Note 22. 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 has increased its presence in the State of Wyoming and further diversified its loan, customer and deposit base with First State Bank’s strong commitment to agriculture. First State Bank operates 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.

On July 31, 2013, the Company acquired 100 percent of the outstanding common stock of NCBI and its wholly-owned subsidiary, North Cascades National Bank, a community bank based in Chelan, Washington. North Cascades 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 expanded the Company’s market into central Washington and further diversified the Company’s loan, customer and deposit base due to the region’s solid economic base of agriculture, fruit processing and tourism. North Cascades Bank operates as a division of the Bank under the name “North Cascades Bank, division of Glacier Bank.” The NCBI acquisition was valued at $30,576,000 and resulted in the Company issuing 687,876 shares of its common stock and $13,833,000 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.

Note 22. Mergers and Acquisitions (continued)

The assets and liabilities of Wheatland and NCBI were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the May 31, 2013 and July 31, 2013 acquisition dates, respectively, and their results of operations have been included in the Company’s consolidated statements of operations since those dates. The excess of the fair value of consideration transferred over total identifiable net assets was recorded as goodwill. The goodwill arising from the acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company, Wheatland and NCBI. None of the goodwill is deductible for income tax purposes as both acquisitions were accounted for as tax-free exchanges. The following table discloses the calculation of the fair value of consideration transferred, the total identifiable net assets acquired and the resulting goodwill relating to the Wheatland and NCBI acquisitions:



	Wheatland		NCBI
(Dollars in thousands)	May 31, 2013		July 31, 2013	Total
Fair value of consideration transferred
Fair value of Company shares issued, net of equity issuance costs	$	28,290	16,743	45,033
Cash consideration for outstanding shares	11,025		13,833	24,858
Total fair value of consideration transferred	39,315		30,576	69,891
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	23,148		27,865	51,013
Investment securities, available-for-sale	75,643		48,058	123,701
Loans receivable	171,199		215,986	387,185
Core deposit intangible	2,079		3,660	5,739
Accrued income and other assets	15,063		24,262	39,325
Total identifiable assets acquired	287,132		319,831	606,963
Liabilities assumed
Deposits	255,197		294,980	550,177
FHLB advances and other borrowed funds	5,467		—	5,467
Accrued expenses and other liabilities	562		4,472	5,034
Total liabilities assumed	261,226		299,452	560,678
Total identifiable net assets	25,906		20,379	46,285
Goodwill recognized	$	13,409	10,197	23,606

The fair value of the Wheatland and NCBI assets acquired includes loans with fair values of $171,199,000 and $215,986,000, respectively. The gross principal and contractual interest due under the Wheatland and NCBI contracts is $176,698,000 and $223,949,000, respectively, all of which is expected to be collectible.

Core deposit intangible assets related to the Wheatland and NCBI acquisitions totaled $2,079,000 with an estimated life of 11 years and $3,660,000 with an estimated life of 10 years, respectively.

The Company incurred $832,000 and $667,000, respectively, of Wheatland and NCBI third-party acquisition-related costs during the year ended December 31, 2013. The expenses are included in other expense in the Company’s consolidated statements of operations.

Note 22. Mergers and Acquisitions (continued)

Total income consisting of net interest income and non-interest income of the acquired operations of Wheatland was approximately $7,946,000 and net income was approximately $2,100,000 from May 31, 2013 to December 31, 2013. Total income consisting of net interest income and non-interest income of the acquired operations of NCBI was approximately $6,837,000 and net income was approximately $1,108,000 from July 31, 2013 to December 31, 2013. The following unaudited pro forma summary presents consolidated information of the Company as if the Wheatland and NCBI acquisitions had occurred on January 1, 2012:

Year ended

(Dollars in thousands)

December 31,
2013

December 31,
2012

Net interest income and non-interest income

Net income