Glacier Bancorp Sees Margin Rising Through 2027, But Deposit Costs Will Shrink Each Step
The bank's deputy CFO said $3.5 billion of loans will reprice higher, while a 4.5% margin may take longer than 2027.
Glacier Bancorp expects its net interest margin to keep widening through 2027, Deputy CFO and Treasurer Byron Pollin said on the bank's third-quarter earnings call, but rising deposit costs will trim the size of each quarterly gain. Pollin said about $3.5 billion of loans will reprice up 125 to 150 basis points over the next 12 months.
Repricing does the heavy lifting
Glacier Bancorp, a Kalispell, Montana, bank holding company that runs Glacier Bank across nine western and southwestern states, reported a tax-equivalent net interest margin of 4.01% for the quarter, up 11 basis points from the second quarter, CEO Randy Chesler said. It was the 11th straight quarter of expansion. Net income hit a record $105 million, up 7% from the prior quarter.
Pollin said securities cash flows are being reinvested roughly 350 basis points above the yield on runoff, and new loan production yields are in the high sixes and trending higher. Chief Credit Administrator Tom Dolan put third-quarter production yields at "674," as transcribed. "Every new loan we put on the books will lift our margin," Pollin said.
New deposit accounts are opening at 2.25% to 2.5%, Pollin said.
Why 4.5% is not a 2027 call
Asked by a Piper Sandler analyst whether 4.5% is a realistic target, Pollin said the bank's historic range is 4% to 4.5%. "I can't say that that's a 2027 event," he said, though "with enough time" he could see the bank reaching the top of that range.
On the fourth quarter, an analyst noted two straight margin lifts of 10 to 12 basis points. Pollin said deposit costs, which fell over recent quarters, will likely drift up, so the gain should be a little less than 10 basis points.
He put the expected deposit beta, the share of rate increases passed on to depositors, at 20% to 25% on total deposits, nearer the low end early in the cycle. The deposit spot rate on September 30 was 1.20%. Pollin called the bank modestly asset sensitive and said asset repricing should more than offset higher funding costs.
Expenses, efficiency and capital
CFO Ron Copher said the bank is "pretty confident" of a fourth-quarter efficiency ratio of 54% to 55%. He said expenses should land toward the high end of the $187 million to $192 million guide, with full-year spending near $757 million within a $750 million to $760 million range. Third-quarter core operating expenses were $190.8 million. He expects a tax rate around 21% for the fourth quarter and the year.
Asked about a buyback, Chesler said the bank is looking at all options, including special dividends and share buybacks, given the capital it expects to build.
Management will update its efficiency target on the fourth-quarter call, Copher said, once budgeting is done.
Sources
- Compared to Estimates, Glacier Bancorp (GBCI) Q3 Earnings: A Look at Key Metrics — Yahoo Finance
- Glacier Bancorp (NYSE:GBCI) reports sales below analyst estimates in Q3 2026 earnings — Yahoo Finance
- Glacier Bancorp: Q3 Earnings Snapshot – WTOP News — wtop.com
- Glacier Bancorp (GBCI) Stock May Be 25% Undervalued On Excess Returns — Yahoo Finance
- What Analyst Projections for Key Metrics Reveal About Glacier Bancorp (GBCI) Q3 Earnings — Yahoo Finance
