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Glacier Bancorp Inc (NASDAQ:GBCI)
Q3 2019 Earnings Call
Oct 18, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Glacier Bancorp Third Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Randy Chesler, President and CEO of Glacier Bancorp. Mr. Chesler, the floor is yours.

Randy Chesler -- President and Chief Executive Officer

All right, thank you, Rusty. Good morning and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Don Cherry, our Chief Administrative Officer; Angela Dose, our Chief Accounting Officer, Barry Johnston, our Chief Credit Officer; Tom Dolan, our Deputy Chief Credit Administrator; and Byron Pollan, our Treasurer. Let me first thank you all for joining us today, and hope you're all enjoying the fall.

Yesterday, we released our third quarter 2019 results. This was a very strong quarter for us with strong net interest margin, excellent deposit growth, steady and improving credit performance and good quality loan growth. As we noted in the last quarter's call, we feel we are very well positioned to navigate through the current interest rate environment. And despite the headwinds in the market for banks, challenging interest rate curve, later innings of a long-term recovery, the Glacier team is strong and we are continuing to build the balance sheet and the Company for the long haul.

Some highlights from the quarter. Earnings were $51.6 million, an increase of $2 million or 5% over the prior-year third quarter, including current period acquisition-related expenses of $2.1 million and $5.4 million of stock compensation expense related to the accelerated vesting of options from the Heritage Bancorp acquisition. Without the acquisition expenses, net income would have been $56.2 million, an increase from the prior-year third quarter of $6.9 million or 14%.

Diluted earnings per share for the quarter were $0.57, a decrease of 2% over the prior year third quarter, but this included the acquisition-related expenses. Organic loan balances increased $84 million or 4% annualized. On a full-year basis, loan balances grew $393 million or 6%. We also had organic core deposit growth of $302 million or 12% annualized. And organic non-interest deposit growth was a very strong $211 million or 26% annualized. This quarter's deposit growth exceeded our expectations.

Net interest margin for the quarter of 4.42% of earning assets increased 9 basis points over the prior quarter, excluding the 2 basis points from discount accretion and 5 basis points from non-accrual interest. The core net interest margin grew 8 basis points in the quarter to 4.35% from 4.27% in the prior quarter and up 17 basis points from 4.18% in the prior-year third quarter. We are very pleased to be one of the few banks in this earning season is to be able to talk about an expanding margin.

Return on assets was 1.55% for the quarter, a 14 basis points decrease over the prior quarter as a result of the acquisition-related expenses that occurred during the quarter. Without those expenses, ROA would have been 1.69% for the quarter. Tangible book value per share at $15.53 at quarter end increased $0.50 a share from the prior quarter and increased $1.90 per share from a year ago. We also declared a regular dividend of $0.29 per share, our 138th consecutive quarterly dividend, which was a 7% increase over the prior quarter.

At the end of July, we successfully closed on the acquisition of Heritage Bancorp in Reno, Nevada. Heritage became our 16th division and our first entrance into Nevada. And we are very excited to welcome the Heritage Bank team to the Glacier team. And then in late September, we also announced the acquisition of State Bank Corp in Lake Havasu, Arizona with total assets of $677 million. State Bank will be combined with our Foothills Bank division and continue its over 20-years legacy of serving Arizona communities. The acquisition, of course, is subject to regulatory approvals and customary conditions of closing and we're expecting to close that late this year or early next year.

Now for a little more color on the quarterly results. Loan production for the first quarter was once again generally well-distributed among all divisions. Loan paydowns were slightly elevated compared with past third quarters. The loan portfolio ended the quarter at $9.5 billion. As a result of the slower third quarter and typically slower fourth quarter, we're anticipating a 6% organic loan growth rate for the year. While we continue to feel very good about our western markets, we've seen an increase in payoffs with customers taking advantage of the strong markets. Liquidity generated from these sales has not been immediately reinvested by sellers at the rate we've seen in the past, due to those sellers being a bit more cautious about making new investments.

In addition, we've seen a small increase in money center banks making larger loans to some of our customers at rates we don't think [Indecipherable] pay for a risk at this point in the cycle. So we're happy with our rate of growth, and we're going to be -- continue to be disciplined in our approach to lending with our eye on the longer term. Total investment securities of $2.6 billion, decreased $28 million or 1% during the quarter and are flat compared to the prior year third quarter. Investment securities represented 20% of total assets at the end of the quarter compared to 23% at the end of the third quarter a year ago.

Once again, our key credit quality ratios improved in almost all categories across the board, reflecting the strength of our loan portfolio. Early stage delinquencies as a percentage of loans at the end of the third quarter were 31 basis points, a decrease of 12 basis points from the prior quarter and flat to the prior third quarter in -- a year ago. Net charge-offs for the quarter were $3.5 million compared to $2.2 million in the third quarter a year ago. This increase in net charge-offs was primarily centered in one loan with a $1.9 million loss resulting from a negotiated short sale.

Non-performing assets as a percentage of subsidiary assets at the end of the quarter were 40 basis points, which is 1 basis point lower than the prior quarter and 21 basis points lower than the prior-year third quarter. At the end of the quarter, the dollar amount of NPAs were $55.1 million, an increase of $3.1 million or 6% from the prior quarter, but the increase was primarily driven by a $2.7 million loan that we expect to resolve early next year. A number of our divisions and division Chief Credit Officers continue to do an excellent job, working through these credits. We think now is the time to be more proactive with the weaker credits and we will continue to do so.

The allowance for loan and lease losses as a percentage of total loans outstanding at the end of this quarter was 1.32%, which is down 14 basis points from the prior quarter and down 31 basis points from the third quarter a year ago. Provision for loan losses was zero in the current and prior quarters. This reflects our continued very positive outlook on our portfolio and our markets. We don't see these one-off loan issues as a trend. Core deposits ended the quarter at $10.7 billion. Total core deposits were organically up 12% annualized or $302 million and increased $287 million or 3% from the quarter a year ago.

Non-interest bearing deposits were organically up $211 million or 26% annualized and increased $280 million or 9% over the prior year's third quarter. We have been focused on growing our share of non-interest deposits for some time now and are really pleased to see the growth trend. Non-interest deposits are now 35% of deposits, up from 32% a year ago. The cost of our core deposits was up slightly from 19 basis points to 21 basis points in the current quarter and up 5 basis points from the prior year's third quarter. We ended the quarter with a loan-to-deposit ratio of 88.71%, down from 90.27% at the end of the prior quarter, resulting from the acquisition and really strong deposit growth.

The total cost of funding for the current quarter was down -- was 39 basis points. This was down from 45 basis points at the end of the prior quarter and 36 basis points at the end of the prior-year third quarter. The decrease was driven by an increase in low-cost deposits that was utilized to pay down high-cost borrowings. Net income for the quarter was $131 million, which was up $11.1 million or 9% from the prior quarter and increased $17.7 million or 16% over the prior-year third quarter. Interest income on commercial loans increased $9.2 million or 10% from the prior quarter and increased $16.6 million or 21% from the prior-year third quarter.

As I noted last quarter, there have been a lot of talk about margin. And now fast forward to this earning season and the conversation about margin is still continuing. Going forward in 2019, we continue to believe we'll see a generally stable core margin, operating in a tight band around current levels. Now the impact on the margin in '20 will depend on the steepness of the interest rate curve at that time. But overall, we feel very well positioned to navigate through this environment.

In early September, the Company implemented balance sheet strategy to increase its net interest income and net interest margin. The strategy included early termination of the Company's $260 million notional pay-fixed interest rate swaps and corresponding debt at 3.73%, along with the sale of $308 million of available-for-sale debt securities. Sale of the investment securities during the quarter resulted in a gain of $13.8 million. Offsetting the gain was a $10 million loss recognized on the early termination of the swaps and a $3.5 million writedown of deferred penalty payments on Federal Home Loan Bank borrowings.

So the net here is, we believe this strategy will mitigate the 5 basis points to 7 basis points of margin headwinds that we talked about for the rest of 2019 on our last quarter's call and continue to provide a bit of support under our margin going forward. Non-interest income for the quarter totaled $43 million. That was up 40% or $12 million from the prior quarter and increased $10.6 million or 33% over the same quarter last year. These increase is primarily attributable to the sale of securities and related to the balance sheet strategy.

Service charges and other fees of $15.1 million decreased $4.9 million or 24% from the prior quarter. And this was due to the decrease in interchange fees as a result of the Durbin Amendment. Notably, gain on sale of loans of $10.4 million increased $2.6 million or 34% over the prior quarter and $3.1 million or 43% over the prior-year third quarter. This was due to increased purchase in refinance activity at very, very strong levels. The Company sold $308 million of securities and recognize the gain of $13.8 million, an increase of $13.7 million from the prior quarter. Other income was down $2.3 million from the prior year's third quarter. And this was a result of a gain of $2.3 million on the sale of a former branch building in the prior-year third quarter.

Non-interest expense for the quarter was $111 million and this increased $24.5 million or 28% from the prior quarter and $27.8 million or 34% over the prior-year third quarter. Compensation and employee benefits increased $10.5 million or 20%. And this was primarily due to the $5.4 million stock comp expense related to the acquisition and -- organic and acquisition growth, which required more employees. Regulatory assessment insurance decreased $1.3 million or 68% from the prior quarter as a result of the $1.3 million of Small Bank Assessment credits applied by the FDIC during the quarter. Other expenses of $29.1 million increased $13.8 million or 91% from the prior quarter. This was driven by the $3.5 million loss on the pay down of Federal Home Loan Bank debt and a $10 million loss on the termination of the cash flow hedges.

Acquisition-related expenses were $2.1 million during the quarter compared to $1.8 million in the prior quarter and $1.3 million a year ago. Tax expense was $12.2 million, a decrease of $356,000 or 3% compared to an increase of $1.4 million or 13% from the prior-year third quarter. Effective tax rate is 19% compared to 18% in the prior-year third quarter. Efficiency ratio impacted by the current quarter unusual events that we've talked about, primarily related to the balance sheet strategy in the acquisition. Excluding those things, the efficiency ratio would have been closer to 54.4%, which keeps us in the range of the 54%, 55% that we've been talking about.

So a lot going on, but we think this third quarter really represents an excellent performance by the Company. In addition to delivering strong operating performance for the quarter, the Company completed the acquisition of Heritage Bank and announced the acquisition of State Bank of Arizona. So our 16 division Presidents and their teams across our eight states now with Nevada as well as our senior staff continue to produce market-leading results and I would like to thank them all for their commitment and their drive to be the best.

So Rusty, that concludes my formal remarks. And I'd now like to turn the call back over to you to open the line for any questions that our analysts may have.

Questions and Answers:

Operator

Sure sir. [Operator Instructions] We have our first question on the line. Jeff Rulis from D.A. Davidson. Your line is open.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Thanks, good morning.

Randy Chesler -- President and Chief Executive Officer

Good morning, Jeff.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Randy, your comments on, I guess, elevated pay downs and perhaps some more aggressive competition kind of moderating that growth outlook a little bit, we've got you're kind of guide for '20 -- or excuse me, for the -- through the end of the year, but how does that bleed into '20 and do you see the paydowns as somewhat temporary? And I guess, the balance of '20, how would you look at growth?

Randy Chesler -- President and Chief Executive Officer

At this point, it looks like a pretty kind of equal segue into '20 at these growth rates. We don't expect a huge change in kind of those factors, but 5% to 6% kind of feels like what '20 is going to look like at this point.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Do you get the sense that just when you're talking to business customers, any softening or any behavioral changes, given macro events that they're sort of pulling in the horns at all? Anything on that front?

Randy Chesler -- President and Chief Executive Officer

No, we talk to our customers a lot across our western states. I think a lot of them remain very confident. I did make a note in my comments just as we see some of our longtime customers experienced in a lot of our markets sell properties, I think they're a little more cautious on making reinvestments and that's part of what's taken our growth rate moderating and slightly, I don't think they have any concerns other than they just want to continue to make good investments and it's getting little harder to find, as the economy has continued to do well over a long period of time.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Got it, OK. And I don't know if Barry John or someone else could tackle it. Just -- do you guys have a CECL update to provide and just thoughts on that and provisioning levels potentially going forward?

Randy Chesler -- President and Chief Executive Officer

You want Barry, you got him.

Barry Johnston -- Chief Credit Administrator

Okay. Good morning, Jeff.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Good morning.

Barry Johnston -- Chief Credit Administrator

We have been running parallel runs since March. We went through about six different runs that we've compared the numbers with, where we're at now, where we're going. Based on what we're seeing, given the fact that there is -- it's still a moving target, the model isn't totally structured yet to the way we want it. Also we have an acquisition coming up with the State Bank of Arizona, that will impact the numbers. And of course there is always the accounting adjustments that impact the numbers, but overall we feel that with CECL implementation, there will be an increase in the reserve from where we project our reserve to be at year end. How big that is? It's still a soft number, so we're just kind of keeping that in our hip pocket until we get closer to year-end when we run the last incurred loss model.

Jeffrey Rulis -- D.A. Davidson -- Analyst

I see. Okay, thanks. And maybe one last one, just the mortgage banking kind of gain on sale, pretty robust obviously, we're -- we'll expect some seasonality, but any thoughts on how that's going quarter-to-date and maybe your thoughts on the out-year as well?

Randy Chesler -- President and Chief Executive Officer

Yes, no, we're very happy, pretty -- very, very strong record quarter for us in terms of the volume, continues to look strong coming into the fourth quarter. So, probably not quite as strong as our third quarter, but pretty good strength across the board. So, we see what we should see, some good -- good strength continue there.

Jeffrey Rulis -- D.A. Davidson -- Analyst

Okay, thank you.

Randy Chesler -- President and Chief Executive Officer

All right, you bet.

Operator

Sir, we have our next question on the line from Matthew Clark from Piper Jaffray. Your line is open.

Randy Chesler -- President and Chief Executive Officer

Good morning, Matthew.

Matthew Clark -- Piper Jaffray -- Analyst

Good morning. Maybe first one just on the securities that were sold this quarter. Can you give us a sense for the kind of the weighted average yield on that portion that was sold just trying to get a sense for what's rolled off relative to what's still on the books?

Ronald Copher -- Chief Financial Officer

Yes, Matt, it's Ron. So, the weighted average yield was basically 2.94%. We sold just some of the longer-dated munis, but very few predominant portion of what we sold was the lower yielding agency securities including some of the agencies that we had from the Heritage acquisition. So in terms of reinvesting that, we're just about halfway done with that and the -- overall, the metrics of the portfolio really haven't changed much. The yield came down maybe 3 basis points when you look at it Q3 over Q2, but in terms of duration weighted average life, it's pretty consistent with what we had at the end of the second quarter. I would also take note that we've built our cash position, so we still got that to hopefully reinvest or even pay down some higher cost deposits we have.

Matthew Clark -- Piper Jaffray -- Analyst

Okay. And then just on deposit costs, have you stabilized pricing at this point? Or do you feel like there's still some upward pressure in terms of exception pricing in deposit rates?

Randy Chesler -- President and Chief Executive Officer

Yes, I would probably say, feel pretty stabilized, we've seen a lot less request for interest rate exceptions. So I think the market has settled down quite a bit. There is still all those -- the one-off kind of circumstance, but generally, Matthew, I'd say it's stabilized quite a bit.

Matthew Clark -- Piper Jaffray -- Analyst

Okay. And then just on charge-offs and credit in general, the $1.9 million loss on the short sale. Is there more clean-up work to be done here, where we might see some lumpy charge-offs or is that process largely complete at this point?

Randy Chesler -- President and Chief Executive Officer

Yes, they are -- we don't see. We don't have a pipeline of credits to work. This one had been in the portfolio for quite a while, had been trouble in the past and we just -- the point I was -- I made in my comments were, we just feel now is the time to get a little more proactive with some of these weaker credits and deal with them and kind of continue to kind of work that through for a number years. We just felt it was a good time to exit it. And I think on a one-off basis, we may see more of those pop up, but we don't -- right now, we don't see a lot of that, but again, our bias [Phonetic] now with a still relatively strong economy is to be proactive with weaker credits. We don't see trends in the portfolio of weakness, but weaker operators are probably the biggest issue right now across the board, so if we see folks that we think can't [Phonetic] carry thus in the distance, we'll be a little bit more proactive.

Matthew Clark -- Piper Jaffray -- Analyst

Okay and then just last one, the operating efficiency ratio of 54.4%. As you kind of work through the budgeting process for next year, are you looking to manage within that range still in the 54% to 55% on an operating basis?

Randy Chesler -- President and Chief Executive Officer

Yes, yes.

Matthew Clark -- Piper Jaffray -- Analyst

Okay, thank you. Thank you.

Randy Chesler -- President and Chief Executive Officer

You're welcome .Rusty?

Operator

Yes, sir. We have our next question from Gordon McGuire from Stephens. Your line is open.

Gordon McGuire -- Stephens Inc -- Analyst

Thank you. Good morning.

Randy Chesler -- President and Chief Executive Officer

Good morning.

Gordon McGuire -- Stephens Inc -- Analyst

So I just wanted to follow up the efficiency question with just how to think about the next quarter expense levels. If I back out, what I would have assumed for the acquisitions on the compensation line, it looks like the core compensation was up about $3 million, which I know you attributed to some new hires, but it just seems a little bit elevated. I'm wondering whether there were some more unusual items or whether this is a decent run rate to look at before cost saves come in?

Randy Chesler -- President and Chief Executive Officer

Yes, no, there were no other unusual items in there and I think you're seeing just the acquisition increases that we brought on with Layton and then with Heritage Bank, pretty close together. So should be a good -- what you have seen now, it should be a pretty good run rate then to -- for the future.

Gordon McGuire -- Stephens Inc -- Analyst

Thanks. And just to clarify the FDIC Small Bank Assessments credits, those are more one-time. So I guess the regulatory expense should move back closer to $2 million a quarter once the remaining credits are applied?

Randy Chesler -- President and Chief Executive Officer

Yes, we don't know when they're going to give us the credits. It's probably going to be over the next couple of quarters, but really it's up to the FDIC and their fund levels. So -- but once that's completed, then that's the end of it.

Gordon McGuire -- Stephens Inc -- Analyst

Got it. And then last one from me on the loan yields. On a core basis, they've been up 4 basis points from the first quarter, but it's just hard for me to see what the underlying impact from the rate environment are, just given the acquisitions, which I think it came over at higher yields. Is there any way you tease that out and help us think about repricing trends over the next few quarters on a kind of a legacy basis?

Randy Chesler -- President and Chief Executive Officer

Let's see. So, if you're looking at the loan yields, they are -- they have done pretty well and we did -- we are getting some lift out of the acquisitions that we brought on both with a little bit higher loan yields. So that's a positive. On the repricing, I don't know, Ron, do you want to comment on that? I think the question about the impact of the repricing?

Ronald Copher -- Chief Financial Officer

Yes. So, the -- we're the -- we have a quite a lot of floor protection. We look at this in the third quarter and in the fourth quarter. So we've got that holding up a lot of what could have repriced. So -- but the new production yields are definitely coming in lower. We are not going to defy gravity, but keep in mind when you look at the margin, you can see that the overall loans went up to 5.23% from 5.20%. So in there, you will see the discount accretion, plus the 5 basis points on non-accrual interest recoveries.

Randy Chesler -- President and Chief Executive Officer

So, yes, I think on the floors, the -- just keep in mind, three quarters of the book has a floor is either fixed or has floor protection and when we look at the fourth quarter, about 90% of the portfolio is protected in some -- one way or the other.

Gordon McGuire -- Stephens Inc -- Analyst

Got it. All right, thank you. That's all I had.

Randy Chesler -- President and Chief Executive Officer

You bet. Rusty, do we have any other questions?

Operator

Yes, sir. We have our next question from Michael Young from SunTrust. Your line is open.

Michael Young -- SunTrust -- Analyst

Hey, everyone. Thanks for the question. Wanted to follow-up first on the loan yields question that was just asked, just on new production. Where the new production yields coming on relative to the back book, just given the 150 basis point drop in five year rate since last year?

Randy Chesler -- President and Chief Executive Officer

Yes. So, we're the -- we have said in the prior quarter call that we thought the loan production yields would come in just north of 5.15%. Actually it's pretty well they came in at just say between 5.05%, 5.10% right in that range. So that held up as well. Again, we think that's a tribute to our floors and we'll still see some of that downward pressure. So, in terms of the back book, there's very little lift and the vintages going back two or three years ago, just given where the five year Federal Home Loan Bank rates are, which we tend to price up the majority of our portfolio.

Michael Young -- SunTrust -- Analyst

Okay. So, essentially you're just getting wider spreads on new production?

Randy Chesler -- President and Chief Executive Officer

Yes. Where we can, yes.

Michael Young -- SunTrust -- Analyst

Okay. And then, also wanted to just follow up on the comments of kind of the slower loan growth with higher payoffs, but it still seems like deposit growth remains very strong. So how are you kind of thinking about that strategically from a mix perspective on the balance sheet? Is that incremental deposit funding going to go into the securities book or how should we think about that?

Randy Chesler -- President and Chief Executive Officer

Yes. No, I think we'd like to see incoming deposits fund loan growth and I think we're seeing that now. So we're happy to have a pretty good balance, but to the extent, now that we have most of the high-cost debt terminated and off the balance sheet, yes, any kind of excess will go toward reinvestment in the portfolio.

Michael Young -- SunTrust -- Analyst

Okay. So we could see some margin compression, a little bit from mix shift, but it would still be NII dollars positive because the balance sheet may grow a little faster than loan growth potentially?

Randy Chesler -- President and Chief Executive Officer

Exactly, yes.

Michael Young -- SunTrust -- Analyst

Okay. And then maybe just a last one kind of clean up question on -- or an update on the State Bank acquisition, just any updates on timing around closing or system conversion?

Randy Chesler -- President and Chief Executive Officer

Yes, we -- closing, we have to go through regulatory approval and that's under way. And, I think late this year or kind of early next year is probably the right timing. If that timing works out, we would look. We have a conversion spot open kind of toward the later end of the first quarter and we generally like to do those acquisitions where we have two banks in the same markets sooner, rather than later, because it's -- when we announced that, we have a lot of customers from both banks going to the new bank and trying to do transactions. So the sooner -- we generally like to do those sooner, rather than later.

Michael Young -- SunTrust -- Analyst

Okay. And one last clean-up question for Ron, just on the tax rate. With the securities restructuring, I don't think it'd be a meaningful adjustment, but any change to the tax rate that we should expect?

Ronald Copher -- Chief Financial Officer

I think we're going to hold at 19%. I've been saying that it would be 20%. It started to move up, but 19% is better. And part of that is, we've been able to do some more tax credits and that's had a pretty good benefit.

Michael Young -- SunTrust -- Analyst

Okay, thanks.

Operator

We have our next question on the line from Andrew Liesch from Sandler O'Neill. Your line is open.

Andrew Liesch -- Sandler O'Neill -- Analyst

Hey, good morning, everyone. You've answered nearly all my questions. Just one quick follow-up though. Just curious if you have the dollar amounts of the loan production and the dollar amounts of the paydowns?

Randy Chesler -- President and Chief Executive Officer

We can give you kind of a high-level number here. So, production was somewhere between $900 million and $1 billion. Payoffs, kind of, between -- right around $900 million, kind of in that ballpark.

Andrew Liesch -- Sandler O'Neill -- Analyst

Got you. Thank you. Yes, like I said, you've covered everything else. Thanks so much.

Randy Chesler -- President and Chief Executive Officer

You bet.

Operator

Our next question comes from the line of Jackie Bohlen from KBW. Your line is open.

Jackie Bohlen -- KBW -- Analyst

Hi, good morning, everyone.

Randy Chesler -- President and Chief Executive Officer

Good morning, Jackie.

Jackie Bohlen -- KBW -- Analyst

Just wondering if you could provide us with an update, given some of the fluctuations in the securities portfolio as to where you're thinking about a target range of securities to assets. Ron, I know you mentioned you're going to be purchasing [Indecipherable] and you're deploying some cash, but just wanted to know where you're thinking about that ratio going forward?

Ronald Copher -- Chief Financial Officer

Don't want to go below the 20%. I could see it going up 21%, no more, just -- so, I think that's the absolute best number I can give you right now, Jackie. I'm truly hoping that excess cash flows into loans, but you've heard the comments.

Jackie Bohlen -- KBW -- Analyst

Okay. So pretty steady from here.

Ronald Copher -- Chief Financial Officer

Yes.

Jackie Bohlen -- KBW -- Analyst

And then, I just wanted to make sure that I understand all the NIM commentary and how those different actions play in with each other. So essentially, the actions that you took in September will have a positive flow through next quarter, because you'll get the full quarter's effect and those will, in essence, offset some of the other pressures from the adverse rate environment to keep the margin fairly flattish. Is that the message?

Randy Chesler -- President and Chief Executive Officer

Exactly right.

Jackie Bohlen -- KBW -- Analyst

Okay, thank you.

Randy Chesler -- President and Chief Executive Officer

You bet.

Jackie Bohlen -- KBW -- Analyst

And then, just one broader one and probably for you, Randy. So you've had an excellent year with M&A just in terms of announcing and closing deals in fairly rapid succession. If you -- you get this most recent one closed, you'll have one closing in 2Q, 3Q and 4Q. How are you feeling about future acquisitions. Is everything -- do you anticipate if that conversion takes place in 1Q to be fully integrated and ready to jump into the next one? Just your updated thoughts on everything.

Randy Chesler -- President and Chief Executive Officer

Yes. No, with this -- so, this was a record year in terms of announced transactions for us with the three transactions, First National Bank and Layton Heritage and now State Bank, close to $2 billion in assets. And the team, I think, has done an incredible job of working on those and closing them and then doing the integration. I think, we continue to have the doors open. We continue to talk to folks. We feel, if there is the right opportunity, that's something we can act on next year, but we're going to continue our disciplined approach to the market and just look for the best, really good banks, good markets, good people. So we -- that may mean another one is on the table, it may mean that we just not are seeing what we like to see. It's just difficult to tell at this point in terms of the quality of the deal flow, but we are -- the team is -- muscle memory on acquisitions is sharp and so I think we'll get through the ones we have and if something very compelling appears, we're going to take a hard look at it.

Jackie Bohlen -- KBW -- Analyst

Okay. And does the implementation of CECL have any effect on how you think about deal announcement timing and closing?

Randy Chesler -- President and Chief Executive Officer

No, we've modeled that out Jackie. We've taken a look at how these would look with CECL. And without and other than the optics of a messy quarter when you make an announcement, it's not going to -- it doesn't change our longer-term strategy and how we feel about acquisitions.

Jackie Bohlen -- KBW -- Analyst

Okay, great, thanks for the color.

Randy Chesler -- President and Chief Executive Officer

You're welcome.

Operator

Our next question comes from the line of Tim Coffey from Janney. Your line is open.

Tim Coffey -- Janney Montgomery -- Analyst

Great, thank you. Good morning, everybody.

Randy Chesler -- President and Chief Executive Officer

Good morning, Tim.

Tim Coffey -- Janney Montgomery -- Analyst

Randy, as we kind of look at your interest-bearing deposits, do you have the opportunity to reprice those in the next quarter? I mean, is it something that the market's providing you an opportunity to do, from a competitive standpoint?

Randy Chesler -- President and Chief Executive Officer

The core deposits I think are pretty stable. I think you saw us, we didn't move a lot when rates went up, didn't move a lot when run rates came back down, and that's kind of our contract with our customers. We're a steady stable, and I don't see really much -- much change there.

Tim Coffey -- Janney Montgomery -- Analyst

Okay. And regards to the loan-to-deposit ratio, is there a level that you want to keep it at, because that looks like it's going to be under pressure a little bit here, at least in this next quarter, but you're going to 2020 and 2021, is there a kind of a bottom level that you would like to kind of be able to stay at?

Randy Chesler -- President and Chief Executive Officer

Well, loan-to-deposit actually improved this quarter with the addition of Heritage, so real happy to see that. It's under 90% and don't see a big change in that going forward. We like kind of the range it's in right now. We'd go higher if we needed to, but probably like to keep it in this, the range it's in right now.

Tim Coffey -- Janney Montgomery -- Analyst

Okay, all right. All the rest of my questions have been answered. Thank you.

Randy Chesler -- President and Chief Executive Officer

You're welcome.

Operator

[Operator Instructions] our next question comes from the line of Matthew Clark from Piper Jaffray. Your line is open.

Matthew Clark -- Piper Jaffray -- Analyst

Hey. Could you just give us the credit mark on the loan portfolio so we could just -- so we could gross up the reserve-to-loan ratio? I think it was $25.9 million last quarter?

Angela Dose -- Chief Accounting Officer

This is Angela and the credit mark for this quarter was $2.9 million.

Matthew Clark -- Piper Jaffray -- Analyst

On the -- with all the acquisitions you've done, it's -- I recall it being around $26 million last quarter?

Angela Dose -- Chief Accounting Officer

Yeah. Oh we want the total discount -- the total discount was $23.6 million, that's what we have left to amortize. During the quarter, with the acquisition of Heritage, the credit mark was $2.9 million, but that portfolio had such great rates, but the net acquired loan discount was minimal. It was only about $8,000 [Phonetic].

Matthew Clark -- Piper Jaffray -- Analyst

Okay. Yes, I was looking for the $23.6 million. Thank you.

Angela Dose -- Chief Accounting Officer

Okay.

Operator

[Operator Instructions] We don't have any more questions. I would like to turn the call over back to Randy Chesler, President and CEO of Glacier Bancorp.

Randy Chesler -- President and Chief Executive Officer

All right, Rusty, thank you, and thank you everybody on the call for dialing in today. Really appreciate you taking the time and we hope you all have a wonderful weekend. Thank you for joining us.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Randy Chesler -- President and Chief Executive Officer

Barry Johnston -- Chief Credit Administrator

Ronald Copher -- Chief Financial Officer

Angela Dose -- Chief Accounting Officer

Jeffrey Rulis -- D.A. Davidson -- Analyst

Matthew Clark -- Piper Jaffray -- Analyst

Gordon McGuire -- Stephens Inc -- Analyst

Michael Young -- SunTrust -- Analyst

Andrew Liesch -- Sandler O'Neill -- Analyst

Jackie Bohlen -- KBW -- Analyst

Tim Coffey -- Janney Montgomery -- Analyst

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