10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

FORM 10-Q

______________________________________________________________________

ý Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2013

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________             

Commission file number 000-18911

______________________________________________________________________

GLACIER BANCORP, INC.

(Exact name of registrant as specified in its charter)

 ______________________________________________________________________

MONTANA	81-0519541
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
49 Commons Loop, Kalispell, Montana	59901
(Address of principal executive offices)	(Zip Code)

(406) 756-4200

Registrant’s telephone number, including area code

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

______________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    No  ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	ý	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting Company	¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ¨  Yes    ý  No

The number of shares of Registrant’s common stock outstanding on July 23, 2013 was 73,590,155. No preferred shares are issued or outstanding.

TABLE OF CONTENTS

	Page
Part I. Financial Information
Item 1 – Financial Statements
Unaudited Condensed Consolidated Statements of Financial Condition – June 30, 2013 and December 31, 2012	3
Unaudited Condensed Consolidated Statements of Operations – Three and Six Months ended June 30, 2013 and 2012	4
Unaudited Condensed Consolidated Statements of Comprehensive Income – Three and Six Months ended June 30, 2013 and 2012	5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity – Six Months ended June 30, 2013 and 2012	6
Unaudited Condensed Consolidated Statements of Cash Flows – Six Months ended June 30, 2013 and 2012	7
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3 – Quantitative and Qualitative Disclosure about Market Risk	62
Item 4 – Controls and Procedures	62
Part II. Other Information	62
Item 1 – Legal Proceedings	62
Item 1A – Risk Factors	62
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3 – Defaults upon Senior Securities	62
Item 4 – Mine Safety Disclosures	63
Item 5 – Other Information	63
Item 6 – Exhibits	63
Signatures	64

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition

(Dollars in thousands, except per share data)	June 30, 2013			December 31, 2012
Assets
Cash on hand and in banks	$	105,272		123,270
Interest bearing cash deposits and federal funds sold	27,184			63,770
Cash and cash equivalents	132,456			187,040
Investment securities, available-for-sale	3,721,377			3,683,005
Loans held for sale	95,495			145,501
Loans receivable	3,673,456			3,397,425
Allowance for loan and lease losses	(130,883		)	(130,854	)
Loans receivable, net	3,542,573			3,266,571
Premises and equipment, net	161,918			158,989
Other real estate owned	40,713			45,115
Accrued interest receivable	43,593			37,770
Deferred tax asset	35,115			20,394
Core deposit intangible, net	7,262			6,174
Goodwill	119,509			106,100
Non-marketable equity securities	49,752			48,812
Other assets	47,053			41,969
Total assets	$	7,996,816		7,747,440
Liabilities
Non-interest bearing deposits	$	1,236,104		1,191,933
Interest bearing deposits	4,122,093			4,172,528
Securities sold under agreements to repurchase	300,024			289,508
Federal Home Loan Bank advances	1,217,445			997,013
Other borrowed funds	8,489			10,032
Subordinated debentures	125,490			125,418
Accrued interest payable	3,824			4,675
Other liabilities	54,345			55,384
Total liabilities	7,067,814			6,846,491
Stockholders’ Equity
Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding	—			—
Common stock, $0.01 par value per share, 117,187,500 shares authorized	736			719
Paid-in capital	672,035			641,737
Retained earnings - substantially restricted	232,849			210,531
Accumulated other comprehensive income	23,382			47,962
Total stockholders’ equity	929,002			900,949
Total liabilities and stockholders’ equity	$	7,996,816		7,747,440
Number of common stock shares issued and outstanding	73,564,900			71,937,222

See accompanying notes to unaudited condensed consolidated financial statements.

3

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months ended			Six Months ended
(Dollars in thousands, except per share data)	June 30, 2013		June 30, 2012	June 30, 2013	June 30, 2012
Interest Income
Residential real estate loans	$	7,026	7,495	14,286	15,279
Commercial loans	29,865		30,430	58,497	61,471
Consumer and other loans	7,909		8,813	15,773	17,983
Investment securities	17,351		17,454	31,550	37,343
Total interest income	62,151		64,192	120,106	132,076
Interest Expense
Deposits	3,474		4,609	7,186	9,563
Securities sold under agreements to repurchase	210		303	437	602
Federal Home Loan Bank advances	2,648		3,218	5,299	6,599
Federal funds purchased and other borrowed funds	54		61	106	123
Subordinated debentures	799		853	1,615	1,755
Total interest expense	7,185		9,044	14,643	18,642
Net Interest Income	54,966		55,148	105,463	113,434
Provision for loan losses	1,078		7,925	3,178	16,550
Net interest income after provision for loan losses	53,888		47,223	102,285	96,884
Non-Interest Income
Service charges and other fees	11,818		11,291	22,404	21,783
Miscellaneous loan fees and charges	1,153		1,113	2,242	2,059
Gain on sale of loans	7,472		7,522	16,561	14,335
Gain on sale of investments	241		—	104	—
Other income	2,538		1,865	4,861	3,952
Total non-interest income	23,222		21,791	46,172	42,129
Non-Interest Expense
Compensation and employee benefits	24,917		23,684	49,494	47,244
Occupancy and equipment	5,906		5,825	11,731	11,793
Advertising and promotions	1,621		1,713	3,169	3,115
Outsourced data processing	813		788	1,638	1,634
Other real estate owned	2,968		2,199	3,852	9,021
Federal Deposit Insurance Corporation premiums	1,154		1,300	2,458	3,012
Core deposit intangibles amortization	505		535	991	1,087
Other expense	10,597		10,146	18,582	18,329
Total non-interest expense	48,481		46,190	91,915	95,235
Income Before Income Taxes	28,629		22,824	56,542	43,778
Federal and state income tax expense	5,927		3,843	13,072	8,464
Net Income	$	22,702	18,981	43,470	35,314
Basic earnings per share	$	0.31	0.26	0.60	0.49
Diluted earnings per share	$	0.31	0.26	0.60	0.49
Dividends declared per share	$	0.15	0.13	0.29	0.26
Average outstanding shares - basic	72,480,019		71,928,697	72,224,263	71,921,885
Average outstanding shares - diluted	72,548,172		71,928,853	72,282,104	71,921,990

See accompanying notes to unaudited condensed consolidated financial statements.

4

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

	Three Months ended					Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012		June 30, 2013		June 30, 2012
Net Income	$	22,702		18,981		43,470		35,314
Other Comprehensive (Loss) Income, Net of Tax
Unrealized (losses) gains on available-for-sale securities	(56,256		)	13,214		(55,685	)	23,232
Reclassification adjustment for gains included in net income	(241		)	—		(104	)	—
Net unrealized (losses) gains on securities	(56,497		)	13,214		(55,789	)	23,232
Tax effect	21,977			(5,140	)	21,702		(9,037	)
Net of tax amount	(34,520		)	8,074		(34,087	)	14,195
Unrealized gains (losses) on derivatives used for cash flow hedges	12,810			(9,051	)	15,562		(5,939	)
Tax effect	(4,983		)	3,521		(6,055	)	2,310
Net of tax amount	7,827			(5,530	)	9,507		(3,629	)
Total other comprehensive (loss) income, net of tax	(26,693		)	2,544		(24,580	)	10,566
Total Comprehensive (Loss) Income	$	(3,991	)	21,525		18,890		45,880

See accompanying notes to unaudited condensed consolidated financial statements.

5

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months ended June 30, 2013 and 2012

(Dollars in thousands, except per share data)	Common Stock			Paid-in Capital		Retained Earnings Substantially Restricted		Accumulated Other Compre- hensive Income
	Shares	Amount								Total
Balance at December 31, 2011	71,915,073	$	719	642,882		173,139		33,487		850,227
Comprehensive income	—	—		—		35,314		10,566		45,880
Cash dividends declared ($0.26 per share)	—	—		—		(18,700	)	—		(18,700	)
Stock issuances under stock incentive plans	16,313	—		233		—		—		233
Stock-based compensation and related taxes	—	—		(1,459	)	—		—		(1,459	)
Balance at June 30, 2012	71,931,386	$	719	641,656		189,753		44,053		876,181
Balance at December 31, 2012	71,937,222	$	719	641,737		210,531		47,962		900,949
Comprehensive income (loss)	—	—		—		43,470		(24,580	)	18,890
Cash dividends declared ($0.29 per share)	—	—		—		(21,152	)	—		(21,152	)
Stock issuances under stock incentive plans	172,422	2		2,653		—		—		2,655
Stock issued in connection with acquisition	1,455,256	15		28,275		—		—		28,290
Stock-based compensation and related taxes	—	—		(630	)	—		—		(630	)
Balance at June 30, 2013	73,564,900	$	736	672,035		232,849		23,382		929,002

See accompanying notes to unaudited condensed consolidated financial statements.

6

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012
Operating Activities
Net income	$	43,470		35,314
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,178			16,550
Net amortization of investment securities premiums and discounts	39,846			29,212
Federal Home Loan Bank stock dividends	—			(5	)
Mortgage loans held for sale originated or acquired	(527,853		)	(500,694	)
Proceeds from sales of mortgage loans held for sale	616,180			547,893
Gain on sale of loans	(16,561		)	(14,335	)
Gain on sale of investments	(104		)	—
Stock-based compensation expense, net of tax benefits	607			236
Excess tax deficiencies from stock-based compensation	188			—
Depreciation of premises and equipment	4,742			4,943
Loss on sale of other real estate owned and writedown	987			6,814
Amortization of core deposit intangibles	991			1,087
Net increase in accrued interest receivable	(3,673		)	(2,147	)
Net decrease in other assets	1,584			1,001
Net decrease in accrued interest payable	(1,007		)	(749	)
Net increase in other liabilities	3,406			8,577
Net cash provided by operating activities	165,981			133,697
Investing Activities
Proceeds from sales, maturities and prepayments of investment securities, available-for-sale	1,165,981			871,472
Purchases of investment securities, available-for-sale	(1,224,241		)	(1,154,990	)
Principal collected on loans	513,255			441,318
Loans originated or acquired	(650,378		)	(478,541	)
Net addition of premises and equipment and other real estate owned	(3,167		)	(5,501	)
Proceeds from sale of other real estate owned	11,066			18,073
Net sale (purchase) of non-marketable equity securities	60			(671	)
Net cash received from acquisitions	12,123			—
Net cash used in investment activities	(175,301		)	(308,840	)
Financing Activities
Net (decrease) increase in deposits	(261,461		)	161,056
Net increase in securities sold under agreements to repurchase	10,516			208,141
Net increase (decrease) in Federal Home Loan Bank advances	214,965			(163,017	)
Net (decrease) increase in federal funds purchased and other borrowed funds	(1,471		)	50
Cash dividends paid	(10,099		)	(18,700	)
Excess tax deficiencies from stock-based compensation	(188		)	—
Proceeds from stock options exercised	2,474			—
Net cash (used in) provided by financing activities	(45,264		)	187,530
Net (decrease) increase in cash and cash equivalents	(54,584		)	12,387
Cash and cash equivalents at beginning of period	187,040			128,032
Cash and cash equivalents at end of period	$	132,456		140,419

See accompanying notes to unaudited condensed consolidated financial statements.

7

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows (Continued)

	Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	15,648	19,391
Cash paid during the period for income taxes	13,660		8,221
Sale and refinancing of other real estate owned	2,507		668
Transfer of loans to other real estate owned	9,889		16,372
Supplemental Disclosure of Non-Cash Investing Activities
Acquisitions
Fair value of common stock shares issued	$	28,290	—
Cash consideration for outstanding shares	11,025		—
Fair value of assets acquired	300,541		—
Liabilities assumed	261,226		—

See accompanying notes to unaudited condensed consolidated financial statements.

8

Glacier Bancorp, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Nature of Operations and Summary of Significant Accounting Policies

General

Glacier Bancorp, Inc. (“Company”) is a Montana corporation headquartered in Kalispell, Montana. The Company provides a full range of banking services to individual and corporate customers in Montana, Idaho, Wyoming, Colorado, Utah and Washington through twelve divisions of its wholly-owned bank subsidiary, Glacier Bank (“Bank”). The Company offers a wide range of banking products and services, including transaction and savings deposits, real estate, commercial, agriculture and consumer loans, mortgage origination services, and retail brokerage services. The Company serves individuals, small to medium-sized businesses, community organizations and public entities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial condition as of June 30, 2013, the results of operations and comprehensive income for the three and six month periods ended June 30, 2013 and 2012, and changes in stockholders’ equity and cash flows for the six month periods ended June 30, 2013 and 2012. The condensed consolidated statement of financial condition of the Company as of December 31, 2012 has been derived from the audited consolidated statements of the Company as of that date.

The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results anticipated for the year ending December 31, 2013.

The Company is a defendant in legal proceedings arising in the normal course of business. In the opinion of management, the disposition of pending litigation will not have a material affect on the Company’s consolidated financial position, results of operations or liquidity.

Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the valuations related to investments and real estate acquired in connection with foreclosures or in satisfaction of loans. For the determination of the ALLL and real estate valuation estimates, management obtains independent appraisals (new or updated) for significant items. Estimates relating to investment valuations are obtained from independent third parties.

Principles of Consolidation

The consolidated financial statements of the Company include the parent holding company and the Bank. The Bank consists of twelve bank divisions, a treasury division and an information technology division. Each of the bank divisions operate under separate names, management teams and directors. The Company considers the Bank to be its sole operating segment as the Bank 1) engages in similar bank business activity from which it earns revenues and incurs expenses, 2) the operating results of the Bank are regularly reviewed by the Chief Executive Officer (i.e., the chief operating decision maker) who makes decisions about resources to be allocated to the Bank, and 3) financial information is available for the Bank. All significant inter-company transactions have been eliminated in consolidation.

On May 31, 2013, the Company completed its acquisition of Wheatland Bankshares, Inc. (“Wheatland”) and its wholly-owned subsidiary, First State Bank, a community bank based in Wheatland, Wyoming. The transaction was accounted for using the acquisition method, and the results of operations of First State Bank have been included in the Company’s consolidated financial statements as of the acquisition date.

The Company formed GBCI Other Real Estate (“GORE”) to isolate certain bank foreclosed properties for legal protection and administrative purposes and the remaining properties are currently held for sale. GORE is included in the Bank operating segment due to its insignificant activity.

9

The Company owns the following trust subsidiaries, each of which issued trust preferred securities as Tier 1 capital instruments: Glacier Capital Trust II, Glacier Capital Trust III, Glacier Capital Trust IV, Citizens (ID) Statutory Trust I, Bank of the San Juans Bancorporation Trust I, First Company Statutory Trust 2001 and First Company Statutory Trust 2003. The trust subsidiaries are not included in the Company’s consolidated financial statements.

Variable Interest Entities

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). The Company also has equity investments in Low-Income Housing Tax Credit (“LIHTC”) partnerships. The CDEs and the LIHTC partnerships are variable interest entities (“VIE”).

The following table summarizes the carrying amounts of the VIE’s assets and liabilities included in the Company’s consolidated financial statements at June 30, 2013 and December 31, 2012:

	June 30, 2013			December 31, 2012
(Dollars in thousands)	CDE (NMTC)		LIHTC	CDE (NMTC)	LIHTC
Assets
Loans receivable	$	35,840	—	35,480	—
Premises and equipment, net	—		13,745	—	16,066
Accrued interest receivable	113		—	117	—
Other assets	969		153	1,114	143
Total assets	$	36,922	13,898	36,711	16,209
Liabilities
Other borrowed funds	$	4,555	1,722	4,555	3,639
Accrued interest payable	4		5	4	6
Other liabilities	92		177	182	136
Total liabilities	$	4,651	1,904	4,741	3,781

Amounts presented in the table above are adjusted for intercompany eliminations. All assets presented can be used only to settle obligations of the consolidated VIEs and all liabilities presented consist of liabilities for which creditors and other beneficial interest holders therein have no recourse to the general credit of the Company.

Loans Receivable

Loans that are intended to be held-to-maturity are reported at the unpaid principal balance less net charge-offs and adjusted for deferred fees and costs on originated loans and unamortized premiums or discounts on acquired loans. Interest income is recognized using the interest method and includes discount accretion and premium amortization on acquired loans and net loan fees on originated loans which are amortized over the expected life of the loans using a method that approximates the level-yield interest method. The Company’s loan segments, which are based on the purpose of the loan, include residential real estate, commercial, and consumer loans. The Company’s loan classes, a further disaggregation of segments, include residential real estate loans (residential real estate segment), commercial real estate and other commercial loans (commercial segment), and home equity and other consumer loans (consumer segment).

Loans that are thirty days or more past due based on payments received and applied to the loan are considered delinquent. Loans are designated non-accrual and the accrual of interest is discontinued when the collection of the contractual principal or interest is unlikely. A loan is typically placed on non-accrual when principal or interest is due and has remained unpaid for ninety days or more. When a loan is placed on non-accrual status, interest previously accrued but not collected is reversed against current period interest income. Subsequent payments are applied to the outstanding principal balance if doubt remains as to the ultimate collectability of the loan. Interest accruals are not resumed on partially charged-off impaired loans. For other loans on nonaccrual, interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

10

The Company recognizes that while borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity for debt repayment. In determining whether non-restructured or unimpaired loans issued to a single or related party group of borrowers should continue to accrue interest when the borrower has other loans that are impaired or troubled debt restructurings (“TDR”), the Company on a quarterly or more frequent basis performs an updated and comprehensive assessment of the willingness and capacity of the borrowers to timely and ultimately repay their total debt obligations, including contingent obligations. Such analysis takes into account current financial information about the borrowers and financially responsible guarantors, if any, including for example:

• analysis of global, i.e., aggregate debt service for total debt obligations;

• assessment of the value and security protection of collateral pledged using current market conditions and alternative market assumptions across a variety of potential future situations; and

• loan structures and related covenants.

The Company considers impaired loans to be the primary credit quality indicator for monitoring the credit quality of the loan portfolio. Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans ninety days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., TDR). Interest income on accruing impaired loans is recognized using the interest method. The Company measures impairment on a loan-by-loan basis in the same manner for each class within the loan portfolio. An insignificant delay or shortfall in the amounts of payments would not cause a loan or lease to be considered impaired. The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the facts and circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest due.

A restructured loan is considered a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. A TDR loan is considered an impaired loan and a specific valuation allowance is established when the fair value of the collateral-dependent loan or present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate based on the original contractual rate) is lower than the carrying value of the impaired loan. The Company made the following types of loan modifications, some of which were considered a TDR:

• Reduction of the stated interest rate for the remaining term of the debt;

• Extension of the maturity date(s) at a stated rate of interest lower than the current market rate for newly originated debt having similar risk characteristics; and

• Reduction of the face amount of the debt as stated in the debt agreements.

For additional information relating to loans, see Note 3.

Allowance for Loan and Lease Losses

Based upon management’s analysis of the Company’s loan portfolio, the balance of the ALLL is an estimate of probable credit losses known and inherent within the Bank’s loan portfolio as of the date of the consolidated financial statements. The ALLL is analyzed at the loan class level and is maintained within a range of estimated losses. Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The determination of the ALLL and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses. The balance of the ALLL is highly dependent upon management’s evaluations of borrowers’ current and prospective performance, appraisals and other variables affecting the quality of the loan portfolio. Individually significant loans and major lending areas are reviewed periodically to determine potential problems at an early date. Changes in management’s estimates and assumptions are reasonably possible and may have a material impact upon the Company’s consolidated financial statements, results of operations or capital.

11

The ALLL consists of a specific valuation allowance component and a general valuation allowance component. The specific component relates to loans that are determined to be impaired and individually evaluated for impairment. The Company measures impairment on a loan-by-loan basis based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except when it is determined that repayment of the loan is expected to be provided solely by the underlying collateral. For impairment based on expected future cash flows, the Company considers all information available as of a measurement date, including past events, current conditions, potential prepayments, and estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan. For alternative ranges of cash flows, the likelihood of the possible outcomes is considered in determining the best estimate of expected future cash flows. The effective interest rate for a loan restructured in a TDR is based on the original contractual rate. For collateral-dependent loans and real estate loans for which foreclosure or a deed-in-lieu of foreclosure is probable, impairment is measured by the fair value of the collateral, less estimated cost to sell. The fair value of the collateral is determined primarily based upon appraisal or evaluation of the underlying real property value.

The general valuation allowance component relates to probable credit losses inherent in the balance of the loan portfolio based on historical loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors. The historical loss experience is based on the previous twelve quarters loss experience by loan class adjusted for risk characteristics in the existing loan portfolio. The same trends and conditions are evaluated for each class within the loan portfolio; however, the risk characteristics are weighted separately at the individual class level based on the Company’s judgment and experience.

The changes in trends and conditions of certain items include the following:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

• Changes in the nature and volume of the portfolio and in the terms of loans;

• Changes in experience, ability, and depth of lending management and other relevant staff;

• Changes in the volume and severity of past due and nonaccrual loans;

• Changes in the quality of the Company’s loan review system;

• Changes in the value of underlying collateral for collateral-dependent loans;

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s existing portfolio.

The ALLL is increased by provisions for loan losses which are charged to expense. The portions of loan balances determined by management to be uncollectible are charged-off as a reduction of the ALLL and recoveries of amounts previously charged-off are credited as an increase to the ALLL. The Company’s charge-off policy is consistent with bank regulatory standards. Consumer loans generally are charged off when the loan becomes over 120 days delinquent. Real estate acquired as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until such time as it is sold.

Impact of Recent Authoritative Accounting Guidance

The Accounting Standards Codification^™ (“ASC”) is the Financial Accounting Standards Board’s (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative.

In June 2011, FASB amended FASB ASC Topic 220, Comprehensive Income. The amendment provides an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Accounting Standards Update (“ASU”) No. 2011-12, Comprehensive Income (Topic 220) deferred the specific requirement of the amendment to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The amendments were effective retrospectively during interim and annual periods beginning after December 15, 2011. ASU No. 2013-2, Comprehensive Income (Topic 220) reversed the deferment of ASU 2011-12 and will be effective prospectively for reporting periods beginning after December 15, 2012 and early adoption is permitted. The Company early adopted ASU No. 2013-2 as of December 31, 2012. The Company has evaluated the impact of the adoption of these amendments and determined there was not a material effect on the Company’s financial position or results of operations.

12

Note 2. Investment Securities, Available-for-Sale

A comparison of the amortized cost and estimated fair value of the Company’s investment securities designated as available-for-sale is presented below.

	June 30, 2013
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government sponsored enterprises
Maturing after one year through five years	2.27	%	$	12,840	270	—		13,110
Maturing after five years through ten years	1.71	%	40		1	—		41
	2.27	%	12,880		271	—		13,151
State and local governments
Maturing within one year	2.02	%	5,066		41	—		5,107
Maturing after one year through five years	2.07	%	158,331		3,063	(265	)	161,129
Maturing after five years through ten years	3.11	%	55,026		904	(656	)	55,274
Maturing after ten years	4.53	%	1,089,519		44,313	(15,466	)	1,118,366
	4.17	%	1,307,942		48,321	(16,387	)	1,339,876
Corporate bonds
Maturing within one year	2.06	%	64,391		630	—		65,021
Maturing after one year through five years	2.10	%	357,036		2,571	(3,173	)	356,434
Maturing after five years through ten years	2.27	%	21,635		53	(346	)	21,342
	2.10	%	443,062		3,254	(3,519	)	442,797
Residential mortgage-backed securities	2.18	%	1,917,954		13,728	(6,129	)	1,925,553
Total investment securities	2.88	%	$	3,681,838	65,574	(26,035	)	3,721,377

13

	December 31, 2012
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government and federal agency
Maturing within one year	1.62	%	$	201	1	—		202
U.S. government sponsored enterprises
Maturing after one year through five years	2.30	%	17,064		371	—		17,435
Maturing after five years through ten years	2.03	%	44		1	—		45
	2.29	%	17,108		372	—		17,480
State and local governments
Maturing within one year	2.01	%	4,288		28	(2	)	4,314
Maturing after one year through five years	2.11	%	149,497		4,142	(142	)	153,497
Maturing after five years through ten years	2.95	%	38,346		1,102	(99	)	39,349
Maturing after ten years	4.70	%	935,897		82,823	(1,362	)	1,017,358
	4.29	%	1,128,028		88,095	(1,605	)	1,214,518
Corporate bonds
Maturing within one year	1.73	%	18,412		51	—		18,463
Maturing after one year through five years	2.22	%	250,027		4,018	(238	)	253,807
Maturing after five years through ten years	2.23	%	16,144		381	—		16,525
	2.19	%	284,583		4,450	(238	)	288,795
Collateralized debt obligations
Maturing after ten years	8.03	%	1,708		—	—		1,708
Residential mortgage-backed securities	1.95	%	2,156,049		8,860	(4,607	)	2,160,302
Total investment securities	2.71	%	$	3,587,677	101,778	(6,450	)	3,683,005

Included in the residential mortgage-backed securities are $39,375,000 and $46,733,000 as of June 30, 2013 and December 31, 2012, respectively, of non-guaranteed private label whole loan mortgage-backed securities of which none of the underlying collateral is considered “subprime.”

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities, nor do they reflect expected shorter maturities based upon early prepayment of principal. Weighted average yields are based on the level-yield method taking into account premium amortization, discount accretion and mortgage-backed securities’ prepayment provisions. Weighted average yields on tax-exempt investment securities exclude the federal income tax benefit.

The cost of each investment sold is determined by specific identification. Gain or loss on sale of investments consists of the following: 

	Three Months ended				Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012	June 30, 2013			June 30, 2012
Gross proceeds	$	75,649		—	$	79,488		—
Less amortized cost	(75,408		)	—	(79,384		)	—
Net gain on sale of investments	$	241		—	$	104		—
Gross gain on sale of investments	$	256		—	$	256		—
Gross loss on sale of investments	(15		)	—	(152		)	—
Net gain on sale of investments	$	241		—	$	104		—

14

Investments with an unrealized loss position are summarized as follows:

	June 30, 2013
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	312,576	(15,987	)	10,434	(400	)	323,010	(16,387	)
Corporate bonds	211,592		(3,519	)	—	—		211,592	(3,519	)
Residential mortgage-backed securities	511,542		(6,086	)	15,991	(43	)	527,533	(6,129	)
Total temporarily impaired securities	$	1,035,710	(25,592	)	26,425	(443	)	1,062,135	(26,035	)

	December 31, 2012
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	102,896	(1,531	)	4,533	(74	)	107,429	(1,605	)
Corporate bonds	41,856		(238	)	—	—		41,856	(238	)
Residential mortgage-backed securities	955,235		(4,041	)	62,905	(566	)	1,018,140	(4,607	)
Total temporarily impaired securities	$	1,099,987	(5,810	)	67,438	(640	)	1,167,425	(6,450	)

With respect to the Company’s review of its securities in an unrealized loss position at June 30, 2013, management determined that it did not intend to sell and there was no expected requirement to sell any of its temporarily impaired securities. Based on an analysis of its impaired securities as of June 30, 2013 and December 31, 2012, the Company determined that none of such securities had other-than-temporary impairment.

15

Note 3. Loans Receivable, Net

The following schedules summarize the activity in the ALLL on a portfolio class basis:

	Three Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,835		15,411		73,335		22,481		10,833		8,775
Provision for loan losses	1,078			(509	)	520		1,880		(1,016	)	203
Charge-offs	(2,271		)	(172	)	(538	)	(594	)	(291	)	(676	)
Recoveries	1,241			67		568		349		100		157
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Three Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	136,586		19,003		73,240		22,444		13,364		8,535
Provision for loan losses	7,925			22		10,374		(1,255	)	(1,471	)	255
Charge-offs	(8,679		)	(953	)	(5,549	)	(887	)	(1,077	)	(213	)
Recoveries	1,627			67		1,033		268		88		171
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

	Six Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,854		15,482		74,398		21,567		10,659		8,748
Provision for loan losses	3,178			(486	)	(432	)	3,579		441		76
Charge-offs	(5,885		)	(349	)	(1,303	)	(1,752	)	(1,629	)	(852	)
Recoveries	2,736			150		1,222		722		155		487
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Six Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,516		17,227		76,920		20,833		13,616		8,920
Provision for loan losses	16,550			2,085		13,010		1,304		(470	)	621
Charge-offs	(19,737		)	(1,320	)	(12,534	)	(2,356	)	(2,358	)	(1,169	)
Recoveries	3,130			147		1,702		789		116		376
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

16

The following schedules disclose the ALLL and loans receivable on a portfolio class basis:

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	11,382	1,026	6,100	3,553	24	679
Collectively evaluated for impairment	119,501		13,771	67,785	20,563	9,602	7,780
Total allowance for loan and lease losses	$	130,883	14,797	73,885	24,116	9,626	8,459
Loans receivable
Individually evaluated for impairment	$	192,573	24,719	117,836	36,705	8,432	4,881
Collectively evaluated for impairment	3,480,883		507,115	1,703,764	686,482	376,256	207,266
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	15,534	1,680	7,716	3,859	870	1,409
Collectively evaluated for impairment	115,320		13,802	66,682	17,708	9,789	7,339
Total allowance for loan and lease losses	$	130,854	15,482	74,398	21,567	10,659	8,748
Loans receivable
Individually evaluated for impairment	$	201,735	25,862	125,282	33,593	11,074	5,924
Collectively evaluated for impairment	3,195,690		490,605	1,530,226	589,804	392,851	192,204
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

Substantially all of the Company’s loan receivables are with customers in the Company’s geographic market areas. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ ability to honor their obligations is dependent upon the economic performance in the Company’s market areas. Net deferred fees, costs, premiums, and discounts of $4,722,000 and $1,379,000 were included in the loans receivable balance at June 30, 2013 and December 31, 2012, respectively.

17

The following schedules disclose the impaired loans by portfolio class basis:

	At or for the Three or Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	57,021	6,975	24,857	21,191	318	3,680
Unpaid principal balance	58,739		7,199	25,954	21,298	321	3,967
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	56,118		6,865	24,411	20,856	460	3,526
Average balance - six months	58,331		7,021	26,139	20,972	758	3,441
Loans without a specific valuation allowance
Recorded balance	$	135,552	17,744	92,979	15,514	8,114	1,201
Unpaid principal balance	154,815		18,846	107,676	17,731	9,318	1,244
Average balance - three months	137,096		17,967	95,185	13,816	8,466	1,662
Average balance - six months	137,722		18,154	95,352	13,340	8,883	1,993
Totals
Recorded balance	$	192,573	24,719	117,836	36,705	8,432	4,881
Unpaid principal balance	213,554		26,045	133,630	39,029	9,639	5,211
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	193,214		24,832	119,596	34,672	8,926	5,188
Average balance - six months	196,053		25,175	121,491	34,312	9,641	5,434

	At or for the Year ended December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	62,759	7,334	29,595	21,205	1,354	3,271
Unpaid principal balance	70,261		7,459	36,887	21,278	1,362	3,275
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	76,656		12,797	36,164	22,665	1,390	3,640
Loans without a specific valuation allowance
Recorded balance	$	138,976	18,528	95,687	12,388	9,720	2,653
Unpaid principal balance	149,412		19,613	102,798	14,318	9,965	2,718
Average balance	162,505		16,034	111,554	19,733	11,993	3,191
Totals
Recorded balance	$	201,735	25,862	125,282	33,593	11,074	5,924
Unpaid principal balance	219,673		27,072	139,685	35,596	11,327	5,993
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	239,161		28,831	147,718	42,398	13,383	6,831

Interest income recognized on impaired loans for the periods ended June 30, 2013 and December 31, 2012 was not significant.

18

The following is a loans receivable aging analysis on a portfolio class basis:

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	18,772	1,318	8,904	4,007	3,774	769
Accruing loans 60-89 days past due	3,290		965	1,382	297	385	261
Accruing loans 90 days or more past due	456		240	—	22	146	48
Non-accrual loans	89,355		12,149	53,400	12,568	9,303	1,935
Total past due and non-accrual loans	111,873		14,672	63,686	16,894	13,608	3,013
Current loans receivable	3,561,583		517,162	1,757,914	706,293	371,080	209,134
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	17,454	3,897	7,424	2,020	2,872	1,241
Accruing loans 60-89 days past due	9,643		1,870	3,745	645	2,980	403
Accruing loans 90 days or more past due	1,479		451	594	197	188	49
Non-accrual loans	96,933		14,237	55,687	13,200	11,241	2,568
Total past due and non-accrual loans	125,509		20,455	67,450	16,062	17,281	4,261
Current loans receivable	3,271,916		496,012	1,588,058	607,335	386,644	193,867
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

19

The following is a summary of the TDRs that occurred during the periods presented and the TDRs that occurred within the previous twelve months that subsequently defaulted during the periods presented on a portfolio class basis:

	Three Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	18		—	4	10	2	2
Pre-modification recorded balance	$	2,645	—	1,340	1,067	160	78
Post-modification recorded balance	$	2,693	—	1,340	1,084	191	78
Troubled debt restructurings that subsequently defaulted
Number of loans	5		1	2	2	—	—
Recorded balance	$	1,982	265	1,555	162	—	—

	Three Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	47		5	15	22	1	4
Pre-modification recorded balance	$	11,929	1,342	5,736	4,309	310	232
Post-modification recorded balance	$	10,650	1,342	4,444	4,322	310	232
Troubled debt restructurings that subsequently defaulted
Number of loans	9		—	4	2	1	2
Recorded balance	$	3,127	—	2,077	531	442	77

	Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	42		7	13	17	2	3
Pre-modification recorded balance	$	9,160	1,623	4,656	2,572	160	149
Post-modification recorded balance	$	9,378	1,794	4,656	2,588	191	149
Troubled debt restructurings that subsequently defaulted
Number of loans	10		1	5	3	—	1
Recorded balance	$	3,145	265	2,607	228	—	45

20

	Six Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	103		8	40	41	7	7
Pre-modification recorded balance	$	28,455	1,701	16,846	8,432	1,095	381
Post-modification recorded balance	$	26,469	1,701	14,838	8,454	1,095	381
Troubled debt restructurings that subsequently defaulted
Number of loans	20		—	11	5	2	2
Recorded balance	$	6,207	—	4,735	798	597	77

For the six months ended June 30, 2013 and 2012, the majority of TDRs occurring in most loan classes was a result of an extension of the maturity date which aggregated 48 percent and 31 percent, respectively, of total TDRs. For commercial real estate, the class with the largest dollar amount of TDRs, approximately 44 percent and 16 percent, respectively, was a result of an extension of the maturity date and 33 percent and 24 percent, respectively, was due to a combination of an interest rate reduction, extension of the maturity date, or reduction in the face amount.

In addition to the TDRs that occurred during the period provided in the preceding table, the Company had TDRs with pre-modification loan balances of $12,505,000 and $24,390,000 for the six months ended June 30, 2013 and 2012, respectively, for which other real estate owned (“OREO”) was received in full or partial satisfaction of the loans. The majority of such TDRs for both periods was in commercial real estate.

Note 4. Goodwill

The Company performed its annual goodwill impairment test during the third quarter of 2012 and determined the fair value of the aggregated reporting units exceeded the carrying value, such that the Company’s goodwill was not considered impaired. Given there were no events or circumstances that occurred since the third quarter 2012 that would more-likely-than-not reduce the fair value of the aggregated reporting units below the carrying value, the Company did not perform interim testing at June 30, 2013. However, further adverse changes in the economic environment, operations of the aggregated reporting units, or other factors could result in the decline in the fair value of the aggregated reporting units which could result in a goodwill impairment in the future. For additional information on goodwill related to acquisitions, see Note 9.

The following schedule discloses the changes in the carrying value of goodwill:

	Three Months ended			Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012	June 30, 2013	June 30, 2012
Net carrying value at beginning of period	$	106,100	106,100	106,100	106,100
Acquisitions	13,409		—	13,409	—
Net carrying value at end of period	$	119,509	106,100	119,509	106,100

The gross carrying value of goodwill and the accumulated impairment charge consists of the following:

(Dollars in thousands)	June 30, 2013			December 31, 2012
Gross carrying value	$	159,668		146,259
Accumulated impairment charge	(40,159		)	(40,159	)
Net carrying value	$	119,509		106,100

21

Note 5. Derivatives and Hedging Activities

As of June 30, 2013, the Company’s interest rate swap derivative financial instruments were designated as cash flow hedges and are summarized as follows:

(Dollars in thousands)	Forecasted Notional  Amount		Variable Interest Rate 1	Fixed Interest Rate 1		Term 2
Interest rate swap	$	160,000	3 month LIBOR	3.378	%	Oct. 21, 2014 - Oct. 21, 2021
Interest rate swap	100,000		3 month LIBOR	2.498	%	Nov 30, 2015 - Nov. 30, 2022

__________

¹The Company pays the fixed interest rate and the counterparties pay the Company the variable interest rate.

²No cash will be exchanged prior to the term.

The hedging strategy converts the LIBOR based variable interest rate on forecasted borrowings to a fixed interest rate, thereby protecting the Company from floating interest rate variability.

The following table summarizes the fair value of the Company’s interest rate swap derivative financial instruments:

		Fair Value
(Dollars in thousands)	Balance Sheet Location	June 30, 2013		December 31, 2012
Interest rate swaps	Other liabilities	$	1,270	16,832

Pursuant to the interest rate swap agreements, the Company pledged collateral to the counterparties in the form of investment securities totaling $34,419,000 at June 30, 2013. There was $0 collateral pledged from the counterparties to the Company as of June 30, 2013. There is the possibility that the Company may need to pledge additional collateral in the future if there were further declines in the fair value of the interest rate swap derivative financial instruments versus the collateral pledged.

Note 6. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

(Dollars in thousands)	June 30, 2013			December 31, 2012
Unrealized gains on available-for-sale securities	$	39,539		95,328
Tax effect	(15,381		)	(37,083	)
Net of tax amount	24,158			58,245
Unrealized losses on derivatives used for cash flow hedges	(1,270		)	(16,832	)
Tax effect	494			6,549
Net of tax amount	(776		)	(10,283	)
Total accumulated other comprehensive income	$	23,382		47,962

22

Note 7. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares as if dilutive outstanding stock options were exercised, using the treasury stock method.

Basic and diluted earnings per share has been computed based on the following:

	Three Months ended			Six Months ended
(Dollars in thousands, except per share data)	June 30, 2013		June 30, 2012	June 30, 2013		June 30, 2012
Net income available to common stockholders, basic and diluted	$	22,702	18,981	$	43,470	35,314
Average outstanding shares - basic	72,480,019		71,928,697	72,224,263		71,921,885
Add: dilutive stock options and awards	68,153		156	57,841		105
Average outstanding shares - diluted	72,548,172		71,928,853	72,282,104		71,921,990
Basic earnings per share	$	0.31	0.26	$	0.60	0.49
Diluted earnings per share	$	0.31	0.26	$	0.60	0.49

There were 74,159 and 945,063 options excluded from the diluted average outstanding share calculation for the six months ended June 30, 2013 and 2012, respectively, due to the option exercise price exceeding the market price of the Company’s common stock.

Note 8. Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

Level 1    Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Transfers in and out of Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) are recognized on the actual transfer date. There were no transfers between fair value hierarchy levels during the six month periods ended June 30, 2013 and 2012.

Recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2013.

Investment securities: fair value for available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections, and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. Where Level 1 or Level 2 inputs are not available, such securities are classified as Level 3 within the hierarchy.

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Fair value determinations of investment securities are the responsibility of the Company’s corporate accounting department. The Company contracts with independent third party pricing vendors to generate fair value estimates on a monthly basis. The Company reviews the vendors’ inputs for fair value estimates and the recommended assignments of levels within the fair value hierarchy. The review includes the extent to which markets for investment securities are determined to have limited or no activity, or are judged to be active markets. The Company reviews the extent to which observable and unobservable inputs are used as well as the appropriateness of the underlying assumptions about risk that a market participant would use in active markets, with adjustments for limited or inactive markets. In considering the inputs to the fair value estimates, the Company places less reliance on quotes that are judged to not reflect orderly transactions, or are non-binding indications. The Company makes independent inquiries of other knowledgeable parties in testing the reliability of the inputs, including consideration for illiquidity, credit risk, and cash flow estimates. In assessing credit risk, the Company reviews payment performance, collateral adequacy, credit rating histories, and issuers’ financial statements with follow-up discussion with issuers. For those markets determined to be inactive, the valuation techniques used are models for which management verifies that discount rates are appropriately adjusted to reflect illiquidity and credit risk. The Company also independently obtains cash flow estimates that are stressed at levels that exceed those used by the independent third party pricing vendors.

Interest rate swap derivative financial instruments: fair values for interest rate swap derivative financial instruments are based upon the estimated amounts to settle the contracts considering current interest rates and are calculated using discounted cash flows that are observable or that can be corroborated by observable market data and, therefore, are classified within Level 2 of the valuation hierarchy. The inputs used to determine fair value include the 3 month LIBOR forward curve to estimate variable rate cash inflows and the spot LIBOR curve to estimate the discount rate. The estimated variable rate cash inflows are compared to the fixed rate outflows and such difference is discounted to a present value to estimate the fair value of the interest rate swaps. The Company also obtains and compares the reasonableness of the pricing from an independent party.

The following schedules disclose the fair value measurement of assets and liabilities measured at fair value on a recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government sponsored enterprises	$	13,151	—	13,151	—
State and local governments	1,339,876		—	1,339,876	—
Corporate bonds	442,797		—	442,797	—
Residential mortgage-backed securities	1,925,553		—	1,925,553	—
Total assets measured at fair value on a recurring basis	$	3,721,377	—	3,721,377	—
Interest rate swaps	$	1,270	—	1,270	—
Total liabilities measured at fair value on a recurring basis	$	1,270	—	1,270	—

24

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government and federal agency	$	202	—	202	—
U.S. government sponsored enterprises	17,480		—	17,480	—
State and local governments	1,214,518		—	1,214,518	—
Corporate bonds	288,795		—	288,795	—
Collateralized debt obligations	1,708		—	1,708	—
Residential mortgage-backed securities	2,160,302		—	2,160,302	—
Total assets measured at fair value on a recurring basis	$	3,683,005	—	3,683,005	—
Interest rate swaps	$	16,832	—	16,832	—
Total liabilities measured at fair value on a recurring basis	$	16,832	—	16,832	—

Non-recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2013.

Other real estate owned: OREO is carried at the lower of fair value at acquisition date or estimated fair value, less estimated cost to sell. Estimated fair value of OREO is based on appraisals or evaluations (new or updated). OREO is classified within Level 3 of the fair value hierarchy.

Collateral-dependent impaired loans, net of ALLL: loans included in the Company’s loan portfolio for which it is probable that the Company will not collect all principal and interest due according to contractual terms are considered impaired. Estimated fair value of collateral-dependent impaired loans is based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company’s credit departments review appraisals for OREO and collateral-dependent loans, giving consideration to the highest and best use of the collateral. The appraisal or evaluation (new or updated) is considered the starting point for determining fair value. The valuation techniques used in preparing appraisals or evaluations (new or updated) include the cost approach, income approach, sales comparison approach, or a combination of the preceding valuation techniques. The key inputs used to determine the fair value of the collateral-dependent loans and OREO include selling costs, discounted cash flow rate or capitalization rate, and adjustment to comparables. Valuations and significant inputs obtained by independent sources are reviewed by the Company for accuracy and reasonableness. The Company also considers other factors and events in the environment that may affect the fair value. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to the impaired loan or OREO may occur. The Company generally obtains appraisals or evaluations (new or updated) annually.

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The following schedules disclose the fair value measurement of assets with a recorded change during the period resulting from re-measuring the assets at fair value on a non-recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	5,459	—	—	5,459
Collateral-dependent impaired loans, net of ALLL	19,039		—	—	19,039
Total assets measured at fair value on a non-recurring basis	$	24,498	—	—	24,498

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	13,983	—	—	13,983
Collateral-dependent impaired loans, net of ALLL	22,966		—	—	22,966
Total assets measured at fair value on a non-recurring basis	$	36,949	—	—	36,949

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Non-recurring Measurements Using Significant Unobservable Inputs (Level 3)

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Fair Value		Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)	June 30, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average) 1
Other real estate owned	$	5,459	Sales comparison approach	Selling costs	6.5% - 10.0% (7.3%)
				Adjustment to comparables	0.0% - 10.0% (0.1%)
Collateral-dependent impaired loans, net of ALLL	$	928	Cost approach	Selling costs	0.0% - 20.0% (4.4%)
	5,182		Income approach	Selling costs	8.0% - 8.0% (8.0%)
				Discount rate	6.0% - 8.3% (7.2%)
	8,515		Sales comparison approach	Selling costs	0.0% - 10.0% (7.9%)
				Discount rate	0.0% - 5.0% (2.5%)
				Adjustment to comparables	0.0% - 5.0% (0.2%)
	4,414		Combined approach	Selling costs	8.0% - 10.0% (8.7%)
				Discount rate	7.5% - 7.5% (7.5%)
				Adjustment to comparables	0.0% - 36.0% (17.4%)
	$	19,039

__________

¹ The range for selling costs and adjustments to comparables indicate reductions to the fair value.

Fair Value of Financial Instruments

The following is a description of the methods used to estimate the fair value of all other assets and liabilities recognized at amounts other than fair value.

Cash and cash equivalents: fair value is estimated at book value.

Loans held for sale: fair value is estimated at book value.

Loans receivable, net of ALLL: fair value is estimated by discounting the future cash flows using the rates at which similar notes would be written for the same remaining maturities. The market rates used are based on current rates the Company would impose for similar loans and reflect a market participant assumption about risks associated with non-performance, illiquidity, and the structure and term of the loans along with local economic and market conditions. Estimated fair value of impaired loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All impaired loans are classified as Level 3 and all other loans are classified as Level 2 within the hierarchy.

Accrued interest receivable: fair value is estimated at book value.

Non-marketable equity securities: fair value is estimated at book value due to restrictions that limit the sale or transfer of such securities.

Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The market rates used were obtained from a knowledgeable independent third party and reviewed by the Company. The rates were the average of current rates offered by the Company’s local competitors. The estimated fair value of demand, NOW, savings, and money market deposits is the book value since rates are regularly adjusted to market rates and transactions are executed at book value daily. Therefore, such deposits are classified in Level 1 of the valuation hierarchy. Certificate accounts and wholesale deposits are classified as Level 2 within the hierarchy.

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Federal Home Loan Bank (“FHLB”) advances: fair value of non-callable FHLB advances is estimated by discounting the future cash flows using rates of similar advances with similar maturities. Such rates were obtained from current rates offered by FHLB. The estimated fair value of callable FHLB advances was obtained from FHLB and the model was reviewed by the Company, including discussions with FHLB.

Securities sold under agreements to repurchase (“repurchase agreements”) and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value.

Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates. The market rates used were averages of currently traded trust preferred securities with similar characteristics to the Company’s issuances and obtained from an independent third party.

Accrued interest payable: fair value is estimated at book value.

Off-balance sheet financial instruments: commitments to extend credit and letters of credit represent the principal categories of off-balance sheet financial instruments. Rates for these commitments are set at time of loan closing, such that no adjustment is necessary to reflect these commitments at market value. The Company has an insignificant amount of off-balance sheet financial instruments.

The following schedules present the carrying amounts, estimated fair values and the level within the fair value hierarchy of the Company’s financial instruments:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	132,456	132,456	—	—
Investment securities, available-for-sale	3,721,377		—	3,721,377	—
Loans held for sale	95,495		95,495	—	—
Loans receivable, net of ALLL	3,542,573		—	3,457,402	181,191
Accrued interest receivable	43,593		43,593	—	—
Non-marketable equity securities	49,752		—	49,752	—
Total financial assets	$	7,585,246	271,544	7,228,531	181,191
Financial liabilities
Deposits	$	5,358,197	3,813,660	1,610,300	—
FHLB advances	1,217,445		—	1,237,320	—
Repurchase agreements and other borrowed funds	308,513		—	308,513	—
Subordinated debentures	125,490		—	78,062	—
Accrued interest payable	3,824		3,824	—	—
Interest rate swaps	1,270		—	1,270	—
Total financial liabilities	$	7,014,739	3,817,484	3,235,465	—

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			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	187,040	187,040	—	—
Investment securities, available-for-sale	3,683,005		—	3,683,005	—
Loans held for sale	145,501		145,501	—	—
Loans receivable, net of ALLL	3,266,571		—	3,184,987	186,201
Accrued interest receivable	37,770		37,770	—	—
Non-marketable equity securities	48,812		—	48,812	—
Total financial assets	$	7,368,699	370,311	6,916,804	186,201
Financial liabilities
Deposits	$	5,364,461	3,585,126	1,789,134	—
FHLB advances	997,013		—	1,027,101	—
Repurchase agreements and other borrowed funds	299,540		—	299,540	—
Subordinated debentures	125,418		—	70,895	—
Accrued interest payable	4,675		4,675	—	—
Interest rate swaps	16,832		—	16,832	—
Total financial liabilities	$	6,807,939	3,589,801	3,203,502	—

Note 9. Mergers and Acquisitions

On May 31, 2013, the Company acquired 100 percent of the outstanding common stock of Wheatland and its wholly-owned subsidiary, First State Bank, a community bank based in Wheatland, Wyoming. First State Bank provides community banking services to individuals and businesses from banking offices in Wheatland, Torrington and Guernsey, Wyoming. As a result of the acquisition, the Company will increase its presence in the State of Wyoming and will further diversify its loan, customer and deposit base with First State Bank’s strong commitment to agriculture. First State Bank will operate as a division of the Bank under the name “First State Bank, division of Glacier Bank.”

The Wheatland acquisition was valued at $39,315,000 and resulted in the Company issuing 1,455,256 shares of its common stock and $11,025,000 in cash in exchange for all of Wheatland’s outstanding common stock shares. The fair value of the Company’s common stock shares issued was determined on the basis of the closing market price of the Company’s common stock shares on the May 31, 2013 acquisition date.

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The assets and liabilities of Wheatland were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the May 31, 2013 acquisition date, and Wheatland’s results of operations have been included in the Company’s consolidated statements of operations since that date. The following table summarizes the fair value of the net assets that the Company acquired from Wheatland:

(Dollars in thousands)	May 31, 2013
Assets
Cash and cash equivalents	$	23,148
Investment securities, available-for-sale	75,643
Loans receivable	171,199
Goodwill and core deposit intangible	15,488
Accrued income and other assets	15,063
Total assets	300,541
Liabilities
Deposits	255,197
Federal Home Loan Bank advances	5,467
Accrued expenses and other liabilities	562
Total liabilities	261,226
Purchase price	$	39,315

The excess of the purchase price over tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Wheatland. None of the goodwill is deductible for income tax purposes as the acquisition is accounted for as a tax-free exchange. The following table discloses the calculation of the purchase price and the resulting goodwill relating to the Wheatland acquisition:

(Dollars in thousands)	May 31, 2013
Purchase price
Fair value of Company common stock shares issued	$	28,290
Cash consideration for outstanding shares	11,025
Total purchase price	39,315
Fair value of net assets acquired
Tangible assets acquired	285,053
Core deposit intangible asset acquired	2,079
Liabilities assumed	(261,226		)
Total fair value of net assets acquired	25,906
Goodwill recognized	$	13,409

The fair value of the assets acquired includes loans with a fair value of $171,199,000. The gross principal and contractual interest due under the contracts is $176,698,000, all of which is expected to be collectible.

The Company incurred $571,000 of Wheatland third-party acquisition-related costs during the six month period ended June 30, 2013. The expenses are included in other expense in the Company's consolidated statements of operations.

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Total income consisting of net interest income and non-interest income of the acquired operations of Wheatland was approximately $1,145,000 and net income was approximately $311,000 from May 31, 2013 to June 30, 2013. The following unaudited pro forma summary presents consolidated information of the Company as if the Wheatland acquisition had occurred on January 1, 2012:

	Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012
Net interest income and non-interest income	$	156,182	161,328
Net income	44,655		36,959

Note 10. Subsequent Event

On July 31, 2013, the Company acquired 100 percent of the outstanding common stock of North Cascades Bankshares, Inc. (“NCBI”) and its wholly-owned subsidiary, North Cascades National Bank, a community bank based in Chelan, Washington. North Cascades National Bank provides community banking services to individuals and businesses in central Washington, with banking offices located in Chelan, Wenatchee, East Wenatchee, Omak, Brewster, Twisp, Okanogan, Grand Coulee and Waterville, Washington. The acquisition expands the Company’s market into central Washington and further diversifies the Company’s loan, customer and deposit base due to the region’s solid economic base of agriculture, fruit processing and tourism. North Cascades National Bank will operate as a division of the Bank under the name “North Cascades Bank, division of Glacier Bank.”

The NCBI acquisition was valued at $30,581,000 and resulted in the Company issuing 687,876 shares of its common stock and $13,838,000 in cash in exchange for all of NCBI's outstanding common stock shares. The fair value of the Company's common stock shares issued was determined on the basis of the closing market price of the Company's common stock shares on the July 31, 2013 acquisition date.

As of July 31, 2013, the book value of NCBI’s total assets was $326,703,000. The initial accounting for the NCBI acquisition has not been completed because the fair value of loans, deposits and numerous other items has not yet been determined.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to provide a more comprehensive review of the Glacier Bancorp, Inc.’s (“Company”) operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in “Part I. Item 1. Financial Statements.”

FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. In addition to the factors set forth in the sections titled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as applicable, in this report and the Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Annual Report”), the following factors, among others, could cause actual results to differ materially from the anticipated results:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio, including as a result of a slow recovery in the housing and real estate markets in its geographic areas;

• increased loan delinquency rates;

• the risks presented by a slow economic recovery and the current sequestration, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations;

• changes in market interest rates, which could adversely affect the Company’s net interest income and profitability;

• legislative or regulatory changes that adversely affect the Company’s business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;

• costs or difficulties related to the completion and integration of acquisitions;

• the goodwill the Company has recorded in connection with acquisitions could become additionally impaired, which may have an adverse impact on earnings and capital;

• reduced demand for banking products and services;

• the risks presented by public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital in the future;

• competition from other financial services companies in the Company’s markets;

• dependence on the CEO, senior management team and Presidents of its bank divisions;

• potential interruption or breach in security of the Company’s systems; and

• the Company’s success in managing risks involved in the foregoing.

Please take into account that forward-looking statements speak only as of the date of this Form 10-Q. The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recent Acquisitions

On May 31, 2013, the Company completed the acquisition of Wheatland Bankshares, Inc. and its wholly-owned subsidiary, First State Bank, which has community bank offices in Wheatland, Torrington, and Guernsey, Wyoming. First State Bank will operate as a division of Glacier Bank under the name “First State Bank, division of Glacier Bank.” Cash of $11.0 million and 1,455,256 shares of the Company's common stock were issued in the acquisition which resulted in $13.4 million of goodwill. The Company incurred $571 thousand of legal and professional expenses in connection with the acquisition. The Company's results of operations and financial condition include the acquisition of First State Bank from the May 31, 2013 acquisition date.

On July 31, 2013, the Company completed the acquisition of North Cascades Bancshares, Inc. and its wholly-owned subsidiary, North Cascades National Bank, which has community bank offices in Chelan, Wenatchee, East Wenatchee, Omak, Brewster, Twisp, Okanogan, Grand Coulee and Waterville, Washington. North Cascades National Bank will operate as a division of Glacier Bank under the name “North Cascades Bank, division of Glacier Bank.” Cash of $13.8 million and 687,876 shares of the Company's common stock were issued in the acquisition.

Financial Condition Analysis

Assets

The following table summarizes the asset balances as of the dates indicated, and the amount of change from December 31, 2012 and June 30, 2012: 

								$ Change from		$ Change from
(Dollars in thousands)	June 30, 2013			December 31, 2012		June 30, 2012		December 31, 2012		June 30, 2012
Cash and cash equivalents	$	132,456		187,040		140,419		(54,584	)	(7,963	)
Investment securities, available-for-sale	3,721,377			3,683,005		3,404,282		38,372		317,095
Loans receivable
Residential real estate	531,834			516,467		525,551		15,367		6,283
Commercial	2,544,787			2,278,905		2,293,876		265,882		250,911
Consumer and other	596,835			602,053		625,769		(5,218	)	(28,934	)
Loans receivable	3,673,456			3,397,425		3,445,196		276,031		228,260
Allowance for loan and lease losses	(130,883		)	(130,854	)	(137,459	)	(29	)	6,576
Loans receivable, net	3,542,573			3,266,571		3,307,737		276,002		234,836
Other assets	600,410			610,824		581,664		(10,414	)	18,746
Total assets	$	7,996,816		7,747,440		7,434,102		249,376		562,714

Excluding retained investment securities of $21.6 million from the acquisition of First State Bank, investment securities increased $41.7 million, or 1 percent, during the current quarter and increased $16.8 million, or less than 1 percent, from December 31, 2012. The Company continued to purchase investment securities during the current quarter primarily to offset principal payments. The investment securities purchased during the current quarter included U.S. agency mortgage-backed securities, U.S. agency collateralized mortgage obligations (“CMO”), corporate and municipal bonds. The investment securities represent 47 percent of total assets at June 30, 2013, compared to 48 percent at December 31, 2012 and 46 percent at June 30, 2012.

Excluding the loans receivable of $171.2 million from the acquisition of First State Bank, the loan portfolio increased $98.4 million, or 3 percent, during the current quarter and increased $57.1 million, or 2 percent, from the prior year second quarter. Excluding the acquisition, all loan categories increased during the current quarter with the largest increase in commercial loans, which increased $93.0 million, or 4 percent. Excluding the acquisition, commercial loans was the one loan category that increased from the prior year second quarter, which increased $106.7 million, or 5 percent, while consumer and other loans decreased $42.8 million, or 7 percent, and residential real estate loans decreased $6.9 million, or 1 percent, from the prior year second quarter. The decreases in consumer and other loans was primarily attributable to customers paying off home equity lines of credit.

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Liabilities

The following table summarizes the liability balances as of the dates indicated, and the amount of change from December 31, 2012 and June 30, 2012: 

					$ Change from		$ Change from
(Dollars in thousands)	June 30, 2013		December 31, 2012	June 30, 2012	December 31, 2012		June 30, 2012
Non-interest bearing deposits	$	1,236,104	1,191,933	1,066,662	44,171		169,442
Interest bearing deposits	4,122,093		4,172,528	3,915,607	(50,435	)	206,486
Repurchase agreements	300,024		289,508	466,784	10,516		(166,760	)
Federal Home Loan Bank advances	1,217,445		997,013	906,029	220,432		311,416
Other borrowed funds	8,489		10,032	9,973	(1,543	)	(1,484	)
Subordinated debentures	125,490		125,418	125,347	72		143
Other liabilities	58,169		60,059	67,519	(1,890	)	(9,350	)
Total liabilities	$	7,067,814	6,846,491	6,557,921	221,323		509,893

Non-interest bearing deposits of $1.236 billion increased $44.2 million, or 4 percent, from December 31, 2012 and increased $169 million, or 16 percent, from June 30, 2012. Excluding non-interest bearing deposits of $30.8 million from the First State Bank acquisition, non-interest bearing deposits at June 30, 2013 increased $13.4 million, or 1 percent, since December 31, 2012 and increased $139 million, or 13 percent, since June 30, 2012.

Interest bearing deposits of $4.122 billion at June 30, 2013 included $372 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposit and certificate accounts). Excluding interest bearing deposits of $224 million from the First State Bank acquisition, interest bearing deposits at June 30, 2013 decreased $275 million, or 7 percent, since December 31, 2012 and was primarily a result of a decrease of $262 million in wholesale deposits. Excluding the acquisition, interest bearing deposits at June 30, 2013 decreased $18.0 million, or less than 1 percent, from June 30, 2012 and included a decrease of $97.6 million in wholesale deposits.

Securities sold under agreements to repurchase (“repurchase agreements”) of $300 million at June 30, 2013 decreased $167 million, or 36 percent, from the prior year second quarter and was primarily due to a decrease of $185 million in wholesale repurchase agreements. Federal Home Loan Bank (“FHLB”) advances increased $220 million from the prior year end and increased $311 million since the prior year second quarter as a result of decreased brokered deposits or wholesale repurchase agreements and the increased need for funding.

34

Stockholders’ Equity

The following table summarizes the stockholders’ equity balances as of the dates indicated, and the amount of change from December 31, 2012 and June 30, 2012: 

								$ Change from		$ Change from
(Dollars in thousands, except per share data)	June 30, 2013			December 31, 2012		June 30, 2012		December 31, 2012		June 30, 2012
Common equity	$	905,620		852,987		832,128		52,633		73,492
Accumulated other comprehensive income	23,382			47,962		44,053		(24,580	)	(20,671	)
Total stockholders’ equity	929,002			900,949		876,181		28,053		52,821
Goodwill and core deposit intangible, net	(126,771		)	(112,274	)	(113,297	)	(14,497	)	(13,474	)
Tangible stockholders’ equity	$	802,231		788,675		762,884		13,556		39,347
Stockholders’ equity to total assets	11.62		%	11.63	%	11.79	%
Tangible stockholders’ equity to total tangible assets	10.19		%	10.33	%	10.42	%
Book value per common share	$	12.63		12.52		12.18		0.11		0.45
Tangible book value per common share	$	10.91		10.96		10.61		(0.05	)	0.30
Market price per share at end of period	$	22.19		14.71		15.46		7.48		6.73

Tangible stockholders' equity of $802 million increased $13.6 million, or 2 percent, from the prior year end as a result of stock issued in connection with the acquisition of First State Bank and an increase in earnings retention which was offset by the decrease in accumulated other comprehensive income. Tangible book value per common share of $10.91 decreased $0.05 per share from the prior year end as a result of the increased stock issued from the acquisition.

On June 27, 2013, the Company's Board of Directors declared a cash dividend of $0.15 per share, payable July 18, 2013 to shareholders of record on July 9, 2013. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Operating Results for Three Months Ended June 30, 2013

Compared to March 31, 2013 and June 30, 2012

Performance Summary

	Three Months ended
(Dollars in thousands, except per share data)	June 30, 2013			March 31, 2013		June 30, 2012
Net income	$	22,702		20,768		18,981
Diluted earnings per share	$	0.31		0.29		0.26
Return on average assets (annualized)	1.17		%	1.11	%	1.04	%
Return on average equity (annualized)	9.78		%	9.20	%	8.69	%

The Company reported net income for the current quarter of $22.7 million, an increase of $3.7 million, or 20 percent, from the $19.0 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.31 per share, an increase of $0.05, or 19 percent, from the prior year second quarter diluted earnings per share of $0.26.

35

Income Summary

The following tables summarize revenue for the periods indicated, including the amount and percentage change from March 31, 2013 and June 30, 2012: 

	Three Months ended
(Dollars in thousands)	June 30, 2013			March 31, 2013		June 30, 2012
Net interest income
Interest income	$	62,151		57,955		64,192
Interest expense	7,185			7,458		9,044
Total net interest income	54,966			50,497		55,148
Non-interest income
Service charges, loan fees, and other fees	12,971			11,675		12,404
Gain on sale of loans	7,472			9,089		7,522
Gain (loss) on sale of investments	241			(137	)	—
Other income	2,538			2,323		1,865
Total non-interest income	23,222			22,950		21,791
	$	78,188		73,447		76,939
Net interest margin (tax-equivalent)	3.30		%	3.14	%	3.49	%

	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	March 31, 2013			June 30, 2012			March 31, 2013		June 30, 2012
Net interest income
Interest income	$	4,196		$	(2,041	)	7	%	(3	)%
Interest expense	(273		)	(1,859		)	(4	)%	(21	)%
Total net interest income	4,469			(182		)	9	%	—	%
Non-interest income
Service charges, loan fees, and other fees	1,296			567			11	%	5	%
Gain on sale of loans	(1,617		)	(50		)	(18	)%	(1	)%
Gain (loss) on sale of investments	378			241			(276	)%	n/m
Other income	215			673			9	%	36	%
Total non-interest income	272			1,431			1	%	7	%
	$	4,741		$	1,249		6	%	2	%

__________

n/m - not measurable

36

Net Interest Income

The current quarter net interest income of $55.0 million increased $4.5 million, or 9 percent, over the prior quarter and decreased $182 thousand, or less than 1 percent, over the prior year second quarter. The current quarter interest income of $62.2 million increased $4.2 million, or 7 percent, over the prior quarter primarily as a result of the increase in interest income on the commercial loans and the increase in interest income on the investment portfolio. The current quarter increase in interest income on the investment portfolio was primarily a result of a decrease in premium amortization (net of discount accretion) on the investment securities (“premium amortization”). The Company has experienced a decrease in premium amortization for a second consecutive quarter, which has been a benefit to the Company compared to the significant increases experienced during the preceding seven quarters. Included in the current quarter interest income was $18.4 million of premium amortization on investment securities compared to $21.4 million in the prior quarter. The current quarter decrease in premium amortization on investment securities was $3.0 million during the current quarter compared to a decrease of $1.9 million in premium amortization in the prior quarter.

The current quarter interest expense of $7.2 million decreased 273 thousand, or 4 percent, from the prior quarter and decreased $1.9 million, or 21 percent, from the prior year second quarter. The cost of total funding (including non-interest bearing deposits) for the current quarter was 43 basis points compared to 46 basis points for the prior quarter and 57 basis points for the prior year second quarter. 

The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.30 percent, an increase of 16 basis points from the prior quarter net interest margin of 3.14 percent. Consistent with the prior quarter increase in the net interest margin, the increase during the current quarter was primarily attributable to the increased yield on the investment securities which was driven by a decrease in the premium amortization. Of the 33 basis points increase in yield on the investment securities in the current quarter, 34 basis points was due to the decrease in premium amortization. The premium amortization in the current quarter accounted for a 103 basis points reduction in the net interest margin compared to a 123 basis points reduction in the prior quarter and 94 basis points reduction in the net interest margin in the prior year second quarter.

Non-interest Income

Non-interest income for the current quarter totaled $23.2 million, an increase of $272 thousand over the prior quarter and an increase of $1.4 million over the same quarter last year. Service charge fee income increased $1.3 million, or 11 percent, from the prior quarter as a result of seasonal activity. Service charge fee income increased $567 thousand, or 5 percent, from the prior year second quarter. Although refinance activity remained historically elevated, gain of $7.5 million on the sale of loans for the current quarter decreased $1.6 million, or 18 percent, from the prior quarter as the Company has started to experience a slowing of refinance activity. Gain on sale of loans for the current quarter decreased $50 thousand, or 66 basis points, from the prior year second quarter. Other income of $2.5 million for the current quarter increased $673 thousand, or 36 percent, from the prior year second quarter primarily as a result of increases in income related to other real estate owned. Included in other income was operating revenue of $93 thousand from other real estate owned and gain of $622 thousand on the sales of other real estate owned, which totaled $715 thousand for the current quarter compared to $726 thousand for the prior quarter and $414 thousand for the prior year second quarter.

37

Non-interest Expense

The following tables summarize non-interest expense for the periods indicated, including the amount and percentage change from March 31, 2013 and June 30, 2012:

	Three Months ended
(Dollars in thousands)	June 30, 2013		March 31, 2013	June 30, 2012
Compensation and employee benefits	$	24,917	24,577	23,684
Occupancy and equipment	5,906		5,825	5,825
Advertising and promotions	1,621		1,548	1,713
Outsourced data processing	813		825	788
Other real estate owned	2,968		884	2,199
Federal Deposit Insurance Corporation premiums	1,154		1,304	1,300
Core deposit intangibles amortization	505		486	535
Other expense	10,597		7,985	10,146
Total non-interest expense	$	48,481	43,434	46,190

	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	March 31, 2013			June 30, 2012			March 31, 2013		June 30, 2012
Compensation and employee benefits	$	340		$	1,233		1	%	5	%
Occupancy and equipment	81			81			1	%	1	%
Advertising and promotions	73			(92		)	5	%	(5	)%
Outsourced data processing	(12		)	25			(1	)%	3	%
Other real estate owned	2,084			769			236	%	35	%
Federal Deposit Insurance Corporation premiums	(150		)	(146		)	(12	)%	(11	)%
Core deposit intangibles amortization	19			(30		)	4	%	(6	)%
Other expense	2,612			451			33	%	4	%
Total non-interest expense	$	5,047		$	2,291		12	%	5	%

Non-interest expense of $48.5 million for the current quarter increased by $5.0 million, or 12 percent, from the prior quarter and increased by $2.3 million, or 5 percent, from the prior year second quarter. Compensation and employee benefits increased by $340 thousand, or 1 percent, from the prior quarter and increased $1.2 million, or 5 percent, from the prior year second quarter as a result of the First State Bank acquisition and annual salary increases. Other real estate owned expense increased $2.1 million, or 236 percent, from the prior quarter and increased $769 thousand, or 35 percent, from the prior year second quarter. The current quarter other real estate owned expense of $3.0 million included $1.2 million of operating expense, $1.7 million of fair value write-downs, and $67 thousand of loss on sale of other real estate owned. Other real estate owned expense will fluctuate as the Company continues to work through non-performing loans and dispose of foreclosed properties. Other expense increased by $2.6 million, or 33 percent, from the prior quarter primarily from legal and professional expenses associated with the acquisition and expenses connected with New Market Tax Credit investments.

38

Efficiency Ratio

The efficiency ratio for the current quarter was 56 percent compared to 54 percent for the prior year second quarter. The increase in the efficiency ratio was primarily driven by the increase in non-interest expense.

Provision for Loan Losses

The following table summarizes the provision for loan losses, net charge-offs and select ratios relating to the provision for loan losses for the previous eight quarters:

(Dollars in thousands)	Provision for Loan Losses		Net Charge-Offs		ALLL as a Percent of Loans		Accruing Loans 30-89 Days Past Due as a Percent of Loans		Non-Performing Assets to Total Sub-sidiary Assets
Second quarter 2013	$	1,078	$	1,030	3.56	%	0.60	%	1.64	%
First quarter 2013	2,100		2,119		3.84	%	0.95	%	1.79	%
Fourth quarter 2012	2,275		8,081		3.85	%	0.80	%	1.87	%
Third quarter 2012	2,700		3,499		4.01	%	0.83	%	2.33	%
Second quarter 2012	7,925		7,052		3.99	%	1.41	%	2.69	%
First quarter 2012	8,625		9,555		3.98	%	1.24	%	2.91	%
Fourth quarter 2011	8,675		9,252		3.97	%	1.42	%	2.92	%
Third quarter 2011	17,175		18,877		3.92	%	0.60	%	3.49	%

The Company continued to experience another quarter of decreases in net charged-off loans with the improved credit quality. Net charged-off loans of $1.0 million during the current quarter decreased $1.1 million, or 51 percent, compared to the prior quarter and decreased $6.0 million, or 85 percent, from the prior year second quarter. The current quarter provision for loan losses of $1.1 million decreased $1.0 million from the prior quarter and decreased $6.8 million from the prior year second quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of provision for loan loss expense. 

The determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about current environmental factors which affect loan losses, such factors including economic conditions, changes in collateral values, net charge-offs, and other factors discussed below in “Additional Management’s Discussion and Analysis.”

Operating Results for Six Months ended June 30, 2013

Compared to June 30, 2012

Performance Summary

	Six Months ended
(Dollars in thousands, except per share data)	June 30, 2013			June 30, 2012
Net income	$	43,470		35,314
Diluted earnings per share	$	0.60		0.49
Return on average assets (annualized)	1.14		%	0.97	%
Return on average equity (annualized)	9.49		%	8.14	%

Net income for the six months ended June 30, 2013 was $43.5 million, an increase of $8.2 million, from the $35.3 million of net income for the prior year first six months. Diluted earnings per share for the first six months of the current year was $0.60 per share, an increase of $0.11, or 22 percent, from the diluted earnings per share in the prior year first six months.

39

Revenue Summary

The following table summarizes revenue for the periods indicated, including the amount and percentage change from June 30, 2012:

	Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012			$ Change			% Change
Net interest income
Interest income	$	120,106		$	132,076		$	(11,970	)	(9	)%
Interest expense	14,643			18,642			(3,999		)	(21	)%
Total net interest income	105,463			113,434			(7,971		)	(7	)%
Non-interest income
Service charges, loan fees, and other fees	24,646			23,842			804			3	%
Gain on sale of loans	16,561			14,335			2,226			16	%
Gain on sale of investments	104			—			104			n/m
Other income	4,861			3,952			909			23	%
Total non-interest income	46,172			42,129			4,043			10	%
	$	151,635		$	155,563		$	(3,928	)	(3	)%
Net interest margin (tax-equivalent)	3.23		%	3.61		%

__________

n/m - not measurable

Net Interest Income

Net interest income for the first six months of the current year decreased $8.0 million, or 7 percent, over the same period last year. Interest income decreased $12.0 million, or 9 percent, while interest expense decreased $4.0 million, or 21 percent, from the first six months of 2012 and was principally due to the increase in premium amortization on investment securities and the reduction of yields on loan balances. Interest income was reduced by $39.8 million in premium amortization on investment securities which was an increase of $10.6 million from the first six months of the prior year. The decrease in interest expense during the current year was primarily attributable to the decreases in interest rates on interest bearing deposits and borrowings.  The funding cost (including non-interest bearing deposits) for the first six months of 2013 was 44 basis points compared to 59 basis points for the first six months 2012. 

The net interest margin, on a tax-equivalent basis, for the first six months of 2013 was 3.23 percent, a 38 basis points reduction from the net interest margin of 3.61 percent for the first six months of 2012. The reduction was attributable to a lower yield on loans and higher premium amortization on investment securities, both of which outpaced the reduction in funding cost. The premium amortization for the first six months of 2013 accounted for a 111 basis points reduction in the net interest margin which was an increase of 24 basis points compared to the 87 basis points reduction in the net interest margin for the same period last year. 

Non-interest Income

Non-interest income of $46.2 million for the first six months of 2013 increased $4.0 million, or 10 percent, over the same period last year. Gain on sale of loans for the first six months of 2013 increased $2.2 million, or 16 percent, from the first six months of 2012 as a result of greater refinance volume, which has recently started to slow down, and loan origination activity. Other income for the first six months of 2013 increased $909 thousand, or 23 percent, over the first six months of 2012. Included in other income was operating revenue of $155 thousand from other real estate owned and gains of $1.3 million on the sale of other real estate owned, which aggregated $1.4 million for the first six months of 2013 compared to $942 thousand for the same period in the prior year.

40

Non-interest Expense Summary

The following table summarizes non-interest expense for the periods indicated, including the amount and percentage change from June 30, 2012:

	Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012		$ Change			% Change
Compensation and employee benefits	$	49,494	$	47,244	$	2,250		5	%
Occupancy and equipment	11,731		11,793		(62		)	(1	)%
Advertising and promotions	3,169		3,115		54			2	%
Outsourced data processing	1,638		1,634		4			—	%
Other real estate owned	3,852		9,021		(5,169		)	(57	)%
Federal Deposit Insurance Corporation premiums	2,458		3,012		(554		)	(18	)%
Core deposit intangibles amortization	991		1,087		(96		)	(9	)%
Other expense	18,582		18,329		253			1	%
Total non-interest expense	$	91,915	$	95,235	$	(3,320	)	(3	)%

Compensation and employee benefits for the first six months of 2013 increased $2.3 million, or 5 percent. Other real estate owned expense of $3.9 million in the first six months of 2013 decreased $5.2 million, or 57 percent, from the first six months of the prior year. The other real estate owned expense for the first six months of 2013 included $1.6 million of operating expenses, $2.0 million of fair value write-downs, and $302 thousand of loss on sale of other real estate owned.  

Efficiency Ratio

The efficiency ratio was 55 percent for the first six months of 2013 and 53 percent for the first six months of 2012. Although there was an increase in non-interest income from the first six months of the prior year, it was not enough to offset the decrease in net interest income which resulted in the increase in the efficiency ratio.

Provision for loan losses

The provision for loan losses was $3.2 million for the first six months of 2013, a decrease of $13.4 million, or 81 percent, from the same period in the prior year. Net charged-off loans during the first half of 2013 was $3.2 million, a decrease of $13.5 million from the first six months of 2012.

41

ADDITIONAL MANAGEMENT’S DISCUSSION AND ANALYSIS

Lending Activity and Practices

The Company focuses its lending activities primarily on the following types of loans: 1) first-mortgage, conventional loans secured by residential properties, particularly single-family, 2) commercial lending that concentrates on targeted businesses, and 3) installment lending for consumer purposes (e.g., auto, home equity, etc.). Supplemental information regarding the Company’s loan portfolio and credit quality based on regulatory classification is provided in the section captioned “Loans by Regulatory Classification” included in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The regulatory classification of loans is based primarily on the type of collateral for the loans. Loan information included in “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on the Company’s loan segments and classes which is based on the purpose of the loan, unless otherwise noted as a regulatory classification.

The following table summarizes the Company’s loan portfolio as of the dates indicated:

	June 30, 2013					December 31, 2012					June 30, 2012
(Dollars in thousands)	Amount			Percent		Amount			Percent		Amount			Percent
Residential real estate loans	$	531,834		15	%	$	516,467		16	%	$	525,551		16	%
Commercial loans
Real estate	1,821,600			52	%	1,655,508			51	%	1,651,690			50	%
Other commercial	723,187			20	%	623,397			19	%	642,186			19	%
Total	2,544,787			72	%	2,278,905			70	%	2,293,876			69	%
Consumer and other loans
Home equity	384,688			11	%	403,925			12	%	422,249			13	%
Other consumer	212,147			6	%	198,128			6	%	203,520			6	%
Total	596,835			17	%	602,053			18	%	625,769			19	%
Loans receivable	3,673,456			104	%	3,397,425			104	%	3,445,196			104	%
Allowance for loan and lease losses	(130,883		)	(4	)%	(130,854		)	(4	)%	(137,459		)	(4	)%
Loans receivable, net	$	3,542,573		100	%	$	3,266,571		100	%	$	3,307,737		100	%

42

Non-performing Assets

The following table summarizes information regarding non-performing assets at the dates indicated:

	At or for the Six Months ended			At or for the Year ended		At or for the Six Months ended
(Dollars in thousands)	June 30, 2013			December 31, 2012		June 30, 2012
Other real estate owned	$	40,713		45,115		69,170
Accruing loans 90 days or more past due
Residential real estate	240			451		421
Commercial	22			791		2,527
Consumer and other	194			237		319
Total	456			1,479		3,267
Non-accrual loans
Residential real estate	12,149			14,237		19,835
Commercial	65,968			68,887		92,693
Consumer and other	11,238			13,809		13,935
Total	89,355			96,933		126,463
Total non-performing assets 1	$	130,524		143,527		198,900
Non-performing assets as a percentage of subsidiary assets	1.64		%	1.87	%	2.69	%
Allowance for loan and lease losses as a percentage of non-performing loans	146		%	133	%	106	%
Accruing loans 30-89 days past due	$	22,062		27,097		48,707
Troubled debt restructurings not included in non-performing assets	$	80,453		100,151		88,483
Interest income 2	$	2,244		5,161		3,392

 __________

¹  As of June 30, 2013, non-performing assets have not been reduced by U.S. government guarantees of $2.9 million.

²  Amounts represent estimated interest income that would have been recognized on loans accounted for on a non-accrual basis as of the end of each period had such loans performed pursuant to contractual terms.

During the first half of 2013, the Company continued to maintained the positive trend of reducing non-performing assets that was established throughout 2012. Non-performing assets at June 30, 2013 were $131 million, a decrease of $4.9 million, or 4 percent, during the current quarter and a decrease of $68.4 million, or 34 percent, from a year ago. The largest category of non-performing assets was the land, lot and other construction category, a regulatory classification, which was $57.9 million, or 44 percent, of the non-performing assets at June 30, 2013. Included in this category was $26.0 million of land development loans and $15.6 million in unimproved land loans at June 30, 2013. The Company has continued to reduce the land, lot and other construction category over the prior two and one-half years. This category of non-performing assets was further reduced by $4.4 million, or 7 percent, during the current quarter. The Company's early stage delinquencies (accruing loans 30-89 days past due) of $22.1 million at June 30, 2013 decreased $10.2 million, or 32 percent, from the prior quarter and decreased $26.6 million, or 55 percent, from the prior year second quarter early stage delinquencies.

43

Most of the Company’s non-performing assets are secured by real estate, and based on the most current information available to management, including updated appraisals or evaluations (new or updated), the Company believes the value of the underlying real estate collateral is adequate to minimize significant charge-offs or loss to the Company. The Company evaluates the level of its non-performing assets, the values of the underlying real estate and other collateral, and related trends in net charge-offs in determining the adequacy of the ALLL. Through pro-active credit administration, the Company works closely with its borrowers to seek favorable resolution to the extent possible, thereby attempting to minimize net charge-offs or losses to the Company. Throughout the past year, the Company has maintained an adequate allowance while working to reduce non-performing assets. The improvement in the credit quality ratios over the past year is a product of this effort.

For non-performing construction loans involving residential structures, the percentage of completion exceeds 95 percent at June 30, 2013. For non-performing construction loans involving commercial structures, the percentage of completion ranges from projects not started to projects completed at June 30, 2013. During the construction loan term, all construction loan collateral properties are inspected at least monthly, or more frequently as needed, until completion. Draws on construction loans are predicated upon the results of the inspection and advanced based upon a percentage of completion basis versus original budget percentages. When construction loans become non-performing and the associated project is not complete, the Company on a case-by-case basis makes the decision to advance additional funds or to initiate collection/foreclosure proceedings. Such decision includes obtaining “as-is” and “at completion” appraisals for consideration of potential increases or decreases in the collateral’s value. The Company also considers the increased costs of monitoring progress to completion, and the related collection/holding period costs should collateral ownership be transferred to the Company. With very limited exception, the Company does not disburse additional funds on non-performing loans. Instead, the Company has proceeded to collection and foreclosure actions in order to reduce the Company’s exposure to loss on such loans.

Construction loans, a regulatory classification, accounted for 39 percent of the Company’s non-accrual loans as of June 30, 2013. Land, lot and other construction loans, a regulatory classification, were 95 percent of the non-accrual construction loans. Of the Company’s $34.7 million of non-accrual construction loans at June 30, 2013, 96 percent of such loans had collateral properties securing the loans in Western Montana and Idaho. With locations and operations in the contiguous northern Rocky Mountain states of Idaho and Montana, the geography and economies of each of these geographic areas are predominantly tied to real estate development given the sprawling abundance of timbered valleys and mountainous terrain with significant lakes, streams and watershed areas. Consistent with the general economic downturn, the market for upscale primary, secondary and other housing as well as the associated construction and building industries have stalled after years of significant growth. As the housing market (rental and owner-occupied) and related industries continue to recover from the downturn, the Company continues to reduce its exposure to loss in the land, lot and other construction loan portfolio.

For additional information on accounting policies relating to non-performing assets and impaired loans, see Note 1 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

Impaired Loans

Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans ninety days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., troubled debt restructuring).

Impaired loans were $193 million and $202 million as of June 30, 2013 and December 31, 2012, respectively. The ALLL includes specific valuation allowances of $11.4 million and $15.5 million of impaired loans as of June 30, 2013 and December 31, 2012, respectively. Of the total impaired loans at June 30, 2013, there were 31 significant commercial real estate and other commercial loans that accounted for $84.4 million, or 44 percent, of the impaired loans. The 31 loans were collateralized by 143 percent of the loan value, the majority of which had appraisals or evaluations (new or updated) during the last year, such appraisals reviewed at least quarterly taking into account current market conditions. Of the total impaired loans at June 30, 2013, there were 138 loans aggregating $101 million, or 52 percent, whereby the borrowers had more than one impaired loan. The amount of impaired loans that have had partial charge-offs during the year for which the Company continues to have concern about the collectability of the remaining loan balance was $2.2 million. Of these loans, there were charge-offs of $994 thousand during 2013.

44

Restructured Loans

A restructured loan is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The Company had TDR loans of $126 million and $151 million as of June 30, 2013 and December 31, 2012, respectively. The Company’s TDR loans are considered impaired loans of which $45.4 million and $50.9 million as of June 30, 2013 and December 31, 2012, respectively, are designated as non-accrual.

Each restructured debt is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service the debt as modified. The Company discourages the use of the multiple loan strategy when restructuring loans regardless of whether or not the notes are TDR loans. The Company does not have any commercial TDR loans as of June 30, 2013 that have repayment dates extended at or near the original maturity date for which the Company has not classified as impaired. At June 30, 2013, the Company has TDR loans of $38.3 million that are in non-accrual status or that have had partial charge-offs during the year, the borrowers of which continue to have $31.9 million in other loans that are on accrual status.

Other Real Estate Owned

The loan book value prior to the acquisition and transfer of the loan into other real estate owned (“OREO”) during 2013 was $12.5 million of which $2.6 million was residential real estate, $7.2 million was commercial, and $2.7 million was consumer loans. The fair value of the loan collateral acquired in foreclosure during 2013 was $9.9 million of which $2.5 million was residential real estate, $5.5 million was commercial, and $1.9 million was consumer loans. The following table sets forth the changes in OREO for the periods indicated:

	Six Months ended			Year ended		Six Months ended
(Dollars in thousands)	June 30, 2013			December 31, 2012		June 30, 2012
Balance at beginning of period	$	45,115		78,354		78,354
Acquisitions	190			—		—
Additions	9,889			27,536		16,372
Capital improvements	79			—		—
Write-downs	(1,971		)	(13,258	)	(6,653	)
Sales	(12,589		)	(47,517	)	(18,903	)
Balance at end of period	$	40,713		45,115		69,170

Allowance for Loan and Lease Losses

Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The ALLL methodology is designed to reasonably estimate the probable loan and lease losses within the Company’s loan portfolio. Accordingly, the ALLL is maintained within a range of estimated losses. The determination of the ALLL, including the provision for loan losses and net charge-offs, is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses, including the credit risk inherent in the loan portfolio, economic conditions nationally and in the local markets in which the Company operates, changes in collateral values, delinquencies, non-performing assets and net charge-offs.

Although the Company continues to actively monitor economic trends, soft economic conditions combined with potential declines in the values of real estate that collateralize most of the Company’s loan portfolio may adversely affect the credit risk and potential for loss to the Company.

The ALLL evaluation is well documented and approved by the Company’s Board of Directors. In addition, the policy and procedures for determining the balance of the ALLL are reviewed annually by the Company’s Board of Directors, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.

45

At the end of each quarter, the Company analyzes its loan portfolio and maintains an ALLL at a level that is appropriate and determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The allowance consists of a specific valuation allowance component and a general valuation allowance component. The specific valuation allowance component relates to loans that are determined to be impaired. A specific valuation allowance is established when the fair value of a collateral-dependent loan or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate) is lower than the carrying value of the impaired loan. The general valuation allowance component relates to probable credit losses inherent in the balance of the loan portfolio based on prior loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors.

The Glacier Bank (“Bank”) divisions’ credit administration reviews their respective loan portfolios to determine which loans are impaired and estimates the specific valuation allowance. The impaired loans and related specific valuation allowance are then provided to the Company’s credit administration for further review and approval. The Company’s credit administration also determines the estimated general valuation and reviews and approves the overall ALLL for the Company. The credit administration of the Company exercises significant judgment when evaluating the effect of applicable qualitative or environmental factors on the Company’s historical loss experience for loans not identified as impaired. Quantification of the impact upon the Company’s ALLL is inherently subjective as data for any factor may not be directly applicable, consistently relevant, or reasonably available for management to determine the precise impact of a factor on the collectability of the Company’s unimpaired loan portfolio as of each evaluation date. The Company’s credit administration documents its conclusions and rationale for changes that occur in each applicable factor’s weight (i.e., measurement) and ensures that such changes are directionally consistent based on the underlying current trends and conditions for the factor. To have directional consistency, the provision for loan losses and credit quality should generally move in the same direction.

The Company’s model of twelve bank divisions with separate management teams provides substantial local oversight to the lending and credit management function. The Company’s business model affords multiple reviews of larger loans before credit is extended, a significant benefit in mitigating and managing the Company’s credit risk. The geographic dispersion of the market areas in which the Company operates further mitigates the risk of credit loss. While this process is intended to limit credit exposure, there can be no assurance that further problem credits will not arise and additional loan losses incurred, particularly in periods of rapid economic downturns.

The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process of identifying impaired loans is necessary to support management’s evaluation of the ALLL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer and management’s evaluation of the loan portfolio credit quality. The loan review function also assesses the evaluation process and provides an independent analysis of the adequacy of the ALLL.

No assurance can be given that the Company will not, in any particular period, sustain losses that are significant relative to the ALLL amount, or that subsequent evaluations of the loan portfolio applying management’s judgment about then current factors, including economic and regulatory developments, will not require significant changes in the ALLL. Under such circumstances, this could result in enhanced provisions for loan losses.

The following table summarizes the allocation of the ALLL as of the dates indicated:

	June 30, 2013						December 31, 2012						June 30, 2012
(Dollars in thousands)	ALLL		Percent of ALLL in Category		Percent of Loans in Category		ALLL		Percent of  ALLL in Category		Percent of Loans in Category		ALLL		Percent of  ALLL in Category		Percent of Loans in Category
Residential real estate	$	14,797	11	%	14	%	$	15,482	12	%	15	%	$	18,139	13	%	15	%
Commercial real estate	73,885		57	%	50	%	74,398		57	%	49	%	79,098		58	%	48	%
Other commercial	24,116		18	%	20	%	21,567		16	%	18	%	20,570		15	%	19	%
Home equity	9,626		7	%	10	%	10,659		8	%	12	%	10,904		8	%	12	%
Other consumer	8,459		7	%	6	%	8,748		7	%	6	%	8,748		6	%	6	%
Totals	$	130,883	100	%	100	%	$	130,854	100	%	100	%	$	137,459	100	%	100	%

46

The following table summarizes the ALLL experience for the periods indicated:

	Six Months ended			Year ended		Six Months ended
(Dollars in thousands)	June 30, 2013			December 31, 2012		June 30, 2012
Balance at beginning of period	$	130,854		137,516		137,516
Provision for loan losses	3,178			21,525		16,550
Charge-offs
Residential real estate	(349		)	(5,267	)	(1,320	)
Commercial loans	(3,055		)	(21,578	)	(14,890	)
Consumer and other loans	(2,481		)	(7,827	)	(3,527	)
Total charge-offs	(5,885		)	(34,672	)	(19,737	)
Recoveries
Residential real estate	150			643		147
Commercial loans	1,944			4,088		2,491
Consumer and other loans	642			1,754		492
Total recoveries	2,736			6,485		3,130
Charge-offs, net of recoveries	(3,149		)	(28,187	)	(16,607	)
Balance at end of period	$	130,883		130,854		137,459
Allowance for loan and lease losses as a percentage of total loans	3.56		%	3.85	%	3.99	%
Net charge-offs as a percentage of total loans	0.09		%	0.83	%	0.48	%

At June 30, 2013, the allowance was $131 million, a decrease of $6.6 million from a year ago. The allowance was 3.56 percent of total loans outstanding at June 30, 2013, a decrease of 28 basis points from 3.84 percent at March 31, 2013, of which 17 basis points was attributable to loans being recorded at fair value from the First State Bank acquisition, resulting in no allowance being carried over. The allowance was 146 percent of non-performing loans at June 31, 2013, an increase from 133 percent at December 31, 2012 and an increase from 106 percent at June 30, 2012.

The Company’s allowance of $131 million is considered adequate to absorb losses from any class of its loan portfolio. For the periods ended June 30, 2013 and 2012, the Company believes the allowance is commensurate with the risk in the Company’s loan portfolio and is directionally consistent with the change in the quality of the Company’s loan portfolio.

When applied to the Company’s historical loss experience, the qualitative or environmental factors result in the provision for loan losses being recorded in the period in which the loss has probably occurred. When the loss is confirmed at a later date, a charge-off is recorded. During 2013, the provision for loan losses exceeded loan charge-offs, net of recoveries, by $29 thousand. During the same period in 2012, loan charge-offs, net of recoveries, exceeded the provision for loan losses by $57 thousand.

The Company provides commercial services to individuals, small to medium size businesses, community organizations and public entities from 110 locations, including 102 branches, across Montana, Idaho, Wyoming, Colorado, Utah, and Washington. The Rocky Mountain states in which the Company operates has diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the changes in the global, national, and local economies are not uniform across the Company’s geographic locations.

47

Although there continues to be heightened uncertainty in the economic environment, there was notable improvements during the last year compared to the past several years. There was steady growth in the housing permits, housing starts, and completions for new privately owned units during the last year in Montana, Idaho, Colorado and Utah in relation to the US national statistics. There was improvement in single family residential real estate construction and sales for all of the Company’s market areas. Single family residential collateral values in Idaho, Wyoming and Montana stabilized (with some improvement in isolated markets in which the Company operates) compared to the prior year and prior 5 year historical trends. There was a steady decline in the number of foreclosures initiated in 2012 for Montana, Idaho, and Wyoming. The unemployment rates for the states in which the Company conducts operations were generally lower compared to the national unemployment rate. The national unemployment rate increased steadily from 5.0 in the first part of 2008 to a range of 7.8 to 10.0 during 2009 through 2012 and has declined to 7.6 in June of 2013. Agricultural price declines in livestock and grain in 2009 have recovered significantly and remain strong. While prices for oil have held strong, prices for natural gas continue to remain weak (due to excess supply) especially when compared to the exceptionally high price levels of natural gas during 2008. The tourism industry and related lodging continues to be a source of strength for the locations where the Company’s market areas have national parks and similar recreational areas in the market areas served.

In evaluating the need for a specific or general valuation allowance for impaired and unimpaired loans, respectively, within the Company’s construction loan portfolio (i.e., regulatory classification), including residential construction and land, lot and other construction loans, the credit risk related to such loans was considered in the ongoing monitoring of such loans, including assessments based on current information, including appraisals or evaluations (new or updated) of the underlying collateral, expected cash flows and the timing thereof, as well as the estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the construction loan. Construction loans are 12 percent of the Company’s total loan portfolio and account for 39 percent of the Company’s non-accrual loans at June 30, 2013. Collateral securing construction loans includes residential buildings (e.g., single/multi-family and condominiums), commercial buildings, and associated land (multi-acre parcels and individual lots, with and without shorelines).

The Company’s allowance consisted of the following components as of the dates indicated:

(Dollars in thousands)	June 30, 2013		December 31, 2012	June 30, 2012
Specific valuation allowance	$	11,382	15,534	19,208
General valuation allowance	119,501		115,320	118,251
Total ALLL	$	130,883	130,854	137,459

The ALLL as a percentage of loans decreased 29 basis points from December 31, 2012 to June 30, 2013, of which 12 basis points were due to $171 million of loans receivable from the First State Bank acquisition which were recorded at fair value with no ALLL being carried over. During 2013, the ALLL decreased by $29 thousand, the net result of a $4.2 million decrease in the specific valuation allowance and a $4.2 million increase in the general valuation allowance. The decrease in the specific valuation allowance since the prior year end was primarily due to the decrease in loans with a specific valuation allowance of $9.2 million. Further supporting the ALLL were the following trends:

• Non-accrual construction loans (i.e., residential construction and land, lot and other construction, each a regulatory classification) were $34.7 million, or 39 percent, of the $89.4 million of non-accrual loans at June 30, 2013, a decrease of $4.5 million from the prior year end and decrease of $25.7 million from June 30, 2012. Non-accrual construction loans accounted for 40 percent of the $96.9 million of non-accrual loans at year end 2012 and 48 percent of the $126 million of non-accrual loans at June 30, 2012.

• Non-performing loans as a percent of total loans decreased to 2.44 percent at June 30, 2013 as compared to 2.90 percent and 3.77 percent at year end 2012 and June 30, 2012, respectively.

• Impaired loans as a percent of total loans decreased to 5.24 percent at June 30, 2013 as compared to 5.94 percent and 6.91 percent at year end 2012 and June 30, 2012, respectively.

• Charge-offs, net of recoveries, in 2013 were $3.1 million, a $13.5 million decrease from the same period in 2012.

• Excluding the First State Bank acquisition, the loan portfolio increased $105 million from the prior year end.

For additional information regarding the ALLL, its relation to the provision for loan losses and risk related to asset quality, see Note 3 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

48

Loans by Regulatory Classification

Supplemental information regarding identification of the Company’s loan portfolio and credit quality based on regulatory classification is provided in the following tables. The regulatory classification of loans is based primarily on the type of collateral for the loans. There may be differences when compared to loan tables and loan amounts appearing elsewhere which reflect the Company’s internal loan segments and classes which are based on the purpose of the loan.

The following table summarizes the Company’s loan portfolio by regulatory classification:

	Loans Receivable, by Loan Type							%  Change from		%  Change from
(Dollars in thousands)	June 30, 2013			December 31, 2012		June 30, 2012		December 31, 2012		June 30, 2012
Custom and owner occupied construction	$	35,529		40,327		39,052		(12	)%	(9	)%
Pre-sold and spec construction	36,967			34,970		49,638		6	%	(26	)%
Total residential construction	72,496			75,297		88,690		(4	)%	(18	)%
Land development	77,080			80,132		93,361		(4	)%	(17	)%
Consumer land or lots	100,549			104,229		114,475		(4	)%	(12	)%
Unimproved land	50,492			53,459		59,548		(6	)%	(15	)%
Developed lots for operative builders	15,105			16,675		21,101		(9	)%	(28	)%
Commercial lots	16,987			19,654		25,035		(14	)%	(32	)%
Other construction	90,735			56,109		32,079		62	%	183	%
Total land, lot, and other construction	350,948			330,258		345,599		6	%	2	%
Owner occupied	753,692			710,161		701,078		6	%	8	%
Non-owner occupied	475,991			452,966		444,419		5	%	7	%
Total commercial real estate	1,229,683			1,163,127		1,145,497		6	%	7	%
Commercial and industrial	470,178			420,459		413,908		12	%	14	%
1st lien	718,793			738,854		690,638		(3	)%	4	%
Junior lien	77,359			82,083		87,544		(6	)%	(12	)%
Total 1-4 family	796,152			820,937		778,182		(3	)%	2	%
Home equity lines of credit	304,859			319,779		338,459		(5	)%	(10	)%
Other consumer	123,947			109,019		109,043		14	%	14	%
Total consumer	428,806			428,798		447,502		—	%	(4	)%
Agriculture	238,136			145,890		162,534		63	%	47	%
Other	182,552			158,160		151,726		15	%	20	%
Total loans receivable, including loans held for sale	3,768,951			3,542,926		3,533,638		6	%	7	%
Less loans held for sale 1	(95,495		)	(145,501	)	(88,442	)	(34	)%	8	%
Total loans receivable	$	3,673,456		3,397,425		3,445,196		8	%	7	%

__________

¹  Loans held for sale are primarily 1st lien 1-4 family loans.

49

The following tables summarize selected information identified by regulatory classification on the Company’s non-performing assets.

	Non-performing Assets, by Loan Type				Non- Accruing Loans	Accruing Loans 90  Days or More Past Due	Other Real Estate Owned
(Dollars in thousands)	June 30, 2013		December 31, 2012	June 30, 2012	June 30, 2013	June 30, 2013	June 30, 2013
Custom and owner occupied construction	$	1,291	1,343	2,914	1,291	—	—
Pre-sold and spec construction	1,319		1,603	7,473	571	—	748
Total residential construction	2,610		2,946	10,387	1,862	—	748
Land development	26,004		31,471	47,154	15,591	—	10,413
Consumer land or lots	5,475		6,459	9,728	2,138	—	3,337
Unimproved land	15,611		19,121	28,914	13,259	—	2,352
Developed lots for operative builders	2,093		2,393	6,932	1,356	—	737
Commercial lots	3,185		1,959	2,581	318	—	2,867
Other construction	5,532		5,105	5,124	189	—	5,343
Total land, lot and other construction	57,900		66,508	100,433	32,851	—	25,049
Owner occupied	16,503		15,662	18,210	11,897	—	4,606
Non-owner occupied	5,091		4,621	3,509	3,525	—	1,566
Total commercial real estate	21,594		20,283	21,719	15,422	—	6,172
Commercial and industrial	7,103		5,970	8,077	7,030	22	51
1st lien	22,543		25,739	34,285	17,646	297	4,600
Junior lien	5,819		6,660	8,861	5,716	—	103
Total 1-4 family	28,362		32,399	43,146	23,362	297	4,703
Home equity lines of credit	6,107		8,041	6,939	5,483	90	534
Other consumer	449		441	405	244	47	158
Total consumer	6,556		8,482	7,344	5,727	137	692
Agriculture	6,146		6,686	7,541	3,101	—	3,045
Other	253		253	253	—	—	253
Total	$	130,524	143,527	198,900	89,355	456	40,713

50

	Accruing 30-89 Days Delinquent Loans,  by Loan Type						%  Change from		%  Change from
(Dollars in thousands)	June 30, 2013		December 31, 2012		June 30, 2012		December 31, 2012		June 30, 2012
Custom and owner occupied construction	$	—	$	5	$	—	(100	)%	n/m
Pre-sold and spec construction	—		893		968		(100	)%	(100	)%
Total residential construction	—		898		968		(100	)%	(100	)%
Land development	—		191		460		(100	)%	(100	)%
Consumer land or lots	338		762		1,650		(56	)%	(80	)%
Unimproved land	341		422		1,129		(19	)%	(70	)%
Developed lots for operative builders	146		422		199		(65	)%	(27	)%
Commercial lots	—		11		—		(100	)%	n/m
Total land, lot and other construction	825		1,808		3,438		(54	)%	(76	)%
Owner occupied	7,297		5,523		10,943		32	%	(33	)%
Non-owner occupied	2,247		2,802		950		(20	)%	137	%
Total commercial real estate	9,544		8,325		11,893		15	%	(20	)%
Commercial and industrial	3,844		1,905		20,847		102	%	(82	)%
1st lien	2,807		7,352		7,220		(62	)%	(61	)%
Junior lien	980		732		880		34	%	11	%
Total 1-4 family	3,787		8,084		8,100		(53	)%	(53	)%
Home equity lines of credit	3,138		4,164		2,541		(25	)%	23	%
Other consumer	755		1,001		698		(25	)%	8	%
Total consumer	3,893		5,165		3,239		(25	)%	20	%
Agriculture	169		912		222		(81	)%	(24	)%
Total	$	22,062	$	27,097	$	48,707	(19	)%	(55	)%

__________

n/m - not measurable

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The following table summarizes net charge-offs at the dates indicated, including identification by regulatory classification:

	Net Charge-Offs (Recoveries), Year-to-Date Period Ending, By Loan Type						Charge-Offs	Recoveries
(Dollars in thousands)	June 30, 2013			December 31, 2012	June 30, 2012		June 30, 2013	June 30, 2013
Custom and owner occupied construction	$	(1	)	24	—		—	1
Pre-sold and spec construction	(16		)	2,489	2,393		—	16
Total residential construction	(17		)	2,513	2,393		—	17
Land development	(76		)	3,035	2,706		247	323
Consumer land or lots	290			4,003	1,957		580	290
Unimproved land	233			636	517		256	23
Developed lots for operative builders	(11		)	1,802	1,201		73	84
Commercial lots	251			362	(81	)	254	3
Other construction	(128		)	—	—		—	128
Total land, lot and other construction	559			9,838	6,300		1,410	851
Owner occupied	(306		)	1,312	1,318		407	713
Non-owner occupied	268			597	189		288	20
Total commercial real estate	(38		)	1,909	1,507		695	733
Commercial and industrial	823			2,651	819		1,374	551
1st lien	287			5,257	2,122		412	125
Junior lien	56			3,464	2,441		160	104
Total 1-4 family	343			8,721	4,563		572	229
Home equity lines of credit	1,346			2,124	807		1,466	120
Other consumer	141			262	32		344	203
Total consumer	1,487			2,386	839		1,810	323
Agriculture	21			125	94		21	—
Other	(29		)	44	92		3	32
Total	$	3,149		28,187	16,607		5,885	2,736

52

Investment Activity

The Company’s investment securities are generally classified as available-for-sale and are carried at estimated fair value with unrealized gains or losses, net of tax, reflected as an adjustment to stockholders’ equity. Investment securities designated as available-for-sale are summarized below:

	June 30, 2013				December 31, 2012				June 30, 2012
(Dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
U.S. government and federal agency	$	—	—	%	$	202	—	%	$	205	—	%
U.S. government sponsored enterprises	13,151		—	%	17,480		—	%	25,488		1	%
State and local governments	1,339,876		36	%	1,214,518		33	%	1,193,080		35	%
Corporate bonds	442,797		12	%	288,795		8	%	159,926		5	%
Collateralized debt obligations	—		—	%	1,708		—	%	2,734		—	%
Residential mortgage-backed securities	1,925,553		52	%	2,160,302		59	%	2,022,849		59	%
Total investment securities, available-for-sale	$	3,721,377	100	%	$	3,683,005	100	%	$	3,404,282	100	%

The Company’s investment portfolio is primarily comprised of residential mortgage-backed securities and state and local government securities which are largely exempt from federal income tax. The Company uses the maximum federal statutory rate of 35 percent in calculating its tax-equivalent yield. The residential mortgage-backed securities are typically short weighted-average life U.S. government agency CMOs and provide the Company with on-going liquidity as scheduled and pre-paid principal payments are made on the securities. It has generally been the Company’s policy to maintain a liquid portfolio above policy limits.

For additional investment activity information, see Note 2 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

Other-Than-Temporary Impairment on Securities Analysis

Non-marketable equity securities owned at June 30, 2013 primarily consisted of stock issued by the FHLB of Seattle, such shares measured at cost in recognition of the transferability restrictions imposed by the issuers. Other non-marketable equity securities include Federal Agriculture Mortgage Corporation and Bankers' Bank of the West Bancorporation, Inc.

With respect to FHLB stock, the Company evaluates such stock for other-than-temporary impairment. Such evaluation takes into consideration 1) FHLB deficiency, if any, in meeting applicable regulatory capital targets, including risk-based capital requirements, 2) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the time period for any such decline, 3) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, 4) the impact of legislative and regulatory changes on the FHLB, and 5) the liquidity position of the FHLB.

Based on the Company's analysis of its impaired non-marketable equity securities as of June 30, 2013, the Company determined that none of such securities had other-than-temporary impairment.

In evaluating debt securities for other-than-temporary impairment losses, management assesses whether the Company intends to sell the security or if it is more-likely-than-not that the Company will be required to sell the debt security. In so doing, management considers contractual constraints, liquidity, capital, asset / liability management and securities portfolio objectives.

For debt securities with limited or inactive markets, the impact of macroeconomic conditions in the U.S. upon fair value estimates includes higher risk-adjusted discount rates and changes in credit ratings provided by nationally recognized credit rating agencies, (e.g., Moody's, Standard and Poor's, and Fitch). In connection with changing macroeconomic conditions affecting the U.S. economy, on June 10, 2013, Standard and Poor's reaffirmed its AA+ rating of U.S. government long term debt but with an improved outlook of stable from negative. On July 18, 2013, Moody's also upgraded its outlook to stable from negative while maintaining its Aaa rating on U.S. government long-term debt. Fitch continues to maintain its AAA long-term debt rating of the U.S. though with a negative outlook. Standard and Poor's, Moody's and Fitch have similar credit ratings and outlooks with respect to certain long-term debt instruments issued by Fannie Mae, Freddie Mac and other U.S. government agencies linked to the long-term U.S. debt.

53

The following table separates investments with an unrealized loss position at June 30, 2013 into two categories: investments purchased prior to 2013 and those purchased during 2013. Of those investments purchased prior to 2013, the fair market value and unrealized loss at December 31, 2012 is also presented.

	June 30, 2013							December 31, 2012
(Dollars in thousands)	Fair Value		Unrealized Loss			Unrealized Loss as a Percent of Fair Value		Fair Value		Unrealized Loss			Unrealized Loss as a Percent of Fair Value
Temporarily impaired securities purchased prior to 2013
State and local governments	$	194,152	$	(7,891	)	(4	)%	$	202,994	$	225		—	%
Corporate bonds	38,180		(460		)	(1	)%	39,532		191			—	%
Residential mortgage-backed securities	119,316		(437		)	—	%	206,627		(1,720		)	(1	)%
Total	$	351,648	$	(8,788	)	(2	)%	$	449,153	$	(1,304	)	—	%
Temporarily impaired securities purchased during 2013
State and local governments	$	128,858	$	(8,496	)	(7	)%
Corporate bonds	173,412		(3,059		)	(2	)%
Residential mortgage-backed securities	408,217		(5,692		)	(1	)%
Total	$	710,487	$	(17,247	)	(2	)%
Temporarily impaired securities
State and local governments	$	323,010	$	(16,387	)	(5	)%
Corporate bonds	211,592		(3,519		)	(2	)%
Residential mortgage-backed securities	527,533		(6,129		)	(1	)%
Total	$	1,062,135	$	(26,035	)	(2	)%

With respect to severity, the following table provides the number of securities and amount of unrealized loss in the various ranges of unrealized loss as a percent of book value at June 30, 2013:

(Dollars in thousands)	Number of Debt Securities	Unrealized Loss
Greater than 15.0%	1	$	(15	)
10.1% to 15.0%	5	(1,500		)
5.1% to 10.0%	94	(11,504		)
0.1% to 5.0%	336	(13,016		)
Total	436	$	(26,035	)

With respect to the duration of the impaired debt securities, the Company identified 26 securities which have been continuously impaired for the twelve months ending June 30, 2013. The valuation history of such securities in the prior year(s) was also reviewed to determine the number of months in prior year(s) in which the identified securities was in an unrealized loss position.

54

The following table provides details of the 26 securities which have been continuously impaired for the twelve months ended June 30, 2013, including the most notable loss for any one bond in each category.

(Dollars in thousands)	Number of Debt Securities	Unrealized Loss for 12 Months Or More			Most Notable Loss
State and local governments	18	$	(400	)	(122	)
Residential mortgage-backed securities	8	(43		)	(15	)
Total	26	$	(443	)

Of the 8 residential mortgage-backed securities, 5 have underlying collateral consisting of U.S. government guaranteed mortgages (e.g., FNMA) and U.S. government sponsored enterprise (e.g., FHLMC) guaranteed mortgages. Each of the 3 remaining residential mortgage-backed securities have underlying non-guaranteed private label whole loan collateral of 30-year fixed rate residential mortgages considered to be “Prime”. The Company engages a third-party to perform detailed analysis for other-than-temporary impairment of such securities. Such analysis takes into consideration original and current data for the tranche and CMO structure, the non-guaranteed classification of each CMO tranche, current and deal inception credit ratings, credit support (protection) afforded the tranche through the subordination of other tranches in the CMO structure, the nature of the collateral (e.g., Prime or Alt-A) underlying each CMO tranche, and realized cash flows since purchase.

Based on the Company's analysis of its impaired debt securities as of June 30, 2013, the Company determined that none of such securities had other-than-temporary impairment.

Sources of Funds

The Company’s deposits have traditionally been the principal source of funds for use in lending and other business purposes. The Company has a number of different deposit programs designed to attract both short-term and long-term deposits from the general public by providing a wide selection of accounts and rates. These programs include non-interest bearing demand accounts, interest bearing checking, regular statement savings, money market deposit accounts, and fixed rate certificates of deposit with maturities ranging from three months to five years, negotiated-rate jumbo certificates, and individual retirement accounts. In addition, the Company obtains wholesale deposits through various programs and are classified as NOW accounts, money market deposit accounts and certificate accounts.

The Company also obtains funds from repayment of loans and investment securities, repurchase agreements, advances from the FHLB, other borrowings, and sale of loans and investment securities. Loan repayments are a relatively stable source of funds, while interest bearing deposit inflows and outflows are significantly influenced by general interest rate levels and market conditions. Borrowings and advances may be used on a short-term basis to compensate for reductions in normal sources of funds such as deposit inflows at less than projected levels. Borrowings also may be used on a long-term basis to support expanded activities and to match maturities of longer-term assets.

55

Short-term borrowings

A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by the Asset Liability Committee (“ALCO”) such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, federal funds purchased and retail and wholesale repurchase agreements. The Company also has access to the short-term discount window borrowing programs (i.e., primary credit) of the Federal Reserve Bank. FHLB advances and certain other short-term borrowings may be extended as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased cost of funds.

The following table provides information relating to short-term borrowings which consists of borrowings that mature within one year at period end: 

	At or for the Six Months ended			At or for the Year ended
(Dollars in thousands)	June 30, 2013			December 31, 2012
Repurchase agreements
Amount outstanding at end of period	$	300,024		289,508
Weighted interest rate on outstanding amount	0.29		%	0.32	%
Maximum outstanding at any month-end	$	312,505		466,784
Average balance	$	289,911		354,324
Weighted average interest rate	0.30		%	0.37	%
FHLB advances
Amount outstanding at end of period	$	939,109		720,000
Weighted interest rate on outstanding amount	0.24		%	0.28	%
Maximum outstanding at any month-end	$	939,109		792,018
Average balance	$	684,707		719,762
Weighted average interest rate	0.26		%	0.50	%

Contractual Obligations and Off-Balance Sheet Arrangements

The Company has outstanding debt obligations, the largest aggregate amount of which were FHLB advances. In the normal course of business, there may be various outstanding commitments to obtain funding, such as brokered deposits, and to extend credit, such as letters of credit and un-advanced loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. The Company does not anticipate any material losses as a result of these transactions.

Liquidity Risk

Liquidity risk is the possibility that the Company will not be able to fund present and future obligations as they come due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost. The objective of liquidity management is to maintain cash flows adequate to meet current and future needs for credit demand, deposit withdrawals, maturing liabilities and corporate operating expenses. Effective liquidity management entails three elements:

1. Assessing on an ongoing basis, the current and expected future needs for funds, and ensuring that sufficient funds or access to funds exist to meet those needs at the appropriate time.

2. Providing for an adequate cushion of liquidity to meet unanticipated cash flow needs that may arise from potential adverse circumstances ranging from high probability/low severity events to low probability/high severity.

3. Balancing the benefits between providing for adequate liquidity to mitigate potential adverse events and the cost of that liquidity.

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The following table identifies certain liquidity sources and capacity available to the Company at June 30, 2013: 

(Dollars in thousands)	June 30, 2013
FHLB advances
Borrowing capacity	$	1,462,204
Amount utilized	(1,217,445		)
Amount available	$	244,759
Federal Reserve Bank discount window
Borrowing capacity	$	595,443
Amount utilized	—
Amount available	$	595,443
Unsecured lines of credit available	$	130,000
Unencumbered investment securities
U.S. government sponsored enterprises	$	13,151
State and local governments	1,028,230
Corporate bonds	442,797
Residential mortgage-backed securities	594,562
Total unencumbered securities	$	2,078,740

The Company has a wide range of versatility in managing the liquidity and asset/liability mix. The Company’s ALCO committee meets regularly to assess liquidity risk, among other matters. The Company monitors liquidity and contingency funding alternatives through management reports of liquid assets (e.g., investment securities), both unencumbered and pledged, as well as borrowing capacity, both secured and unsecured.

Capital Resources

Maintaining capital strength continues to be a long-term objective. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. Taking these considerations into account, the Company may, as it has done in the past, decide to utilize a portion of its strong capital position to repurchase shares of its outstanding common stock, from time to time, depending on market price and other relevant considerations.

The Federal Reserve Board has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. The Company and the Bank were considered well capitalized by their respective regulators as of June 30, 2013 and 2012. There are no conditions or events after June 30, 2013 that management believes have changed the Company’s or the Bank’s risk-based capital category.

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The following table illustrates the Federal Reserve Board’s capital adequacy guidelines and the Company’s compliance with those guidelines as of June 30, 2013.

(Dollars in thousands)	Tier 1 Capital			Total Capital		Tier 1 Leverage Capital
Total stockholders’ equity	$	929,002		929,002		929,002
Less:
Goodwill and intangibles	(126,771		)	(126,771	)	(126,771		)
Net unrealized gains on investment securities and change in fair value of derivatives used for cash flow hedges	(23,382		)	(23,382	)	(23,382		)
Plus:
Allowance for loan and lease losses	—			62,905		—
Subordinated debentures	124,500			124,500		124,500
Total regulatory capital	$	903,349		966,254		903,349
Risk-weighted assets	$	4,964,271		4,964,271
Total adjusted average assets						$	7,623,699
Capital ratio	18.20		%	19.46	%	11.85		%
Regulatory “well capitalized” requirement	6.00		%	10.00	%
Excess over “well capitalized” requirement	12.20		%	9.46	%

In addition to the primary and contingent liquidity sources available, the Company has the capacity to issue 117,187,500 shares of common stock of which 73,564,900 has been issued as of June 30, 2013. The Company also has the capacity to issue 1,000,000 shares of preferred stock of which none has been issued as of June 30, 2013.

Federal and State Income Taxes

The Company files a consolidated federal income tax return, using the accrual method of accounting. All required tax returns have been timely filed. Financial institutions are subject to the provisions of the Internal Revenue Code of 1986, as amended, in the same general manner as other corporations.

Under Montana, Idaho, Colorado and Utah law, financial institutions are subject to a corporation income tax, which incorporates or is substantially similar to applicable provisions of the Internal Revenue Code. The corporation income tax is imposed on federal taxable income, subject to certain adjustments. State taxes are incurred at the rate of 6.75 percent in Montana, 7.6 percent in Idaho, 5 percent in Utah and 4.63 percent in Colorado. Wyoming and Washington do not impose a corporate-level income tax.

The Company has equity investments in Certified Development Entities which have received allocations of New Markets Tax Credits (“NMTC”). Administered by the Community Development Financial Institutions Fund of the U.S. Department of the Treasury, the NMTC program is aimed at stimulating economic and community development and job creation in low-income communities. The federal income tax credits received are claimed over a seven-year credit allowance period. The Company also has equity investments in Low-Income Housing Tax Credits which are indirect federal subsidies used to finance the development of affordable rental housing for low-income households. The federal income tax credits are claimed over a ten-year credit allowance period. The Company has investments in Qualified Zone Academy and Qualified School Construction bonds whereby the Company receives quarterly federal income tax credits in lieu of taxable interest income until the bonds mature. The federal income tax credits on these bonds are subject to federal and state income tax.

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Following is a list of expected federal income tax credits to be received in the years indicated.

(Dollars in thousands)	New Markets Tax Credits		Low-Income Housing Tax Credits	Investment Securities Tax Credits	Total
2013	$	2,775	1,270	930	4,975
2014	2,850		1,270	908	5,028
2015	2,850		1,175	883	4,908
2016	1,014		1,175	858	3,047
2017	450		1,060	782	2,292
Thereafter	—		3,082	4,456	7,538
	$	9,939	9,032	8,817	27,788

Income tax expense for the six months ended June 30, 2013 and 2012 was $13.1 million and $8.5 million, respectively. The Company’s effective tax rate for the six months ended June 30, 2013 and 2012 was 23.1 percent and 19.3 percent, respectively. The primary reason for the low effective rates are the amount of tax-exempt investment income and federal tax credits. The tax-exempt income was $20.4 million and $19.0 million for the six months ended June 30, 2013 and 2012, respectively. The federal tax credit benefits were $2.3 million and $2.2 million for the six months ended June 30, 2013 and 2012, respectively. The Company continues to hold its investments in select municipal securities and variable interest entities whereby the Company receives federal tax credits.

Average Balance Sheet

The following schedule provides 1) the total dollar amount of interest and dividend income of the Company for earning assets and the average yield; 2) the total dollar amount of interest expense on interest bearing liabilities and the average rate; 3) net interest and dividend income and interest rate spread; and 4) net interest margin (tax-equivalent).

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	Three Months ended						Six Months ended
	June 30, 2013						June 30, 2013
(Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate		Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	594,543	$	7,026	4.73	%	$	606,133	$	14,286	4.71	%
Commercial loans	2,381,231		29,865		5.03	%	2,326,455		58,497		5.07	%
Consumer and other loans	587,728		7,909		5.40	%	587,581		15,773		5.41	%
Total loans 1	3,563,502		44,800		5.04	%	3,520,169		88,556		5.07	%
Tax-exempt investment securities 2	1,025,295		15,229		5.94	%	992,693		29,379		5.92	%
Taxable investment securities 3	2,696,142		7,174		1.06	%	2,691,461		11,946		0.89	%
Total earning assets	7,284,939		67,203		3.70	%	7,204,323		129,881		3.64	%
Goodwill and intangibles	116,356						114,208
Non-earning assets	349,175						349,088
Total assets	$	7,750,470					$	7,667,619
Liabilities
Non-interest bearing deposits	$	1,177,041	$	—	—	%	$	1,159,210	$	—	—	%
NOW accounts	969,412		285		0.12	%	967,616		558		0.12	%
Savings accounts	513,840		58		0.05	%	504,957		131		0.05	%
Money market deposit accounts	999,353		497		0.20	%	998,227		1,011		0.20	%
Certificate accounts	1,120,206		2,292		0.82	%	1,101,274		4,719		0.86	%
Wholesale deposits 4	552,539		342		0.25	%	565,790		767		0.27	%
FHLB advances	1,001,899		2,648		1.06	%	961,997		5,299		1.11	%
Repurchase agreements, federal funds purchased and other borrowed funds	424,246		1,063		1.00	%	425,960		2,158		1.02	%
Total interest bearing liabilities	6,758,536		7,185		0.43	%	6,685,031		14,643		0.44	%
Other liabilities	60,553						59,168
Total liabilities	6,819,089						6,744,199
Stockholders’ Equity
Common stock	725						722
Paid-in capital	651,939						646,995
Retained earnings	233,104						226,806
Accumulated other comprehensive income	45,613						48,897
Total stockholders’ equity	931,381						923,420
Total liabilities and stockholders’ equity	$	7,750,470					$	7,667,619
Net interest income (tax-equivalent)			$	60,018					$	115,238
Net interest spread (tax-equivalent)					3.27	%					3.20	%
Net interest margin (tax-equivalent)					3.30	%					3.23	%

__________

¹  Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.

²  Includes tax effect of $4.7 million and $9.0 million on tax-exempt investment security income for the three and six months ended June 30, 2013, respectively.

³  Includes tax effect of $379 thousand and $760 thousand on investment security tax credits for the three and six months ended June 30, 2013, respectively.

⁴  Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts.

60

Rate/Volume Analysis

Net interest income can be evaluated from the perspective of relative dollars of change in each period. Interest income and interest expense, which are the components of net interest income, are shown in the following table on the basis of the amount of any increases (or decreases) attributable to changes in the dollar levels of the Company’s interest earning assets and interest bearing liabilities (“Volume”) and the yields earned and rates paid on such assets and liabilities (“Rate”). The change in interest income and interest expense attributable to changes in both volume and rates has been allocated proportionately to the change due to volume and the change due to rate. 

	Six Months ended June 30,
	2013 vs. 2012
	Increase (Decrease) Due to:
(Dollars in thousands)	Volume			Rate		Net
Interest income
Residential real estate loans	$	481		(1,474	)	(993	)
Commercial loans	1,105			(4,079	)	(2,974	)
Consumer and other loans	(1,309		)	(901	)	(2,210	)
Investment securities (tax-equivalent)	5,371			(10,565	)	(5,194	)
Total interest income	5,648			(17,019	)	(11,371	)
Interest expense
NOW accounts	105			(271	)	(166	)
Savings accounts	28			(73	)	(45	)
Money market deposit accounts	161			(326	)	(165	)
Certificate accounts	242			(1,822	)	(1,580	)
Wholesale deposits	(141		)	(280	)	(421	)
FHLB advances	(292		)	(1,008	)	(1,300	)
Repurchase agreements, federal funds purchased and other borrowed funds	(242		)	(80	)	(322	)
Total interest expense	(139		)	(3,860	)	(3,999	)
Net interest income (tax-equivalent)	$	5,787		(13,159	)	(7,372	)

Net interest income (tax-equivalent) decreased $7.4 million for the six months ended June 30, 2013 compared to the same period in 2012. The decrease in interest income was driven primarily by the premium amortization (net of discount accretion) on investment securities and reduced interest rates on the loan portfolio. Although, the Company was able to lower interest expense by reducing deposit and borrowing interest rates, it was not enough to offset the reduction in interest income.

Effect of inflation and changing prices

GAAP often requires the measurement of financial position and operating results in terms of historical dollars, without consideration for change in relative purchasing power over time due to inflation. Virtually all assets of the Company are monetary in nature; therefore, interest rates generally have a more significant impact on a company’s performance than does the effect of inflation.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company believes there have not been any material changes in information about the Company’s market risk than was provided in the 2012 Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(c)) as of the date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second quarter 2013, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various claims, legal actions and complaints which arise in the ordinary course of business. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial condition or results of operations of the Company.

Item 1A. Risk Factors

The Company believes there have been no material changes from risk factors previously disclosed in the 2012 Annual Report. The risks and uncertainties described in the 2012 Annual Report should be carefully reviewed. These are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties that the Company does not currently know about or that the Company currently believes are immaterial, or that the Company has not predicted, may also harm its business operations or adversely affect the Company. If any of these risks or uncertainties actually occurs, the Company’s business, financial condition, operating results or liquidity could be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not Applicable

(b) Not Applicable

(c) Not Applicable

Item 3. Defaults upon Senior Securities

(a) Not Applicable

(b) Not Applicable

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Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

(a) Not Applicable

(b) Not Applicable

Item 6. Exhibits

Exhibit 31.1 - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

Exhibit 31.2 - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

Exhibit 32 - Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

Exhibit 101 - The following financial information from Glacier Bancorp, Inc's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 is formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 8, 2013.

GLACIER BANCORP, INC.

/s/ Michael J. Blodnick

Michael J. Blodnick

President and CEO

/s/ Ron J. Copher

Ron J. Copher

Executive Vice President and CFO

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Michael J. Blodnick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2013	/s/ Michael J. Blodnick
	Michael J. Blodnick
	President/CEO

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Ron J. Copher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2013	/s/ Ron J. Copher
	Ron J. Copher
	Executive Vice President/CFO

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Glacier Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Michael J. Blodnick, President and Chief Executive Officer, and Ron J. Copher, Executive Vice President and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

August 8, 2013	/s/ Michael J. Blodnick
	Michael J. Blodnick
	President/CEO
August 8, 2013	/s/ Ron J. Copher
	Ron J. Copher
	Executive Vice President/CFO

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Mergers and Acquisitions Mergers and Acquisitions

6 Months Ended

Jun. 30, 2013

Mergers and Acquisitions [Abstract]

Mergers and Acquisitions

Note 9. Mergers and Acquisitions

On May 31, 2013, the Company acquired 100 percent of the outstanding common stock of Wheatland and its wholly-owned subsidiary, First State Bank, a community bank based in Wheatland, Wyoming. First State Bank provides community banking services to individuals and businesses from banking offices in Wheatland, Torrington and Guernsey, Wyoming. As a result of the acquisition, the Company will increase its presence in the State of Wyoming and will further diversify its loan, customer and deposit base with First State Bank’s strong commitment to agriculture. First State Bank will operate as a division of the Bank under the name “First State Bank, division of Glacier Bank.”

The Wheatland acquisition was valued at $39,315,000 and resulted in the Company issuing 1,455,256 shares of its common stock and $11,025,000 in cash in exchange for all of Wheatland’s outstanding common stock shares. The fair value of the Company’s common stock shares issued was determined on the basis of the closing market price of the Company’s common stock shares on the May 31, 2013 acquisition date.

The assets and liabilities of Wheatland were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the May 31, 2013 acquisition date, and Wheatland’s results of operations have been included in the Company’s consolidated statements of operations since that date. The following table summarizes the fair value of the net assets that the Company acquired from Wheatland:

(Dollars in thousands)	May 31, 2013
Assets
Cash and cash equivalents	$	23,148
Investment securities, available-for-sale	75,643
Loans receivable	171,199
Goodwill and core deposit intangible	15,488
Accrued income and other assets	15,063
Total assets	300,541
Liabilities
Deposits	255,197
Federal Home Loan Bank advances	5,467
Accrued expenses and other liabilities	562
Total liabilities	261,226
Purchase price	$	39,315

The excess of the purchase price over tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Wheatland. None of the goodwill is deductible for income tax purposes as the acquisition is accounted for as a tax-free exchange. The following table discloses the calculation of the purchase price and the resulting goodwill relating to the Wheatland acquisition:

(Dollars in thousands)	May 31, 2013
Purchase price
Fair value of Company common stock shares issued	$	28,290
Cash consideration for outstanding shares	11,025
Total purchase price	39,315
Fair value of net assets acquired
Tangible assets acquired	285,053
Core deposit intangible asset acquired	2,079
Liabilities assumed	(261,226		)
Total fair value of net assets acquired	25,906
Goodwill recognized	$	13,409

The fair value of the assets acquired includes loans with a fair value of $171,199,000. The gross principal and contractual interest due under the contracts is $176,698,000, all of which is expected to be collectible.

The Company incurred $571,000 of Wheatland third-party acquisition-related costs during the six month period ended June 30, 2013. The expenses are included in other expense in the Company's consolidated statements of operations.

Total income consisting of net interest income and non-interest income of the acquired operations of Wheatland was approximately $1,145,000 and net income was approximately $311,000 from May 31, 2013 to June 30, 2013. The following unaudited pro forma summary presents consolidated information of the Company as if the Wheatland acquisition had occurred on January 1, 2012:

	Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012
Net interest income and non-interest income	$	156,182	161,328
Net income	44,655		36,959

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Mergers and Acquisitions Purchase Price and Goodwill Recognized (Details 1) (Wheatland Bankshares [Member], USD $)	May 31, 2013
Wheatland Bankshares [Member]
Purchase price
Fair value of Company common stock shares issued	$ 28,290,000
Cash consideration for outstanding shares	11,025,000
Total purchase price	39,315,000
Fair value of net assets acquired
Tangible assets acquired	285,053,000
Core deposit intangible asset acquired	2,079,000
Liabilities assumed	(261,226,000)
Total fair value of net assets acquired	25,906,000
Goodwill recognized	$ 13,409,000

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest Income
Residential real estate loans	$ 7,026	$ 7,495	$ 14,286	$ 15,279
Commercial loans	29,865	30,430	58,497	61,471
Consumer and other loans	7,909	8,813	15,773	17,983
Investment securities	17,351	17,454	31,550	37,343
Total interest income	62,151	64,192	120,106	132,076
Interest Expense
Deposits	3,474	4,609	7,186	9,563
Securities sold under agreements to repurchase	210	303	437	602
Federal Home Loan Bank advances	2,648	3,218	5,299	6,599
Federal funds purchased and other borrowed funds	54	61	106	123
Subordinated debentures	799	853	1,615	1,755
Total interest expense	7,185	9,044	14,643	18,642
Net Interest Income	54,966	55,148	105,463	113,434
Provision for loan losses	1,078	7,925	3,178	16,550
Net interest income after provision for loan losses	53,888	47,223	102,285	96,884
Non-Interest Income
Service charges and other fees	11,818	11,291	22,404	21,783
Miscellaneous loan fees and charges	1,153	1,113	2,242	2,059
Gain on sale of loans	7,472	7,522	16,561	14,335
Gain on sale of investments	241	0	104	0
Other income	2,538	1,865	4,861	3,952
Total non-interest income	23,222	21,791	46,172	42,129
Non-Interest Expense
Compensation and employee benefits	24,917	23,684	49,494	47,244
Occupancy and equipment	5,906	5,825	11,731	11,793
Advertising and promotions	1,621	1,713	3,169	3,115
Outsourced data processing	813	788	1,638	1,634
Other real estate owned	2,968	2,199	3,852	9,021
Federal Deposit Insurance Corporation premiums	1,154	1,300	2,458	3,012
Core deposit intangibles amortization	505	535	991	1,087
Other expense	10,597	10,146	18,582	18,329
Total non-interest expense	48,481	46,190	91,915	95,235
Income Before Income Taxes	28,629	22,824	56,542	43,778
Federal and state income tax expense	5,927	3,843	13,072	8,464
Net Income	$ 22,702	$ 18,981	$ 43,470	$ 35,314
Basic earnings per share	$ 0.31	$ 0.26	$ 0.60	$ 0.49
Diluted earnings per share	$ 0.31	$ 0.26	$ 0.60	$ 0.49
Dividends declared per share	$ 0.15	$ 0.13	$ 0.29	$ 0.26
Average outstanding shares - basic	72,480,019	71,928,697	72,224,263	71,921,885
Average outstanding shares - diluted	72,548,172	71,928,853	72,282,104	71,921,990

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Investment Securities, Available-for-Sale

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Investment Securities, Available-for-Sale

Note 2. Investment Securities, Available-for-Sale

A comparison of the amortized cost and estimated fair value of the Company’s investment securities designated as available-for-sale is presented below.

	June 30, 2013
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government sponsored enterprises
Maturing after one year through five years	2.27	%	$	12,840	270	—		13,110
Maturing after five years through ten years	1.71	%	40		1	—		41
	2.27	%	12,880		271	—		13,151
State and local governments
Maturing within one year	2.02	%	5,066		41	—		5,107
Maturing after one year through five years	2.07	%	158,331		3,063	(265	)	161,129
Maturing after five years through ten years	3.11	%	55,026		904	(656	)	55,274
Maturing after ten years	4.53	%	1,089,519		44,313	(15,466	)	1,118,366
	4.17	%	1,307,942		48,321	(16,387	)	1,339,876
Corporate bonds
Maturing within one year	2.06	%	64,391		630	—		65,021
Maturing after one year through five years	2.10	%	357,036		2,571	(3,173	)	356,434
Maturing after five years through ten years	2.27	%	21,635		53	(346	)	21,342
	2.10	%	443,062		3,254	(3,519	)	442,797
Residential mortgage-backed securities	2.18	%	1,917,954		13,728	(6,129	)	1,925,553
Total investment securities	2.88	%	$	3,681,838	65,574	(26,035	)	3,721,377

	December 31, 2012
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government and federal agency
Maturing within one year	1.62	%	$	201	1	—		202
U.S. government sponsored enterprises
Maturing after one year through five years	2.30	%	17,064		371	—		17,435
Maturing after five years through ten years	2.03	%	44		1	—		45
	2.29	%	17,108		372	—		17,480
State and local governments
Maturing within one year	2.01	%	4,288		28	(2	)	4,314
Maturing after one year through five years	2.11	%	149,497		4,142	(142	)	153,497
Maturing after five years through ten years	2.95	%	38,346		1,102	(99	)	39,349
Maturing after ten years	4.70	%	935,897		82,823	(1,362	)	1,017,358
	4.29	%	1,128,028		88,095	(1,605	)	1,214,518
Corporate bonds
Maturing within one year	1.73	%	18,412		51	—		18,463
Maturing after one year through five years	2.22	%	250,027		4,018	(238	)	253,807
Maturing after five years through ten years	2.23	%	16,144		381	—		16,525
	2.19	%	284,583		4,450	(238	)	288,795
Collateralized debt obligations
Maturing after ten years	8.03	%	1,708		—	—		1,708
Residential mortgage-backed securities	1.95	%	2,156,049		8,860	(4,607	)	2,160,302
Total investment securities	2.71	%	$	3,587,677	101,778	(6,450	)	3,683,005

Included in the residential mortgage-backed securities are $39,375,000 and $46,733,000 as of June 30, 2013 and December 31, 2012, respectively, of non-guaranteed private label whole loan mortgage-backed securities of which none of the underlying collateral is considered “subprime.”

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities, nor do they reflect expected shorter maturities based upon early prepayment of principal. Weighted average yields are based on the level-yield method taking into account premium amortization, discount accretion and mortgage-backed securities’ prepayment provisions. Weighted average yields on tax-exempt investment securities exclude the federal income tax benefit.

The cost of each investment sold is determined by specific identification. Gain or loss on sale of investments consists of the following: 

	Three Months ended				Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012	June 30, 2013			June 30, 2012
Gross proceeds	$	75,649		—	$	79,488		—
Less amortized cost	(75,408		)	—	(79,384		)	—
Net gain on sale of investments	$	241		—	$	104		—
Gross gain on sale of investments	$	256		—	$	256		—
Gross loss on sale of investments	(15		)	—	(152		)	—
Net gain on sale of investments	$	241		—	$	104		—

Investments with an unrealized loss position are summarized as follows:

	June 30, 2013
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	312,576	(15,987	)	10,434	(400	)	323,010	(16,387	)
Corporate bonds	211,592		(3,519	)	—	—		211,592	(3,519	)
Residential mortgage-backed securities	511,542		(6,086	)	15,991	(43	)	527,533	(6,129	)
Total temporarily impaired securities	$	1,035,710	(25,592	)	26,425	(443	)	1,062,135	(26,035	)

	December 31, 2012
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	102,896	(1,531	)	4,533	(74	)	107,429	(1,605	)
Corporate bonds	41,856		(238	)	—	—		41,856	(238	)
Residential mortgage-backed securities	955,235		(4,041	)	62,905	(566	)	1,018,140	(4,607	)
Total temporarily impaired securities	$	1,099,987	(5,810	)	67,438	(640	)	1,167,425	(6,450	)

With respect to the Company’s review of its securities in an unrealized loss position at June 30, 2013, management determined that it did not intend to sell and there was no expected requirement to sell any of its temporarily impaired securities. Based on an analysis of its impaired securities as of June 30, 2013 and December 31, 2012, the Company determined that none of such securities had other-than-temporary impairment.

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of interest rate swap derivative financial instruments

(Dollars in thousands)	Forecasted Notional  Amount		Variable Interest Rate 1	Fixed Interest Rate 1		Term 2
Interest rate swap	$	160,000	3 month LIBOR	3.378	%	Oct. 21, 2014 - Oct. 21, 2021
Interest rate swap	100,000		3 month LIBOR	2.498	%	Nov 30, 2015 - Nov. 30, 2022

__________

¹The Company pays the fixed interest rate and the counterparties pay the Company the variable interest rate.

²No cash will be exchanged prior to the term.

Fair value of interest rate swap derivative financial instruments

		Fair Value
(Dollars in thousands)	Balance Sheet Location	June 30, 2013		December 31, 2012
Interest rate swaps	Other liabilities	$	1,270	16,832

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Subsequent Event Subsequent Event (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012	Jul. 31, 2013 North Cascades Bancshares [Member]
Percentage of Outstanding Common Stock Acquired			100.00%
Total purchase price			$ 30,581,000
Number of Shares Issued for Aquisition			687,876
Cash consideration for outstanding shares			13,838,000
Total assets	$ 7,996,816,000	$ 7,747,440,000	$ 326,703,000

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Subsequent Event Subsequent Event

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Event

Note 10. Subsequent Event

On July 31, 2013, the Company acquired 100 percent of the outstanding common stock of North Cascades Bankshares, Inc. (“NCBI”) and its wholly-owned subsidiary, North Cascades National Bank, a community bank based in Chelan, Washington. North Cascades National Bank provides community banking services to individuals and businesses in central Washington, with banking offices located in Chelan, Wenatchee, East Wenatchee, Omak, Brewster, Twisp, Okanogan, Grand Coulee and Waterville, Washington. The acquisition expands the Company’s market into central Washington and further diversifies the Company’s loan, customer and deposit base due to the region’s solid economic base of agriculture, fruit processing and tourism. North Cascades National Bank will operate as a division of the Bank under the name “North Cascades Bank, division of Glacier Bank.”

The NCBI acquisition was valued at $30,581,000 and resulted in the Company issuing 687,876 shares of its common stock and $13,838,000 in cash in exchange for all of NCBI's outstanding common stock shares. The fair value of the Company's common stock shares issued was determined on the basis of the closing market price of the Company's common stock shares on the July 31, 2013 acquisition date.

As of July 31, 2013, the book value of NCBI’s total assets was $326,703,000. The initial accounting for the NCBI acquisition has not been completed because the fair value of loans, deposits and numerous other items has not yet been determined.

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Fair Value of Assets and Liabilities (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	$ 3,721,377	$ 3,683,005
Interest rate swap [Member]
Fair value measurement of assets and liabilities measured at fair value
Total liabilities measured at fair value on a recurring basis	1,270	16,832
U.S. government and federal agency [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		202
U.S. government sponsored enterprises [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	13,151	17,480
State and local governments [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	1,339,876	1,214,518
Corporate bonds [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	442,797	288,795
Collateralized debt obligations [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		1,708
Residential mortgage-backed securities [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	1,925,553	2,160,302
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Interest rate swap [Member]
Fair value measurement of assets and liabilities measured at fair value
Total liabilities measured at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. government and federal agency [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. government sponsored enterprises [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | State and local governments [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate bonds [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Collateralized debt obligations [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Residential mortgage-backed securities [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	3,721,377	3,683,005
Significant Other Observable Inputs (Level 2) [Member] | Interest rate swap [Member]
Fair value measurement of assets and liabilities measured at fair value
Total liabilities measured at fair value on a recurring basis	1,270	16,832
Significant Other Observable Inputs (Level 2) [Member] | U.S. government and federal agency [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		202
Significant Other Observable Inputs (Level 2) [Member] | U.S. government sponsored enterprises [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	13,151	17,480
Significant Other Observable Inputs (Level 2) [Member] | State and local governments [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	1,339,876	1,214,518
Significant Other Observable Inputs (Level 2) [Member] | Corporate bonds [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	442,797	288,795
Significant Other Observable Inputs (Level 2) [Member] | Collateralized debt obligations [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		1,708
Significant Other Observable Inputs (Level 2) [Member] | Residential mortgage-backed securities [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	1,925,553	2,160,302
Significant Unobservable Inputs (Level 3) [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | Interest rate swap [Member]
Fair value measurement of assets and liabilities measured at fair value
Total liabilities measured at fair value on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | U.S. government and federal agency [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		0
Significant Unobservable Inputs (Level 3) [Member] | U.S. government sponsored enterprises [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | State and local governments [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | Corporate bonds [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | Collateralized debt obligations [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis		0
Significant Unobservable Inputs (Level 3) [Member] | Residential mortgage-backed securities [Member]
Fair value measurement of assets and liabilities measured at fair value
Total assets measured at fair value on a recurring basis	$ 0	$ 0

XML

Loans Receivable, Net (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loan portfolio aging analysis
Accruing loans 30-59 days past due	$ 18,772	$ 17,454
Accruing loans 60-89 days past due	3,290	9,643
Accruing loans 90 days or more past due	456	1,479
Non-accrual loans	89,355	96,933
Total past due and non-accrual loans	111,873	125,509
Current loans receivable	3,561,583	3,271,916
Total loans receivable	3,673,456	3,397,425
Residential Real Estate [Member]
Loan portfolio aging analysis
Accruing loans 30-59 days past due	1,318	3,897
Accruing loans 60-89 days past due	965	1,870
Accruing loans 90 days or more past due	240	451
Non-accrual loans	12,149	14,237
Total past due and non-accrual loans	14,672	20,455
Current loans receivable	517,162	496,012
Total loans receivable	531,834	516,467
Commercial Real Estate [Member]
Loan portfolio aging analysis
Accruing loans 30-59 days past due	8,904	7,424
Accruing loans 60-89 days past due	1,382	3,745
Accruing loans 90 days or more past due	0	594
Non-accrual loans	53,400	55,687
Total past due and non-accrual loans	63,686	67,450
Current loans receivable	1,757,914	1,588,058
Total loans receivable	1,821,600	1,655,508
Other Commercial [Member]
Loan portfolio aging analysis
Accruing loans 30-59 days past due	4,007	2,020
Accruing loans 60-89 days past due	297	645
Accruing loans 90 days or more past due	22	197
Non-accrual loans	12,568	13,200
Total past due and non-accrual loans	16,894	16,062
Current loans receivable	706,293	607,335
Total loans receivable	723,187	623,397
Home Equity [Member]
Loan portfolio aging analysis
Accruing loans 30-59 days past due	3,774	2,872
Accruing loans 60-89 days past due	385	2,980
Accruing loans 90 days or more past due	146	188
Non-accrual loans	9,303	11,241
Total past due and non-accrual loans	13,608	17,281
Current loans receivable	371,080	386,644
Total loans receivable	384,688	403,925
Other Consumer [Member]
Loan portfolio aging analysis
Accruing loans 30-59 days past due	769	1,241
Accruing loans 60-89 days past due	261	403
Accruing loans 90 days or more past due	48	49
Non-accrual loans	1,935	2,568
Total past due and non-accrual loans	3,013	4,261
Current loans receivable	209,134	193,867
Total loans receivable	$ 212,147	$ 198,128

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Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair value measurement of assets and liabilities measured at fair value on a recurring basis

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government sponsored enterprises	$	13,151	—	13,151	—
State and local governments	1,339,876		—	1,339,876	—
Corporate bonds	442,797		—	442,797	—
Residential mortgage-backed securities	1,925,553		—	1,925,553	—
Total assets measured at fair value on a recurring basis	$	3,721,377	—	3,721,377	—
Interest rate swaps	$	1,270	—	1,270	—
Total liabilities measured at fair value on a recurring basis	$	1,270	—	1,270	—

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government and federal agency	$	202	—	202	—
U.S. government sponsored enterprises	17,480		—	17,480	—
State and local governments	1,214,518		—	1,214,518	—
Corporate bonds	288,795		—	288,795	—
Collateralized debt obligations	1,708		—	1,708	—
Residential mortgage-backed securities	2,160,302		—	2,160,302	—
Total assets measured at fair value on a recurring basis	$	3,683,005	—	3,683,005	—
Interest rate swaps	$	16,832	—	16,832	—
Total liabilities measured at fair value on a recurring basis	$	16,832	—	16,832	—

Fair value measurement of assets measured at fair value on a non-recurring basis

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	5,459	—	—	5,459
Collateral-dependent impaired loans, net of ALLL	19,039		—	—	19,039
Total assets measured at fair value on a non-recurring basis	$	24,498	—	—	24,498

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	13,983	—	—	13,983
Collateral-dependent impaired loans, net of ALLL	22,966		—	—	22,966
Total assets measured at fair value on a non-recurring basis	$	36,949	—	—	36,949

Quantitative information about assets measured at fair value on a non-recurring basis for which Level 3 inputs were used

	Fair Value		Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)	June 30, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average) 1
Other real estate owned	$	5,459	Sales comparison approach	Selling costs	6.5% - 10.0% (7.3%)
				Adjustment to comparables	0.0% - 10.0% (0.1%)
Collateral-dependent impaired loans, net of ALLL	$	928	Cost approach	Selling costs	0.0% - 20.0% (4.4%)
	5,182		Income approach	Selling costs	8.0% - 8.0% (8.0%)
				Discount rate	6.0% - 8.3% (7.2%)
	8,515		Sales comparison approach	Selling costs	0.0% - 10.0% (7.9%)
				Discount rate	0.0% - 5.0% (2.5%)
				Adjustment to comparables	0.0% - 5.0% (0.2%)
	4,414		Combined approach	Selling costs	8.0% - 10.0% (8.7%)
				Discount rate	7.5% - 7.5% (7.5%)
				Adjustment to comparables	0.0% - 36.0% (17.4%)
	$	19,039

__________

¹ The range for selling costs and adjustments to comparables indicate reductions to the fair value.

Carrying amounts and estimated fair values of financial instruments

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	132,456	132,456	—	—
Investment securities, available-for-sale	3,721,377		—	3,721,377	—
Loans held for sale	95,495		95,495	—	—
Loans receivable, net of ALLL	3,542,573		—	3,457,402	181,191
Accrued interest receivable	43,593		43,593	—	—
Non-marketable equity securities	49,752		—	49,752	—
Total financial assets	$	7,585,246	271,544	7,228,531	181,191
Financial liabilities
Deposits	$	5,358,197	3,813,660	1,610,300	—
FHLB advances	1,217,445		—	1,237,320	—
Repurchase agreements and other borrowed funds	308,513		—	308,513	—
Subordinated debentures	125,490		—	78,062	—
Accrued interest payable	3,824		3,824	—	—
Interest rate swaps	1,270		—	1,270	—
Total financial liabilities	$	7,014,739	3,817,484	3,235,465	—

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	187,040	187,040	—	—
Investment securities, available-for-sale	3,683,005		—	3,683,005	—
Loans held for sale	145,501		145,501	—	—
Loans receivable, net of ALLL	3,266,571		—	3,184,987	186,201
Accrued interest receivable	37,770		37,770	—	—
Non-marketable equity securities	48,812		—	48,812	—
Total financial assets	$	7,368,699	370,311	6,916,804	186,201
Financial liabilities
Deposits	$	5,364,461	3,585,126	1,789,134	—
FHLB advances	997,013		—	1,027,101	—
Repurchase agreements and other borrowed funds	299,540		—	299,540	—
Subordinated debentures	125,418		—	70,895	—
Accrued interest payable	4,675		4,675	—	—
Interest rate swaps	16,832		—	16,832	—
Total financial liabilities	$	6,807,939	3,589,801	3,203,502	—

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Basic and diluted earnings per share

	Three Months ended			Six Months ended
(Dollars in thousands, except per share data)	June 30, 2013		June 30, 2012	June 30, 2013		June 30, 2012
Net income available to common stockholders, basic and diluted	$	22,702	18,981	$	43,470	35,314
Average outstanding shares - basic	72,480,019		71,928,697	72,224,263		71,921,885
Add: dilutive stock options and awards	68,153		156	57,841		105
Average outstanding shares - diluted	72,548,172		71,928,853	72,282,104		71,921,990
Basic earnings per share	$	0.31	0.26	$	0.60	0.49
Diluted earnings per share	$	0.31	0.26	$	0.60	0.49

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Components of accumulated other comprehensive income, included in stockholders' equity
Unrealized gains on available-for-sale securities	$ 39,539	$ 95,328
Tax effect	(15,381)	(37,083)
Net of tax amount	24,158	58,245
Unrealized losses on derivatives used for cash flow hedges	(1,270)	(16,832)
Tax effect	494	6,549
Net of tax amount	(776)	(10,283)
Total accumulated other comprehensive income	$ 23,382	$ 47,962

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Investment Securities, Available-for-Sale (Details Textual) (Residential mortgage-backed securities [Member], USD $)	Jun. 30, 2013	Dec. 31, 2012
Residential mortgage-backed securities [Member]
Investment Securities, Available-for-Sale (Textual) [Abstract]
Non-guaranteed private label whole loan mortgage-backed securities	$ 39,375,000	$ 46,733,000

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Loans Receivable, Net (Details Textual) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Net deferred fees, costs, premiums, and discounts included in loans receivable	$ 4,722,000		$ 1,379,000
Percentage of TDRs resulting from extensions of maturity date	48.00%	31.00%
Troubled debt restructurings, pre-modification loan balances, for which OREO was received	$ 12,505,000	$ 24,390,000
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Percentage of TDRs resulting from extensions of maturity date	44.00%	16.00%
Percentage of TDRs resulting of a combination of interest rate reduction, extension of maturity date, or reduction in face amount	33.00%	24.00%

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Fair Value of Assets and Liabilities (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets with a recorded change resulting from re-measuring at fair value on a non-recurring basis
Collateral-dependent impaired loans, net of ALLL	$ 19,039
Fair Value, Measurements, Nonrecurring [Member]
Assets with a recorded change resulting from re-measuring at fair value on a non-recurring basis
Other real estate owned	5,459	13,983
Collateral-dependent impaired loans, net of ALLL	19,039	22,966
Total assets measured at fair value on a non-recurring basis	24,498	36,949
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets with a recorded change resulting from re-measuring at fair value on a non-recurring basis
Other real estate owned	0	0
Collateral-dependent impaired loans, net of ALLL	0	0
Total assets measured at fair value on a non-recurring basis	0	0
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets with a recorded change resulting from re-measuring at fair value on a non-recurring basis
Other real estate owned	0	0
Collateral-dependent impaired loans, net of ALLL	0	0
Total assets measured at fair value on a non-recurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Assets with a recorded change resulting from re-measuring at fair value on a non-recurring basis
Other real estate owned	5,459	13,983
Collateral-dependent impaired loans, net of ALLL	19,039	22,966
Total assets measured at fair value on a non-recurring basis	$ 24,498	$ 36,949

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Investment Securities, Available-for-Sale (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Total investment securities, weighted yield	2.88%	2.71%
Total investment securities, amortized cost	$ 3,681,838	$ 3,587,677
Total investment securities, gross unrealized gains	65,574	101,778
Total investment securities, gross unrealized losses	(26,035)	(6,450)
Total investment securities, fair value	3,721,377	3,683,005
U.S. government and federal agency [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Maturing within one year, weighted yield		1.62%
Maturing within one year, amortized cost		201
Maturing within one year, gross unrealized gains		1
Maturing within one year, fair value		202
U.S. government sponsored enterprises [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Maturing after one year through five years, weighted yield	2.27%	2.30%
Maturing after five years through ten years, weighted yield	1.71%	2.03%
Total investment securities, weighted yield	2.27%	2.29%
Maturing after one year through five years, amortized cost	12,840	17,064
Maturing after five years through ten years, amortized cost	40	44
Total investment securities, amortized cost	12,880	17,108
Maturing after one year through five years, gross unrealized gains	270	371
Maturing after five years through ten years, gross unrealized gains	1	1
Total investment securities, gross unrealized gains	271	372
Maturing after one year through five years, fair value	13,110	17,435
Maturing after five years through ten years, fair value	41	45
Total investment securities, fair value	13,151	17,480
State and local governments [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Maturing within one year, weighted yield	2.02%	2.01%
Maturing after one year through five years, weighted yield	2.07%	2.11%
Maturing after five years through ten years, weighted yield	3.11%	2.95%
Maturing after ten years, weighted yield	4.53%	4.70%
Total investment securities, weighted yield	4.17%	4.29%
Maturing within one year, amortized cost	5,066	4,288
Maturing after one year through five years, amortized cost	158,331	149,497
Maturing after five years through ten years, amortized cost	55,026	38,346
Maturing after ten years, amortized cost	1,089,519	935,897
Total investment securities, amortized cost	1,307,942	1,128,028
Maturing within one year, gross unrealized gains	41	28
Maturing after one year through five years, gross unrealized gains	3,063	4,142
Maturing after five years through ten years, gross unrealized gains	904	1,102
Maturing after ten years, gross unrealized gains	44,313	82,823
Total investment securities, gross unrealized gains	48,321	88,095
Maturing within one year, gross unrealized losses	0	(2)
Maturing after one year through five years, gross unrealized losses	(265)	(142)
Maturing after five years through ten years, gross unrealized losses	(656)	(99)
Maturing after ten years, gross unrealized losses	(15,466)	(1,362)
Total investment securities, gross unrealized losses	(16,387)	(1,605)
Maturing within one year, fair value	5,107	4,314
Maturing after one year through five years, fair value	161,129	153,497
Maturing after five years through ten years, fair value	55,274	39,349
Maturing after ten years, fair value	1,118,366	1,017,358
Total investment securities, fair value	1,339,876	1,214,518
Corporate bonds [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Maturing within one year, weighted yield	2.06%	1.73%
Maturing after one year through five years, weighted yield	2.10%	2.22%
Maturing after five years through ten years, weighted yield	2.27%	2.23%
Total investment securities, weighted yield	2.10%	2.19%
Maturing within one year, amortized cost	64,391	18,412
Maturing after one year through five years, amortized cost	357,036	250,027
Maturing after five years through ten years, amortized cost	21,635	16,144
Total investment securities, amortized cost	443,062	284,583
Maturing within one year, gross unrealized gains	630	51
Maturing after one year through five years, gross unrealized gains	2,571	4,018
Maturing after five years through ten years, gross unrealized gains	53	381
Total investment securities, gross unrealized gains	3,254	4,450
Maturing within one year, gross unrealized losses	0	0
Maturing after one year through five years, gross unrealized losses	(3,173)	(238)
Maturing after five years through ten years, gross unrealized losses	(346)
Total investment securities, gross unrealized losses	(3,519)	(238)
Maturing within one year, fair value	65,021	18,463
Maturing after one year through five years, fair value	356,434	253,807
Maturing after five years through ten years, fair value	21,342	16,525
Total investment securities, fair value	442,797	288,795
Collateralized debt obligations [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Maturing after ten years, weighted yield		8.03%
Maturing after ten years, amortized cost		1,708
Maturing after ten years, gross unrealized losses		0
Maturing after ten years, fair value		1,708
Residential mortgage-backed securities [Member]
Comparison of amortized cost and estimated fair value of investment securities, available-for-sale
Total investment securities, weighted yield	2.18%	1.95%
Total investment securities, amortized cost	1,917,954	2,156,049
Total investment securities, gross unrealized gains	13,728	8,860
Total investment securities, gross unrealized losses	(6,129)	(4,607)
Total investment securities, fair value	$ 1,925,553	$ 2,160,302

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Derivatives and Hedging Activities (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Interest Rate Swap One [Member]
Summary of interest rate derivative financial instruments
Forecasted notional amount	$ 160,000
Interest rate swap, counterparty variable interest rate	3 month LIBOR
Interest rate swap, fixed interest rate	3.378%
Effective date of interest rate swap agreements	Oct. 21, 2014
Maturity date of interest rate swap agreements	Oct. 21, 2021
Interest Rate Swap Two [Member]
Summary of interest rate derivative financial instruments
Forecasted notional amount	$ 100,000
Interest rate swap, counterparty variable interest rate	3 month LIBOR
Interest rate swap, fixed interest rate	2.498%
Effective date of interest rate swap agreements	Nov. 30, 2015
Maturity date of interest rate swap agreements	Nov. 30, 2022

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Components of accumulated other comprehensive income

(Dollars in thousands)	June 30, 2013			December 31, 2012
Unrealized gains on available-for-sale securities	$	39,539		95,328
Tax effect	(15,381		)	(37,083	)
Net of tax amount	24,158			58,245
Unrealized losses on derivatives used for cash flow hedges	(1,270		)	(16,832	)
Tax effect	494			6,549
Net of tax amount	(776		)	(10,283	)
Total accumulated other comprehensive income	$	23,382		47,962

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $)	Total	Common Stock	Paid-in Capital	Retained Earnings Substantially Restricted	Accumulated Other Comprehensive Income
Balance, beginning at Dec. 31, 2011	$ 850,227,000	$ 719,000	$ 642,882,000	$ 173,139,000	$ 33,487,000
Balance, beginning, shares at Dec. 31, 2011		71,915,073
Net income	35,314,000			35,314,000
Comprehensive income, accumulated other comprehensive income	10,566,000				10,566,000
Comprehensive income, total	45,880,000
Cash dividends declared	(18,700,000)			(18,700,000)
Stock issuances under stock incentive plans, shares		16,313
Stock issuances under stock incentive plans, value	233,000		233,000
Stock-based compensation and related taxes	(1,459,000)		(1,459,000)
Balance, ending at Jun. 30, 2012	876,181,000	719,000	641,656,000	189,753,000	44,053,000
Balance, ending, shares at Jun. 30, 2012		71,931,386
Balance, beginning at Dec. 31, 2012	900,949,000	719,000	641,737,000	210,531,000	47,962,000
Balance, beginning, shares at Dec. 31, 2012	71,937,222	71,937,222
Net income	43,470,000			43,470,000
Comprehensive income, accumulated other comprehensive income	(24,580,000)				(24,580,000)
Comprehensive income, total	18,890,000
Cash dividends declared	(21,152,000)			(21,152,000)
Stock issuances under stock incentive plans, shares		172,422
Stock issuances under stock incentive plans, value	2,655,000	2,000	2,653,000
Stock issued in connection with acquisitions, shares		1,455,256
Stock issued in connection with acquisitions, value	28,290,000	15,000	28,275,000
Stock-based compensation and related taxes	(630,000)		(630,000)
Balance, ending at Jun. 30, 2013	$ 929,002,000	$ 736,000	$ 672,035,000	$ 232,849,000	$ 23,382,000
Balance, ending, shares at Jun. 30, 2013	73,564,900	73,564,900

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Activities
Net income	$ 43,470	$ 35,314
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,178	16,550
Net amortization of investment securities premiums and discounts	39,846	29,212
Federal Home Loan Bank stock dividends	0	(5)
Mortgage loans held for sale originated or acquired	(527,853)	(500,694)
Proceeds from sales of mortgage loans held for sale	616,180	547,893
Gain on sale of loans	(16,561)	(14,335)
Gain on sale of investments	(104)	0
Stock-based compensation expense, net of tax benefits	607	236
Excess tax deficiencies from stock-based compensation	188	0
Depreciation of premises and equipment	4,742	4,943
Loss on sale of other real estate owned and writedown	987	6,814
Amortization of core deposit intangibles	991	1,087
Net increase in accrued interest receivable	(3,673)	(2,147)
Net decrease in other assets	1,584	1,001
Net decrease in accrued interest payable	(1,007)	(749)
Net increase in other liabilities	3,406	8,577
Net cash provided by operating activities	165,981	133,697
Investing Activities
Proceeds from sales, maturities and prepayments of investment securities, available-for-sale	1,165,981	871,472
Purchases of investment securities, available-for-sale	(1,224,241)	(1,154,990)
Principal collected on loans	513,255	441,318
Loans originated or acquired	(650,378)	(478,541)
Net addition of premises and equipment and other real estate owned	(3,167)	(5,501)
Proceeds from sale of other real estate owned	11,066	18,073
Net sale (purchase) of non-marketable equity securities	60	(671)
Net cash received from acquisitions	12,123	0
Net cash used in investment activities	(175,301)	(308,840)
Financing Activities
Net (decrease) increase in deposits	(261,461)	161,056
Net increase in securities sold under agreements to repurchase	10,516	208,141
Net increase (decrease) in Federal Home Loan Bank advances	214,965	(163,017)
Net (decrease) increase in federal funds purchased and other borrowed funds	(1,471)	50
Cash dividends paid	(10,099)	(18,700)
Excess tax deficiencies from stock-based compensation	(188)	0
Proceeds from stock options exercised	2,474	0
Net cash (used in) provided by financing activities	(45,264)	187,530
Net (decrease) increase in cash and cash equivalents	(54,584)	12,387
Cash and cash equivalents at beginning of period	187,040	128,032
Cash and cash equivalents at end of period	132,456	140,419
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	15,648	19,391
Cash paid during the period for income taxes	13,660	8,221
Sale and refinancing of other real estate owned	2,507	668
Transfer of loans to other real estate owned	9,889	16,372
Supplemental Disclosure of Non-Cash Investing Activities
Fair value of common stock shares issued	28,290
Cash consideration for outstanding shares	11,025
Fair value of assets acquired	300,541
Liabilities assumed	$ 261,226

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Loans Receivable, Net

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Loans Receivable, Net

Note 3. Loans Receivable, Net

The following schedules summarize the activity in the ALLL on a portfolio class basis:

	Three Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,835		15,411		73,335		22,481		10,833		8,775
Provision for loan losses	1,078			(509	)	520		1,880		(1,016	)	203
Charge-offs	(2,271		)	(172	)	(538	)	(594	)	(291	)	(676	)
Recoveries	1,241			67		568		349		100		157
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Three Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	136,586		19,003		73,240		22,444		13,364		8,535
Provision for loan losses	7,925			22		10,374		(1,255	)	(1,471	)	255
Charge-offs	(8,679		)	(953	)	(5,549	)	(887	)	(1,077	)	(213	)
Recoveries	1,627			67		1,033		268		88		171
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

	Six Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,854		15,482		74,398		21,567		10,659		8,748
Provision for loan losses	3,178			(486	)	(432	)	3,579		441		76
Charge-offs	(5,885		)	(349	)	(1,303	)	(1,752	)	(1,629	)	(852	)
Recoveries	2,736			150		1,222		722		155		487
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Six Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,516		17,227		76,920		20,833		13,616		8,920
Provision for loan losses	16,550			2,085		13,010		1,304		(470	)	621
Charge-offs	(19,737		)	(1,320	)	(12,534	)	(2,356	)	(2,358	)	(1,169	)
Recoveries	3,130			147		1,702		789		116		376
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

The following schedules disclose the ALLL and loans receivable on a portfolio class basis:

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	11,382	1,026	6,100	3,553	24	679
Collectively evaluated for impairment	119,501		13,771	67,785	20,563	9,602	7,780
Total allowance for loan and lease losses	$	130,883	14,797	73,885	24,116	9,626	8,459
Loans receivable
Individually evaluated for impairment	$	192,573	24,719	117,836	36,705	8,432	4,881
Collectively evaluated for impairment	3,480,883		507,115	1,703,764	686,482	376,256	207,266
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	15,534	1,680	7,716	3,859	870	1,409
Collectively evaluated for impairment	115,320		13,802	66,682	17,708	9,789	7,339
Total allowance for loan and lease losses	$	130,854	15,482	74,398	21,567	10,659	8,748
Loans receivable
Individually evaluated for impairment	$	201,735	25,862	125,282	33,593	11,074	5,924
Collectively evaluated for impairment	3,195,690		490,605	1,530,226	589,804	392,851	192,204
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

Substantially all of the Company’s loan receivables are with customers in the Company’s geographic market areas. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ ability to honor their obligations is dependent upon the economic performance in the Company’s market areas. Net deferred fees, costs, premiums, and discounts of $4,722,000 and $1,379,000 were included in the loans receivable balance at June 30, 2013 and December 31, 2012, respectively.

The following schedules disclose the impaired loans by portfolio class basis:

	At or for the Three or Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	57,021	6,975	24,857	21,191	318	3,680
Unpaid principal balance	58,739		7,199	25,954	21,298	321	3,967
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	56,118		6,865	24,411	20,856	460	3,526
Average balance - six months	58,331		7,021	26,139	20,972	758	3,441
Loans without a specific valuation allowance
Recorded balance	$	135,552	17,744	92,979	15,514	8,114	1,201
Unpaid principal balance	154,815		18,846	107,676	17,731	9,318	1,244
Average balance - three months	137,096		17,967	95,185	13,816	8,466	1,662
Average balance - six months	137,722		18,154	95,352	13,340	8,883	1,993
Totals
Recorded balance	$	192,573	24,719	117,836	36,705	8,432	4,881
Unpaid principal balance	213,554		26,045	133,630	39,029	9,639	5,211
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	193,214		24,832	119,596	34,672	8,926	5,188
Average balance - six months	196,053		25,175	121,491	34,312	9,641	5,434

	At or for the Year ended December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	62,759	7,334	29,595	21,205	1,354	3,271
Unpaid principal balance	70,261		7,459	36,887	21,278	1,362	3,275
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	76,656		12,797	36,164	22,665	1,390	3,640
Loans without a specific valuation allowance
Recorded balance	$	138,976	18,528	95,687	12,388	9,720	2,653
Unpaid principal balance	149,412		19,613	102,798	14,318	9,965	2,718
Average balance	162,505		16,034	111,554	19,733	11,993	3,191
Totals
Recorded balance	$	201,735	25,862	125,282	33,593	11,074	5,924
Unpaid principal balance	219,673		27,072	139,685	35,596	11,327	5,993
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	239,161		28,831	147,718	42,398	13,383	6,831

Interest income recognized on impaired loans for the periods ended June 30, 2013 and December 31, 2012 was not significant.

The following is a loans receivable aging analysis on a portfolio class basis:

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	18,772	1,318	8,904	4,007	3,774	769
Accruing loans 60-89 days past due	3,290		965	1,382	297	385	261
Accruing loans 90 days or more past due	456		240	—	22	146	48
Non-accrual loans	89,355		12,149	53,400	12,568	9,303	1,935
Total past due and non-accrual loans	111,873		14,672	63,686	16,894	13,608	3,013
Current loans receivable	3,561,583		517,162	1,757,914	706,293	371,080	209,134
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	17,454	3,897	7,424	2,020	2,872	1,241
Accruing loans 60-89 days past due	9,643		1,870	3,745	645	2,980	403
Accruing loans 90 days or more past due	1,479		451	594	197	188	49
Non-accrual loans	96,933		14,237	55,687	13,200	11,241	2,568
Total past due and non-accrual loans	125,509		20,455	67,450	16,062	17,281	4,261
Current loans receivable	3,271,916		496,012	1,588,058	607,335	386,644	193,867
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

The following is a summary of the TDRs that occurred during the periods presented and the TDRs that occurred within the previous twelve months that subsequently defaulted during the periods presented on a portfolio class basis:

	Three Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	18		—	4	10	2	2
Pre-modification recorded balance	$	2,645	—	1,340	1,067	160	78
Post-modification recorded balance	$	2,693	—	1,340	1,084	191	78
Troubled debt restructurings that subsequently defaulted
Number of loans	5		1	2	2	—	—
Recorded balance	$	1,982	265	1,555	162	—	—

	Three Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	47		5	15	22	1	4
Pre-modification recorded balance	$	11,929	1,342	5,736	4,309	310	232
Post-modification recorded balance	$	10,650	1,342	4,444	4,322	310	232
Troubled debt restructurings that subsequently defaulted
Number of loans	9		—	4	2	1	2
Recorded balance	$	3,127	—	2,077	531	442	77

	Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	42		7	13	17	2	3
Pre-modification recorded balance	$	9,160	1,623	4,656	2,572	160	149
Post-modification recorded balance	$	9,378	1,794	4,656	2,588	191	149
Troubled debt restructurings that subsequently defaulted
Number of loans	10		1	5	3	—	1
Recorded balance	$	3,145	265	2,607	228	—	45

	Six Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	103		8	40	41	7	7
Pre-modification recorded balance	$	28,455	1,701	16,846	8,432	1,095	381
Post-modification recorded balance	$	26,469	1,701	14,838	8,454	1,095	381
Troubled debt restructurings that subsequently defaulted
Number of loans	20		—	11	5	2	2
Recorded balance	$	6,207	—	4,735	798	597	77

For the six months ended June 30, 2013 and 2012, the majority of TDRs occurring in most loan classes was a result of an extension of the maturity date which aggregated 48 percent and 31 percent, respectively, of total TDRs. For commercial real estate, the class with the largest dollar amount of TDRs, approximately 44 percent and 16 percent, respectively, was a result of an extension of the maturity date and 33 percent and 24 percent, respectively, was due to a combination of an interest rate reduction, extension of the maturity date, or reduction in the face amount.

In addition to the TDRs that occurred during the period provided in the preceding table, the Company had TDRs with pre-modification loan balances of $12,505,000 and $24,390,000 for the six months ended June 30, 2013 and 2012, respectively, for which other real estate owned (“OREO”) was received in full or partial satisfaction of the loans. The majority of such TDRs for both periods was in commercial real estate.

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Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Note 1. Nature of Operations and Summary of Significant Accounting Policies

General

Glacier Bancorp, Inc. (“Company”) is a Montana corporation headquartered in Kalispell, Montana. The Company provides a full range of banking services to individual and corporate customers in Montana, Idaho, Wyoming, Colorado, Utah and Washington through twelve divisions of its wholly-owned bank subsidiary, Glacier Bank (“Bank”). The Company offers a wide range of banking products and services, including transaction and savings deposits, real estate, commercial, agriculture and consumer loans, mortgage origination services, and retail brokerage services. The Company serves individuals, small to medium-sized businesses, community organizations and public entities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial condition as of June 30, 2013, the results of operations and comprehensive income for the three and six month periods ended June 30, 2013 and 2012, and changes in stockholders’ equity and cash flows for the six month periods ended June 30, 2013 and 2012. The condensed consolidated statement of financial condition of the Company as of December 31, 2012 has been derived from the audited consolidated statements of the Company as of that date.

The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results anticipated for the year ending December 31, 2013.

The Company is a defendant in legal proceedings arising in the normal course of business. In the opinion of management, the disposition of pending litigation will not have a material affect on the Company’s consolidated financial position, results of operations or liquidity.

Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the valuations related to investments and real estate acquired in connection with foreclosures or in satisfaction of loans. For the determination of the ALLL and real estate valuation estimates, management obtains independent appraisals (new or updated) for significant items. Estimates relating to investment valuations are obtained from independent third parties.

Principles of Consolidation

The consolidated financial statements of the Company include the parent holding company and the Bank. The Bank consists of twelve bank divisions, a treasury division and an information technology division. Each of the bank divisions operate under separate names, management teams and directors. The Company considers the Bank to be its sole operating segment as the Bank 1) engages in similar bank business activity from which it earns revenues and incurs expenses, 2) the operating results of the Bank are regularly reviewed by the Chief Executive Officer (i.e., the chief operating decision maker) who makes decisions about resources to be allocated to the Bank, and 3) financial information is available for the Bank. All significant inter-company transactions have been eliminated in consolidation.

On May 31, 2013, the Company completed its acquisition of Wheatland Bankshares, Inc. (“Wheatland”) and its wholly-owned subsidiary, First State Bank, a community bank based in Wheatland, Wyoming. The transaction was accounted for using the acquisition method, and the results of operations of First State Bank have been included in the Company’s consolidated financial statements as of the acquisition date.

The Company formed GBCI Other Real Estate (“GORE”) to isolate certain bank foreclosed properties for legal protection and administrative purposes and the remaining properties are currently held for sale. GORE is included in the Bank operating segment due to its insignificant activity.

The Company owns the following trust subsidiaries, each of which issued trust preferred securities as Tier 1 capital instruments: Glacier Capital Trust II, Glacier Capital Trust III, Glacier Capital Trust IV, Citizens (ID) Statutory Trust I, Bank of the San Juans Bancorporation Trust I, First Company Statutory Trust 2001 and First Company Statutory Trust 2003. The trust subsidiaries are not included in the Company’s consolidated financial statements.

Variable Interest Entities

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). The Company also has equity investments in Low-Income Housing Tax Credit (“LIHTC”) partnerships. The CDEs and the LIHTC partnerships are variable interest entities (“VIE”).

The following table summarizes the carrying amounts of the VIE’s assets and liabilities included in the Company’s consolidated financial statements at June 30, 2013 and December 31, 2012:

	June 30, 2013			December 31, 2012
(Dollars in thousands)	CDE (NMTC)		LIHTC	CDE (NMTC)	LIHTC
Assets
Loans receivable	$	35,840	—	35,480	—
Premises and equipment, net	—		13,745	—	16,066
Accrued interest receivable	113		—	117	—
Other assets	969		153	1,114	143
Total assets	$	36,922	13,898	36,711	16,209
Liabilities
Other borrowed funds	$	4,555	1,722	4,555	3,639
Accrued interest payable	4		5	4	6
Other liabilities	92		177	182	136
Total liabilities	$	4,651	1,904	4,741	3,781

Amounts presented in the table above are adjusted for intercompany eliminations. All assets presented can be used only to settle obligations of the consolidated VIEs and all liabilities presented consist of liabilities for which creditors and other beneficial interest holders therein have no recourse to the general credit of the Company.

Loans Receivable

Loans that are intended to be held-to-maturity are reported at the unpaid principal balance less net charge-offs and adjusted for deferred fees and costs on originated loans and unamortized premiums or discounts on acquired loans. Interest income is recognized using the interest method and includes discount accretion and premium amortization on acquired loans and net loan fees on originated loans which are amortized over the expected life of the loans using a method that approximates the level-yield interest method. The Company’s loan segments, which are based on the purpose of the loan, include residential real estate, commercial, and consumer loans. The Company’s loan classes, a further disaggregation of segments, include residential real estate loans (residential real estate segment), commercial real estate and other commercial loans (commercial segment), and home equity and other consumer loans (consumer segment).

Loans that are thirty days or more past due based on payments received and applied to the loan are considered delinquent. Loans are designated non-accrual and the accrual of interest is discontinued when the collection of the contractual principal or interest is unlikely. A loan is typically placed on non-accrual when principal or interest is due and has remained unpaid for ninety days or more. When a loan is placed on non-accrual status, interest previously accrued but not collected is reversed against current period interest income. Subsequent payments are applied to the outstanding principal balance if doubt remains as to the ultimate collectability of the loan. Interest accruals are not resumed on partially charged-off impaired loans. For other loans on nonaccrual, interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

The Company recognizes that while borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity for debt repayment. In determining whether non-restructured or unimpaired loans issued to a single or related party group of borrowers should continue to accrue interest when the borrower has other loans that are impaired or troubled debt restructurings (“TDR”), the Company on a quarterly or more frequent basis performs an updated and comprehensive assessment of the willingness and capacity of the borrowers to timely and ultimately repay their total debt obligations, including contingent obligations. Such analysis takes into account current financial information about the borrowers and financially responsible guarantors, if any, including for example:

• analysis of global, i.e., aggregate debt service for total debt obligations;

• assessment of the value and security protection of collateral pledged using current market conditions and alternative market assumptions across a variety of potential future situations; and

• loan structures and related covenants.

The Company considers impaired loans to be the primary credit quality indicator for monitoring the credit quality of the loan portfolio. Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans ninety days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., TDR). Interest income on accruing impaired loans is recognized using the interest method. The Company measures impairment on a loan-by-loan basis in the same manner for each class within the loan portfolio. An insignificant delay or shortfall in the amounts of payments would not cause a loan or lease to be considered impaired. The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the facts and circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest due.

A restructured loan is considered a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. A TDR loan is considered an impaired loan and a specific valuation allowance is established when the fair value of the collateral-dependent loan or present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate based on the original contractual rate) is lower than the carrying value of the impaired loan. The Company made the following types of loan modifications, some of which were considered a TDR:

• Reduction of the stated interest rate for the remaining term of the debt;

• Extension of the maturity date(s) at a stated rate of interest lower than the current market rate for newly originated debt having similar risk characteristics; and

• Reduction of the face amount of the debt as stated in the debt agreements.

For additional information relating to loans, see Note 3.

Allowance for Loan and Lease Losses

Based upon management’s analysis of the Company’s loan portfolio, the balance of the ALLL is an estimate of probable credit losses known and inherent within the Bank’s loan portfolio as of the date of the consolidated financial statements. The ALLL is analyzed at the loan class level and is maintained within a range of estimated losses. Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The determination of the ALLL and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses. The balance of the ALLL is highly dependent upon management’s evaluations of borrowers’ current and prospective performance, appraisals and other variables affecting the quality of the loan portfolio. Individually significant loans and major lending areas are reviewed periodically to determine potential problems at an early date. Changes in management’s estimates and assumptions are reasonably possible and may have a material impact upon the Company’s consolidated financial statements, results of operations or capital.

The ALLL consists of a specific valuation allowance component and a general valuation allowance component. The specific component relates to loans that are determined to be impaired and individually evaluated for impairment. The Company measures impairment on a loan-by-loan basis based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except when it is determined that repayment of the loan is expected to be provided solely by the underlying collateral. For impairment based on expected future cash flows, the Company considers all information available as of a measurement date, including past events, current conditions, potential prepayments, and estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan. For alternative ranges of cash flows, the likelihood of the possible outcomes is considered in determining the best estimate of expected future cash flows. The effective interest rate for a loan restructured in a TDR is based on the original contractual rate. For collateral-dependent loans and real estate loans for which foreclosure or a deed-in-lieu of foreclosure is probable, impairment is measured by the fair value of the collateral, less estimated cost to sell. The fair value of the collateral is determined primarily based upon appraisal or evaluation of the underlying real property value.

The general valuation allowance component relates to probable credit losses inherent in the balance of the loan portfolio based on historical loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors. The historical loss experience is based on the previous twelve quarters loss experience by loan class adjusted for risk characteristics in the existing loan portfolio. The same trends and conditions are evaluated for each class within the loan portfolio; however, the risk characteristics are weighted separately at the individual class level based on the Company’s judgment and experience.

The changes in trends and conditions of certain items include the following:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

• Changes in the nature and volume of the portfolio and in the terms of loans;

• Changes in experience, ability, and depth of lending management and other relevant staff;

• Changes in the volume and severity of past due and nonaccrual loans;

• Changes in the quality of the Company’s loan review system;

• Changes in the value of underlying collateral for collateral-dependent loans;

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s existing portfolio.

The ALLL is increased by provisions for loan losses which are charged to expense. The portions of loan balances determined by management to be uncollectible are charged-off as a reduction of the ALLL and recoveries of amounts previously charged-off are credited as an increase to the ALLL. The Company’s charge-off policy is consistent with bank regulatory standards. Consumer loans generally are charged off when the loan becomes over 120 days delinquent. Real estate acquired as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until such time as it is sold.

Impact of Recent Authoritative Accounting Guidance

The Accounting Standards Codification^™ (“ASC”) is the Financial Accounting Standards Board’s (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative.

In June 2011, FASB amended FASB ASC Topic 220, Comprehensive Income. The amendment provides an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Accounting Standards Update (“ASU”) No. 2011-12, Comprehensive Income (Topic 220) deferred the specific requirement of the amendment to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The amendments were effective retrospectively during interim and annual periods beginning after December 15, 2011. ASU No. 2013-2, Comprehensive Income (Topic 220) reversed the deferment of ASU 2011-12 and will be effective prospectively for reporting periods beginning after December 15, 2012 and early adoption is permitted. The Company early adopted ASU No. 2013-2 as of December 31, 2012. The Company has evaluated the impact of the adoption of these amendments and determined there was not a material effect on the Company’s financial position or results of operations.

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Goodwill Goodwill (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Goodwill [Line Items]
Net carrying value at beginning of period	$ 106,100	$ 106,100	$ 106,100	$ 106,100
Acquisitions	13,409	0	13,409	0
Net carrying value at end of period	$ 119,509	$ 106,100	$ 119,509	$ 106,100

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Mergers and Acquisitions Mergers and Acquisitions (Tables)

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Fair Value of the Net Assets Acquired

(Dollars in thousands)	May 31, 2013
Assets
Cash and cash equivalents	$	23,148
Investment securities, available-for-sale	75,643
Loans receivable	171,199
Goodwill and core deposit intangible	15,488
Accrued income and other assets	15,063
Total assets	300,541
Liabilities
Deposits	255,197
Federal Home Loan Bank advances	5,467
Accrued expenses and other liabilities	562
Total liabilities	261,226
Purchase price	$	39,315

Calculation of the Purchase Price and the Resulting Goodwill Relating to Acquisitions

(Dollars in thousands)	May 31, 2013
Purchase price
Fair value of Company common stock shares issued	$	28,290
Cash consideration for outstanding shares	11,025
Total purchase price	39,315
Fair value of net assets acquired
Tangible assets acquired	285,053
Core deposit intangible asset acquired	2,079
Liabilities assumed	(261,226		)
Total fair value of net assets acquired	25,906
Goodwill recognized	$	13,409

Unaudited Pro Forma Summary of the Company as if the Acquisitions had Occurred at the Beginning of the Period

	Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012
Net interest income and non-interest income	$	156,182	161,328
Net income	44,655		36,959

XML

Investment Securities, Available-for-Sale (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gain or loss on sale of investments
Gross proceeds	$ 75,649	$ 0	$ 79,488	$ 0
Less amortized cost	(75,408)	0	(79,384)	0
Net gain on sale of investments	241	0	104	0
Gross gain on sale of investments	256	0	256	0
Gross loss on sale of investments	$ (15)	$ 0	$ (152)	$ 0

XML

Loans Receivable, Net (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	$ 57,021	$ 57,021	$ 62,759
Loans with a specific valuation allowance, Unpaid principal balance	58,739	58,739	70,261
Loans with a specific valuation allowance, Average balance	56,118	58,331	76,656
Loans without a specific valuation allowance, Recorded balance	135,552	135,552	138,976
Loans without a specific valuation allowance, Unpaid principal balance	154,815	154,815	149,412
Loans without a specific valuation allowance, Average balance	137,096	137,722	162,505
Recorded balance	192,573	192,573	201,735
Unpaid principal balance	213,554	213,554	219,673
Specific valuation allowance	11,382	11,382	15,534
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	11,382	11,382	15,534
Average balance	193,214	196,053	239,161
Residential Real Estate [Member]
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	6,975	6,975	7,334
Loans with a specific valuation allowance, Unpaid principal balance	7,199	7,199	7,459
Loans with a specific valuation allowance, Average balance	6,865	7,021	12,797
Loans without a specific valuation allowance, Recorded balance	17,744	17,744	18,528
Loans without a specific valuation allowance, Unpaid principal balance	18,846	18,846	19,613
Loans without a specific valuation allowance, Average balance	17,967	18,154	16,034
Recorded balance	24,719	24,719	25,862
Unpaid principal balance	26,045	26,045	27,072
Specific valuation allowance	1,026	1,026	1,680
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	1,026	1,026	1,680
Average balance	24,832	25,175	28,831
Commercial Real Estate [Member]
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	24,857	24,857	29,595
Loans with a specific valuation allowance, Unpaid principal balance	25,954	25,954	36,887
Loans with a specific valuation allowance, Average balance	24,411	26,139	36,164
Loans without a specific valuation allowance, Recorded balance	92,979	92,979	95,687
Loans without a specific valuation allowance, Unpaid principal balance	107,676	107,676	102,798
Loans without a specific valuation allowance, Average balance	95,185	95,352	111,554
Recorded balance	117,836	117,836	125,282
Unpaid principal balance	133,630	133,630	139,685
Specific valuation allowance	6,100	6,100	7,716
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	6,100	6,100	7,716
Average balance	119,596	121,491	147,718
Other Commercial [Member]
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	21,191	21,191	21,205
Loans with a specific valuation allowance, Unpaid principal balance	21,298	21,298	21,278
Loans with a specific valuation allowance, Average balance	20,856	20,972	22,665
Loans without a specific valuation allowance, Recorded balance	15,514	15,514	12,388
Loans without a specific valuation allowance, Unpaid principal balance	17,731	17,731	14,318
Loans without a specific valuation allowance, Average balance	13,816	13,340	19,733
Recorded balance	36,705	36,705	33,593
Unpaid principal balance	39,029	39,029	35,596
Specific valuation allowance	3,553	3,553	3,859
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	3,553	3,553	3,859
Average balance	34,672	34,312	42,398
Home Equity [Member]
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	318	318	1,354
Loans with a specific valuation allowance, Unpaid principal balance	321	321	1,362
Loans with a specific valuation allowance, Average balance	460	758	1,390
Loans without a specific valuation allowance, Recorded balance	8,114	8,114	9,720
Loans without a specific valuation allowance, Unpaid principal balance	9,318	9,318	9,965
Loans without a specific valuation allowance, Average balance	8,466	8,883	11,993
Recorded balance	8,432	8,432	11,074
Unpaid principal balance	9,639	9,639	11,327
Specific valuation allowance	24	24	870
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	24	24	870
Average balance	8,926	9,641	13,383
Other Consumer [Member]
Summary of the impaired loans by portfolio class of loans
Loans with a specific valuation allowance, Recorded balance	3,680	3,680	3,271
Loans with a specific valuation allowance, Unpaid principal balance	3,967	3,967	3,275
Loans with a specific valuation allowance, Average balance	3,526	3,441	3,640
Loans without a specific valuation allowance, Recorded balance	1,201	1,201	2,653
Loans without a specific valuation allowance, Unpaid principal balance	1,244	1,244	2,718
Loans without a specific valuation allowance, Average balance	1,662	1,993	3,191
Recorded balance	4,881	4,881	5,924
Unpaid principal balance	5,211	5,211	5,993
Specific valuation allowance	679	679	1,409
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	679	679	1,409
Average balance	$ 5,188	$ 5,434	$ 6,831

XML

Mergers and Acquisitions Mergers and Acquisitions (Details Textual) (USD $)	3 Months Ended		6 Months Ended		1 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Wheatland Bankshares [Member]	Jun. 30, 2013 Wheatland Bankshares [Member]	May 31, 2013 Wheatland Bankshares [Member]
Percentage of Outstanding Common Stock Acquired							100.00%
Total purchase price							$ 39,315,000
Number of Shares Issued for Aquisition							1,455,256
Cash consideration for outstanding shares							11,025,000
Loans receivable							171,199,000
Loans Receivable Acquired, Gross Principal and Contractual Interest Due							176,698,000
Loans Receivable Acquired, Gross Principal and Contractual Interest Due, Expected to be Uncollectible							0
Third-party Acquisition Related Costs						571,000
Net interest income and non-interest income					1,145,000
Net income	$ 22,702,000	$ 18,981,000	$ 43,470,000	$ 35,314,000	$ 311,000

XML

Fair Value of Assets and Liabilities Fair Value of Assets and Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral-dependent impaired loans, net of ALLL	$ 19,039
Cost Approach [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral-dependent impaired loans, net of ALLL	928
Cost Approach [Member] | Selling Costs [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	20.00%
Weighted Average Rate on Unobservable Inputs	4.40%
Income Approach [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral-dependent impaired loans, net of ALLL	5,182
Income Approach [Member] | Selling Costs [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	8.00%
Maximum Rate on Unobservable Inputs	8.00%
Weighted Average Rate on Unobservable Inputs	8.00%
Income Approach [Member] | Discount Rate [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	6.00%
Maximum Rate on Unobservable Inputs	8.30%
Weighted Average Rate on Unobservable Inputs	7.20%
Sales Comparison Approach [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Other real estate owned	5,459
Collateral-dependent impaired loans, net of ALLL	8,515
Sales Comparison Approach [Member] | Selling Costs [Member] | Other real estate owned [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	6.50%
Maximum Rate on Unobservable Inputs	10.00%
Weighted Average Rate on Unobservable Inputs	7.30%
Sales Comparison Approach [Member] | Selling Costs [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	10.00%
Weighted Average Rate on Unobservable Inputs	7.90%
Sales Comparison Approach [Member] | Discount Rate [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	5.00%
Weighted Average Rate on Unobservable Inputs	2.50%
Sales Comparison Approach [Member] | Adjustment to Comparables [Member] | Other real estate owned [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	10.00%
Weighted Average Rate on Unobservable Inputs	0.10%
Sales Comparison Approach [Member] | Adjustment to Comparables [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	5.00%
Weighted Average Rate on Unobservable Inputs	0.20%
Combined Approach [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Collateral-dependent impaired loans, net of ALLL	$ 4,414
Combined Approach [Member] | Selling Costs [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	8.00%
Maximum Rate on Unobservable Inputs	10.00%
Weighted Average Rate on Unobservable Inputs	8.70%
Combined Approach [Member] | Discount Rate [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	7.50%
Maximum Rate on Unobservable Inputs	7.50%
Weighted Average Rate on Unobservable Inputs	7.50%
Combined Approach [Member] | Adjustment to Comparables [Member] | Collateral-dependent Impaired Loans, Net of ALLL [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Minimum Rate on Unobservable Inputs	0.00%
Maximum Rate on Unobservable Inputs	36.00%
Weighted Average Rate on Unobservable Inputs	17.40%

XML

Derivatives and Hedging Activities (Details Textual) (USD $)	Jun. 30, 2013
Derivatives and Hedging Activities (Textual) [Abstract]
Investment securities pledged to counterparties as collateral	$ 34,419,000
Collateral pledged from the counterparties to the Company	$ 0

XML

Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Preferred shares, par value	$ 0.01	$ 0.01
Preferred shares, authorized	1,000,000	1,000,000
Preferred shares, issued	0	0
Preferred shares, outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	117,187,500	117,187,500

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Accumulated Other Comprehensive Income

Note 6. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

(Dollars in thousands)	June 30, 2013			December 31, 2012
Unrealized gains on available-for-sale securities	$	39,539		95,328
Tax effect	(15,381		)	(37,083	)
Net of tax amount	24,158			58,245
Unrealized losses on derivatives used for cash flow hedges	(1,270		)	(16,832	)
Tax effect	494			6,549
Net of tax amount	(776		)	(10,283	)
Total accumulated other comprehensive income	$	23,382		47,962

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 22,702	$ 18,981	$ 43,470	$ 35,314
Other Comprehensive (Loss) Income, Net of Tax
Unrealized (losses) gains on available-for-sale securities	(56,256)	13,214	(55,685)	23,232
Reclassification adjustment for gains included in net income	(241)	0	(104)	0
Net unrealized (losses) gains on securities	(56,497)	13,214	(55,789)	23,232
Tax effect	21,977	(5,140)	21,702	(9,037)
Net of tax amount	(34,520)	8,074	(34,087)	14,195
Unrealized gains (losses) on derivatives used for cash flow hedges	12,810	(9,051)	15,562	(5,939)
Tax effect	(4,983)	3,521	(6,055)	2,310
Net of tax amount	7,827	(5,530)	9,507	(3,629)
Total other comprehensive (loss) income, net of tax	(26,693)	2,544	(24,580)	10,566
Total Comprehensive (Loss) Income	$ (3,991)	$ 21,525	$ 18,890	$ 45,880

XML

Condensed Consolidated Statements of Financial Condition (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Cash on hand and in banks	$ 105,272	$ 123,270
Interest bearing cash deposits and federal funds sold	27,184	63,770
Cash and cash equivalents	132,456	187,040
Investment securities, available-for-sale	3,721,377	3,683,005
Loans held for sale	95,495	145,501
Loans receivable	3,673,456	3,397,425
Allowance for loan and lease losses	(130,883)	(130,854)
Loans receivable, net	3,542,573	3,266,571
Premises and equipment, net	161,918	158,989
Other real estate owned	40,713	45,115
Accrued interest receivable	43,593	37,770
Deferred tax asset	35,115	20,394
Core deposit intangible, net	7,262	6,174
Goodwill	119,509	106,100
Non-marketable equity securities	49,752	48,812
Other assets	47,053	41,969
Total assets	7,996,816	7,747,440
Liabilities
Non-interest bearing deposits	1,236,104	1,191,933
Interest bearing deposits	4,122,093	4,172,528
Securities sold under agreements to repurchase	300,024	289,508
Federal Home Loan Bank advances	1,217,445	997,013
Other borrowed funds	8,489	10,032
Subordinated debentures	125,490	125,418
Accrued interest payable	3,824	4,675
Other liabilities	54,345	55,384
Total liabilities	7,067,814	6,846,491
Stockholders' Equity
Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding	0	0
Common stock, $0.01 par value per share, 117,187,500 shares authorized	736	719
Paid-in capital	672,035	641,737
Retained earnings - substantially restricted	232,849	210,531
Accumulated other comprehensive income	23,382	47,962
Total stockholders' equity	929,002	900,949
Total liabilities and stockholders' equity	$ 7,996,816	$ 7,747,440
Number of common stock shares issued and outstanding	73,564,900	71,937,222

XML

Fair Value of Assets and Liabilities (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial assets
Cash and cash equivalents	$ 132,456	$ 187,040
Investment securities, available-for-sale	3,721,377	3,683,005
Investment securities available-for-sale, Fair value	3,721,377	3,683,005
Loans held for sale	95,495	145,501
Loans receivable, net of ALLL	3,542,573	3,266,571
Accrued interest receivable	43,593	37,770
Non-marketable equity securities	49,752	48,812
Total financial assets	7,585,246	7,368,699
Financial liabilities
Deposits	5,358,197	5,364,461
FHLB advances	1,217,445	997,013
Repurchase agreements and other borrowed funds	308,513	299,540
Subordinated debentures	125,490	125,418
Accrued interest payable	3,824	4,675
Interest rate swap	1,270	16,832
Total financial liabilities	7,014,739	6,807,939
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial assets
Cash and cash equivalents, Fair value	132,456	187,040
Loans held for sale, Fair value	95,495	145,501
Accrued interest receivable, Fair value	43,593	37,770
Total financial assets, Fair value	271,544	370,311
Financial liabilities
Deposits, Fair value	3,813,660	3,585,126
Accrued interest payable, Fair value	3,824	4,675
Total financial liabilities, Fair value	3,817,484	3,589,801
Significant Other Observable Inputs (Level 2) [Member]
Financial assets
Investment securities available-for-sale, Fair value	3,721,377	3,683,005
Loans receivable, net of ALLL, Fair value	3,457,402	3,184,987
Non-marketable equity securities, Fair value	49,752	48,812
Total financial assets, Fair value	7,228,531	6,916,804
Financial liabilities
Deposits, Fair value	1,610,300	1,789,134
FHLB advances, Fair value	1,237,320	1,027,101
Repurchase agreements and other borrowed funds, Fair value	308,513	299,540
Subordinated debentures, Fair value	78,062	70,895
Interest rate swap agreements, Fair value	1,270	16,832
Total financial liabilities, Fair value	3,235,465	3,203,502
Significant Unobservable Inputs (Level 3) [Member]
Financial assets
Loans receivable, net of ALLL, Fair value	181,191	186,201
Total financial assets, Fair value	$ 181,191	$ 186,201

XML

Nature of Operations and Summary of Significant Accounting Policies (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Assets
Loans receivable	$ 3,673,456,000	$ 3,397,425,000
Premises and equipment, net	161,918,000	158,989,000
Accrued interest receivable	43,593,000	37,770,000
Other assets	47,053,000	41,969,000
Total assets	7,996,816,000	7,747,440,000
Liabilities
Other borrowed funds	8,489,000	10,032,000
Accrued interest payable	3,824,000	4,675,000
Other liabilities	54,345,000	55,384,000
Total liabilities	7,067,814,000	6,846,491,000
CDE (NMTC) [Member]
Assets
Loans receivable	35,840,000	35,480,000
Accrued interest receivable	113,000	117,000
Other assets	969,000	1,114,000
Total assets	36,922,000	36,711,000
Liabilities
Other borrowed funds	4,555,000	4,555,000
Accrued interest payable	4,000	4,000
Other liabilities	92,000	182,000
Total liabilities	4,651,000	4,741,000
LIHTC [Member]
Assets
Premises and equipment, net	13,745,000	16,066,000
Other assets	153,000	143,000
Total assets	13,898,000	16,209,000
Liabilities
Other borrowed funds	1,722,000	3,639,000
Accrued interest payable	5,000	6,000
Other liabilities	177,000	136,000
Total liabilities	$ 1,904,000	$ 3,781,000

XML

Goodwill (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying value of goodwill and the accumulated impairment charge

(Dollars in thousands)	June 30, 2013			December 31, 2012
Gross carrying value	$	159,668		146,259
Accumulated impairment charge	(40,159		)	(40,159	)
Net carrying value	$	119,509		106,100

	Three Months ended			Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012	June 30, 2013	June 30, 2012
Net carrying value at beginning of period	$	106,100	106,100	106,100	106,100
Acquisitions	13,409		—	13,409	—
Net carrying value at end of period	$	119,509	106,100	119,509	106,100

XML

Derivatives and Hedging Activities (Details 1) (Interest Rate Swap [Member], Other Liabilities [Member], Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Interest Rate Swap [Member] | Other Liabilities [Member] | Fair Value, Measurements, Recurring [Member]
Fair value of interest rate derivative financial instruments
Fair Value	$ 1,270	$ 16,832

XML

Mergers and Acquisitions Unaudited Pro Forma Summary (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Business Acquisition [Line Items]
Net interest income and non-interest income	$ 156,182	$ 161,328
Net income	$ 44,655	$ 36,959

XML

Loans Receivable, Net (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Loan	Jun. 30, 2012 Loan	Jun. 30, 2013 Loan	Jun. 30, 2012 Loan
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	18	47	42	103
Troubled debt restructurings, Pre-modification recorded balance	$ 2,645	$ 11,929	$ 9,160	$ 28,455
Troubled debt restructurings, Post-modification recorded balance	2,693	10,650	9,378	26,469
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	5	9	10	20
Financing Receivable Modifications Subsequent Defaults Recorded Investment	1,982	3,127	3,145	6,207
Residential Real Estate [Member]
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	0	5	7	8
Troubled debt restructurings, Pre-modification recorded balance	0	1,342	1,623	1,701
Troubled debt restructurings, Post-modification recorded balance	0	1,342	1,794	1,701
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	1	0	1	0
Financing Receivable Modifications Subsequent Defaults Recorded Investment	265	0	265	0
Commercial Real Estate [Member]
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	4	15	13	40
Troubled debt restructurings, Pre-modification recorded balance	1,340	5,736	4,656	16,846
Troubled debt restructurings, Post-modification recorded balance	1,340	4,444	4,656	14,838
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	2	4	5	11
Financing Receivable Modifications Subsequent Defaults Recorded Investment	1,555	2,077	2,607	4,735
Other Commercial [Member]
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	10	22	17	41
Troubled debt restructurings, Pre-modification recorded balance	1,067	4,309	2,572	8,432
Troubled debt restructurings, Post-modification recorded balance	1,084	4,322	2,588	8,454
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	2	2	3	5
Financing Receivable Modifications Subsequent Defaults Recorded Investment	162	531	228	798
Home Equity [Member]
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	2	1	2	7
Troubled debt restructurings, Pre-modification recorded balance	160	310	160	1,095
Troubled debt restructurings, Post-modification recorded balance	191	310	191	1,095
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	1	0	2
Financing Receivable Modifications Subsequent Defaults Recorded Investment	0	442	0	597
Other Consumer [Member]
Summary of troubled debt restructurings
Troubled debt restructurings, Number of Loans	2	4	3	7
Troubled debt restructurings, Pre-modification recorded balance	78	232	149	381
Troubled debt restructurings, Post-modification recorded balance	78	232	149	381
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	2	1	2
Financing Receivable Modifications Subsequent Defaults Recorded Investment	$ 0	$ 77	$ 45	$ 77

XML

Loans Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Allowance for loan and lease losses
Balance at beginning of period	$ 130,835	$ 136,586	$ 130,854	$ 137,516
Provision for loan losses	1,078	7,925	3,178	16,550
Charge-offs	(2,271)	(8,679)	(5,885)	(19,737)
Recoveries	1,241	1,627	2,736	3,130
Balance at end of period	130,883	137,459	130,883	137,459
Residential Real Estate [Member]
Allowance for loan and lease losses
Balance at beginning of period	15,411	19,003	15,482	17,227
Provision for loan losses	(509)	22	(486)	2,085
Charge-offs	(172)	(953)	(349)	(1,320)
Recoveries	67	67	150	147
Balance at end of period	14,797	18,139	14,797	18,139
Commercial Real Estate [Member]
Allowance for loan and lease losses
Balance at beginning of period	73,335	73,240	74,398	76,920
Provision for loan losses	520	10,374	(432)	13,010
Charge-offs	(538)	(5,549)	(1,303)	(12,534)
Recoveries	568	1,033	1,222	1,702
Balance at end of period	73,885	79,098	73,885	79,098
Other Commercial [Member]
Allowance for loan and lease losses
Balance at beginning of period	22,481	22,444	21,567	20,833
Provision for loan losses	1,880	(1,255)	3,579	1,304
Charge-offs	(594)	(887)	(1,752)	(2,356)
Recoveries	349	268	722	789
Balance at end of period	24,116	20,570	24,116	20,570
Home Equity [Member]
Allowance for loan and lease losses
Balance at beginning of period	10,833	13,364	10,659	13,616
Provision for loan losses	(1,016)	(1,471)	441	(470)
Charge-offs	(291)	(1,077)	(1,629)	(2,358)
Recoveries	100	88	155	116
Balance at end of period	9,626	10,904	9,626	10,904
Other Consumer [Member]
Allowance for loan and lease losses
Balance at beginning of period	8,775	8,535	8,748	8,920
Provision for loan losses	203	255	76	621
Charge-offs	(676)	(213)	(852)	(1,169)
Recoveries	157	171	487	376
Balance at end of period	$ 8,459	$ 8,748	$ 8,459	$ 8,748

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Loans Receivable, Net (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Allowance for loan and lease losses
Individually evaluated for impairment	$ 11,382		$ 15,534
Collectively evaluated for impairment	119,501		115,320
Total allowances for loan and lease losses	130,883	130,835	130,854	137,459	136,586	137,516
Loans receivable
Individually evaluated for impairment	192,573		201,735
Collectively evaluated for impairment	3,480,883		3,195,690
Total loans receivable	3,673,456		3,397,425
Residential Real Estate [Member]
Allowance for loan and lease losses
Individually evaluated for impairment	1,026		1,680
Collectively evaluated for impairment	13,771		13,802
Total allowances for loan and lease losses	14,797	15,411	15,482	18,139	19,003	17,227
Loans receivable
Individually evaluated for impairment	24,719		25,862
Collectively evaluated for impairment	507,115		490,605
Total loans receivable	531,834		516,467
Commercial Real Estate [Member]
Allowance for loan and lease losses
Individually evaluated for impairment	6,100		7,716
Collectively evaluated for impairment	67,785		66,682
Total allowances for loan and lease losses	73,885	73,335	74,398	79,098	73,240	76,920
Loans receivable
Individually evaluated for impairment	117,836		125,282
Collectively evaluated for impairment	1,703,764		1,530,226
Total loans receivable	1,821,600		1,655,508
Other Commercial [Member]
Allowance for loan and lease losses
Individually evaluated for impairment	3,553		3,859
Collectively evaluated for impairment	20,563		17,708
Total allowances for loan and lease losses	24,116	22,481	21,567	20,570	22,444	20,833
Loans receivable
Individually evaluated for impairment	36,705		33,593
Collectively evaluated for impairment	686,482		589,804
Total loans receivable	723,187		623,397
Home Equity [Member]
Allowance for loan and lease losses
Individually evaluated for impairment	24		870
Collectively evaluated for impairment	9,602		9,789
Total allowances for loan and lease losses	9,626	10,833	10,659	10,904	13,364	13,616
Loans receivable
Individually evaluated for impairment	8,432		11,074
Collectively evaluated for impairment	376,256		392,851
Total loans receivable	384,688		403,925
Other Consumer [Member]
Allowance for loan and lease losses
Individually evaluated for impairment	679		1,409
Collectively evaluated for impairment	7,780		7,339
Total allowances for loan and lease losses	8,459	8,775	8,748	8,748	8,535	8,920
Loans receivable
Individually evaluated for impairment	4,881		5,924
Collectively evaluated for impairment	207,266		192,204
Total loans receivable	$ 212,147		$ 198,128

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Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Note 5. Derivatives and Hedging Activities

As of June 30, 2013, the Company’s interest rate swap derivative financial instruments were designated as cash flow hedges and are summarized as follows:

(Dollars in thousands)	Forecasted Notional  Amount		Variable Interest Rate 1	Fixed Interest Rate 1		Term 2
Interest rate swap	$	160,000	3 month LIBOR	3.378	%	Oct. 21, 2014 - Oct. 21, 2021
Interest rate swap	100,000		3 month LIBOR	2.498	%	Nov 30, 2015 - Nov. 30, 2022

__________

¹The Company pays the fixed interest rate and the counterparties pay the Company the variable interest rate.

²No cash will be exchanged prior to the term.

The hedging strategy converts the LIBOR based variable interest rate on forecasted borrowings to a fixed interest rate, thereby protecting the Company from floating interest rate variability.

The following table summarizes the fair value of the Company’s interest rate swap derivative financial instruments:

		Fair Value
(Dollars in thousands)	Balance Sheet Location	June 30, 2013		December 31, 2012
Interest rate swaps	Other liabilities	$	1,270	16,832

Pursuant to the interest rate swap agreements, the Company pledged collateral to the counterparties in the form of investment securities totaling $34,419,000 at June 30, 2013. There was $0 collateral pledged from the counterparties to the Company as of June 30, 2013. There is the possibility that the Company may need to pledge additional collateral in the future if there were further declines in the fair value of the interest rate swap derivative financial instruments versus the collateral pledged.

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Nature of Operations and Summary of Significant Accounting Policies (Details Textual)	6 Months Ended
	Jun. 30, 2013
Nature of Operations and Summary of Significant Accounting Policies (Textual) [Abstract]
Number of Bank Divisions	12
Number of Operating Segments	1
Minimum Period Past Due to Consider Loan as Delinquent	30 days
Minimum Period Past Due to Consider Loan as Non Accrual	90 days
Minimum Number of Days Delinquent to Charge off Consumer Loans	120 days

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Goodwill (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Gross carrying value of goodwill and the accumulated impairment charge
Gross carrying value	$ 159,668		$ 146,259
Accumulated impairment charge	(40,159)		(40,159)
Net carrying value	$ 119,509	$ 106,100	$ 106,100	$ 106,100	$ 106,100	$ 106,100

XML

Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Note 8. Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

Level 1    Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Transfers in and out of Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) are recognized on the actual transfer date. There were no transfers between fair value hierarchy levels during the six month periods ended June 30, 2013 and 2012.

Recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2013.

Investment securities: fair value for available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections, and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. Where Level 1 or Level 2 inputs are not available, such securities are classified as Level 3 within the hierarchy.

Fair value determinations of investment securities are the responsibility of the Company’s corporate accounting department. The Company contracts with independent third party pricing vendors to generate fair value estimates on a monthly basis. The Company reviews the vendors’ inputs for fair value estimates and the recommended assignments of levels within the fair value hierarchy. The review includes the extent to which markets for investment securities are determined to have limited or no activity, or are judged to be active markets. The Company reviews the extent to which observable and unobservable inputs are used as well as the appropriateness of the underlying assumptions about risk that a market participant would use in active markets, with adjustments for limited or inactive markets. In considering the inputs to the fair value estimates, the Company places less reliance on quotes that are judged to not reflect orderly transactions, or are non-binding indications. The Company makes independent inquiries of other knowledgeable parties in testing the reliability of the inputs, including consideration for illiquidity, credit risk, and cash flow estimates. In assessing credit risk, the Company reviews payment performance, collateral adequacy, credit rating histories, and issuers’ financial statements with follow-up discussion with issuers. For those markets determined to be inactive, the valuation techniques used are models for which management verifies that discount rates are appropriately adjusted to reflect illiquidity and credit risk. The Company also independently obtains cash flow estimates that are stressed at levels that exceed those used by the independent third party pricing vendors.

Interest rate swap derivative financial instruments: fair values for interest rate swap derivative financial instruments are based upon the estimated amounts to settle the contracts considering current interest rates and are calculated using discounted cash flows that are observable or that can be corroborated by observable market data and, therefore, are classified within Level 2 of the valuation hierarchy. The inputs used to determine fair value include the 3 month LIBOR forward curve to estimate variable rate cash inflows and the spot LIBOR curve to estimate the discount rate. The estimated variable rate cash inflows are compared to the fixed rate outflows and such difference is discounted to a present value to estimate the fair value of the interest rate swaps. The Company also obtains and compares the reasonableness of the pricing from an independent party.

The following schedules disclose the fair value measurement of assets and liabilities measured at fair value on a recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government sponsored enterprises	$	13,151	—	13,151	—
State and local governments	1,339,876		—	1,339,876	—
Corporate bonds	442,797		—	442,797	—
Residential mortgage-backed securities	1,925,553		—	1,925,553	—
Total assets measured at fair value on a recurring basis	$	3,721,377	—	3,721,377	—
Interest rate swaps	$	1,270	—	1,270	—
Total liabilities measured at fair value on a recurring basis	$	1,270	—	1,270	—

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale
U.S. government and federal agency	$	202	—	202	—
U.S. government sponsored enterprises	17,480		—	17,480	—
State and local governments	1,214,518		—	1,214,518	—
Corporate bonds	288,795		—	288,795	—
Collateralized debt obligations	1,708		—	1,708	—
Residential mortgage-backed securities	2,160,302		—	2,160,302	—
Total assets measured at fair value on a recurring basis	$	3,683,005	—	3,683,005	—
Interest rate swaps	$	16,832	—	16,832	—
Total liabilities measured at fair value on a recurring basis	$	16,832	—	16,832	—

Non-recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended June 30, 2013.

Other real estate owned: OREO is carried at the lower of fair value at acquisition date or estimated fair value, less estimated cost to sell. Estimated fair value of OREO is based on appraisals or evaluations (new or updated). OREO is classified within Level 3 of the fair value hierarchy.

Collateral-dependent impaired loans, net of ALLL: loans included in the Company’s loan portfolio for which it is probable that the Company will not collect all principal and interest due according to contractual terms are considered impaired. Estimated fair value of collateral-dependent impaired loans is based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company’s credit departments review appraisals for OREO and collateral-dependent loans, giving consideration to the highest and best use of the collateral. The appraisal or evaluation (new or updated) is considered the starting point for determining fair value. The valuation techniques used in preparing appraisals or evaluations (new or updated) include the cost approach, income approach, sales comparison approach, or a combination of the preceding valuation techniques. The key inputs used to determine the fair value of the collateral-dependent loans and OREO include selling costs, discounted cash flow rate or capitalization rate, and adjustment to comparables. Valuations and significant inputs obtained by independent sources are reviewed by the Company for accuracy and reasonableness. The Company also considers other factors and events in the environment that may affect the fair value. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to the impaired loan or OREO may occur. The Company generally obtains appraisals or evaluations (new or updated) annually.

The following schedules disclose the fair value measurement of assets with a recorded change during the period resulting from re-measuring the assets at fair value on a non-recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	5,459	—	—	5,459
Collateral-dependent impaired loans, net of ALLL	19,039		—	—	19,039
Total assets measured at fair value on a non-recurring basis	$	24,498	—	—	24,498

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Other real estate owned	$	13,983	—	—	13,983
Collateral-dependent impaired loans, net of ALLL	22,966		—	—	22,966
Total assets measured at fair value on a non-recurring basis	$	36,949	—	—	36,949

Non-recurring Measurements Using Significant Unobservable Inputs (Level 3)

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Fair Value		Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)	June 30, 2013		Valuation Technique	Unobservable Input	Range (Weighted Average) 1
Other real estate owned	$	5,459	Sales comparison approach	Selling costs	6.5% - 10.0% (7.3%)
				Adjustment to comparables	0.0% - 10.0% (0.1%)
Collateral-dependent impaired loans, net of ALLL	$	928	Cost approach	Selling costs	0.0% - 20.0% (4.4%)
	5,182		Income approach	Selling costs	8.0% - 8.0% (8.0%)
				Discount rate	6.0% - 8.3% (7.2%)
	8,515		Sales comparison approach	Selling costs	0.0% - 10.0% (7.9%)
				Discount rate	0.0% - 5.0% (2.5%)
				Adjustment to comparables	0.0% - 5.0% (0.2%)
	4,414		Combined approach	Selling costs	8.0% - 10.0% (8.7%)
				Discount rate	7.5% - 7.5% (7.5%)
				Adjustment to comparables	0.0% - 36.0% (17.4%)
	$	19,039

__________

¹ The range for selling costs and adjustments to comparables indicate reductions to the fair value.

Fair Value of Financial Instruments

The following is a description of the methods used to estimate the fair value of all other assets and liabilities recognized at amounts other than fair value.

Cash and cash equivalents: fair value is estimated at book value.

Loans held for sale: fair value is estimated at book value.

Loans receivable, net of ALLL: fair value is estimated by discounting the future cash flows using the rates at which similar notes would be written for the same remaining maturities. The market rates used are based on current rates the Company would impose for similar loans and reflect a market participant assumption about risks associated with non-performance, illiquidity, and the structure and term of the loans along with local economic and market conditions. Estimated fair value of impaired loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All impaired loans are classified as Level 3 and all other loans are classified as Level 2 within the hierarchy.

Accrued interest receivable: fair value is estimated at book value.

Non-marketable equity securities: fair value is estimated at book value due to restrictions that limit the sale or transfer of such securities.

Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The market rates used were obtained from a knowledgeable independent third party and reviewed by the Company. The rates were the average of current rates offered by the Company’s local competitors. The estimated fair value of demand, NOW, savings, and money market deposits is the book value since rates are regularly adjusted to market rates and transactions are executed at book value daily. Therefore, such deposits are classified in Level 1 of the valuation hierarchy. Certificate accounts and wholesale deposits are classified as Level 2 within the hierarchy.

Federal Home Loan Bank (“FHLB”) advances: fair value of non-callable FHLB advances is estimated by discounting the future cash flows using rates of similar advances with similar maturities. Such rates were obtained from current rates offered by FHLB. The estimated fair value of callable FHLB advances was obtained from FHLB and the model was reviewed by the Company, including discussions with FHLB.

Securities sold under agreements to repurchase (“repurchase agreements”) and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value.

Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates. The market rates used were averages of currently traded trust preferred securities with similar characteristics to the Company’s issuances and obtained from an independent third party.

Accrued interest payable: fair value is estimated at book value.

Off-balance sheet financial instruments: commitments to extend credit and letters of credit represent the principal categories of off-balance sheet financial instruments. Rates for these commitments are set at time of loan closing, such that no adjustment is necessary to reflect these commitments at market value. The Company has an insignificant amount of off-balance sheet financial instruments.

The following schedules present the carrying amounts, estimated fair values and the level within the fair value hierarchy of the Company’s financial instruments:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount June 30, 2013		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	132,456	132,456	—	—
Investment securities, available-for-sale	3,721,377		—	3,721,377	—
Loans held for sale	95,495		95,495	—	—
Loans receivable, net of ALLL	3,542,573		—	3,457,402	181,191
Accrued interest receivable	43,593		43,593	—	—
Non-marketable equity securities	49,752		—	49,752	—
Total financial assets	$	7,585,246	271,544	7,228,531	181,191
Financial liabilities
Deposits	$	5,358,197	3,813,660	1,610,300	—
FHLB advances	1,217,445		—	1,237,320	—
Repurchase agreements and other borrowed funds	308,513		—	308,513	—
Subordinated debentures	125,490		—	78,062	—
Accrued interest payable	3,824		3,824	—	—
Interest rate swaps	1,270		—	1,270	—
Total financial liabilities	$	7,014,739	3,817,484	3,235,465	—

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount December 31, 2012		Quoted Prices in Active  Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	187,040	187,040	—	—
Investment securities, available-for-sale	3,683,005		—	3,683,005	—
Loans held for sale	145,501		145,501	—	—
Loans receivable, net of ALLL	3,266,571		—	3,184,987	186,201
Accrued interest receivable	37,770		37,770	—	—
Non-marketable equity securities	48,812		—	48,812	—
Total financial assets	$	7,368,699	370,311	6,916,804	186,201
Financial liabilities
Deposits	$	5,364,461	3,585,126	1,789,134	—
FHLB advances	997,013		—	1,027,101	—
Repurchase agreements and other borrowed funds	299,540		—	299,540	—
Subordinated debentures	125,418		—	70,895	—
Accrued interest payable	4,675		4,675	—	—
Interest rate swaps	16,832		—	16,832	—
Total financial liabilities	$	6,807,939	3,589,801	3,203,502	—

XML

Goodwill

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Note 4. Goodwill

The Company performed its annual goodwill impairment test during the third quarter of 2012 and determined the fair value of the aggregated reporting units exceeded the carrying value, such that the Company’s goodwill was not considered impaired. Given there were no events or circumstances that occurred since the third quarter 2012 that would more-likely-than-not reduce the fair value of the aggregated reporting units below the carrying value, the Company did not perform interim testing at June 30, 2013. However, further adverse changes in the economic environment, operations of the aggregated reporting units, or other factors could result in the decline in the fair value of the aggregated reporting units which could result in a goodwill impairment in the future. For additional information on goodwill related to acquisitions, see Note 9.

The following schedule discloses the changes in the carrying value of goodwill:

	Three Months ended			Six Months ended
(Dollars in thousands)	June 30, 2013		June 30, 2012	June 30, 2013	June 30, 2012
Net carrying value at beginning of period	$	106,100	106,100	106,100	106,100
Acquisitions	13,409		—	13,409	—
Net carrying value at end of period	$	119,509	106,100	119,509	106,100

The gross carrying value of goodwill and the accumulated impairment charge consists of the following:

(Dollars in thousands)	June 30, 2013			December 31, 2012
Gross carrying value	$	159,668		146,259
Accumulated impairment charge	(40,159		)	(40,159	)
Net carrying value	$	119,509		106,100

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash dividends declared per share	$ 0.29	$ 0.26
Retained Earnings Substantially Restricted
Cash dividends declared per share	$ 0.29	$ 0.26

XML

Mergers and Acquisitions Fair Value of Net Assets Acquired (Details) (Wheatland Bankshares [Member], USD $) In Thousands, unless otherwise specified	May 31, 2013
Wheatland Bankshares [Member]
Assets
Cash and cash equivalents	$ 23,148
Investment securities, available-for-sale	75,643
Loans receivable	171,199
Goodwill and core deposit intangible	15,488
Accrued income and other assets	15,063
Total assets	300,541
Liabilities
Deposits	255,197
Federal Home Loan Bank advances	5,467
Accrued expenses and other liabilities	562
Total liabilities	261,226
Purchase price	$ 39,315

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Basic and diluted earnings per share computation
Net income available to common stockholders, basic and diluted	$ 22,702	$ 18,981	$ 43,470	$ 35,314
Average outstanding shares - basic	72,480,019	71,928,697	72,224,263	71,921,885
Add: dilutive stock options and awards	68,153	156	57,841	105
Average outstanding shares - diluted	72,548,172	71,928,853	72,282,104	71,921,990
Basic earnings per share	$ 0.31	$ 0.26	$ 0.60	$ 0.49
Diluted earnings per share	$ 0.31	$ 0.26	$ 0.60	$ 0.49
Earnings Per Share (Textual) [Abstract]
Options excluded from the diluted average outstanding share calculation			74,159	945,063

XML

Investment Securities, Available-for-Sale (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value
Fair Value, Less than 12 Months	$ 1,035,710	$ 1,099,987
Fair Value, 12 Months or More	26,425	67,438
Fair Value, Total	1,062,135	1,167,425
Unrealized Loss
Unrealized Loss, Less than 12 Months	(25,592)	(5,810)
Unrealized Loss, 12 Months or More	(443)	(640)
Unrealized Loss, Total	(26,035)	(6,450)
State and local governments [Member]
Fair Value
Fair Value, Less than 12 Months	312,576	102,896
Fair Value, 12 Months or More	10,434	4,533
Fair Value, Total	323,010	107,429
Unrealized Loss
Unrealized Loss, Less than 12 Months	(15,987)	(1,531)
Unrealized Loss, 12 Months or More	(400)	(74)
Unrealized Loss, Total	(16,387)	(1,605)
Corporate bonds [Member]
Fair Value
Fair Value, Less than 12 Months	211,592	41,856
Fair Value, 12 Months or More	0
Fair Value, Total	211,592	41,856
Unrealized Loss
Unrealized Loss, Less than 12 Months	(3,519)	(238)
Unrealized Loss, 12 Months or More	0
Unrealized Loss, Total	(3,519)	(238)
Residential mortgage-backed securities [Member]
Fair Value
Fair Value, Less than 12 Months	511,542	955,235
Fair Value, 12 Months or More	15,991	62,905
Fair Value, Total	527,533	1,018,140
Unrealized Loss
Unrealized Loss, Less than 12 Months	(6,086)	(4,041)
Unrealized Loss, 12 Months or More	(43)	(566)
Unrealized Loss, Total	$ (6,129)	$ (4,607)

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Nature of Operations and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

General

Glacier Bancorp, Inc. (“Company”) is a Montana corporation headquartered in Kalispell, Montana. The Company provides a full range of banking services to individual and corporate customers in Montana, Idaho, Wyoming, Colorado, Utah and Washington through twelve divisions of its wholly-owned bank subsidiary, Glacier Bank (“Bank”). The Company offers a wide range of banking products and services, including transaction and savings deposits, real estate, commercial, agriculture and consumer loans, mortgage origination services, and retail brokerage services. The Company serves individuals, small to medium-sized businesses, community organizations and public entities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial condition as of June 30, 2013, the results of operations and comprehensive income for the three and six month periods ended June 30, 2013 and 2012, and changes in stockholders’ equity and cash flows for the six month periods ended June 30, 2013 and 2012. The condensed consolidated statement of financial condition of the Company as of December 31, 2012 has been derived from the audited consolidated statements of the Company as of that date.

The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results anticipated for the year ending December 31, 2013.

The Company is a defendant in legal proceedings arising in the normal course of business. In the opinion of management, the disposition of pending litigation will not have a material affect on the Company’s consolidated financial position, results of operations or liquidity.

Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the valuations related to investments and real estate acquired in connection with foreclosures or in satisfaction of loans. For the determination of the ALLL and real estate valuation estimates, management obtains independent appraisals (new or updated) for significant items. Estimates relating to investment valuations are obtained from independent third parties.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements of the Company include the parent holding company and the Bank. The Bank consists of twelve bank divisions, a treasury division and an information technology division. Each of the bank divisions operate under separate names, management teams and directors. The Company considers the Bank to be its sole operating segment as the Bank 1) engages in similar bank business activity from which it earns revenues and incurs expenses, 2) the operating results of the Bank are regularly reviewed by the Chief Executive Officer (i.e., the chief operating decision maker) who makes decisions about resources to be allocated to the Bank, and 3) financial information is available for the Bank. All significant inter-company transactions have been eliminated in consolidation.

On May 31, 2013, the Company completed its acquisition of Wheatland Bankshares, Inc. (“Wheatland”) and its wholly-owned subsidiary, First State Bank, a community bank based in Wheatland, Wyoming. The transaction was accounted for using the acquisition method, and the results of operations of First State Bank have been included in the Company’s consolidated financial statements as of the acquisition date.

The Company formed GBCI Other Real Estate (“GORE”) to isolate certain bank foreclosed properties for legal protection and administrative purposes and the remaining properties are currently held for sale. GORE is included in the Bank operating segment due to its insignificant activity.

The Company owns the following trust subsidiaries, each of which issued trust preferred securities as Tier 1 capital instruments: Glacier Capital Trust II, Glacier Capital Trust III, Glacier Capital Trust IV, Citizens (ID) Statutory Trust I, Bank of the San Juans Bancorporation Trust I, First Company Statutory Trust 2001 and First Company Statutory Trust 2003. The trust subsidiaries are not included in the Company’s consolidated financial statements.

Variable Interest Entities

Variable Interest Entities

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). The Company also has equity investments in Low-Income Housing Tax Credit (“LIHTC”) partnerships. The CDEs and the LIHTC partnerships are variable interest entities (“VIE”).

The following table summarizes the carrying amounts of the VIE’s assets and liabilities included in the Company’s consolidated financial statements at June 30, 2013 and December 31, 2012:

	June 30, 2013			December 31, 2012
(Dollars in thousands)	CDE (NMTC)		LIHTC	CDE (NMTC)	LIHTC
Assets
Loans receivable	$	35,840	—	35,480	—
Premises and equipment, net	—		13,745	—	16,066
Accrued interest receivable	113		—	117	—
Other assets	969		153	1,114	143
Total assets	$	36,922	13,898	36,711	16,209
Liabilities
Other borrowed funds	$	4,555	1,722	4,555	3,639
Accrued interest payable	4		5	4	6
Other liabilities	92		177	182	136
Total liabilities	$	4,651	1,904	4,741	3,781

Amounts presented in the table above are adjusted for intercompany eliminations. All assets presented can be used only to settle obligations of the consolidated VIEs and all liabilities presented consist of liabilities for which creditors and other beneficial interest holders therein have no recourse to the general credit of the Company.

Loans Receivable

Loans Receivable

Loans that are intended to be held-to-maturity are reported at the unpaid principal balance less net charge-offs and adjusted for deferred fees and costs on originated loans and unamortized premiums or discounts on acquired loans. Interest income is recognized using the interest method and includes discount accretion and premium amortization on acquired loans and net loan fees on originated loans which are amortized over the expected life of the loans using a method that approximates the level-yield interest method. The Company’s loan segments, which are based on the purpose of the loan, include residential real estate, commercial, and consumer loans. The Company’s loan classes, a further disaggregation of segments, include residential real estate loans (residential real estate segment), commercial real estate and other commercial loans (commercial segment), and home equity and other consumer loans (consumer segment).

Loans that are thirty days or more past due based on payments received and applied to the loan are considered delinquent. Loans are designated non-accrual and the accrual of interest is discontinued when the collection of the contractual principal or interest is unlikely. A loan is typically placed on non-accrual when principal or interest is due and has remained unpaid for ninety days or more. When a loan is placed on non-accrual status, interest previously accrued but not collected is reversed against current period interest income. Subsequent payments are applied to the outstanding principal balance if doubt remains as to the ultimate collectability of the loan. Interest accruals are not resumed on partially charged-off impaired loans. For other loans on nonaccrual, interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

The Company recognizes that while borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity for debt repayment. In determining whether non-restructured or unimpaired loans issued to a single or related party group of borrowers should continue to accrue interest when the borrower has other loans that are impaired or troubled debt restructurings (“TDR”), the Company on a quarterly or more frequent basis performs an updated and comprehensive assessment of the willingness and capacity of the borrowers to timely and ultimately repay their total debt obligations, including contingent obligations. Such analysis takes into account current financial information about the borrowers and financially responsible guarantors, if any, including for example:

• analysis of global, i.e., aggregate debt service for total debt obligations;

• assessment of the value and security protection of collateral pledged using current market conditions and alternative market assumptions across a variety of potential future situations; and

• loan structures and related covenants.

The Company considers impaired loans to be the primary credit quality indicator for monitoring the credit quality of the loan portfolio. Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans ninety days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., TDR). Interest income on accruing impaired loans is recognized using the interest method. The Company measures impairment on a loan-by-loan basis in the same manner for each class within the loan portfolio. An insignificant delay or shortfall in the amounts of payments would not cause a loan or lease to be considered impaired. The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the facts and circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest due.

A restructured loan is considered a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. A TDR loan is considered an impaired loan and a specific valuation allowance is established when the fair value of the collateral-dependent loan or present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate based on the original contractual rate) is lower than the carrying value of the impaired loan. The Company made the following types of loan modifications, some of which were considered a TDR:

• Reduction of the stated interest rate for the remaining term of the debt;

• Extension of the maturity date(s) at a stated rate of interest lower than the current market rate for newly originated debt having similar risk characteristics; and

• Reduction of the face amount of the debt as stated in the debt agreements.

For additional information relating to loans, see Note 3.

Allowance for Loan and Lease Losses

Allowance for Loan and Lease Losses

Based upon management’s analysis of the Company’s loan portfolio, the balance of the ALLL is an estimate of probable credit losses known and inherent within the Bank’s loan portfolio as of the date of the consolidated financial statements. The ALLL is analyzed at the loan class level and is maintained within a range of estimated losses. Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The determination of the ALLL and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses. The balance of the ALLL is highly dependent upon management’s evaluations of borrowers’ current and prospective performance, appraisals and other variables affecting the quality of the loan portfolio. Individually significant loans and major lending areas are reviewed periodically to determine potential problems at an early date. Changes in management’s estimates and assumptions are reasonably possible and may have a material impact upon the Company’s consolidated financial statements, results of operations or capital.

The ALLL consists of a specific valuation allowance component and a general valuation allowance component. The specific component relates to loans that are determined to be impaired and individually evaluated for impairment. The Company measures impairment on a loan-by-loan basis based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except when it is determined that repayment of the loan is expected to be provided solely by the underlying collateral. For impairment based on expected future cash flows, the Company considers all information available as of a measurement date, including past events, current conditions, potential prepayments, and estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan. For alternative ranges of cash flows, the likelihood of the possible outcomes is considered in determining the best estimate of expected future cash flows. The effective interest rate for a loan restructured in a TDR is based on the original contractual rate. For collateral-dependent loans and real estate loans for which foreclosure or a deed-in-lieu of foreclosure is probable, impairment is measured by the fair value of the collateral, less estimated cost to sell. The fair value of the collateral is determined primarily based upon appraisal or evaluation of the underlying real property value.

The general valuation allowance component relates to probable credit losses inherent in the balance of the loan portfolio based on historical loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors. The historical loss experience is based on the previous twelve quarters loss experience by loan class adjusted for risk characteristics in the existing loan portfolio. The same trends and conditions are evaluated for each class within the loan portfolio; however, the risk characteristics are weighted separately at the individual class level based on the Company’s judgment and experience.

The changes in trends and conditions of certain items include the following:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

• Changes in the nature and volume of the portfolio and in the terms of loans;

• Changes in experience, ability, and depth of lending management and other relevant staff;

• Changes in the volume and severity of past due and nonaccrual loans;

• Changes in the quality of the Company’s loan review system;

• Changes in the value of underlying collateral for collateral-dependent loans;

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s existing portfolio.

The ALLL is increased by provisions for loan losses which are charged to expense. The portions of loan balances determined by management to be uncollectible are charged-off as a reduction of the ALLL and recoveries of amounts previously charged-off are credited as an increase to the ALLL. The Company’s charge-off policy is consistent with bank regulatory standards. Consumer loans generally are charged off when the loan becomes over 120 days delinquent. Real estate acquired as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until such time as it is sold.

Impact of Recent Authoritative Accounting Guidance

Impact of Recent Authoritative Accounting Guidance

The Accounting Standards Codification^™ (“ASC”) is the Financial Accounting Standards Board’s (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative.

In June 2011, FASB amended FASB ASC Topic 220, Comprehensive Income. The amendment provides an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Accounting Standards Update (“ASU”) No. 2011-12, Comprehensive Income (Topic 220) deferred the specific requirement of the amendment to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The amendments were effective retrospectively during interim and annual periods beginning after December 15, 2011. ASU No. 2013-2, Comprehensive Income (Topic 220) reversed the deferment of ASU 2011-12 and will be effective prospectively for reporting periods beginning after December 15, 2012 and early adoption is permitted. The Company early adopted ASU No. 2013-2 as of December 31, 2012. The Company has evaluated the impact of the adoption of these amendments and determined there was not a material effect on the Company’s financial position or results of operations.

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Earnings Per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Note 7. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares as if dilutive outstanding stock options were exercised, using the treasury stock method.

Basic and diluted earnings per share has been computed based on the following:

	Three Months ended			Six Months ended
(Dollars in thousands, except per share data)	June 30, 2013		June 30, 2012	June 30, 2013		June 30, 2012
Net income available to common stockholders, basic and diluted	$	22,702	18,981	$	43,470	35,314
Average outstanding shares - basic	72,480,019		71,928,697	72,224,263		71,921,885
Add: dilutive stock options and awards	68,153		156	57,841		105
Average outstanding shares - diluted	72,548,172		71,928,853	72,282,104		71,921,990
Basic earnings per share	$	0.31	0.26	$	0.60	0.49
Diluted earnings per share	$	0.31	0.26	$	0.60	0.49

There were 74,159 and 945,063 options excluded from the diluted average outstanding share calculation for the six months ended June 30, 2013 and 2012, respectively, due to the option exercise price exceeding the market price of the Company’s common stock.

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Loans Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Summary of the activity in the ALLL on a portfolio class basis

	Three Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,835		15,411		73,335		22,481		10,833		8,775
Provision for loan losses	1,078			(509	)	520		1,880		(1,016	)	203
Charge-offs	(2,271		)	(172	)	(538	)	(594	)	(291	)	(676	)
Recoveries	1,241			67		568		349		100		157
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Three Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	136,586		19,003		73,240		22,444		13,364		8,535
Provision for loan losses	7,925			22		10,374		(1,255	)	(1,471	)	255
Charge-offs	(8,679		)	(953	)	(5,549	)	(887	)	(1,077	)	(213	)
Recoveries	1,627			67		1,033		268		88		171
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

	Six Months ended June 30, 2013
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	130,854		15,482		74,398		21,567		10,659		8,748
Provision for loan losses	3,178			(486	)	(432	)	3,579		441		76
Charge-offs	(5,885		)	(349	)	(1,303	)	(1,752	)	(1,629	)	(852	)
Recoveries	2,736			150		1,222		722		155		487
Balance at end of period	$	130,883		14,797		73,885		24,116		9,626		8,459

	Six Months ended June 30, 2012
(Dollars in thousands)	Total			Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,516		17,227		76,920		20,833		13,616		8,920
Provision for loan losses	16,550			2,085		13,010		1,304		(470	)	621
Charge-offs	(19,737		)	(1,320	)	(12,534	)	(2,356	)	(2,358	)	(1,169	)
Recoveries	3,130			147		1,702		789		116		376
Balance at end of period	$	137,459		18,139		79,098		20,570		10,904		8,748

Summary of the ALLL and loans receivable on a portfolio class basis

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	11,382	1,026	6,100	3,553	24	679
Collectively evaluated for impairment	119,501		13,771	67,785	20,563	9,602	7,780
Total allowance for loan and lease losses	$	130,883	14,797	73,885	24,116	9,626	8,459
Loans receivable
Individually evaluated for impairment	$	192,573	24,719	117,836	36,705	8,432	4,881
Collectively evaluated for impairment	3,480,883		507,115	1,703,764	686,482	376,256	207,266
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	15,534	1,680	7,716	3,859	870	1,409
Collectively evaluated for impairment	115,320		13,802	66,682	17,708	9,789	7,339
Total allowance for loan and lease losses	$	130,854	15,482	74,398	21,567	10,659	8,748
Loans receivable
Individually evaluated for impairment	$	201,735	25,862	125,282	33,593	11,074	5,924
Collectively evaluated for impairment	3,195,690		490,605	1,530,226	589,804	392,851	192,204
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

Summary of impaired loans by portfolio class of loans

	At or for the Three or Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	57,021	6,975	24,857	21,191	318	3,680
Unpaid principal balance	58,739		7,199	25,954	21,298	321	3,967
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	56,118		6,865	24,411	20,856	460	3,526
Average balance - six months	58,331		7,021	26,139	20,972	758	3,441
Loans without a specific valuation allowance
Recorded balance	$	135,552	17,744	92,979	15,514	8,114	1,201
Unpaid principal balance	154,815		18,846	107,676	17,731	9,318	1,244
Average balance - three months	137,096		17,967	95,185	13,816	8,466	1,662
Average balance - six months	137,722		18,154	95,352	13,340	8,883	1,993
Totals
Recorded balance	$	192,573	24,719	117,836	36,705	8,432	4,881
Unpaid principal balance	213,554		26,045	133,630	39,029	9,639	5,211
Specific valuation allowance	11,382		1,026	6,100	3,553	24	679
Average balance - three months	193,214		24,832	119,596	34,672	8,926	5,188
Average balance - six months	196,053		25,175	121,491	34,312	9,641	5,434

	At or for the Year ended December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	62,759	7,334	29,595	21,205	1,354	3,271
Unpaid principal balance	70,261		7,459	36,887	21,278	1,362	3,275
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	76,656		12,797	36,164	22,665	1,390	3,640
Loans without a specific valuation allowance
Recorded balance	$	138,976	18,528	95,687	12,388	9,720	2,653
Unpaid principal balance	149,412		19,613	102,798	14,318	9,965	2,718
Average balance	162,505		16,034	111,554	19,733	11,993	3,191
Totals
Recorded balance	$	201,735	25,862	125,282	33,593	11,074	5,924
Unpaid principal balance	219,673		27,072	139,685	35,596	11,327	5,993
Specific valuation allowance	15,534		1,680	7,716	3,859	870	1,409
Average balance	239,161		28,831	147,718	42,398	13,383	6,831

Loans receivable aging analysis on a portfolio class basis

	June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	18,772	1,318	8,904	4,007	3,774	769
Accruing loans 60-89 days past due	3,290		965	1,382	297	385	261
Accruing loans 90 days or more past due	456		240	—	22	146	48
Non-accrual loans	89,355		12,149	53,400	12,568	9,303	1,935
Total past due and non-accrual loans	111,873		14,672	63,686	16,894	13,608	3,013
Current loans receivable	3,561,583		517,162	1,757,914	706,293	371,080	209,134
Total loans receivable	$	3,673,456	531,834	1,821,600	723,187	384,688	212,147

	December 31, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Accruing loans 30-59 days past due	$	17,454	3,897	7,424	2,020	2,872	1,241
Accruing loans 60-89 days past due	9,643		1,870	3,745	645	2,980	403
Accruing loans 90 days or more past due	1,479		451	594	197	188	49
Non-accrual loans	96,933		14,237	55,687	13,200	11,241	2,568
Total past due and non-accrual loans	125,509		20,455	67,450	16,062	17,281	4,261
Current loans receivable	3,271,916		496,012	1,588,058	607,335	386,644	193,867
Total loans receivable	$	3,397,425	516,467	1,655,508	623,397	403,925	198,128

Summary of troubled debt restructurings on a portfolio class basis

	Three Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	18		—	4	10	2	2
Pre-modification recorded balance	$	2,645	—	1,340	1,067	160	78
Post-modification recorded balance	$	2,693	—	1,340	1,084	191	78
Troubled debt restructurings that subsequently defaulted
Number of loans	5		1	2	2	—	—
Recorded balance	$	1,982	265	1,555	162	—	—

	Three Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	47		5	15	22	1	4
Pre-modification recorded balance	$	11,929	1,342	5,736	4,309	310	232
Post-modification recorded balance	$	10,650	1,342	4,444	4,322	310	232
Troubled debt restructurings that subsequently defaulted
Number of loans	9		—	4	2	1	2
Recorded balance	$	3,127	—	2,077	531	442	77

	Six Months ended June 30, 2013
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	42		7	13	17	2	3
Pre-modification recorded balance	$	9,160	1,623	4,656	2,572	160	149
Post-modification recorded balance	$	9,378	1,794	4,656	2,588	191	149
Troubled debt restructurings that subsequently defaulted
Number of loans	10		1	5	3	—	1
Recorded balance	$	3,145	265	2,607	228	—	45

	Six Months ended June 30, 2012
(Dollars in thousands)	Total		Residential Real Estate	Commercial Real Estate	Other Commercial	Home Equity	Other Consumer
Troubled debt restructurings
Number of loans	103		8	40	41	7	7
Pre-modification recorded balance	$	28,455	1,701	16,846	8,432	1,095	381
Post-modification recorded balance	$	26,469	1,701	14,838	8,454	1,095	381
Troubled debt restructurings that subsequently defaulted
Number of loans	20		—	11	5	2	2
Recorded balance	$	6,207	—	4,735	798	597	77

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Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of the carrying amounts of variable interest entities' assets and liabilities included in consolidated financial statements

	June 30, 2013			December 31, 2012
(Dollars in thousands)	CDE (NMTC)		LIHTC	CDE (NMTC)	LIHTC
Assets
Loans receivable	$	35,840	—	35,480	—
Premises and equipment, net	—		13,745	—	16,066
Accrued interest receivable	113		—	117	—
Other assets	969		153	1,114	143
Total assets	$	36,922	13,898	36,711	16,209
Liabilities
Other borrowed funds	$	4,555	1,722	4,555	3,639
Accrued interest payable	4		5	4	6
Other liabilities	92		177	182	136
Total liabilities	$	4,651	1,904	4,741	3,781

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 23, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	GLACIER BANCORP INC
Entity Central Index Key	0000868671
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		73,590,155

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Investment Securities, Available-for-Sale (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Comparison of amortized cost and estimated fair value of investment securities designated as available-for-sale

	June 30, 2013
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government sponsored enterprises
Maturing after one year through five years	2.27	%	$	12,840	270	—		13,110
Maturing after five years through ten years	1.71	%	40		1	—		41
	2.27	%	12,880		271	—		13,151
State and local governments
Maturing within one year	2.02	%	5,066		41	—		5,107
Maturing after one year through five years	2.07	%	158,331		3,063	(265	)	161,129
Maturing after five years through ten years	3.11	%	55,026		904	(656	)	55,274
Maturing after ten years	4.53	%	1,089,519		44,313	(15,466	)	1,118,366
	4.17	%	1,307,942		48,321	(16,387	)	1,339,876
Corporate bonds
Maturing within one year	2.06	%	64,391		630	—		65,021
Maturing after one year through five years	2.10	%	357,036		2,571	(3,173	)	356,434
Maturing after five years through ten years	2.27	%	21,635		53	(346	)	21,342
	2.10	%	443,062		3,254	(3,519	)	442,797
Residential mortgage-backed securities	2.18	%	1,917,954		13,728	(6,129	)	1,925,553
Total investment securities	2.88	%	$	3,681,838	65,574	(26,035	)	3,721,377

	December 31, 2012
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government and federal agency
Maturing within one year	1.62	%	$	201	1	—		202
U.S. government sponsored enterprises
Maturing after one year through five years	2.30	%	17,064		371	—		17,435
Maturing after five years through ten years	2.03	%	44		1	—		45
	2.29	%	17,108		372	—		17,480
State and local governments
Maturing within one year	2.01	%	4,288		28	(2	)	4,314
Maturing after one year through five years	2.11	%	149,497		4,142	(142	)	153,497
Maturing after five years through ten years	2.95	%	38,346		1,102	(99	)	39,349
Maturing after ten years	4.70	%	935,897		82,823	(1,362	)	1,017,358
	4.29	%	1,128,028		88,095	(1,605	)	1,214,518
Corporate bonds
Maturing within one year	1.73	%	18,412		51	—		18,463
Maturing after one year through five years	2.22	%	250,027		4,018	(238	)	253,807
Maturing after five years through ten years	2.23	%	16,144		381	—		16,525
	2.19	%	284,583		4,450	(238	)	288,795
Collateralized debt obligations
Maturing after ten years	8.03	%	1,708		—	—		1,708
Residential mortgage-backed securities	1.95	%	2,156,049		8,860	(4,607	)	2,160,302
Total investment securities	2.71	%	$	3,587,677	101,778	(6,450	)	3,683,005

Gain or loss on sale of Investments

	Three Months ended				Six Months ended
(Dollars in thousands)	June 30, 2013			June 30, 2012	June 30, 2013			June 30, 2012
Gross proceeds	$	75,649		—	$	79,488		—
Less amortized cost	(75,408		)	—	(79,384		)	—
Net gain on sale of investments	$	241		—	$	104		—
Gross gain on sale of investments	$	256		—	$	256		—
Gross loss on sale of investments	(15		)	—	(152		)	—
Net gain on sale of investments	$	241		—	$	104		—

Summary of investments with an unrealized loss position

	June 30, 2013
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	312,576	(15,987	)	10,434	(400	)	323,010	(16,387	)
Corporate bonds	211,592		(3,519	)	—	—		211,592	(3,519	)
Residential mortgage-backed securities	511,542		(6,086	)	15,991	(43	)	527,533	(6,129	)
Total temporarily impaired securities	$	1,035,710	(25,592	)	26,425	(443	)	1,062,135	(26,035	)

	December 31, 2012
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	102,896	(1,531	)	4,533	(74	)	107,429	(1,605	)
Corporate bonds	41,856		(238	)	—	—		41,856	(238	)
Residential mortgage-backed securities	955,235		(4,041	)	62,905	(566	)	1,018,140	(4,607	)
Total temporarily impaired securities	$	1,099,987	(5,810	)	67,438	(640	)	1,167,425	(6,450	)