Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
FORM 10-Q 
 	 	 	
[X]	 	Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934	
 	 	 	
 	 	For the quarterly period ended March 31, 2003	
 	 	 	
[   ]	 	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) 
 	 	 	
DELAWARE	 	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)	
Registrant’s telephone number, including area code      (406) 756-4200

N/A	 	 	

(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.     Yes [X]     No [  ] 
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes [X]     No [  ] 
The number of shares of Registrant’s common stock outstanding on May 6th, 2003 was 17,516,770. No preferred shares are issued or outstanding. 

TABLE OF CONTENTS
									
		Consolidated Statements of Financial Condition	
		Consolidated Statements of Operations	
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income	
		Consolidated Statements of Cash Flows	
		Notes to Consolidated Financial Statements	
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	
	Item 3. Quantitative and Qualitative Disclosure About Market Risk	
	Item 4. Controls and Procedures	
PART II – OTHER INFORMATION	
	Item 1. Legal Proceedings	
	Item 2. Changes in Securities and Use of Proceeds	
	Item 3. Defaults upon Senior Securities	
	Item 4. Submission of Matters to a Vote of Securities Holders	
	Item 5. Other Information	
	Item 6. Exhibits and Reports on Form 8-K.	
SIGNATURES	
CERTIFICATIONS	
EXHIBIT 99	

Table of Contents
GLACIER BANCORP, INC.
Quarterly Report on Form 10-Q 
Index 
 	 	 	 	 	 	 	
 	 	 	 	Page #	
 	 	 	 		
Part I.	Financial Information	 	 	 	 	
 	Item 1 – Financial Statements	 	 	 	 	
 	 	Consolidated Statements of Financial Condition – March 31, 2003, December 31, 2002 and March 31, 2002 (unaudited)	 	 	3	 	
 	 	Consolidated Statements of Operations – Three months ended March 31, 2003 and 2002 (unaudited)	 	 	4	 	
 	 	Consolidated Statements of Stockholders’ Equity and Comprehensive Income – Year ended December 31, 2002 and three months ended March 31, 2003 (unaudited)	 	 	5	 	
 	 	Consolidated Statements of Cash Flows – Three months ended March 31, 2003 and 2002 (unaudited)	 	 	6	 	
 	 	Notes to Consolidated Financial Statements (unaudited)	 	 	7	 	
 	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	18	 	
 	Item 3 – Quantitative and Qualitative Disclosure about Market Risk	 	 	22	 	
 	Item 4 – Controls and Procedures	 	 	23	 	
Part II.	Other Information	 	 	23	 	
 	Item 1 – Legal Proceedings	 	 	23	 	
 	Item 2 – Changes in Securities and Use of Proceeds	 	 	23	 	
 	Item 3 – Defaults Upon Senior Securities	 	 	23	 	
 	Item 4 – Submission of Matters to a Vote of Security Holders	 	 	24	 	
 	Item 5 – Other Information	 	 	24	 	
 	Item 6 – Exhibits and Reports on Form 8-K	 	 	24	 	
 	Signatures	 	 	24	 	
 	Certifications	 	 	25	 	

Table of Contents
Glacier Bancorp, Inc. 
Consolidated Statements of Financial Condition 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	March 31,	 	December 31,	 	March 31,	
(Unaudited - dollars in thousands, except per share data)	 	2003	 	2002	 	2002	
	 		 		 		
 	 	 	 	 	 	 	 	 	 	 	 	 	(Restated - See note 2)	
Assets:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash on hand and in banks	 	$	71,092	 	 	 	74,624	 	 	 	62,677	 	
 	Interest bearing cash deposits	 	 	15,536	 	 	 	4,753	 	 	 	14,565	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	Cash and cash equivalents	 	 	86,628	 	 	 	79,377	 	 	 	77,242	 	
 	 	 	 		 	 	 		 	 	 		 	
 	Investments:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Investment securities, available-for-sale	 	 	258,545	 	 	 	260,606	 	 	 	187,031	 	
 	 	Mortgage backed securities, available-for-sale	 	 	525,352	 	 	 	479,355	 	 	 	378,841	 	
 	 	Federal Home Loan Bank and Federal Reserve Bank stock, at cost	 	 	43,975	 	 	 	42,864	 	 	 	38,038	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	 	Total investments	 	 	827,872	 	 	 	782,825	 	 	 	603,910	 	
 	 	 	 		 	 	 		 	 	 		 	
 	Net loans receivable:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	 	323,311	 	 	 	361,522	 	 	 	387,659	 	
 	 	Commercial Loans	 	 	704,751	 	 	 	673,256	 	 	 	625,287	 	
 	 	Consumer and other loans	 	 	284,804	 	 	 	286,819	 	 	 	290,317	 	
 	 	Allowance for loan losses	 	 	(21,627	)	 	 	(20,944	)	 	 	(19,498	)	
 	 	 	 		 	 	 		 	 	 		 	
 	 	 	Total loans, net	 	 	1,291,239	 	 	 	1,300,653	 	 	 	1,283,765	 	
 	 	 	 		 	 	 		 	 	 		 	
 	Premises and equipment, net	 	 	48,436	 	 	 	47,215	 	 	 	48,898	 	
 	Real estate and other assets owned, net	 	 	1,077	 	 	 	1,542	 	 	 	921	 	
 	Accrued interest receivable	 	 	12,403	 	 	 	13,421	 	 	 	12,489	 	
 	Core deposit intangible, net	 	 	6,484	 	 	 	6,822	 	 	 	7,900	 	
 	Goodwill, net	 	 	33,189	 	 	 	33,189	 	 	 	33,736	 	
 	Other assets	 	 	15,178	 	 	 	16,300	 	 	 	14,943	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	$	2,322,506	 	 	 	2,281,344	 	 	 	2,083,804	 	
 	 	 	 		 	 	 		 	 	 		 	
Liabilities and stockholders’ equity:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Non-interest bearing deposits	 	$	307,659	 	 	 	295,016	 	 	 	238,243	 	
 	Interest bearing deposits	 	 	1,168,443	 	 	 	1,164,907	 	 	 	1,188,634	 	
 	Advances from Federal Home Loan Bank of Seattle	 	 	500,425	 	 	 	483,660	 	 	 	373,985	 	
 	Securities sold under agreements to repurchase	 	 	59,518	 	 	 	46,206	 	 	 	31,823	 	
 	Other borrowed funds	 	 	2,357	 	 	 	15,087	 	 	 	8,146	 	
 	Accrued interest payable	 	 	5,425	 	 	 	6,090	 	 	 	7,313	 	
 	Current income taxes	 	 	3,818	 	 	 	815	 	 	 	3,752	 	
 	Deferred tax liability	 	 	7,839	 	 	 	8,629	 	 	 	1,449	 	
 	Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	
 	Other liabilities	 	 	12,244	 	 	 	13,685	 	 	 	12,804	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	Total liabilities	 	 	2,102,728	 	 	 	2,069,095	 	 	 	1,901,149	 	
 	 	 	 		 	 	 		 	 	 		 	
 	Preferred shares, 1,000,000 shares authorized. None outstanding	 	 	—	 	 	 	—	 	 	 	—	 	
 	Common stock, $.01 par value per share. 50,000,000 shares authorized	 	 	175	 	 	 	173	 	 	 	171	 	
 	Paid-in capital	 	 	176,560	 	 	 	173,408	 	 	 	169,386	 	
 	Retained earnings - substantially restricted	 	 	34,244	 	 	 	28,557	 	 	 	11,848	 	
 	Accumulated other comprehensive income	 	 	8,799	 	 	 	10,111	 	 	 	1,250	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	Total stockholders’ equity	 	 	219,778	 	 	 	212,249	 	 	 	182,655	 	
 	 	 	 		 	 	 		 	 	 		 	
 	 	$	2,322,506	 	 	 	2,281,344	 	 	 	2,083,804	 	
 	 	 	 		 	 	 		 	 	 		 	
 	Number of shares outstanding	 	 	17,495,616	 	 	 	17,285,818	 	 	 	17,074,413	 	
 	Book value per share	 	$	12.56	 	 	 	12.28	 	 	 	10.70	 	
 	Tangible book value per share	 	$	10.29	 	 	 	9.96	 	 	 	8.26	 	
See accompanying notes to consolidated financial statements 
3 

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Glacier Bancorp, Inc. 
Consolidated Statements of Operations 
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Three months ended March 31,	
 	 	 	 		
(unaudited - dollars in thousands, except per share data)	 	2003	 	2002	
	 		 		
 	 	 	 	 	 	 	 	(Restated - See note 2)	
Interest income:	 	 	 	 	 	 	 	 	
 	Real estate loans	 	$	6,252	 	 	 	7,838	 	
 	Commercial loans	 	 	11,617	 	 	 	11,432	 	
 	Consumer and other loans	 	 	5,102	 	 	 	5,813	 	
 	Investment securities and other	 	 	8,637	 	 	 	7,995	 	
 	 	 	 		 	 	 		 	
 	 	Total interest income	 	 	31,608	 	 	 	33,078	 	
 	 	 	 		 	 	 		 	
Interest expense:	 	 	 	 	 	 	 	 	
 	Deposits	 	 	4,947	 	 	 	7,442	 	
 	Federal Home Loan Bank of Seattle Advances	 	 	4,212	 	 	 	4,185	 	
 	Securities sold under agreements to repurchase	 	 	158	 	 	 	156	 	
 	Trust preferred securities	 	 	904	 	 	 	904	 	
 	Other borrowed funds	 	 	9	 	 	 	24	 	
 	 	 	 		 	 	 		 	
 	 	Total interest expense	 	 	10,230	 	 	 	12,711	 	
 	 	 	 		 	 	 		 	
Net interest income	 	 	21,378	 	 	 	20,367	 	
 	Provision for loan losses	 	 	841	 	 	 	1,300	 	
 	 	 	 		 	 	 		 	
 	 	Net interest income after provision for loan losses	 	 	20,537	 	 	 	19,067	 	
 	 	 	 		 	 	 		 	
Non-interest income:	 	 	 	 	 	 	 	 	
 	Service charges and other fees	 	 	3,589	 	 	 	3,163	 	
 	Miscellaneous loan fees and charges	 	 	1,057	 	 	 	987	 	
 	Gains on sale of loans	 	 	2,244	 	 	 	1,097	 	
 	Gains on sale of investments, net	 	 	17	 	 	 	—	 	
 	Other income	 	 	560	 	 	 	602	 	
 	 	 	 		 	 	 		 	
 	 	Total non-interest income	 	 	7,467	 	 	 	5,849	 	
 	 	 	 		 	 	 		 	
Non-interest expense:	 	 	 	 	 	 	 	 	
 	Compensation, employee benefits and related expenses	 	 	7,979	 	 	 	7,782	 	
 	Occupancy and equipment expense	 	 	2,435	 	 	 	2,301	 	
 	Outsourced data processing expense	 	 	562	 	 	 	446	 	
 	Core deposit intangibles amortization	 	 	338	 	 	 	361	 	
 	Other expenses	 	 	3,569	 	 	 	3,475	 	
 	 	 	 		 	 	 		 	
 	 	Total non-interest expense	 	 	14,883	 	 	 	14,365	 	
 	 	 	 		 	 	 		 	
Earnings before income taxes	 	 	13,121	 	 	 	10,551	 	
 	Federal and state income tax expense	 	 	4,273	 	 	 	3,654	 	
 	 	 	 		 	 	 		 	
Net earnings	 	$	8,848	 	 	 	6,897	 	
 	 	 	 		 	 	 		 	
Basic earnings per share	 	$	0.51	 	 	 	0.41	 	
Diluted earnings per share	 	$	0.50	 	 	 	0.40	 	
Dividends declared per share	 	$	0.18	 	 	 	0.16	 	
Return on average assets (annualized)	 	 	1.58	%	 	 	1.33	%	
Return on average equity (annualized)	 	 	16.41	%	 	 	15.09	%	
Return on tangible average equity (annualized)	 	 	20.08	%	 	 	19.63	%	
Average outstanding shares - basic	 	 	17,413,423	 	 	 	17,014,148	 	
Average outstanding shares - diluted	 	 	17,652,805	 	 	 	17,298,634	 	
See accompanying notes to consolidated financial statements. 
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Glacier Bancorp, Inc. 
Consolidated Statements of Stockholders’ Equity
and Comprehensive Income
Year ended December 31, 2002 and Three months ended March 31, 2003 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Retained	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	earnings	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(accumulated	 	Accumulated	 	Total	
 	 	 	Common Stock	 	 	 	 	 	deficit)	 	other comp-	 	stock-	
 	 	 		 	Paid-in	 	substantially	 	rehensive	 	holders’	
(Unaudited - dollars in thousands, except per share data)	 	Shares	 	Amount	 	capital	 	restricted	 	income	 	equity	
	 		 		 		 		 		 		
Balance at December 31, 2001	 	 	16,874,422	 	 	$	169	 	 	 	167,371	 	 	 	7,687	 	 	 	1,756	 	 	 	176,983	 	
Comprehensive income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net earnings	 	 	—	 	 	 	—	 	 	 	—	 	 	 	32,402	 	 	 	—	 	 	 	32,402	 	
 	Unrealized gain on securities, net of reclassification adjustment	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8,355	 	 	 	8,355	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Total comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	40,757	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Cash dividends declared ($.67 per share)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(11,532	)	 	 	—	 	 	 	(11,532	)	
Stock options exercised	 	 	411,396	 	 	 	4	 	 	 	4,957	 	 	 	—	 	 	 	—	 	 	 	4,961	 	
Tax benefit from stock related compensation	 	 	—	 	 	 	—	 	 	 	1,080	 	 	 	—	 	 	 	—	 	 	 	1,080	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Balance at December 31, 2002	 	 	17,285,818	 	 	$	173	 	 	 	173,408	 	 	 	28,557	 	 	 	10,111	 	 	 	212,249	 	
Comprehensive income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net earnings	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8,848	 	 	 	—	 	 	 	8,848	 	
 	Unrealized loss on securities, net of reclassification adjustment	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(1,312	)	 	 	(1,312	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Total comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,536	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Cash dividends declared ($.18 per share)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(3,161	)	 	 	—	 	 	 	(3,161	)	
Stock options exercised	 	 	209,798	 	 	 	2	 	 	 	3,152	 	 	 	—	 	 	 	—	 	 	 	3,154	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Balance at March 31, 2003	 	 	17,495,616	 	 	$	175	 	 	 	176,560	 	 	 	34,244	 	 	 	8,799	 	 	 	219,778	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
See accompanying notes to consolidated financial statements 
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Table of Contents
Glacier Bancorp, Inc. 
Consolidated Statements of Cash Flows 
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	Three months ended March 31,	
 	 	 	 	 		
(Unaudited - dollars in thousands)	 	2003	 	2002	
	 		 		
 	 	 	 	 	 	 	 	 	(Restated - See note 2)	
OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	
 	Net cash provided by operating activities	 	$	31,575	 	 	 	35,128	 	
INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	
 	Proceeds from sales, maturities and prepayments of investments available-for-sale	 	 	48,770	 	 	 	48,112	 	
 	Purchases of investments available-for-sale	 	 	(97,982	)	 	 	(107,544	)	
 	Principal collected on installment and commercial loans	 	 	149,045	 	 	 	139,176	 	
 	Installment and commercial loans originated or acquired	 	 	(178,524	)	 	 	(150,780	)	
 	Principal collections on mortgage loans	 	 	67,195	 	 	 	62,097	 	
 	Mortgage loans originated or acquired	 	 	(43,620	)	 	 	(39,642	)	
 	Net purchase of FHLB and FRB stock	 	 	(475	)	 	 	(541	)	
 	Net (addition) disposal of premises and equipment	 	 	(2,252	)	 	 	704	 	
 	 	 		 	 	 		 	
 	 	NET CASH USED IN INVESTING ACTIVITIES	 	 	(57,843	)	 	 	(48,418	)	
 	 	 		 	 	 		 	
FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	
 	Net increase (decrease) in deposits	 	 	16,179	 	 	 	(19,188	)	
 	Net increase in FHLB advances and other borrowed funds	 	 	4,035	 	 	 	13,775	 	
 	Net increase (decrease) in securities sold under repurchase agreements	 	 	13,312	 	 	 	(762	)	
 	Cash dividends paid to stockholders	 	 	(3,161	)	 	 	(2,736	)	
 	Proceeds from exercise of stock options	 	 	3,154	 	 	 	2,017	 	
 	 	 		 	 	 		 	
 	 	NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	 	 	33,519	 	 	 	(6,894	)	
 	 	 		 	 	 		 	
 	 	NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	 	 	7,251	 	 	 	(20,184	)	
 	CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	 	79,377	 	 	 	97,426	 	
 	 	 		 	 	 		 	
 	CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	86,628	 	 	 	77,242	 	
 	 	 		 	 	 		 	
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION	 	 	 	 	 	 	 	 	
 	Cash paid (received) during the period for:	Interest	 	$	10,896	 	 	 	14,577	 	
 	 	 	Income taxes	 	$	(354	)	 	 	—	 	
See accompanying notes to consolidated financial statements. 
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Table of Contents
Notes to Consolidated Financial Statements 
1)	 	Basis of Presentation:	
 		
 	 	In the opinion of management, the accompanying unaudited 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, 2003, December 31, 2002, and March 31, 2002, stockholders’ equity for the three months ended March 31, 2003 and the year ended December 31, 2002, the results of operations for the three months ended March 31, 2003 and 2002, and cash flows for the three months ended March 31, 2003 and 2002.	
 		
 	 	The accompanying 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 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, 2002. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results anticipated for the year ending December 31, 2003. Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.	
 		
2)	 	Restatement of Prior Period Earnings	
 		
 	 	In October 2002, the Financial Accounting Standards Board (“FASB”) issued Statement 147, Acquisitions of Certain Other Intangible Assets, an amendment of Statement 72 and 144 and FASB Interpretations 9. Under the provisions of Statement 147, the acquisition of all or part of a financial institution that meets the definition of a business combination will be accounted for by the purchase method in accordance with FASB Statement 141, Business Combinations. Statement 147 provides that long-term customer relationships intangible assets, except for servicing assets, recognized in the acquisition of financial institution, be evaluated for impairment under provisions of Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets.	
 		
 	 	The Company has evaluated the goodwill recognized in connection with its branch acquisitions and determined that it meets the criteria of Statement 147, and therefore the unidentifiable intangible asset has been reclassified to goodwill and is subject to Statement 142, Goodwill and Other Intangible Assets. The reclassification was retroactively applied to January 1, 2002, which resulted in the restatement of previously filed financial statements. The impact for the three months ended March 31, 2002, was to increase net earnings by $149,000 and basic and diluted earnings per share by $.01.	
 		
3)	 	Organizational Structure:	
 		
 	 	The Company, headquartered in Kalispell, Montana, is a Delaware corporation incorporated in 1990, pursuant to the reorganization of Glacier Bank, FSB into a bank holding company. The Company is the parent company for nine wholly owned subsidiaries: Glacier Bank (“Glacier”), First Security Bank of Missoula (“First Security”), Western Security Bank (“Western”), Big Sky Western Bank (“Big Sky”), Valley Bank of Helena (“Valley”), Glacier Bank of Whitefish (“Whitefish”), Community First, Inc. (“CFI”), and Glacier Capital Trust I (“Glacier Trust”), all located in Montana, and Mountain West Bank (“Mountain West”) which is located in Idaho and Utah. The Company does not have any off-balance sheet entities.	
 		
 	 	CFI provides full service brokerage services through Raymond James Financial Services, Inc.	
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 	 	The following abbreviated organizational chart illustrates the various relationships:	
 
4)	 	Ratios:	
 		
 	 	Returns on average assets and average equity were calculated based on daily averages.	
 		
5)	 	Cash Dividend Declared:	
 		
 	 	On March 14, 2003, the Board of Directors declared a $.18 per share quarterly cash dividend to stockholders of record on April 8, 2003, payable on April 17, 2003.	
 		
6)	 	Computation of 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 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	 	Three	
 	 	months ended	 	months ended	
 	 	March 31, 2003	 	March 31, 2002	
 	 		 		
Net earnings available to common stockholders	 	$	8,848,098	 	 	 	6,896,831	 	
Average outstanding shares - basic	 	 	17,413,423	 	 	 	17,014,148	 	
Add: Dilutive stock options	 	 	239,382	 	 	 	284,486	 	
 	 	 		 	 	 		 	
Average outstanding shares - diluted	 	 	17,652,805	 	 	 	17,298,634	 	
 	 	 		 	 	 		 	
Basic earnings per share	 	$	0.51	 	 	 	0.41	 	
 	 	 		 	 	 		 	
Diluted earnings per share	 	$	0.50	 	 	 	0.40	 	
 	 	 		 	 	 		 	
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7)	 	Investments:	
 		
 	 	A comparison of the amortized cost and estimated fair value of the Company’s investment securities, available for sale, is as follows.	
INVESTMENTS AS OF MARCH 31, 2003 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Estimated	
 	 	 	 	Weighted	 	Amortized	 	Gross Unrealized	 	Fair	
(Dollars in thousands)	 	Yield	 	Cost	 	Gains	 	Losses	 	Value	
	 		 		 		 		 		
U.S. Government and Federal Agencies	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing after ten years	 	 	3.17	%	 	 	1,039	 	 	 	10	 	 	 	(2	)	 	 	1,047	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	3.17	%	 	 	1,039	 	 	 	10	 	 	 	(2	)	 	 	1,047	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
State and Local Governments and other issues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing within one year	 	 	5.86	%	 	 	5,162	 	 	 	119	 	 	 	—	 	 	 	5,281	 	
 	maturing one year through five years	 	 	4.54	%	 	 	5,994	 	 	 	111	 	 	 	(97	)	 	 	6,008	 	
 	maturing five years through ten years	 	 	5.40	%	 	 	3,066	 	 	 	116	 	 	 	—	 	 	 	3,182	 	
 	maturing after ten years	 	 	5.38	%	 	 	235,851	 	 	 	7,959	 	 	 	(783	)	 	 	243,027	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	5.37	%	 	 	250,073	 	 	 	8,305	 	 	 	(880	)	 	 	257,498	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Mortgage-Backed Securities	 	 	5.48	%	 	 	69,580	 	 	 	2,412	 	 	 	(2	)	 	 	71,990	 	
Real Estate Mortgage Investment Conduits	 	 	3.97	%	 	 	448,646	 	 	 	5,370	 	 	 	(654	)	 	 	453,362	 	
FHLB and FRB stock, at cost	 	 	6.17	%	 	 	43,975	 	 	 	—	 	 	 	—	 	 	 	43,975	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Investments	 	 	4.65	%	 	$	813,313	 	 	 	16,097	 	 	 	(1,538	)	 	 	827,872	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
INVESTMENTS AS OF DECEMBER 31, 2002 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Estimated	
 	 	 	 	Weighted	 	Amortized	 	Gross Unrealized	 	Fair	
(Dollars in thousands)	 	Yield	 	Cost	 	Gains	 	Losses	 	Value	
	 		 		 		 		 		
U.S. Government and Federal Agencies	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing after ten years	 	 	3.45	%	 	$	1,086	 	 	 	10	 	 	 	(2	)	 	 	1,094	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	3.45	%	 	 	1,086	 	 	 	10	 	 	 	(2	)	 	 	1,094	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
State and Local Governments and other issues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing within one year	 	 	5.81	%	 	 	3,144	 	 	 	53	 	 	 	—	 	 	 	3,197	 	
 	maturing one year through five years	 	 	5.20	%	 	 	10,037	 	 	 	227	 	 	 	(98	)	 	 	10,166	 	
 	maturing five years through ten years	 	 	5.44	%	 	 	2,457	 	 	 	101	 	 	 	—	 	 	 	2,558	 	
 	maturing after ten years	 	 	5.44	%	 	 	236,620	 	 	 	8,046	 	 	 	(1,075	)	 	 	243,591	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	5.43	%	 	 	252,258	 	 	 	8,427	 	 	 	(1,173	)	 	 	259,512	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Mortgage-Backed Securities	 	 	5.39	%	 	 	81,043	 	 	 	2,440	 	 	 	(82	)	 	 	83,401	 	
Real Estate Mortgage Investment Conduits	 	 	4.63	%	 	 	388,927	 	 	 	7,208	 	 	 	(181	)	 	 	395,954	 	
FHLB and FRB stock, at cost	 	 	6.17	%	 	 	42,864	 	 	 	—	 	 	 	—	 	 	 	42,864	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Investments	 	 	5.06	%	 	$	766,178	 	 	 	18,085	 	 	 	(1,438	)	 	 	782,825	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Interest income includes tax-exempt interest for the three months ended March 31, 2003 and 2002 of $2,590,000 and $1,489,000, respectively.	
 		
 	 	Gross proceeds from sales of investment securities for the three months ended March 31, 2003 and 2002 were $2,031,000, and $0, respectively, resulting in gross gains of approximately $17,000, and $0, respectively. The cost of any investment sold is determined by specific identification.	
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8)	 	Loans	
 	 	 	The following table summarizes the Company’s loan portfolio. The loans mature or are repriced at various times.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	At	 	At	
 	 	03/31/03	 	12/31/2002	
TYPE OF LOAN	 		 		
(Dollars in Thousands)	 	Amount	 	Percent	 	Amount	 	Percent	
Real Estate Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Residential first mortgage loans	 	$	286,379	 	 	 	22.2	%	 	$	310,205	 	 	 	23.8	%	
 	Loans held for sale	 	 	37,509	 	 	 	2.9	%	 	 	51,987	 	 	 	4.0	%	
 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	     Total	 	 	323,888	 	 	 	25.1	%	 	 	362,192	 	 	 	27.8	%	
Commercial Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	427,420	 	 	 	33.1	%	 	 	397,803	 	 	 	30.6	%	
 	Other commercial loans	 	 	278,544	 	 	 	21.6	%	 	 	276,675	 	 	 	21.3	%	
 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	     Total	 	 	705,964	 	 	 	54.7	%	 	 	674,478	 	 	 	51.9	%	
Installment and Other Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Consumer loans	 	 	106,158	 	 	 	8.2	%	 	 	112,893	 	 	 	8.7	%	
 	Home equity loans	 	 	178,728	 	 	 	13.8	%	 	 	174,033	 	 	 	13.4	%	
 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	     Total	 	 	284,886	 	 	 	22.0	%	 	 	286,926	 	 	 	22.1	%	
 	Net deferred loan fees, premiums and discounts	 	 	(1,872	)	 	 	-0.1	%	 	 	(1,999	)	 	 	-0.2	%	
 	Allowance for Losses	 	 	(21,627	)	 	 	-1.7	%	 	 	(20,944	)	 	 	-1.6	%	
 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Net Loans	 	$	1,291,239	 	 	 	100.0	%	 	$	1,300,653	 	 	 	100.0	%	
 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	The following table sets forth information regarding the Company’s non-performing assets at the dates indicated:	
 	 	 	 	 	 	 	 	 	 	 	 	
NONPERFORMING ASSETS	 	At	 	At	
(Dollars in Thousands)	 	3/31/2003	 	12/31/2002	
 	 		 		
Non-accrual loans:	 	 	 	 	 	 	 	 	
 	 	Mortgage loans	 	$	2,341	 	 	 	2,476	 	
 	 	Commercial loans	 	 	5,283	 	 	 	5,157	 	
 	 	Consumer loans	 	 	416	 	 	 	409	 	
 	 	 	 	 		 	 	 		 	
 	 	 	Total	 	$	8,040	 	 	 	8,042	 	
Accruing Loans 90 days or more overdue:	 	 	 	 	 	 	 	 	
 	 	Mortgage loans	 	 	140	 	 	 	846	 	
 	 	Commercial loans	 	 	654	 	 	 	968	 	
 	 	Consumer loans	 	 	116	 	 	 	184	 	
 	 	 	 	 		 	 	 		 	
 	 	 	Total	 	$	910	 	 	 	1,998	 	
Real estate and other assets owned, net	 	 	1,076	 	 	 	1,542	 	
 	 	 	 	 		 	 	 		 	
Total non-performing loans, and real estate and other assets owned, net	 	$	10,026	 	 	 	11,582	 	
 	 	 	 	 		 	 	 		 	
 	As a percentage of total assets	 	 	0.43	%	 	 	0.51	%	
Interest Income (1)	 	$	140	 	 	 	596	 	
(1)	 	This is the amount of interest that would have been recorded on loans accounted for on a non-performing basis for the three months ended March 31, 2003 and the year ended December 31, 2002, if such loans had been current for the entire period.	
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 	 	 	The following table illustrates the loan loss experience:	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Three months ended	 	Year ended	
ALLOWANCE FOR LOAN LOSS	 	March 31,	 	December 31,	
(Dollars in Thousands)	 	2003	 	2002	
 	 		 		
Balance at beginning of period	 	$	20,944	 	 	 	18,654	 	
 	Charge offs:	 	 	 	 	 	 	 	 	
 	 	Residential real estate	 	 	(124	)	 	 	(887	)	
 	 	Commercial loans	 	 	(32	)	 	 	(2,522	)	
 	 	Consumer loans	 	 	(227	)	 	 	(1,328	)	
 	 	 		 	 	 		 	
 	 	 	 	Total charge offs	 	$	(383	)	 	 	(4,737	)	
 	 	 		 	 	 		 	
 	Recoveries:	 	 	 	 	 	 	 	 	
 	 	Residential real estate	 	 	61	 	 	 	276	 	
 	 	Commercial loans	 	 	79	 	 	 	326	 	
 	 	Consumer loans	 	 	85	 	 	 	680	 	
 	 	 		 	 	 		 	
 	 	 	 	Total recoveries	 	$	225	 	 	 	1,282	 	
 	 	 		 	 	 		 	
 	Chargeoffs, net of recoveries	 	 	(158	)	 	 	(3,455	)	
 	Provision	 	 	841	 	 	 	5,745	 	
 	 	 		 	 	 		 	
Balance at end of period	 	$	21,627	 	 	 	20,944	 	
 	 	 		 	 	 		 	
Ratio of net charge offs to average loans outstanding during the period	 	 	0.01	%	 	 	0.26	%	
 	 	 	The following table summarizes the allocation of the allowance for loan losses:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	March 31, 2003	 	December 31, 2002	
 	 	 		 		
 	 	 	 	 	 	 	Percent	 	 	 	 	 	Percent	
 	 	 	 	 	 	of loans in	 	 	 	 	 	of loans in	
(Dollars in thousands)	 	Allowance	 	category	 	Allowance	 	category	
	 		 		 		 		
Residential first mortgage	 	$	2,029	 	 	 	24.6	%	 	 	2,334	 	 	 	27.4	%	
Commercial real estate	 	 	7,170	 	 	 	32.5	%	 	 	7,088	 	 	 	30.1	%	
Other commercial	 	 	8,023	 	 	 	21.2	%	 	 	7,670	 	 	 	20.9	%	
Consumer	 	 	4,405	 	 	 	21.7	%	 	 	3,852	 	 	 	21.6	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	21,627	 	 	 	100.0	%	 	 	20,944	 	 	 	100.0	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
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9)	 	Intangible Assets	
 	 	 	The following table sets forth information regarding the Company’s core deposit intangibles and mortgage servicing rights as of March 31, 2003:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Core Deposit	 	Mortgage	 	 	 	 	
(Dollars in thousands)	 	Intangible	 	Servicing Rights (1)	 	Total	
	 		 		 		
 	Gross carrying value	 	$	9,836	 	 	 	 	 	 	 	 	 	
 	Accumulated Amortization	 	 	(3,352	)	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	
 	Net carrying value	 	$	6,484	 	 	 	1,833	 	 	 	8,317	 	
 	 	 		 	 	 	 	 	 	 	 	 	
Weighted-Average amortization period	 	 	 	 	 	 	 	 	 	 	 	 	
 	(Period in years)	 	 	10.0	 	 	 	8.6	 	 	 	9.7	 	
Aggregate Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 	
 	For the three months ended March 31, 2003	 	$	338	 	 	 	167	 	 	 	505	 	
 	For the three months ended March 31, 2002	 	$	361	 	 	 	91	 	 	 	452	 	
Estimated Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 	
 	For the year ended December 31, 2003	 	$	1,219	 	 	 	323	 	 	 	1,542	 	
 	For the year ended December 31, 2004	 	 	1,011	 	 	 	307	 	 	 	1,318	 	
 	For the year ended December 31, 2005	 	 	847	 	 	 	292	 	 	 	1,139	 	
 	For the year ended December 31, 2006	 	 	779	 	 	 	276	 	 	 	1,055	 	
 	For the year ended December 31, 2007	 	 	766	 	 	 	260	 	 	 	1,026	 	
(1)	 	The mortgage servicing rights are included in other assets and the gross carrying value and accumulated amortization are not readily available	
10)	 	Deposits	
 	 	 	The following table illustrates the amounts outstanding for deposits greater than $100,000 at March 31, 2003, according to the time remaining to maturity:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Certificates	 	Demand	 	 	 	 	
(Dollars in thousands)	 	of Deposit	 	Deposits	 	Totals	
	 		 		 		
Within three months	 	$	17,286	 	 	 	401,730	 	 	 	419,016	 	
Three to six months	 	 	24,087	 	 	 	—	 	 	 	24,087	 	
Seven to twelve months	 	 	13,159	 	 	 	—	 	 	 	13,159	 	
Over twelve months	 	 	22,324	 	 	 	—	 	 	 	22,324	 	
 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	76,856	 	 	 	401,730	 	 	 	478,586	 	
 	 	 		 	 	 		 	 	 		 	
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11)	 	Advances and Other Borrowings	
 	 	 	The following chart illustrates the average balances and the maximum outstanding month-end balances for Federal Home Loan Bank of Seattle (FHLB) advances and repurchase agreements:	
 	 	 	 	 	 	 	 	 	 	
 	 	 	As of and	 	As of and	
 	 	 	for the three	 	for the twelve	
 	 	 	months ended	 	months ended	
(Dollars in thousands)	 	March 31, 2003	 	December 31, 2002	
 	 		 		
FHLB Advances	 	 	 	 	 	 	 	 	
 	Amount outstanding at end of period	 	$	500,425	 	 	 	483,660	 	
 	Average balance	 	$	490,510	 	 	 	409,168	 	
 	Maximum outstanding at any month-end	 	$	500,425	 	 	 	483,660	 	
 	Weighted average interest rate	 	 	3.48	%	 	 	4.15	%	
Repurchase Agreements:	 	 	 	 	 	 	 	 	
 	Amount outstanding at end of period	 	$	59,518	 	 	 	46,206	 	
 	Average balance	 	$	55,849	 	 	 	35,479	 	
 	Maximum outstanding at any month-end	 	$	59,518	 	 	 	46,206	 	
 	Weighted average interest rate	 	 	1.15	%	 	 	1.46	%	
12)	 	Stockholders’ Equity:	
 	 	 	The Federal Reserve Board has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. The following table illustrates the Federal Reserve Board’s capital adequacy guidelines and the Company’s compliance with those guidelines as of March 31, 2003:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CONSOLIDATED	 	 	 	 	 	 	
	 	Tier 1 (Core)	 	Tier 2 (Total)	 	Leverage	
(Dollars in thousands)	 	Capital	 	Capital	 	Capital	
	 		 		 		
GAAP Capital	 	$	219,778	 	 	 	219,778	 	 	 	219,778	 	
Less: Goodwill and intangibles	 	 	(39,673	)	 	 	(39,673	)	 	 	(39,673	)	
 	Accumulated other comprehensive gain on AFS securities	 	 	(8,799	)	 	 	(8,799	)	 	 	(8,799	)	
Plus: Allowance for loan losses	 	 	—	 	 	 	19,289	 	 	 	—	 	
 	Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	
 	Other adjustments	 	 	—	 	 	 	144	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	
Regulatory capital computed	 	$	206,306	 	 	 	225,739	 	 	 	206,306	 	
 	 	 		 	 	 		 	 	 		 	
Risk weighted assets	 	$	1,543,129	 	 	 	1,543,129	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	
Total average assets	 	 	 	 	 	 	 	 	 	$	2,222,750	 	
 	 	 	 	 	 	 	 	 	 	 		 	
Capital as % of defined assets	 	 	13.37	%	 	 	14.63	%	 	 	9.28	%	
Regulatory “well capitalized” requirement	 	 	6.00	%	 	 	10.00	%	 	 	5.00	%	
 	 	 		 	 	 		 	 	 		 	
Excess over “well capitalized” requirement	 	 	7.37	%	 	 	4.63	%	 	 	4.28	%	
 	 	 		 	 	 		 	 	 		 	
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13)	 	Comprehensive Earnings:	
 		
 	 	The Company’s only component of other comprehensive earnings is the unrealized gains and losses on available-for-sale securities.	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	For the three months	
 	 	ended March 31,	
Dollars in thousands	 	2003	 	2002	
	 		 		
Net earnings	 	$	8,848	 	 	 	6,897	 	
Unrealized holding loss arising during the period	 	 	(2,119	)	 	 	(834	)	
Tax benefit	 	 	797	 	 	 	328	 	
 	 	 		 	 	 		 	
 	Net after tax	 	 	(1,322	)	 	 	(506	)	
Reclassification adjustment for gains included in net income	 	 	17	 	 	 	—	 	
Tax expense	 	 	(7	)	 	 	—	 	
 	 	 		 	 	 		 	
 	Net after tax	 	 	10	 	 	 	—	 	
 	Net unrealized loss on securities	 	 	(1,312	)	 	 	(506	)	
 	 	 		 	 	 		 	
 	 	Total comprehensive earnings	 	$	7,536	 	 	 	6,391	 	
 	 	 		 	 	 		 	
14)	 	Stock Based Compensation	
 	 	 	The exercise price of all options granted has been equal to the fair market value of the underlying stock at the date of grant and, accordingly, no compensation cost has been recognized for its stock options in the financial statements. Had the company determined compensation cost based on the fair value of the option itself at the grant date for its stock options under FASB Statement 123, Accounting for Stock-Based Compensation, the Company’s net income would have been reduced to the pro forma amounts indicated below:	
 	 	 	 	 	 	 	 	 	 	
 	 	 	Three months ended March 31,	
 	 	 		
 	 	 	2003	 	2002	
 	 	 		 		
Net earnings (in thousands):    	As reported	 	$	8,848	 	 	 	6,897	 	
 	Compensation cost	 	 	(187	)	 	 	(144	)	
 	 	 		 	 	 		 	
 	Pro forma	 	 	8,661	 	 	 	6,753	 	
 	 	 		 	 	 		 	
Basic earnings per share:  	As reported	 	 	0.51	 	 	 	0.41	 	
 	Compensation cost	 	 	(0.01	)	 	 	(0.01	)	
 	 	 		 	 	 		 	
 	Pro forma	 	 	0.50	 	 	 	0.40	 	
 	 	 		 	 	 		 	
Diluted earnings per share:  	As reported	 	 	0.50	 	 	 	0.40	 	
 	Compensation cost	 	 	(0.01	)	 	 	(0.01	)	
 	 	 		 	 	 		 	
 	Pro forma	 	 	0.49	 	 	 	0.39	 	
 	 	 		 	 	 		 	
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15)	 	Segment Information	
 	 	 	The Company evaluates segment performance internally based on individual bank charters, and thus the operating segments are so defined. The following schedule provides selected financial data for the Company’s operating segments. Centrally provided services to the Banks are allocated based on estimated usage of those services. The operating segment identified as “Other” includes the Parent, non-bank units, and eliminations of transactions between segments.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Three months ended and as of March 31, 2003	
 	 	 	 		
 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	9,080	 	 	 	8,360	 	 	 	6,162	 	 	 	7,056	 	 	 	3,094	 	
Intersegment revenues	 	 	51	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Expenses	 	 	6,539	 	 	 	5,961	 	 	 	4,846	 	 	 	5,730	 	 	 	2,374	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	2,592	 	 	 	2,399	 	 	 	1,316	 	 	 	1,326	 	 	 	720	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Assets	$	507,853	 	 	 	490,927	 	 	 	404,824	 	 	 	412,816	 	 	 	186,439	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 	 		 		 		 		
Revenues from external customers	 	 	3,246	 	 	 	2,017	 	 	 	60	 	 	 	39,075	 	
Intersegment revenues	 	 	33	 	 	 	—	 	 	 	11,158	 	 	 	11,242	 	
Expenses	 	 	2,566	 	 	 	1,502	 	 	 	709	 	 	 	30,227	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(11,242	)	 	 	(11,242	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	 	713	 	 	 	515	 	 	 	(733	)	 	 	8,848	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Assets	 	 	187,375	 	 	 	134,972	 	 	 	(2,700	)	 	 	2,322,506	 	

 	 	 	 	Three months ended and as of March 31, 2002	
 	 	 	 		
 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	9,157	 	 	 	8,482	 	 	 	6,852	 	 	 	5,950	 	 	 	3,219	 	
Intersegment revenues	 	 	101	 	 	 	7	 	 	 	6	 	 	 	—	 	 	 	—	 	
Expenses	 	 	6,970	 	 	 	6,620	 	 	 	5,662	 	 	 	5,200	 	 	 	2,608	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	2,288	 	 	 	1,869	 	 	 	1,196	 	 	 	750	 	 	 	611	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Assets	$	476,844	 	 	 	434,346	 	 	 	392,493	 	 	 	346,081	 	 	 	166,766	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 	 		 		 		 		
Revenues from external customers	 	 	3,147	 	 	 	2,055	 	 	 	65	 	 	 	38,927	 	
Intersegment revenues	 	 	19	 	 	 	—	 	 	 	8,873	 	 	 	9,006	 	
Expenses	 	 	2,616	 	 	 	1,594	 	 	 	760	 	 	 	32,030	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(9,006	)	 	 	(9,006	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	 	550	 	 	 	461	 	 	 	(828	)	 	 	6,897	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Assets	 	 	165,601	 	 	 	117,891	 	 	 	(16,218	)	 	 	2,083,804	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
15 

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16)	 	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,	
 	 	 	 	2003 vs. 2002	
 	 	 	 	Increase (Decrease) due to:	
 	 		
(Dollars in Thousands)	 	Volume	 	Rate	 	Net	
 	 		 		 		
Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	
Real Estate Loans	 	$	(1,287	)	 	 	(299	)	 	 	(1,586	)	
Commercial Loans	 	 	1,252	 	 	 	(1,067	)	 	 	185	 	
Consumer and Other Loans	 	 	(166	)	 	 	(545	)	 	 	(711	)	
Investment Securities	 	 	2,802	 	 	 	(2,160	)	 	 	642	 	
 	 	 		 	 	 		 	 	 		 	
 	 	Total Interest Income	 	 	2,601	 	 	 	(4,071	)	 	 	(1,470	)	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
NOW Accounts	 	 	4	 	 	 	(101	)	 	 	(97	)	
Savings Accounts	 	 	13	 	 	 	(100	)	 	 	(87	)	
Money Market Accounts	 	 	145	 	 	 	(684	)	 	 	(539	)	
Certificates of Deposit	 	 	(580	)	 	 	(1,192	)	 	 	(1,772	)	
FHLB Advances	 	 	1,388	 	 	 	(1,361	)	 	 	27	 	
Other Borrowings and	 	 	 	 	 	 	 	 	 	 	 	 	
 	Repurchase Agreements	 	 	257	 	 	 	(270	)	 	 	(13	)	
 	 	 		 	 	 		 	 	 		 	
 	 	Total Interest Expense	 	 	1,227	 	 	 	(3,708	)	 	 	(2,481	)	
 	 	 		 	 	 		 	 	 		 	
Net Interest Income	 	$	1,374	 	 	 	(363	)	 	 	1,011	 	
 	 	 		 	 	 		 	 	 		 	
16 

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17)	 	Average Balance Sheet	
 	 	 	The following schedule provides (i) the total dollar amount of interest and dividend income of the Company for earning assets and the resultant average yield; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rate; (iii) net interest and dividend income; (iv) interest rate spread; and (v) net interest margin. Non-accrual loans are included in the average balance of the loans.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Three months ended 3-31-03	 	For the Three months ended 3-31-02	
 	 		 		
 	 	 	 	 	 	Interest	 	Average	 	 	 	 	 	Interest	 	Average	
AVERAGE BALANCE SHEET	 	Average	 	and	 	Yield/	 	Average	 	and	 	Yield/	
(Dollars in Thousands)	 	Balance	 	Dividends	 	Rate	 	Balance	 	Dividends	 	Rate	
 	 		 		 		 		 		 		
ASSETS	 	 	 	 	
 	Real Estate Loans	 	$	336,018	 	 	 	6,252	 	 	 	7.44	%	 	$	402,041	 	 	 	7,838	 	 	 	7.80	%	
 	Commercial Loans	 	 	687,118	 	 	 	11,617	 	 	 	6.86	%	 	 	619,317	 	 	 	11,432	 	 	 	7.49	%	
 	Consumer and Other Loans	 	 	283,807	 	 	 	5,102	 	 	 	7.29	%	 	 	292,149	 	 	 	5,813	 	 	 	8.07	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Loans	 	 	1,306,943	 	 	 	22,971	 	 	 	7.13	%	 	 	1,313,507	 	 	 	25,083	 	 	 	7.74	%	
 	Tax -Exempt Investment Securities (1)	 	 	204,221	 	 	 	2,590	 	 	 	5.07	%	 	 	114,455	 	 	 	1,489	 	 	 	5.21	%	
 	Investment Securities	 	 	593,105	 	 	 	6,047	 	 	 	4.08	%	 	 	475,975	 	 	 	6,506	 	 	 	5.47	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Earning Assets	 	 	2,104,269	 	 	 	31,608	 	 	 	6.01	%	 	 	1,903,937	 	 	 	33,078	 	 	 	6.95	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Non-Earning Assets	 	 	165,927	 	 	 	 	 	 	 	 	 	 	 	165,708	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL ASSETS	 	$	2,270,196	 	 	 	 	 	 	 	 	 	 	$	2,069,645	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	NOW Accounts	 	$	206,086	 	 	 	119	 	 	 	0.23	%	 	$	201,484	 	 	 	215	 	 	 	0.43	%	
 	Savings Accounts	 	 	129,495	 	 	 	152	 	 	 	0.48	%	 	 	123,398	 	 	 	242	 	 	 	0.79	%	
 	Money Market Accounts	 	 	360,443	 	 	 	1,175	 	 	 	1.32	%	 	 	332,262	 	 	 	1,713	 	 	 	2.09	%	
 	Certificates of Deposit	 	 	467,744	 	 	 	3,501	 	 	 	3.04	%	 	 	525,475	 	 	 	5,272	 	 	 	4.07	%	
 	FHLB Advances	 	 	490,510	 	 	 	4,212	 	 	 	3.48	%	 	 	368,352	 	 	 	4,185	 	 	 	4.61	%	
 	Repurchase Agreements and Other Borrowed Funds	 	 	94,863	 	 	 	1,071	 	 	 	4.58	%	 	 	76,621	 	 	 	1,084	 	 	 	5.73	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Interest Bearing Liabilities	 	 	1,749,141	 	 	 	10,230	 	 	 	2.37	%	 	 	1,627,592	 	 	 	12,711	 	 	 	3.17	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	 	Non-interest Bearing Deposits	 	 	274,226	 	 	 	 	 	 	 	 	 	 	 	228,533	 	 	 	 	 	 	 	 	 	
 	 	Other Liabilities	 	 	28,203	 	 	 	 	 	 	 	 	 	 	 	30,646	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Liabilities	 	 	2,051,570	 	 	 	 	 	 	 	 	 	 	 	1,886,771	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Common Stock	 	 	174	 	 	 	 	 	 	 	 	 	 	 	170	 	 	 	 	 	 	 	 	 	
 	Paid-In Capital	 	 	175,070	 	 	 	 	 	 	 	 	 	 	 	167,750	 	 	 	 	 	 	 	 	 	
 	Retained Earnings	 	 	32,616	 	 	 	 	 	 	 	 	 	 	 	11,461	 	 	 	 	 	 	 	 	 	
 	Accumulated Other	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Comprehensive Earnings	 	 	10,766	 	 	 	 	 	 	 	 	 	 	 	3,493	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Stockholders’ Equity	 	 	218,626	 	 	 	 	 	 	 	 	 	 	 	182,874	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	 	$	2,270,196	 	 	 	 	 	 	 	 	 	 	$	2,069,645	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Net Interest Income	 	 	 	 	 	$	21,378	 	 	 	 	 	 	 	 	 	 	$	20,367	 	 	 	 	 	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Net Interest Spread	 	 	 	 	 	 	 	 	 	 	3.64	%	 	 	 	 	 	 	 	 	 	 	3.78	%	
 	Net Interest Margin on average earning assets	 	 	 	 	 	 	 	 	 	 	4.12	%	 	 	 	 	 	 	 	 	 	 	4.28	%	
 	Return on Average Assets	 	 	 	 	 	 	 	 	 	 	1.58	%	 	 	 	 	 	 	 	 	 	 	1.33	%	
 	Return on Average Equity	 	 	 	 	 	 	 	 	 	 	16.41	%	 	 	 	 	 	 	 	 	 	 	15.09	%	
(1)	 	Excludes tax effect on non-taxable investment security income	
17 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
Financial Condition 
This section discusses the changes in Statement of Financial Condition items from March 31, 2002 and December 31, 2002, to March 31, 2003. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	 	March 31,	 	December 31,	 	March 31,	 	December 31,	 	March 31,	
Assets ($ in thousands)	 	2003	 	2002	 	2002	 	2002	 	2002	
 	 		 		 		 		 		
Cash on hand and in banks	 	$	71,092	 	 	 	74,624	 	 	 	62,677	 	 	 	(3,532	)	 	 	8,415	 	
Investment securities and interest bearing deposits	 	 	843,408	 	 	 	787,578	 	 	 	618,475	 	 	 	55,830	 	 	 	224,933	 	
Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	323,311	 	 	 	361,522	 	 	 	387,659	 	 	 	(38,211	)	 	 	(64,348	)	
 	Commercial	 	 	704,751	 	 	 	673,256	 	 	 	625,287	 	 	 	31,495	 	 	 	79,464	 	
 	Consumer	 	 	284,804	 	 	 	286,819	 	 	 	290,317	 	 	 	(2,015	)	 	 	(5,513	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans	 	 	1,312,866	 	 	 	1,321,597	 	 	 	1,303,263	 	 	 	(8,731	)	 	 	9,603	 	
 	Allowance for loan losses	 	 	(21,627	)	 	 	(20,944	)	 	 	(19,498	)	 	 	(683	)	 	 	(2,129	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans net of allowance for loan losses	 	 	1,291,239	 	 	 	1,300,653	 	 	 	1,283,765	 	 	 	(9,414	)	 	 	7,474	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Other assets	 	 	116,767	 	 	 	118,489	 	 	 	118,887	 	 	 	(1,722	)	 	 	(2,120	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	2,322,506	 	 	 	2,281,344	 	 	 	2,083,804	 	 	 	41,162	 	 	 	238,702	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
At March 31, 2003 total assets were $2.323 billion which is $239 million greater than the March 31, 2002 assets of $2.084 billion, or 11 percent, of which $41 million of the increase occurred during the first quarter of 2003. 
Total loans, net of the allowance for loan losses, have increased $7 million from March 31, 2002 and decreased $9 million from December 31, 2002. With interest rates at the lowest level in decades the past year, a large number of real estate loans have been refinanced, which coupled with our decision to sell the majority of the real estate loan production, has resulted in a reduction in real estate loans of $64 million, of which $38 million of the decrease occurred during the first quarter of 2003. Since March 31, 2002 Commercial loans have increased $79 million, or 13 percent, and continue to be the focus of our lending. Approximately 40 percent, or $31 million, of the increase in commercial loans has occurred since December 31, 2002. Consumer loans over the last twelve months have declined $6 million with a significant portion of the decline attributed to the planned runoff in the WesterFed auto dealer originated consumer loans. Home-equity loans continue to be the primary source of our consumer loan originations and have increased approximately 15 percent from a year ago. Home equity loans comprise 63 percent of consumer loans at March 31, 2003. 
Investment securities, including interest bearing deposits in other financial institutions, have increased $225 million since March 31, 2002 and $56 million from December 31, 2002. The cash received from the reduction in real estate loans has been redeployed in mortgage related investment securities with characteristics that result in less interest rate risk than retaining 30 year loans. Additional investments were made to use funding liquidity that exceeds loan growth opportunities. 
The Company typically sells a majority of mortgage loans originated, retaining servicing only on loans sold to certain lenders. The sale of loans in the secondary mortgage market reduces the Company’s risk of holding long- term, fixed rate loans in the loan portfolio. The Company has also been active in generating commercial SBA loans. A portion of some of those loans are sold to other investors. The amount of loans sold and serviced for others on March 31, 2003 was approximately $237 million. 
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 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	March 31,	 	December 31,	 	March 31,	 	December 31,	 	March 31,	
Liabilities ($ in thousands)	 	2003	 	2002	 	2002	 	2002	 	2002	
 	 		 		 		 		 		
Deposits - non-interest bearing	 	$	307,659	 	 	 	295,016	 	 	 	238,243	 	 	 	12,643	 	 	 	69,416	 	
Deposits - interest bearing	 	 	1,168,443	 	 	 	1,164,907	 	 	 	1,188,634	 	 	 	3,536	 	 	 	(20,191	)	
Advances from Federal Home Loan Bank	 	 	500,425	 	 	 	483,660	 	 	 	373,985	 	 	 	16,765	 	 	 	126,440	 	
Other borrowed funds	 	 	61,875	 	 	 	61,293	 	 	 	39,969	 	 	 	582	 	 	 	21,906	 	
Other liabilities	 	 	29,326	 	 	 	29,219	 	 	 	25,318	 	 	 	107	 	 	 	4,008	 	
Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total liabilities	 	$	2,102,728	 	 	 	2,069,095	 	 	 	1,901,149	 	 	 	33,633	 	 	 	201,579	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Total deposits have increased $49 million from the March 31, 2002 balances and $16 million from December 31, 2002. There was a significant increase of $69 million, or 29 percent, in non-interest bearing deposits, of which $13 million occurred during the first quarter 2003. This growth in low cost stable funding gives us increased flexibility in managing our asset mix. Interest-bearing deposits are down $20 million, or 2 percent, most of which was a reduction in certificates of deposit. The small increase of $4 million in interest-deposits since December 31, 2002 is attributable to the seasonal fluctuation in deposits. Federal home loan bank advances, other borrowed funds, and repurchase agreements, have also increased $148 million from March 31, 2002 and $17 million from December 31, 2002 as we continue to take advantage of these funding sources. 
Pending Acquisition and additional location 
On April 24, 2003, a definitive agreement to acquire Pend Oreille Bank, which operates from two locations in Sandpoint, Idaho and one location in Newport, Washington, was signed. The bank is approximately $65 million in total assets with deposits of $57 million. These locations will become additional branches of Mountain West Bank, the Company’s Idaho based subsidiary. The transaction is all cash in the amount of $10.4 million. It is expected that the acquisition, which is scheduled to close as early as June 30, 2003, will be immediately accretive to earnings. 
Mountain West Bank opened an additional location in the growing Boise market bringing the total locations in the Boise, Nampa area to five. 
Liquidity and Capital Resources 
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. The principal source of the Company’s cash revenues is the dividends received from the Company’s banking subsidiaries. The payment of dividends is subject to government regulation, in that regulatory authorities may prohibit banks and bank holding companies from paying dividends which would constitute an unsafe or unsound banking practice. The subsidiaries source of funds is generated by deposits, principal and interest payments on loans, sale of loans and securities, short and long-term borrowings, and net income. In addition, all seven banking subsidiaries are members of the FHLB. As of March 31, 2003, the Company had $776 million of available FHLB line of which $500 million was utilized. Accordingly, management of the Company has a wide range of versatility in managing the liquidity and asset/liability mix for each individual institution as well as the Company as a whole. During 2003, all seven financial institutions maintained liquidity and regulatory capital levels in excess of regulatory requirements and operational needs. 
Commitments 
In the normal course of business, there are various outstanding commitments to extend credit, such as letters of credit and unadvanced loan commitments, which are not reflected in the accompanying consolidated financial statements. Management does not anticipate any material losses as a result of these transactions. 
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 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
Stockholders’ equity	 	March 31,	 	December 31,	 	March 31,	 	December 31,	 	March 31,	
($ in thousands except per share data)	 	2003	 	2002	 	2002	 	2002	 	2002	
 	 		 		 		 		 		
Common equity	 	$	210,979	 	 	 	202,138	 	 	 	181,405	 	 	 	8,841	 	 	 	29,574	 	
Net unrealized gain on securities	 	 	8,799	 	 	 	10,111	 	 	 	1,250	 	 	 	(1,312	)	 	 	7,549	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total stockholders’ equity	 	$	219,778	 	 	 	212,249	 	 	 	182,655	 	 	 	7,529	 	 	 	37,123	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Stockholders’ equity to total assets	 	 	9.46	%	 	 	9.30	%	 	 	8.77	%	 	 	 	 	 	 	 	 	
Tangible equity to total assets	 	 	7.89	%	 	 	7.68	%	 	 	6.91	%	 	 	 	 	 	 	 	 	
Book value per common share	 	$	12.56	 	 	 	12.28	 	 	 	10.70	 	 	 	0.28	 	 	 	1.86	 	
Tangible book value per common share	 	$	10.29	 	 	 	9.96	 	 	 	8.26	 	 	 	0.33	 	 	 	2.03	 	
Market price per share at end of quarter	 	$	26.76	 	 	 	23.56	 	 	 	23.19	 	 	 	3.20	 	 	 	3.57	 	
Each of the equity ratios and book value per share amounts have increased substantially from the prior year, primarily the result of earnings retention, stock options exercised, and net unrealized gains on securities. Our equity to asset ratio is near historic highs for the Company which creates challenges for effective deployment of capital to maintain an appropriate return on equity. The Company declared a 10 percent stock dividend, payable in common stock on May 22, 2003 to shareholders of record on May 13, 2003. 
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	March 31,	 	December 31,	 	March 31,	
 	 		 		 		
Credit quality information ($ in thousands)	 	2003	 	2002	 	2003	
 	 		 		 		
Allowance for loan losses	 	$	21,627	 	 	 	20,944	 	 	 	19,498	 	
Non-performing assets	 	$	10,026	 	 	 	11,582	 	 	 	12,766	 	
Allowance as a percentage of non performing assets	 	 	215.71	%	 	 	180.83	%	 	 	152.73	%	
Non-performing assets as a percentage of total assets	 	 	0.43	%	 	 	0.51	%	 	 	0.61	%	
Allowance as a percentage of total loans	 	 	1.65	%	 	 	1.58	%	 	 	1.50	%	
Net charge-offs as a percentage of loans	 	 	0.012	%	 	 	0.261	%	 	 	0.035	%	
Allowance for Loan Loss and Non-Performing Assets 
Non-performing assets as a percentage of total assets at March 31, 2003 were ..43 percent, a decrease from .61 percent at March 31, 2002 and .51 percent at December 31, 2002. This compares to the Peer Group average of .62 percent at December 31, 2002, the most recent information available. The reserve for loan losses was 216 percent of non-performing assets at March 31, 2003, up from 153 percent a year ago and 181 percent from December 31, 2002. 
With the continuing change in loan mix from residential real estate to commercial and consumer loans, which historically have greater credit risk, the Company has increased the balance in the reserve for loan losses account. The reserve balance has increased $2.129 million, or 11 percent, to $21.627 million, which is 1.65 percent of total loans outstanding, up from 1.50 percent a year ago and 1.58 percent from December 31, 2002. The first quarter provision expense for loan losses was $841 thousand, a decrease of $459 thousand from the same quarter in 2002. 
Critical Accounting Policies 
Companies may apply certain critical accounting policies requiring management to make subjective or complex judgments, often as a result of the need to estimate the effect of matters that are inherently uncertain. The Company considers its only critical accounting policy to be the allowance for loan losses. The allowance for loan losses is established through a provision for loan losses charged against earnings. The balance of 
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allowance for loan losses are maintained at the amount management believes will be adequate to absorb known and inherent losses in the loan portfolio. The appropriate balance of allowance for loan losses is determined by applying estimated loss factors to the credit exposure from outstanding loans. Estimated loss factors are based on subjective measurements including management’s assessment of the internal risk classifications, changes in the nature of the loan portfolio, industry concentrations and the impact of current local, regional and national economic factors on the quality of the loan portfolio. Changes in these estimates and assumptions are reasonably possible and may have a material impact on the Company’s consolidated financial statements, results of operation or liquidity. 
 	 	Results of Operations – The three months ended March 31, 2003 compared to the three months ended March 31, 2002.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Three months ended March 31,	
Revenue summary	 		
($ in thousands)	 	2003	 	2002	 	$ change	 	% change	
 	 		 		 		 		
Net interest income	 	$	21,378	 	 	 	20,367	 	 	 	1,011	 	 	 	5.0	%	
Fees and other revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges, loan fees, and other fees	 	 	4,646	 	 	 	4,150	 	 	 	496	 	 	 	12.0	%	
 	Gain on sale of loans	 	 	2,244	 	 	 	1,097	 	 	 	1,147	 	 	 	104.6	%	
 	Other income	 	 	577	 	 	 	602	 	 	 	(25	)	 	 	-4.2	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	 	Total non-interest income	 	 	7,467	 	 	 	5,849	 	 	 	1,618	 	 	 	27.7	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total revenue	 	$	28,845	 	 	 	26,216	 	 	 	2,629	 	 	 	10.0	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Tax equivilent net interest margin	 	 	4.26	%	 	 	4.39	%	 	 	 	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	 	 	 	 	
Net Interest Income 
Net interest income for the quarter increased $1.011 million, or 5 percent, over the same period in 2002. Total interest income is $1.470 million, or 4 percent lower that the same quarter in 2002, while total interest expense is $2.481 million or 19 percent lower. Lower interest rates were the main reason for the reduction in interest income and interest expense. The increase in non-interest bearing deposits also resulted in reduced interest expense. The net interest margin as a percentage of earning assets, on a tax equivalent basis, decreased from 4.4 percent for the 2002 quarter to 4.3 percent in 2003. We recorded increased amortization of premiums in 2003 on mortgage backed securities, resulting from prepayments due to the continuing low interest rates. The additional amortization expense accounted for most of the reduction in the net interest margin. We continue to invest in short term securities with low yields rather than extending maturities to obtain higher current yields with corresponding interest rate risk. This also results in lower current interest margins. 
Non-interest Income 
Fee income increased 12 percent over the same period last year, driven primarily by increased deposit account activity, increases in service fee income, and interchange fees on electronic check cards. The increase in gain on sale of loans reflects the low level of mortgage interest rates and resulting purchase and refinancing activity. Other income was lower in the current years’ quarter by $25 thousand. 
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 	 	 	Three months ended March 31,	
Non-interest expense summary	 		
($ in thousands)	 	2003	 	2002	 	$ change	 	% change	
 	 		 		 		 		
Compensation and employee benefits	 	$	7,979	 	 	 	7,782	 	 	 	197	 	 	 	2.5	%	
Occupancy and equipment expense	 	 	2,435	 	 	 	2,301	 	 	 	134	 	 	 	5.8	%	
Outsourced data processing expense	 	 	562	 	 	 	446	 	 	 	116	 	 	 	26.0	%	
Core deposit intangible amortization	 	 	338	 	 	 	361	 	 	 	(23	)	 	 	-6.4	%	
Other expenses	 	 	3,569	 	 	 	3,475	 	 	 	94	 	 	 	2.7	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total non-interest expense	 	$	14,883	 	 	 	14,365	 	 	 	518	 	 	 	3.6	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Non-interest Expense 
Non-interest expense increased by $518 thousand, or 4 percent, from the same quarter of 2002. Compensation and benefit expense increased $197 thousand, or 3 percent from the first quarter of 2002. Occupancy and equipment expense increased $134 thousand, or 6 percent, and outsourced data processing expense increased by $116 thousand, or 26 percent. Other expenses increased $94 thousand, or 3 percent. The increased expenses were primarily the result of increases in the volume of transactions handled. The outsourced data processing expense is expected to decrease as Mountain West Bank is converting its core processing to the Company’s in-house data system in the second quarter of 2003. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 52 percent for the 2003 quarter which is an improvement over the 55 percent for the 2002 quarter. 
Item 3. Quantitative and Qualitative Disclosure About Market Risk 
Market Risk: 
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company’s primary market risk exposure is interest rate risk. The ongoing monitoring and management of this risk is an important component of the Company’s asset/liability management process which is governed by policies established by its Board of Directors that are reviewed and approved annually. The Board of Directors delegates responsibility for carrying out the asset/liability management policies to the Asset/Liability Committee (ALCO). In this capacity ALCO develops guidelines and strategies impacting the Company’s asset/liability management related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels/trends. 
Interest Rate Risk: 
Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with the Company’s financial instruments also change thereby impacting net interest income (NII), the primary component of the Company’s earnings. ALCO utilizes the results of a detailed and dynamic simulation model to quantify the estimated exposure of NII to sustained interest rate changes. While ALCO routinely monitors simulated NII sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate risk. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all assets and liabilities reflected on the Company’s statement of financial condition. This sensitivity analysis is compared to ALCO policy limits which specify a maximum tolerance level for NII exposure over a one year horizon, assuming no balance sheet growth, given a 200 or 100 basis point (bp) upward and downward shift in interest rates. A parallel and pro rata shift in rates over a 12-month period is assumed as a benchmark. Other non-parallel rate movement scenarios are also modeled to determine the potential impact on net interest income. The following reflects the Company’s NII sensitivity analysis as of December 31, 2002, the most recent information available, as compared to the 10% Board approved policy limit (dollars in thousands). There have been no significant changes in operation or the market that would materially affect the estimated 
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sensitivity. The table illustrates the estimated change in net interest income over a twelve month period based on the three months activity ended March 31, 2003. 
 	 	 	 	 	 	 	 	 	
Interest Rate Sensitivity	 	+200 bp	 	-100 bp	
 	 		 		
Estimated sensitivity	 	 	-1.37	%	 	 	0.46	%	
Estimated increase (decrease) in net interest income	 	$	(1,188	)	 	 	399	 	
The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of assets and liability cashflows, and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change. 
Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to: prepayment/refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other internal/external variables. Furthermore, the sensitivity analysis does not reflect actions that ALCO might take in responding to or anticipating changes in interest rates. 
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 defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within 90 days before the filing 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 we file or submit under the Exchange act. 
Changes in Internal Controls 
There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses, therefore no corrective actions were taken. 
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 2. Changes in Securities and Use of Proceeds 
 	 	None	
Item 3. Defaults upon Senior Securities 
 	 	None	
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Item 4. Submission of Matters to a Vote of Securities Holders 
 	 	None	
Item 5. Other Information 
 	 	None	
Item 6. Exhibits and Reports on Form 8-K. 
 	(a)	 	Exhibits	
 	 	 	 	 	
Exhibit 99	 	– 	 	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	
 	(b)	 	Current Report on Form 8-K	
 	 	 	 	 	
None	 	 	 	 	
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 12, 2003	 	/s/ Michael J. Blodnick	
 	 		
 	 	Michael J. Blodnick	
 	 	President/CEO	
 	 	 	
May 12, 2003	 	/s/ James H. Strosahl	
 	 		
 	 	James H. Strosahl	
 	 	Executive Vice President/CFO	
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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 quarterly 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 quarterly report;	
 		
3.	 	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;	
 		
4.	 	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:	
 	a)	 	designed such disclosure controls and procedures 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 quarterly report is being prepared;	
 		
 	b)	 	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and	
 		
 	c)	 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;	
5.	 	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):	
 	a)	 	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and	
 		
 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and	
6.	 	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.	
May 12, 2003 
 	
/s/ Michael J. Blodnick	
	
Michael J. Blodnick	
President/CEO	
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I, James H. Strosahl, certify that: 
1.	 	I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.;	
 		
2.	 	Based on my knowledge, this quarterly 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 quarterly report;	
 		
3.	 	Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;	
 		
4.	 	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:	
 	a)	 	designed such disclosure controls and procedures 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 quarterly report is being prepared;	
 		
 	b)	 	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and	
 		
 	c)	 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;	
5.	 	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):	
 	a)	 	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and	
 		
 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and	
6.	 	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.	
May 12, 2003 
 	
/s/ James H. Strosahl	
	
James H. Strosahl	
Executive Vice President/CFO	
26 

                                                                      EXHIBIT 99

                            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, 2003, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), we, Michael J.
Blodnick, President and Chief Executive Officer, and James H. Strosahl,
Executive Vice President and Chief Financial Officer, of Glacier Bancorp, Inc.,
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.

May 12, 2003

                                                 /s/ Michael J. Blodnick
                                                 -----------------------
                                                 Michael J. Blodnick
                                                 President/CEO

                                                 /s/ James H. Strosahl
                                                 ---------------------
                                                 James H. Strosahl
                                                 Executive Vice President/CFO