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 September 30, 2002
	
[   ]	 	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 [   ] 
The number of shares of Registrant’s common stock outstanding on November 5th, 2002 was 17,236,312. No preferred shares are issued or outstanding. 

  

GLACIER BANCORP, INC.
Quarterly Report on Form 10-Q 
Index 
 	 	 	 	 	 	 		 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Page #	
 	 	 	 	 	 	 	 	 	 		
Part I.	 	 	 	 	 	Financial Information	 	 	 	 	
 	
 	 	 	 	Item 1  —	 	Financial Statements	 	 	 	 	
 	
 	 	 	 	 	 	 	 	Consolidated Statements of Financial Condition September 30, 2002, December 31, and September 30, 2001 (unaudited)	 	 	3	 	
 	
 	 	 	 	 	 	 	 	Consolidated Statements of Operations — Three and Nine months ended September 30, 2002 and 2001 (unaudited)	 	 	4	 	
 	
 	 	 	 	 	 	 	 	Consolidated Statements of Stockholders’ Equity and Comprehensive Income — Year ended December 31, 2001 and Nine months ended September 30, 2002 (unaudited)	 	 	5	 	
 	
 	 	 	 	 	 	 	 	Consolidated Statements of Cash Flows — Nine months ended September 30, 2002 and 2001 (unaudited)	 	 	6	 	
 	
 	 	 	 	 	 	 	 	Notes to Consolidated Financial Statements (unaudited)	 	 	7	 	
 	
 	 	 	 	Item 2  —	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	20	 	
 	
 	 	 	 	Item 3  —	 	Quantitative and Qualitative Disclosure about Market Risk	 	 	25	 	
 	
 	 	 	 	Item 4  —	 	Controls and Procedures	 	 	26	 	
 	
Part II.	 	 	 	 	 	Other Information	 	 	26	 	
 	
 	 	 	 	Item 1  —	 	Legal Proceedings	 	 	26	 	
 	
 	 	 	 	Item 2  —	 	Changes in Securities and Use of Proceeds	 	 	27	 	
 	
 	 	 	 	Item 3  —	 	Defaults Upon Senior Securities	 	 	27	 	
 	
 	 	 	 	Item 4  —	 	Submission of Matters to a Vote of Security Holders	 	 	27	 	
 	
 	 	 	 	Item 5  —	 	Other Information	 	 	27	 	
 	
 	 	 	 	Item 6  —	 	Exhibits and Reports on Form 8-K	 	 	27	 	
 	
 	 	 	 	Signatures	 	 	 	27	 	
2

Glacier Bancorp, Inc.
Consolidated Statements of Financial Condition 
							
(Unaudited – dollars in thousands except per share data)	September 30,	 	December 31,	 	September 30,	 	
							
	2002	 	2001	 	2001	 	
Assets: 	 	 	 		 	 		 	 		 	
    Cash on hand and in banks	 	 	$	62,723 	 	 	73,456	 	 	64,064	 	
    Interest bearing cash deposits	 	 	 	18,690 	 	 	23,970	 	 	9,790	 	
							
       Cash and cash equivalents	 	 	 	81,413 	 	 	97,426	 	 	73,854	 	
							
    Investments:	 	 		
       Investment securities, available–for–sale	 	 	 	233,229 	 	 	158,036	 	 	154,721	 	
       Mortgage backed securities, available–for–sale	 	 	 	421,966 	 	 	350,542	 	 	346,019	 	
       Federal Home Loan Bank and Federal Reserve Bank stock, at cost	 	 	 	42,128 	 	 	37,007	 	 	36,076	 	
							
            Total investments	 	 	 	697,323 	 	 	545,585	 	 	536,816	 	
							
    Net loans receivable:	 	 		
       Real estate loans	 	 	 	383,890 	 	 	421,996	 	 	441,232	 	
       Commercial Loans	 	 	 	674,139 	 	 	620,134	 	 	627,110	 	
       Consumer and other loans	 	 	 	291,164 	 	 	298,851	 	 	308,010	 	
       Allowance for loan losses	 	 	 	(21,342 	)	 	(18,654	)	 	(18,528	)	
							
            Total loans, net	 	 	 	1,327,851 	 	 	1,322,327	 	 	1,357,824	 	
							
    Premises and equipment, net	 	 	 	47,524 	 	 	50,566	 	 	52,071	 	
    Real estate and other assets owned, net	 	 	 	852 	 	 	593	 	 	727	 	
    Accrued interest receivable	 	 	 	13,447 	 	 	12,409	 	 	14,388	 	
    Core deposit intangible, net	 	 	 	7,181 	 	 	8,261	 	 	8,630	 	
    Goodwill	 	 	 	33,189 	 	 	33,510	 	 	35,381	 	
    Other assets	 	 	 	15,034 	 	 	15,070	 	 	15,274	 	
							
 	 	 	$	2,223,814 	 	 	2,085,747	 	 	2,094,965	 	
							
Liabilities and stockholders’ equity: 	 	 		
    Deposits – non-interest bearing	 	 	$	292,653 	 	 	234,318	 	 	244,450	 	
    Deposits – interest bearing	 	 	 	1,206,000 	 	 	1,211,746	 	 	1,209,469	 	
    Advances from Federal Home Loan Bank of Seattle	 	 	 	402,367 	 	 	367,295	 	 	360,654	 	
    Securities sold under agreements to repurchase	 	 	 	33,572 	 	 	32,585	 	 	29,392	 	
    Other borrowed funds	 	 	 	16,799 	 	 	1,060	 	 	12,020	 	
    Accrued interest payable	 	 	 	6,291 	 	 	9,179	 	 	10,657	 	
    Current income taxes	 	 	 	1,642 	 	 	95	 	 	3,371	 	
    Deferred tax liability	 	 	 	8,240 	 	 	1,780	 	 	2,685	 	
    Trust preferred securities	 	 	 	35,000 	 	 	35,000	 	 	35,000	 	
    Other liabilities	 	 	 	15,058 	 	 	15,706	 	 	15,672	 	
							
       Total liabilities	 	 	 	2,017,622 	 	 	1,908,764	 	 	1,923,370	 	
							
    Preferred shares, 1,000,000 shares authorized. None outstanding	 	 	 	-- 	 	 	--	 	 	--	 	
    Common stock, $.01 par value per share	 	 		
       50,000,000 shares authorized	 	 	 	172 	 	 	169	 	 	167	 	
    Paid–in capital	 	 	 	171,457 	 	 	167,371	 	 	163,384	 	
    Retained earnings – substantially restricted	 	 	 	22,912 	 	 	7,687	 	 	3,761	 	
    Accumulated other comprehensive income	 	 	 	11,651 	 	 	1,756	 	 	4,283	 	
							
       Total stockholders' equity	 	 	 	206,192 	 	 	176,983	 	 	171,595	 	
							
 	 	 	$	2,223,814 	 	 	2,085,747	 	 	2,094,965	 	
							
    Number of shares outstanding	 	 	 	17,223,574 	 	 	16,874,422	 	 	16,728,482	 	
    Book value of equity per share	 	 	$	11.97 	 	 	10.49	 	 	10.26	 	
    Tangible book value per share	 	 	$	9.63 	 	 	8.01	 	 	7.63	 	
See accompanying notes to consolidated financial statements 
3

Glacier Bancorp, Inc.
Consolidated Statements of Operations 
		 		 	
(unaudited – dollars in thousands except per share data)	Three months ended September 30,		Nine months ended September 30,		
		 		 	
	2002		2001		2002 		2001		
									
Interest income: 	 	 	 		 	 		 	 		 	 		 	
     Real estate loans	 	 	$	7,190 	 	 	9,332	 	 	22,253 	 	 	26,313	 	
     Commercial loans	 	 	 	12,007 	 	 	12,824	 	 	35,088 	 	 	34,524	 	
     Consumer and other loans	 	 	 	5,643 	 	 	6,733	 	 	17,142 	 	 	19,221	 	
     Investments	 	 	 	8,989 	 	 	8,211	 	 	25,931 	 	 	22,080	 	
									
           Total interest income	 	 	 	33,829 	 	 	37,100	 	 	100,414 	 	 	102,138	 	

Interest expense: 	 	 		
     Deposits	 	 	 	6,429 	 	 	11,452	 	 	20,544 	 	 	33,250	 	
     FHLB Advances	 	 	 	4,189 	 	 	5,212	 	 	12,555 	 	 	14,049	 	
     Securities sold under agreements to repurchase	 	 	 	144 	 	 	266	 	 	433 	 	 	791	 	
     Trust preferred securities	 	 	 	904 	 	 	904	 	 	2,711 	 	 	2,410	 	
     Other borrowed funds	 	 	 	32 	 	 	67	 	 	72 	 	 	210	 	
									
           Total interest expense	 	 	 	11,698 	 	 	17,901	 	 	36,315 	 	 	50,710	 	

Net interest income 	 	 	 	22,131 	 	 	19,199	 	 	64,099 	 	 	51,428	 	
     Provision for loan losses	 	 	 	1,665 	 	 	1,006	 	 	4,225 	 	 	3,429	 	
									
          Net interest income after provision for loan losses	 	 	 	20,466 	 	 	18,193	 	 	59,874 	 	 	47,999	 	

Non–interest income: 	 	 		
     Service charges and other fees	 	 	 	3,726 	 	 	3,270	 	 	10,332 	 	 	9,009	 	
     Miscellaneous loan fees and charges	 	 	 	1,031 	 	 	995	 	 	3,056 	 	 	2,728	 	
     Gains on sale of loans	 	 	 	1,225 	 	 	1,111	 	 	3,497 	 	 	2,766	 	
     Gains on sale of investments, net	 	 	 	— 	 	 	24	 	 	2 	 	 	88	 	
     Other income	 	 	 	475 	 	 	395	 	 	1,753 	 	 	2,085	 	
									
          Total non–interest income	 	 	 	6,457 	 	 	5,795	 	 	18,640 	 	 	16,676	 	
									
Non–interest expense: 	 	 		
     Compensation, employee benefits	 	 		
            and related expenses	 	 	 	7,541 	 	 	7,392	 	 	22,856 	 	 	20,182	 	
     Occupancy and equipment expense	 	 	 	2,340 	 	 	2,187	 	 	6,965 	 	 	6,147	 	
     Outsourced data processing expense	 	 	 	547 	 	 	707	 	 	1,508 	 	 	2,007	 	
     Core deposit intangibles amortization	 	 	 	359 	 	 	383	 	 	1,080 	 	 	957	 	
     Goodwill amortization	 	 	 	— 	 	 	492	 	 	— 	 	 	1,229	 	
     Other expenses	 	 	 	3,209 	 	 	3,948	 	 	10,294 	 	 	10,427	 	
     Minority interest	 	 	 	— 	 	 	—	 	 	— 	 	 	35	 	
									
          Total non–interest expense	 	 	 	13,996 	 	 	15,109	 	 	42,703 	 	 	40,984	 	
									
Earnings before income taxes 	 	 	 	12,927 	 	 	8,879	 	 	35,811 	 	 	23,691	 	
					
     Federal and state income tax expense	 	 	 	4,311 	 	 	3,172	 	 	12,170 	 	 	8,462	 	
									
Net earnings 	 	 	$	8,616 	 	 	5,707	 	 	23,641 	 	 	15,229	 	

Basic earnings per share	 	 	$	0.50 	 	 	0.34	 	 	1.38 	 	 	0.99	 	
Diluted earnings per share	 	 	$	0.49 	 	 	0.33	 	 	1.36 	 	 	0.96	 	
Dividends declared per share	 	 	$	0.17 	 	 	0.15	 	 	0.49 	 	 	0.45	 	
Return on average assets (annualized)	 	 	 	1.58 	%	 	1.06	%	 	1.48 	%	 	1.06	%	
Return on average equity (annualized)	 	 	 	17.03 	%	 	13.50	%	 	16.42 	%	 	13.41	%	
Return on tangible average equity (annualized)	 	 	 	21.32 	%	 	18.09	%	 	20.94 	%	 	17.91	%	
Average outstanding shares – basic	 	 	 	17,209,487 	 	 	16,676,275	 	 	17,120,894 	 	 	15,344,475	 	
Average outstanding shares – diluted	 	 	 	17,501,540 	 	 	17,078,578	 	 	17,420,288 	 	 	15,828,650	 	
					
See accompanying notes to consolidated financial statements. 
4

Glacier Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity
and Comprehensive Income 
Year ended December 31, 2001 and Nine months ended September 30, 2002 
								
					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, 2000	 	 	 	11,447,150	 	$	114	 	 	101,828	 	 	(4,087	)	 	258	 	 	98,113	 		
								
Comprehensive income:	 	 		
     Net earnings	 	 	 	—	 	 	—	 	 	—	 	 	21,689	 	 	—	 	 	21,689	 		
     Unrealized gain on securities, net of reclassification adjustment	 	 	 	—	 	 	—	 	 	—	 	 	—	 	 	1,498	 	 	1,498	 		
									
Total comprehensive income	 	 	 	23,187	 		

Cash dividends declared ($.60 per share)	 	 	 	—	 	 	—	 	 	—	 	 	(9,915	)	 	—	 	 	(9,915	)		
Stock options exercised	 	 	 	864,571	 	 	9	 	 	6,755	 	 	—	 	 	—	 	 	6,764	 		
Tax benefit from stock related compensation	 	 	 	—	 	 	—	 	 	2,778	 	 	—	 	 	—	 	 	2,778	 		
Conversion of debentures	 	 	 	32,239	 	 	1	 	 	341	 	 	—	 	 	—	 	 	342	 		
Stock issued in connection with merger of WesterFed Financial Corporation	 	 	 	4,530,462	 	 	45	 	 	55,669	 	 	—	 	 	—	 	 	55,714	 		
														
Balance at December 31, 2001	 	 	 	16,874,422	 	$	169	 	 	167,371	 	 	7,687	 	 	1,756	 	 	176,983	 		
								
Comprehensive income:	 	 		
     Net earnings	 	 	 	—	 	 	—	 	 	—	 	 	23,641	 	 	—	 	 	23,641	 		
     Unrealized gain on securities, net of reclassification adjustment	 	 	 	—	 	 	—	 	 	—	 	 	—	 	 	9,895	 	 	9,895	 		
									
Total comprehensive income	 	 	 	 	 	 	33,536	 		

Cash dividends declared ($.49 per share)	 	 	 	—	 	 	—	 	 	—	 	 	(8,416	)	 	—	 	 	(8,416	)		
Stock options exercised	 	 	 	349,152	 	 	3	 	 	4,086	 	 	—	 	 	—	 	 	4,089	 		
														
Balance at September 30, 2002	 	 	 	17,223,574	 	$	172	 	 	171,457	 	 	22,912	 	 	11,651	 	 	206,192	 		

See accompanying notes to consolidated financial statements 
5

Glacier Bancorp, Inc.
Consolidated Statements of Cash Flows 
						
(Unaudited - dollars in thousands except per share data)	Nine months ended September 30,				
						
	2002		2001	 		 	
							
OPERATING ACTIVITIES: 	 	 	 		 	 		 	 		 		
      Net cash provided by operating activities	 	 	$	17,671 	 	 	11,660	 		
					
INVESTING ACTIVITIES: 	 	 		
      Proceeds from sales, maturities and prepayments of	 	 		
          investments available–for–sale	 	 	 	146,080 	 	 	158,134	 		
      Purchases of investments available–for–sale	 	 	 	(280,008 	)	 	(256,425	)		
      Principal collected on installment and commercial loans	 	 	 	422,530 	 	 	272,133	 		
      Installment and commercial loans originated or acquired	 	 	 	(468,848 	)	 	(352,595	)		
      Principal collections on mortgage loans	 	 	 	186,291 	 	 	245,170	 		
      Mortgage loans originated or acquired	 	 	 	(136,293 	)	 	(170,680	)		
      Net purchase of FHLB and FRB stock	 	 	 	(3,583 	)	 	(3,490	)		
      Acquisition of WesterFed Financial Corporation and several branches	 	 	 	— 	 	 	107,239	 		
      Sale of branches	 	 	 	— 	 	 	(53,131	)		
      Net decrease in premises and equipment	 	 	 	91 	 	 	541	 		
							
           NET CASH USED IN INVESTING ACTIVITIES	 	 	 	(133,740 	)	 	(53,104	)		
							
FINANCING ACTIVITIES: 	 	 		
      Net increase in deposits	 	 	 	52,589 	 	 	26,404	 		
      Net increase in FHLB advances and other borrowed funds	 	 	 	50,810 	 	 	6,194	 		
      Net increase (decrease) in securities sold under repurchase agreements	 	 	 	987 	 	 	(3,336	)		
      Proceeds from issuance of trust preferred securities	 	 	 	— 	 	 	35,000	 		
      Cash dividends paid to stockholders	 	 	 	(8,416 	)	 	(6,645	)		
      Proceeds from exercise of stock options and other stock issued	 	 	 	4,086 	 	 	5,895	 		
							
          NET CASH PROVIDED BY FINANCING ACTIVITIES	 	 	 	100,056 	 	 	63,512	 		
							
          NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	 	 	 	(16,013 	)	 	22,068	 		
      CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	 	 	97,426 	 	 	51,786	 		
							
      CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	 	$	81,413 	 	 	73,854	 		
							
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 	 	 		
      Cash paid during the period for:	 	 	 	  	 	 	 	 	 	 	 		
                                                 Interest			$	39,203 	 	 	52,230	 		
                                                 Income taxes			$	10,619 	 	 	6,101	 		
See accompanying notes to consolidated financial statements. 
6

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 September 30, 2002, December 31, 2001, and September 30, 2001, stockholders’ equity for the nine months ended September 30, 2002 and the year ended December 31, 2001, the results of operations for the three and nine months ended September 30, 2002 and 2001, and the cash flows for the nine months ended September 30, 2002 and 2001. 	

  	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, 2001. Operating results for the nine months ended September 30, 2002 are not necessarily indicative of the results anticipated for the year ending December 31, 2002. Certain reclassifications have been made to the 2001 financial statements to conform to the 2002 presentation. 	

2)	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. 	

  	The following abbreviated organizational chart illustrates the various relationships: 	

7

3)	Ratios:	

 	Returns on average assets and average equity were calculated based on daily averages.	

4)	Cash Dividend Declared:	

 	September 25, 2002, the Board of Directors declared a $.17 per share quarterly cash dividend to stockholders of record on October 8, 2002, payable on October 17, 2002. 	

5)	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		Nine		Nine		
	months ended		months ended		months ended		months ended		
	Sept. 30, 2002		Sept. 30, 2001		Sept. 30, 2002 		Sept. 30, 2001		
									
Net earnings available to common	 	 	 		 	 		 	 		 	 		 	
   stockholders, basic	 	 	$	8,616,194 	 	 	5,707,016	 	 	23,641,308 	 	 	15,229,360	 	
   After tax effect of interest on	 	 		
      convertible subordinated debentures	 	 	 	— 	 	 	4,000	 	 	— 	 	 	12,000	 	
									
Net earnings available to common	 	 		
   stockholders, diluted	 	 	$	8,616,194 	 	 	5,711,016	 	 	23,641,308 	 	 	15,241,360	 	

					
Average outstanding shares - basic	 	 	 	17,209,487 	 	 	16,676,275	 	 	17,120,894 	 	 	15,344,475	 	
Add: Dilutive stock options	 	 	 	292,053 	 	 	369,278	 	 	299,394 	 	 	451,150	 	
      Convertible subordinated debentures	 	 	 	— 	 	 	33,025	 	 	— 	 	 	33,025	 	
									
Average outstanding shares - diluted	 	 	 	17,501,540 	 	 	17,078,578	 	 	17,420,288 	 	 	15,828,650	 	

					
Basic earnings per share	 	 	$	0.50 	 	 	0.34	 	 	1.38 	 	 	0.99	 	

Diluted earnings per share	 	 	$	0.49 	 	 	0.33	 	 	1.36 	 	 	0.96	 	

6)	Investments: 	

  	A comparison of the amortized cost and estimated fair value of the Company’s investments is as follows. All investments are held at market value, except the Federal Home Loan Bank of Seattle (FHLB) and Federal Reserve Bank (FRB) stock. The FHLB and FRB stocks are restricted because they may only be sold to another member institution or the FHLB or FRB at their par values. Due to the restrictive terms, and lack of a readily determinable market value, FHLB and FRB stocks are carried at cost. 	

8

INVESTMENTS AS OF SEPTEMBER 30, 2002 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	Gross Unrealized	 	Estimated	
	 	Weighted	 	Amortized	 		 	Fair	
(Dollars in thousands)	 	Yield	 	Cost	 	Gains	 	Losses	 	Value	
	 		 		 		 		 		
U.S. Government and Federal Agencies	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing after ten years	 	 	3.58	%	 	$	1,104	 	 	 	9	 	 	 	(2	)	 	 	1,111	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	3.58	%	 	 	1,104	 	 	 	9	 	 	 	(2	)	 	 	1,111	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
State and Local Governments and other issues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing within one year	 	 	5.68	%	 	 	2,148	 	 	 	52	 	 	 	—	 	 	 	2,200	 	
 	maturing one year through five years	 	 	5.48	%	 	 	11,293	 	 	 	52	 	 	 	(118	)	 	 	11,427	 	
 	maturing five years through ten years	 	 	5.69	%	 	 	3,127	 	 	 	120	 	 	 	—	 	 	 	3,247	 	
 	maturing after ten years	 	 	5.54	%	 	 	206,161	 	 	 	9,635	 	 	 	(552	)	 	 	215,244	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	5.54	%	 	 	222,729	 	 	 	10,059	 	 	 	(670	)	 	 	232,118	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Mortgage-Backed Securities	 	 	5.63	%	 	 	94,644	 	 	 	2,673	 	 	 	(36	)	 	 	97,281	 	
 		
Real Estate Mortgage Investment Conduits	 	 	5.32	%	 	 	317,462	 	 	 	7,361	 	 	 	(138	)	 	 	324,685	 	
 		
FHLB and FRB stock, at cost	 	 	6.00	%	 	 	42,128	 	 	 	—	 	 	 	—	 	 	 	42,128	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Investments	 	 	5.47	%	 	$	678,067	 	 	 	20,102	 	 	 	(846	)	 	 	697,323	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
INVESTMENTS AS OF DECEMBER 31, 2001 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	Gross Unrealized	 	Estimated	
	 	Weighted	 	Amortized	 		 	Fair	
(Dollars in thousands)	 	Yield	 	Cost	 	Gains	 	Losses	 	Value	
	 		 		 		 		 		
U.S. Government and Federal Agencies	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing after ten years	 	 	2.77	%	 	$	1,330	 	 	 	12	 	 	 	(3	)	 	 	1,339	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	2.77	%	 	 	1,330	 	 	 	12	 	 	 	(3	)	 	 	1,339	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
State and Local Governments and other issues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing within one year	 	 	3.25	%	 	 	4,639	 	 	 	28	 	 	 	—	 	 	 	4,667	 	
 	maturing one year through five years	 	 	5.36	%	 	 	13,774	 	 	 	291	 	 	 	(65	)	 	 	14,000	 	
 	maturing five years through ten years	 	 	5.50	%	 	 	2,349	 	 	 	57	 	 	 	(6	)	 	 	2,400	 	
 	maturing after ten years	 	 	5.81	%	 	 	135,789	 	 	 	1,563	 	 	 	(1,722	)	 	 	135,630	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	5.67	%	 	 	156,551	 	 	 	1,939	 	 	 	(1,793	)	 	 	156,697	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Mortgage-Backed Securities	 	 	6.08	%	 	 	129,322	 	 	 	1,868	 	 	 	(126	)	 	 	131,064	 	
 		
Real Estate Mortgage Investment Conduits	 	 	6.11	%	 	 	218,470	 	 	 	2,941	 	 	 	(1,933	)	 	 	219,478	 	
 		
FHLB and FRB stock, at cost	 	 	6.82	%	 	 	37,007	 	 	 	—	 	 	 	—	 	 	 	37,007	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Investments	 	 	6.01	%	 	$	542,680	 	 	 	6,760	 	 	 	(3,855	)	 	 	545,585	 	

  	Gross proceeds from sales of investment securities for the three months and nine months ended September 30, 2002 and year ended December 31, 2001 were $0, $24,428,000, and $86,311,000, respectively, resulting in gross gains of approximately $0, $215,000, and $71,000 and gross losses of approximately $0, $213,000, and $7,000. The cost of any investment sold is determined by specific identification. 	

9

7)	Loans	

 	The following table summarizes the Company’s loan portfolio. The loans mature or are repriced at various times.	

 	 	 	 	At	 	At	
TYPE OF LOAN	 	09/30/02	 	12/31/2001	
	 		 		
(Dollars in Thousands)	 	Amount	 	Percent	 	Amount	 	Percent	
	 		 		 		 		
Real Estate Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Residential first mortgage loans	 	$	3543,786	 	 	 	25.9	%	 	$	395,417	 	 	 	29.9	%	
 	Loans held for sale	 	 	40,832	 	 	 	3.1	%	 	 	27,403	 	 	 	2.1	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total	 	 	384,618	 	 	 	29.0	%	 	 	422,820	 	 	 	32.0	%	
Commercial Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	395,995	 	 	 	29.8	%	 	 	379,346	 	 	 	28.7	%	
 	Other commercial loans	 	 	279,300	 	 	 	21.0	%	 	 	241,811	 	 	 	18.3	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total	 	 	675,295	 	 	 	50.8	%	 	 	621,157	 	 	 	47.0	%	
Installment and Other Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Consumer loans	 	 	122,084	 	 	 	9.2	%	 	 	142,875	 	 	 	10.8	%	
 	Home equity loans	 	 	169,199	 	 	 	12.7	%	 	 	156,140	 	 	 	11.8	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total	 	 	291,283	 	 	 	21.9	%	 	 	299,015	 	 	 	22.6	%	
 	Net deferred loan fees, premiums and discounts	 	 	(2,003	)	 	 	-0.1	%	 	 	(2,011	)	 	 	-0.2	%	
 	Allowance for Losses	 	 	(21,342	)	 	 	-1.6	%	 	 	(18,654	)	 	 	-1.4	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Net Loans	 	$	1,327,851	 	 	 	100.0	%	 	$	1,322,327	 	 	 	100.0	%	

 	The following table sets forth information regarding the Company’s non-performing assets at the dates indicated:	

	 	At	 	At	
(Dollars in Thousands)	 	9/30/2002	 	12/31/2001	
	 		 		
Non–accrual loans:	 	 	 	 	 	 	 	 	
 	 	Mortgage loans	 	$	2,293	 	 	 	4,044	 	
 	 	Commercial loans	 	 	5,508	 	 	 	4,568	 	
 	 	Consumer loans	 	 	573	 	 	 	620	 	
 	 	 		 	 	 		 	
 	 	 	Total	 	$	8,674	 	 	 	9,232	 	
Accruing Loans 90 days or more overdue:	 	 	 	 	 	 	 	 	
 	 	Mortgage loans	 	 	707	 	 	 	818	 	
 	 	Commercial loans	 	 	471	 	 	 	376	 	
 	 	Consumer loans	 	 	256	 	 	 	243	 	
 	 	 		 	 	 		 	
 	 	 	Total	 	$	1,434	 	 	 	1,437	 	
Real estate and other assets owned, net	 	 	852	 	 	 	593	 	
 	 	 		 	 	 		 	
Total non–performing loans, and real estate and other assets owned, net	 	$	10,960	 	 	 	11,262	 	
 	 	 		 	 	 		 	
 	As a percentage of total assets	 	 	0.49	%	 	 	0.53	%	
Interest Income (1)	 	$	486	 	 	 	658	 	
(1)	 	This is the amount of interest that would have been recorded on loans accounted for on a non–performing basis for the nine months ended September 30, 2002 and the year ended December 31, 2001, if such loans had been current for the entire period.	
10

 	The following table illustrates the loan loss experience: 	

ALLOWANCE FOR LOAN LOSS	 	Nine months ended	 	Year ended	
	 	September 30,	 	December 31,	
(Dollars in Thousands)	 	2002	 	2001	
	 		 		
Balance at beginning of period	 	$	18,654	 	 	 	7,799	 	
 	Charge offs:	 	 	 	 	 	 	 	 	
 	 	Residential real estate	 	 	(680	)	 	 	(677	)	
 	 	Commercial loans	 	 	(1,039	)	 	 	(723	)	
 	 	Consumer loans	 	 	(916	)	 	 	(2,029	)	
 	 	 		 	 	 		 	
 	 	 	Total charge offs	 	$	(2,635	)	 	 	(3,429	)	
 	 	 		 	 	 		 	
 	Recoveries:	 	 	 	 	 	 	 	 	
 	 	Residential real estate	 	 	254	 	 	 	33	 	
 	 	Commercial loans	 	 	261	 	 	 	266	 	
 	 	Consumer loans	 	 	583	 	 	 	567	 	
 	 	 		 	 	 		 	
 	 	 	Total recoveries	 	$	1,098	 	 	 	866	 	
 	 	 		 	 	 		 	
 	Chargeoffs, net of recoveries	 	 	(1,537	)	 	 	(2,563	)	
 	Purchased reserve	 	 	—	 	 	 	8,893	 	
 	Provision	 	 	4,225	 	 	 	4,525	 	
 	 	 		 	 	 		 	
Balance at end of period	 	$	21,342	 	 	 	18,654	 	
 	 	 		 	 	 		 	
Ratio of net charge offs to average loans outstanding during the period	 	 	0.16	%	 	 	0.20	%	
 
 	The following table summarizes the allocation of the allowance for loan losses:	

 	 	 	September 30, 2002	 	December 31, 2001	
 	 	 		 		
 	 	 	 	 	 	 	Percent	 	 	 	 	 	Percent	
	 	 	 	 	 	of loans in	 	 	 	 	 	of loans in	
(Dollars in thousands)	 	Allowance	 	category	 	Allowance	 	category	
	 		 		 		 		
Residential first mortgage	 	$	2,604	 	 	 	28.4	%	 	 	2,722	 	 	 	31.5	%	
Commercial real estate	 	 	6,859	 	 	 	29.3	%	 	 	5,906	 	 	 	28.3	%	
Other commercial	 	 	7,945	 	 	 	20.7	%	 	 	6,225	 	 	 	18.0	%	
Consumer	 	 	3,934	 	 	 	21.6	%	 	 	3,801	 	 	 	22.2	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	21,342	 	 	 	100.0	%	 	 	18,654	 	 	 	100.0	%	

8)	Deposits	

 	The following table illustrates the amounts outstanding for deposits greater than $100,000 at September 30, 2002, according to the time remaining to maturity: 	

	 	Certificates	 	Demand	 	 	 	 	
(Dollars in thousands)	 	of Deposit	 	Deposits	 	Totals	
	 		 		 		
Within three months	 	$	24,794	 	 	 	388,550	 	 	 	413,344	 	
Three to six months	 	 	16,483	 	 	 	—	 	 	 	16,483	 	
Seven to twelve months	 	 	20,065	 	 	 	—	 	 	 	20,065	 	
Over twelve months	 	 	16,139	 	 	 	—	 	 	 	16,139	 	
 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	77,481	 	 	 	388,550	 	 	 	466,031	 	
 	 	 		 	 	 		 	 	 		 	
11

9)	Advances and Other Borrowings 	

 	The following chart illustrates the average balances and the maximum outstanding month-end balances for FHLB advances and repurchase agreements:	

	 	September 30,	December 31,	
 	(Dollars in thousands)	 	2002	 	2001		
	 		 			
FHLB Advances	 	 	 	 	 	 	 	 		
 	Amount outstanding at end of period	 	$	402,367	 	 	 	367,295	 		
 	Average balance	 	$	394,270	 	 	 	349,023	 		
 	Maximum outstanding at any month–end	 	$	433,262	 	 	 	416,222	 		
 	Weighted average interest rate	 	 	4.26	%	 	 	5.24	%		
Repurchase Agreements:	 	 	 	 	 	 	 	 		
 	Amount outstanding at end of period	 	$	33,572	 	 	 	32,585	 		
 	Average balance	 	$	33,685	 	 	 	27,375	 		
 	Maximum outstanding at any month–end	 	$	41,113	 	 	 	37,814	 		
 	Weighted average interest rate	 	 	1.72	%	 	 	2.11	%		
 
10)	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 September 30, 2002: 	

CONSOLIDATED	 	 	 	 	 	 	
	 	Tier 1 (Core)	 	Tier 2 (Total)	 	Leverage	
(Dollars in thousands)	 	Capital	 	Capital	 	Capital	
	 		 		 		
GAAP Capital	 	$	206,192	 	 	 	206,192	 	 	 	206,192	 	
Less: Goodwill and intangibles	 	 	(40,370	)	 	 	(40,370	)	 	 	(40,370	)	
 	Accumulated other comprehensive gain on AFS securities	 	 	(11,651	)	 	 	(11,651	)	 	 	(11,651	)	
Plus: Allowance for loan losses	 	 	—	 	 	 	18,887	 	 	 	—	 	
 	Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	
 	Other Adjustments	 	 	—	 	 	 	110	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	
Regulatory capital computed	 	$	189,171	 	 	 	208,168	 	 	 	189,171	 	
 	 	 		 	 	 		 	 	 		 	
Risk weighted assets	 	$	1,508,540	 	 	 	1,508,540	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	
Total average assets	 	 	 	 	 	 	 	 	 	$	2,127,792	 	
 	 	 	 	 	 	 	 	 	 	 		 	
Capital as % of defined assets	 	 	12.54	%	 	 	13.80	%	 	 	8.89	%	
Regulatory “well capitalized” requirement	 	 	6.00	%	 	 	10.00	%	 	 	5.00	%	
 	 	 		 	 	 		 	 	 		 	
Excess over “well capitalized” requirement	 	 	6.54	%	 	 	3.80	%	 	 	3.89	%	

12

11)	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	 	For the six months	
 	 	 	 	ended September 30,	 	ended September 30,		
	 		 			
Dollars in thousands	 	2002	 	2001	 	2002	 	2001		
	 		 		 		 			
Net earnings	 	$	8,616	 	 	 	5,707	 	 	 	23,641	 	 	 	15,229	 		
Unrealized holding gain arising during the period	 	 	7,989	 	 	 	3,694	 	 	 	16,354	 	 	 	6,561	 		
Tax expense	 	 	(3,153	)	 	 	!1,485	)	 	 	(6,460	)	 	 	(2,590	)		
 	 	 		 	 	 		 	 	 		 	 	 		 		
 	Net after tax	 	 	4,836	 	 	 	2,209	 	 	 	9,894	 	 	 	3,971	 		
Reclassification adjustment for gains included in net income	 	 	—	 	 	 	24	 	 	 	2	 	 	 	88	 		
Tax expense	 	 	—	 	 	 	(9	)	 	 	(1	)	 	 	(34	)		
 	 	 		 	 	 		 	 	 		 	 	 		 		
 	Net after tax	 	 	—	 	 	 	15	 	 	 	1	 	 	 	54	 		
 	Net unrealized gain on securities	 	 	4,836	 	 	 	2,224	 	 	 	9,895	 	 	 	4,025	 		
 	 	 		 	 	 		 	 	 		 	 	 		 		
 	 	Total comprehensive earnings	 	$	13,452	 	 	 	7,931	 	 	 	33,536	 	 	 	19,254	 		

12)	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. During the third quarter of 2001, certain branches of Western were transferred to other Company owned banks located in the same geographic area which accounted for the change in activity for certain segments. 	

 	 	 	Nine months ended and as of September 30, 2002	
 	 	 		
	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	28,245	 	 	 	25,651	 	 	 	20,423	 	 	 	18,920	 	 	 	9,517	 	
Intersegment revenues	 	 	247	 	 	 	82	 	 	 	8	 	 	 	—	 	 	 	—	 	
Expenses	 	 	20,882	 	 	 	19,723	 	 	 	16,338	 	 	 	16,041	 	 	 	7,485	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	$	7,610	 	 	 	6,010	 	 	 	4,093	 	 	 	2,879	 	 	 	2,032	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	486,924	 	 	 	481,290	 	 	 	399,316	 	 	 	387,089	 	 	 	175,368	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 		 		 		 		
Revenues from external customers	 	 	9,720	 	 	 	6,360	 	 	 	218	 	 	 	119,054	 	
Intersegment revenues	 	 	103	 	 	 	—	 	 	 	29,867	 	 	 	30,307	 	
Expenses	 	 	8,201	 	 	 	4,762	 	 	 	1,981	 	 	 	95,413	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(30,307	)	 	 	(30,307	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	 	1,622	 	 	 	1,598	 	 	 	(2,203	)	 	 	23,641	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	 	1821,356	 	 	 	123,551	 	 	 	(12,065	)	 	 	2,223,829	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
13

 	 	 	Nine months ended and as of September 30, 2001	
 	 	 		
	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	30,584	 	 	 	18,552	 	 	 	33,079	 	 	 	15,278	 	 	 	6,723	 	
Intersegment revenues	 	 	937	 	 	 	14	 	 	 	169	 	 	 	192	 	 	 	2	 	
Expenses	 	 	25,707	 	 	 	14,743	 	 	 	29,476	 	 	 	15,108	 	 	 	5,756	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	$	5,814	 	 	 	3,823	 	 	 	3,772	 	 	 	362	 	 	 	969	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	528,848	 	 	 	422,687	 	 	 	381,994	 	 	 	318,159	 	 	 	166,879	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 		 		 		 		
Revenues from external customers	 	 	8,074	 	 	 	6,255	 	 	 	270	 	 	 	118,815	 	
Intersegment revenues	 	 	125	 	 	 	14	 	 	 	20,216	 	 	 	21,669	 	
Expenses	 	 	6,870	 	 	 	4,995	 	 	 	931	 	 	 	103,586	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(21,669	)	 	 	(21,669	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	 	1,329	 	 	 	1,274	 	 	 	(2,114	)	 	 	15,229	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	 	165,859	 	 	 	122,991	 	 	 	(12,452	)	 	 	2,094,965	 	

 	 	 	Three months ended and as of September 30, 2002	
 	 	 		
	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	9,589	 	 	 	8,633	 	 	 	6,762	 	 	 	6,467	 	 	 	3,232	 	
Intersegment revenues	 	 	77	 	 	 	33	 	 	 	—	 	 	 	—	 	 	 	—	 	
Expenses	 	 	6,929	 	 	 	6,549	 	 	 	5,268	 	 	 	5,425	 	 	 	2,478	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	$	2,737	 	 	 	2,117	 	 	 	1,494	 	 	 	1,042	 	 	 	754	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	486,924	 	 	 	481,290	 	 	 	399,316	 	 	 	387,089	 	 	 	175,368	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 		 		 		 		
Revenues from external customers	 	 	3,303	 	 	 	2,177	 	 	 	123	 	 	 	40,286	 	
Intersegment revenues	 	 	33	 	 	 	—	 	 	 	10,850	 	 	 	10,993	 	
Expenses	 	 	2,874	 	 	 	1,594	 	 	 	553	 	 	 	31,670	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(10,993	)	 	 	(10,993	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	 	462	 	 	 	583	 	 	 	(573	)	 	 	8,616	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	 	182,356	 	 	 	123,551	 	 	 	(12,065	)	 	 	2,223,829	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
14

 	 	 	Three months ended and as of September 30, 2001	
 	 	 		
	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	10,792	 	 	 	8,230	 	 	 	9,366	 	 	 	5,872	 	 	 	3,130	 	
Intersegment revenues	 	 	478	 	 	 	3	 	 	 	161	 	 	 	—	 	 	 	2	 	
Expenses	 	 	9,025	 	 	 	6,530	 	 	 	8,796	 	 	 	5,615	 	 	 	2,567	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	$	2,245	 	 	 	1,703	 	 	 	731	 	 	 	257	 	 	 	565	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	528,848	 	 	 	422,687	 	 	 	381,994	 	 	 	318,159	 	 	 	166,879	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	Valley	 	Whitefish	 	Other	 	Consolidated	
 	 	 		 		 		 		
Revenues from external customers	 	 	3,386	 	 	 	2,249	 	 	 	(130	)	 	 	42,895	 	
Intersegment revenues	 	 	59	 	 	 	8	 	 	 	7,557	 	 	 	8,268	 	
Expenses	 	 	2,889	 	 	 	1,791	 	 	 	(25	)	 	 	37,188	 	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(8,268	)	 	 	(8,268	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net income	 	 	556	 	 	 	466	 	 	 	(816	)	 	 	5,707	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	 	165,859	 	 	 	122,991	 	 	 	(12,452	)	 	 	2,094,965	 	

13)	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. 	

 	 	 	Nine Months Ended September 30,	
 	 	 	2002 vs. 2001	
 	 	 	Increase (Decrease) due to:	
 	 	 		
(Dollars in Thousands)	 	Volume	 	Rate	 	Net	
	 		 		 		
Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	
Real Estate Loans	 	$	(2,691	)	 	 	(1,369	)	 	 	(4,060	)	
Commercial Loans	 	 	6,854	 	 	 	(6,290	)	 	 	564	 	
Consumer and Other Loans	 	 	(110	)	 	 	(1,969	)	 	 	(2,079	)	
Investment Securities	 	 	6,898	 	 	 	(3,047	)	 	 	3,851	 	
 	 	 		 	 	 		 	 	 		 	
 	Total Interest Income	 	 	10,951	 	 	 	(12,675	)	 	 	(1,724	)	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
NOW Accounts	 	 	219	 	 	 	(1,048	)	 	 	(829	)	
Savings Accounts	 	 	349	 	 	 	(1,172	)	 	 	(823	)	
Money Market Accounts	 	 	2,280	 	 	 	(4,487	)	 	 	(2,207	)	
Certificates of Deposit	 	 	(1,555	)	 	 	(7,292	)	 	 	(8,847	)	
FHLB Advances	 	 	1,941	 	 	 	(3,435	)	 	 	(1,494	)	
Other Borrowings and Repurchase Agreements	 	 	463	 	 	 	(658	)	 	 	(195	)	
 	 	 		 	 	 		 	 	 		 	
 	Total Interest Expense	 	 	3,697	 	 	 	(18,092	)	 	 	(14,395	)	
 	 	 		 	 	 		 	 	 		 	
Net Interest Income	 	$	7,254	 	 	 	5,417	 	 	 	12,671	 	
 	 	 		 	 	 		 	 	 		 	
15

14)	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 Nine months ended 9-30-02	 	For the year ended 12-31-01	
 	 	 	 		 		
 	 	 	 	 	 	 	 	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	 	$	383,386	 	 	 	22,253	 	 	 	7.74	%	 	$	428,999	 	 	 	34,012	 	 	 	7.93	%	
 	Commercial Loans	 	 	641,598	 	 	 	35,088	 	 	 	7.31	%	 	 	556,907	 	 	 	48,292	 	 	 	8.67	%	
 	Consumer and Other Loans	 	 	289,616	 	 	 	17,142	 	 	 	7.91	%	 	 	292,732	 	 	 	25,528	 	 	 	8.72	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Loans	 	 	1,314,600	 	 	 	74,483	 	 	 	7.58	%	 	 	1,278,638	 	 	 	107,832	 	 	 	8.43	%	
 	Investment Securities	 	 	637,052	 	 	 	25,931	 	 	 	5.43	%	 	 	501,927	 	 	 	30,088	 	 	 	5.99	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Earning Assets	 	 	1,951,652	 	 	 	100,414	 	 	 	6.86	%	 	 	1,780,565	 	 	 	137,920	 	 	 	7.75	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Non-Earning Assets	 	 	171,838	 	 	 	 	 	 	 	165,687	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL ASSETS	 	$	2,123,490	 	 	 	 	 	 	$	1,946,252	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	NOW Accounts	 	$	204,993	 	 	 	578	 	 	 	0.38	%	 	$	183,399	 	 	 	1,758	 	 	 	0.96	%	
 	Savings Accounts	 	 	127,245	 	 	 	676	 	 	 	0.71	%	 	 	102,736	 	 	 	1,855	 	 	 	1.81	%	
 	Money Market Accounts	 	 	349,620	 	 	 	5,316	 	 	 	2.03	%	 	 	287,150	 	 	 	9,575	 	 	 	3.33	%	
 	Certificates of Deposit	 	 	506,989	 	 	 	13,974	 	 	 	3.69	%	 	 	552,469	 	 	 	29,504	 	 	 	5.34	%	
 	FHLB Advances	 	 	394,270	 	 	 	12,555	 	 	 	4.26	%	 	 	349,023	 	 	 	18,280	 	 	 	5.24	%	
 	Repurchase Agreements and Other Borrowed Funds	 	 	74,188	 	 	 	3,216	 	 	 	5.80	%	 	 	66,658	 	 	 	4,574	 	 	 	6.86	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Interest Bearing Liabilities	 	 	1,657,305	 	 	 	36,315	 	 	 	2.93	%	 	 	1,541,435	 	 	 	65,546	 	 	 	4.25	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	 	Non–interest Bearing Deposits	 	 	247,358	 	 	 	 	 	 	 	216,238	 	 	 	 	 	
 	 	Other Liabilities	 	 	26,844	 	 	 	 	 	 	 	27,847	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Liabilities	 	 	1,931,507	 	 	 	 	 	 	 	1,785,520	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Common Stock	 	 	171	 	 	 	 	 	 	 	157	 	 	 	 	 	
 	Paid-In Capital	 	 	169,789	 	 	 	 	 	 	 	152,420	 	 	 	 	 	
 	Retained Earnings	 	 	16,921	 	 	 	 	 	 	 	5,929	 	 	 	 	 	
 	Accumulated Other Comprehensive Earnings	 	 	5,102	 	 	 	 	 	 	 	2,226	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Stockholders’ Equity	 	 	191,983	 	 	 	 	 	 	 	160,732	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	 	$	2,123,490	 	 	 	 	 	 	$	1,946,252	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Net Interest Income	 	 	 	$	64,099	 	 	 	 	 	 	$	72,374	 	 	 	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Net Interest Spread	 	 	 	 	 	 	3.93	%	 	 	 	 	 	 	3.49	%	
 	Net Interest Margin on average earning assets	 	 	 	 	 	 	4.38	%	 	 	 	 	 	 	4.06	%	
 	Return on Average Assets	 	 	 	 	 	 	1.48	%	 	 	 	 	 	 	1.11	%	
 	Return on Average Equity	 	 	 	 	 	 	16.42	%	 	 	 	 	 	 	13.49	%	
16

15)	Recently Issued Accounting Standards 	

  	In July 2001, the Financial Accounting Standards Board (FASB) issued Statement 141, Business Combinations, and Statement 142, Goodwill and Other Intangible Assets. In October 2002, FASB issued Statement 147, Acquisitions of Certain Financial Institutions. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria that intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. However, goodwill recognized in connection with a branch acquisition will follow Statement 147, which states that if certain criteria are met in Statement 147, the amount of unidentifiable intangible asset will be reclassified to goodwill upon adoption of that Statement and follow Statement 142. Prior to October 2002, goodwill associated with branch acquisitions was subject to the provisions of Statement 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, which required amortization of the unidentifiable intangible asset. In addition, financial institutions meeting the requirements of Statement 147 will be required to restate previously issued financial statements. The objective of that restatement requirement is to present the balance sheet and income statement as if the amount accounted for under Statement 72 as an unidentifiable intangible asset had been reclassified to goodwill as of the date Statement 142 was initially applied. Statement 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company adopted the provisions of Statement 141 immediately, and Statement 142 and 144 effective January 1, 2002. Statement 147 was adopted October 1, 2002 and retroactively applied to January 1, 2002. 	

  	Statement 141 required upon adoption of Statement 142 that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. The Company was required to reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the end of the first interim period after adoption (March 31, 2002). In addition, to the extent an intangible asset was identified as having an indefinite useful life, the Company was required to test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss would be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period. 	

  	In connection with the transitional goodwill impairment evaluation, Statement 142 required the Company to perform an assessment of whether there was an indication that goodwill was impaired as of the date of adoption. To accomplish this, the Company identified its reporting units and determined the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company had up to six months from the date of adoption (June 30, 2002) to determine the fair value of each reporting unit and compare it to the reporting unit’s carrying amount. To the extent a reporting unit’s carrying amount exceeded its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption (January 1, 2002). This second step, if necessary, is required to be completed as soon as possible, but no later than the end of the year of adoption (December 31, 2002). Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company’s consolidated statements of operations. 	

17

  	As of September 30, 2002, the Company has identified its reporting units as its banking subsidiaries and has allocated goodwill accordingly. Intangibles with definite useful lives have been re-assessed and the useful lives and residual values were determined to be adequate. Intangibles with indefinite useful lives have been tested for impairment loss. The Company estimated the fair value of each reporting unit, and determined that each unit’s fair value exceeds the carrying value of each reporting unit, and consequently no impairment is evident at this time. The Company has evaluated the goodwill recognized in connection with 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. The reclassification was retroactively applied to January 1, 2002, which resulted in the restatement of previously filed financial statements. On an annual basis, prior to the end of the third quarter, the Company will revaluate the useful lives, residual value, and test goodwill for impairment, as required by Statement 142. 	

  	The following table sets forth information regarding the Company’s core deposit intangibles and mortgage servicing rights: 	

 	 	 	 	
 	 	 			
	 	Core Deposit	 	Mortgage	 	 		
(Dollars in thousands)	 	Intangible	 	Servicing Rights(1)	 	Total		
	 		 		 			
 	Gross carrying value	 	$	9,836	 	 	 	 	 	 	 	 	 		
 	Accumulated Amortization	 	 	(2,655	)	 	 	 	 	 	 	 	 		
 	 	 		 	 	 	 	 	 	 	 	 		
 	Net carrying value	 	$	7,181	 	 	 	2,188	 	 	 	9,299	 		
 	 	 		 	 	 	 	 	 	 	 	 		
Weighted–Average amortization period	 	 	 	 	 	 	 	 	 	 	 	 		
 	(Period in years)	 	 	10.0	 	 	 	8.8	 	 	 	9.7	 		
Aggregate Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 		
 	For the three months ended September 30, 2002	 	$	359	 	 	 	115	 	 	 	474	 		
 	For the nine months ended September 30, 2002	 	$	1,080	 	 	 	301	 	 	 	1,381	 		
Estimated Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 		
 	For the year ended December 31, 2002	 	$	1,439	 	 	 	294	 	 	 	1,733	 		
 	For the year ended December 31, 2003	 	 	1,219	 	 	 	280	 	 	 	1,499	 		
 	For the year ended December 31, 2004	 	 	1,011	 	 	 	267	 	 	 	1,278	 		
 	For the year ended December 31, 2005	 	 	847	 	 	 	253	 	 	 	1,100	 		
 	For the year ended December 31, 2006	 	 	779	 	 	 	239	 	 	 	1,018	 		

(1)	 	Gross carrying value and accumulated amortization are not readily available	
18

  	The changes in the carrying amount of goodwill for the nine months ended September 30, 2002 are as follows. 	

 	 	Balance	 	Goodwill	 	Balance	
	 	At	 	Adjustments	 	At	
(Dollars in thousands)	 	12/31/2001	 	2002(1)	 	9/30/2002	
	 		 		 		
Parent	 	$	2,151	 	 	 	(2,151	)	 	 	—	 	
Glacier Bank	 	 	4,074	 	 	 	10	 	 	 	4,084	 	
First Security	 	 	3,796	 	 	 	861	 	 	 	4,657	 	
Western	 	 	4,193	 	 	 	(345	)	 	 	3,848	 	
Mountain	 	 	16,818	 	 	 	—	 	 	 	16,818	 	
Big Sky	 	 	1,752	 	 	 	—	 	 	 	1,752	 	
Valley	 	 	726	 	 	 	1,044	 	 	 	1,770	 	
Whitefish	 	 	—	 	 	 	260	 	 	 	260	 	
 	 	 		 	 	 		 	 	 		 	
 	 	$	33,510	 	 	 	(321	)	 	 	33,189	 	

(1)	 	Adjustments are purchase accounting adjustments and recovery of contingencies related to the WesterFed Financial Corporation acquisition on February 28, 2001 and reclassification of goodwill from the parent to the apropriate subsidiary.	

  	The following pro forma information presents the consolidated results of operations as if the adoption of Statement 142 and 147 had occurred on January 1, 2001. The table is for comparison purposes only: 	

 	 	For the Three Months	 	For the Nine Months	
 	 	Ended September 30,	 	Ended September 30,	
	 		 		
(Dollars in thousands)	 	2002	 	2001	 	2002	 	2001	
	 		 		 		 		
Reported net income	 	$	8,616	 	 	 	5,707	 	 	 	23,641	 	 	 	15,229	 	
Add back goodwill amortization, net of tax	 	 	—	 	 	 	395	 	 	 	—	 	 	 	995	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Adjusted net income	 	$	8,616	 	 	 	6,102	 	 	 	23,641	 	 	 	16,224	 	

 	 	For the Three Months Ended September 30,	
 	 		
 	 	2002	 	2001	
 	 		 		
 	 	Basic EPS	 	Diluted EPS	 	Basic EPS	 	Diluted EPS	
 	 		 		 		 		
Reported net income	 	$	0.50	 	 	 	0.49	 	 	 	0.34	 	 	 	0.33	 	
Add back goodwill amortization, net of tax	 	 	—	 	 	 	—	 	 	 	0.03	 	 	 	0.03	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Adjusted net income	 	$	0.50	 	 	 	0.49	 	 	 	0.37	 	 	 	0.36	 	

 	 	For the Nine Months Ended September 30,	
 	 		
 	 	2002	 	2001	
 	 		 		
 	 	Basic EPS	 	Diluted EPS	 	Basic EPS	 	Diluted EPS	
 	 		 		 		 		
Reported net income	 	$	1.38	 	 	 	1.36	 	 	 	0.99	 	 	 	0.96	 	
Add back goodwill amortization, net of tax	 	 	—	 	 	 	—	 	 	 	0.07	 	 	 	0.07	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Adjusted net income	 	$	1.38	 	 	 	1.36	 	 	 	1.06	 	 	 	1.03	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
19

  	The following table illustrates the affect of the adoption of Statement 147, which was retroactively applied to January 1, 2002.	

 	 	Three	 	Three	 	Six	
	 	months ended	 	months ended	 	months ended	
(Dollars in thousands)	 	Mar 31, 2002	 	June 30, 2002	 	June 30, 2002	
	 		 		 		
Reported net income	 	$	6,748	 	 	 	7,979	 	 	 	14,727	 	
Add back goodwill amortization, net of tax	 	 	149	 	 	 	149	 	 	 	298	 	
 	 	 		 	 	 		 	 	 		 	
Adjusted net income	 	$	6,897	 	 	 	8,128	 	 	 	15,025	 	
 	 	 		 	 	 		 	 	 		 	
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 September 30, 2001 and December 31, 2001, to September 30, 2002. 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	 	September 30,	 	December 31,	 	September 30,	 	December 31,	 	September 30,	
Assets ($ in thousands) 	 	2002	 	2001	 	2001	 	2001	 	2001	
 	 	 	 		 		 		 		 		
Cash on hand and in banks	 	$	62,723	 	 	 	73,456	 	 	 	64,064	 	 	 	(10,733	)	 	 	(1,341	)	
Investment securities and interest bearing deposits	 	 	673,885	 	 	 	532,548	 	 	 	510,530	 	 	 	141,337	 	 	 	163,355	 	
Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	383,890	 	 	 	421,996	 	 	 	441,232	 	 	 	(38,106	)	 	 	(57,342	)	
 	Commercial and Agricultural	 	 	674,139	 	 	 	620,134	 	 	 	627,110	 	 	 	54,005	 	 	 	47,029	 	
 	Consumer	 	 	291,164	 	 	 	298,851	 	 	 	308,010	 	 	 	(7,687	)	 	 	(16,846	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans	 	 	1,349,193	 	 	 	1,340,981	 	 	 	1,376,352	 	 	 	8,212	 	 	 	(27,159	)	
 	Allowance for loan losses	 	 	(21,342	)	 	 	(18,654	)	 	 	(18,528	)	 	 	(2,688	)	 	 	(2,814	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans net of allowance for loan losses	 	 	1,327,851	 	 	 	1,322,327	 	 	 	1,357,824	 	 	 	5,524	 	 	 	(29,973	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Other assets	 	 	159,355	 	 	 	157,416	 	 	 	162,547	 	 	 	1,939	 	 	 	(3,192	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	2,223,814	 	 	 	2,085,747	 	 	 	2,094,965	 	 	 	138,067	 	 	 	128,849	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
At September 30, 2002 total assets were $2.224 billion which is $129 million larger than the September 30, 2001 assets of $2.095 billion, an increase of 6 percent. Total assets have increased $138 million from December 31, 2001. 
Total loans, net of the allowance for loan losses, have decreased $30 million from September 30, 2001. With lower interest rates during 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 $57 million. Total loans, net of the allowance for loan losses, have increased $6 million from December 31, 2001, partly due to the increase in commercial loans which have increased $54 million and continue to be the lending focus. Consumer loans have declined $17 million, since September 30, 2001, of which $8 million of the decline occurred in 2002, with a significant portion of the decline attributed to the planned runoff in the WesterFed auto dealer originated consumer loans. We are focusing on home-equity loans as the primary source for the consumer loan portfolio. 
Investment securities, including interest bearing deposits in other financial institutions, have increased $163 million from September 30, 2001, of which $141 million occurred in 2002. Much of 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. 
20

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 increases in interest rates 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 September 30, 2002 was approximately $265 million. 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	September 30,	 	December 31,	 	September 30,	 	December 31,	 	September 30,	
Liabilities ($ in thousands) 	 	2002	 	2001	 	2001	 	2001	 	2001	
 	 	 		 		 		 		 		
Deposits — non–interest bearing	 	$	292,653	 	 	 	234,318	 	 	 	244,450	 	 	 	58,335	 	 	 	48,203	 	
Deposits — interest bearing	 	 	1,206,000	 	 	 	1,211,746	 	 	 	1,209,469	 	 	 	(5,746	)	 	 	(3,469	)	
Advances from Federal Home Loan Bank	 	 	402,367	 	 	 	367,295	 	 	 	360,654	 	 	 	35,072	 	 	 	41,713	 	
Other borrowed funds	 	 	50,371	 	 	 	33,645	 	 	 	41,412	 	 	 	16,726	 	 	 	8,959	 	
Other liabilities	 	 	31,231	 	 	 	26,760	 	 	 	32,385	 	 	 	4,471	 	 	 	(1,154	)	
Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total liabilities	 	$	2,017,622	 	 	 	1,908,764	 	 	 	1,963,370	 	 	 	108,858	 	 	 	94,252	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Total deposits have increased $45 and $53 million from September 30, 2001 and December 31, 2001, respectively. Non-interest bearing deposits are up $48 million, or 20 percent, and interest-bearing deposits are down $3 million from September 30, 2001. Federal home loan bank advances, other borrowed funds, and repurchase agreements, have also increased $51 million from September 30, 2001. 
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 September 30, 2002, the Company had $761 million of available FHLB line of which $402 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 2002, 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. 
21

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
Stockholders’ equity	 	September 30,	 	December 31,	 	September 30,	 	December 31,	 	September 30,	
($ in thousands except per share data)	 	2002	 	2001	 	2001	 	2001	 	2001	
 	 	 		 		 		 		 		
Common equity	 	$	194,541	 	 	 	175,227	 	 	 	167,312	 	 	 	19,314	 	 	 	27,229	 	
Net unrealized gain on securities	 	 	11,651	 	 	 	1,756	 	 	 	4,283	 	 	 	9,895	 	 	 	7,368	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total stockholders’ equity	 	$	206,192	 	 	 	176,983	 	 	 	171,595	 	 	 	29,209	 	 	 	34,597	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Stockholders’ equity to total assets	 	 	9.27	%	 	 	8.49	%	 	 	8.19	%	 	 	 	 	 	 	 	 	
Tangible equity to total assets	 	 	7.59	%	 	 	6.62	%	 	 	6.22	%	 	 	 	 	 	 	 	 	
Book value per common share	 	$	11.97	 	 	 	10.49	 	 	 	10.26	 	 	 	1.48	 	 	 	1.71	 	
Tangible book value per common share	 	$	9.63	 	 	 	8.01	 	 	 	7.63	 	 	 	1.62	 	 	 	2.00	 	
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. 

 	 	September 30,	 	June 30,	 	December 31,	 	September 30,	
 	 		 		 		 		
Credit quality information ($ in thousands)	 	2002	 	2002	 	2001	 	2001	
 	 		 		 		 		
Allowance for loan losses	 	$	21,342	 	 	 	19,941	 	 	 	18,654	 	 	 	18,528	 	
Non–performing assets	 	$	10,960	 	 	 	9,214	 	 	 	11,262	 	 	 	11,089	 	
Allowance as a percentage of non performing assets	 	 	194.73	%	 	 	216.42	%	 	 	165.64	%	 	 	167.08	%	
Non–performing assets as a percentage of total assets	 	 	0.49	%	 	 	0.43	%	 	 	0.53	%	 	 	0.53	%	
Allowance as a percentage of total loans	 	 	1.58	%	 	 	1.52	%	 	 	1.39	%	 	 	1.35	%	
Allowance for Loan Loss and Non-Performing Assets 
Non-performing assets as a percentage of total assets at September 30, 2002 were .49 percent versus .53 percent at the same time last year, which compares to the Peer Group average of .63 percent at June 30, 2002, the most recent information available. The allowance for loan losses was 195 percent of non-performing assets at September 30, 2002, up from 167 percent a year ago. 
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 allowance for loan losses account. The allowance balance has increased $2.814 million, or 15 percent over September 30, 2001, to $21.342 million, which is 1.58 percent of total loans outstanding, up from 1.35 percent a year ago and 1.39 percent at December 31, 2001. The third quarter provision expense for loan losses was $1.665 million, an increase of $659 thousand from the same quarter in 2001. 
The 2002 provision expense for loan losses through September was $4.225 million which is an increase of $796 thousand over the first nine months of 2001. The reserve has increased because of the increased percentage of commercial loans which historically carry a higher risk profile than residential real estate loans which now comprise a smaller percentage of the loans outstanding. Net charged off loans as a percentage of loans outstanding were .11 for the first nine months of 2002 which is down from .12 for the same period in 2001. 
22

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 allowance for loan losses is 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 September 30, 2002 compared to the three months ended
September 30, 2001. 

 	 	 	 	Three months ended September 30,	
Revenue summary	 		
($ in thousands)	 	2002	 	2001	 	$ change	 	% change	
 	 	 	 		 		 		 		
Net interest income	 	$	22,131	 	 	 	19,199	 	 	 	2,932	 	 	 	15.3	%	
Fees and other revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges, loan fees, and other fees	 	 	4,757	 	 	 	4,265	 	 	 	492	 	 	 	11.5	%	
 	Gain on sale of loans	 	 	1,225	 	 	 	1,111	 	 	 	114	 	 	 	10.3	%	
 	Other income	 	 	475	 	 	 	419	 	 	 	56	 	 	 	13.4	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	 	Total non–interest income	 	 	6,457	 	 	 	5,795	 	 	 	662	 	 	 	11.4	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total revenue	 	$	28,588	 	 	 	24,994	 	 	 	3,594	 	 	 	14.4	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Tax equivilent net interest margin	 	 	4.58	%	 	 	3.93	%	 	 	 	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	 	 	 	 	
Net Interest Income
Net interest income for the quarter increased $2.932 million, or 15 percent, over the same period in 2001. Total interest income is $3.271 million, or 9 percent lower that the same quarter in 2001, while total interest expense is $6.203 million, or 35 percent lower. The increase in non-interest bearing deposits contributed to the reduced interest expense. Lower interest rates in 2002 have also reduced interest income and interest expense. The net interest margin as a percentage of earning assets, on a tax equivalent basis, increased from 3.9 percent for the 2001 quarter to 4.6 percent in 2002. The net interest margin for the third quarter was the same as the prior quarter and an increase over the 4.4 percent margin in the first quarter of 2002. 
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 rates, and interchange fees on electronic check cards. The increase in gain on sale of loans reflects the low level of mortgage rates and resulting purchase and refinancing activity. Other non-interest income increases were from a variety of volume related activity increases over this quarter of last year. 
23

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Three months ended September 30,	
Non–interest expense summary	 		
($ in thousands)	 	2002	 	2001	 	$ change	 	% change	
 	 	 		 		 		 		
Compensation and employee benefits	 	$	7,541	 	 	 	7,392	 	 	 	149	 	 	 	2.0	%	
Occupancy and equipment expense	 	 	2,340	 	 	 	2,187	 	 	 	153	 	 	 	7.0	%	
Outsourced data processing expense	 	 	547	 	 	 	707	 	 	 	(160	)	 	 	-22.6	%	
Core deposit intangible amortization	 	 	359	 	 	 	383	 	 	 	(24	)	 	 	-6.3	%	
Goodwill amortization	 	 	—	 	 	 	492	 	 	 	(492	)	 	 	-100.0	%	
Other expenses	 	 	3,209	 	 	 	3,948	 	 	 	(739	)	 	 	-18.7	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total non–interest expense	 	$	13,996	 	 	 	15,109	 	 	 	(1,113	)	 	 	-7.4	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Non-interest Expense 
Non-interest expense decreased by $1.113 million, or 7 percent, from the same quarter of 2001, however, 2001 includes $325 thousand in merger and conversion expense, and $492 thousand in goodwill amortization. The decrease in goodwill amortization is the result of the adoption of Statement of Financial Accounting Standards 142 and 147, see footnote 15 for further information. During the third quarter of 2002 there was a $323 thousand reversal of a merger related accrual, so non-interest expense from operations is $27 thousand higher than last year. During the third quarter of 2001 the data processing functions for Western Security Bank were converted to our in-house system. This has reduced the outsourced data processing costs and increased compensation and benefits expense. Compensation and benefit expense has increased $149 thousand, or 2 percent from the third quarter of 2001. Core deposit intangible asset amortization was $359 thousand which is a decrease of $24 thousand from the prior year. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 49 percent ratio for the 2002 quarter which is an improvement over the 60 percent ratio for the quarter in 2001. 
Results of Operations – The nine months ended September 30, 2002 compared to the nine months ended
September 30, 2001. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Nine months ended September 30,	
Revenue Summary	 		
($ in thousands)	 	2002	 	2001	 	$ change	 	% change	
 	 	 	 		 		 		 		
Net interest income	 	$	64,099	 	 	 	51,428	 	 	 	12,671	 	 	 	24.6	%	
Fees and other revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges, loan fees, and other fees	 	 	13,388	 	 	 	11,737	 	 	 	1,651	 	 	 	14.1	%	
 	Gain on sale of loans	 	 	3,497	 	 	 	2,766	 	 	 	731	 	 	 	26.4	%	
 	Other income	 	 	1,755	 	 	 	2,173	 	 	 	(418	)	 	 	-19.2	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	 	Total non–interest income	 	 	18,640	 	 	 	16,676	 	 	 	1,964	 	 	 	11.8	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total revenue	 	$	82,739	 	 	 	68,104	 	 	 	14,635	 	 	 	21.5	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Tax equivilent net interest margin	 	 	4.52	%	 	 	3.99	%	 	 	 	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	 	 	 	 	
Net Interest Income
Net interest income for the nine months ended September 30, 2002 was $64.099 million, an increase of $12.671 million, or 25 percent over the same nine months of 2001. The WesterFed acquisition on February 28, 2001, and the Idaho and Utah branch acquisitions in March 2001 are the primary reasons for the increase. Interest income has decreased $1.724 million, or 2 percent, while interest expense has declined $14.395 million, or 28 percent. The increase in non-interest bearing deposits and significant reductions in rates paid on deposits and borrowed funds, are the primary reasons for the decreased interest expense. As a percentage of earning assets, on a tax equivalent basis, the year-to-date interest margin has improved from 4.0 percent to 4.5 percent. 
24

Non-interest Income
Fee income increased $1.651 million, or 14 percent, primarily the result of the acquisition in the later part of the first quarter in 2001. Gain on sale of loans increased $731 thousand, or 26 percent. Mortgage interest rates have been very attractive to consumers during the past year and have led to higher levels of mortgage originations from both purchases and refinances. Included in other income in 2001 was a $511 thousand gain-on-sale of the Glacier Bank Cut Bank office, as a result other income was $93 thousand higher this year. 

 	 	 	Nine months ended September 30,	
Non–interest expense summary	 		
($ in thousands)	 	2002	 	2001	 	$ change	 	% change	
 	 	 		 		 		 		
Compensation and employee benefits	 	$	22,856	 	 	 	20,182	 	 	 	2,674	 	 	 	13.2	%	
Occupancy and equipment expense	 	 	6,965	 	 	 	6,147	 	 	 	818	 	 	 	13.3	%	
Outsourced data processing expense	 	 	1,508	 	 	 	2,007	 	 	 	(499	)	 	 	-24.9	%	
Core deposit intangible amortization	 	 	1,080	 	 	 	957	 	 	 	123	 	 	 	12.9	%	
Goodwill amortization	 	 	—	 	 	 	1,229	 	 	 	(1,229	)	 	 	-100.0	%	
Other expenses	 	 	10,294	 	 	 	10,462	 	 	 	(168	)	 	 	-1.6	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total non–interest expense	 	$	42,703	 	 	 	40,984	 	 	 	1,719	 	 	 	4.2	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Non-interest Expense
Non-interest expense increased $1.719 million, or 4 percent, over 2001, however, 2001 also includes $1.250 million in merger and conversion expense, and goodwill amortization of $1.229 million, and 2002 includes a reversal of a merger related accrual of $323 thousand, so non-interest expense from operations has increased $4.521 million over last year. The 2001 acquisitions are much of the reason for this increase. The decrease in goodwill amortization is the result of the adoption of Statement of Financial Accounting Standards 142 and 147, see footnote 15 for further information. During the third quarter of 2001 the data processing functions for Western Security Bank were converted to the in-house system. This has reduced the outsourced data processing costs and increased compensation and benefits expense. Core deposit asset amortization was $1.080 million, which is an increase of $123 thousand. The efficiency ratio in 2002 is 52 percent which is an improvement over the 60 percent ratio in 2001. 
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. 
25

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 balance sheet. 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 basis point (bp) upward and 100 bp downward shift in interest rates. A parallel and pro rata shift in rates over a 12 month period is assumed. The following reflects the Company’s NII sensitivity analysis as of June 30, 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 sensitivity. The table illustrates the estimated change in net interest income over a twelve month period based on the nine months activity ended September 30, 2002. 
 	 	 	 	 	 	 	 	 	
Interest Rate Sensitivity	 	+200 bp	 	-100 bp	
	 		 		
Estimated sensitivity	 	 	-2.58	%	 	 	0.80	%	
Estimated increase (decrease) in net interest income	 	$	(2,205	)	 	 	684	 	
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. 
26

Item 2.  Changes in Securities and Use of Proceeds 
      None
Item 3.  Defaults upon Senior Securities 
      None
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 cause this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 	 	 	 	 	
 	 	GLACIER BANCORP, INC. 
	
November 11, 2002	 	By: 	 	/s/ Michael J. Blodnick	
 	 	 	 		
 	 	 	 	Michael J. Blodnick
President/CEO
	
November 11, 2002	 	By: 	 	/s/ James H. Strosahl	
 	 	 	 		
 	 	 	 	James H. Strosahl
Executive Vice President/CFO	
27

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. 	

November 11, 2002 
 	 	 	 	 	
 	 	By: 	 	/s/ Michael J. Blodnick	
 	 	 	 		
 	 	 	 	Michael J. Blodnick
President/CEO
	
28

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. 	

November 11, 2002 
 	 	 	 	 	
 	 	By: 	 	/s/ James H. Strosahl 	
 	 	 	 		
 	 	 	 	James H. Strosahl
Executive Vice President/CFO
	
29

Exhibit 99 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TOSECTION 
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 September 30, 2002, 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.	
November 11, 2002 
 	 	 	 	 	
 	 	By: 	 	/s/ Michael J. Blodnick	
 	 	 	 		
 	 	 	 	Michael J. Blodnick
President/CEO
	
 	 	By: 	 	/s/ James H. Strosahl	
 	 	 	 		
 	 	 	 	James H. Strosahl
Executive Vice President/CFO