10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2011

o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

COMMISSION FILE 0-18911

GLACIER BANCORP, INC.

(Exact name of registrant as specified in its charter)

MONTANA	81-0519541
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
49 Commons Loop, Kalispell, Montana	59901
(Address of principal executive offices)	(Zip Code)
(406) 756-4200
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer þ	Accelerated Filer o	Non-Accelerated Filer o	Smaller reporting Company o
		(Do not check if a smaller reporting company)

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The number of shares of Registrant’s common stock outstanding on April 21, 2011 was 71,915,073. No preferred shares are issued or outstanding.

GLACIER BANCORP, INC.
Quarterly Report on Form 10-Q

Index

	Page
Part I. Financial Information
Item 1 – Financial Statements
Unaudited Condensed Consolidated Statements of Financial Condition – March 31, 2011 and December 31, 2010		3
Unaudited Condensed Consolidated Statements of Operations – Three Months ended March 31, 2011 and 2010		4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income – Year ended December 31, 2010 and Three Months ended March 31, 2011		5
Unaudited Condensed Consolidated Statements of Cash Flows – Three Months ended March 31, 2011 and 2010		6
Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3 – Quantitative and Qualitative Disclosure about Market Risk		54
Item 4 – Controls and Procedures		54
Part II. Other Information		54
Item 1 – Legal Proceedings		54
Item 1A – Risk Factors		54
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		60
Item 3 – Defaults upon Senior Securities		60
Item 5 – Other Information		60
Item 6 – Exhibits		60
Signatures		61
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition

	March 31,			December 31,
(Dollars in thousands, except per share data)	2011			2010
Assets
Cash on hand and in banks	$	75,471			71,465
Federal funds sold		—			—
Interest bearing cash deposits		22,633			33,625
Cash and cash equivalents		98,104			105,090
Investment securities, available-for-sale		2,706,315			2,396,459
Loans held for sale		23,904			76,213
Loans receivable, gross		3,646,986			3,749,289
Allowance for loan and lease losses		(140,829	)		(137,107	)
Loans receivable, net		3,506,157			3,612,182
Premises and equipment, net		152,922			152,492
Other real estate owned		82,594			73,485
Accrued interest receivable		33,707			30,246
Deferred tax asset		37,962			40,284
Core deposit intangible, net		10,030			10,757
Goodwill		146,259			146,259
Non-marketable equity securities		64,434			64,429
Other assets		47,476			51,391
Total assets	$	6,909,864			6,759,287
Liabilities
Non-interest bearing deposits	$	888,311			855,829
Interest bearing deposits		3,663,999			3,666,073
Federal Home Loan Bank advances		960,097			965,141
Securities sold under agreements to repurchase		250,932			249,403
Other borrowed funds		14,135			20,005
Accrued interest payable		6,790			7,245
Subordinated debentures		125,167			125,132
Other liabilities		160,544			32,255
Total liabilities		6,069,975			5,921,083
Stockholders’ Equity
Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding		—			—
Common stock, $0.01 par value per share, 117,187,500 shares authorized		719			719
Paid-in capital		642,876			643,894
Retained earnings — substantially restricted		194,000			193,063
Accumulated other comprehensive income		2,294			528
Total stockholders’ equity		839,889			838,204
Total liabilities and stockholders’ equity	$	6,909,864			6,759,287
Number of shares outstanding		71,915,073			71,915,073
Book value per share	$	11.68			11.66

See accompanying notes to unaudited condensed consolidated financial statements.

3

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months ended March 31,
(Dollars in thousands, except per share data)	2011			2010
Interest Income
Residential real estate loans	$	8,716			11,833
Commercial loans		33,058			36,672
Consumer and other loans		10,450			10,640
Investment securities		16,149			14,253
Total interest income		68,373			73,398
Interest Expense
Deposits		7,088			9,331
Federal Home Loan Bank advances		2,548			2,311
Securities sold under agreements to repurchase		357			416
Subordinated debentures		1,643			1,636
Other borrowed funds		33			190
Total interest expense		11,669			13,884
Net Interest Income		56,704			59,514
Provision for loan losses		19,500			20,910
Net interest income after provision for loan losses		37,204			38,604
Non-Interest Income
Service charges and other fees		10,208			9,520
Miscellaneous loan fees and charges		977			1,126
Gain on sale of loans		4,694			3,891
Gain on sale of investments		124			314
Other income		1,392			1,332
Total non-interest income		17,395			16,183
Non-Interest Expense
Compensation, employee benefits and related expense		21,603			21,356
Occupancy and equipment expense		5,954			5,948
Advertising and promotions		1,484			1,592
Outsourced data processing expense		773			694
Core deposit intangibles amortization		727			820
Other real estate owned expense		2,099			2,318
Federal Deposit Insurance Corporation premiums		2,324			2,200
Other expense		7,512			7,033
Total non-interest expense		42,476			41,961
Earnings Before Income Taxes		12,123			12,826
Federal and state income tax expense		1,838			2,756
Net Earnings	$	10,285			10,070
Basic earnings per share	$	0.14			0.16
Diluted earnings per share	$	0.14			0.16
Dividends declared per share	$	0.13			0.13
Return on average assets (annualized)		0.62	%		0.67	%
Return on average equity (annualized)		4.95	%		5.75	%
Average outstanding shares — basic		71,915,073			62,763,299
Average outstanding shares — diluted		71,915,073			62,763,299

See accompanying notes to unaudited condensed consolidated financial statements.

4

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income
Year ended December 31, 2010 and Three Months ended March 31, 2011

								Retained			Accumulated			Total
								Earnings			Other Comp-			Stock-
	Common Stock				Paid-in			Substantially			rehensive			holders'
(Dollars in thousands, except per share data)	Shares		Amount		Capital			Restricted			Income (Loss)			Equity
Balance at January 1, 2010		61,619,803	$	616		497,493			188,129			(348	)		685,890
Comprehensive income:
Net earnings		—		—		—			42,330			—			42,330
Unrealized gain on securities, net of reclassification adjustment and taxes		—		—		—			—			876		876
Total comprehensive income														43,206
Cash dividends declared ($0.52 per share)		—		—		—			(37,396	)		—			(37,396	)
Stock options exercised		3,805		—		58			—			—			58
Public offering of stock issued		10,291,465		103		145,493			—			—			145,596
Stock based compensation and tax benefit		—		—		850			—			—			850
Balance at December 31, 2010		71,915,073	$	719		643,894			193,063			528			838,204
Comprehensive income:
Net earnings		—		—		—			10,285			—			10,285
Unrealized gain on securities, net of reclassification adjustment and taxes		—		—		—			—			1,766		1,766
Total comprehensive income														12,051
Cash dividends declared ($0.13 per share)		—		—		—			(9,348	)		—			(9,348	)
Stock options exercised		—		—		—			—			—			—
Stock based compensation and tax benefit		—		—		(1,018	)		—			—			(1,018	)
Balance at March 31, 2011		71,915,073	$	719		642,876			194,000			2,294			839,889

See accompanying notes to unaudited condensed consolidated financial statements.

5

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Three Months ended March 31
(Dollars in thousands)	2011			2010
Operating Activities
Net cash provided by operating activities	$	226,910		62,937
Investing Activities
Proceeds from sales, maturities and prepayments of investments available-for-sale		104,065			107,235
Purchases of investments available-for-sale		(420,785	)		(229,917	)
Principal collected on commercial and consumer loans		150,052			166,829
Commercial and consumer loans originated or acquired		(163,105	)		(166,437	)
Principal collections on real estate loans		102,977			40,490
Real estate loans originated or acquired		(21,882	)		(28,026	)
Net purchase of FHLB and FRB stock		—			(677	)
Proceeds from sale of other real estate owned		6,033			5,689
Net addition of premises and equipment and other real estate owned		(2,961	)		(2,858	)
Net cash used in investment activities		(245,606	)		(107,672	)
Financing Activities
Net increase in deposits		30,408			64,692
Net (decrease) increase in FHLB advances		(5,044	)		12,519
Net increase in securities sold under repurchase agreements		1,529			29,604
Net decrease in Federal Reserve Bank discount window		—			(225,000	)
Net decrease in other borrowed funds		(5,835	)		(6,925	)
Cash dividends paid		(9,348	)		(9,348	)
Proceeds from exercise of stock options and other stock issued		—			145,705
Net cash provided by financing activities		11,710			11,247
Net decrease in cash and cash equivalents		(6,986	)		(33,488	)
Cash and cash equivalents at beginning of period		105,090			210,575
Cash and cash equivalents at end of period	$	98,104			177,087
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	12,236			13,829
Cash paid during the period for income taxes		—			—
Sale and refinancing of other real estate owned		1,145			4,319
Other real estate acquired in settlement of loans		17,277			13,418

See accompanying notes to unaudited condensed consolidated financial statements.

6

Notes to Unaudited Condensed Consolidated Financial Statements

1) Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of Glacier Bancorp Inc.’s (the “Company”) financial condition as of March 31, 2011, stockholders’ equity and comprehensive income for the three months ended March 31, 2011, the results of operations for the three month period ended March 31, 2011 and 2010, and cash flows for the three months ended March 31, 2011 and 2010. The condensed consolidated statement of financial condition and statement of stockholders’ equity and comprehensive income of the Company as of and for the year ended December 31, 2010 have been derived from the audited consolidated statements of the Company as of that date.

The accompanying condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results anticipated for the year ending December 31, 2011. Certain reclassifications have been made to the 2010 financial statements to conform to the 2011 presentation.

Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the valuations related to investments and real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the ALLL and other real estate valuation estimates, management obtains independent appraisals for significant items. Estimates relating to investments are obtained from independent parties. Estimates relating to business combinations are determined based on internal calculations using significant independent party inputs and independent party valuations.

2) Organizational Structure

The Company, headquartered in Kalispell, Montana, is a Montana corporation incorporated in 2004 as a successor corporation to the Delaware corporation incorporated in 1990. The Company is a regional multi-bank holding company that provides a full range of banking services to individual and corporate customers in Montana, Idaho, Wyoming, Colorado, Utah and Washington through its bank subsidiaries (collectively referred to hereafter as the “Banks”). The bank subsidiaries are subject to competition from other financial service providers. The bank subsidiaries are also subject to the regulations of certain government agencies and undergo periodic examinations by those regulatory authorities.

As of March 31, 2011, the Company is the parent holding company (“Parent”) for eleven independent wholly-owned community bank subsidiaries: Glacier Bank (“Glacier”), First Security Bank of Missoula (“First Security”), Western Security Bank (“Western”), Valley Bank of Helena (“Valley”), Big Sky Western Bank (“Big Sky”), and First Bank of Montana (“First Bank-MT”), all located in Montana, Mountain West Bank (“Mountain West”) and Citizens Community Bank (“Citizens”) located in Idaho, 1st Bank (“1st Bank”) and First National Bank & Trust (“First National”) located in Wyoming, and Bank of the San Juans (“San Juans”) located in Colorado. All significant inter-company transactions have been eliminated in consolidation.

7

In 2010, the Company formed a wholly-owned subsidiary, GBCI Other Real Estate (“GORE”), to isolate certain bank foreclosed properties for legal protection and administrative purposes. The foreclosed properties were sold to GORE from bank subsidiaries at fair market value and properties remaining are currently held for sale.

In addition, the Company owns seven trust subsidiaries, Glacier Capital Trust II (“Glacier Trust II”), Glacier Capital Trust III (“Glacier Trust III”), Glacier Capital Trust IV (“Glacier Trust IV”), Citizens (ID) Statutory Trust I (“Citizens Trust I”), Bank of the San Juans Bancorporation Trust I (“San Juans Trust I”), First Company Statutory Trust 2001 (“First Co Trust 01”) and First Company Statutory Trust 2003 (“First Co Trust 03”) for the purpose of issuing trust preferred securities and, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification™ (“ASC”) Topic 810, Consolidation, the trust subsidiaries are not consolidated into the Company’s financial statements.

FASB ASC Topic 810, Consolidation, states that a variable interest entity (“VIE”) exists when either the entity’s total equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support or the equity investors as a group lack any of the following three characteristics: the power through voting rights or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, the obligation to absorb the expected losses of the entity, the right to receive the expected residual returns of the entity. A variable interest is a contractual ownership or other interest that changes with changes in the fair value of the VIE’s net assets exclusive of variable interests. Under the guidance, the Company is deemed to be the primary beneficiary and required to consolidate a VIE if it has a variable interest in the VIE that provides it with a controlling financial interest. The determination of whether a controlling financial interest exists is based on whether a single party has both the power to direct the VIE’s significant activities and has an obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The guidance requires continual reconsideration of conclusions reached regarding which variable interest holder is a VIE’s primary beneficiary.

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of new markets tax credits (“NMTC”). The Company also has equity investments in low-income housing tax credit (“LIHTC”) partnerships. The CDEs and the LIHTC partnerships are VIEs. The underlying activities of the VIEs are community development projects designed primarily to promote community welfare, such as economic rehabilitation and development of low-income areas by providing housing, services, or jobs for residents. The maximum exposure to loss in the VIEs is the amount of equity invested and credit extended by the Company; however, the Company has credit protection in the form of indemnification agreements, guarantees, and collateral arrangements. The Company has evaluated the variable interests held by the Company in each CDE (NMTC) and LIHTC partnership investments and determined that the Company is the primary beneficiary of such VIEs and has consolidated the VIEs into the bank subsidiary which holds the direct investment in the VIE. For the CDE (NMTC) and LIHTC investments, the creditors and other beneficial interest holders therein have no recourse to the general credit of the bank subsidiaries. As of March 31, 2011, the Company had investments in VIEs of $39,780,000 and $3,263,000 for the CDE (NMTC) and LIHTC partnerships, respectively. The total assets consolidated into the bank subsidiaries approximated the investments in the VIEs.

8

The following abbreviated organizational chart illustrates the various relationships as of March 31, 2011:

9

3)	Investment Securities, Available-for-Sale
	A comparison of the amortized cost and estimated fair value of the Company’s investment securities designated as available-for-sale is presented below.

	Three Months ended March 31, 2011
	Weighted			Amortized		Gross Unrealized					Fair
(Dollars in thousands)	Yield			Cost		Gains		Losses			Value
U.S. Government and federal agency
Maturing after one year through five years		1.62	%	$	206		4		—			210
U.S. Government sponsored enterprises
Maturing after one year through five years		2.21	%		37,202		352		—			37,554
Maturing after five years through ten years		1.89	%		86		—		—			86
Maturing after ten years		—			—		—		—			—
		2.20	%		37,288		352		—			37,640
State and local governments and other issues
Maturing within one year		2.70	%		1,790		20		(3	)		1,807
Maturing after one year through five years		2.49	%		83,067		292		(79	)		83,280
Maturing after five years through ten years		2.76	%		38,221		235		(39	)		38,417
Maturing after ten years		4.88	%		763,023		8,911		(14,057	)		757,877
		4.56	%		886,101		9,458		(14,178	)		881,381
Collateralized debt obligations
Maturing after ten years		8.03	%		11,178		—		(4,103	)		7,075
Residential mortgage-backed securities		2.26	%		1,767,764		15,347		(3,102	)		1,780,009
Total investment securities		3.04	%	$	2,702,537		25,161		(21,383	)		2,706,315

	Year ended December 31, 2010
	Weighted			Amortized		Gross Unrealized					Fair
(Dollars in thousands)	Yield			Cost		Gains		Losses			Value
U.S. Government and federal agency
Maturing after one year through five years		1.62	%	$	207		4		—			211
U.S. Government sponsored enterprises
Maturing after one year through five years		2.38	%		40,715		715		—			41,430
Maturing after five years through ten years		1.94	%		84		—		—			84
Maturing after ten years		0.73	%		4		—		—			4
		2.38	%		40,803		715		—			41,518
State and local governments and other issues
Maturing within one year		2.62	%		1,703		20		(5	)		1,718
Maturing after one year through five years		3.70	%		8,341		214		(10	)		8,545
Maturing after five years through ten years		3.73	%		18,675		379		(56	)		18,998
Maturing after ten years		4.91	%		639,364		5,281		(15,873	)		628,772
		4.86	%		668,083		5,894		(15,944	)		658,033
Collateralized debt obligations
Maturing after ten years		8.03	%		11,178		—		(4,583	)		6,595
Residential mortgage-backed securities		2.23	%		1,675,319		17,569		(2,786	)		1,690,102
Total investment securities		3.00	%	$	2,395,590		24,182		(23,313	)		2,396,459

10

Included in the residential mortgage-backed securities is $63,556,000 and $68,051,000 as of March 31, 2011 and December 31, 2010, respectively, of non-guaranteed private label whole loan mortgage-backed securities of which none of the underlying collateral is “subprime.” Maturities of securities do not reflect repricing opportunities present in adjustable rate securities, nor do they reflect expected shorter maturities based upon early prepayment of principal. Weighted yields are based on the constant yield method taking into account premium amortization and discount accretion. Weighted yields on tax-exempt investment securities exclude the tax effect.

Interest income from investment securities consists of the following:

(Dollars in thousands)	2011		2010
Taxable interest	$	9,370		8,685
Tax-exempt interest		6,779		5,568
Total interest income	$	16,149		14,253

The cost of each investment sold is determined by specific identification. Gain and loss on sale of investments consists of the following:

	Three Months
	ended March 31,
(Dollars in thousands)	2011			2010
Gross proceeds	$	4,134			9,058
Less amortized cost		(4,010	)		(8,744	)
Net gain on sale of investments	$	124			314
Gross gain on sale of investments	$	184			390
Gross loss on sale of investments		(60	)		(76	)
Net gain on sale of investments	$	124			314

At March 31, 2011 and December 31, 2010, the Company had investment securities with carrying values of $760,444,000 and $879,330,000, respectively, pledged as collateral for Federal Home Loan Bank (“FHLB”) advances, securities sold under agreements to repurchase, U.S. Treasury Tax and Loan borrowings and deposits of several local government units.

Investments with an unrealized loss position at March 31, 2011:

	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
State and local governments and other issues	$	354,109		12,400		15,477		1,778		369,586		14,178
Collateralized debt obligations		—		—		7,074		4,103		7,074		4,103
Residential mortgage-backed securities		324,957		2,307		16,258		795		341,215		3,102
Total temporarily impaired securities	$	679,066		14,707		38,809		6,676		717,875		21,383

11

Investments with an unrealized loss position at December 31, 2010:

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
State and local governments and other issues	$	365,164		(14,680	)		13,129		(1,264	)		378,293		(15,944	)
Collateralized debt obligations		—		—			6,595		(4,583	)		6,595		(4,583	)
Residential mortgage-backed securities		364,925		(1,585	)		19,304		(1,201	)		384,229		(2,786	)
Total temporarily impaired securities	$	730,089		(16,265	)		39,028		(7,048	)		769,117		(23,313	)

The Company assesses individual securities in its investment securities portfolio for impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant. An investment is impaired if the fair value of the security is less than its carrying value at the financial statement date. If impairment is determined to be other-than-temporary, an impairment loss is recognized by reducing the amortized cost for the credit loss portion of the impairment with a corresponding charge to earnings of a like amount.

For fair value estimates provided by third party vendors, management also considered the models and methodology for appropriate consideration of both observable and unobservable inputs, including appropriately adjusted discount rates and credit spreads for securities with limited or inactive markets, and whether the quoted prices reflect orderly transactions. For certain securities, the Company obtained independent estimates of inputs, including cash flows, in supplement to third party vendor provided information. The Company also reviewed financial statements of select issuers, with follow up discussions with issuers’ management for clarification and verification of information relevant to the Company’s impairment analysis.

In evaluating securities for other-than-temporary impairment losses, management assesses whether the Company intends to sell or if it is more likely-than-not that it will be required to sell impaired securities. In so doing, management considers contractual constraints, liquidity, capital, asset/liability management and securities portfolio objectives. With respect to its impaired securities at March 31, 2011, management determined that it does not intend to sell and that there is no expected requirement to sell any of its impaired securities.

Based on an analysis of its impaired securities as of March 31, 2011, the Company determined that none of such securities had other-than-temporary impairment.

12

4) Loans Receivable, Net

The following is a summary of the recorded investment in loans and ALLL for the periods ended March 31, 2011 and December 31, 2010 on a portfolio class basis:

	At or for the Three Months ended March 31, 2011
				Residential			Commercial			Other			Home
(Dollars in thousands)	Total			Real Estate			Real Estate			Commercial			Equity			Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,107			20,957			76,147			19,932			13,334			6,737
Provision for loan losses		19,500			(2,260	)		14,267			2,638			2,121			2,734
Charge-offs		(16,504	)		(1,769	)		(10,628	)		(1,753	)		(1,332	)		(1,022	)
Recoveries		726			76			312			143			83			112
Balance at end of period	$	140,829			17,004			80,098			20,960			14,206			8,561
Allowance for loan and lease losses
Individually evaluated for impairment	$	15,402			601			8,786			4,069			974			972
Collectively evaluated for impairment		125,427			16,403			71,312			16,891			13,232			7,589
Total ALLL	$	140,829			17,004			80,098			20,960			14,206			8,561
Loans receivable
Individually evaluated for impairment	$	218,741			19,055			158,144			26,183			9,889			5,470
Collectively evaluated for impairment		3,428,245			524,174			1,601,737			618,667			459,245			224,422
Total Loans receivable	$	3,646,986			543,229			1,759,881			644,850			469,134			229,892

	December 31, 2010
			Residential		Commercial		Other		Home
(Dollars in thousands)	Total		Real Estate		Real Estate		Commercial		Equity		Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	16,871		2,793		10,184		2,649		504		741
Collectively evaluated for impairment		120,236		18,164		65,963		17,283		12,830		5,996
Total ALLL	$	137,107		20,957		76,147		19,932		13,334		6,737
Loans receivable
Individually evaluated for impairment	$	225,052		29,480		165,784		21,358		6,138		2,292
Collectively evaluated for impairment		3,524,237		603,397		1,630,719		633,230		476,999		179,892
Total Loans receivable	$	3,749,289		632,877		1,796,503		654,588		483,137		182,184

Substantially all of the Company’s loan receivables are with customers within the Company’s market areas. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ ability to honor their obligations is dependent upon the economic performance in the Company’s market areas. Net deferred fees, premiums, and discounts are included in the loan receivable balances of $5,165,000 and $6,001,000 at March 31, 2011 and December 31, 2010, respectively.

The following is a summary of activity in the ALLL for the periods ended March 31, 2011 and March 31, 2010:

	March 31,			March 31,
(Dollars in thousands)	2011			2010
Balance at the beginning of the year	$	137,107			142,927
Charge-offs		(16,504	)		(21,477	)
Recoveries		726			1,240
Provision		19,500			20,910
Balance at the end of the period	$	140,829			143,600

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The following is a summary of the impaired loans by portfolio class of loans for the periods ended March 31, 2011 and December 31, 2010:

	At or for the Three Months ended March 31, 2011
			Residential		Commercial		Other		Home
(Dollars in thousands)	Total		Real Estate		Real Estate		Commercial		Equity		Consumer
Loans with a specific valuation allowance
Recorded balance	$	61,141		4,736		39,106		11,457		1,778		4,064
Unpaid principal balance		64,971		4,714		41,925		12,470		1,793		4,069
Valuation allowance		15,402		601		8,786		4,069		974		972
Average impaired loans		63,155		8,604		41,722		8,678		1,255		2,896
Loans without a specific valuation allowance
Recorded balance	$	157,600		14,319		119,038		14,726		8,111		1,406
Unpaid principal balance		190,136		15,993		145,976		17,261		9,029		1,877
Average impaired loans		158,742		15,663		120,242		15,093		6,759		985
Totals
Recorded balance	$	218,741		19,055		158,144		26,183		9,889		5,470
Unpaid principal balance		255,107		20,707		187,901		29,731		10,822		5,946
Valuation allowance		15,402		601		8,786		4,069		974		972
Average impaired loans		221,897		24,267		161,964		23,771		8,014		3,881

	At or for the Year ended December 31, 2010
			Residential		Commercial		Other		Home
(Dollars in thousands)	Total		Real Estate		Real Estate		Commercial		Equity		Consumer
Loans with a specific valuation allowance
Recorded balance	$	65,170		12,473		44,338		5,898		732		1,729
Unpaid principal balance		73,195		12,970		50,614		6,934		945		1,732
Valuation allowance		16,871		2,793		10,184		2,649		504		741
Average impaired loans		71,192		10,599		51,627		5,773		1,514		1,679
Loans without a specific valuation allowance
Recorded balance	$	159,882		17,007		121,446		15,460		5,406		563
Unpaid principal balance		186,280		20,399		142,141		16,909		6,204		627
Average impaired loans		152,364		18,402		109,136		17,412		5,696		1,718
Totals
Recorded balance	$	225,052		29,480		165,784		21,358		6,138		2,292
Unpaid principal balance		259,475		33,369		192,755		23,843		7,149		2,359
Valuation allowance		16,871		2,793		10,184		2,649		504		741
Average impaired loans		223,556		29,001		160,763		23,185		7,210		3,397

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The following is a loan portfolio aging analysis as of March 31, 2011 and December 31, 2010:

	At March 31, 2011
			Residential		Commercial		Other		Home
(Dollars in thousands)	Total		Real Estate		Real Estate		Commercial		Equity		Consumer
Accruing loans 30-59 days or more past due	$	41,701		11,337		16,122		4,689		2,946		6,607
Accruing loans 60-89 days or more past due		10,701		404		8,317		1,040		484		456
Accruing loans 90 days or more past due		6,578		191		2,171		1,378		2,383		455
Non-accual loans		178,402		16,949		126,071		25,219		6,810		3,353
Total past due and non-accrual loans		237,382		28,881		152,681		32,326		12,623		10,871
Current loans receivable		3,409,604		514,348		1,607,200		612,524		456,511		219,021
Total loans receivable	$	3,646,986		543,229		1,759,881		644,850		469,134		229,892

	At December 31, 2010
			Residential		Commercial		Other		Home
(Dollars in thousands)	Total		Real Estate		Real Estate		Commercial		Equity		Consumer
Accruing loans 30-59 days or more past due	$	36,545		13,450		11,399		6,262		3,031		2,403
Accruing loans 60-89 days or more past due		8,952		1,494		4,424		1,053		1,642		339
Accruing loans 90 days or more past due		4,531		506		731		2,320		910		64
Non-accual loans		192,505		23,095		142,334		18,802		5,431		2,843
Total past due and non-accrual loans		242,533		38,545		158,888		28,437		11,014		5,649
Current loans receivable		3,506,756		594,332		1,637,615		626,151		472,123		176,535
Total loans receivable	$	3,749,289		632,877		1,796,503		654,588		483,137		182,184

Interest income recognized on impaired loans for the periods ended March 31, 2011 and December 31, 2010 was not significant. The Company’s TDR loans are included in the amount of impaired loans. As of March 31, 2011, the Company had TDR loans of $62,371,000 of which $36,686,000 was on non-accrual status.

The Company generally sells its long-term mortgage loans originated, retaining servicing only when required by certain lenders. The sale of loans in the secondary mortgage market reduces the Company’s risk of holding residential fixed rate loans in the loan portfolio. The amount of loans sold and serviced for others at March 31, 2011 and December 31, 2010 was $170,009,000 and $173,446,000, respectively.

The Company occasionally purchases and sells other loan participations, the majority of which are large commercial loans. For participation transactions, the bank subsidiaries originate and sell the loan participations at fair value on a proportionate ownership basis, with no recourse conditions.

The Company considers its impaired loans to be the primary credit quality indicator for monitoring the credit quality of the loan portfolio. Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement; and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans 90 days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., troubled debt restructuring (“TDR”) loans). Loan impairment is measured in the same manner for each class within the loan portfolio.

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5) Other Intangible Assets

The following table sets forth information regarding the Company’s core deposit intangibles:

(Dollars in thousands)	March 31, 2011
Gross carrying value	$	31,847
Accumulated amortization		(21,817	)
Net carrying value	$	10,030
Weighted-average amortization period
(Period in years)		9.1
Aggregate amortization expense
For the three months ended March 31, 2011	$	727
Estimated amortization expense
For the year ended December 31, 2011	$	2,473
For the year ended December 31, 2012		2,111
For the year ended December 31, 2013		1,860
For the year ended December 31, 2014		1,611
For the year ended December 31, 2015		1,368

6) Deposits

The following table identifies the amount outstanding at March 31, 2011 for deposits of $100,000 and greater, according to the time remaining to maturity. Included in certificates of deposit are brokered certificates of deposit and deposits issued through the Certificate of Deposit Account Registry System of $368,012,000. Included in demand deposits are brokered deposits of $196,193,000.

	Certificates		Demand
(Dollars in thousands)	of Deposit		Deposits		Totals
Within three months	$	319,570		1,810,386		2,129,956
Three months to six months		236,951		—		236,951
Seven months to twelve months		191,102		—		191,102
Over twelve months		151,791		—		151,791
Totals	$	899,414		1,810,386		2,709,800

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7) Short-term Borrowings

The following table provides information relating short-term borrowings which includes borrowings that mature within one year of period end:

	At or for the Three			At or for the
	Months ended			Year ended
(Dollars in thousands)	March 31, 2011			December 31, 2010
FHLB advances
Amount outstanding at end of period	$	733,028			761,064
Weighted interest rate on outstanding amount		0.44	%		0.32	%
Maximum outstanding at any month-end	$	777,052			773,076
Average balance	$	754,647			488,044
Weighted average interest rate		0.45	%		0.39	%
Repurchase agreements
Amount outstanding at end of period	$	250,932			249,403
Weighted interest rate on outstanding amount		0.60	%		0.63	%
Maximum outstanding at any month-end	$	250,932			252,083
Average balance	$	240,579			227,202
Weighted average interest rate		0.60	%		0.71	%
Total FHLB advances, repurchase agreements, and Federal Reserve Bank discount window
Amount outstanding at end of period	$	983,960			1,010,467
Weighted interest rate on outstanding amount		0.48	%		0.40	%
Maximum outstanding at any month-end	$	1,027,984			1,025,159
Average balance	$	995,226			715,246
Weighted average interest rate		0.49	%		0.49	%

8) Comprehensive Income

The Company’s only component of comprehensive income other than net earnings is the unrealized gain or loss, net of tax, on available-for-sale securities.

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	Three Months
	ended March 31,
(Dollars in thousands)	2011			2010
Net earnings	$	10,285			10,070
Unrealized holding gains arising during the period		3,028			9,953
Tax expense		(1,186	)		(3,900	)
Net after tax		1,842			6,053
Reclassification adjustment for gains included in net earnings		(124	)		(314	)
Tax expense		48			123
Net after tax		(76	)		(191	)
Net unrealized gain on securities		1,766			5,862
Total comprehensive income	$	12,051			15,932

9) Federal and State Income Taxes

The Company and its bank subsidiaries join together in the filing of consolidated income tax returns in the following jurisdictions: federal, Montana, Idaho, Colorado and Utah. Although 1st Bank and First National have operations in Wyoming and Mountain West has operations in Washington, neither Wyoming nor Washington imposes a corporate-level income tax. All required income tax returns have been timely filed. The following schedule summarizes the years that remain subject to examination as of March 31, 2011:

	Years ended December 31,
Federal	2007, 2008 and 2009
Montana	2007, 2008 and 2009
Idaho	2007, 2008 and 2009
Colorado	2007, 2008 and 2009
Utah	2007, 2008 and 2009

The Company has investments in CDEs which received NMTC allocations. Administered by the Community Development Financial Institutions Fund of the U.S. Department of the Treasury, the NMTC program is aimed at stimulating economic and community development and job creation in low-income communities. The federal income tax credits received are claimed over a seven-year credit allowance period. The Company also has made investments in LIHTCs which are indirect federal subsidies used to finance the development of affordable rental housing for low-income households. The federal income tax credits received are claimed over a ten-year credit allowance period. The Company has investments in Qualified Zone Academy and Qualified School Construction bonds whereby the Company receives quarterly federal income tax credits in lieu of taxable interest income until the bonds mature. The federal income tax credits on these bonds are subject to federal and state income tax.

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Following is a list of expected federal income tax credits to be received in the years indicated.

	New		Low-Income		Investment
Years ended	Markets		Housing		Securities
(Dollars in thousands)	Tax Credits		Tax Credits		Tax Credits		Total
2011	$	2,000		1,176		953		4,129
2012		2,306		1,270		939		4,515
2013		2,400		1,270		921		4,591
2014		2,400		1,270		899		4,569
2015		2,400		1,174		875		4,449
Thereafter		564		5,379		5,263		11,206
	$	12,070		11,539		9,850		33,459

The Company had no unrecognized tax benefit as of March 31, 2011 and 2010. The Company recognizes interest related to unrecognized income tax benefits in interest expense and penalties are recognized in other expense. During the three months ended March 31, 2011 and 2010, the Company did not recognize interest expense or penalties with respect to income tax liabilities. The Company had no accrued liabilities for the payment of interest or penalties at March 31, 2011 and 2010.

10) Earnings Per Share

Basic earnings per common share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares as if dilutive outstanding stock options were exercised, using the treasury stock method.

The following schedule contains the data used in the calculation of basic and diluted earnings per share:

	Three Months
	ended March 31,
	2011		2010
Net earnings available to common stockholders, basic and diluted	$	10,285,000		10,070,000
Average outstanding shares — basic		71,915,073		62,763,299
Add: dilutive stock options		—		—
Average outstanding shares — diluted		71,915,073		62,763,299
Basic earnings per share	$	0.14		0.16
Diluted earnings per share	$	0.14		0.16

There were 1,746,472 and 2,408,381 stock options excluded from the diluted average outstanding share calculation for the three months ended March 31, 2011 and 2010, respectively, due to the option exercise price exceeding the market price.

11) Fair Value of Financial Instruments

FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires the Company to disclose information relating to fair value. Fair value is defined as the price that would be received to sell an

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asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Topic establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1   Quoted prices in active markets for identical assets or liabilities

Level 2   Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3   Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

The following is a description of the inputs and valuation methodologies used for financial assets measured at fair value on a recurring basis. There have been no significant changes in the valuation techniques during the period ended March 31, 2011.

Investment securities: fair value for available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections, and cash flows. For those securities where greater reliance on unobservable inputs occurs, such securities are classified as Level 3 within the hierarchy.

The following schedule discloses the major class of assets measured at fair value on a recurring basis during the three month period ended March 31, 2011 and the year ended December 31, 2010.

	Assets/		Quoted Prices		Significant
	Liabilities		in Active Markets		Other		Significant
	Measured at		for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
(Dollars in thousands)	03/31/11		(Level 1)		(Level 2)		(Level 3)
Financial assets
U.S. Government and federal agency	$	210		—		210		—
Government sponsored enterprises		37,640		—		37,640		—
State and local governments and other issues		881,381		—		881,381		—
Collateralized debt obligations		7,075		—		—		7,075
Residential mortgage-backed securities		1,780,009		—		1,779,811		198
Total financial assets	$	2,706,315		—		2,699,042		7,273

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	Assets/		Quoted Prices		Significant
	Liabilities		in Active Markets		Other		Significant
	Measured at		for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
(Dollars in thousands)	12/31/10		(Level 1)		(Level 2)		(Level 3)
Financial assets
U.S. Government and federal agency	$	211		—		211		—
Government sponsored enterprises		41,518		—		41,518		—
State and local governments and other issues		658,033		—		658,033		—
Collateralized debt obligations		6,595		—		—		6,595
Residential mortgage-backed securities		1,690,102		—		1,689,946		156
Total financial assets	$	2,396,459		—		2,389,708		6,751

The following schedules reconcile the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three month periods ended March 31, 2011 and 2010.

	Significant Unobservable Inputs (Level 3)
			State and Local		Collateralized		Residential
			Government and		Debt		Mortgage-backed
(Dollars in thousands)	Total		Other Issues		Obligations		Securities
Balance as of December 31, 2010	$	6,751		—		6,595		156
Total unrealized gains included in other comprehensive income		522		—		480		42
Amortization, accretion and principal payments		—		—		—		—
Sales, maturities and calls		—		—		—		—
Transfers out of Level 3		—		—		—		—
Balance as of March 31, 2011	$	7,273		—		7,075		198

	Significant Unobservable Inputs (Level 3)
				State and Local			Collateralized		Residential
				Government and			Debt		Mortgage-backed
(Dollars in thousands)	Total			Other Issues			Obligations		Securities
Balance as of December 31, 2009	$	9,988			2,088			6,789		1,111
Total unrealized gains included in other comprehensive income		2,842			—			2,385		457
Amortization, accretion and principal payments		—			—			—		—
Purchases		—			—			—		—
Transfers out of Level 3		(2,088	)		(2,088	)		—		—
Balance as of March 31, 2010	$	10,742			—			9,174		1,568

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis. There have been no significant changes in the valuation techniques during the period ended March 31, 2011.

Other real estate owned: other real estate owned is carried at the lower of fair value at acquisition date or estimated fair value, less estimated cost to sell. Estimated fair value of other real estate owned is based on appraisals or evaluations. Other real estate owned is classified within Level 3 of the fair value hierarchy.

Collateral-dependent impaired loans, net of ALLL: loans included in the Company’s financials for which it is probable that the Company will not collect all principal and interest due according to

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contractual terms are considered impaired in accordance with FASB ASC Topic 310, Receivables. Estimated fair value of collateral-dependent impaired loans is based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

In determining fair values of other real estate owned and the collateral-dependent impaired loan, the Company considers the appraisal or evaluation as the starting point for determining fair value and the Company also considers other factors and events in the environment that may affect the fair value.

The following schedule discloses the major classes of assets with a recorded change during the year in the consolidated financial statements resulting from re-measuring the assets at fair value on a non-recurring basis for the periods ending March 31, 2011 and December 31, 2010.

	Assets/		Quoted Prices		Significant
	Liabilities		in Active Markets		Other		Significant
	Measured at		for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
(Dollars in thousands)	03/31/11		(Level 1)		(Level 2)		(Level 3)
Financial assets
Other real estate owned	$	1,393		—		—		1,393
Collateral-dependent impaired loans, net of allowance for loan and lease losses		33,930		—		—		33,930
Total financial assets	$	35,323		—		—		35,323

	Assets/		Quoted Prices		Significant
	Liabilities		in Active Markets		Other		Significant
	Measured at		for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
(Dollars in thousands)	12/31/10		(Level 1)		(Level 2)		(Level 3)
Financial assets
Other real estate owned	$	17,492		—		—		17,492
Collateral-dependent impaired loans, net of allowance for loan and lease losses		47,283		—		—		47,283
Total financial assets	$	64,775		—		—		64,775

The following is a description of the methods used to estimate the fair value of all other financial instruments recognized at amounts other than fair value.

Financial Assets

The estimated fair value of cash, federal funds sold, interest bearing cash deposits, and accrued interest receivable is the book value of such financial assets.

The estimated fair value of FHLB and FRB stock is book value due to the restrictions that such stock may only be sold to another member institution or the FHLB or FRB at par value. These assets are included in non-marketable equity securities reported on the Company’s balance sheet.

Loans held for sale: fair value is estimated at book value due to the insignificant time between origination date and sale date.

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Loans receivable, net of ALLL: fair value for loans, net of ALLL, is estimated by discounting the future cash flows using the rates at which similar notes would be written for the same remaining maturities.

Financial Liabilities

The estimated fair value of accrued interest payable is the book value of such financial liabilities.

Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The estimated fair value of demand, NOW, savings, and money market deposits is the book value since rates are regularly adjusted to market rates.

Advances from FHLB: fair value of advances is estimated based on borrowing rates currently available to the Company for advances with similar terms and maturities.

Repurchase agreements and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value.

Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates for subordinated debt issuances with similar characteristics.

Off-balance sheet financial instruments: commitments to extend credit and letters of credit represent the principal categories of off-balance sheet financial instruments. Rates for these commitments are set at time of loan closing, such that no adjustment is necessary to reflect these commitments at market value. The Company has immaterial off-balance sheet financial instruments.

The following presents the carrying amounts and estimated fair values as of March 31, 2011 and December 31, 2010:

	March 31, 2011				December 31, 2010
(Dollars in thousands)	Amount		Fair Value		Amount		Fair Value
Financial assets
Cash and cash equivalents	$	98,104		98,104		105,090		105,090
Investment securities		2,706,315		2,706,315		2,396,459		2,396,459
Loans held for sale		23,904		23,904		76,213		76,213
Loans receivable, net of allowance for loan and lease losses		3,506,157		3,551,031		3,612,182		3,631,716
Non-marketable equity securities		64,434		64,434		64,429		64,429
Accrued interest receivable		33,707		33,707		30,246		30,246
Total financial assets	$	6,432,621		6,477,495		6,284,619		6,304,153
Financial liabilities
Deposits	$	4,552,310		4,563,339		4,521,902		4,533,974
FHLB advances		960,097		969,977		965,141		974,853
Repurchase agreements and other borrowed funds		265,067		265,072		269,408		269,414
Subordinated debentures		125,167		70,806		125,132		70,404
Accrued interest payable		6,790		6,790		7,245		7,245
Total financial liabilities	$	5,909,431		5,875,984		5,888,828		5,855,890

23

12) Operating Segment Information

FASB ASC Topic 280, Segment Reporting, requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision makers in deciding how to allocate resources and in assessing performance. The Company defines operating segments and evaluates segment performance internally based on individual bank charters, with the exception of GORE. If required, VIEs are consolidated into the operating segment which invested in the entities.

The accounting policies of the individual operating segments are the same as those of the Company. Transactions between operating segments are conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations. Intersegment revenues primarily represents interest income on intercompany borrowings, management fees, and data processing fees received by individual banks or the Parent. Intersegment revenues, expenses and assets are eliminated in order to report results in accordance with accounting principles generally accepted in the United States of America. Expenses for centrally provided services are allocated based on the estimated usage of those services.

The following schedules provide selected financial data for the Company’s operating segments:

	At or for the Three Months ended March 31, 2011
				Mountain			First															First
(Dollars in thousands)	Glacier			West			Security			Western			1st Bank			Valley			Big Sky			National
External revenues	$	17,334			17,469			12,657			8,194			7,613			4,969			4,741			3,261
Intersegment revenues		66			142			20			55			3			59			3			35
Expenses		(15,041	)		(18,509	)		(10,714	)		(6,305	)		(6,515	)		(3,493	)		(3,782	)		(2,753	)
Net Earnings (Loss)	$	2,359			(898	)		1,963			1,944			1,101			1,535			962			543
Total Assets	$	1,387,078			1,172,141			1,062,765			764,396			746,074			398,690			363,805			360,346
				First Bank			San
	Citizens			of MT			Juans			GORE			Parent			Eliminations						Consolidated
External revenues	$	4,156			2,314			2,629			30			401			—						85,768
Intersegment revenues		18			35			44			—			14,686			(15,166	)					—
Expenses		(3,583	)		(1,481	)		(2,210	)		(324	)		(4,862	)		4,089						(75,483	)
Net Earnings (Loss)	$	591			868			463			(294	)		10,225			(11,077	)					10,285
Total Assets	$	317,353			254,958			234,195			21,232			984,190			(1,157,359	)					6,909,864

24

	At or for the Three Months ended March 31, 2010
				Mountain			First
(Dollars in thousands)	Glacier			West			Security			Western			1st Bank			Valley			Big Sky
External revenues	$	18,735			18,950			12,556			8,128			7,976			5,092			4,836
Intersegment revenues		48			19			18			132			91			36			—
Expenses		(17,735	)		(18,484	)		(10,160	)		(6,317	)		(6,501	)		(3,631	)		(4,504	)
Net Earnings (Loss)	$	1,048			485			2,414			1,943			1,566			1,497			332
Total Assets	$	1,337,314			1,246,716			912,266			625,791			633,025			318,270			376,947
	First						First Bank			San
	National			Citizens			of MT			Juans			Parent			Eliminations			Consolidated
External revenues	$	4,040			4,148			2,420			2,637			63			—			89,581
Intersegment revenues		8			—			50			—			14,636			(15,038	)		—
Expenses		(3,676	)		(3,570	)		(1,691	)		(2,461	)		(4,629	)		3,848			(79,511	)
Net Earnings (Loss)	$	372			578			779			176			10,070			(11,190	)		10,070
Total Assets	$	305,986			256,681			211,717			176,832			981,417			(1,157,094	)		6,225,868

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this Form 10-Q:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio, including as a result of declines in the housing and real estate markets in its geographic areas;

• increased loan delinquency rates;

• the risks presented by a continued economic downturn, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations;

• changes in market interest rates, which could adversely affect the Company’s net interest income and profitability;

• legislative or regulatory changes that adversely affect the Company’s business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;

• costs or difficulties related to the integration of acquisitions;

• the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital;

• reduced demand for banking products and services;

• the risks presented by public stock market volatility, which could adversely affect the market price of our common stock and our ability to raise additional capital in the future;

• competition from other financial services companies in our markets;

25

• loss of services from the senior management team; and

• the Company’s success in managing risks involved in the foregoing.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Risk Factors in Item 1A. Please take into account that forward-looking statements speak only as of the date of this Form 10-Q. The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

Financial Condition Analysis

Assets

										$ Change from			$ Change from
	March 31,			December 31,			March 31,			December 31,			March 31,
(Unaudited - Dollars in thousands)	2011			2010			2010			2010			2010
Cash on hand and in banks	$	75,471			71,465			93,242			4,006			(17,771	)
Investments, interest bearing deposits, and fed funds		2,728,948			2,430,084			1,658,230			298,864			1,070,718
Loans
Residential real estate		543,229			632,877			717,306			(89,648	)		(174,077	)
Commercial		2,404,731			2,451,091			2,593,266			(46,360	)		(188,535	)
Consumer and other		699,026			665,321			704,789			33,705			(5,763	)
Loans receivable		3,646,986			3,749,289			4,015,361			(102,303	)		(368,375	)
Allowance for loan and lease losses		(140,829	)		(137,107	)		(143,600	)		(3,722	)		2,771
Loans receivable, net		3,506,157			3,612,182			3,871,761			(106,025	)		(365,604	)
Other assets		599,288			645,556			602,635			(46,268	)		(3,347	)
Total assets	$	6,909,864			6,759,287			6,225,868			150,577			683,996

Total assets at March 31, 2011 were $6.910 billion, which is $151 million, or 2 percent greater than total assets of $6.759 billion at December 31, 2010 and $684 million, or 11 percent greater than total assets of $6.226 billion at March 31, 2010.

Investment securities, including interest bearing deposits and federal funds sold, have increased $299 million, or 12 percent, from December 31, 2010 and increased $1.071 billion, or 65 percent, since March 31, 2010. The Company continues to purchase investment securities, predominately mortgage-backed securities issued by Freddie Mac and Fannie Mae, with short weighted-average-lives to offset the current lack of loan growth. The Company also continues to selectively purchase and diversify it’s tax-exempt investment securities. Investment securities represent 39 percent of total assets at March 31, 2011 versus 36 percent of total assets at March 31, 2010.

At March 31, 2011, loans receivable were $3.647 billion, a decrease of $102 million, or 3 percent, over loans receivable of $3.749 billion at December 31, 2010. Excluding net charge-offs of $15.8 million and loans transferred to other real estate of $16.7 million, loans decreased $69.5 million, or 2 percent from December 31, 2010. During the past twelve months, gross loans decreased $368 million, or 9 percent, over gross loans of $4.015 billion at March 31, 2010. The largest decrease in dollars was in commercial loans which decreased $189 million, or 7 percent, from March 31, 2010.

26

Liabilities

							$ Change from			$ Change from
	March 31,		December 31,		March 31,		December 31,			March 31,
(Unaudited — Dollars in thousands)	2011		2010		2010		2010			2010
Non-interest bearing deposits	$	888,311		855,829		828,141		32,482			60,170
Interest bearing deposits		3,663,999		3,666,073		3,336,703		(2,074	)		327,296
FHLB advances		960,097		965,141		802,886		(5,044	)		157,211
Securities sold under agreements to repurchase and other borrowed funds		265,067		269,408		248,894		(4,341	)		16,173
Other liabilities		167,334		39,500		45,765		127,834			121,569
Subordinated debentures		125,167		125,132		125,024		35			143
Total liabilities	$	6,069,975		5,921,083		5,387,413		148,892			682,562

As of March 31, 2011, non-interest bearing deposits of $888 million increased $32 million, or 4 percent, since December 31, 2010 and increased $60 million, or 7 percent, since March 31, 2010. Interest bearing deposits of $3.664 billion at March 31, 2011 include $181 million issued through the Certificate of Deposit Account Registry System (“CDARS”). Interest bearing deposits decreased $2 million, or .1 percent, from the prior quarter, which includes a $3.4 million reduction in wholesale deposits. Interest bearing deposits increased $327 million, or 10 percent from March 31, 2010 which included $184 million from wholesale deposits and CDARS. The increase in non-interest bearing deposits from both the prior quarter and the same quarter last year was driven by growth in the number of personal and business customers, as well as existing customers retaining cash deposits because of the uncertainty in the current interest rate environment and for liquidity purposes. The decrease in interest bearing deposits from the prior quarter resulted primarily from seasonal decreases that typically occur during the first quarter.

Increases in deposits have reduced the Company’s reliance on the amount of borrowings necessary to fund investment security growth. Federal Home Loan Bank advances decreased $5 million, or 1 percent, from December 31, 2010 and increased $157 million, or 20 percent, from March 31, 2010. Repurchase agreements and other borrowed funds were $265 million at March 31, 2011, a decrease of $4.3 million, or 2 percent, from December 31, 2010. Included in Other Liabilities at March 31, 2011 is a $128.9 million obligation for securities purchased in March that will settle in April.

27

Stockholders’ Equity

										$ Change from			$ Change from
	March 31,			December 31,			March 31,			December 31,			March 31,
(Unaudited — Dollars in thousands, except per share data)	2011			2010			2010			2010			2010
Common equity	$	837,595			837,676			832,941			(81	)		4,654
Accumulated other comprehensive income		2,294			528			5,514			1,766			(3,220	)
Total stockholders’ equity		839,889			838,204			838,455			1,685			1,434
Goodwill and core deposit intangible, net		(156,289	)		(157,016	)		(159,376	)		727			3,087
Tangible stockholders’ equity	$	683,600			681,188			679,079			2,412			4,521
Stockholders’ equity to total assets		12.15	%		12.40	%		13.47	%
Tangible stockholders’ equity to total tangible assets		10.12	%		10.32	%		11.19	%
Book value per common share	$	11.68			11.66			11.66			0.02			0.02
Tangible book value per common share	$	9.51			9.47			9.44			0.04			0.07
Market price per share at end of year	$	15.05			15.11			15.23			(0.06	)		(0.18	)

Total stockholders’ equity and book value per share increased $1.7 million and $0.02 per share, respectively, from the prior quarter resulting from the increase in accumulated other comprehensive income representing net unrealized gains or losses (net of tax) on the securities portfolio. Tangible stockholders’ equity in that same period increased $2.4 million, or $0.04 per share. Total stockholders’ equity and book value per share increased $1.4 million and $0.02 per share, respectively, from March 31, 2010, the increase largely the result of higher undivided profits. Tangible stockholders’ equity increased $4.5 million, or $0.07 per share since March 31, 2010 resulting in tangible stockholders’ equity to tangible assets of 10.12 percent and tangible book value per share of $9.51 as of March 31, 2011.

On March 30, 2011, the board of directors declared a cash dividend of $0.13 per share, payable April 21, 2011 to shareholders of record on April 12, 2011. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality and general economic conditions.

Results of Operations — The three months ended March 31, 2011
Compared to December 31, 2010 and March 31, 2010

Performance Summary

The Company reported net earnings of $10.3 million for the first quarter of 2011, an increase of $215 thousand, or 2 percent, from the $10.1 million for the first quarter of 2010. The diluted earnings per share of $0.14 for the quarter represented a 12.5 percent decrease from the diluted earnings per share of $0.16 for the same quarter of 2010. There were no non recurring income or expense items impacting this quarter’s earnings per share. Annualized return on average assets and return on average equity for the first quarter were 0.62 percent and 4.95 percent, respectively, which compares with prior year returns for the first quarter of 0.67 percent and 5.75 percent, respectively.

28

Revenue Summary

	Three Months ended
	March 31,			December 31,			March 31,
(Unaudited — Dollars in thousands)	2011			2010			2010
Net interest income
Interest income	$	68,373			69,083			73,398
Interest expense		11,669			12,420			13,884
Total net interest income		56,704			56,663			59,514
Non-interest income
Service charges, loan fees, and other fees		11,185			12,178			10,646
Gain on sale of loans		4,694			9,842			3,891
Gain on sale of investments		124			2,225			314
Other income		1,392			1,715			1,332
Total non-interest income		17,395			25,960			16,183
	$	74,099			82,623			75,697
Net interest margin (tax-equivalent)		3.91	%		3.91	%		4.43	%

	$ Change from			$ Change from			%Change from			% Change from
	December 31,			March 31,			December 31,			March 31,
(Unaudited — Dollars in thousands)	2010			2010			2010			2010
Net interest income
Interest income	$	(710	)		(5,025	)		-1	%		-7	%
Interest expense		(751	)		(2,215	)		-6	%		-16	%
Total net interest income		41			(2,810	)		0	%		-5	%
Non-interest income
Service charges, loan fees, and other fees		(993	)		539			-8	%		5	%
Gain on sale of loans		(5,148	)		803			-52	%		21	%
Gain on sale of investments		(2,101	)		(190	)		-94	%		-61	%
Other income		(323	)		60			-19	%		5	%
Total non-interest income		(8,565	)		1,212			-33	%		7	%
	$	(8,524	)		(1,598	)		-10	%		-2	%

Net Interest Income

Net interest income increased $41 thousand from the prior quarter as the reduction in interest expense outpaced the decrease in interest income. The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.91 percent unchanged from the prior quarter. The net interest margin figure includes a 2 basis points reduction from the reversal of interest on non-accrual loans. The decrease in funding expense this past quarter was the result of the Company’s banks continuing to aggressively manage their cost of funds. The decrease in interest income for the quarter was due to the continued low interest rate environment and reduction in loan balances which put further pressure on earning assets yields. In addition, premium amortization on Collateralized Mortgage Obligations (CMO’s) this quarter increased by $1.2 million putting further pressure on interest income. As mortgage refinance activity continues to drop off, premium amortization should decline in future quarters.

Non-interest Income

Non-interest income for the quarter totaled $17.4 million, a decrease of $8.6 million over the prior quarter end and an increase of $1.2 million over the same quarter last year. Service charge fee income of $11.2 million decreased $1.0 million, or 8 percent, during the quarter. The decrease from the prior quarter was primarily due to seasonal factors and a shorter number of days in the quarter. Gain on sale of loans decreased $5.1 million, or 52 percent, over the prior quarter primarily the result of the dramatic drop off in refinances. Gain on sale of loans increased $1 million, or 21 percent, over the prior year’s first quarter which was positively impacted by the first time home buyer tax credit. Net gain on the sale of investments was $124 thousand for the current quarter compared to $2.2 million

29

for the previous quarter and $314 thousand for the prior year’s first quarter. Such sales were executed with the proceeds used to purchase additional securities that enable the investment portfolio to perform well across varying interest rate scenarios. Other income of $1.4 million for the current quarter is a decrease of $323 thousand from the prior quarter. In the prior quarter there was a $194 thousand gain on 1^st Bank’s merchant card servicing portfolio that accounted for a majority of the difference.

Non-interest Expense

	Three Months ended
	March 31,		December 31,		March 31,
(Unaudited — Dollars in thousands)	2011		2010		2010
Compensation, employee benefits and related expense	$	21,603		22,485		21,356
Occupancy and equipment expense		5,954		6,291		5,948
Advertising and promotions		1,484		1,683		1,592
Outsourced data processing expense		773		852		694
Core deposit intangibles amortization		727		758		820
Other real estate owned expense		2,099		2,847		2,318
Federal Deposit Insurance Corporation premiums		2,324		2,123		2,200
Other expenses		7,512		8,697		7,033
Total non-interest expense	$	42,476		45,736		41,961

	$ Change from			$ Change from			%Change from			%Change from
	December 31,			March 31,			December 31,			March 31,
(Unaudited — Dollars in thousands)	2010			2010			2010			2010
Compensation, employee benefits and related expense	$	(882	)		247			-4	%		1	%
Occupancy and equipment expense		(337	)		6			-5	%		0	%
Advertising and promotions		(199	)		(108	)		-12	%		-7	%
Outsourced data processing expense		(79	)		79			-9	%		11	%
Core deposit intangibles amortization		(31	)		(93	)		-4	%		-11	%
Other real estate owned expense		(748	)		(219	)		-26	%		-9	%
Federal Deposit Insurance Corporation premiums		201			124			9	%		6	%
Other expenses		(1,185	)		479			-14	%		7	%
Total non-interest expense	$	(3,260	)		515			-7	%		1	%

Non-interest expense of $42.5 million for the quarter decreased by $3.3 million, or 7 percent, from the prior quarter and increased $515 thousand, or 1 percent, from the prior year first quarter. During the quarter all the major expense categories decreased with the exception of FDIC premiums which increased as a result of higher deposit levels. Compensation and employee benefits increased by $247 thousand, or 1 percent, to $21.6 million from the prior year first quarter. The Company and all eleven banks continue to closely manage this expense and control the number of full time equivalents.

Occupancy and equipment expense decreased $337 thousand, or 5 percent, from the prior quarter and increased $6 thousand, or .1 percent, from the prior year first quarter. Advertising and promotion expense decreased $199 thousand, or 12 percent, from the prior quarter and decreased $108 thousand, or 7 percent, from the first quarter of 2010. Other real estate owned expense of $2.1 million decreased $748 thousand, or 26 percent, from the prior quarter and decreased $219 thousand, or 9 percent, from prior year first quarter. The current quarter other real estate owned expense of $2.1 million included $881 thousand of operating expenses, $758 thousand of fair value write-downs, and $453 thousand of loss on sale of other real estate owned. FDIC premiums increased $201 thousand, or 9 percent, from prior quarter and increased $124 thousand, or 6 percent, from the prior year first quarter, the result of the increased amount of dollars on deposit. Other expenses decreased $1.2 million, or 14 percent, from the prior quarter and increased $479 thousand, or 1 percent, from the prior year first quarter.

30

Efficiency Ratio

The efficiency ratio is calculated as non-interest expense before other real estate owned expenses, core deposit intangible amortization, and non-recurring expense items as a percentage of fully taxable-equivalent net interest income and non-interest income, excluding gains and losses on sale of investment securities, other real estate owned income, and non-recurring income items. The efficiency ratio for the quarter was 52 percent compared to 50 percent for the prior year first quarter. The increase resulted from continuing pressure on net interest income in the current low interest rate environment.

Provision for Loan Losses

Credit Quality Trends
(Unaudited — $ in thousands)

								Accruing
								Loans 30-89			Non-Performing
	Provision				ALLL			Days Overdue			Assets to
	for Loan		Net		as a Percent			as a Percent of			Total Subsidiary
	Losses		Charge-Offs		of Loans			Loans			Assets
Q1 2011	$	19,500		15,778		3.86	%		1.44	%		3.78	%
Q4 2010		27,375		24,525		3.66	%		1.21	%		3.91	%
Q3 2010		19,162		26,570		3.47	%		1.06	%		4.03	%
Q2 2010		17,246		19,181		3.58	%		0.92	%		4.01	%
Q1 2010		20,910		20,237		3.58	%		1.53	%		4.19	%
Q4 2009		36,713		19,116		3.52	%		2.15	%		4.13	%
Q3 2009		47,050		19,094		3.14	%		1.09	%		4.10	%
Q2 2009		25,140		11,543		2.41	%		1.55	%		3.06	%

The current quarter provision for loan loss expense was $19.5 million, a decrease of $7.9 million from the prior quarter and a decrease of $1.4 million from the first quarter in 2010. Net charged-off loans for the current quarter were $15.8 million compared to $24.5 million for the prior quarter and $20.2 million for the first quarter in 2010.

The determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about current environmental factors which affect loan losses, such factors including economic conditions, changes in collateral values, net charge-offs, and other factors discussed in “Additional Management’s Discussion and Analysis” — Allowance for Loan and Lease Losses.

Additional Management’s Discussion and Analysis

Loan Portfolio

The following tables summarize selected information by bank and regulatory classification on the Company’s loan portfolio.

31

	Loans Receivable by Bank								% Change			% Change
	Balance			Balance			Balance		from			from
(Dollars in thousands)	03/31/11			12/31/10			03/31/10		12/31/10			03/31/10
Glacier	$	829,571			857,177			911,668		-3	%		-9	%
Mountain West		754,491			788,028			918,668		-4	%		-18	%
First Security		557,986			567,303			579,529		-2	%		-4	%
Western		274,142			295,613			306,725		-7	%		-11	%
1st Bank		261,067			264,513			283,296		-1	%		-8	%
Valley		182,395			179,005			182,649		2	%		0	%
Big Sky		246,452			246,337			261,757		0	%		-6	%
First National		138,178			141,827			147,406		-3	%		-6	%
Citizens		155,379			160,416			159,750		-3	%		-3	%
First Bank-MT		110,025			109,309			115,425		1	%		-5	%
San Juans		141,113			143,574			148,488		-2	%		-5	%
Eliminations		(3,813	)		(3,813	)		—		0	%		n/m
Total	$	3,646,986			3,749,289			4,015,361		-3	%		-9	%

	Land, Lot and Other Construction Loans by Bank						% Change			% Change
	Balance		Balance		Balance		from			from
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		12/31/10			03/31/10
Glacier	$	133,164		148,319		160,171		-10	%		-17	%
Mountain West		130,074		147,991		206,953		-12	%		-37	%
First Security		56,873		72,409		81,068		-21	%		-30	%
Western		28,748		29,535		30,893		-3	%		-7	%
1st Bank		31,438		29,714		30,272		6	%		4	%
Valley		15,234		12,816		14,204		19	%		7	%
Big Sky		55,369		53,648		64,484		3	%		-14	%
First National		10,615		12,341		10,635		-14	%		0	%
Citizens		9,491		12,187		13,168		-22	%		-28	%
First Bank-MT		818		830		982		-1	%		-17	%
San Juans		27,894		30,187		36,152		-8	%		-23	%
Total	$	499,718		549,977		648,982		-9	%		-23	%

	Land, Lot and Other Construction Loans by Bank, by Type at 03/31/11
			Consumer				Developed		Commercial
	Land		Land or		Unimproved		Lots for		Developed		Other
(Dollars in thousands)	Development		Lot		Land		Operative Builders		Lot		Construction
Glacier	$	62,671		26,922		28,275		8,480		5,756		1,060
Mountain West		32,954		57,860		8,554		14,865		4,301		11,540
First Security		25,094		6,327		18,654		4,016		495		2,287
Western		13,418		4,964		3,469		589		1,769		4,539
1st Bank		6,734		9,183		3,423		276		2,211		9,611
Valley		2,311		4,899		1,234		—		3,356		3,434
Big Sky		21,541		15,140		9,137		979		2,573		5,999
First National		1,867		3,900		1,620		293		602		2,333
Citizens		2,384		1,257		2,384		45		680		2,741
First Bank-MT		—		78		461		—		—		279
San Juans		3,160		14,355		2,023		—		7,591		765
Total	$	172,134		144,885		79,234		29,543		29,334		44,588

32

The following tables summarize selected information by bank and regulatory classification on the Company’s loan portfolio.

													Custom &
	Residential Construction Loans by Bank, by Type						% Change			% Change			Owner		Pre-Sold
	Balance		Balance		Balance		from			from			Occupied		& Spec
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		12/31/10			03/31/10			03/31/11		03/31/11
Glacier	$	28,090		34,526		53,824		-19	%		-48	%	$	6,703		21,387
Mountain West		18,712		21,375		43,725		-12	%		-57	%		8,153		10,559
First Security		8,967		10,123		17,321		-11	%		-48	%		4,013		4,954
Western		877		1,350		3,196		-35	%		-73	%		460		417
1st Bank		4,437		6,611		14,914		-33	%		-70	%		2,631		1,806
Valley		3,825		4,950		5,109		-23	%		-25	%		3,000		825
Big Sky		11,745		11,004		17,608		7	%		-33	%		634		11,111
First National		1,726		1,958		2,583		-12	%		-33	%		1,340		386
Citizens		8,799		9,441		11,553		-7	%		-24	%		4,577		4,222
First Bank-MT		749		502		265		49	%		183	%		599		150
San Juans		5,731		7,018		6,957		-18	%		-18	%		5,731		—
Total	$	93,658		108,858		177,055		-14	%		-47	%	$	37,841		55,817
	Single Family Residential Loans by Bank, by Type						% Change			% Change			1st		Junior
	Balance		Balance		Balance		from			from			Lien		Lien
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		12/31/10			03/31/10			03/31/11		03/31/11
Glacier	$	173,946		187,683		194,253		-7	%		-10	%	$	152,466		21,480
Mountain West		253,094		282,429		284,456		-10	%		-11	%		215,455		37,639
First Security		87,441		92,011		84,665		-5	%		3	%		73,552		13,889
Western		34,881		42,070		43,413		-17	%		-20	%		32,809		2,072
1st Bank		57,089		59,337		60,576		-4	%		-6	%		52,532		4,557
Valley		56,349		60,085		64,268		-6	%		-12	%		46,160		10,189
Big Sky		30,794		32,496		32,715		-5	%		-6	%		27,839		2,955
First National		13,229		13,948		17,580		-5	%		-25	%		10,204		3,025
Citizens		13,959		19,885		21,020		-30	%		-34	%		12,426		1,533
First Bank-MT		8,295		8,618		9,902		-4	%		-16	%		7,235		1,060
San Juans		30,301		29,124		30,804		4	%		-2	%		28,802		1,499
Total	$	759,378		827,686		843,652		-8	%		-10	%	$	659,480		99,898
	Commercial Real Estate Loans by Bank, by Type						% Change			% Change			Owner		Non-Owner
	Balance		Balance		Balance		from			from			Occupied		Occupied
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		12/31/10			03/31/10			03/31/11		03/31/11
Glacier	$	219,656		224,215		230,338		-2	%		-5	%	$	113,522		106,134
Mountain West		205,842		206,732		231,804		0	%		-11	%		125,792		80,050
First Security		241,817		227,662		225,168		6	%		7	%		163,002		78,815
Western		103,719		103,443		105,358		0	%		-2	%		57,683		46,036
1st Bank		55,585		58,353		64,363		-5	%		-14	%		40,961		14,624
Valley		51,467		50,325		49,601		2	%		4	%		32,935		18,532
Big Sky		87,305		88,135		87,446		-1	%		0	%		54,935		32,370
First National		26,435		27,609		25,706		-4	%		3	%		19,784		6,651
Citizens		59,861		61,737		57,733		-3	%		4	%		38,234		21,627
First Bank-MT		17,229		17,492		18,367		-2	%		-6	%		9,692		7,537
San Juans		50,747		50,066		48,166		1	%		5	%		28,944		21,803
Total	$	1,119,663		1,115,769		1,144,050		0	%		-2	%	$	685,484		434,179

33

The following tables summarize selected information by bank and regulatory classification on the Company’s loan portfolio.

	Consumer Loans by Bank, by Type						% Change			% Change			Home Equity		Other
	Balance		Balance		Balance		from			from			Line of Credit		Consumer
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		12/31/10			03/31/10			03/31/11		03/31/11
Glacier	$	144,537		150,082		163,345		-4	%		-12	%	$	130,762		13,775
Mountain West		68,358		70,304		72,329		-3	%		-5	%		60,223		8,135
First Security		69,214		71,677		76,276		-3	%		-9	%		45,042		24,172
Western		41,338		43,081		47,836		-4	%		-14	%		29,355		11,983
1st Bank		38,700		40,021		42,953		-3	%		-10	%		15,872		22,828
Valley		23,444		23,745		25,105		-1	%		-7	%		14,383		9,061
Big Sky		27,119		27,733		28,054		-2	%		-3	%		24,304		2,815
First National		24,018		24,217		25,810		-1	%		-7	%		14,750		9,268
Citizens		28,961		29,040		30,314		0	%		-4	%		23,296		5,665
First Bank-MT		7,538		8,005		7,896		-6	%		-5	%		3,763		3,775
San Juans		14,221		14,848		15,359		-4	%		-7	%		13,199		1,022
Total	$	487,448		502,753		535,277		-3	%		-9	%	$	374,949		112,499

n/m — not measurable

Non-performing Assets

The following tables summarize information regarding non-performing assets at the dates indicated, including breakouts by regulatory and bank subsidiary classification:

	March 31,			December 31,			March 31,
(Unaudited-Dollars in thousands)	2011			2010			2010
Non-accrual loans
Residential real estate	$	16,949			23,095			23,287
Commercial		151,290			161,136			167,831
Consumer and other		10,163			8,274			7,051
Total		178,402			192,505			198,169
Accruing loans 90 days or more overdue
Residential real estate		191			506			304
Commercial		3,550			3,051			7,943
Consumer and other		2,837			974			2,242
Total		6,578			4,531			10,489
Other real estate owned		82,594			73,485			59,481
Total non-performing loans and real estate and other assets owned	$	267,574			270,521			268,139
Allowance for loan and lease losses as a percentage of non-performing loans		76	%		70	%		69	%
Non-performing assets as a percentage of total subsidiary assets		3.78	%		3.91	%		4.19	%
Accruing loans 30-89 days overdue	$	52,402			45,497			61,255
Interest income 1	$	2,471			10,987			2,831

1 Amounts represent estimated interest income that would have been recognized on loans accounted for on a non-accrual basis for the three months ended March 31, 2011, year ended December 31, 2010 and three months ended March 31, 2010 had such loans performed pursuant to contractual terms.

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The following tables summarize selected information by bank and regulatory classification on the Company’s loan portfolio.

							Non-		Accruing		Other
	Non-performing Assets, by Loan Type						Accruing		Loans 90 Days		Real Estate
	Balance		Balance		Balance		Loans		or More Overdue		Owned
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		03/31/11		03/31/11		03/31/11
Custom and owner occupied construction	$	2,362		2,575		1,842		1,439		—		923
Pre-sold and spec construction		12,410		16,071		30,339		4,632		—		7,778
Land development		82,465		83,989		76,254		54,434		122		27,909
Consumer land or lots		12,763		12,543		12,245		6,802		651		5,310
Unimproved land		42,755		44,116		38,585		23,361		759		18,635
Developed lots for operative builders		7,079		7,429		11,626		2,823		—		4,256
Commercial lots		2,630		3,110		1,705		787		—		1,843
Other construction		4,302		3,837		3,485		4,302		—		—
Commercial real estate		35,798		36,978		35,222		26,705		1,103		7,990
Commercial and industrial		17,577		13,127		13,055		16,314		258		1,005
Agriculture loans		7,112		5,253		5,293		6,595		112		405
Municipal loans		—		—		4,495		—		—		—
1-4 family		32,904		34,791		25,151		24,846		3,447		4,611
Home equity lines of credit		5,697		4,805		7,083		4,994		84		619
Consumer		641		446		850		368		42		231
Other		1,079		1,451		909		—		—		1,079
Total	$	267,574		270,521		268,139		178,402		6,578		82,594

									Non-Accrual &
	Accruing 30-89 Days Delinquent Loans and						Accruing		Accruing Loans		Other
	Non-Performing Assets, by Bank						30-89 Days		90 Days or		Real Estate
	Balance		Balance		Balance		Overdue		More Overdue		Owned
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		03/31/11		03/31/11		03/31/11
Glacier	$	82,529		75,869		92,315		19,808		55,133		7,588
Mountain West		82,852		83,872		94,952		14,020		52,565		16,267
First Security		58,289		59,770		57,775		9,955		34,244		14,090
Western		9,739		11,237		8,427		1,134		4,974		3,631
1st Bank		22,306		16,686		21,244		3,468		11,274		7,564
Valley		2,145		1,900		2,123		687		1,331		127
Big Sky		20,785		21,739		34,090		1,003		11,552		8,230
First National		9,539		9,901		9,009		892		7,319		1,328
Citizens		6,345		8,000		5,909		976		3,555		1,814
First Bank — MT		219		553		1,394		168		51		—
San Juans		5,297		6,549		2,156		291		2,982		2,024
GORE		19,931		19,942		—		—		—		19,931
Total	$	319,976		316,018		329,394		52,402		184,980		82,594

Non-performing assets as a percentage of the total subsidiary assets at March 31, 2011 were 3.78 percent, down from 3.91 percent at December 31, 2010 and down from 4.19 percent at March 31, 2010. The allowance for loan and lease losses (“ALLL” or “allowance”) was 76 percent of non-performing loans at March 31, 2011, an increase from 70 percent for the prior quarter end and from 69 percent at March 31, 2010. Most of the Company’s non-performing assets are secured by real estate and, based on the most current information available to management, including updated appraisals or evaluations, the Company believes the value of the underlying real estate collateral is adequate to minimize significant charge-offs or loss to the Company. Each bank subsidiary evaluates the level of its non-performing assets, the values of the underlying real estate and other collateral, and related trends in net charge-offs in determining the adequacy of the ALLL. Through pro-

35

active credit administration, the Banks work closely with borrowers to seek favorable resolution to the extent possible, thereby attempting to minimize net charge-offs or losses to the Company.

Loans that are thirty days or more past due based on payments received and applied to the loan are considered delinquent. Loans are designated non-accrual and the accrual of interest is discontinued when the collection of the contractual principal or interest is unlikely. A loan is typically placed on non-accrual when principal or interest is due and has remained unpaid for ninety days or more. When a loan is placed on non-accrual status, interest previously accrued but not collected is reversed against current period interest income. Subsequent payments are applied to the outstanding principal balance if doubt remains as to the ultimate collectability of the loan. Interest accruals are not resumed on partially charged-off impaired loans. For other loans on non-accrual, interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement; and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. Impaired loans include non-performing loans (i.e., non-accrual loans and accruing loans 90 days or more past due) and accruing loans under ninety days past due where it is probable payments will not be received according to the loan agreement (e.g., troubled debt restructuring loans). The Company measures impairment on a loan-by-loan basis. An insignificant delay or shortfall in the amounts of payments would not cause a loan or lease to be considered impaired. The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the facts and circumstances surrounding the loan and the borrower, including the length and reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest due. At the time a loan is identified as impaired, it is measured for impairment and thereafter reviewed and measured on at least a quarterly basis for additional impairment.

The amount of the impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except when it is determined that repayment of the loan is expected to be provided solely by the underlying collateral. For impairment based on expected future cash flows, the Company considers all information available as of a measurement date, including past events, current conditions, potential prepayments, and estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the loan. For alternative ranges of cash flows, the likelihood of the possible outcomes is considered in determining the best estimate of expected future cash flows. The effective interest rate for a loan restructured in a troubled debt restructuring is based on the original contractual rate.

For collateral-dependent loans and real estate loans for which foreclosure or a deed-in-lieu of foreclosure is probable, impairment is measured by the fair value of the collateral, less estimated cost to sell. The fair value of the collateral is determined primarily based upon appraisal or evaluation (new or updated) of the underlying property value. The Company reviews appraisals or evaluations, giving consideration to the highest and best use of the collateral, with values reduced by discounts to consider lack of marketability and estimated cost to sell. Appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to an impaired loan’s value may occur.

In deciding whether to obtain a new or updated appraisal or evaluation, the Company considers the impact of the following factors and environmental events:

• passage of time;

• improvements to, or lack of maintenance of, the collateral property;

36

• stressed and volatile economic conditions, including market values;

• changes in the performance, risk profile, size and complexity of the credit exposure;

• limited or specific use collateral property;

• high loan-to-value credit exposures;

• changes in the adequacy of the collateral protections, including loan covenants and financially responsible guarantors;

• competing properties in the market area;

• changes in zoning and environmental contamination;

• the nature of subsequent transactions (e.g., modification, restructuring, refinancing); and

• the availability of alternative financing sources.

The Company also takes into account (1) the Company’s experience with whether the appraised values of impaired collateral-dependent loans are actually realized, and (2) the timing of cash flows expected to be received from the underlying collateral to the extent such timing is significantly different than anticipated in the most recent appraisal.

The Company generally obtains new or updated appraisals or evaluations annually for collateral underlying impaired loans. For collateral-dependent loans for which the appraisal of the underlying collateral is more than twelve months old, the Company updates collateral valuations through procedures that include obtaining current inspections of the collateral property, broker price opinions, comprehensive market analyses and current data for conditions and assumptions (e.g., discounts, comparable sales and trends) underlying the appraisals’ valuation techniques. The Company’s impairment/valuation procedures take into account new and updated appraisals on similar properties in the same area in order to capture current market valuation changes, unfavorable and favorable.

When the ultimate collectability of the total principal of an impaired loan is in doubt and designated as non-accrual, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal on an impaired loan is not in doubt, contractual interest is generally credited to interest income when received under the cash basis method. Impaired loans were $218.7 million and $225.1 million as of March 31, 2011 and December 31, 2010, respectively. The ALLL includes valuation allowances of $15.4 million and $16.9 million specific to impaired loans as of March 31, 2011 and December 31, 2010, respectively. Of the total impaired loans at March 31, 2011, there were 40 commercial real estate and other commercial loans, each exceeding $1 million, such loans aggregating $105.6 million, or 48 percent, of the impaired loans. The 40 loans were collateralized by 164 percent of the loan value, the majority of which had appraisals (new or updated) in 2010, such appraisals reviewed at least quarterly taking into account current market conditions. Of the total impaired loans at March 31, 2011, there were 244 loans aggregating to $130.2 million, or 59 percent, whereby the borrowers had more than one impaired loan. The amount of impaired loans that have had partial charge-offs during the year for which the Company continues to have concern about the collectability of the remaining loan balance was $24.0 million. Of these loans, there were charge-offs of $10.7 million during the first quarter of 2011.

A restructured loan is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The Company made the following types of loan modifications, some of which were considered TDR:

• Reduction of the stated interest rate for the remaining term of the debt;

• Extension of the maturity date(s) at a stated rate of interest lower than the current market rate for newly originated debt having similar risk characteristics; and

• Reduction of the face amount of the debt as stated in the debt agreements.

37

Each restructured debt is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service the debt as modified. The Company discourages the multiple loan strategy when restructuring loans regardless of whether or not the notes are TDR loans. The Company’s TDR loans are considered impaired loans of which the majority are designated as nonaccrual. The Company does not have any commercial TDR loans as of March 31, 2011 that have repayment dates extended at or near the original maturity date for which the Company has not classified as impaired. The Company had TDR loans of $62.4 million as of March 31, 2011 of which $36.7 million were on non-accrual status. The Company has TDR loans of $16.4 million that are in non-accrual status or that have had partial charge-offs during the year, the borrowers of which continue to have $29.2 million in other loans that are on accrual status.

The Company recognizes that while borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity for debt repayment. In determining whether non-restructured or unimpaired loans issued to a single or related party group of borrowers should continue to accrue interest when the borrower has other loans that are impaired or troubled debt restructurings, the Company on a quarterly or more frequent basis performs an updated and comprehensive assessment of the willingness and capacity of the borrowers to timely and ultimately repay their total debt obligations, including contingent obligations. Such analysis takes into account current financial information about the borrowers and financially responsible guarantors, if any, including for example:

• analysis of global, i.e., aggregate debt service for total debt obligations;

• assessment of the value and security protection of collateral pledged using current market conditions and alternative market assumptions across a variety of potential future situations; and

• loan structures and related covenants.

For non-performing construction loans involving residential structures, the percentage of completion exceeds 95 percent at March 31, 2011. For construction loans involving commercial structures, the percentage of completion ranges from projects not started to projects completed at March 31, 2011. During the construction loan term, all construction loan collateral properties are inspected at least monthly, or more frequently as needed, until completion. Draws on construction loans are predicated upon the results of the inspection and advanced based upon a percentage of completion basis versus original budget percentages. When construction loans become non-performing and the associated project is not complete, the Company on a case-by-case basis makes the decision to advance additional funds or to initiate collection/foreclosure proceedings. Such decision includes obtaining “as-is” and “at completion” appraisals for consideration of potential increases or decreases in the collateral’s value. The Company also considers the increased costs of monitoring progress to completion, and the related collection/holding period costs should collateral ownership be transferred to the Company. With very limited exception, the Company does not disburse additional funds on non-performing loans; instead, the Company has proceeded to collection and foreclosure actions in order to reduce the Company’s exposure to loss on such loans.

Interest Reserves

Interest reserves are used to periodically advance loan funds to pay interest charges on the outstanding balance of the related loan. As with any extension of credit, the decision to establish a loan-funded interest reserve upon origination of construction loans, including residential construction and land, lot and other construction loans, is based on prudent underwriting, including the feasibility of the project, expected cash flow, creditworthiness of the borrower and guarantors, and the protection provided by the real estate and other underlying collateral. Interest reserves provide an effective means for addressing the cash flow characteristics of construction loans. In response to the downturn in the housing market and potential impact upon construction lending, the Company discourages the creation or continued use of interest reserves.

The Company’s loan policy and credit administration practices establish standards and limits for all extensions of credit that are secured by interests in or liens on real estate, or made for the purpose of financing the

38

construction of real property or other improvements. Ongoing monitoring and review of the loan portfolio is based on current information, including: the borrowers’ and guarantors’ creditworthiness, value of the real estate and other collateral, the project’s performance against projections, and monthly inspections by employees or external parties until the real estate project is complete.

Interest reserves are advanced provided the related construction loan is performing as expected. Loans with interest reserves may be extended, renewed or restructured only when the related loan continues to perform as expected and meets the prudent underwriting standards identified above. Such renewals, extension or restructuring are not permitted in order to keep the related loan current.

In monitoring the performance and credit quality of a construction loan, the Company assesses the adequacy of any remaining interest reserve, and whether the use of an interest reserve remains appropriate in the presence of emerging weakness and associated risks in the construction loan.

The ongoing accrual and recognition of uncollected interest as income continues only when facts and circumstances continue to reasonably support the contractual payment of principal or interest. Loans are typically designated as non-accrual when the collection of the contractual principal or interest is unlikely and has remained unpaid for ninety days or more. For such loans, the accrual of interest and its capitalization into the loan balance will be discontinued.

The Company had loans of $121.3 million and $141.1 million with remaining interest reserves of $629 thousand and $879 thousand as of March 31, 2011 and December 31, 2010, respectively.

Allowance for Loan and Lease Losses

Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The ALLL methodology is designed to reasonably estimate the probable loan and lease losses within each bank subsidiary’s loan and lease portfolios. Accordingly, the ALLL is maintained within a range of estimated losses. The determination of the ALLL, including the provision for loan losses and net charge-offs, is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses, including the credit risk inherent in the loan and lease portfolios, economic conditions nationally and in the local markets in which the community bank subsidiaries operate, changes in collateral values, delinquencies, non-performing assets and net charge-offs.

Although the Company and Banks continue to actively monitor economic trends, soft economic conditions combined with potential declines in the values of real estate that collateralize most of the Company’s loan and lease portfolios may adversely affect the credit risk and potential for loss to the Company.

The ALLL evaluation is well documented and approved by each bank subsidiary’s Board of Directors and reviewed by the Parent’s Board of Directors. In addition, the policy and procedures for determining the balance of the ALLL are reviewed annually by each bank subsidiary’s Board of Directors, the Parent’s Board of Directors, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.

At the end of each quarter, each of the community bank subsidiaries analyzes its loan and lease portfolio and maintain an ALLL at a level that is appropriate and determined in accordance with accounting principles generally accepted in the United States of America. The allowance consists of a specific allocation component and a general allocation component. The specific allocation component relates to loans that are determined to be impaired. A valuation allowance is established when the fair value of a collateral-dependent loan or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate) is lower than the carrying value of the impaired loan. The general allocation component relates to probable credit losses inherent in the balance of the portfolio based on prior loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors.

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When applied to each bank subsidiary’s historical loss experience, the environmental factors result in the provision for loan losses being recorded in the period in which the loss has probably occurred. When the loss is confirmed at a later date, a charge-off is recorded.

Management of each bank subsidiary exercises significant judgment when evaluating the effect of applicable qualitative or environmental factors on each bank subsidiary’s historical loss experience for loans not identified as impaired. Quantification of the impact upon each subsidiary bank’s ALLL is inherently subjective as data for any factor may not be directly applicable, consistently relevant, or reasonably available for management to determine the precise impact of a factor on the collectability of the bank’s unimpaired loan portfolio as of each evaluation date. Bank management documents its conclusions and rationale for changes that occur in each applicable factor’s weight, i.e., measurement and ensures that such changes are directionally consistent based on the underlying current trends and conditions for the factor.

The Company is committed to a conservative management of the credit risk within the loan and lease portfolios, including the early recognition of problem loans. The Company’s credit risk management includes stringent credit policies, individual loan approval limits, limits on concentrations of credit, and committee approval of larger loan requests. Management practices also include regular internal and external credit examinations, identification and review of individual loans and leases experiencing deterioration of credit quality, procedures for the collection of non-performing assets, quarterly monitoring of the loan and lease portfolios, semi-annual review of loans by industry, and periodic stress testing of the loans secured by real estate.

The Company’s model of eleven independent wholly-owned community banks, each with its own loan committee, chief credit officer and Board of Directors, provides substantial local oversight to the lending and credit management function. Unlike a traditional, single-bank holding company, the Company’s decentralized business model affords multiple reviews of larger loans before credit is extended, a significant benefit in mitigating and managing the Company’s credit risk. The geographic dispersion of the market areas in which the Company and the community bank subsidiaries operate further mitigates the risk of credit loss. While this process is intended to limit credit exposure, there can be no assurance that further problem credits will not arise and additional loan losses incurred, particularly in periods of rapid economic downturns.

The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process, utilizing each of the Banks’ internal credit risk rating process, is necessary to support management’s evaluation of the ALLL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer and management’s evaluation of the loan portfolio credit quality. The loan review function also assesses the evaluation process and provides an independent analysis of the adequacy of the ALLL.

The Company considers the ALLL balance of $141 million adequate to cover inherent losses in the loan and lease portfolios as of March 31, 2011. However, no assurance can be given that the Company will not, in any particular period, sustain losses that are significant relative to the ALLL amount, or that subsequent evaluations of the loan and lease portfolios applying management’s judgment about then current factors, including economic and regulatory developments, will not require significant changes in the ALLL. Under such circumstances, this could result in enhanced provisions for loan losses. See additional risk factors in “Part II, ITEM 1A. Risk Factors.”

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The following table summarizes the allocation of the ALLL:

	March 31, 2011					December 31, 2010					March 31, 2010
	Allowance		Percent			Allowance		Percent			Allowance		Percent
	for Loan and		of Loans in			for Loan and		of Loans in			for Loan and		of Loans in
(Unaudited — Dollars in thousands)	Lease Losses		Category			Lease Losses		Category			Lease Losses		Category
Residential real estate	$	17,004		14.9	%		20,957		16.9	%		13,363		19.3	%
Commercial real estate		80,098		48.3	%		76,147		47.9	%		66,929		46.2	%
Other commercial		20,960		17.6	%		19,932		17.4	%		40,186		17.6	%
Home equity		14,206		12.9	%		13,334		12.9	%		13,431		12.1	%
Other consumer		8,561		6.3	%		6,737		4.9	%		9,691		4.8	%
Totals	$	140,829		100.0	%		137,107		100.0	%		143,600		100.0	%

The following tables summarize the ALLL experience at the dates indicated, including breakouts by regulatory and bank subsidiary classification:

	Three Months ended			Year ended			Three Months ended
	March 31,			December 31,			March 31,
(Unaudited — Dollars in thousands)	2011			2010			2010
Balance at beginning of period	$	137,107			142,927			142,927
Charge-offs
Residential real estate		(5,281	)		(16,575	)		(2,830	)
Commercial loans		(10,098	)		(69,595	)		(17,229	)
Consumer and other loans		(1,125	)		(7,780	)		(1,418	)
Total charge-offs		(16,504	)		(93,950	)		(21,477	)
Recoveries
Residential real estate		95			749			9
Commercial loans		439			2,203			1,165
Consumer and other loans		192			485			66
Total recoveries		726			3,437			1,240
Charge-offs, net of recoveries		(15,778	)		(90,513	)		(20,237	)
Provision for loan losses		19,500			84,693			20,910
Balance at end of period	$	140,829			137,107			143,600
Allowance for loan and lease losses as a percentage of total loan and leases		3.86	%		3.66	%		3.58	%
Net charge-offs as a percentage of total loans		0.43	%		2.41	%		0.50	%

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									Provision for
							Provision for		the Year-to-Date		ALLL
	Allowance for Loan and Lease Losses						Year-to-Date		Ended 03/31/11		as a Percent
	Balance		Balance		Balance		Ended		Over Net		of Loans
(Dollars in thousands)	03/31/11		12/31/10		03/31/10		03/31/11		Charge-Offs		03/31/11
Glacier	$	35,904		34,701		37,618		5,850		1.3		4.33	%
Mountain West		35,380		35,064		35,858		7,500		1.0		4.69	%
First Security		20,072		19,046		18,913		3,300		1.5		3.60	%
Western		7,603		7,606		8,737		300		1.0		2.77	%
1st Bank		11,411		10,467		11,310		1,000		17.9		4.37	%
Valley		4,588		4,651		4,634		—		—		2.52	%
Big Sky		10,551		9,963		11,144		650		10.5		4.28	%
First National		2,312		2,527		2,212		—		—		1.67	%
Citizens		5,501		5,502		5,554		700		1.0		3.54	%
First Bank — MT		3,018		3,020		2,965		—		—		2.74	%
San Juans		4,489		4,560		4,655		200		0.7		3.18	%
Total	$	140,829		137,107		143,600		19,500		1.2		3.86	%

	Net Charge-Offs, Year-to-Date Period Ending, By Bank
	Balance		Balance		Balance			Charge-Offs		Recoveries
(Dollars in thousands)	03/31/11		12/31/10		03/31/10			03/31/11		03/31/11
Glacier	$	4,647		24,327		10,560			4,718		71
Mountain West		7,183		47,487		5,693			7,434		251
First Security		2,274		7,296		1,629			2,336		62
Western		303		2,106		325			363		60
1st Bank		56		2,578		335			253		197
Valley		63		216		33			71		8
Big Sky		62		4,048		1,192			95		33
First National		216		605		237			221		5
Citizens		701		1,363		61			740		39
First Bank-MT		2		149		104			2		—
San Juans		271		338		68			271		—
Total	$	15,778		90,513		20,237			16,504		726
	Net Charge-Offs (Recoveries), Year-to-Date
	Period Ending, By Loan Type
	Balance		Balance		Balance			Charge-Offs		Recoveries
(Dollars in thousands)	03/31/11		12/31/10		03/31/10			03/31/11		03/31/11
Residential construction	$	2,832		7,147		853			2,852		20
Land, lot and other construction		7,434		51,580		12,090			7,572		138
Commercial real estate		890		10,181		1,532			1,046		156
Commercial and industrial		1,344		5,612		2,459			1,480		136
1-4 family		2,924		9,897		2,517			3,035		111
Home equity lines of credit		285		4,496		614			337		52
Consumer		31		951		188			135		104
Other		38		649		(16	)		47		9
Total	$	15,778		90,513		20,237			16,504		726

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The allowance determined by each of the eleven community bank subsidiaries is combined together into a single allowance for the Company. As of March 31, 2011, December 31, 2010 and March 31, 2010, the Company’s allowance consisted of the following components:

	March 31,		December 31,		March 31,
(Unaudited — Dollars in thousands)	2011		2010		2010
Specific allowance	$	15,402		16,871		17,036
General allowance		125,427		120,236		126,564
Total allowance	$	140,829		137,107		143,600

Each of the Bank’s ALLL is considered adequate to absorb losses from any class of its loan and lease portfolio. For the quarter ended March 31, 2011 and throughout 2010, the Company believes the allowance is commensurate with the risk in the Company’s loan and lease portfolio and is directionally consistent with the change in the quality of the Company’s loan and lease portfolio as determined at each bank subsidiary.

In total, the ALLL has decreased $2.8 million, or 1.9 percent, from a year ago. The ALLL of $141 million is 3.86 percent of total loans outstanding at March 31, 2011, up from 3.66 percent of total loans at year end 2010, and up from 3.58 percent of total loans at prior year first quarter end. While the overall amount of the ALLL has decreased from a year ago, the increase in the ALLL as a percent of loans is the result of a continuing overall upward increase in environmental factors upon each bank subsidiary’s historical loss experience. Despite the upward increase in environmental factors upon each bank subsidiary’s historical loss experience, the general allocation of the Company’s allowance decreased by $1.1 million due to the decrease of $368 million, or 9 percent, in total loans at March 31, 2011 compared to the prior year first quarter end.

During the first quarter of 2011, the overall total of the ALLL increased by $3.7 million, the net result of a $1.5 million decrease in the specific allocation and a $5.2 million increase in the general allocation of the allowance. The increase in the general allocation during the current quarter is due to an increase in the bank subsidiaries’ overall historical loss experience during the quarter although total loans decreased by $102 million during the quarter.

Presented below are select aggregated statistics that were also considered when determining the adequacy of the Company’s ALLL at March 31, 2011:

	Positive Trends
•	The provision for loan losses in the first quarter of 2011 was $19.5 million, a decrease of $7.9 million from the prior quarter.
•	Charge-offs, net of recoveries, in the first quarter of 2011 were $15.8 million, a decrease of $8.7 million from the prior quarter.
•	Non-accrual construction loans (i.e., residential construction and land, lot and other construction) were $98.6 million, or 55 percent, of the $178.4 million of non-accrual loans at March 31, 2011, a reduction of $19.1 million during the current quarter. Non-accrual construction loans at year end 2010 accounted for 61 percent of the $192.5 million of non-accrual loans.
•	The allowance as a percent of non-performing loans at March 31, 2011 was 76 percent versus 70 percent at year end 2010.
•	Non-performing loans as a percent of total loans decreased to 5.07 percent during the first quarter of 2011 as compared to 5.26 percent at year end 2010.

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	Negative Trends
•	Net charge-offs of construction loans were $10.3 million, or 66 percent, of the $15.8 million of net charge-offs during the current quarter compared to net charge-offs of construction loans of $13.7 million, or 56 percent, of the $24.5 million of net charge-offs in fourth quarter 2010.
•	Impaired loans as a percent of total loans were 6 percent at March 31, 2011, the same percent at year end 2010.
•	Early stage delinquencies (accruing loans 30-89 days past due) increased to $52.4 million at quarter end from $45.5 million at year end 2010.

The eleven bank subsidiaries provide commercial services to individuals, small to medium size businesses, community organizations and public entities from 105 locations, including 96 branches, across Montana, Idaho, Wyoming, Colorado, Utah, and Washington. The Rocky Mountain areas in which the bank subsidiaries operate have diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the downturn in the global, national, and local economies is not uniform across each of the bank subsidiaries.

Though stabilized, the soft economic conditions during much of 2010 continued in the current quarter, including declining sales of existing real property (e.g., single family residential, multi-family, commercial buildings and land), an increase in existing inventory of real property, increase in real property delinquencies and foreclosures, and corresponding decrease in absorption rates, and lower values of real property that collateralize most of the Company’s loan and lease portfolios, among other factors. While the national unemployment rate increased steadily from 7.4 percent at the start of 2009 to 10.0 percent at year end 2009, dropping to 9.4 percent at year end 2010 and 8.8 percent at March 31, 2011, the unemployment rates for the states in which the community bank subsidiaries conduct operations were significantly lower throughout this time period compared to the national unemployment rate. Agricultural price declines in livestock and grain in 2009 have recovered significantly. Concurrently, prices for oil have held strong, while prices for natural gas remain below the exceptionally high price levels of 2008. The decline in the cost of living, as reflected in CPI measures, helped buffer the general softening of the economy nationally, regionally and locally, and the impact of lower real property values. The tourism industry and related lodging continues to be a source of strength for those banks whose market areas have national parks and similar recreational areas in the market areas served. Such changes affected the bank subsidiaries in distinctly different ways as each bank has its own geographic area and local economy influences over both a short-term and long-term horizon.

The specific allowance allocation of $15.4 million pertains to total impaired loans of $218.7 million. Included in the impaired loans is $157.6 million of loans which have no specific allowance allocation since the fair value of collateral-dependent loans or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate) is higher than the carrying value of such impaired loans. In determining the need for a specific allowance allocation on impaired loans, the effects of decreases in the fair value of the underlying collateral were considered.

In evaluating the need for a specific or general valuation allowance for impaired and unimpaired loans, respectively, within the Company’s construction loan portfolio, including residential construction and land, lot and other construction loans, the credit risk related to such loans was considered in the ongoing monitoring of such loans, including assessments based on current information, including new or updated appraisals or evaluations of the underlying collateral, expected cash flows and the timing thereof, as well as the estimated costs to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the construction loan. Construction loans are 16 percent of the Company’s total loan portfolio and account for 55 percent of the Company’s non-accrual loans at March 31, 2011. Collateral securing construction loans include residential buildings (e.g., single/multi-family and condominiums), commercial buildings, and associated land (multi-acre parcels and individual lots, with and without shorelines). Outstanding balances are centered in Western Montana

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and Northern Idaho, as well as Boise, Sun Valley, Idaho. None of the individual bank subsidiaries have a concentration of construction loans exceeding 5 percent of the Company’s total loan portfolio.

As identified below, the following four bank subsidiaries had non-accrual construction loans that aggregated 5 percent or more of the Company’s $98.6 million of non-accrual construction loans at March 31, 2011. The Company had $117.7 million of non-accrual construction loans at December 31, 2010, a decrease of $19.1 million, or 16 percent. Also identified below are the principal areas of the bank subsidiaries’ operations in which the collateral properties of such non-accrual construction loans are located:

Mountain West	33 percent	Northern Idaho and Boise and Sun Valley, Idaho
Glacier	32 percent	Western Montana
First Security	17 percent	Western Montana
Big Sky	10 percent	Western Montana

Residential non-accrual construction loans are 6 percent of the total construction loans on non-accrual status as of March 31, 2011. Unimproved land and land development loans collectively account for the bulk of the non-accrual commercial construction loans at each of the four bank subsidiaries. With locations and operations in the contiguous northern Rocky Mountain states of Idaho and Montana, the geography and economies of each of the four bank subsidiaries are predominantly tied to real estate development given the sprawling abundance of timbered valleys and mountainous terrain with significant lakes, streams and watershed areas. Consistent with the general economic downturn, the market for upscale primary, secondary and other housing as well as the associated construction and building industries have stalled after years of significant growth. As the housing market (rental and owner-occupied) and related industries continue to recover from the downturn, the Company continues to reduce its exposure to loss in the construction loan and other segments of the total loan portfolio.

Other-Than-Temporary Impairment on Securities Accounting Policy and Analysis

The Company views the determination of whether an investment security is temporarily or other-than-temporarily impaired as a critical accounting policy, as the estimate is susceptible to significant change from period to period because it requires management to make significant judgments, assumptions and estimates in the preparation of its consolidated financial statements. The Company assesses individual securities in its investment securities portfolio for impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant. An investment is impaired if the fair value of the security is less than its carrying value at the financial statement date. If impairment is determined to be other-than-temporary, an impairment loss is recognized by reducing the amortized cost for the credit loss portion of the impairment with a corresponding charge to earnings for a like amount.

For fair value estimates provided by third party vendors, management also considered the models and methodology for appropriate consideration of both observable and unobservable inputs, including appropriately adjusted discount rates and credit spreads for securities with limited or inactive markets, and whether the quoted prices reflect orderly transactions. For certain securities, the Company obtained independent estimates of inputs, including cash flows, in supplement to third party vendor provided information. The Company also reviewed financial statements of select issuers, with follow up discussions with issuers’ management for clarification and verification of information relevant to the Company’s impairment analysis.

Equity securities owned at March 31, 2011 primarily consisted of stock issued by the FHLB of Seattle, FHLB of Topeka and the FRB, such shares measured at cost in recognition of the transferability restrictions imposed by the issuers. Other equity securities include Federal Agriculture Mortgage Corporation and Bankers’ Bank of the West Bancorporation, Inc. The fair value of other equity securities in an unrealized loss position was $8 thousand, with unrealized losses of $4 thousand or 44 percent of fair value, at March 31, 2011.

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With respect to FHLB stock, the Company evaluates such stock for other-than-temporary impairment. Such evaluation takes into consideration (1) FHLB deficiency, if any, in meeting applicable regulatory capital targets, including risk-based capital requirements, (2) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the time period for any such decline, (3) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (4) the impact of legislative and regulatory changes on the FHLB, and (5) the liquidity position of the FHLB.

Based on the analysis of its impaired equity securities as of March 31, 2011, the Company determined that none of such securities had other-than-temporary impairment.

The Company believes that macroeconomic conditions occurring the first three months of 2011 and in 2010 have unfavorably impacted the fair value of certain debt securities in its investment portfolio. For debt securities with limited or inactive markets, the impact of these macroeconomic conditions upon fair value estimates includes higher risk-adjusted discount rates and downgrades in credit ratings provided by nationally recognized credit rating agencies, (e.g., Moody’s, S&P, Fitch, and DBRS).

In evaluating debt securities for other-than-temporary impairment losses, management assesses whether the Company intends to sell the security or if it is more likely-than-not that the Company will be required to sell the debt security. In so doing, management considers contractual constraints, liquidity, capital, asset / liability management and securities portfolio objectives.

The Company sold 7 debt securities during the first three months of 2011, including 3 sold at a realized gain of $184 thousand and 4 sold at a realized loss of $60 thousand resulting in a net realized gain of $124 thousand. Debt securities sold during 2010, included 119 securities of which 108 were sold at a realized gain of $7.8 million and 11 were sold at a realized loss of $3.0 million. Of the securities sold at a realized loss, none had previously been subject to an other-than-temporary impairment charge, and none were subject to an expectation or requirement to sell. With respect to its impaired debt securities at March 31, 2011, management determined that it does not intend to sell and that there is no expected requirement to sell any of its impaired debt securities.

As of March 31, 2011, there were 556 investments in an unrealized loss position of which 554 were debt securities and 2 were equity securities. With respect to the 554 debt securities, state and local government securities have the largest unrealized loss. The fair value of the residential mortgage-backed securities, which have underlying collateral consisting of U.S. government sponsored enterprise guaranteed mortgages and non-guaranteed private label whole loan mortgages, were $341.2 million at March 31, 2011 of which $115.9 million was purchased during 2011, the remainder of which had a fair market value of $225.3 million at March 31, 2011. For the securities purchased in 2011, there has been an unrealized loss of $688 thousand since purchase. Of the remaining residential mortgage-backed securities in a loss position, the unrealized loss increased from .89 percent of fair value at December 31, 2010 to 1.07 percent of fair value at March 31, 2011. The fair value of Collateralized Debt Obligation (“CDO”) securities in an unrealized loss position is $7.1 million, with unrealized losses of $4.1 million at March 31, 2011; the unrealized loss decreased from 69.48 percent of fair value at December 31, 2010 to 58 percent of fair value at March 31, 2011. The fair value of state and local government securities in an unrealized loss position were $338.6 million at March 31, 2011 of which $21.2 million was purchased during 2011, the remainder of which had a fair market value of $317.4 million at December 31, 2010. For the securities purchased in 2011, there has been an unrealized loss of $291 thousand since purchase. Of the remaining state and local government securities in a loss position, the unrealized loss decreased from 4.68 percent of fair value at December 31, 2010 to 4.35 percent of fair value at March 31, 2011. With respect to severity, the following table provides the number of securities and amount of unrealized loss in the various ranges of unrealized loss as a percent of book value.

46

			Number of		Number of
	Unrealized		Debt		Equity
(Dollars in thousands)	Loss		Securities		Securities
Greater than 40.0%	$	4,106		6		1
30.1% to 40.0%		—		—		—
20.1% to 30.0%		290		1		—
15.1% to 20.0%		731		3		—
10.1% to 15.0%		863		6		—
5.1% to 10.0%		8,006		116		1
0.1% to 5.0%		7,388		422		—
Total	$	21,384		554		2

With respect to the duration of the impaired debt securities, the Company identified 35 securities which have been continuously impaired for the twelve months ending March 31, 2011. The valuation history of such securities in the prior year(s) was also reviewed to determine the number of months in prior year(s) in which the identified securities was in an unrealized loss position. Of the 35 securities, 18 are state and local tax-exempt securities with an unrealized loss of $1.8 million, the most notable of which had an unrealized loss of $522 thousand. Of the 35 securities, 6 are identical CDO securities with an aggregate unrealized loss of $4.1 million, the most notable of which had an unrealized loss of $1 million.

With respect to the CDO securities, each is in the form of a pooled trust preferred structure of which the Company owns a portion of the Senior Notes tranche. All of the assets underlying the pooled trust preferred structure are capital securities issued by trust subsidiaries of holding companies of banks and thrifts. Since December 31, 2009, the Senior Notes have been rated “A3” by Moody’s. The Senior Notes have also been rated as of March 31, 2011 by Fitch as “BBB,” such rating effective September 21, 2010. Prior to such downgrade, Fitch had rated the Senior Notes as “A.” As of March 31, 2011 and December 31, 2010, 9 of the 26 trust subsidiaries were treated by the Trustee as in default, either because of an actual default or elective deferral of interest payments on their respective obligations. As of the end of the third and second quarters of 2010, 8 of the 26 trust subsidiaries were treated by the Trustee as in default on their respective obligations underlying the CDO structure. As of the end of the first quarter of 2010 and the fourth quarter of 2009, 6 of the 26 trust subsidiaries were treated as in default compared to 3 of the 26 trust subsidiaries treated as in default on their respective obligations as of the end of the first three quarters of 2009. In accordance with the prospectus for the CDO structure, the priority of payments favors holders of the Senior Notes over holders of the Mezzanine Notes and Income Notes. Though the maturity of the CDO structure is June 15, 2031, 25.28 percent of the outstanding principle of the Senior Notes has been prepaid through March 31, 2011. More specifically, at any time the Senior Notes are outstanding, if either the Senior Principle or Senior Interest Coverage Tests (the “Senior Coverage Tests”) are not satisfied as of a calculation date, then funds that would have otherwise been used to make payments on the Mezzanine Notes or Income Notes shall instead be applied as principle prepayments on the Senior Notes. For the first quarter of 2011 and the preceding five quarters, the Senior Principle Coverage Test was below its threshold level, while the Senior Interest Coverage Test exceeded its threshold level. The Senior Coverage Tests exceeded the threshold levels for each of the first three quarters of 2009. In its assessment of the Senior Notes for potential other-than-temporary impairment, the Company evaluated the underlying issuers and engaged a third party vendor to stress test the performance of the underlying capital securities and related obligors. Such stress testing has been performed as of the first quarter of 2011 and at the end of each quarter of 2010 and 2009. In each instance of stress testing, the results reflect no credit loss for the Senior Notes. In evaluating such results, the Company reviewed with the third party vendor the stress test assumptions and concurred with the analyses in concluding that the impairment at March 31, 2011 and at the end of each of the prior quarters of 2010 and 2009 was temporary, and not other-than-temporary.

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Of the 35 securities temporarily impaired continuously for the three months ended March 31, 2011, 6 are non-guaranteed private label whole loan mortgages with an aggregate unrealized loss of $793 thousand, the most notable of which had an unrealized loss of $414 thousand. Of the 6 non-guaranteed private label whole loan mortgages, 2 are collateralized by 30-year fixed rate residential mortgages considered to be “Prime” and 4 are collateralized by 30-year fixed rate residential mortgages considered to be “ALT — A.” Moreover, none of the underlying mortgage collateral is considered “subprime.”

The Company engages a third-party to perform detailed analysis for other-than-temporary impairment of such securities. Such analysis takes into consideration original and current data for the tranche and CMO structure, the non-guaranteed classification of each CMO tranche, current and deal inception credit ratings, credit support (protection) afforded the tranche through the subordination of other tranches in the CMO structure, the nature of the collateral (e.g., Prime or Alt-A) underlying each CMO tranche, and realized cash flows since purchase. When available, the collateral loss estimates are compared against loss estimates obtained from the credit rating agencies for the CMO structure and the resulting impact upon the tranche.

The analysis includes performance projections based upon cash flow assumptions designed to assess risk by capturing key performance data and trends such as delinquencies, severity of defaults, severity of collateral loss, and a range of prepayment speeds taking into account both voluntary (“CRR”) and involuntary (“CDR”) payments and the seniority of the CMO tranche within the CMO deal. The projected cash flows incorporate a range of macroeconomic trends, including for example, interest rates, gross domestic product and employment, as well as home price appreciation/depreciation (“HPA”) and geographic affordability (“Geo Aff”).

HPA is a primary driver of credit performance in addition to loan characteristics. Negative HPA refers to declining house price appreciation (i.e., depreciation in essence). HPA scenarios are performed at loan-level capturing characteristics such as loan-to-value, credit scores (e.g., FICO), loan type, occupancy, purpose, and geography. Geo Aff is also a house price appreciation scenario and such refers to house price affordability levels by geography (relative to income). Prior to performing any HPA or Geo Aff-based analysis, significant fine-tuning adjustments are made to factor in the current state of the housing market. Tuning adjustments include delinquency roll rates, cure rates, voluntary prepayments, loan-to-values, and credit scores. Additionally, other factors used in the analyses are updated for current market conditions and trends, including loss severities and collateral loss estimates provided by the credit rating agencies for the CMO structures.

Based on the analysis of its impaired debt securities as of March 31, 2011, the Company determined that none of such securities had other-than-temporary impairment.

Income Tax Expense

Income tax expense for the three months ended March 31, 2011 and 2010 was $1.8 million and $2.8 million, respectively. The Company’s effective tax rate for the three months ended March 31, 2011 and 2010 was 15.2 percent and 21.5 percent, respectively. The primary reason for the low effective rate is the amount of tax-exempt investment income and federal tax credits. The tax-exempt income was $6.8 million and $5.6 million for the three months ended March 31, 2011 and 2010, respectively. The federal tax credit benefits were $418 thousand and $229 thousand for the three ended March 31, 2011 and March 31, 2010, respectively. The Company continues its investments in select municipal securities and various VIEs whereby the Company receives federal tax credits. For additional information on income taxes, see Note 9, Federal and State Income Taxes, in “ITEM 1. Financial Statements.”

Average Balance Sheet

The following schedule provides 1) the total dollar amount of interest and dividend income of the Company for earning assets and the average yield; 2) the total dollar amount of interest expense on interest-bearing liabilities and the average rate; 3) net interest and dividend income and interest rate spread; and 4) net interest margin and

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net interest margin tax-equivalent; and 5) return on average assets and return on average equity. Non-accrual loans are included in the average balance of the loans.

	Three Months ended 03/31/11							Three Months ended 03/31/10
					Average							Average
	Average		Interest &		Yield/			Average		Interest &		Yield/
(Dollars in thousands)	Balance		Dividends		Rate			Balance		Dividends		Rate
Assets
Residential real estate loans	$	601,640		8,716		5.79	%	$	783,177		11,833		6.04	%
Commercial loans		2,411,846		33,058		5.56	%		2,592,529		36,672		5.74	%
Consumer and other loans		702,248		10,450		6.03	%		691,190		10,640		6.24	%
Total loans and loans held for sale		3,715,734		52,224		5.70	%		4,066,896		59,145		5.90	%
Tax-exempt investment securities 1		583,904		6,778		4.64	%		459,764		5,568		4.84	%
Taxable investment securities 2		1,936,316		9,371		1.94	%		1,181,846		8,685		2.94	%
Total earning assets		6,235,954		68,373		4.45	%		5,708,506		73,398		2.21	%
Goodwill and intangibles		156,703							159,851
Non-earning assets		284,631							268,688
Total assets	$	6,677,288						$	6,137,045
Liabilities
NOW accounts	$	748,058		525		0.28	%	$	716,239		733		0.41	%
Savings accounts		374,031		148		0.16	%		331,676		204		0.25	%
Money market demand accounts		878,391		1,106		0.51	%		811,580		1,963		0.98	%
Certificate accounts		1,082,083		4,483		1.68	%		1,072,352		5,411		5.05	%
Wholesale deposits 3		537,008		826		0.62	%		373,167		1,020		1.11	%
FHLB advances		946,997		2,548		1.09	%		802,000		2,311		1.17	%
Securities sold under agreements to repurchase and other borrowed funds		387,060		2,033		2.13	%		507,963		2,242		1.79	%
Total interest bearing liabilities		4,953,628		11,669		0.96	%		4,614,977		13,884		1.22	%
Non-interest bearing deposits		851,900							779,998
Other liabilities		29,436							31,400
Total liabilities		5,834,964							5,426,375
Stockholders’ Equity
Common stock		719							628
Paid-in capital		643,937							513,808
Retained earnings		194,596							193,643
Accumulated other comprehensive income		3,072							2,591
Total stockholders’ equity		842,324							710,670
Total liabilities and stockholders’ equity	$	6,677,288						$	6,137,045
Net Interest Income			$	56,704						$	59,514
Net Interest Spread						3.49	%						3.99	%
Net Interest Margin						3.69	%						4.23	%
Net Interest Margin (tax-equivalent)						3.91	%						4.43	%

1	Excludes tax effect of $3,001,000 and $2,465,000 on tax-exempt investment security income for the three months ended March 31, 2011 and 2010, respectively.
2	Excludes tax effect of $392,000 and $312,000 on investment security tax credits for the three months ended March 31, 2011 and 2010, respectively.
3	Wholesale deposits include brokered deposits classified as NOW,money market demand, and CDs.

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Rate/Volume Analysis

Net interest income can be evaluated from the perspective of relative dollars of change in each period. Interest income and interest expense, which are the components of net interest income, are shown in the following table on the basis of the amount of any increases (or decreases) attributable to changes in the dollar levels of the Company’s interest-earning assets and interest-bearing liabilities (“Volume”) and the yields earned and rates paid on such assets and liabilities (“Rate”). The change in interest income and interest expense attributable to changes in both volume and rates has been allocated proportionately to the change due to volume and the change due to rate.

	Three Months ended March 31,
	2011 vs. 2010
	Increase (Decrease) Due to:
(Dollars in thousands)	Volume			Rate			Net
Interest income
Residential real estate loans	$	(2,743)			(374	)		(3,117	)
Commercial loans		(2,556	)		(1,058	)		(3,614	)
Consumer and other loans		170			(360	)		(190	)
Investment securities		7,629			(5,733	)		1,896
Total interest income		2,500			(7,525	)		(5,025	)
Interest expense
NOW accounts		33			(241	)		(208	)
Savings accounts		26			(81	)		(55	)
Money market demand accounts		162			(1,019	)		(857	)
Certificate accounts		48			(978	)		(930	)
Wholesale deposits		448			(641	)		(193	)
FHLB advances		418			(181	)		237
Repurchase agreements and other borrowed funds		(534	)		325			(209	)
Total interest expense		601			(2,816	)		(2,215	)
Net interest income	$	1,899			(4,709	)		(2,810	)

Liquidity Risk

Liquidity risk is the possibility that the Company will not be able to fund present and future obligations as they come due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost. The objective of liquidity management is to maintain cash flows adequate to meet current and future needs for credit demand, deposit withdrawals, maturing liabilities and corporate operating expenses. Effective liquidity management entails three elements:

1.	Assessing on an ongoing basis, the current and expected future needs for funds, and ensuring that sufficient funds or access to funds exist to meet those needs at the appropriate time.
2.	Providing for an adequate cushion of liquidity to meet unanticipated cash flow needs that may arise from potential adverse circumstances ranging from high probability/low severity events to low probability/high severity.
3.	Balancing the benefits between providing for adequate liquidity to mitigate potential adverse events and the cost of that liquidity.

The Banks’ primary sources of funds are deposits, receipts of principal and interest payments on loans and investment securities, proceeds from sale of loans and securities, short and long-term borrowings. In addition, the Company maintains liquidity capacity through secured and unsecured borrowing programs, brokered

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deposit relationships, and unencumbered securities. The following table identifies certain liquidity sources and capacity available to the Company at March 31, 2011:

	March 31
(Dollars in thousands)	2011
FHLB advances
Borrowing capacity	$	1,103,037
Amount utilized		(960,097	)
Amount available	$	142,940
FRB discount window
Borrowing capacity	$	255,764
Amount utilized		—
Amount available	$	255,764
Unsecured lines of credit available	$	156,760
Unencumbered securities
U.S. government and federal agency	$	—
U.S. government sponsored enterprises		5,054
State and local governments and other stock		809,822
Collateralized debt obligations		7,074
Residential mortgage-backed securities		1,083,080
Total unencumbered securities	$	1,905,030

The Company and each of the bank subsidiaries has a wide range of versatility in managing the liquidity and asset/liability mix across each of the bank subsidiaries as well as the Company as a whole. Asset liability committees (“ALCO”) are maintained at the Parent and bank subsidiary levels with the ALCO committees meeting regularly to assess liquidity risk, among other matters. The Company monitors liquidity and contingency funding alternatives through management reports of liquid assets (e.g., investment securities), both unencumbered and pledged, as well as borrowing capacity, both secured and unsecured.

Capital Resources

Maintaining capital strength continues to be a long-term objective. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital also is a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. Stockholders’ equity increased $1.7 million from year end 2010, or .2 percent, the net result of earnings of $10.3 million, an increase of $1.8 million in unrealized gains on available-for-sale securities, less cash dividend payments of $9.3 million.

The Federal Reserve Board has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. Each bank subsidiary was considered well capitalized by their respective regulator as of March 31, 2011 and December 31, 2010. There are no conditions or events since quarter end that management believes have changed the Company’s or subsidiaries’ risk-based capital category. The following table illustrates the Federal Reserve Board’s capital adequacy guidelines and the Company’s compliance with those guidelines as of March 31, 2011.

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	Tier 1 (Core)		Tier 2 (Total)		Leverage
(Dollars in thousands)	Capital		Capital		Capital
Total stockholders’ equity	$	839,889		839,889		839,889
Less:
Goodwill and intangibles		(154,434)		(154,434)		(154,434)
Net unrealized gain on AFS debt securities		(2,294)		(2,294)		(2,294)
Other adjustments		(80)		(80)		(80)
Plus:
Allowance for loan and lease losses		—		56,541		—
Subordinated debentures		124,500		124,500		124,500
Other adjustments				4
Regulatory capital	$	807,581		864,126		807,581
Risk weighted assets	$	4,438,902		4,438,902
Total adjusted average assets					$	6,522,774
Capital as % of risk weighted assets		18.19%		19.47%		12.38%
Regulatory “well capitalized” requirement		6.00%		10.00%
Excess over “well capitalized” requirement		12.19%		9.47%

Dividend payments were $0.13 per share for the period ended March 31, 2011. The payment of dividends is subject to government regulation in that regulatory authorities may prohibit banks and bank holding companies from paying dividends that would constitute an unsafe or unsound banking practice. Additionally, current guidance from the Federal Reserve provides, among other things, that dividends per share on the Company’s common stock generally should not exceed earnings per share, measured over the previous four fiscal quarters.

In addition to the primary and safeguard liquidity sources available, the Company has the capacity to issue 117,187,500 shares of common stock of which 71,915,073 has been issued as of March 31, 2011. The Company’s capacity to issue additional shares has been demonstrated with the most recent stock issuances in 2010 and 2008, although no assurances can be made that future stock issuances would be as successful. The Company also has the capacity to issue 1,000,000 shares of preferred shares of which none are currently issued.

Short-term borrowings

A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by ALCO such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, FRB borrowings, federal funds purchased, brokered deposits, and wholesale repurchase agreements. FHLB advances and certain other short-term borrowings may be extended as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased costs of funds.

Commitments

In the normal course of business, there are various outstanding commitments to extend credit, such as letters of credit and un-advanced loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. Management does not anticipate any material losses as a result of these transactions. The Company has outstanding debt maturities, the largest aggregate amount of which are FHLB advances.

Effect of inflation and changing prices

Generally accepted accounting principles often require the measurement of financial position and operating results in terms of historical dollars, without consideration for change in relative purchasing power over time

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due to inflation. Virtually all assets of the Company and each bank subsidiary are monetary in nature; therefore, interest rates generally have a more significant impact on a company’s performance than does the effect of inflation.

Impact of Recent Authoritative Accounting Guidance

The Accounting Standards Codification is FASB’s officially recognized source of authoritative U.S. generally accepted accounting principles (“GAAP”) applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative.

In April 2011, FASB issued an amendment to FASB ASC Topic 310, Receivables. The amendments in this Update provide additional guidance or clarification regarding a creditor’s determination of whether a restructuring is a troubled debt restructuring. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must separately conclude that both of the following exist 1) the restructuring constitutes a concession 2) the debtor is experiencing financial difficulties. The amendment provides further guidance as to when the creditor has granted a concession and the debtor is experiencing financial difficulties. The amendments in this Update are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. An entity should disclose the information relating to troubled debt restructurings which was deferred in January 2011 by Accounting Standards Update No. 2011-01, Topic 310, Receivables (Topic 310), for interim and annual periods beginning on or after June 15, 2011. The Company is currently evaluating the impact of the adoption of this amendment, but does not expect it to have a material effect on the Company’s financial position or results of operations.

In December 2010, FASB issued an amendment to FASB ASC Topic 805, Business Combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company has evaluated the impact of the adoption of this amendment and determined there was not a material effect on the Company’s financial position or results of operations.

In December 2010, FASB issued an amendment to FASB ASC Topic 350, Intangibles — Goodwill and Other. The amendments in this Update affect all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. The amendments in this Update modify Step 1 so that for those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company has evaluated the impact of the adoption of this amendment and determined there was not a material effect on the Company’s financial position or results of operations.

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ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

The Company believes that there have not been any material changes in information about the Company’s market risk than was provided in the Form 10-K report for the year ended December 31, 2010.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(c)) as of the date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter 2011, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

There are no pending material legal proceedings to which the registrant or its subsidiaries are a party.

ITEM 1A. Risk Factors

The Company and its eleven independent wholly-owned community bank subsidiaries are exposed to certain risks. The following is a discussion of the most significant risks and uncertainties that may affect the Company’s business, financial condition and future results.

The continued challenging economic environment could have a material adverse effect on the Company’s future results of operations or market price of stock.

The national economy, and the financial services sector in particular, are still facing significant challenges. Substantially all of the Company’s loans are to businesses and individuals in Montana, Idaho, Wyoming, Utah, Colorado and Washington, markets facing many of the same challenges as the national economy, including elevated unemployment and declines in commercial and residential real estate. Although some economic indicators are improving both nationally and in the Company’s markets, unemployment remains high and there remains substantial uncertainty regarding when and how strongly a sustained economic recovery will occur. The inability of borrowers to repay loans can erode earnings by reducing earnings and by requiring the Company to add to its allowance for loan and lease losses. While the Company cannot accurately predict how long these conditions may exist, the economic downturn could continue to present risks for some time for the industry and Company. A further deterioration in economic conditions in the nation as a whole or in the Company’s markets could result in the following consequences, any of which could have an adverse impact,

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which may be material, on the Company’s business, financial condition, results of operations and prospects, and could also cause the market price of the Company’s stock to decline:

• loan delinquencies may increase further;

• problem assets and foreclosures may increase further;

• collateral for loans made may decline further in value, in turn reducing customers’ borrowing power, reducing the value of assets and collateral associated with existing loans and increasing the potential severity of loss in the event of loan defaults;

• demand for banking products and services may decline; and

• low cost or non-interest bearing deposits may decrease.

The allowance for loan and lease losses may not be adequate to cover actual loan losses, which could adversely affect earnings.

The Company maintains an ALLL in an amount that it believes is adequate to provide for losses in the loan portfolio. While the Company strives to carefully manage and monitor credit quality and to identify loans that may become non-performing, at any time there are loans included in the portfolio that will result in losses, but that have not been identified as non-performing or potential problem loans. By closely monitoring credit quality, the Company attempts to identify deteriorating loans before they become non-performing assets and adjust the ALLL accordingly. However, because future events are uncertain, and if the economic downturn continues or deteriorates further, there may be loans that deteriorate to a non-performing status in an accelerated time frame. As a result, future additions to the ALLL may be necessary. Because the loan portfolio contains a number of loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in non-performing loans, requiring an increase to the ALLL. Additionally, future significant additions to the ALLL may be required based on changes in the mix of loans comprising the portfolio, changes in the financial condition of borrowers, which may result from changes in economic conditions, or changes in the assumptions used in determining the ALLL. Additionally, federal banking regulators, as an integral part of their supervisory function, periodically review the Company’s loan portfolio and the adequacy of the ALLL. These regulatory agencies may require the Company to recognize further loan loss provisions or charge-offs based upon their judgments, which may be different from the Company’s judgments. Any increase in the ALLL would have an adverse effect, which could be material, on the Company’s financial condition and results of operations.

The Company has a high concentration of loans secured by real estate, so any further deterioration in the real estate markets could require material increases in ALLL and adversely affect the Company’s financial condition and results of operations.

The Company has a high degree of concentration in loans secured by real estate. A sluggish recovery, or a continuation of the downturn in the economic conditions or real estate values, of the Company’s market areas could adversely impact borrowers’ ability to repay loans secured by real estate and the value of real estate collateral, thereby increasing the credit risk associated with the loan portfolio. The Company’s ability to recover on these loans by selling or disposing of the underlying real estate collateral is adversely impacted by declining real estate values, which increases the likelihood that the Company will suffer losses on defaulted loans secured by real estate beyond the amounts provided for in the ALLL. This, in turn, could require material increases in the ALLL which would adversely affect the Company’s financial condition and results of operations, perhaps materially.

A tightening of the credit markets may make it difficult to obtain adequate funding for loan growth, which could adversely affect earnings.

A tightening of the credit markets and the inability to obtain or retain adequate funds for continued loan growth at an acceptable cost may negatively affect the Company’s asset growth and liquidity position and, therefore, earnings capability. In addition to core deposit growth, maturity of investment securities and loan payments, the Company also relies on alternative funding sources through correspondent banking, and borrowing lines with the FRB and FHLB to fund loans. In the event the current economic downturn continues, particularly in

55

the housing market, these resources could be negatively affected, both as to price and availability, which would limit and or raise the cost of the funds available to the Company.

There can be no assurance the Company will be able to continue paying dividends on the common stock at recent levels.

The ability to pay dividends on the Company’s common stock depends on a variety of factors. The Company paid dividends of $0.13 per share in each quarter of 2010 and the first quarter of 2011. There can be no assurance that the Company will be able to continue paying quarterly dividends commensurate with recent levels. In that regard, the Federal Reserve now is requiring the Company to provide prior written notice and related information for staff review before declaring or paying dividends. In addition, current guidance from the Federal Reserve provides, among other things, that dividends per share generally should not exceed earnings per share. As a result, future dividends will depend on sufficient earnings to support them. Furthermore, the Company’s ability to pay dividends depends on the amount of dividends paid to the Company by its subsidiaries, which is also subject to government regulation, oversight and review. In addition, the ability of some of the bank subsidiaries to pay dividends to the Company is subject to prior regulatory approval.

The Company may not be able to continue to grow organically or through acquisitions.

Historically, the Company has expanded through a combination of organic growth and acquisitions. If market and regulatory conditions remain challenging, the Company may be unable to grow organically or successfully complete potential future acquisitions. In particular, while the Company intends to focus any near-term acquisition efforts on FDIC-assisted transactions within its existing market areas, there can be no assurance that such opportunities will become available on terms that are acceptable to the Company. Furthermore, there can be no assurance that the Company can successfully complete such transactions, since they are subject to a formal bid process and regulatory review and approval.

The FDIC has increased insurance premiums to rebuild and maintain the federal deposit insurance fund and there may be additional future premium increases and special assessments.

In 2009, the FDIC imposed a special deposit insurance assessment of five basis points on all insured institutions, and also required insured institutions to prepay estimated quarterly risk-based assessments through 2012.

The Dodd-Frank Act established 1.35% as the minimum deposit insurance fund reserve ratio. The FDIC has determined that the fund reserve ratio should be 2.0% and has adopted a plan under which it will meet the statutory minimum fund reserve ratio of 1.35% by the statutory deadline of September 30, 2020. The Dodd-Frank Act requires the FDIC to offset the effect on institutions with assets less than $10 billion of the increase in the statutory minimum fund reserve ratio to 1.35% from the former statutory minimum of 1.15%. The FDIC has not announced how it will implement this offset or how larger institutions will be affected by it.

Despite the FDIC’s actions to restore the deposit insurance fund, the fund will suffer additional losses in the future due to failures of insured institutions. There can be no assurance that there will not be additional significant deposit insurance premium increases, special assessments or prepayments in order to restore the insurance fund’s reserve ratio. Any significant premium increases or special assessments could have a material adverse effect on the Company’s financial condition and results of operations.

The Company’s loan portfolio mix increases the exposure to credit risks tied to deteriorating conditions.

The loan portfolio contains a high percentage of commercial, commercial real estate, real estate acquisition and development loans in relation to the total loans and total assets. These types of loans have historically been viewed as having more risk of default than residential real estate loans or certain other types of loans or investments. In fact, the FDIC has issued pronouncements alerting banks of its concern about banks with a heavy concentration of commercial real estate loans. These types of loans also typically are larger than residential real estate loans and other commercial loans. Because the Company’s loan portfolio contains a

56

significant number of commercial and commercial real estate loans with relatively large balances, the deterioration of one or more of these loans may cause a significant increase in non-performing loans. An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for loan losses, or an increase in loan charge-offs, which could have an adverse impact on results of operations and financial condition.

Non-performing assets have increased and could continue to increase, which could adversely affect the Company’s results of operations and financial condition.

Non-performing assets (which include foreclosed real estate) adversely affects the Company’s net income and financial condition in various ways. The Company does not record interest income on non-accrual loans or other real estate owned, thereby adversely affecting its income. When the Company takes collateral in foreclosures and similar proceedings, it is required to mark the related asset to the then fair market value of the collateral, less estimated cost to sell, which may result in a charge-off of the value of the asset and lead the Company to increase the provision for loan losses. An increase in the level of non-performing assets also increases the Company’s risk profile and may impact the capital levels its regulators believe is appropriate in light of such risks. Continued decreases in the value of these assets, or the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond the Company’s control, could adversely affect the Company’s business, results of operations and financial condition, perhaps materially. In addition to the carrying costs to maintain other real estate owned, the resolution of non-performing assets increases the Company’s loan administration costs generally, and requires significant commitments of time from management and the Company’s directors, which reduces the time they have to focus on growing the Company’s business. There can be no assurance that the Company will not experience further increases in non-performing assets in the future.

Decline in the fair value of the Company’s investment portfolio could adversely affect earnings.

The fair value of the Company’s investment securities could decline as a result of factors including changes in market interest rates, credit quality and ratings, lack of market liquidity and other economic conditions. Investment securities are impaired if the fair value of the security is less than the carrying value. When a security is impaired, the Company determines whether impairment is temporary or other-than-temporary. If an impairment is determined to be other-than temporary, an impairment loss is recognized by reducing the amortized cost only for the credit loss associated with an other-than-temporary loss with a corresponding charge to earnings for a like amount. Any such impairment charge would have an adverse effect, which could be material, on the Company’s results of operations and financial condition.

Fluctuating interest rates can adversely affect profitability.

The Company’s profitability is dependent to a large extent upon net interest income, which is the difference (or “spread”) between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings, and other interest-bearing liabilities. Because of the differences in maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities, changes in interest rates do not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Accordingly, fluctuations in interest rates could adversely affect the Company’s interest rate spread, and, in turn, profitability. The Company seeks to manage its interest rate risk within well established guidelines. Generally, the Company seeks an asset and liability structure that insulates net interest income from large deviations attributable to changes in market rates. However, the Company’s structures and practices to manage interest rate risk may not be effective in a highly volatile rate environment.

If the goodwill recorded in connection with acquisitions becomes impaired, it could have an adverse impact on earnings and capital.

Accounting standards require that the Company account for acquisitions using the acquisition method of accounting. Under acquisition accounting, if the purchase price of an acquired company exceeds the fair value of its net assets, the excess is carried on the acquirer’s balance sheet as goodwill. In accordance with generally

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accepted accounting principles in the United States of America, goodwill is not amortized but rather is evaluated for impairment on an annual basis or more frequently if events or circumstances indicate that a potential impairment exists. Although the Company has not incurred an impairment of goodwill, there can be no assurance that future evaluations of goodwill will not result in findings of impairment and write-downs, which could be material. An impairment of goodwill could have a material adverse affect on the Company’s business, financial condition and results of operations. Furthermore, an impairment of goodwill could subject the Company to regulatory limitations, including the ability to pay dividends on common stock.

Growth through future acquisitions could, in some circumstances, adversely affect profitability or other performance measures.

The Company has in recent years acquired other financial institutions. The Company may in the future engage in selected acquisitions of additional financial institutions, including transactions that may receive assistance from the FDIC, although there can be no assurance that the Company will be able to successfully complete any such transactions. There are risks associated with any such acquisitions that could adversely affect profitability and other performance measures. These risks include, among other things, incorrectly assessing the asset quality of a financial institution being acquired, encountering greater than anticipated cost of integrating acquired businesses into the Company’s operations, and being unable to profitably deploy funds acquired in an acquisition. The Company cannot provide any assurance as to the extent to which the Company can continue to grow through acquisitions or the impact of such acquisitions on the Company’s operating results or financial condition.

The Company anticipates that it might issue capital stock in connection with future acquisitions. Acquisitions and related issuances of stock may have a dilutive effect on earnings per share and the percentage ownership of current shareholders.

The Company may pursue additional capital in the future, which could dilute the holders of the Company’s outstanding common stock and may adversely affect the market price of common stock.

In the current economic environment, the Company believes it is prudent to consider alternatives for raising capital when opportunities to raise capital at attractive prices present themselves, in order to further strengthen the Company’s capital and better position itself to take advantage of opportunities that may arise in the future. Such alternatives may include issuance and sale of common or preferred stock, trust preferred securities, or borrowings by the Company, with proceeds contributed to the bank subsidiaries. Any such capital raising alternatives could dilute the holders of the Company’s outstanding common stock, and may adversely affect the market price of the Company’s common stock and performance measures such as earnings per share.

Business would be harmed if the Company lost the services of any of the senior management team.

The Company believes its success to date has been substantially dependent on its Chief Executive Officer and other members of the executive management team, and on the Presidents of its bank subsidiaries. The loss of any of these persons could have an adverse effect on the Company’s business and future growth prospects.

Competition in the Company’s market areas may limit future success.

Commercial banking is a highly competitive business. The Company competes with other commercial banks, savings and loan associations, credit unions, finance, insurance and other non-depository companies operating in its market areas. The Company is subject to substantial competition for loans and deposits from other financial institutions. Some of its competitors are not subject to the same degree of regulation and restriction as the Company. Some of the Company’s competitors have greater financial resources than the Company. If the Company is unable to effectively compete in its market areas, the Company’s business, results of operations and prospects could be adversely affected.

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The Company operates in a highly regulated environment and changes of or increases in, or supervisory enforcement of, banking or other laws and regulations or governmental fiscal or monetary policies could adversely affect the Company.

The Company is subject to extensive regulation, supervision and examination by federal and state banking authorities. In addition, as a publicly-traded company, the Company is subject to regulation by the Securities and Exchange Commission. Any change in applicable regulations or federal, state or local legislation or in policies or interpretations or regulatory approaches to compliance and enforcement, income tax laws and accounting principles could have a substantial impact on the Company and its operations. Changes in laws and regulations may also increase expenses by imposing additional fees or taxes or restrictions on operations. Additional legislation and regulations that could significantly affect powers, authority and operations may be enacted or adopted in the future, which could have a material adverse effect on the Company’s financial condition and results of operations. Failure to appropriately comply with any such laws, regulations or principles could result in sanctions by regulatory agencies or damage to the Company’s reputation, all of which could adversely affect the Company’s business, financial condition or results of operations.

In that regard, sweeping financial regulatory reform legislation was enacted in July 2010. Among other provisions, the new legislation 1) creates a new Bureau of Consumer Financial Protection with broad powers to regulate consumer financial products such as credit cards and mortgages, 2) creates a Financial Stability Oversight Council comprised of the heads of other regulatory agencies, 3) will lead to new capital requirements from federal banking agencies, 4) places new limits on electronic debt card interchange fees, and 5) will require the Securities and Exchange Commission and national stock exchanges to adopt significant new corporate governance and executive compensation reforms. The new legislation and regulations are expected to increase the overall costs of regulatory compliance.

Further, regulators have significant discretion and authority to prevent or remedy unsafe or unsound practices or violations of laws or regulations by financial institutions and holding companies in the performance of their supervisory and enforcement duties. Recently, these powers have been utilized more frequently due to the serious national, regional and local economic conditions the Company is facing. The exercise of regulatory authority may have a negative impact on the Company’s financial condition and results of operations. Additionally, the Company’s business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the Federal Reserve Board.

The Company cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted on the financial markets, on the Company and on its bank subsidiaries. The terms and costs of these activities, or the failure of these actions to help stabilize the financial markets, asset prices, market liquidity and a continuation or worsening of current financial market and economic conditions could materially and adversely affect the Company’s business, financial condition, results of operations, and the trading price of the Company’s common stock.

The Company has various anti-takeover measures that could impede a takeover.

The Company’s articles of incorporation include certain provisions that could make more difficult the acquisition of the Company by means of a tender offer, a proxy contest, merger or otherwise. These provisions include a requirement that any “Business Combination” (as defined in the articles of incorporation) be approved by at least 80 percent of the voting power of the then-outstanding shares, unless it is either approved by the Board of Directors or certain price and procedural requirements are satisfied. In addition, the authorization of preferred stock, which is intended primarily as a financing tool and not as a defensive measure against takeovers, may potentially be used by management to make more difficult uninvited attempts to acquire control of the Company. These provisions may have the affect of lengthening the time required for a person to acquire control of the Company through a tender offer, proxy contest or otherwise, and may deter any potentially unfriendly offers or other efforts to obtain control of the Company. This could deprive the Company’s

59

shareholders of opportunities to realize a premium for their Glacier common stock, even in circumstances where such action is favored by a majority of the Company’s shareholders.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

     (a) Not Applicable

     (b) Not Applicable

     (c) Not Applicable

ITEM 3. Defaults upon Senior Securities

     (a) Not Applicable

     (b) Not Applicable

ITEM 5. Other Information

     (a) Not Applicable

     (b) Not Applicable

ITEM 6. Exhibits

Exhibit 31.1	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes — Oxley Act of 2002
Exhibit 31.2	—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes — Oxley Act of 2002
Exhibit 32	—	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes — Oxley Act of 2002
Exhibit 101	—	The following financial information from Glacier Bancorp, Inc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 is formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GLACIER BANCORP, INC.
May 10, 2011	/s/ Michael J. Blodnick
	Michael J. Blodnick
	President/CEO

May 10, 2011	/s/ Ron J. Copher
	Ron J. Copher
	Senior Vice President/CFO

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Michael J. Blodnick, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2011

/s/ Michael J. Blodnick  

Michael J. Blodnick 

President/CEO 

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Ron J. Copher, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 10, 2011

/s/ Ron J. Copher  

Ron J. Copher 

Senior Vice President/CFO 

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Glacier Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Michael J. Blodnick, President and Chief Executive Officer, and Ron J. Copher, Senior Vice President and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

May 10, 2011

/s/ Michael J. Blodnick  

Michael J. Blodnick 

President/CEO 

/s/ Ron J. Copher  

Ron J. Copher 

Senior Vice President/CFO