Mergers and Acquisitions

On August 31, 2014, the Company acquired 100 percent of the outstanding common stock of FNBR, a privately-owned company, and its wholly-owned subsidiary, First National Bank of the Rockies, a community bank based in Grand Junction, Colorado. First National Bank of the Rockies provides community banking services to individuals and businesses in northwestern Colorado, with banking offices located in Grand Junction, Steamboat Springs, Meeker, Rangely, Craig, Hayden and Oak Creek. As a result of the acquisition, the Company further diversified its loan and deposit customer base with its increased presence in the state of Colorado. The branches of First National Bank of the Rockies were merged into Glacier Bank and became a part of the Bank of the San Juans division. The consideration paid by the Company to acquire FNBR was $31,817,000, which resulted in the Company issuing 555,732 shares of its common stock and $16,690,000 in cash in exchange for all of FNBR’s outstanding common stock. 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 August 31, 2014 acquisition date. The Company recorded a $680,000 bargain purchase gain due to the fair value of FNBR’s identifiable net assets exceeding the consideration transferred. The bargain purchase gain is included in other income in the Company’s consolidated statements of operations. Before recognizing the bargain purchase gain, the Company reassessed whether it correctly identified and valued each of the assets acquired and liabilities assumed. The objective of the reassessment process was to ensure that the measurements reflected consideration of all available information as of the acquisition date. The reassessment process included reviewing FNBR’s statement of financial condition to verify that all assets and liabilities had been identified and then re-evaluating and challenging again the procedures and the reasonableness of the significant assumptions utilized in determining the fair value of the identifiable assets and liabilities with respect to the acquisition date. The Company obtained fair value estimates from independent third party specialists for the significant identifiable assets and liabilities, including loans, investment securities and deposits. Following the reassessment process, the Company concluded that the consideration transferred and all of the assets acquired and liabilities assumed had been properly identified and valued.

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. The excess of the fair value of consideration transferred over total identifiable net assets 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 NCBI. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

Note 22. Mergers and Acquisitions (continued)

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. The excess of the fair value of consideration transferred over total identifiable net assets 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 was accounted for as a tax-free exchange.

The assets and liabilities of FNBR, NCBI and Wheatland were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the August 31, 2014, July 31, 2013 and May 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 following table discloses the calculation of the fair value of the consideration transferred, the total identifiable net assets acquired and the resulting bargain purchase gain or goodwill arising from the FNBR, NCBI and Wheatland acquisitions:



	FNBR			NCBI	Wheatland
(Dollars in thousands)	August 31, 2014			July 31, 2013	May 31, 2013
Fair value of consideration transferred
Fair value of Company shares issued, net of equity issuance costs	$	15,127		16,743	28,290
Cash consideration for outstanding shares	16,690			13,833	11,025
Contingent consideration	—			—	—
Total fair value of consideration transferred	31,817			30,576	39,315
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	14,578			27,865	23,148
Investment securities	157,018			48,058	75,643
Loans receivable	137,488			215,986	171,199
Core deposit intangible	4,199			3,660	2,079
Accrued income and other assets	35,884			24,262	15,063
Total identifiable assets acquired	349,167			319,831	287,132
Liabilities assumed
Deposits	309,641			294,980	255,197
Federal Home Loan Bank advances	—			—	5,467
Accrued expenses and other liabilities	7,029			4,472	562
Total liabilities assumed	316,670			299,452	261,226
Total identifiable net assets	32,497			20,379	25,906
(Bargain purchase gain) goodwill recognized	$	(680	)	10,197	13,409

Note 22. Mergers and Acquisitions (continued)

The fair value of the FNBR, NCBI and Wheatland assets acquired includes loans with fair values of $137,488,000, $215,986,000 and $171,199,000, respectively. The gross principal and contractual interest due under the FNBR, NCBI and Wheatland contracts is $146,019,000, $223,949,000 and $176,698,000, respectively, all of which is expected to be collectible.

Core deposit intangible assets related to the FNBR, NCBI and Wheatland acquisitions totaled $4,199,000 with an estimated life of 10 years, $3,660,000 with an estimated life of 10 years, and $2,079,000 with an estimated life of 11 years, respectively.

The Company incurred $552,000 of FNBR third-party acquisition-related costs during the year ended December 31, 2014. The Company incurred $667,000 and $832,000, respectively, of NCBI and Wheatland 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.

Total income consisting of net interest income and non-interest income of the acquired operations of FNBR was approximately $6,672,000 and net income was approximately $1,675,000 from August 31, 2014 to December 31, 2014. 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. 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.

The following unaudited pro forma summary presents consolidated information of the Company as if the FNBR acquisition had occurred on January 1, 2013:

The following unaudited pro forma summary presents consolidated information of the Company as if the NCBI and Wheatland acquisitions had occurred on January 1, 2012:

Years ended

(Dollars in thousands)

December 31,
2014

December 31,
2013

Net interest income and non-interest income

Net income