Glacier Bancorp, Inc. Stock

Good day, and thank you for standing by. Welcome to the Glacier Bancorp Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Randall Chesler, President and CEO of Glacier Bancorp. Please go ahead.

Well, good morning, and thank you for joining us today. With me here in Kalispell is Ron Copher, our Chief Financial Officer; Tom Dolan, our Chief Credit Administrator; Angela Dose, our Chief Accounting Officer; and Byron Pollan, our Treasurer.

I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined starting on Page 13 of our press release, and we encourage you to review this section.

Last night, we issued our earnings release for the second quarter, and we believe it represents another quarter of strong results. Net income was $97.9 million for the second quarter up 19% from the prior quarter and up 85% from the second quarter of last year.

Diluted earnings per share were $0.75, up 19% from the prior quarter and up 67% from the prior year second quarter. A key driver of our strong performance continues to be net interest income and margin expansion.

Net interest income increased to $276 million or 3% from the first quarter and up 33% from the second quarter of last year. Our tax equivalent net interest margin expanded to 3.9%, up 10 basis points from the first quarter and up 69 basis points from the prior year second quarter.

From a pretax preprovision net revenue perspective, our PPNR for the second quarter was 130.8 million, an increase of 23% from the prior quarter and an increase of 53% from the second quarter a year ago.

We also saw continued improvement in our funding profile. The total cost of funding declined to 1.33%, down 7 basis points from the prior quarter and down 30 basis points from the second quarter of last year.

Core deposit costs, including noninterest-bearing deposits, was 1.18%, down 2 basis points from the prior quarter. Noninterest-bearing deposits remained at 30% of total deposits for the quarter, consistent with the last quarter and the second quarter a year ago.

Turning to the balance sheet. Loans ended the quarter at $21.4 billion, increasing $330 million or 6% annualized from the first quarter. Loan growth was broad-based and reflected our continued focus on disciplined production in attractive markets.

Total average deposits were $24.5 billion for the quarter, up $112 million or 2% annualized from the prior quarter. Period-end deposits were $24.7 billion, down slightly from the prior quarter, but overall deposit levels remain stable and continue to comfortably support our liquidity and funding strategy.

Credit quality remains excellent, consistent with our disciplined underwriting culture. Early stage delinquencies declined from the prior quarter. While non-performing assets increased modestly but remained low as a percentage of subsidiary assets. Our allowance for credit loss at 1.22% of total loans reflects our conservative and consistent approach to reserving.

Expenses were well controlled in the quarter, acquisition-related expenses declined meaningfully from the first quarter, and the operating efficiency ratio improved to 56.21% compared to 63.05% in the prior quarter.

For the first half of the year, net income was $180 million, an increase of 68% from the prior year first half. Diluted earnings per share for the first half of 2026 was $1.38 per share, an increase of 48% from the prior year first half.

Net interest income for the first half of 2026 was $545 million, an increase of 37% from the prior year first half. The loan portfolio increased $2.831 billion or 15% from the prior year first half. Total deposits increased $3.026 billion or 14% from the prior year first half.

The net interest margin as a percentage of earning assets on a tax equivalent basis for the first half of 2026 was 3.85%, an increase of 73 basis points from the prior year first half. These results clearly show the earnings and operating momentum that has occurred across the company.

During the quarter, the Board declared a quarterly dividend of $0.33 per share. This marks our 165th consecutive quarterly dividend and we have increased the dividend 49x over our history. We are encouraged by the results for the second quarter and through the first half of the year.

The continued progress in margin, efficiency and disciplined balance sheet growth driven by Glacier's community banking model, give us a solid foundation for the remainder of 2026. With that, I will ask the operator to open the line for any questions.

[Operator Instructions] And our first question comes from Matthew Clark of Piper Sandler.

Just wanted to start on the funding side, deposit cost down nicely again here. I guess it would be helpful to have the spot rate at the end of June and then your outlook on deposit costs in general, just assuming the Fed remains on hold and how the competition is these days?

Sure, Matthew. This is Byron. You're looking for the spot cost at the end of June, June 30, our deposit cost was 1.18% in line with our average for the quarter. So in terms of our outlook, I do think our deposit costs will likely be stable from here. And of course, that depends on what the Fed does.

But assuming Fed on hold, as you mentioned, I would think that we would just kind of maintain this level of deposit costs going forward. Now if the Fed does hike rate at some point later in the year, we'd have to adjust that outlook a little bit. But I think from now, a good outlook is just a stable comp.

Okay. And then just on the loan side, loan growth stepped up here. I think 3Q tends to be a seasonally strong one for you, but I just wanted to touch base on the pipeline and your outlook for growth?

Yes. Matthew, this is Tom. Yes, second and third quarter are typically our stronger quarters in the year, more so than the fourth and the first quarter, and we've seen that for the last couple of years. I don't see anything that would really change that. But pipeline still remain very healthy. We're seeing a pull-through. We're seeing back build. And some of the tailwinds we also saw in the second quarter with construction draws and entering into the ag growth season, that will continue into the third quarter as well.

Okay. And then maybe one for Ron. Your expenses came in a lot better than expected. I just wanted to get the updated guide for the second half of the year?

Yes, the updated guide, we're going to stick with quarterly guide that I gave for Q2. So that will be $187 million to $192 million. We recognize we came in lower than that. But some of the discretionary spending could come back in the second half of the year. So we're not -- we just allow for that. But overall, very, very good control expenses.

And our next question comes from Jeff Rulis of D.A. Davidson.

I guess a question on the -- follow on the loan growth and Randy, you mentioned pretty broad-based. Just to unpack that a little bit. In Q1, you had pretty strong growth out of Texas. It was kind of the lion's share of the growth. Just wanted to kind of double down on the geography contribution this quarter of the loan growth?

Sure. So as we've stated, we're really operating in two regions, Southwest, Mountain West. Southwest continues to do very well. I think they're rebuilding the pipeline after a very strong first quarter. So -- but we see really, really good trends there. And in the Mountain West, they had a very strong quarter. So it's I think both doing very well. So yes, we expect to see that continue.

Okay. So that was maybe they flipped strengths in the quarter in terms of net production as Southwest rebuilds. And -- but going forward, it looks like a strong pipeline across the region. Is that...

Yes. Exactly. Exactly right.

Got it. And Randy, I guess I'd check in on the -- been a bit on the M&A side, a quiet start nationally, but we're starting to see a pickup recently. And I just -- I guess, versus last quarter at this time versus now any more active discussions? I know you hold a lot of them, but I just want to see where we sit on the M&A side?

Sure. Yes, maybe separate that into two pieces. There's our internal discussions that we have, meaning it's not an official sale. We're talking to people. Those continue to move along at a good pace. What I still see is somewhat muted is the investment banker pipeline production of deals and where people are officially coming to market and we measure that by the phone calls we get, letting us know about those things.

Still seems a bit muted, but from the talk that I've had with the investment banker, I think that we'll probably start to see that increase a bit towards the end of the year. But overall, compared to first quarter, I'd say about the same, Jeff, probably still a bit muted.

Okay. Appreciate it. And sorry, if I could slip in a last one. Just on the earning asset balance, the mix and I guess trying to get a sense for accelerating loan growth. But I guess your intentions on the securities portfolio and maybe expectations for start to see some earning asset growth. If you could comment on that?

Sure. And we'll have Byron comment on that. We did make some purchases this quarter, so we're kind of slowly wading back into the investment purchase of investments, but I'll let Byron give you some color on that.

Yes. As Randy mentioned, we did dip our toes back into the bond market. We purchased about $250 million of bonds in the quarter. And I expect we'll continue purchasing, putting some cash to work going forward.

In terms of growth, I do see our AEA will expand from here. I think what you saw even in Q2 with the decline AEA, it's still a little bit of an echo of the deleveraging that we had going on. We talked a lot about the pay down of our FHLB advances.

And that last maturity, that last payoff didn't happen until late in Q1. And so when you look at the averages of Q1 versus the average of Q2, that still had an impact. Now that's complete. I would expect from here, our AEA will increase in Q3 and Q4.

And our next question comes from Kelly Motta of KBW.

I would love to talk a bit about the margin. You had a few things working in kind of a negative direction this quarter, one being the nonaccrual interest reversal and then a lower level of accretion. So if you had a similar level to last quarter, you'd be closer to you would have actually come in, in the mid-3.9%.

So I'm just wondering, as we think about that exit 4% margin, it feels like that's in the range. How are you -- any updates on how you're thinking about the exit margin from here? And maybe some -- I know the accretion can swing around. So some commentary on what's a normal level, at least for modeling purposes would be helpful.

Sure, Kelly. Thank you for the question. Yes, we're very pleased that our margin continues to expand, and we expect that it will continue to grow. When you're looking at that 4%, I do think we'll hit that 4% level early in the fourth quarter of '26 and we'll keep going from there. So when you think about an exit margin for '26, I do expect we'll be north of 4%.

I do think what you saw some of those headwinds were a little bit of an anomaly. There is -- you can never really forecast the timing of payoffs and things like that. But it feels to me like that impact that you saw that headwind was a little bit elevated. We're not expecting that, that level will continue going forward. I think the level of discount accretion you saw in Q2 is probably a more normal level to assume going forward.

Okay. That's really helpful. And then I appreciate the color on the securities reinvestment. Can you provide additional detail on what you're seeing on loan pricing and any commentary on the competitive dynamics impacting new loan production yields either way?

Sure. Yes, Kelly, this is Tom. We're still seeing production yields in excess of 6.5%. We saw that consistently throughout the quarter. From a competitive standpoint, that probably is the largest competitor factor is the pricing and we see it more in the large metro areas versus the smaller markets where we have a more commanding market share. I think that trend is continuing. And I think that's probably going to continue into the third quarter.

We're still not seeing a lot of competition on underwriting discipline or structure, which is good, at least in the spaces that we operate in. So I'm encouraged to see that it's still primarily focused on pricing, which really hasn't been a change over the last couple of years.

Got it. That's helpful. That all sounds really encouraging. With these factors in mind, you were well above 4% pre-COVID, at least for a bit. Any -- I know it's a little early to talk about '27, but is there any preliminary thoughts on what given the pretty meaningful tailwind of back pricing still to come, what a normalized margin means for Glacier over the longer term?

Yes, Kelly, I do think, as you mentioned, there is a lot of momentum in our asset repricing I do think longer term, I do think about a margin in terms of a range between 4% and 4.5%, more of our historical norm. And I do think there are things that can kind of bring us towards the higher end of that range.

Given enough time, a friendly yield curve, a steeper yield curve would certainly be helpful meaningful loan growth. That always helps with the level of new production rates that Tom mentioned, that's going to lift our margin towards the higher end of that range. So I do see that we'll continue to increase our margins throughout '27, ultimately where it normalizes and where it kind of levels out, that remains to be seen, but I do see growth throughout next year as well.

[Operator Instructions] And our next question comes from Evan Kwiatkowski of Raymond James.

It's Evan on for David. I just firstly just wanted to touch on maybe deposit competition across your footprint. I know you've said in the past, you're probably more insulated than others based on your presence in more rural areas. I'm just curious how you view competitive funding cost pressures going forward and if there's been any change from your prior views?

Yes. Evan, I don't see any change in the level of competition. I think competition is strong. It always is, but it's rational. There are always some outliers in our markets. But those outliers, they're not driving the market. And as you saw, our results, we were able to bring our deposit costs down a couple of basis points in Q2. So from what I see, is it appears to me that competition is rational.

Rational. And the other thing I'd add on the market, 75% more rural, 25% more urban, it's both the nature of the market and our focus on the core relationship in those markets, which really drives the lower cost. And we don't see those dynamics changing.

That's really helpful. And then maybe just moving to credit. I noticed there's a slight uptick in nonaccruals, but trends seem really solid still. Just curious what you're seeing broadly maybe what caused that uptick? And then maybe if there's any sectors or segments that you're watching more closely than others?

Sure. Yes. This is Tom. I would classify it as stable overall. We're not seeing any specific industry or geography or asset class that's showing any outsized risk. But I would say that if there's one segment where we're still watching closely, it's probably -- it's been this way for over a year now. We are watching the ag book. 2025 ended up being stronger than we were anticipating 2026 is off to a good start as well. But obviously, there's been some headwinds in that industry that we're paying some attention to.

But I think going back to what Randy said about deposit aggregation, Same thing on the loan side. We really try to build the bank the longtime operators in the market, and that's no different in the ag sector with taking the long-time multigenerational growing families. They lived in these time and again, and we see that happening this time.

Got it. And then maybe going back to Texas, you've noted in the past, it's still a bit too early to see impacts from disruption in the state. I'm just wondering if you've seen any emerging trends of being able to capitalize on displaced customers or new team members or in any other part of your footprint where there may be dislocation or disruption?

Yes. So we're watching that carefully. And I think by that, you mean bigger banks coming in, acquiring some banks in our markets and what the implication of that is.

So there's really two areas that we're keeping an eye on. One is in Colorado with PNC's purchase a FirstBank. I would say that the preliminary so early and got a lot of respect for PNC. At the same time, we do see some customers starting to move and to our benefit. And so as these bigger banks come into the markets like this, their ability to carry forward the community banking that people have become used to is still kind of up for judgment.

And so -- but initially, it seems that there is some good movement our way with some very good customers. And so we're very happy to talk to those customers and take advantage of that opportunity in Texas.

We've got some very strong commercial lending leadership, and I think they're having good success talking to people and bringing on incremental talent that we're finding as a result of some of the recent acquisitions.

So I'd say, overall, right now, it feels like it's favorable for us. But again, some very good banks, larger banks. And so maybe a little too early to say that's a conclusion, but early trends are positive for us.

And we have a follow-up question from Kelly Motta of KBW.

Jump back on. I did want to ask a question about capital management just because in light of your improving profitability, capital continues to build. I appreciate the commentary on M&A, but any other thoughts as you look ahead here about capital management?

Yes, Kelly, we'll -- I'll let Byron to give you some color on that. We've been talking a lot about that, obviously, because we're increasing capital and the industry is increasing capital broadly. And we see that as something that's going to continue here. But we'll let Byron fill in the blanks there.

Yes, Kelly, our capital is strong. And as you point out, it will continue to grow with our earnings growth. It's early yet. We're still evaluating our outlook for capital build. But I would say we have a lot of flexibility in how we approach capital return, and we're keeping all of our options open. We're having discussions ongoing around this topic and evaluating all of our options.

I show no further questions at this time. I'd like to turn it back to Randy Chesler for closing remarks.

All right. Well, thank you, Didi, and thank you for the folks for your questions. We appreciate it. We appreciate everybody dialing in, in the summer and taking time to check in on how things are going. Hope you have a great day, great weekend and great rest of the summer. Thanks for dialing in.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Thank you for standing by, and welcome to the Glacier Bancorp First Quarter 2026 Earnings Conference Call. [Operator Instructions]

As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Randy Chesler, President and CEO. Please go ahead, sir.

Good morning, and thank you for joining us today. With me here in Kalispell is Ron Copher, our Chief Financial Officer; Tom Dolan, our Chief Credit Administrator; Angela Dose, our Chief Accounting Officer; and Byron Pollan, our Treasurer.

I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined starting on Page 9 of our press release, and we encourage you to review this section. Last night, we issued our earnings release for the first quarter of 2026, and we believe it represents a great start to the year with another quarter of strong results.

Net income was $82.1 million, an increase of $18.4 million or 29% from the prior quarter and an increase of $27.6 million, or 51%, from the prior year first quarter. Diluted earnings per share was $0.63 per share, an increase of $0.14 per share or 29% from the prior quarter, an increase of $0.15 per share or 31% from the prior year first quarter. A key driver of our performance continues to be margin expansion.

The net interest margin as a percentage of earning assets on a tax equivalent basis was 3.80%, an increase of 22 basis points from the prior quarter and an increase of 76 basis points from the prior year first quarter. The loan yield of 6.16% in the current quarter increased 7 basis points from the prior quarter and increased 39 basis points from the prior year first quarter. The total earning asset yield of 5.11% in the current quarter increased 11 basis points from the prior quarter and increased 50 basis points from the prior year first quarter.

The total cost of funding of 1.4% in the current quarter decreased 12 basis points from the prior quarter and decreased 28 basis points from the prior year first quarter. Turning to balance sheet trends. The loan portfolio of $21 billion at the end of the quarter increased $106 million, or 2%, annualized from the prior quarter. The Southwest region, which includes Arizona and Texas grew in excess of 7% annualized during the current quarter, underscoring the strength of our diversified geographic footprint.

On the funding side, total deposits of $24.7 billion at quarter end increased $151 million or 2% annualized from the prior quarter. Noninterest-bearing deposits of $7.4 billion increased $113 million or 6% annualized from the prior quarter. Looking past the quarterly acquisition-related expenses, the non-GAAP operating results show the core strength of the business without acquisition expenses.

Operating EPS was $0.70 per share. Operating expenses were $188.2 million for the quarter, demonstrating consistent cost control. Our credit portfolio continues to perform very well. Nonperforming assets remained low at 25 basis points of total assets with a slight increase from the prior quarter. Net charge-offs declined to 2 basis points of total loans, down from 6 basis points in the prior quarter. Our allowance for credit remains at 1.22% of total loans, reflecting our conservative approach to risk management.

We also executed well on integration and operations. During the quarter, we completed the core conversion of Guaranty Bank, which we acquired in October of 2025. And I want to thank our teams for their excellent work and focus on our customers throughout the conversion.

As always, we remain committed to consistent shareholder returns. In March, we declared our quarterly dividend of $0.33 per share, representing our 164th consecutive quarterly dividend. We are very encouraged with the business performance in the first quarter and look forward to a strong 2026. Our exceptional team, expanding footprint, unique business model, strong business performance, disciplined credit culture and strong capital base continue to provide a solid foundation for future growth. That ends my formal remarks. And now I would like the operator to please open the line for any questions that our analysts may have.

Certainly. And our first question for today comes from the line of Jeff Rulis from D.A. Davidson.

Randy, just kind of at a high level, I wanted to chat about the sort of the Texas market on the Southwest footprint. And I got larger banks kind of spare the names of those, but talking about as they enter the market kind of putting a positive spin on maybe an out-of-market buyer, getting in and talking about the opportunities. We've also heard from smaller banks that there's even greater market share opportunities due to disruption.

I guess what how would you put your experience as you've been in the market now for some time and particularly through guarantee. What -- how would you couch that environment?

Yes. Well, I think to some extent, the numbers speak for themselves. They grew in excess of 6% in the first quarter. During the same period of time, we were doing -- completing the conversion. So they did a great job. I really see the bulk of what's happening there is business as usual. They're just continuing to grow with -- in the markets that they're in with good customers.

There is some disruption happening in some of the larger banks acquire some of the midsized banks there. It's still a little bit early to tell just how extensive that's going to be at this point, Jeff.

Fair enough. And Randy, if I could extend that maybe a question to additional M&A conversations in the footprint, and I guess I'd ask you if you could just focus on Texas for a bit and then maybe opine on the broader Glacier footprint as well. But starting with just what -- as guarantee and conversations have occurred, how is that update? And then broadly speaking.

Yes. One of the things that we thought would happen is that our model and our approach would be really well received in the market in Texas, given the dynamics down there, given the type of banks and the type of business very aligned already with how we do business.

And I think that's been demonstrated. We've had already multiple conversations. So I think that's proceeding well, and people are on different time lines, and we're in no hurry, and we continue to be very, very disciplined with good banks and good markets with good people. So that's continuing. Mountain West region, still some very good discussions. That hasn't changed at all. So again, I think we made the point, one of the strengths for our -- for Glacier Bancorp is the size of the geographic area that we have to kind of look for opportunities. And so I think that's continuing and will prove to be a very good advantage for us.

Okay. I appreciate the perspective. And then just 1 last one, if I could just talk to the margin. I want to check in on -- you've had that north of 4% goal or had that coming into the quarter and a pretty sizable jump. I don't know if that resets the ceiling or you just got there quicker. If you could just reorient where we sit on the margin traction trend.

Yes, Jeff, this is Byron. I would say very pleased with our margin lift in the first quarter. Yes, I would say our margin was really firing on all cylinders in Q1. We've now had 9 consecutive quarters of margin expansion and that plus 22 was the largest quarterly increase over that run. So just very pleased to see what we've been able to accomplish there.

We do see more lift ahead of us. And with this strong start to the year, I would say that puts us right on track to hit that 4% target. I wouldn't say that we're looking to go much beyond that, maybe it accelerates it a little bit. But I still think we're -- we'll see that 4% in the second half of this year. So it really hasn't changed our timing in terms of that broader guide of second half of '26 in terms of hitting [indiscernible]

Okay. Byron, if I just put that a different way, if this is correct, the levers that you had and maybe the FHLB, I mean you're kind of pulling those and you took advantage of, but that doesn't necessarily mean that you've pushed that ceiling higher potentially, but you just -- you got to there quicker maybe than some had expected. Is that fair?

I think that's right. And I would say going forward, you talk about the levers. The drivers of our margin are shifting a little bit. I would say we retain a clear upward bias. But just kind of you mentioned FHLB payoff well, that's complete. We did finalize the payoff of our FHLB advances in Q1. So that's done.

From a deposit cost perspective, I think we could, from here, maybe squeak out another couple of basis points of deposit cost reduction. But I would say with the Fed on hold, it feels like deposit costs for the most part, will be stabilizing and moving sideways from here. So to this point, we really enjoyed a boost from both sides of the balance sheet. I think going forward, we're going to lean a little bit more on the asset side of our balance sheet to see further margin lift.

Our asset repricing, as we've talked a lot about, does have momentum to it. I think you could see a slow and steady up on our asset repricing through '27, in fact. We have $3 billion of loans repricing in the next year, and that's going to earn an incremental rate of 75 to 100 basis points. Now that we have all the guaranteed data and converted and into our reporting, that's where that increased number is coming from that $3 billion of repricing and then new loans, new production rates are very strong, I would say, north of 6.5%.

So that's very helpful. And on the investment side, we're still seeing very strong cash flow. And that -- those securities are running off at a very low rate with the one handle on them. So you put all those drivers together, we're still seeing lift ahead of us. But probably going to be leaning more on the asset side of the balance sheet to realize that additional lift.

Understood. That's great. And Byron, the $3 billion, is that just a forward look 12 months or you're talking about just in '26.

That's the forward look 12 months from March 31.

And our next question comes from the line of Matthew Clark from Piper Sandler.

Just wanted to start on the loan growth this quarter, 2% annualized at least end of period basis, maybe a little slower start to the year, but I assume there was some -- that's partly due to seasonality. Just remind us how you feel about the kind of growth expectations for the year. I think we were thinking somewhere in that 3% to 5% range, but -- and just speak to the pipeline, I guess, coming into 2Q.

Yes. Matthew, at this point, I think we're still comfortable with that low to mid-single digits. But the pipeline still shows continued strength in levels, in both pull-through and back build. But there's a lot of uncertainty out there. And depending on some of the geopolitical and associated economic risk that go along with that, that could potentially change.

So I think we're still comfortable with the low to mid-single digits. Your point on the first quarter, definitely, was a seasonal impact. I think we'll see improvement in the second and the third quarter. And as we -- as Randy mentioned in his comments, the benefits of the southwestern region of our footprint doesn't quite have the same level of seasonality trends that the northern part of the footprint a lot more susceptible to colder weather that tends to slow down construction advances, et cetera. .

Great. And then just on expenses, you came in a little bit below the guidance range for the quarter. Any update there going forward? And do you still contemplate getting to that 54%, 55% efficiency ratio in the fourth quarter?

Yes, Matthew, Ron here. We definitely plan to get to the 54%, 55% efficiency ratio. I just want to point out, again that, that's core operating. So when you look at our efficiency ratio reported for the first quarter, it came in at 63%, well that's loaded in the numerator with the acquisition expenses, including the compensation release coming out of that acquisition.

So yes, we'll do that. The guide that I gave 3 months ago on the call in January, I just want to reiterate that at [ $750 million to $766 million ] for the full year. And I think it's important to point out that we remain cautious on hiring, spending in general. Given the economic uncertainty, certainly add in the building conflicts. So we think all of our divisions, corporate departments have done a good job in looking at where they might fall back on some expenses, but likely to show up in the -- as the year unfolds, too early to tell. So just reiterating 54% to 55%, I feel very good about that on a core operating basis and staying with the guide.

Okay. And that efficiency ratio. I know it obviously excludes merger charges and related comp. But does it also exclude amortization expense?

No. So for instance, you're talking the core deposit intangible amortization.

Yes.

That would still be in there.

And our next question comes from the line of David Feaster from Raymond James.

I wanted to -- maybe just switching back to Texas and the Guaranty deal just for a minute. That's converted integrated at this point. It sounds like they did about 6% growth in the first quarter. I guess, first, how did the conversion and integration go? It sounds like they didn't miss a beat, but just wanted to see how that went and the growth that they're seeing, are they -- what's driving that?

And what are they excited about? Is it growth from existing clients where they can deepen relationships now that -- they've got more capabilities and a bigger balance sheet? Or is this new relationships that you can now service them because they previously could. Just kind of curious some of those dynamics, if you could touch on that.

Sure. Yes, the conversion is behind us. I think the teams are doing a great job, continuing to help out the folks in Texas and get them used to our systems. But that's moving forward. As you noted, they really didn't miss a beat. You look at the loan growth of 6%. I'm very, very pleased with that. So I think all those things have gone well and are moving really -- moving in the right direction. I think Tom can give you a little color on the makeup of that business. Tom, do you want to comment on that?

I think your question around whether it's coming from existing borrowers deepening the relationship or new borrowers, it's a little bit of both. They've seen some nice strong pipeline growth that's continuing that continue to be stable even going into the second quarter. And certainly, one of the main benefits for them is the ability now to deepen those relationships that, at one point, from an aggregate standpoint [indiscernible] up against their their comfort level. And so we're able to continue growing with those as well. But certainly, new customers really throughout their footprint has been a good source of pipeline growth as well.

And maybe just a high level follow-up kind of on Matthew's question on the growth side. Could you maybe just elaborate on the -- like how are the pipelines across your footprint? Where are you seeing growth? I know there was some noise from reclassification this quarter from resi to CRE. But just kind of curious, the complexion of the pipeline and how competition is across your footprint. Anecdotally, we hear a lot on the pricing front. But curious if you're seeing that and kind of how origination yields are looking in the pipeline and just any details you could help us out with?

Sure. Yes, the composition of the pipeline, still largely driven by commercial real estate and it's a good representation of both owner and nonowner and that's really spread throughout the footprint. And following on the heels of that is probably some C&I opportunities as well.

And I've mentioned this in the last couple of calls, a bigger component of the total pipeline compared to rewind the clock a couple of years, we're starting to see more construction demand. And as we know, those don't fund at close. So we've seen good, strong top line production levels. And as we get into the summer parts of the early year, we'll start to see those lines draw in addition to utilization lines for other segments of the portfolio as well, including agriculture as we get into the growing season.

So I think certainly, we're going to see some stronger second and third quarter as we move into this year. And then from a competition standpoint, we haven't really seen any significant change in the last quarter. Markets where we have a controlling market share, we're generally able to get much better pricing. And that allows us to compete better in the larger markets where we do have more pricing competition.

So production yield was about [ 6.75 ] for the quarter. We're still getting good spreads. We saw that middle part of the curve increase in March. And as a result, we saw late quarter and into the early second quarter, production yields come up a little bit as well to follow suit.

Okay. That's helpful. And maybe just on the other side of the balance sheet, I mean, deposit growth is really strong. And what's typically a seasonally slower period, especially on the noninterest-bearing side. Just -- could you touch on again, the competitive landscape on the funding side as the industry is trying to accelerate growth and fund that. And then are there any segments or markets where you're having more success driving core deposit growth?

Yes, David, we had a great quarter for deposits. First quarter can be a mixed bag sometimes. Sometimes the outflow in Q1, so to see such good such strong deposit growth was really encouraging. I think the divisions are doing a great job of competing in their market. And you saw our balance increase and at the same time, bringing our overall cost down.

And so just a fantastic result and really encouraged by what we see on the noninterest-bearing side. And so that really outperformed our expectations for Q1. And so I think that bodes well for the rest of the year. I can't say exactly kind of where that will play out. But we do see headwinds in Q2, particularly with the seasonal tax flows. But overall, what we see, we've seen a very strong start to the year and encouraged by the success that our divisions have had.

And our next question comes from the line of Andrew Terrell from Stephens.

If I could go back to just the margin quickly. Good to see you guys in the quarter at 0 and the FHLB advances. I don't think there's any broker deposits. But just curious on -- as you look forward, kind of throughout the year, I heard the commentary around deposits and maybe being able to eke out just a little bit more on the cost side. But any other changes you can make in the funding position or deposit base just acknowledging kind of the cash flows you'll have coming up this year on the bond book or what the kind of net expectation is there?

Yes, I do think we could see a couple of more basis points in Q2. And really, I'd point to our CD portfolio. We do have over 60% of our CDs maturing every quarter. And so in Q2, what we have maturing, we are -- the renewal rates that we've seen, at least early on, are coming in a little bit lower than those maturing late. And so I think if I were to point to any particular line item, I would say, look for maybe a little bit of cost decline in our overall CD portfolio. But beyond that, with the Fed on hold, I do think, for the most part, we might see deposit rates moving sideways for the rest of the year.

Yes. Got it. Okay. And then I guess with the FHLB is now down at 0, should we expect relative kind of stability in the bond book? Are you starting to purchase securities again? Or is that kind of excess cash cow?

Yes. With excess cash that we see building, particularly in the second half of this year, we are evaluating investment strategy. So we do expect to be active in the market buying bonds in the second half of this year. So yes, looking to put that excess cash to work.

Okay. Great. And if I can ask just around you guys have had the dividend pretty stable in the past couple of years, and the payout ratio has obviously dropped pretty drastically over the past 2 years or so. Just can you remind us where you generally like to operate from a dividend payout dividend payout range and just kind of your thoughts on capital deployment going forward?

Yes. I think the -- we -- yes, the dividend payout ratio has dropped significantly. We're very, very pleased to see that. it's Going to continue to trend down. We're looking forward to seeing that drop below 50 very -- in the next couple of quarters. So I think we feel very good about that. And certainly, we've had a lot of discussions about capital. We're going to be building quite a bit of capital when you take in the regulatory relief plus just the position of the balance sheet.

And so Byron and team, Ron, been very active and looking really at rethinking all options, given the amount of capital that's going to be accumulating.

Do you have a general expectation on -- I know it's just a proposal right now, but the kind of capital benefit you could expect if the proposal goes through as written right now?

Yes. We took a look at that. It's -- I understand it's still early in proposed stage. But most of the impact to us would be on the risk-weighted asset side. So we do expect to see some risk-weighted asset relief. Early calculations indicate that, that could be somewhere in the neighborhood of 75 to 80 basis points of CET1 capital ratio for us. And so this rule as proposed does become final. I think we see -- I think we'd see a bump somewhere in the neighborhood of 75 basis points on our risk-weighted ratio. .

[Operator Instructions] Our next question comes from the line of Kelly Motta from KBW.

I would love to follow up. I apologize if I missed it, but when you were discussing the margin in regards to the excess liquidity and the deployment of that. Could you quantify what you consider to be kind of excess cash levels currently on the balance sheet. It's a little tougher to see given the breakout in taxes [indiscernible] taxable, it's baked in with securities. So I'm trying to just get a sense of kind of the dry powder in there.

Yes. I don't know that we have a specific target in mind. More than anything, I think we're looking at the runoff as bonds are maturing and cash builds, and I'll just throw a number of that, somewhere above the $1 billion range in terms of overall cash. I think that's really where we'll be looking to redeploy those cash flows going forward. It could -- that level could ebb and flow, kind of depending on market opportunities, depending on timing of what we see ahead of us and what's going on in the broader balance sheet, but probably somewhere in that $750 million to $1 billion in cash beyond that would be a zone where we would look to reinvest.

Okay. Great. That's helpful. And then not to beat a dead horse about the margin. But understanding that this really remarkable level in Q1 was in part driven by the liability side where things are leveled off kind of from here, it still seems like there's a lot of earning asset expansion, 11 basis points, I believe, this quarter, which bodes well for exit market potentially higher than that 4% by 4Q.

Just wondering, is that 11 basis points sustainable? Any sort of puts or takes there? And is there a way that we should be thinking about that continued cadence and exit margin in '26 and through '27 given it seems like those dynamics are fairly durable. Sorry, I know there's a lot in there.

Yes, sure. The 11 basis points in Q1. One thing to point out with the day count and the way the interest accrued, I would say that helped. That margin is or that boost has increased in Q1. So a little bit of an unwind, we would expect to see just from a day count perspective in 2Q and beyond, the repricing lift that I mentioned earlier, as you say, is durable and will be there. .

In terms of an exit margin, there's a little bit of potential to maybe go past 4%, I wouldn't say we're going to blow through it. Maybe we creep above it a little bit. But those are my expectations, at least at this point.

Okay. And that sustainability of earning asset yields understanding the day count into '27. Is that the correct kind of way to think about it given the long-term tail of the repricing story?

I think it is. Yes, I think it is.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Randy Chesler for any further remarks.

Yes. Thank you, Jonathan, and thank you, everyone, for dialing in today. We appreciate you taking time out of your Friday. We wish everyone a great weekend, and thank you again for joining us.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Good day, and thank you for standing by. Welcome to the Glacier Bancorp Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Randy Chesler, President and CEO of Glacier Bancorp. Please go ahead.

Good morning, and thank you for joining us today. With me here in Kalispell is Ron Copher, our Chief Financial Officer; Tom Dolan, our Chief Credit Administrator; Angela Dose, our Chief Accounting Officer; and Byron Pollan, our Treasurer.

I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined on Page 14 of our press release, and we encourage you to review this section. 2025 was a transformative year for Glacier Bancorp. We successfully closed two strategic acquisitions: Bank of Idaho in April and Guaranty Bank & Trust in October. Growing our footprint in fast-growing Idaho and expanding our Southwest region to include the great state of Texas.

These markets offer strong growth potential and fit seamlessly with our long-term growth strategy. We converted the Bank of Idaho business operating platform in September and plan to convert Guaranty Bank & Trust in February. This was the largest acquisition year in our history with over $4.7 billion acquired, topping our previous record of $4.1 billion in 2021.

We delivered strong financial results in 2025 with significant growth in all key metrics. We also delivered an excellent quarter, continuing our momentum with strong margin expansion, higher loan yields, lower cost of funding and solid high-quality loan growth. The company's total assets exceeded $30 billion in the quarter, ending the year at $32 billion in total assets, which was another record for the company.

Net income was $63.8 million for the quarter, including the $36 million of expenses related to our 2025 acquisitions. Net income for 2025 was $239 million, an increase of $48.9 million or 26% from the prior year net income and was driven by the two acquisitions and our disciplined approach to increasing our net interest margin during the year.

Pretax pre-provision net revenues of $362 million for 2025 increased $107 million or 42% over the prior year. Diluted earnings per share for the quarter was $0.49 per share. Diluted earnings per share for 2025 was $1.99 per share. An increase of $0.31 per share or 18% from the prior year. Net interest income of $266 million for the quarter increased $41 million or 18% from the prior quarter. Net interest income of $889 million for 2025 increased $184 million or 26% from the prior year. The loan portfolio of $21 billion at the end of 2025 increased $2 billion or 11% from the prior quarter.

For 2025, the loan portfolio increased $3.7 billion or 21%. Total deposits of $24.6 billion increased $2.7 billion or 12% from the prior quarter. Total deposits increased $4 billion or 20% during 2025. The net interest margin as a percentage of earning assets on a tax equivalent basis for the quarter was 3.58%. An increase of 19 basis points from the prior quarter and an increase of 61 basis points from the prior year fourth quarter.

The loan yield of 6.09% in the quarter increased 12 basis points from the prior quarter and increased 37 basis points from the prior year fourth quarter. The total earning asset yield of 5% in the quarter increased 14 basis points from the prior quarter and increased 43 basis points from the prior year fourth quarter. The total cost of funding, including noninterest-bearing deposits of 1.52% in the quarter decreased basis points from the prior quarter and decreased 19 basis points from the prior year fourth quarter.

Total noninterest expense of $195 million for the quarter increased $26.8 million or 16% over the prior quarter, primarily due to the increased cost from our two acquisitions. Included in noninterest expense for the quarter was $24 million from the Guaranty Bank & Trust acquisition and $3 million of expenses related to vacating branch locations. Noninterest income for the quarter totaled $40 million, which was an increase of $5 million or 14% over the prior quarter and was up 28% over the prior year fourth quarter. Service charges and fees increased 14% from the prior quarter and increased 20% over the prior year fourth quarter.

In 2025, our efficiency ratio dropped from 66.7% at the beginning of the year to 63%, showing good momentum for continued steady reduction. Credit quality remains at historically low levels. Our nonperforming assets remained low at 22 basis points of total assets with a slight increase from the prior quarter driven primarily by the acquisition of Guaranty Bank & Trust. Net charge-offs were 6 basis points of total loans for the year compared to 8 basis points in the prior year.

Our allowance for credit remains at 1.22% of total loans, reflecting our conservative approach to risk management. We continue to improve our strong capital position with tangible stockholders' equity increasing $609 million or 29% in 2025. Tangible book value per share increased to $21, up 12% year-over-year. And in November, we declared our 163rd consecutive quarterly dividend of $0.33 per share, underscoring our commitment to delivering consistent shareholder returns.

We are very pleased with the performance in the fourth quarter and for the full year 2025. Our exceptional team, expanding footprint, unique business model, strong business performance, disciplined credit culture and strong capital base provide a very solid foundation for future growth.

So that ends my formal remarks. And I would now like the operator to open the line for any questions our analysts may have.

[Operator Instructions] And our first question comes from David Feaster of Raymond James.

I just wanted to -- I want to start on the growth side. Obviously, it was a noisy quarter. We had the Guaranty deal organic growth, you guys laid it out, it was about 1% annualized, a little bit slower than maybe we expected. It looks like it's actually pretty solid in the quarter.

So I just wanted to -- of what you saw on the loan side that maybe kept things a little bit slower this quarter. And then just how you think about growth going forward? And when you'd expect Guaranty to maybe start contributing more meaningfully as all those bankers are trained on the new systems and fully ramped up?

Yes. Yes, there's a lot going on, and we actually feel good about the growth. But let me let Tom fill you in on some of the details there.

Yes, David. Fourth quarter and even first quarter is seasonally slower for us. In the fourth quarter, we exited the ag season, the construction season. So the tailwind provided by those draws earlier in the year, those fees for the ag growers at the end of their season, we saw a lot of line paydowns as they went to harvest. And then not unusual for us to see lower line utilization in the latter part of the year as well.

Looking into 2026, we're looking to low to mid-single digits for the full year. But one thing I want to mention, we are now at a record level of our pipeline early this year. And it's too early to tell whether the increase in the pipeline that we've seen is a surge or if it's sustainable.

In addition to that, a growing piece of the production is related to construction, and that's been evident for the last couple of quarters. And as you know, those don't fund at origination. So it should give us some decent tailwinds heading into the stronger seasonal quarters, second, third quarter. So we could be towards the higher end of that range for 2026.

And then in terms of Guaranty, to answer your other question there, they've hit the ground running. I think they're going to add meaningful production for us, quite frankly, they are starting immediately.

That's great. That's great. And then, Byron, I just wanted to maybe dig back into the margin trajectory going forward. I mean, thus far, it's kind of played out exactly how you've laid it out. I know you've laid out that kind of that 4% threshold by the end of this year. I just wanted to make sure that, that was still on track. And maybe if you could walk us through the NIM walk and what gives you confidence in your ability to achieve that? And how dependent is that 4% level on Fed cuts?

Yes, David, this is Byron. Yes, we've seen tremendous progress in our net interest margin. We've got great momentum, and we continue to see momentum ahead of us. We have a lot of programmatic structural repricing drivers in the balance sheet. That will, to your point, that will continue to lift margin regardless of the Fed. So we're not in any way Fed dependent. And we continue to see growth ahead of us. We do expect to hit 4% at some point later this year, probably second half of second half of '26. So green lights ahead.

Okay. That's great. And then, maybe just touching on the expense side. Obviously, there's a lot of noise just with the Guaranty deal, ongoing savings from [ Boyd ], just wanted to see if you could help us think about the core expense run rate heading into the new year and how you'd expect expenses to trend over the year and maybe some investments that you might have on the horizon just including potential hiring, I mean there is a lot of disruption in the market. Just kind of curious what investments in your thoughts on that.

Yes. Dave, this is Byron here. So our -- just to cover what's happened in Q4. So our reported all-in noninterest expense was $194.6 million, but we had some onetime -- we had M&A of $5.8 million. As we explained in the earnings release, $3 million related to -- three leased branches, and then we had $827,000 reversal of FDIC assessment. So taking those three adjustments into account, our operating core noninterest expense was $186.6 million, which was within the guide, we said $185 million to $189 million. So feel good about that. The run rate for next year, the first quarter, as is traditional, will step up.

We're going to guide $189 million to $193 million, and that represents just a 2% increase compared to Q4. And then it will step down there over Q2, Q3, Q4 as we grow into our expense base. And basically, that's the typical pattern that we exhibit. So -- but in terms of the technology spend, the really good news is that helping us control our noninterest expense as we get more efficient as our divisions, our people embrace that technology.

So it's made a difference certainly in the numerator of the efficiency ratio, but as well, it's helping to help with us with our net interest income, the loans, the commercial loans, what we're doing there, the treasury management services, we continue to pick up good news there as the divisions embrace it more so.

And including what Guaranty Bank & Trust will bring to us. They're very excited about that. So as Randy commented, we've made some pretty good headway, especially if you look at the four consecutive quarters in '25. Each time whether you look at reported or operating, our efficiency ratio continues to improve. And the good news is, we think in this year, we will be able to hit mid-50s, 54% to 55%, which is our traditional range.

In terms of investment in people, David, and there is a lot of disruption. I think one of the interesting things here is and we're looking at all the people. We really kind of whittle funnel the folks, the talent down and find that there's fewer rather than many that we think would be a good fit for our team and add some real significant lift.

And so, really no material increase in expense associated with bringing those people on, it's more individual. And as I said, that's because there's a lot of people. But when you really sort through who has a relationships and who's got a lot to bring to the table, it's actually a smaller number.

And our next question comes from Andrew Terrell of Stephens.

If I could just follow back up on expenses. I appreciate the guide, the $189 million to $193 million in the first quarter, but it sounds like it moderates afterwards. I know you guys will have the core system conversion and some cost saves coming through from Guaranty. But I'm just trying to get a sense of a full year kind of expected expenses if you add it for 2026. Just the 1Q guide is a little bit higher than where consensus is. I'm just trying to make sure we're maybe stepping down appropriately throughout '26.

Yes. So Ron here. I appreciate the question. So Q2 through Q4, I would estimate it will range, and this is for each of the three remaining quarters. $187 million to $192 million. So on a full year guide basis, that shapes up to be -- and I'm talking core. I want to make that very clear. So when I say core, I'm excluding M&A, onetime unusual items, gain or loss on any facility sales, et cetera. But the full year guide would be $750 million to, say, -- excuse me, to $766 million for the full year. Again, that's core operating expense.

Understood. I appreciate it. If I could move over just to margin quickly. You guys buy into your credit, really spot on kind of with where we've talked about margin going. I'd just like to maybe better understand on the origination side? And just as we think about the asset repricing potential, what are you seeing in terms of new origination yields and spreads right now? Have you seen any level of increased competition that's impacted that? Just hoping to get some more comfortability around the pace of loan yield expansion or earning asset yield expansion?

Yes. Let me -- I think Tom can answer a part of that. And then, Byron, if you have things to add, that would be great.

Yes. On the production, we're still seeing good spreads. We're around 300 basis points over the index. We that we utilize. For the fourth quarter, we were a little over 6.8%. We've seen that come up a little bit towards the latter part of December and continuing into January. That's what we're seeing on the production side right now.

Byron, anything to add?

No. I think you covered it. Repricing is another area of lift for us. I think we expect to see north of $2 billion of assets reprice and we'll be gaining 75 to 100 basis points on that balance. So another strong driver there.

Great. I appreciate it. And then last one for me, just I'd be curious, do you guys have the final day 1 tangible dilution for Guaranty, and maybe I missed it, but I think it's all to be fairly dilutive when you guys announced. But your tangible book value was up pretty nicely this quarter, and capital is obviously in a better spot than what you were forecasting as well. So I was just hoping if you had the update there.

Yes. No. That was one of the -- there's many good things about that guaranteed transaction, but one of them was a tangible book value payback period, which was 6 months. So don't see any change to that. So still tracking to that.

Our next question comes from Kelly Motta of KBW.

I'm sorry, I do want to get a few points of clarification on certain pieces of the guide. Ron, I just wanted to make sure on the expenses at the upper end was $766 million. Is that correct?

That's correct.

Okay. So in terms of where you -- it sounds like you're still expecting to get into that mid-50s efficiency by the second half of the year. In terms of where the expenses kind of come out, can you -- I would imagine the upper end of the range would be commensurate with higher revenues. Like is that the right way to think about it? And just kind of any puts and takes of what could push you higher versus lower end?

Yes. So yes, revenues increase. And as we add some talent, you the expenses would expect to go up. And that just -- that's a typical pattern. So I have a complete agreement with that. Jeff, I want to be clear, just on that first quarter, that's typically our higher first quarter because we have the merit pay increases, employment taxes and then it will drop down. And we're doing very well across the divisions, the corporate department with controlling our noninterest expense. And so I think that's really helping with the efficiency ratio. But the net interest income revenue is growing is certainly making a big difference as well as we continue to get towards that. As you said in the second half, get to the mid-50s on the efficiency ratio.

Got it. That's really helpful. And then what was a nice, I guess, surprise or at least relative to my model is your loan yields came in higher and granted there was the contribution from Guaranty. It looks like loan fees were fairly minimal. So as you look ahead, maybe can you provide where new loan pricing is coming on and how we should be thinking about that as being additive to the outlook ahead?

Yes. I think that, as Tom commented on, we're getting a little better margin at origination than we expected. We saw some compression in the tail end of '25. But December was really strong, and that margin, we're getting closer to 3% margin on the new loan pricing. And so whether that continues or not, it's a little difficult to say. It's a little early, but we're encouraged. We're starting off the year with that dynamic, and we'll just see if that trend carries through for the rest of '26.

Got it. That's helpful. And then maybe a last question for Byron is obviously, the cash flows from securities with the treasury ladder maturing has been a nice tailwind. Can you remind us kind of the cadence of securities cash flows as we get through the year?

Sure. We're expecting roughly $425 million of cash flow from the securities book every quarter. And that's a rough estimate quarterly for '26.

Got it. Do you have the blended roll-off yields on that?

That's going to be -- it's going to have a one handle on it. It's going to probably be in the low to mid-1% range.

And our next question comes from Jeff Rulis of D.A. Davidson.

Tom, I wanted to circle back to the -- to your -- the growth conversation. And I think you're loans up 3% organically this year. And I understand kind of the guide for this coming year is at a minimum that level and hope to do better. But was there anything in '25 that you had more kind of credit trimming or balance sheet adjustments, certainly brought on a lot of your busiest acquisition year. So I don't know if there was some balance sheet reshaping.

Just trying to get a sense for -- it feels like the model is in some fantastic markets and repeating 3% might be a little mild. So anything in '25 that you maybe had headwinds versus '26 that releases maybe some of those pressures?

Yes. I think there's two things that are real tailwinds. One is the construction production we've had over the last few quarters, as we know the construction season, that's going to be a tailwind for net growth. Those don't typically fully fund at close. So as we enter the construction season, especially in the northern part of the footprint, that will pick up.

Same thing with the ag book, and then we typically see stronger line utilization towards the middle part of the year. From a headwinds perspective, 2025 was impacted, probably a little more than normal with some early term payouts. We've talked about that on prior calls. We'll just have to watch that to see if that's continuing trend.

And just given the overall CRE market, cap rate is still quite low. NOI is probably better than anticipated. That gives a pretty good investment return for those developers as they hit stabilization on those projects. So the economics around that are still pretty positive for the investor side. So that's just something we'll need to watch to.

Okay. And Randy, I guess the baseline question for you on busiest acquisition here in the history of the bank as you get into the Southwest footprint in terms of more conversations as well as the historical regions that you've been in. How is the M&A outlook from your perspective?

No, I think it's good. And we're having conversations in the Mountain West region, as well as the Southwest. And there's increasing activity there. And I'd say we're being very disciplined and selective as we've always been as more and more things appear. And right now, our focus is on getting the Guaranty Bank & Trust conversion done. We're going to do that in mid-February. And really making sure that goes exceedingly well, which we believe it will. And then I think we have a lot of conversations ongoing. We'll see where that will take us. But I think it should be a very good environment for the next couple of years.

We have a follow-up from Andrew Terrell of Stephens.

Just a couple of quick questions around the margin. Byron, I think you said it was a little north of $2 billion for repricing assets in 2026. Do you have a -- can you confirm that? Do you have a comparable figure for 2027? And then separately, I was going to ask, you're getting close to the end on the FHLB balances. Do the rest of those come off in the first part of 2026. And then with some of the excess cash flow you're generating, what should we think about in terms of uses of that? Does it go back into the bond book? Is there anything else that needs to come off in terms of higher cost funding? Just a couple of the moving pieces there?

Sure. In terms of the repricing, Andrew, I don't have the '27 number in front of me. I can look that up and get back to you. I think it would be comparable to what we expect in '26, $2 billion, $2.5 billion, somewhere in that neighborhood would likely be repricing in '27. In terms of the FHLB paydown, we expect to complete the payoff of our FHLB advances later in the first quarter. I think mid-March is the payoff of that. And so that will be great to see the path of that higher cost debt. And that's been a big part of our margin recovery story as well.

And that will be funded with securities cash flow with the elevated cash flow that we noted earlier coming off of the securities portfolio perfectly sufficient to fund that payoff. So -- and once we pay off that remaining $440 million, that's pretty much it in terms of our wholesale funding that's left.

Yes. And so it just probably gets put back into the bond book at that point, the excess cash flows?

Exactly right. Yes. We're looking at strategies for later this year to what to do to redeploy that cash that would build.

And we have a follow-up from David Feaster of Raymond James.

I wanted to circle back to Guaranty and just kind of get a sense of how that integration has gone so far. Going into a new market can be very difficult and Texas isn't easy, but I know that's a market that you know well or Andy. I suspect it's pretty limited disruption just given, this is a new division that you are creating, no real branch changes or anything like that?

And again, Tom, I appreciate the commentary that they're already starting to contribute. But I just wanted to get an early read on the integration now that we're a few months in post close and kind of what's you're most excited about with them at this point?

Sure. Yes. I mean to start with our model, we keep the name. It's a 100-year-old bank in terms of minimizing disruption. We've -- we keep the people, we have seen leadership in place. And so that is very, very helpful compared to some of the other transitions ongoing in the market down there. We think that we're extremely well positioned with customers and employees.

So that part, just setting the stage with the model is very, very helpful and positive from our standpoint. It's been a great fit. I think we've noticed that from the beginning and talked about that. The culture fit certainly on the credit side. Tom has done a lot of work and it's a very good fit. So it looks very much like a seamless handoff. They're integrated into the credit system right now. And we're very, very mindful of making sure that they have all the tools they need to succeed.

In terms of being excited about it. I mean, it's -- the franchise has been and still is extremely well positioned in that market. They've got a great legacy base in East Texas with the Mount Pleasant as the centerpiece there. But a lot of very, very good markets. And then they're exposed to some very strong growth markets with very good teams in place. So Dallas-Forth Worth, College Station, Houston, Austin. And so I think the opportunity, and they're really just have scratched the surface there. That's probably the most exciting thing is as we give them some sophisticated tools, so we're giving them our automated commercial loan processing system. That's going to create some productivity, some improvement in how we can serve customers there.

And then a much bigger balance sheet, so an ability to take care of customers, bring back relationships that had to be handed off from a $3 billion bank to a $30 billion bank. So all those things, David, we think will be really, really nice tailwinds going forward.

Okay. That's great. And then I don't want to beat a dead horse on the margin. You guys have been very clear on the near-term dynamics. But if I think longer term, just given the strength of your core deposit base, you've historically operated. You had a pre-pandemic, you had a margin in the mid-4% realm. I just wanted to get your thoughts on if that's still an achievable level, again, based on the back book repricing and securities tailwinds even into 2027, would you still expect fairly robust margin expansion in '27?

Yes, David, we do see continued expansion, whether we get to 4.5%. Let's get to 4% first and then work and build on that progress. But just from what I see ahead of us right now, yes, I could see us growing beyond that 4% in '27 absolutely.

And our next question comes from Matthew Clark of Piper Sandler.

I just want to clarify the expense run rate for the upcoming quarter, the guide. Did you say $189 million to $190 million or $189 million to $193 million?

$193 million, Ron here, $189 million to $193 million.

Got it. Okay. And then on your deposit costs this quarter, they ticked up a little bit here. I'm assuming that's from the guaranteed deal? Or was there something else going on? And I assume we're going to see deposit cost trend back down from here, though?

That's exactly right. Yes. The uptick that you saw was from the acquisition, and we do expect to see declining deposit costs from here.

Okay. Got it. And then on the -- for the cost saves, did you get any cost -- I think it was expected to be a little over $17 million from Guaranty. Did you get any of the cost saves out this quarter? Or is it all on the come beginning in 1Q?

Yes, Ron here, it will really take hold after the conversion. And so that's really where it is. We've been just doing a lot of things, as Randy pointed out, but they will show up. They've been very, very mindful of that, and we're working with them back to Randy's point, Integration, coordination going very well.

Good. Okay. And then on the net charge-offs this quarter. I know we're splitting hairs at 12 basis points, but up from the prior quarter. Anything unusual in that in those charge-offs, anything outsized? Or is that kind of more normal, you think?

No, more normal and typical for year-end cleanup. We typically -- as we continue to scrub the portfolio, if there's an opportunity to exit a credit, we'll do it. So it's normal. Nothing outsized, nothing unusual.

This concludes our question-and-answer session. I would like to turn it back to Randy Chesler for closing remarks.

Very good. Thank you, Didi, and thank you, everybody, for dialing in today. Very excited about the trends here and the growth into '26. So we appreciate everybody dialing in. Have a great Friday and a great weekend. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, everyone, and welcome to the Glacier Bancorp Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

Now it's my pleasure to turn the call over to Glacier Bancorp's President and CEO, Randy Chesler. Please go ahead.

Good morning, and thank you for joining us today. With me here in Kalispell is Ron Copher, our Chief Financial Officer; Tom Dolan, our Chief Credit Administrator; Angela Dose, our Chief Accounting Officer; and Byron Pollan, our Treasurer. I'd like to point out that the discussion today is subject to the same forward-looking considerations outlined starting on Page 13 of our press release, and we encourage you to review this section.

We delivered another excellent quarter, continuing our momentum with strong margin expansion, higher loan yields, lower deposit costs and solid high-quality loan growth. We also completed the core conversion of the Bank of Idaho with assets of approximately $1.4 billion. And shortly after quarter end, we successfully closed the acquisition of Guaranty Bank & Trust, adding $3.1 billion in assets and expanding our presence in the Southwest.

Bank of Idaho was successfully folded into 3 of our existing divisions: Citizens Community in Pocatello; Mountain West in Boise; and Wheatland Bank in Eastern Washington. The Bank of Idaho brought us a terrific team of lenders and staff, as well as excellent customer relationships.

The Guaranty transaction marks our first entrance into the State of Texas, and we're excited about the long-term opportunities this brings. Our focus now is on delivering a flawless conversion in the first quarter of 2026 and making sure we have happy employees and customers.

For the third quarter, Glacier Bancorp reported net income of $67.9 million or $0.57 per diluted share. The third quarter net income represents an increase of 29% from the prior quarter and reflects a 33% increase in net income compared to the same quarter last year. Pretax pre-provision net revenues of $250 million for the first 9 months of the current year increased $77.1 million or 45% over the prior year first 9 months. Our loan portfolio grew $258 million to $18.8 billion or 6% annualized from the prior quarter. Commercial real estate continues to be a key driver of loan growth.

Deposits also grew, reaching $22 billion, up 4% annualized from the last quarter. Noninterest-bearing deposits grew again this quarter, increasing 5% annualized and now representing 31% of total deposits. We reported net interest income of $225 million, up $18 million or 9% from the prior quarter and up $45 million or 25% from the same quarter last year.

Our net interest margin on a tax adjusted basis expanded to 3.39%, up 18 basis points from the prior quarter and up 56 basis points year-over-year. This marks our seventh consecutive quarter of margin expansion, reflecting the strength of our loan portfolio repricing, our ability to get good margin on new loans and our continued focus on managing funding cost. The loan yield of 5.97% in the current quarter increased 11 basis points from the prior quarter and increased 28 basis points from the prior year third quarter. The total earning asset yield of 4.86% in the current quarter increased 13 basis points from the prior quarter and increased 34 basis points from the prior year third quarter.

Total cost of funding declined to 1.58%, down 5 basis points from the prior quarter, as we reduced higher-cost Federal Home Loan Bank borrowings by $360 million. Core deposit costs decreased in the quarter to 1.23% from 1.25% in the prior quarter. Noninterest expense was $168 million, up $13 million or 8% from the second quarter, primarily due to increased costs from acquisitions.

Noninterest income totaled $35 million in the current quarter, up $2.4 million or 7% from the prior quarter and up 2% year-over-year. Service charges and fees increased 5% from the prior quarter, while gains on loan sales increased 18% from the prior quarter. Our efficiency ratio remained at 62%, down from 65% a year ago with good momentum for continued steady reduction.

Credit quality remains very strong. Our nonperforming assets remain low at 0.19% of total assets. And net charge-offs were $2.9 million for the quarter, or 3 basis points of loans. Our allowance for credit remains at 1.22% of total loans, reflecting our conservative approach to risk management. We continue to maintain a strong capital position, with tangible stockholders' equity increasing $304 million or 14% in the current year. Tangible book value per share increased to $20.46, up 8% year-over-year. And we declare our 162nd consecutive quarterly dividend of $0.33 per share, underscoring our commitment to delivering consistent shareholder returns.

We are very pleased with our performance this quarter. Our expanding footprint, unique business model, strong business performance, disciplined credit culture and strong capital base provide a solid foundation for future growth.

That ends my formal remarks. And I would now like the operator to open the line for any questions that our analysts may have.

[Operator Instructions] One moment for our first question that comes from the line of Jeff Rulis with D.A. Davidson.

You guys, on the margin, you did note the 7 consecutive quarters of expansion. This quarter's was the largest sequential of all of them. I won't read into kind of the lumpiness of that, I suppose, but a good sign, nonetheless. You guys have really guided very well on the trend on that front. Maybe just catch us up on where you think you see it headed in light of September's cut and potentially, a couple more this -- through the end of the year? That would be great on the visibility front.

Jeff, this is Byron. Yes, it has been great to see the continued improvement in our margin. And I would say those repricing drivers in our balance sheet that we've discussed, they remain in place. And so we do see continued growth ahead of us in terms of our outlook. For Q4, we anticipate that, that will grow. Our margin, additional 18 to 20 basis points in the fourth quarter, that does include the impact of Guaranty.

I know a lot of folks will be interested in our 2026 outlook. I don't have specifics for you there. We're just now starting our budgeting cycle for 2026. But broadly speaking, what I can say is that we do expect to see continued margin growth throughout the year. I would say, though, that the pace of quarterly increase is likely to moderate throughout next year. So hopefully, that gives you some color for where we're headed. We do see continued growth.

Just to refine that, Byron, when you said the margin growth throughout the year, you're mentioning additionally in '26, but not specifically. Is that what you were referring to?

Exactly right. Yes. I don't have a specific guide for you on '26. I think we need to get to our budgeting cycle first to really refine that expectation. But from where we sit right now, we do see continued growth throughout the year. But quarter-to-quarter, I could see the pace of growth starting to moderate a little bit.

Understood. And Randy, we are early goings in the Texas market, but interested in the reception there and how potentially, your view of finding further partnerships in Texas and Oklahoma, if that's -- if you got any update there, if you're just as encouraged or less, more? Just interested in that feedback so far. Again, very early, but notable anyway.

Yes. No, absolutely. First, I'd say, I think Guaranty may be the best cultural fit of any acquisition we've done in the last 10 years. Very, very good fit. Our focus right now is on getting Guaranty converted in 1Q and making sure that goes extremely well. I will tell you, there's conversations already. We'll have plenty of interested banks who would like to have a conversation when we're ready. Our job one right now is making sure we get through the conversion in 1Q and do it really, really well, make sure our customers are happy, employees are happy. And then like I said, we'll have plenty of banks to talk to.

Got you. Maybe one last housekeeping, if I could squeeze it in. The tax rate seemed a little elevated. I don't know if that's a factor of kind of merger cost, but if you could just point us to maybe a good rate going forward?

Yes, Jeff, Ron here. It is a function of, largely, the merger-related expenses, some of which are nondeductible. And I would tell you that third quarter rate, I would use that as well for fourth quarter.

Okay. And Ron, are you -- is that an assumption of additional merger costs or just more of a core rate to match third quarter?

We'll have some more merger costs as well, but it's -- I think it's a pretty good rate to go with.

One moment for our next question that comes from the line of David Feaster with Raymond James.

Maybe just on the growth side. I mean loan growth has been solid, kind of remained in that mid-single digit realm. Just wanted to get a sense of how demand is trending, how the pipeline is shaping up and you're backfilling that production? And then just any comments on the competitive landscape as well? And I mean, we're hearing more competition, especially on the pricing side, maybe a bit more on the structure as well. But just again, I wanted to get a sense of your thoughts on the loan growth side and how that competitive landscape is shaping up.

Yes, David, this is Tom. Yes, third quarter was another good quarter for us. Typically, second and third quarter are seasonally stronger for us, a little bit less so in fourth and first quarter. I think we expect that a little bit. But from a pipeline perspective, we continue to see consistent pull-through. We continue to see consistent build back. And it is really fairly consistent throughout the footprint, too.

And I think the -- from a competition standpoint, it's a little bit geographic-specific. In some of the larger markets, we'll see more pricing competition, a little bit less so in markets where we have more of a controlling market share. We're -- certainly, the types of deals that we go after, just core Main Street lending. We're not really seeing competitors stretch on the structure side, which is encouraging. And that's certainly not something that we would do. So it tends to be more pricing related.

Okay. And maybe just staying on credit broadly. I mean, credit is still pretty benign for you all, especially just in the government. The increase that you guys saw in nonaccruals, all government guaranteed. Is there anything on the credit front that you're seeing at this point or watch more closely? Or is there anything specific within the small business space that you're seeing notable pressures?

The only industry that I would say is a little bit outsized is probably the ag sector. Hard grain prices, hay prices are still quite depressed. We're faring quite well through this. I think our banks do a good job of securing those assets with -- certainly more hard assets than crops. And so I think that gives the flexibility of both us and the borrower to work through these cycles. And certainly, our ag lenders have a tremendous amount of experience and have seen cycles like this over and over again.

But outside of that, David, there's really no specific geography or industry segment that's showing an outsized level of risk. We saw a little bit of an increase this quarter, similar to last quarter. I think we're just continuing to see more normalization from the historic lows that we were showing for the last couple of years.

Okay. And then maybe last one for me, just maybe a bit higher level, conceptual. Like, I mean, you look back, I mean, there's obviously -- you guys have done a great job driving the margin expansion, right? And there is a huge tailwind just from the remix in your pricing side. And then again, obviously, organic loan and deposit growth is, again, accretive to the margin as well.

You look -- pre-pandemic, right? I mean, you guys were consistently operating well north of 4%. Yes, is that -- just in this kind of world, is that still a reasonable target? I mean, you guys have continued to march your way towards that, but is that a reasonable target that we could hit in some time in the foreseeable future? Is that -- just kind of curious, your thoughts on that?

Yes, David, I do think we can get back to that 4% threshold. It's a matter of timing. I think it's really a matter of when, not if. I don't have specific timing for you. It wouldn't surprise me towards the end of next year if we see a full handle on our net interest margin.

Now a lot of things could impact that between here and there. What happens with our loan growth and deposit growth, what's the Fed doing and shape of the curve, all of those things are going to influence that longer-term margin. But I do see the potential to get there in the future.

Our next question comes from the line of Matthew Clark with Piper Sandler.

I want to start on the deposit cost side. Just -- if you could give us the spot rate on deposits at the end of September? And just give us a sense for what kind of beta you think you can achieve with this last rate cut that we just got and subsequent rate cuts?

Our spot deposit cost on September 30 was 1.22%. In terms of our beta, to this point, we've been able to achieve a down rate beta somewhere in the mid-teens with some amount of lag there. Our deposit cost doesn't react immediately to a rate cut. It takes us a little time to kind of work into that, call it, 15% deposit beta. With the addition of Guaranty, their deposit base has a slightly higher beta. So if we were 15%, I think somewhere going forward with a combination of Glacier and Guaranty, maybe that pushes us up another couple of percent. So somewhere in the range of, call it, 15% to 20% would be my expectation for our down rate beta going forward.

Okay. And then the other one for me, just around the expense run rate and your updated guidance there, whether or not that's changed since last quarter with Guaranty now in the fold at the start of the fourth quarter. I don't know if you want to -- it sounds like you're still budgeting for next year, so I don't know if you want to offer up anything in the first quarter, but I assume there's some seasonality there?

Yes. Let's -- Ron here. Thank you for the question. Yes, well, we're budgeting, so I'm just going to limit the discussion to the third quarter, I want to touch on that and then go towards the fourth quarter. So in the third quarter, we finished -- reported noninterest expense, $167.8 million. That includes $7 million in acquisition-related expense and $800,000 we incurred for a fixed asset write-down related to a branch consolidation in one of our Montana markets.

And I want to remind folks that the core noninterest expense includes merger-related expenses, other onetime unusual items. So taking those adjustments into account, our core noninterest expense was flat at $160 million, right in the midpoint of the guide of $159 million to $161 million that was shared on the last quarter's call.

And then moving into the fourth quarter. Just looking at Bank of Idaho, we had a full 3 months of expense from them versus 2 months in the prior quarter. So Bank of Idaho, projected to add $9 million to $10 million in that third quarter, came in just about $9 million, the low end of that guide. And we expect that to occur. Bank of Idaho impact for the fourth quarter will be just right around that $9 million number.

So then with the acquisition of Guaranty Bank on October 1 versus -- we think it would be October 31 -- we're now going to have a full 3 months of expense from Guaranty, and this will cause a step up in our core noninterest expense. It will add $21 million to $22 million to core noninterest expense in the fourth quarter. But in addition, because of purchase accounting, we're going to have $3 million of amortization expense for a core deposit intangible that we had to record as we would on any acquisition.

So in the fourth quarter, when you look across it and put it all together, we're expecting a range of $185 million to $189 million. And again, that includes Guaranty Bank. So -- but collectively, I just want to speak very highly of our bank divisions, corporate department. They've done very well in limiting, controlling their expenses. We do continue to take a cautious approach in hiring and spending in general. You still got higher levels of market volatility, et cetera. Let me open it up for questions.

One moment for our next question. And it's from the line of Andrew Terrell with Stephens.

Maybe I'll just start back there on expenses. Ron, I really appreciate the guidance on 4Q with all kind of the moving pieces. Just understanding that the core system conversion for Guaranty until the first quarter of '26, I'm assuming the $185 million to $189 million guide for the fourth quarter doesn't incorporate much in terms of cost save. And question being, should we expect some moderation of that $185 million to $189 million going into 2026, just as we experience the core system conversion and get some cost saves?

Yes, we will have in the beginning of the first quarter, again, largely related to after the conversion, that's when the cost saves really start to kick in. And as we modeled, we're modeling 20% reduction in noninterest expense cost saves. 50% of that, we will achieve in '26. The other 50% will be in '27. And so as I mentioned earlier, we're still beginning, I should say, in the budgeting process, but there will be some moderation.

Yes. Got it. Okay. I appreciate it. And if I could go back to just the margin commentary briefly for Byron. I appreciate all the color there. I specifically wanted to ask about the comment of just less margin expansion sequentially throughout '26 versus what you've experienced this year. And you guys have benefited from a few things this year. It's -- M&A has helped, the FHLB deleverage is up significantly, and I think that slows down or kind of ends in 1Q of next year, but then the fixed asset repricing. And I'm curious, the comments on slower margin expansion next year, is that mostly reflective of less FHLB deleverage, potential less M&A-related expansion, but asset repricing trends staying intact? Or do you expect relatively less asset repricing benefits as well?

I would say, for the most part, it's the FHLB deleveraging. As you point out, that -- we really finished that by the end of the first quarter. And so we don't -- that extra boost or pop that we get from paying down high-cost corporate funding, that will end in Q1. But also on the fixed asset repricing, we still see -- from a balance perspective, we still see that asset repricing is there. I would say from a rate perspective, the 5-year point of the curve has come down some. And so that's also kind of playing into and influencing that comment I made earlier, where we're seeing less lift. I think we'll see less repricing lift just because of the -- where that 5-year point in the curve is right now. It could change, of course.

Yes. Fair enough. Okay. And last one just for Randy. I appreciate your comments on the Texas market and how well the Guaranty acquisition has gone so far. I wanted to ask about your comments. I know the near-term priority is getting everything integrated from Guaranty, but it sounds like conversations maybe could be picking up. And I think your comments were specific to Texas, but I'm curious just on the overall M&A strategy going forward. Should we expect there is more of an emphasis in the Texas market as you build out scale there? Or are you equally as focused kind of legacy Mountain West franchise in Texas? I guess, is one more in a row? Or would you expect to grow more in one than the other?

Yes. So I'd say overall, M&A, I think what we offer is becoming even more attractive to sellers, especially with some of the larger banks purchasing banks in our market. We think that's very, very positive for us, so we offer something that's very different and very attractive to a lot of sellers.

I don't think we can put an emphasis on Texas over the Mountain West, the Southwest over the Mountain West. It's just getting back to -- we have a lot of optionality with very, very good sellers across that entire area. So we don't -- we're not really prioritizing one area over the other. Like I said, our focus is to do a great job on the conversion, and then we'll see where the conversations take us.

Our next question is from Kelly Motta with KBW.

Maybe one for Byron. I think the guidance for margin last quarter was 15 to 17 basis points, plus another 5 to 7 from Guaranty. It seems like at least near term, it might be a little bit lower. Can you provide any context for the color around that? Wondering if Guaranty is maybe contributing less or there's less accretion income? Any color would be helpful.

Sure. We have an estimate in there for the loan marks and the purchase accounting accretion. So we have an estimate in there. I think it may be a little bit more modest than it was prior quarter. Also, kind of back to that 5-year point of the curve, our repricing is just a little bit softer. And also, just looking at the rate cuts -- and I mentioned that lag on the deposit side. So the timing of the cuts and the reaction of our deposit base can create a little bit of noise during the quarter. And so put that all together, thought it might be good to just kind of rein in just a little bit, that margin cut. 18 to 20 is still a very strong quarter for us.

Got it. That's really helpful. Another question that maybe you can humor me on, this nondepository financial institution lending. From what I can see in the call reports, it looks like it's almost negligible, where you guys -- what your exposure is. Just wondering if that's the case? And if you could provide -- just a moment -- credit has been such a strong selling point of Glacier, just the types of commercial credits you look at and kind of what gives you comfort with the outlook ahead?

Sure, Kelly, it's Tom. And you're right on the assessment of the nondepository financial institution. It's immaterial. And Kelly, it's just -- it's not a business line for us, neither is syndicated or any other indirect type of business. With our division model, kind of answer the last part of your question. At the end of the day, we're a collection of community banks, we're Main Street lenders that deal with local businesses and consumers. And we just haven't had the appetite really at all for syndicated indirect, nor do we foresee exploring it. And so I think when we look at the nature of the pipeline, it really falls right in line with how the footprint is laid out. Good, strong local borrowers, Main Street lenders that we've had relationships with for years.

Thank you, Tom. I'll step back.

[Operator Instructions] All right. And our last question comes from the line of Tim Coffey with Janney Montgomery Scott.

Tom, if I could follow on that last question Kelly was asking. I mean, we've seen a handful of missteps in the last couple of weeks from some banks. And I was wondering if, in general, you could discuss kind of the processes and checks you have in place at Glacier to ensure that borrowers are doing what they're supposed to be doing?

Yes, sure. Well, first of all, it begins with knowing your customer. And the other thing is the loans that we have on our books, we're in control over. So that kind of goes back to that indirect comment or purchase participations or syndication. That's just isn't really a space that we play in. We want to be directly in control of the relationship.

And then I think to answer the latter part of your question, we have a credit administration function in every single one of our divisions. And that's proximate to the Street, proximate to the customers. They're in the communities, where we meet with our borrowers on a regular basis, typically minimum on a quarterly basis for our larger borrowers. But we're also seeing these borrowers at community events and sporting events.

And so it goes back to just the true core community bank-type lending. And then from a more formal perspective, we're very good and deliberate with our covenant structure and our new originations, our ongoing annual reviews of both -- each of the division banks and then also an ongoing regular review of the portfolio at large. And so I think when you just encapsulate all those things together, we really have a strong understanding of what's going on with our borrowers.

All right. That's great. All my other questions have been asked and answered.

Thank you so much. And this will conclude our Q&A session, and I will pass it back to Randy for concluding comments.

All right. Thank you, Carmen. And I want to thank everyone for dialing in today and joining our call. Have a great Friday and a great weekend.

Thank you. And this concludes our conference. Thank you all for participating, and you may now disconnect.