Mergers and Acquisitions

12 Months Ended

Dec. 31, 2020

The Company has completed the following acquisitions during the last two years:

•State Bank Corp. and its wholly-owned subsidiary, State Bank of Arizona

•Heritage Bancorp and its wholly-owned subsidiary, Heritage Bank of Nevada

•FNB Bancorp and its wholly-owned subsidiary, The First National Bank of Layton

The assets and liabilities of SBAZ, Heritage, and FNB were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of their acquisition dates and their results of operations have been included in the Company’s consolidated statements of operations since those dates. The following table discloses the fair value estimates of the consideration transferred, the total identifiable net assets acquired and the resulting goodwill arising from the acquisitions:


(Dollars in thousands)	SBAZ February 29, 2020	Heritage July 31, 2019	FNB April 30, 2019
Fair value of consideration transferred
Fair value of Company shares issued	112,133	229,385	87,153
Cash consideration	13,721	16,420	4

Total fair value of consideration transferred	125,854	245,805	87,157
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	57,434	84,446	11,311
Debt securities	142,174	103,231	47,247
Loans receivable, net of ACL	451,653	615,279	245,485
Core deposit intangible 1	2,593	13,566	8,963
Accrued income and other assets	33,971	35,891	24,848
Total identifiable assets acquired	687,825	852,413	337,854
Liabilities assumed
Deposits	603,289	722,220	274,646
Borrowings	10,904	—	7,273
Accrued expenses and other liabilities	5,373	9,919	10,079
Total liabilities assumed	619,566	732,139	291,998
Total identifiable net assets	68,259	120,274	45,856
Goodwill recognized	57,595	125,531	41,301

______________________________

1 The core deposit intangible for each acquisition was determined to have an estimated life of 10 years.

2020 Acquisitions

On February 29, 2020, the Company acquired 100 percent of the outstanding common stock of State Bank Corp. and its wholly-owned subsidiary, State Bank of Arizona, a community bank based in Lake Havasu City, Arizona. SBAZ was merged into the Company and its banking operations were incorporated into The Foothills Bank division of Glacier Bank, continuing to provide banking services to individuals and businesses in Arizona with locations in Bullhead City, Cottonwood, Kingman, Lake Havasu City, Phoenix, Prescott Valley and Prescott. The preliminary value of the SBAZ acquisition was $125,854,000 and resulted in the Company issuing 3,007,044 shares of its common stock and paying $13,721,000 in cash in exchange for all of SBAZ’s outstanding common stock shares. The fair value of the Company shares issued was determined on the basis of the closing market price of the Company’s common stock on the February 29, 2020 acquisition date. The excess of the preliminary 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 SBAZ. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

The fair values of SBAZ assets acquired include loans with fair value of $451,702,000, respectively. The gross principal and contractual interest due under the contracts was $452,510,000. The Company evaluated the principal and contractual interest due at the acquisition date and determined that insignificant amounts were not expected to be collectible.

The Company incurred $4,489,000 of expenses in connection with the acquisition, respectively, during the year ended December 31, 2020. Mergers and acquisition expenses are included in other expense in the Company's consolidated statements of operations and consist of third-party costs, conversion costs and employee retention and severance expenses.

Total income consisting of net interest income and non-interest income of the acquired operations of SBAZ was approximately $31,606,000 and net income was approximately $8,524,000 from February 29, 2020 to December 31, 2020. The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition had occurred on January 1, 2019:


	Year ended
(Dollars in thousands)	December 31, 2020	December 31, 2019
Net interest income and non-interest income	777,869	664,789
Net income	265,289	218,365

2019 Acquisitions

On July 31, 2019, the Company acquired 100 percent of the outstanding common stock of Heritage Bancorp and its wholly-owned subsidiary, Heritage Bank of Nevada, a community bank based in Reno, Nevada. Heritage provides banking services to individuals and businesses throughout northern Nevada with locations in Carson City, Gardnerville, Reno and Sparks. The acquisition expanded the Company’s franchise footprint into Northern Nevada. Heritage operates as a new division of the Bank under its existing name and management team. The Heritage acquisition was valued at $245,805,000 and resulted in the Company issuing 5,473,276 shares of its common stock and paying $16,420,000 in cash in exchange for all of Heritage’s outstanding common stock shares. The fair value of the Company shares issued was determined on the basis of the closing market price of the Company’s common stock on the July 31, 2019 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 Heritage. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

On April 30, 2019, the Company acquired 100 percent of the outstanding common stock of FNB Bancorp and its wholly-owned subsidiary, The First National Bank of Layton, a community bank based in Layton, Utah. FNB provides banking services to individuals and businesses throughout Utah with locations in Layton, Bountiful, Clearfield and Draper. The acquisition expanded the Company’s presence in Utah and sets the stage for future growth. The branches of FNB, along with the Bank’s branches operating in Utah, operate as a new division of the Bank under the name “First Community Bank Utah, division of Glacier Bank.” The FNB acquisition was valued at $87,157,000 and resulted in the Company issuing 2,046,341 shares of its common stock. The fair value of the Company shares issued was determined on the basis of the closing market price of the Company’s common stock on the April 30, 2019 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 FNB. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

The fair values of the Heritage and FNB assets acquired include loans with fair values of $615,279,000 and $245,485,000, respectively. The gross principal and contractual interest due under the Heritage and FNB contracts was $617,214,000 and

$248,226,000, respectively. The Company evaluated the principal and contractual interest due at each of the acquisition dates and determined that insignificant amounts were not expected to be collectible.

The Company incurred $3,032,000 and $4,979,000 of expenses in connection with the Heritage and FNB acquisitions, respectively, during the year ended December 31, 2019. Mergers and acquisition expenses are included in other expense in the Company's consolidated statements of operations and consist of third-party costs, conversion costs and employee retention and severance expenses.

Total income consisting of net interest income and non-interest income of the acquired operations of Heritage was approximately $15,506,000 and net income was approximately $2,286,000 from July 31, 2019 to December 31, 2019. Total income consisting of net interest income and non-interest income of the acquired operations of FNB was approximately $12,607,000 and net income was approximately $249,000 from April 30, 2019 to December 31, 2019. The following unaudited pro forma summary presents consolidated information of the Company as if the Heritage and FNB acquisitions had occurred on January 1, 2018:


	Year ended
(Dollars in thousands)	December 31, 2019	December 31, 2018
Net interest income and non-interest income	662,937	608,787
Net income	216,045	209,004