Unassociated Document

KALISPELL, MONTANA - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net earnings of $17.014 million for the fourth quarter, a decrease of $1.132 million, or 6 percent, from the $18.146 million for the fourth quarter of 2007. Diluted earnings per share of $.29 for the quarter decreased 15 percent from the diluted earnings per share of $.34 for the same quarter of 2007. Annualized return on average assets and return on average equity for the fourth quarter were 1.27 percent and 11.02 percent, which compares with prior year returns for the fourth quarter of 1.51 percent and 13.74 percent, respectively.

Net earnings for the year ended December 31, 2008 were $65.657 million, which is a decrease of $2.946 million, or 4 percent, over the prior year. Diluted earnings per share of $1.19 is a decrease of 7 percent from the $1.28 earned in 2007. “While we are disappointed that we did not achieve our earnings goals for the year, we are very proud of the Company’s performance in the most difficult climate in decades,” said Mick Blodnick, President and Chief Executive Officer. “With a national economy that continued to slip at an accelerated pace during the second half of the year, bank earnings came under increasing stress and yet our core operating results continued to be very good. On a pre-tax, pre-provision basis, it was by far our best year ever.”

Included in net earnings for 2008 is a nonrecurring charge of $4.602 million ($7.6 million pre-tax) for other than temporary impairment with respect to investments in Federal Home Loan Mortgage Corporation (“Freddie Mac”) preferred stock and Federal National Mortgage Association (“Fannie Mae”) common stock, a nonrecurring gain of $1.0 million ($1.7 million pre-tax) from the sale and relocation of Mountain West Bank’s office facility in Ketchum, Idaho, and a nonrecurring gain of $150 thousand ($248 thousand pre-tax) from the first quarter sale of Principal Financial Group shares and the mandatory redemption of a portion of Visa, Inc. shares. Included in 2007 net earnings is a nonrecurring $1.0 million gain ($1.6 million pre-tax) from the sale of Western Security Bank’s Lewistown, Montana branch, which was partially offset by approximately $500 thousand of nonrecurring expenses from the merger of three of the acquired Citizens Development Company’s (“CDC”) five subsidiaries into Glacier Bancorp, Inc. subsidiaries.

	December 31,			December 31,			$ change from
	2008			2007			December 31,
Assets ($ in thousands)	(unaudited)			(audited)			2007

Cash on hand and in banks	$	125,123		$	145,697		$	(20,574	)
Investments, interest bearing deposits, FHLB stock, FRB stock, and Fed Funds		1,000,224			782,236			217,988
Loans:
Real estate		838,375			725,854			112,521
Commercial		2,575,828			2,247,303			328,525
Consumer and other		715,990			638,378			77,612
Total loans		4,130,193			3,611,535			518,658
Allowance for loan and lease losses		(76,739	)		(54,413	)		(22,326	)
Total loans net of allowance for loan and lease losses		4,053,454			3,557,122			496,332
Other assets		375,169			332,275			42,894
Total Assets	$	5,553,970		$	4,817,330		$	736,640

At December 31, 2008, total loans were $4.130 billion, an increase of $207 million, or 5 percent over total loans of $3.923 billion at September 30, 2008, with all categories showing increases. The increase in loans for the quarter includes $145 million for Bank of the San Juans as of year end. For the fourth quarter 2008, commercial loans grew the most with an increase of $124 million, or 5 percent, followed by consumer loans, which are primarily comprised of home equity loans, increasing by $69 million, or 9 percent, and real estate loans increased $15 million, or 2 percent. For the year, total loans increased $519 million, or 14 percent, over total loans of $3.612 billion at December 31, 2007. Excluding the loan growth attributable to Bank of the San Juans, the loan portfolio increased organically 10 percent for 2008. During the year, commercial loans grew the most with an increase of $329 million, or 15 percent, followed by real estate loans, which increased $113 million, or 16 percent, and consumer loans, which are primarily comprised of home equity loans, increasing by $78 million, or 12 percent from the fourth quarter of 2007

	December 31,		December 31,		$ change from
	2008		2007		December 31,
Liabilities ($ in thousands)	(unaudited)		(audited)		2007

Non-interest bearing deposits	$	747,439	$	788,087	$	(40,648	)
Interest bearing deposits		2,515,036		2,396,391		118,645
Advances from Federal Home Loan Bank		338,456		538,949		(200,493	)
Securities sold under agreements to
repurchase and other borrowed funds		1,110,731		401,621		709,110
Other liabilities		44,331		45,147		(816	)
Subordinated debentures		121,037		118,559		2,478
Total liabilities	$	4,877,030	$	4,288,754	$	588,276

As of December 31, 2008, non-interest bearing deposits decreased $41 million, or 5 percent, since December 31, 2007, and decreased $7 million, or 1 percent, since September 30, 2008. Interest bearing deposits increased $119 million, or 5 percent for the year, and increased $233 million, or 10 percent, for the quarter. Federal Home Loan Bank (“FHLB”) advances at December 31, 2008 decreased $200 million, or 37 percent, from December 31, 2007 and decreased $389 million, or 53 percent, from September 30, 2008. Repurchase agreements and other borrowed funds were $1.1 billion at December 31, 2008, an increase of $709 million, or 177 percent, from December 31, 2007, and an increase of $421 million, or 61 percent, from September 30, 2008. Included in this latter category are U.S. Treasury Tax and Loan funds of $6 million at December 31, 2008, a decrease of $351 million from September 30, 2008, and a decrease of $215 million from December 31, 2007. Also, included in this category are Federal Reserve Bank discount window borrowings of $914 million at December 31, 2008, an increase of $774 million from September 30, 2008. There were no discount window borrowings at December 31, 2007.

	December 31,			December 31,			$ change from
Stockholders' equity	2008			2007			December 31,
($ in thousands except per share data)	(unaudited)			(audited)			2007

Common equity	$	678,183		$	525,459		$	152,724
Accumulated other comprehensive (loss) income		(1,243	)		3,117			(4,360	)
Total stockholders' equity		676,940			528,576			148,364
Core deposit intangible, net, and goodwill		(159,765	)		(154,264	)		(5,501	)
Tangible stockholders' equity	$	517,175		$	374,312		$	142,863

Stockholders' equity to total assets		12.19	%		10.97	%
Tangible stockholders' equity to total tangible assets		9.59	%		8.03	%
Book value per common share	$	11.04		$	9.85		$	1.19
Tangible book value per common share	$	8.43		$	6.98		$	1.45
Market price per share at end of period	$	19.02		$	18.74		$	0.28

Total stockholders’ equity and book value per share amounts have increased $148 million and $1.19 per share, respectively, from December 31, 2007, the result of earnings retention and exercised stock options, and $94 million in net proceeds from the Company’s November equity offering of 6,325,000 shares of common stock at a price of $15.50 per share. Tangible stockholders equity has increased $143 million, or 38 percent since December 31, 2007, with tangible stockholders’ equity at 9.59 percent of total tangible assets at December 31, 2008, up from 8.03 percent at December 31, 2007. Accumulated other comprehensive income, representing net unrealized gains or losses (net of tax) on investment securities designated as available for sale, decreased $4 million from December 31, 2007. “With our successful common equity raise in the fourth quarter, we have now built our capital to a high level,” Blodnick said. “This strong capital base will give us the ability to take advantage of strategic opportunities as they present themselves in the future.”

Revenue summary
($ in thousands)	Three months ended
	December 31,			September 30,			December 31,
	2008			2008			2007
	(unaudited)			(unaudited)			(unaudited)
Net interest income
Interest income	$	76,707		$	75,689		$	79,117
Interest expense		18,599			22,113			30,918
Net interest income		58,108			53,576			48,199

Non-interest income
Service charges, loan fees, and other fees		11,522			12,800			11,790
Gain on sale of loans		3,195			3,529			3,330
Loss on investments		-			(7,593	)		-
Other income		920			3,018			1,117
Total non-interest income		15,637			11,754			16,237
	$	73,745		$	65,330		$	64,436

Tax equivalent net interest margin		4.81	%		4.65	%		4.52	%

($ in thousands)	$ change from			$ change from			% change from			% change from
	September 30,			December 31,			September 30,			December 31,
	2008			2007			2008			2007
Net interest income
Interest income	$	1,018		$	(2,410	)		1	%		-3	%
Interest expense	$	(3,514	)	$	(12,319	)		-16	%		-40	%
Net interest income		4,532			9,909			8	%		21	%

Non-interest income
Service charges, loan fees, and other fees		(1,278	)		(268	)		-10	%		-2	%
Gain on sale of loans		(334	)		(135	)		-9	%		-4	%
Loss on investments		7,593			-			-100	%		n/m
Other income		(2,098	)		(197	)		-70	%		-18	%
Total non-interest income		3,883			(600	)		33	%		-4	%
	$	8,415		$	9,309			13	%		14	%

Net interest income for the quarter increased $5 million, or 8 percent, from the prior quarter, and increased $10 million, or 21 percent, over the same period in 2007. Interest income for the current quarter increased $1.0 million, or 1 percent, with interest expense decreasing $4 million, or 16 percent, compared to the prior quarter. While total interest income has decreased by $2 million, or 3 percent, from the same period last year, total interest expense has decreased by $12 million, or 40 percent, from the same period last year. The decrease in total interest expense is primarily attributable to rate decreases in interest bearing deposits and lower cost borrowings. The net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.81 percent which is 16 basis points higher than the 4.65 percent achieved for the prior quarter and 29 basis points higher than the 4.52 percent result for the fourth quarter of 2007. “We are pleased with the net interest margin results for the quarter and especially for the year as our banks have maintained discipline in pricing loans while reducing rates paid on interest bearing deposits,” said Ron Copher, Chief Financial Officer.

Non-interest income for the quarter increased $4 million, or 33 percent, from the prior quarter, and decreased $600 thousand, or 4 percent, over the same period in 2007. The Other Income category of non-interest income for the prior quarter includes the $1.7 million gain from the sale and relocation of Mountain West Bank’s office facility in Ketchum, Idaho. Excluding this nonrecurring item and also excluding the nonrecurring $7.6 million other than temporary impairment charge on the Freddie Mac and Fannie Mae stock, non-interest income for the current quarter decreased $2 million from the prior quarter and decreased $600 thousand over the same period in 2007. Fee income decreased $1.3 million, or 10 percent, during the quarter, compared to the decrease of $268 thousand, or 2 percent, over the same period last year. Gain on sale of loans decreased $334 thousand, or 9 percent, for the quarter and decreased $135 thousand, or 4 percent, over the same period last year.

Non-interest expense summary	Three months ended
($ in thousands)	December 31,		September 30,		December 31,
	2008		2008		2007
	(unaudited)		(unaudited)		(unaudited)

Compensation and employee benefits	$	18,775	$	21,188	$	18,684
Occupancy and equipment expense		5,923		5,502		5,042
Advertising and promotion expense		1,675		1,942		1,609
Outsourced data processing		638		556		710
Core deposit intangibles amortization		741		764		786
Other expenses		8,340		7,809		7,633
Total non-interest expense	$	36,092	$	37,761	$	34,464

($ in thousands)	$ change from			$ change from			% change from			% change from
	September 30,			December 31,			September 30,			December 31,
	2008			2007			2008			2007

Compensation and employee benefits	$	(2,413	)	$	91			-11	%		0	%
Occupancy and equipment expense		421			881			8	%		17	%
Advertising and promotion expense		(267	)		66			-14	%		4	%
Outsourced data processing		82			(72	)		15	%		-10	%
Core deposit intangibles amortization		(23	)		(45	)		-3	%		-6	%
Other expenses		531			707			7	%		9	%
Total non-interest expense	$	(1,669	)	$	1,628			-4	%		5	%

Non-interest expense decreased by $1.7 million, or 4 percent, from the prior quarter and increased by $1.6 million, or 5 percent, from the same quarter of 2007. Compensation and employee benefits expense decreased $2.4 million, or 11 percent, over the prior quarter, and increased $91 thousand over the same quarter of 2007. The current quarter decrease in compensation and benefits is attributable to reductions in commissions tied to production, as well as reduction in bonuses and employee benefits tied to Company performance. The number of full-time-equivalent employees has increased from 1,480 to 1,571, a 6 percent increase since December 31, 2007. Occupancy and equipment expense increased $421 thousand, or 8 percent, for the quarter, while other expenses increased $531 thousand, or 7 percent, for the quarter. Occupancy and equipment expense increased $881 thousand, or 17 percent, while other expenses increased $707 thousand, or 9 percent since December 31, 2007. Such increases reflect the addition of Bank of the San Juans in December, cost of facility upgrades, additional branch locations, and other general and administrative costs. Advertising and promotion expense decreased $267 thousand, or 14 percent, from the prior quarter, and increased $66 thousand, or 4 percent, from the same quarter of 2007, such increases attributable to branch promotions and the banks continuing focus on attracting and retaining non-interest bearing and other low cost deposits.

	December 31,			September 30,			December 31,
Credit quality information	2008			2008			2007
($ in thousands)	(unaudited)			(unaudited)			(audited)

Allowance for loan and lease losses	$	76,739		$	65,633		$	54,413

Real estate and other assets owned	$	11,539		$	9,506		$	2,043
Accruing Loans 90 days or more overdue		8,613			4,924			2,685
Non-accrual loans		64,301			56,322			8,560
Total non-performing assets	$	84,453		$	70,752		$	13,288

Allowance for loan and lease losses as a
percentage of non-performing assets		91	%		93	%		409	%

Non-performing assets as a percentage of total bank assets		1.46	%		1.30	%		0.27	%

Allowance for loan and lease losses as a
percentage of total loans		1.86	%		1.67	%		1.51	%

Net charge-offs as a percentage of total loans		0.213	%		0.128	%		0.060	%

Accruing Loans 30-89 days or more overdue	$	54,787		$	25,690		$	45,490

At December 31, 2008, the allowance for loan and lease losses was $76.739 million, an increase of $22 million, or 41 percent, from a year ago. The current quarter provision for loan loss expense was $12.2 million, an increase of $9.3 million from the same quarter in 2007. Charged-off loans for the current quarter exceeded recoveries of previously charged-off loans by $3.7 million. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will determine the level of additional provision expense.

The allowance was 1.86 percent of total loans outstanding at December 31, 2008, up from 1.67 percent at the prior quarter end, and up from 1.51 percent at December 31, 2007. The allowance was 91 percent of non-performing assets at December 31, 2008, down from 93 percent for the prior quarter end and down from 409 percent a year ago. Non-performing assets as a percentage of total bank assets at December 31, 2008 were at 1.46 percent, up from 1.30 percent as of September 30, 2008, and up from .27 percent at December 31, 2007. “Non-performing assets increased in the fourth quarter, but at a slower pace than the previous quarter,” Blodnick said. “However, as the economy continues to weaken we expect credit quality to remain a challenge. Our plan is to continue deploying significant resources in order to maintain and control credit quality at manageable levels.”

Revenue summary
($ in thousands)	Twelve months ended
	December 31,			December 31,			$ change from			% change from
	2008			2007			December 31,			December 31,
	(unaudited)			(audited)			2007			2007
Net interest income
Interest income	$	302,985		$	304,760		$	(1,775	)		-1	%
Interest expense		90,372			121,291		$	(30,919	)		-25	%
Net interest income		212,613			183,469			29,144			16	%

Non-interest income
Service charges, loan fees, and other fees		47,506			45,486			2,020			4	%
Gain on sale of loans		14,849			13,283			1,566			12	%
Loss on sale of investments		(7,345	)		(8	)		(7,337	)		91713	%
Other income		6,024			6,057			(33	)		-1	%
Total non-interest income		61,034			64,818			(3,784	)		-6	%
	$	273,647		$	248,287		$	25,360			10	%

Tax equivalent net interest margin		4.70	%		4.50	%

Net interest income for the current year increased $29 million, or 16 percent, over the same period in 2007. Total interest income decreased $1.8 million, or 1 percent, for the current year, while total interest expense decreased $31 million, or 25 percent, over the same period in 2007. The decrease in interest expense is primarily attributable to the rate decreases on interest bearing deposits and lower cost borrowings. The net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.70 percent, an increase of 20 basis points from the 4.50 percent for the same period in 2007.

Total non-interest income decreased $4 million, or 6 percent in 2008. Excluding the current year nonrecurring items, consisting of the $7.6 million charge for other than temporary impairment on the Freddie Mac and Fannie Mae securities, the $1.7 million gain from the sale and relocation of Mountain West Bank’s branch in Ketchum, Idaho, the first quarter $248 thousand combined gain from the sale of Principal Financial Group stock and mandatory redemption of a portion of Visa, Inc. shares, and also excluding the prior year nonrecurring $1.6 million gain from the first quarter sale of Western Security Bank’s Lewistown, Montana branch, non-interest income for 2008 increased $3.5 million from the same period in 2007. Fee income increased $2 million, or 4 percent, over last year, driven primarily by an increased number of loan and deposit accounts, as well as additional products and service offerings. Gain on sale of loans increased $2 million, or 12 percent, from last year.

Non-interest expense summary	Twelve months ended
($ in thousands)	December 31,		December 31,		$ change from			% change from
	2008		2007		December 31,			December 31,
	(unaudited)		(audited)		2007			2007

Compensation and employee benefits	$	82,027	$	79,070	$	2,957			4	%
Occupancy and equipment expense		21,674		19,152		2,522			13	%
Advertising and promotion expense		6,989		6,306		683			11	%
Outsourced data processing		2,508		2,755		(247	)		-9	%
Core deposit intangibles amortization		3,051		3,202		(151	)		-5	%
Other expenses		29,660		27,432		2,228			8	%
Total non-interest expense	$	145,909	$	137,917	$	7,992			6	%

Non-interest expense increased in 2008 by $8 million, or 6 percent, compared to 2007. Included in 2007 is approximately $500,000 of non-recurring expenses and costs, including overtime, associated with the January 2007 merger of three of the five CDC subsidiaries into Glacier Bancorp, Inc.’s subsidiaries, and related operating system conversions. Compensation and employee benefit expense increased $3 million, or 4 percent, from 2007, such increase attributable to the increase in full-time equivalent employees from 1,480 to 1,571 in 2008. Occupancy and equipment expense increased $3 million, or 13 percent, while other expenses increased $2 million, or 8 percent, since December 31, 2007, reflecting the addition of Bank of the San Juans in December, cost of additional locations and facility upgrades. Advertising and promotion expense increased $683 thousand, or 11 percent, from 2007, due primarily to branch promotions and the banks continuing focus on attracting and retaining non-interest bearing and other low cost deposits.

Glacier Bancorp, Inc. is a regional multi-bank holding company providing commercial banking services in 56 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and conducts its operations principally through eleven community bank subsidiaries. These subsidiaries include six Montana banks: Glacier Bank of Kalispell, First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, First Bank of Montana of Lewistown; as well as Mountain West Bank in Idaho, Utah and Washington; 1st Bank in Wyoming, Citizens Community Bank in Idaho, First National Bank of Morgan in Utah and Bank of the San Juans in Colorado.

This news release includes forward looking statements, which describe management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking and the strength of the local economies in which it operates. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in the Company’s public filings, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on the Company than expected and adversely affect the company’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new banks and/or branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which the Company is engaged.

GLACIER BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands except per share data)	December 31,			December 31,
	2008			2007
	(unaudited)			(audited)
Assets:
Cash on hand and in banks	$	125,123			145,697
Federal funds sold		6,480			135
Interest bearing cash deposits		3,652			81,777

Investment securities, available-for-sale		990,092			700,324

Net loans receivable:
Real estate loans		838,375			725,854
Commercial loans		2,575,828			2,247,303
Consumer and other loans		715,990			638,378
Allowance for loan and lease losses		(76,739	)		(54,413	)
Total loans, net		4,053,454			3,557,122

Premises and equipment, net		133,949			123,749
Real estate and other assets owned, net		11,539			2,043
Accrued interest receivable		28,777			26,168
Deferred tax asset		14,292			-
Core deposit intangible, net		13,013			13,963
Goodwill		146,752			140,301
Other assets		26,847			26,051
Total assets	$	5,553,970			4,817,330

Liabilities and stockholders' equity:
Non-interest bearing deposits	$	747,439			788,087
Interest bearing deposits		2,515,036			2,396,391
Advances from Federal Home Loan Bank		338,456			538,949
Securities sold under agreements to repurchase		188,363			178,041
Federal Reserve Discount Window		914,000			-
U.S. Treasury Tax & Loan		6,067			221,409
Other borrowed funds		2,301			2,171
Accrued interest payable		9,751			13,281
Deferred tax liability		-			481
Subordinated debentures		121,037			118,559
Other liabilities		34,580			31,385
Total liabilities		4,877,030			4,288,754

Preferred shares, $.01 par value per share. 1,000,000 shares authorized
None issued or outstanding		-			-
Common stock, $.01 par value per share. 117,187,500 shares authorized		613			536
Paid-in capital		491,794			374,728
Retained earnings - substantially restricted		185,776			150,195
Accumulated other comprehensive (loss) income		(1,243	)		3,117
Total stockholders' equity		676,940			528,576
Total liabilities and stockholders' equity	$	5,553,970			4,817,330
Number of shares outstanding		61,331,273			53,646,480
Book value of equity per share		11.04			9.85


($ in thousands except per share data)	Three months ended December 31,						Twelve months ended December 31,
	2008			2007			2008			2007
	(unaudited)			(unaudited)			(unaudited)			(audited)
Interest income:
Real estate loans	$	13,374			14,405			51,166			59,664
Commercial loans		40,274			42,443			165,119			157,644
Consumer and other loans		11,861			12,498			47,725			48,105
Investment securities and other		11,198			9,771			38,975			39,347
Total interest income		76,707			79,117			302,985			304,760

Interest expense:
Deposits		12,151			20,673			55,012			81,459
Federal Home Loan Bank advances		2,478			4,778			15,355			18,897
Securities sold under agreements to repurchase		756			1,821			3,823			7,445
Subordinated debentures		1,852			1,884			7,430			7,537
Other borrowed funds		1,362			1,762			8,752			5,953
Total interest expense		18,599			30,918			90,372			121,291

Net interest income		58,108			48,199			212,613			183,469
Provision for loan losses		12,223			2,960			28,480			6,680
Net interest income after provision for loan losses		45,885			45,239			184,133			176,789

Non-interest income:
Service charges and other fees		10,195			10,130			41,550			37,931
Miscellaneous loan fees and charges		1,327			1,660			5,956			7,555
Gain on sale of loans		3,195			3,330			14,849			13,283
Loss on sale of investments		-			-			(7,345	)		(8	)
Other income		920			1,117			6,024			6,057
Total non-interest income		15,637			16,237			61,034			64,818

Non-interest expense:
Compensation, employee benefits
and related expenses		18,775			18,684			82,027			79,070
Occupancy and equipment expense		5,923			5,042			21,674			19,152
Advertising and promotion expense		1,675			1,609			6,989			6,306
Outsourced data processing expense		638			710			2,508			2,755
Core deposit intangibles amortization		741			786			3,051			3,202
Other expenses		8,340			7,633			29,660			27,432
Total non-interest expense		36,092			34,464			145,909			137,917
Earnings before income taxes		25,430			27,012			99,258			103,690

Federal and state income tax expense		8,416			8,866			33,601			35,087
Net earnings	$	17,014			18,146			65,657			68,603

Basic earnings per share		0.30			0.34			1.20			1.29
Diluted earnings per share		0.29			0.34			1.19			1.28
Dividends declared per share		0.13			0.13			0.52			0.50
Return on average assets (annualized)		1.27	%		1.51	%		1.31	%		1.49	%
Return on average equity (annualized)		11.02	%		13.74	%		11.63	%		13.82	%
Average outstanding shares - basic		57,458,743			53,681,922			54,851,145			53,236,489
Average outstanding shares - diluted		57,556,778			54,030,134			55,003,814			53,748,398


AVERAGE BALANCE SHEET	For the three months ended 12-31-08								For the twelve months ended 12-31-08
(Unaudited - $ in Thousands)				Interest		Average						Interest		Average
	Average			and		Yield/			Average			and		Yield/
ASSETS	Balance			Dividends		Rate			Balance			Dividends		Rate
Real Estate Loans	$	784,227			13,374		6.82	%	$	746,135			51,166		6.86	%
Commercial Loans		2,506,404			40,274		6.39	%		2,390,990			165,119		6.91	%
Consumer and Other Loans		701,784			11,861		6.72	%		671,296			47,725		7.11	%
Total Loans		3,992,415			65,509		6.53	%		3,808,421			264,010		6.93	%
Tax -Exempt Investment Securities (1)		355,772			4,354		4.90	%		282,884			13,901		4.91	%
Other Investment Securities		599,559			6,844		4.57	%		555,955			25,074		4.51	%
Total Earning Assets		4,947,746			76,707		6.20	%		4,647,260			302,985		6.52	%
Goodwill and Core Deposit Intangible		151,737								152,822
Other Non-Earning Assets		229,763								229,321
TOTAL ASSETS	$	5,329,246							$	5,029,403

LIABILITIES
AND STOCKHOLDERS' EQUITY
NOW Accounts	$	480,121			682		0.57	%	$	467,374			3,014		0.64	%
Savings Accounts		276,511			429		0.62	%		272,673			1,865		0.68	%
Money Market Accounts		737,401			3,569		1.93	%		760,599			17,234		2.27	%
Certificates of Deposit		886,583			7,471		3.35	%		860,780			32,899		3.82	%
FHLB Advances		671,087			2,478		1.47	%		566,933			15,355		2.71	%
Repurchase Agreements
and Other Borrowed Funds		882,341			3,970		1.79	%		752,958			20,005		2.66	%
Total Interest Bearing Liabilities		3,934,044			18,599		1.88	%		3,681,317			90,372		2.46	%
Non-interest Bearing Deposits		736,449								739,079
Other Liabilities		44,811								44,222
Total Liabilities		4,715,304								4,464,618

Common Stock		575								548
Paid-In Capital		435,007								393,158
Retained Earnings		183,737								171,385
Accumulated Other
Comprehensive (Loss)		(5,377	)							(306	)
Total Stockholders' Equity		613,942								564,785
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	5,329,246							$	5,029,403


Net Interest Income				$	58,108							$	212,613
Net Interest Spread							4.32	%							4.06	%
Net Interest Margin							4.67	%							4.58	%
Net Interest Margin (Tax Equivalent)							4.81	%							4.70	%
Return on Average Assets (annualized)							1.27	%							1.31	%
Return on Average Equity (annualized)							11.02	%							11.63	%

(1)

Excludes tax effect of $6,155 and $1,928 on non-taxable investment security income for the year and quarter ended December 31, 2008, respectively.

FOR IMMEDIATE RELEASE	Contact: Michael J. Blodnick
	(406) 751-4701
	Ron J. Copher
	(406) 751-7706

	Bank of
(Unaudited - $ in thousands)	the San Juans

Total assets	$	157,648
Investments, including FHLB stock	$	1,060
Net loans	$	139,376
Non-interest bearing deposits	$	21,453
Interest bearing deposits	$	97,481

Earnings Summary	Three months						Twelve months
($ in thousands, except per share data)	ended December 31,						ended December 31,
	(unaudited)			(unaudited)			(unaudited)			(audited)
	2008			2007			2008			2007

Net earnings	$	17,014		$	18,146		$	65,657		$	68,603
Diluted earnings per share	$	0.29		$	0.34		$	1.19		$	1.28
Return on average assets (annualized)		1.27	%		1.51	%		1.31	%		1.49	%
Return on average equity (annualized)		11.02	%		13.74	%		11.63	%		13.82	%