Good day, ladies and gentlemen, and welcome to the Glacier Bancorp First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Mick Blodnick. Sir, you may begin.

Thank you, Kate. Welcome, and thank you all for joining us this morning. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Barry Johnston, our Chief Credit Administrator; and Angela Dose, our Principal Accounting Officer. Last night, we once again reported record earnings for the first quarter of 2013. Earnings for the quarter were $20,800,000, that compares to $16,300,000 in last year's quarter; that's an increase of 27%. Diluted earnings per share for the quarter were $0.29 compared to $0.23 in the prior year's quarter, a 26% increase. There was just a small loss on the sale of investments in the quarter. Aside from that, there were no other extraordinary items recorded. We earned a return on average assets for the quarter of 1.11%, and return on tangible equity of 10.63%, both were the best quarterly earnings ratios since December 2008. From an earnings perspective, revenue growth is still a challenge. It has become increasingly difficult to grow earning assets at a pace fast enough to offset the earnings pressure being applied by this low rate environment. Fortunately, as I previously stated, we still possess a couple of levers that make up for the revenue decline. This past quarter, we continued to benefit from lower credit costs, both in the form of charged off loans and other real-estate-owned expense. And for the first time in 7 quarters, we finally experienced a reduction in premium amortization on our investment portfolio. We certainly hope both of these trends continue through the rest of this year. If they do, we should deliver good earnings even with the challenges to top line revenue growth. For us, the highlight of the quarter was the announcement of 2 additions to Glacier Bancorp that we feel will provide terrific opportunities to further…

[Operator Instructions] Our first question comes from the line of Brad Milsaps with Sandler O'Neill. Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division: Mick, I was just curious, can you maybe talk a little bit about your loan growth prospects? Any certain part of your footprint that's showing you a little bit more growth. I know you mentioned the 2% number. Just kind of curious kind of what your thoughts are on kind of where you'll -- what categories you'll see a lot of that be driven from? And do you feel like you've run off the bulk of the portfolio that you wanted to get rid of and you can kind of start to grow from this point going forward? I'm just kind of curious how much that would impact the number as well?

Well, there's still, as I mentioned earlier, there still are some distressed properties and projects out there that we'd kind of like to push out the door, which are still not necessarily in OREO, they're in NPLs, which would affect -- which would provide a headwind if we were successful in disposing of those, Brad, to our overall loan growth. But we're winding that down now, there's no doubt about it. And we really think that some of the larger projects that we can be successful in getting rid of some of them. A lot of those are already in OREO, so those would not be impacting our loan numbers. So it's kind of a mixed bag there but the larger projects probably are sitting in that OREO bucket. As far as your first question regarding where are we seeing the activity or the loan growth, I would probably say that it's -- there's no one area, Brad, where it's just exceptionally stronger than the rest of the footprint. I mean, I think we're seeing deals and opportunities and loans coming from all the banks. If I had to pick one area though, I guess, that maybe we're seeing a little bit stronger loan growth, it'd probably be coming out of Idaho, coming out of that Spokane, Coeur d'Alene, Boise area. But it's not real significant as far as what we're seeing there versus what we're seeing in Montana, Wyoming, Colorado. So it's hard to put your finger on one particular market that's really driving a lot of loan growth. But I suspect that if you look through the first quarter's numbers. And as I said in my remarks, we were very, very pleasantly surprised to have an increase in the first quarter, because that usually doesn't happen even in the best of times. I'm not sure that we can pinpoint one exact bank or one exact market for causing most of the growth. Barry, you have any other thoughts or you have any other comments?

Probably where most of our growth is coming from is the other construction category, it's probably the -- any commercial real estate projects. We have some hospitals under construction, 4 or 5 apartment complexes that are going up, and then we advanced on some office buildings. And so that's probably -- and that kind of goes with this time of the year, as these projects start coming out of the ground. We've had a real mild winter in our area this year, so a lot of the construction projects that normally wouldn't start until the second quarter of the year actually have come out of the ground, and that's what we're seeing some of that growth is on that commercial real estate, both owner and nonowner-occupied. Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division: Great. And then maybe a question for Mick or Ron. You guys did a nice job on expenses in the first quarter. Looked like other expenses were down quite a bit. Sort of absent any reductions related to mortgage banking commissions, is this a pretty good run rate for the year? Do you have any other expense initiatives planned? I know you had the charter consolidation a few quarters ago. Anything else on the horizon that would move that number plus or minus either way?

I don't really think so, Brad. I think that, I think it's probably -- you're looking at a pretty decent run rate going forward. Brad J. Milsaps - Sandler O'Neill + Partners, L.P., Research Division: Okay. Great. And Mick, do you happen to have the accruing TDR number?

I do. It was $80 million down from $100 million. So it was a 20% drop from end of year.

Our next question comes from the line of Jeff Rulis with D.A. Davidson. Jeffrey Rulis - D.A. Davidson & Co., Research Division: Mick, following up on the OREO cost, anything sort of -- I don't know if it's one-time, I mean it's historically a more challenging quarter for you guys on the real estate side. And I think -- do you take away that it -- there were certain projects or something you felt good about moving that, that was a lower number? Or you alluded to kind of the firming up of real estate, encouraged by that trend?

I really do think, Jeff, that some of the real estate trends and the valuations that we're seeing is really propping up that number. That's not to say that from quarter-to-quarter, you might have that one project where we choose to just finally get rid of it, we're willing to take maybe a larger loss than we needed to if we held onto it. But take for example in this last quarter, there was 1 piece of OREO that we sold. And I think there was virtually no loss at all on that piece of OREO. And it was a reflection, Jeff, of the fact that real estate values have firmed and this was on some developed lots, and they wanted those developed lots. So if we can continue to see that kind of firming -- we haven't probably in our markets, at least I am not aware and I don't think Barry has informed me that anywhere in our footprint have we seen -- maybe with the -- a little bit with the exception of Boise. I'm hearing that there's some shortage of maybe nice developed lots down there. But for the most part, we still have a fair number of subdivisions and lots available, unlike what you're hearing in some of the other parts of the country. I did talk to one local realtor here just yesterday, and the one area that we are probably very, very similar to most of the other parts of the country is the inventory of homes is very, very tight. There's not a lot of homes out there for sale. This particular realtor was crying for listings, wasn't crying for buyers. So maybe that bodes well. We had a big meeting yesterday among all of our real estate staff from all of the banks. And I think that was one of the things we talked a little bit about is what kind of resi construction opportunities are we going to be seeing over the rest of this year and into 2014. But I do think that we still could, Jeff, have that one -- we could still have that one project, an OREO that we decide we're just done with it, we want it gone. But for the most part I think that we've marked these things pretty conservatively. And this increasing real estate values that we're experiencing, I think bodes pretty well for us to not have to take a lot of significant charges as we move forward. Jeffrey Rulis - D.A. Davidson & Co., Research Division: That's good news. On the CMO side, you've talked about hopefully sort of minimizing the premium amortization. But is there -- within that portfolio, any more moves to sort of actively move away from the CMO exposure going forward?

Yes. I mean, I think we will. I mean, it's still -- they're so -- that portfolio is huge, so -- I mean, it's not like we will probably just cut the cord tomorrow and just stop buying CMOs. But in this first quarter, we, as I mentioned, we did start to change the mix. We didn't buy anywhere near as many CMOs as we have the last 3, 4, almost 5 years now. I would suspect some of those trends are going to continue. The other thing, Jeff, is if we could start to see a strengthening in loan growth, that obviously would take some pressure off of our need to further backfill with CMO securities. So we're hoping that we can finally start to see better loan growth volume. And in addition, I think you will continue to see a reshuffling of the mix. Jeffrey Rulis - D.A. Davidson & Co., Research Division: And then one quick last one, just a housekeeping. The First State closing, does that look like an end of quarter, end of Q2 event at this point?

Well, right now, we're keeping our fingers crossed. But every indication is that we should be closing on May 31.

Our next question comes from the line of Joe Morford with RBC.

I guess, just curious, your current thoughts on the reserve and provisioning, particularly with the reserves still hanging up near that 4% level and generally all [ph] accounts, the credit trends moving in the right direction, recognizing the portfolio's not growing too much right now. When should we start to see that start to come down at maybe a little faster pace?

I didn't mention any in my formal remarks but I figured that maybe this question would come up, so -- and it's a very good question. One of the reasons that we were probably a little on the conservative side, and Barry and myself talked about this quite a bit throughout the quarter. As you know, we haven't been a company that's been too anxious to release reserves. We recognize that, that reserve and that allowance that we have is fully satisfactory. But we also -- because of the transactions -- we also wanted to make sure that on a pro forma basis, that we're still comfortable with our loan loss reserve. And remember, under purchase accounting, we're not bringing any reserves over when we close on First State Bank and when we close on North Cascades National. So with no reserve coming over, I mean we wanted to make sure that -- where are we going to be? And I've done the math, and it looks like we're still, even with the addition of First State Bank and North Cascades, and with no provision coming over on either those transactions, we should still be right around 3.5%, between 3.4% and 3.5%, ALLL. So we kind of want to wait and -- we didn't want to do anything, we wanted to make sure we fully covered our charge-offs this quarter. Didn't want to go out there and do something goofy, and have some purchase accounting numbers that came out differently than what we expected. So we should have, as I mentioned just before to Jeff, we should have -- keep our fingers crossed -- we're hoping to have First State Bank closed and completed the end of next month, and then we'll be looking to close -- right now our tentative date to close on North Cascades is July 31, we're hoping we can stay on track for that closing. But my expectations are that even after we close both those transactions, and even bringing no reserve over, I think our reserve is still going to be definitely adequate. The other good thing is, as we've mentioned on the conference calls with the investors, after both of those transactions, both banks are bringing over some very, very attractive and very strong loan portfolios, especially from a credit quality perspective. So we're going to have to wait and see how the dust settles, see what some of our other credit quality numbers look like. But we fully expect that each of those transactions are further going to lower all of our credit quality ratios and lower them by -- in a good way.

And when you do start getting to that point of [indiscernible] might release some more reserves that you're more likely to go just a 0 provision rather than, say, a negative provision?

Absolutely. No doubt. I just never -- I just can't even think of a scenario that would ever -- where I would ever want to go to a negative provision. Not after all the hard work these last 5 years, I would never recommend and I just can't imagine us even contemplating that one, Joe.

Our next question comes from the line of Jennifer Demba with SunTrust Robinson Humphrey.

Mick, a follow-up on Joe's line of questioning. So your net charge-offs were around, I think, 80 basis points last year. Would you -- and they obviously went down substantially in the first quarter. Would you envision them being sort of half the rate of last year this year, or what do you think will play out here in 2013?

That's probably a really good estimate, Jen. I mean, I'd love to have them end the year at 24 basis points, which was the annualized run rate coming out of the first quarter. But that may be -- that may just be a little bit naïve. I think you're probably much closer to thinking that if we could end the year in that 40, maybe even as high as 50, depends how aggressive we got from charging some additional things off. But I think you're closer to hitting the mark with about half of where we were last year.

And you said you guys are still, even with the deals that you have pending, you feel like you have enough capital to continue to acquire if something comes available. Have you seen any new conversations emerge after announcing the 2 deals recently?

Yes. I think that whenever you do something like we did in a 30-day period, I think you're probably going to get other individuals' attentions and other community bankers' attentions -- and some of those dialogues have taken place. But I think I've been pretty clear, Jen, about one thing, and that is that we're going to be very methodical and thoughtful about getting these 2 integrated and getting them integrated right. But once again, we've got the ability to do something. I'm just -- right now, we're just not looking that aggressively to do something. If something absolutely was so compelling, certainly we'd take a look at it. But with some of the conversations that have transpired over the last couple of months since these transactions were announced -- some of those, maybe a year from now we might entertain doing something. Others, I'm not so sure. But for the time being, we're going to really be focused now over the next 2 to 3 quarters on getting both Wyoming and Washington integrated.

Our next question comes from Jacque Chimera with KBW. Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division: Mick, I wanted to just swing back over to the securities portfolio and the kind of the less CMOs that you're booking and then the other things that you're putting into that portfolio. Assuming that mortgage volume just maintains the refinance and payoffs and everything like that, as you continue with this new plan, will you still see positive impacts in the future quarters, just from the reshuffle alone?

We should. Yes. Most definitely, Jacque, we should. I mean, this first quarter, obviously we didn't see the cash flow come off of the CMO portfolio that we saw in the fourth quarter. And that was a good thing. So it didn't make us run as fast just to replace some of the dollars as we had to back in quarters 3 and 4 of last year. But there's no doubt that as we start to reshuffle the deck a little bit on the investment portfolio that just that reshuffling alone -- forget the fact like you said that refis don't go down a lot -- that will have some positive impact to premium amortization. What would really be an added catalyst would be if we did see that slow down in refis. And I've said to all of you before, and you know this very well, that we understand, and I even mentioned in my remarks that we would give up fee income if [ph] refis. Just for example, I just got the numbers, and for the first quarter of the year, 63% of our mortgage volume was refis and 37% were purchases. We're going to work hard on moving that purchase transaction number higher, big part of what Barry and Don Chery and them spent yesterday with all of our mortgage people on was to come up with strategies as to how to do that. But let's just say that refis, as you said, Jacque, stay at the same level, I still think that we're going to see better, better premium amortization. And if they are to lower like some experts around the country think, and some of them are calling for a pretty significant lowering of refis. That's going to hurt our fee income. There's no way were going to replace all that fee income with purchases. But boy, that would really be a good thing for the premium amortization side. Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division: Now understood. And just also circling back to the comment you had about the lack of inventory and the possibility of residential construction. Is that a necessity to see purchase volume increase meaningfully? I mean outside of just the ratio shift that happens as mortgage refi comes down?

Yes, I think it's somewhat hand-in-hand. You're right. I mean, if we can have all -- that's an excellent question. We could have all the intent in the world of increasing purchase activity. But as that realtor told me yesterday, if there's nothing to purchase -- because there's not a lot of inventory out there for individuals to purchase -- that's going to make that, that much more challenging. Which then, I think, if that is a prolonged issue -- I mean, we saw the numbers that came out yesterday, day before. I mean, new housing starts now for last month were at an annualized rate of 1 million housing starts. Now I recognized a disproportionate amount of that was multifamily. But I'm not sure that we're going to continue to see that disproportionate amount of multifamily to single-family. I think that trend could start to move over a little bit more into single-family construction. And that's maybe what it's going to take in order to allow people to purchase their homes because it's just sounding like, right now, that inventory levels are pretty lean. Jacquelynne Chimera - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And then, just lastly. There -- a lot of banks had a decline in their mortgage banking income between 4Q and 1Q, but yours held pretty flat. Was that volume-driven? Gain-on-sale-driven? Were there any major changes between the 2 quarters?

No. I mean, the volumes were pretty much intact. We've set some goals for all the banks this year. They're going to be challenging goals, and it's not going to be easy for them. But I think, in the first quarter, most of that maintaining of that level of gain on sale or mortgage origination fee income was the fact that our volumes stayed pretty much intact. It wasn't that we were -- in fact, if anything, I think, in the first quarter, we saw some -- we didn't see some of the spreads out there on service release premium that we saw in the third and fourth quarter when those spreads were widening because there was so much volume and so much activity that rates were being -- I don't know if it was artificially maintained higher, but I think those moved back in, in this last quarter. So definitely, as a result we would have had to have had just as good a volume.

[Operator Instructions] Our next question comes from the line of Tim Coffey with FIG Partners.

Mick, I wanted to talk about the securities book one more time. Given the changes that are going to be happening to the balance sheet going forward with the acquisitions, are you in a position to start unwinding the securities books? You talked about reshuffling the mix and lowering the concentration of CMOs. But on the aggregate portfolio, should we expect that it's going to start declining going forward?

Tim, we wouldn't really have to at this point in time because, I think, if you add both of these transactions, I mean, it's going to take -- and even maintained the investment portfolio at its current size, I mean, we're going to be somewhere in that $8.5 million (sic) [billion] asset range. I think what's going to drive -- 2 things are going to drive our -- the size of that investment portfolio, Tim. Number one, clearly, right now, if you get closer to $10 billion in assets, that's going to be an absolute key consideration as to letting and drawing that investment portfolio down. No doubt about that. But we've got a ways to go there. I think, in the interim, we're going to be looking at, okay, the securities we are buying, are they creating any kind of earnings and incremental net income for us? If some of the things we've done this last quarter, we're still comfortable what they are, we'll do that. The other thing, I guess, too, Tim, is once we get both of the transactions closed, then we can sit back and see just exactly where we're at and what we've actually done to the balance sheet. And then from that, and that won't be till late third quarter by the time we get them both done, then we'll probably sit back and decide just what is our strategy going forward. I would not expect that between now and the middle part of August, Tim, that we're going to make any major strategical changes aside from what we've been doing, that is to have some change in the mix of the investment portfolio. I would not expect that you're going to see that come off by $200 million, $300 million, $400 million.

But sort of a long-term goal of yours is to reduce the securities...

Absolutely. I mean, yes. I mean, I can see, at some point in time, if we're successful, which I think we can be, in adding more and more community banks to the company, then we've got, and we've said this over and over, we've got that great lever in this investment portfolio. And ideally, we would like to be, 3, 5 years from now, we'd like to be a $9.5 billion bank with a 15% or 20% investment portfolio. And that would come by more and more, preferably, organic growth or acquisitions. And as we get closer to that $10 billion in assets, pare back that investment portfolio.

I'm not showing any further questions at this time. I'd like to turn the call back over to Mr. Mick Blodnick for closing remarks.

Okay. Well, I appreciate all of you taking the time this morning to join us. Again, I thought it was a pretty good start to 2013. Hopefully, over the next 3 quarters, we can add to what we've started. As I mentioned in my formal remarks, we are very, very excited to be bringing on First State Bank and North Cascades National Bank. We'll be working very hard over the next 3 quarters of this year to close and begin the integration process, especially in the back office side. I think both of these transactions are going to create a great deal of opportunities for us, as far as the ability to further grow our franchise, both down in Southeast Wyoming and Northern Colorado, as well as Central Washington. So we're excited, and with that, I hope everybody has a great weekend, and I look forward to talking to you later. Bye now.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone, have a great day.