset sensitivity as rates presumably go higher at some point?

Barry Johnston

Yes, and in fact Ron and myself are talking about that continually and my guess would be that you would see in the subsequent or in the next few quarters that we will probably be looking more and more into doing some further extension not relying as much on borrowings.

And I mention that, we have had very good success on the deposit side this past year and our ratios, I didn't calculate a longer deposit ratio at the end of the year, I guess I should have. But it continues to obviously as we don’t continue to come way off and lead down and deposits are growing our reliance on borrowings and other wholesale funding continues to dissipate.

And the next thing is that we are very cognizant of the potential of rates moving up and when they do move up of what that’s going to do and we can continue to model extensively our exposure and all I can tell you Brett is I think we will be doing the right thing but that probably will come with some liability extension as we move forward into 2010.

Operator

And we’ll take our next question from the line of Jeff Rulis. Please go ahead.

Jeff Rulis

Just a follow-on on the delinquencies, given that I guess two-thirds of the delinquencies were related to residential properties and that's not necessarily late cycle type stuff. I was wondering if that sort of surprises you that your new delinquencies are in that sector. As Barry mentioned, it was a couple big projects perhaps in that spec land, but if you could comment on that.

Mick Blodnick

Jeff, were you saying that because most of the delinquencies are in that one to four family.

Jeff Rulis

Being that a third is spec land, a third single family residential, the increase in NPAs is more CRE type later cycle but I guess couch that your delinquency increase was more maybe some early cycle type stuff that again I guess characterize that as it was a couple of big projects and I guess going forward what would new delinquencies I guess if they were to occur, where would you expect those?

Mick Blodnick

I think that we are starting. Everybody has been saying that our markets are late into this whole cycle and there maybe some validity to that and yet I still look around that the stage with the exception of Idaho, I still look at the states that we are doing business in and unemployment rates in that are still very good compared to the national averages and compared to more states out west and yet every one of those states that we are in continue to experience higher and higher on employment levels. I think it's a function of partly of that I mean there are more stress we have seen a couple and I am talking primarily about the one to four family and maybe some of the land development type loans.

I think we are starting to see a few; we have had a few significant layoffs in Western Montana that we have announced over the last month or two. I am not sure if we got huge exposure to those particular employee bases but as you know it's that trickle down effect that affects everyone else. And yeah we are definitely seeing higher delinquency rates on the traditional one to four family turned down more to loans and I think that hope there is did we underwrite those properly because these are the ones, a lot of the one to four family about 80%-85%-90% above of our one to four family production kit sold in the secondary market.

So I am hoping that and I think this the case that a lot of the ones that we kept, we kept because loan to values were low, because borrowers at that time had good jobs or had capacity, now that can change though and I think that's somewhere what we are experiencing. And we have a seen couple of higher end homes, jumble homes that have definitely gone into that delinquency status and these were some people that we are pretty well healed and either some events or something has go change their circumstances dramatically.

So yeah I mean late stage, early stage I think we look at it as just problems that we're going to have to continue to deal with and we're going to have to continue potentially to reserve against.

Jeff Rulis

Okay. And then kind of switching gears a bit on the charge-off pace and maybe it was misguided in the last call from my part but I got the indication that maybe that charge-off level would increase going forward but it was I guess flat quarter-to-quarter. Any reason there that, that was held flat or wasn’t a bigger number.

Mick Blodnick

No in fact I think we were somewhat disappointed that it was where it was. I think we are hoping that we could have kept that jus a little bit lower. But I think you bring up an excellent point Jeff and that is that this coming year I'm not so sure of that provision is. I hope that provision isn’t going to have to be what it was in 2009. But as I said in my remarks we could very easily hit that same 1.5% net charge-offs. I hope we don’t but we're really going to start lower these overall NPAs and get these off the books. I think our plan is to be more aggressive on the charge-off and writing-down some of these.

We built up as you can see we built up a large reserve and now I think its time for us to really start to show some progress on the NPA front. Barry you got anything to add?

Barry Johnston

We went through the cycle this past fall and we anticipated the charge-offs overall when we sat here a year or so, and we were hoping to hold them underneath 1% that's definitely didn't happen I think we might be able to hold rest of in that. I guess that where they were going to be at so we are anticipating that this year is going to look similar to what we were last year.

I don't know, now that we've increased the reserve up to that 3.5% level that we will continue to reserve at the level we did in 2009 given that we are there. But it will still depend on, we have to maintain directional consistency if so our NPAs continue to increase, we will see some deterioration of collateral values in this economy states at the level of that. We will continue to provision accordingly so like my thoughts are as we have released cover charge-offs if not a little bit more so that's where we anticipate we are going to be at this year.

Mick Blodnick

The one headwind Jeff we are not seeing is obviously we are not provisioning for much loan growth because we just don't see right now much in the way of that I mean it would be nice if there was some good quality demand out there but at least right now, we're in the middle of winter things can change when spring hits but right now we are not expecting much there so.

Operator

And we will go next to the line of Brad Milsaps. Please go ahead.

Brad Milsaps

Mick, I think my notes are correct here, but if I recall I think some of your banks were going through kind of annual regulatory exams in the fourth quarter. Were you guys able to get full reports back by the time in conjunction with the earnings announcement? I assume everything went as planned there but just thought you might give us an update.

Mick Blodnick

Yes, obviously you cant say anything about regulatory exams but I can tell you that they are pretty much all completed for 2009, we had a fair number of them in the second half of the year, we do have on some of our smaller banks that are on 18 month cycles, we have got a few of them already scheduled it on the docket for 2010 but we are completely through that cycle now.

Brad Milsaps

Okay. And then just kind of a housekeeping question maybe for Ron. Just kind of curious on the tax rate going forward. Ron, is there a certain level of kind of pretax earning that you guys need to get to provide for taxes in any given quarter? And just maybe comment on the tax benefit that you had in the fourth quarter of last year.

Ron Copher

Let me start with the tax benefit, the last time of our investment portfolio just about a third of it is invested in municipal bonds and so as our earnings come down the percentage that the muni bond income represents as a percentage of that grows up dramatically. And so you saw that it on our third quarter in particular and then continuing effect go to a lesser degree in the fourth quarter. It is presently related to the tax-exempt muni bonds. But in addition as you guys saw in the third quarter 10Q we are having more federal income tax credits in various forms that we are taking advantage of them. So that’s had a impact in the fourth quarter but certainly we will have an impact going forward in 2010 as we continue to take advantage of tax credit opportunities.

So, I was just going to mention it going forward our effective tax rate will certainly come down. I’m going to just estimate at this point 30% would be a very good place to start. And so until your first part as to the precise level that is going to change and I don’t want to put a number out there because if we continue to invest on these tax-credit opportunities that number that you were talking about changes. So hopefully the 30% aggressive, what you guys would need to know.

Brad Milsaps

Just one final question. Mick, you've talked a lot about it in the past but now that you guys have worked through '09, I'm just kind of curious what your thoughts are, updated thoughts are on FDIC-assisted deals or other types of M&A opportunities that are out there? Just curious if you've changed your tune at all or what you are thinking?

Mick Blodnick

No, it really hasn’t changed too much, its pretty much what we said last quarter that there was an FDIC assisted deal that was in our market that could be folded in, it would be something that we would take a look at and made this a good thing. We don’t see a lot in some of the markets that we are currently in especially like a Montana, Wyoming, and Idaho. There has been a few in some of the other states so we at least have a small presence in but I guess at the end of the day we are just not that interested or didn’t feel that there was much franchise value in those particular bank. So, we are just moving on, we will look at those but I would say that our tone and approach hasn’t really changed dramatically since the last quarter Brad.

Operator

And we’ll go now to the line of Jennifer Demba. Please go ahead.

Jennifer Demba

My questions have been asked, thanks.

Operator

(Operator Instructions). And we will take a follow-up question from the line of Matthew Clark. Please go ahead.

Matthew Clark

Just a quick follow-up on the comp line. You guys tend to see a pretty decent increase I'm sure for the typical seasonal accruals in the first quarter. I just wanted to know whether or not you guys had any plans to delay some of those accruals or not, whether or not we are going to see a typical increase this coming quarter on the comp line?

Mick Blodnick

Up line, yes, you’ll see just your traditional merit raises, this year that merit raise is right at 2%. So you’ll see that increase to comp but outside of that it wouldn’t expect you are going to see anything significant outside of that Matthew.

Matthew Clark

Okay, great.

Operator

And it does appear at this time that we have no further question.

Mick Blodnick

Okay and we’ll ramp up by just thanking everyone for being on the phone this morning. If you have any other further questions we are always around so you can give us a call and see if we get some more of those questions answered. Again thank you very much for your interest in GBCI and your support of GBCI. And again like I said earlier, we are going to do everything we can, it’s a new year and we are going to continue to grind and plough our way through this thing, I do believe better times are on the horizon and we are going to do everything we can to take advantage over then get our performance back to the level that as share holders all of you have become accustomed to from this company over many, many year. So, that’s our goal and that’s the plan and we are going to do everything to make that become reality. And with that, thank you all very much and have a great weekend.

Operator

And again this does conclude today’s teleconference. You may now disconnect. And please enjoy the rest of your day. Thank you.

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Source: Glacier Bancorp Inc. Q4 2009 Earnings Call Transcript
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