Good day, ladies and gentlemen, and welcome to the Glacier Bancorp's Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to your host, Mick Blodnick. Please go ahead.

Welcome, and thank you for joining us this morning. With me this morning is Ron Copher, our Chief Financial Officer; Don Chery, our Chief Administrative Officer; Barry Johnston, our Chief Credit Administrator; and Angela Dose, our Principal Accounting Officer. Last night, we reported record earnings for the fourth quarter and full year 2012. Earnings for the quarter were $20,800,000. That compares to $14,300,000 in last year's quarter. That's an increase of 45%. Diluted earnings per share for the quarter were $0.29 compared to $0.20 in the prior year quarter, also a 45% increase. There were no extraordinary items or gain on sale of investments during the quarter. Earnings for the year were $75,500,000 versus $17,500,000 the prior year. That's an increase of $58 million. Diluted earnings per share for the year were $1.05 compared to $0.24 in 2011. Excluding an after-tax goodwill impairment charge of $32.6 million recorded in 2011, earnings for the prior year period were $50,100,000. And diluted earnings per share were $0.70 a share. Excluding the impairment charge, net income increased by 51% for the year, and diluted earnings per share increased by 50% over the prior year period. We earned a return on average assets for the quarter of 1.06% and a return on tangible equity of 10.63%. For the year, our return on average assets was 1.01%, and return on tangible equity was 9.96%. From an earnings perspective, both the fourth quarter and full year continued to show steady progress over last year. However, we believe our performance can improve further, notwithstanding the challenges presented by the current banking environment, especially to our top line revenues. Although there was significant progress made this past quarter to reduce credit costs, we expect those costs to decrease further in 2013 and allow us to deliver solid earnings…

[Operator Instructions] We'll move on to our next question. Our next question comes from Brad Milsaps from Sandler O'Neill. Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division: Just maybe a couple of questions on loan growth. I know you mentioned there may be some bright spots out there you are seeing, yet it still remains really competitive. Can you talk a little bit about maybe the loan pipeline today versus this time last year? And then the credits that -- maybe percentage credits that you're turning down, and it sounds like it's mostly related to unwillingness to fix terms for a long period of time. But just maybe talk about that a little bit more?

Yes, I mean, I don't think there's any doubt that the pipeline is stronger this year than it was a year ago. And I think we saw the pipeline as 2012 -- as we went through 2012, I think that pipeline continued to expand. And probably in the last 6 months, we noted especially some pretty significant improvement in activity and credits that we were getting a chance to look at. And I still think that pricing and terms are something that are troublesome. I mean, you're getting a chance to look at a lot of transactions, but a lot of these come with fixing rates for 15, 20 years. And as I have said over and over, in the past, we've been hesitant to do that. Now we may have to, as we move forward, on some of these, we may have to take a little bit different tact, and that is to start maybe match-funding some of these longer-term loans, if that's what it takes to keep the relationship or get the transaction done, something we used to do a lot back in the 1990s, early part of the last decade, but really kind of got away from here more recently. So -- but Barry has a much better handle on what he's seeing, so I'll let him comment on what he's seeing for volumes and where he's seeing the volume.

Yes, Brad, one of the things that -- our loan growth was essentially pretty much just down a little bit from last year, and there was a couple of factors that led to that, primarily as we continued to clean up our balance sheet, or in regards to credit metrics. But if you look at some of the categories that have decreased, they are really the categories that where we've taken that initiative to do that and where we've had some of our challenges in the past. And presold and spec, that was down 41% last year, but custom and owner-occupied the category that's pretty conservative and fairly profitable, was up 14%. And then total landlocked and other construction was down 13%. But if you break it out by categories, land development, consumer land, unimproved land, developed lots, were up to builders, and commercial lots were all down double-digits. But other construction, which is a lot of new production that we put on in the last 6 months, the quarter is up 63%. Owner-occupied and nonowner-occupied turned commercial real estate, got a small increase there, 3 in 1. And that's the category that we're really fighting right now as far as rates and terms. But even given that, the competitive pressures out there, we're able to maintain a 3% growth rate there. So -- and then 1-4 family essentially stayed flat, when we exclude the loans held for sale. Home Equity Lines of Credit, of course, are down. Everybody is tending to take those balances and refinance into a term credit, given the low environment, that we're down 7% year overall. But that portfolio is relatively small dollars in relationship to the entire portfolio. And then e.g. other, and are down 3 and up 5. So it's those categories where…

The accruing TDRs were down $5 million. They were at $100 million versus $105 million a quarter before. And regarding M&A, yes, the activity level has definitely picked up. I think we're getting a lot of opportunities to have discussions with multiple parties. And it's our hope that in 2013, as I mentioned in my comments, that we're going to be able to, hopefully, get something done. I mean, there's some very -- from our perspective, Brad, there are some very interesting and exciting opportunities out there. It's just a function of whether or not we could ever get those transactions completed. And that's always a big "if". But I'm feeling pretty good, based on just the volume of activity and the volume of discussions.

We'll move on to our next question. Our next question comes from Jennifer Demba from SunTrust.

I had to jump on late, so you probably covered this, I apologize. Can you just talk about what type of problem loan sales you foresee executing in '13?

I think that the -- we didn't cover that. I think probably, the problem assets that we expect, it's going to be along the same lines of what we've had over the last year or 2. I mean, I think we're still going to be trying to move out some land development and some unimproved land loans. You're going to have -- although it's leveling off, I think there are still some 1-4 family loans constantly going into foreclosure. Although, as I may have mentioned in my comments, those tend to cycle through relatively quickly unlike the raw land or the land development loans, which in some cases, we've sat on for an extended period of time. Don't see much. We've got a few commercial real estate projects, but don't see much there. Totally surprising to us through this whole downturn has been our Home Equity lines of Credit. They just really -- I think it was a function of the way we underwrote them and the quality of that portfolio. We just haven't seen much in the way of losses on HELOCs. And of course, that's a portfolio that's declining now, as we are obviously getting a lot of our lines -- or Home Equity Lines of Credit paid off and refinanced into first. Barry, do you have any other thoughts?

Yes, under Home Equity, actually. Of that total, about 1/2 of them are first liens, so that helps. The other 1/2 is second liens, and we always were pretty conservative in how we underwrote those. We never got above 100% LTVs, or a few in that category, a few in the 90%. But most of them were 80% or less. So that's an indicator of why that portfolio has done pretty well through this cycle.

And one other thing, Jennifer, I think it's a function of just lack of inventory in a number of our markets, which have really, like Barry said earlier, really come down. You look at the NPAs in our resi construction portfolio, that has really dropped. I mean, we just don't have much left in problem assets on residential construction. So I don't see that as being an area where we're going to be able to make much in the way of gains. Again, it's going to still, in my mind, come primarily from 1-4 family, come from land development and unimproved land.

Our next question comes from Daniel Cardenas from Raymond James. Daniel E. Cardenas - Raymond James & Associates, Inc., Research Division: Just a couple of quick questions. Maybe just a quick update on how the charter consolidation is going? Is that going according to plan, better-than-expected, worse-than-expected?

It's going way better-than-expected. I mean, although we didn't really expect -- I mean, I can honestly say the reorganization, I don't think internally we expected that it was -- we were going to have any kind of meltdown or anything like that. But it really has afforded us to do some things, some of which we knew we were going to be able to accomplish from just from an overall regulatory- and supervisory-burden perspective. And we were going to take a lot of that burden off of the individual banks. That absolutely has been the case. It's also allowed us, internally, to do some things. I think, first and foremost, if you talk to most of our division presidents, they'll tell you that it's really allowed them to get back out on the street, in their communities, re-engaging with their customers on a variety of products, services and just being, once again, becoming community bankers. Internally, I think it's allowed us to do some things that are really going to start to make a difference, especially in 2013. We made some changes to the structure of the company in the fourth quarter. I think that's going to pay dividends. I think it's going to reduce a lot of work and time and effort that was being basically wasted. I think that's going to go away. So every month, it seems like there's been 1 or 2 more things that we've come across. A lot of these have been ideas from the banks. They've been pushing a lot of these initiatives, so why do we do this anymore, why should we even do that? And then, of course, some of us at the holding company have come up with some ideas, too, about being -- doing things that would allow…

And Dan, we've always, long term, we have always said, that we never wanted to go below 8. 8 is kind of -- it's not cast in concrete, but it's really been a long-term goal or number that we focus on. And we're still clearly above that. But there's been times in the past when we had a growth spurt, that tangible common equity started to move down around 8%. It was one of the reasons we did a follow-on offering back in 2010, and actually, the first one in '08 also. So I guess, if you're looking for a number, that's probably as close as one that we really try to manage to.

[Operator Instructions] Our next question comes from Tim Coffey from FIG Partners.

Given the comments you've made about your improvements in credit quality and what's going on in the nonaccrual bucket, I'm wondering if we look at some of the gains you've been booking on OREO sales, would you anticipate those to remain at similar levels for the last 2 quarters? Or would you think they would change?

Boy, I think there's 2 competing forces there, Tim. On the one hand, I think it's only logical to expect that as you get deeper down into your OREO, probably those types of assets are probably more troublesome for whatever reason. I mean, they're just not as enticing to a buyer or they've got some issue with them. Although the flip side of it is, we have written down a lot of those OREO to very low levels. So on the one hand, yes, you start to have to deal with more distressed OREO properties, which would argue that maybe your OREO losses could be higher. But then offsetting that is the pretty significant discounts that we have applied to all of those already, and offsetting that -- offsetting the negative is also a firming up real estate market. And in some of these, even though you would argue that a land development project or a raw land project this last 6 months wasn't the most attractive, we were still able to sell it, and in some cases, sell it at what we were carrying it at, or either a very small loss or a small gain. So I think just the overall real estate market and real estate values is going to continue to help us throughout 2013. So that's probably a long answer, but I guess at the end, I wouldn't expect OREO to change or differ too much from what we've seen the last 2 quarters. I mean, again, I think that the product that's still left out there in OREO has been priced pretty much where it needs to be to move it, and that we would probably not see a lot of additional loss. And in some cases, we might not even accept any additional loss to move it. We held firm on a number of properties this last year, and offers that we were getting earlier in the year, Tim, and compared to what we got in the fourth quarter, they were significantly higher. So I mean, as we have far less of it, our willingness to give stuff away, it's just not going to be there. So overall, I think that we're not going to see any noticeable change.

Okay. That's helpful. And then looking at your noncredit operating expenses, as those -- do you have -- there's opportunities to trim that back? Or is it more of being able to leverage what you already have in expenses and generate more in assets, more spread income?

I think it's the latter. It's the -- it's our ability to leverage. I mean, we run pretty lean. I mean, we really do. I think the banks do a great job, and of course, this was an initiative of ours last year. It's going to be an initiative of ours again this year, to really focus on our efficiency ratios at each of them, each of the bank divisions. And so I don't think there's a lot in operating expenses that can -- we can take a knife to. I think what we can do, though, is hopefully move to change the mix of our earning assets. Clearly, we would like to lessen that investment portfolio by more quality loans. And as Brad asked earlier, I mean, if we can get some M&A activity going, I think we've got the system, then we've got the company, we've got the ability to handle more of those types of assets and take advantage of that additional scale and just become that much more efficient. So yes, it's definitely the latter. We want to grow this company, and I believe that the incremental growth that we're adding would not be necessarily causing us to add the same level of expense. So I just think that's going to be where we're going to focus on and hopefully, like I said, hopefully, we can get some things done either on the loan growth side or on the M&A side.

Yes. And then I just have a question about the deposit growth that you're seeing. Is any of that translating into new business? Or is that just existing business that's adding to the deposits?

No, there's no doubt, we're -- I mean, the last 2 years, just our -- in '11 and '12, we've added almost 12% more customers to the company. So I mean, yes, we are getting higher and higher balances, 18% each in the last 2 years, growth in noninterest-bearing accounts. But during that same time, we've also grown our customer base by 12%. So it's a combination of both. I mean, clearly, some of our existing customers are keeping higher balances. We can see that. We track that. But it's also a function, that our banks have done a very good job of bringing in new customers and expanding our customer base.

Our next question is a follow-up question or comment from Daniel Cardenas from Raymond James. Daniel E. Cardenas - Raymond James & Associates, Inc., Research Division: Just a quick follow-up question on the M&A. Just kind of given the changed operating environment, has that changed what you're looking for in a potential acquisition candidate?

Well, to some degree, Dan. I mean, I think our focus, going forward, will be to diversify our loan portfolio, definitely. I don't think -- number one, I don't think we have any reason to move outside of our existing footprint. I think, over the next couple of years, there's going to be plenty of opportunities within our existing footprint of 6 states to do possible transactions. But one of the things we are looking at, clearly, is to reduce our exposure to real estate. I mean, I think there are a number of opportunities throughout, again, throughout our geography that would give us some diversification within that loan portfolio. That's definitely going to be one of them. I think another one is going to be some of the economies. We're heavily laden in a -- a lot of our economies are tied to tourism. We clearly would like to see more of an egg-based exposure, something that we have a little bit of with our existing banks, but something that, I think, would further diversify our balance sheet in our loan portfolio. And I think it's just a good line of business. So we'll be looking at some of those things. I mean, I don't think that there will be too many banks that will materially change the liability side of our balance sheet. I mean, I -- although we're not going to go out there and look for banks that are totally dependent on brokered CDs or high-cost CDs. I mean, most of the companies that we would be very interested in would be your typical community bank, and those would have a funding base that looks very much like ours and our 11 existing banks' funding base. So I think the real change would be in trying to further diversify that loan portfolio.

Our next question comes from Joe Morford from RBC Capital.

Just a couple of follow-ups, I guess. First, I mean, you've talked about being a little more optimistic about loan growth. How should we think about net balance sheet growth? It sounds like if you got the opportunity and loan growth comes in, you'll just fund it with securities, and the overall earning asset base won't grow all that much? Or...

Yes, I wouldn't expect -- we grew at 8% this year. I would say that our targets for this coming year is somewhere -- I mean, total balance sheet growth, Joe, somewhere in that 3% to 5% range. And we're hoping that a majority of that is net loan growth.

Right, okay. And then the other question is, the reserve release is a little more this quarter. I mean, you said that will continue, but should we see it at kind of this similar pace? Or is there any reason to think that you might take the reserve down at a bigger pace at all?

No, not really. We provisioned what, $21.5 million in 2012. There's going to be some provision where we're not going to just probably drop them, unless trends really pick up. But we went from $64.5 million and we're down to $21.5 million. I don't know. I mean, I'm just speculating here. Do we go from $21 million to $15 million? Do we go to $21 million to $10 million? A lot about it is just going to depend upon how much more progress we make in the early part of the year or throughout the year, for that matter, how much progress we make in further improving credit quality. And of course, another important component is just how fast can we grow our loans, too. So -- but I think that I would be very, very surprised, Joe, if our provision was the same as it was this year. We're not expecting that.

I'm showing no further questions at this time. I will now turn the call back over to management for closing remarks.

Okay. Thank you, all, very much for meeting with us this morning. Once again, I think to sum up the year, I think it was a very good year. I think we made a tremendous amount of progress. I still think there's some things that we could obviously do better. I think that if we're fortunate enough to have a few things happen next year, it could have a pretty significant impact on 2013's results. But we're very, very pleased with the work that all of the banks did. And with that, I'll just wish everybody a great weekend, and thank you very much for joining us this morning. Bye now.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect, and have a wonderful day.