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 June 30, 2003	
 	 	 	
o	 	Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 	
 	 	 	
 	 	For the transition period from      to      	
COMMISSION FILE 0-18911 
GLACIER BANCORP, INC. 
(Exact name of registrant as specified in its charter) 
 	 	 	
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 August 6, 2003 was 19,300,141. 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	
EXHIBIT 31.1	
EXHIBIT 31.2	
EXHIBIT 32	

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 - June 30, 2003, December 31, 2002 and June 30, 2002 (unaudited)	 	 	3	 	
 	 	 	 	Consolidated Statements of Operations - Three and six months ended June 30, 2003 and 2002 (unaudited)	 	 	4	 	
 	 	 	 	Consolidated Statements of Stockholders’ Equity and Comprehensive Income — Year ended December 31, 2002 and six months ended June 30, 2003 (unaudited)	 	 	5	 	
 	 	 	 	Consolidated Statements of Cash Flows - Six months ended June 30, 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	 	 	19	 	
Item 3 -	 	Quantitative and Qualitative Disclosure about Market Risk	 	 	24	 	
Item 4 -	 	Controls and Procedures	 	 	25	 	
Part II.	 	Other Information	 	 	26	 	
Item 1 -	 	Legal Proceedings	 	 	26	 	
Item 2 -	 	Changes in Securities and Use of Proceeds	 	 	26	 	
Item 3 -	 	Defaults Upon Senior Securities	 	 	26	 	
Item 4 -	 	Submission of Matters to a Vote of Security Holders	 	 	26	 	
Item 5 -	 	Other Information	 	 	26	 	
Item 6 -	 	Exhibits and Reports on Form 8-K	 	 	27	 	
Signatures	 	 	 	 	27	 	

Table of Contents
Glacier Bancorp, Inc.
Consolidated Statements of Financial Condition 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Unaudited - dollars in thousands, except per share data)	 	June 30,	 	December 31,	 	June 30,	
	 		 		 		
 	 	 	 	2003	 	2002	 	2002	
 	 	 	 		 		 		
 	 	 	 	 	 	 	 	 	 	 	 	(Restated - See note 2)	
Assets:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash on hand and in banks	 	$	71,738	 	 	 	74,624	 	 	 	59,812	 	
 	Interest bearing cash deposits	 	 	11,387	 	 	 	4,753	 	 	 	7,410	 	
 	 	 		 	 	 		 	 	 		 	
 	 	Cash and cash equivalents	 	 	83,125	 	 	 	79,377	 	 	 	67,222	 	
 	 	 		 	 	 		 	 	 		 	
 	Investments:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Investment securities, available-for-sale	 	 	254,114	 	 	 	260,606	 	 	 	213,752	 	
 	 	Mortgage backed securities, available-for-sale	 	 	630,337	 	 	 	479,355	 	 	 	403,029	 	
 	 	Federal Home Loan Bank and Federal Reserve Bank stock, at cost	 	 	44,681	 	 	 	42,864	 	 	 	41,343	 	
 	 	 		 	 	 		 	 	 		 	
 	 	Total investments	 	 	929,132	 	 	 	782,825	 	 	 	658,124	 	
 	 	 		 	 	 		 	 	 		 	
 	Net loans receivable:	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	 	339,057	 	 	 	361,522	 	 	 	372,318	 	
 	 	Commercial Loans	 	 	780,321	 	 	 	673,256	 	 	 	650,749	 	
 	 	Consumer and other loans	 	 	285,411	 	 	 	286,819	 	 	 	292,639	 	
 	 	Allowance for loan losses	 	 	(22,354	)	 	 	(20,944	)	 	 	(19,941	)	
 	 	 		 	 	 		 	 	 		 	
 	 	Total loans, net	 	 	1,382,435	 	 	 	1,300,653	 	 	 	1,295,765	 	
 	 	 		 	 	 		 	 	 		 	
 	Premises and equipment, net	 	 	48,658	 	 	 	47,215	 	 	 	47,455	 	
 	Real estate and other assets owned, net	 	 	682	 	 	 	1,542	 	 	 	699	 	
 	Accrued interest receivable	 	 	13,213	 	 	 	13,421	 	 	 	13,047	 	
 	Core deposit intangible, net	 	 	6,193	 	 	 	6,822	 	 	 	7,541	 	
 	Goodwill, net	 	 	33,189	 	 	 	33,189	 	 	 	33,189	 	
 	Other assets	 	 	14,734	 	 	 	16,300	 	 	 	15,023	 	
 	 	 		 	 	 		 	 	 		 	
 	 	$	2,511,361	 	 	 	2,281,344	 	 	 	2,138,065	 	
 	 	 		 	 	 		 	 	 		 	
Liabilities and stockholders’ equity:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Non-interest bearing deposits	 	$	337,193	 	 	 	295,016	 	 	 	256,519	 	
 	Interest bearing deposits	 	 	1,165,386	 	 	 	1,164,907	 	 	 	1,175,893	 	
 	Advances from Federal Home Loan Bank of Seattle	 	 	625,670	 	 	 	483,660	 	 	 	406,603	 	
 	Securities sold under agreements to repurchase	 	 	74,808	 	 	 	46,206	 	 	 	34,744	 	
 	Other borrowed funds	 	 	12,383	 	 	 	15,087	 	 	 	8,457	 	
 	Accrued interest payable	 	 	5,092	 	 	 	6,090	 	 	 	6,452	 	
 	Current income taxes	 	 	1,314	 	 	 	815	 	 	 	737	 	
 	Deferred tax liability	 	 	10,244	 	 	 	8,629	 	 	 	5,083	 	
 	Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	
 	Other liabilities	 	 	14,006	 	 	 	13,685	 	 	 	13,471	 	
 	 	 		 	 	 		 	 	 		 	
 	 	Total liabilities	 	 	2,281,096	 	 	 	2,069,095	 	 	 	1,942,959	 	
 	 	 		 	 	 		 	 	 		 	
 	Preferred shares, 1,000,000 shares authorized. None outstanding	 	 	—	 	 	 	—	 	 	 	—	 	
 	Common stock, $.01 par value per share 50,000,000 shares authorized	 	 	193	 	 	 	173	 	 	 	172	 	
 	Paid-in capital	 	 	220,624	 	 	 	173,408	 	 	 	170,894	 	
 	(Accumulated deficit) retained earnings — substantially restricted	 	 	(3,089	)	 	 	28,557	 	 	 	17,224	 	
 	Accumulated other comprehensive income	 	 	12,537	 	 	 	10,111	 	 	 	6,816	 	
 	 	 		 	 	 		 	 	 		 	
 	 	Total stockholders’ equity	 	 	230,265	 	 	 	212,249	 	 	 	195,106	 	
 	 	 		 	 	 		 	 	 		 	
 	 	$	2,511,361	 	 	 	2,281,344	 	 	 	2,138,065	 	
 	 	 		 	 	 		 	 	 		 	
 	Number of shares outstanding	 	 	19,280,059	 	 	 	19,014,400	 	 	 	18,898,098	 	
 	Book value per share	 	$	11.94	 	 	 	11.16	 	 	 	10.32	 	
 	Tangible book value per share	 	$	9.90	 	 	 	9.06	 	 	 	8.17	 	
See accompanying notes to consolidated financial statements 
3 

Table of Contents
Glacier Bancorp, Inc.
Consolidated Statements of Operations 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(unaudited - dollars in thousands, except per share data)	 	Three months ended June 30,	 	Six months ended June 30,	
	 		 		
 	 	 	2003	 	2002	 	2003	 	2002	
 	 	 		 		 		 		
 	 	 	 	 	 	 	(Restated - See note 2)	 	 	 	 	 	(Restated - See note 2)	
 	 	 	 	 	 	 		 	 	 	 	 		
Interest income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate loans	 	$	5,849	 	 	 	7,225	 	 	 	12,101	 	 	 	15,063	 	
 	Commercial loans	 	 	12,362	 	 	 	11,649	 	 	 	23,979	 	 	 	23,081	 	
 	Consumer and other loans	 	 	5,030	 	 	 	5,686	 	 	 	10,132	 	 	 	11,499	 	
 	Investment securities and other	 	 	8,372	 	 	 	8,947	 	 	 	17,463	 	 	 	16,942	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total interest income	 	 	31,613	 	 	 	33,507	 	 	 	63,675	 	 	 	66,585	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Interest expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Deposits	 	 	4,431	 	 	 	6,673	 	 	 	9,378	 	 	 	14,115	 	
 	Federal Home Loan Bank of Seattle Advances	 	 	4,087	 	 	 	4,181	 	 	 	8,299	 	 	 	8,366	 	
 	Securities sold under agreements to repurchase	 	 	175	 	 	 	133	 	 	 	333	 	 	 	289	 	
 	Trust preferred securities	 	 	909	 	 	 	903	 	 	 	1,813	 	 	 	1,807	 	
 	Other borrowed funds	 	 	47	 	 	 	16	 	 	 	56	 	 	 	40	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total interest expense	 	 	9,649	 	 	 	11,906	 	 	 	19,879	 	 	 	24,617	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Net interest income	 	 	21,964	 	 	 	21,601	 	 	 	43,796	 	 	 	41,968	 	
 	Provision for loan losses	 	 	1,051	 	 	 	1,260	 	 	 	1,892	 	 	 	2,560	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net interest income after provision for loan losses	 	 	20,913	 	 	 	20,341	 	 	 	41,904	 	 	 	39,408	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Non-interest income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges and other fees	 	 	3,846	 	 	 	3,443	 	 	 	7,435	 	 	 	6,606	 	
 	Miscellaneous loan fees and charges	 	 	1,132	 	 	 	1,099	 	 	 	2,162	 	 	 	1,864	 	
 	Gains on sale of loans	 	 	3,211	 	 	 	1,258	 	 	 	5,482	 	 	 	2,433	 	
 	Gains on sale of investments, net of impairment charge	 	 	1,685	 	 	 	2	 	 	 	1,248	 	 	 	2	 	
 	Other income	 	 	439	 	 	 	532	 	 	 	999	 	 	 	1,278	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total non-interest income	 	 	10,313	 	 	 	6,334	 	 	 	17,326	 	 	 	12,183	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Non-interest expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Compensation, employee benefits and related expenses	 	 	9,050	 	 	 	7,533	 	 	 	17,029	 	 	 	15,315	 	
 	Occupancy and equipment expense	 	 	2,295	 	 	 	2,324	 	 	 	4,730	 	 	 	4,625	 	
 	Outsourced data processing expense	 	 	266	 	 	 	515	 	 	 	828	 	 	 	961	 	
 	Core deposit intangibles amortization	 	 	291	 	 	 	360	 	 	 	629	 	 	 	721	 	
 	Other expenses	 	 	4,418	 	 	 	3,610	 	 	 	7,987	 	 	 	7,085	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total non-interest expense	 	 	16,320	 	 	 	14,342	 	 	 	31,203	 	 	 	28,707	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Earnings before income taxes	 	 	14,906	 	 	 	12,333	 	 	 	28,027	 	 	 	22,884	 	
 	Federal and state income tax expense	 	 	4,974	 	 	 	4,205	 	 	 	9,247	 	 	 	7,859	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Net earnings	 	$	9,932	 	 	 	8,128	 	 	 	18,780	 	 	 	15,025	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Basic earnings per share '	 	$	0.52	 	 	 	0.43	 	 	 	0.98	 	 	 	0.80	 	
Diluted earnings per share	 	$	0.51	 	 	 	0.42	 	 	 	0.96	 	 	 	0.79	 	
Dividends declared per share	 	$	0.19	 	 	 	0.15	 	 	 	0.35	 	 	 	0.29	 	
Return on average assets (annualized)	 	 	1.67	%	 	 	1.51	%	 	 	1.63	%	 	 	1.41	%	
Return on average equity (annualized)	 	 	17.51	%	 	 	16.77	%	 	 	16.95	%	 	 	15.78	%	
Return on tangible average equity (annualized)	 	 	21.20	%	 	 	21.40	%	 	 	20.62	%	 	 	20.31	%	
Average outstanding shares — basic	 	 	19,267,556	 	 	 	18,852,953	 	 	 	19,211,468	 	 	 	18,784,258	 	
Average outstanding shares — diluted	 	 	19,569,414	 	 	 	19,197,076	 	 	 	19,495,418	 	 	 	19,116,131	 	
See accompanying notes to consolidated financial statements. 
4 

Table of Contents
Glacier Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity
and Comprehensive Income
Year ended December 31, 2002 and Six months ended June 30, 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 ($.61 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	 	 	—	 	 	 	—	 	 	 	—	 	 	 	18,780	 	 	 	—	 	 	 	18,780	 	
 	Unrealized gain on securities, net of reclassification adjustment	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,426	 	 	 	2,426	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Total comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	21,206	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	
Cash dividends declared ($.35 per share)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(6,827	)	 	 	—	 	 	 	(6,827	)	
Stock options exercised	 	 	243,205	 	 	 	2	 	 	 	3,650	 	 	 	—	 	 	 	—	 	 	 	3,652	 	
10% stock dividend	 	 	1,751,036	 	 	 	18	 	 	 	43,566	 	 	 	(43,599	)	 	 	—	 	 	 	(15	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Balance at June 30, 2003	 	 	19,280,059	 	 	$	193	 	 	 	220,624	 	 	 	(3,089	)	 	 	12,537	 	 	 	230,265	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
See accompanying notes to consolidated financial statements 
5 

Table of Contents
Glacier Bancorp, Inc.
Consolidated Statements of Cash Flows 
 	 	 	 	 	 	 	 	 	 	 	
(Unaudited - dollars in thousands)	 	Six months ended June 30,	
	 		
 	 	 	 	2003	 	2002	
 	 	 	 		 		
 	 	 	 	 	 	 	 	(Restated - See note 2)	
OPERATING ACTIVITIES :	 	 	 	 	 	 	 	 	
 	Net cash provided by operating activities	 	$	33,038	 	 	 	29,305	 	
 	 	 		 	 	 		 	
INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	
 	Proceeds from sales, maturities and prepayments of investments available-for-sale	 	 	162,984	 	 	 	105,754	 	
 	Purchases of investments available-for-sale	 	 	(308,689	)	 	 	(208,096	)	
 	Principal collected on installment and commercial loans	 	 	307,486	 	 	 	303,572	 	
 	Installment and commercial loans originated or acquired	 	 	(413,141	)	 	 	(327,974	)	
 	Principal collections on mortgage loans	 	 	143,767	 	 	 	134,549	 	
 	Mortgage loans originated or acquired	 	 	(124,939	)	 	 	(99,352	)	
 	Net purchase of FHLB and FRB stock	 	 	(672	)	 	 	(3,359	)	
 	Net (addition) disposal of premises and equipment	 	 	(3,459	)	 	 	2,148	 	
 	 	 		 	 	 		 	
 	NET CASH USED IN INVESTING ACTIVITIES	 	 	(236,663	)	 	 	(92,758	)	
 	 	 		 	 	 		 	
FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	
 	Net increase (decrease) in deposits	 	 	42,656	 	 	 	(13,652	)	
 	Net increase in FHLB advances and other borrowed funds	 	 	139,305	 	 	 	46,704	 	
 	Net increase in securities sold under repurchase agreements	 	 	28,602	 	 	 	2,159	 	
 	Cash dividends paid to stockholders	 	 	(6,827	)	 	 	(5,488	)	
 	Proceeds from exercise of stock options and other stock issued	 	 	3,637	 	 	 	3,526	 	
 	 	 		 	 	 		 	
 	NET CASH PROVIDED BY FINANCING ACTIVITIES	 	 	207,373	 	 	 	33,249	 	
 	 	 		 	 	 		 	
 	NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	 	 	3,748	 	 	 	(30,204	)	
 	CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	 	79,377	 	 	 	97,426	 	
 	 	 		 	 	 		 	
 	CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	83,125	 	 	 	67,222	 	
 	 	 		 	 	 		 	
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 	 	 	 	 	 	 	 	 	
 	Cash paid during the period for: Interest	 	$	20,879	 	 	 	27,345	 	
 	 	Income taxes	 	$	5,908	 	 	 	7,219	 	
See accompanying notes to consolidated financial statements. 
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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 June 30, 2003, December 31, 2002, and June 30, 2002, stockholders’ equity for the six months ended June 30, 2003 and the year ended December 31, 2002, the results of operations for the three and six months ended June 30, 2003 and 2002, and cash flows for the six months ended June 30, 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 six months ended June 30, 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 and six months ended June 30, 2002, was to increase net earnings by $149,000 and $298,000, increase basic earnings per share by $.01 and .02, and increase diluted earnings per share by $.00 and .02, respectively.	
 		
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)	 	Dividends Declared:	
 		
 	 	On April 30, 2003, the Board of Directors declared a 10 percent stock dividend, payable in common stock of Glacier Bancorp, Inc. to stockholders of record on May 13, 2003, payable on May 22, 2003, and all prior period amounts have been restated to reflect the stock dividend. On June 25, 2003, the Board of Directors declared a $.19 per share quarterly cash dividend to stockholders of record on July 8, 2003, payable on July 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	 	Six	 	Six	
 	 	months ended	 	months ended	 	months ended	 	months ended	
 	 	June 30, 2003	 	June 30, 2002	 	June 30, 2003	 	June 30, 2002	
 	 		 		 		 		
Net earnings available to common stockholders	 	$	9,932,250	 	 	 	8,128,283	 	 	 	18,780,348	 	 	 	15,025,115	 	
Average outstanding shares — basic	 	 	19,267,556	 	 	 	18,852,953	 	 	 	19,211,472	 	 	 	18,784,258	 	
Add: Dilutive stock options	 	 	301,858	 	 	 	344,123	 	 	 	283,946	 	 	 	331,873	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Average outstanding shares — diluted	 	 	19,569,414	 	 	 	19,197,076	 	 	 	19,495,418	 	 	 	19,116,131	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Basic earnings per share	 	$	0.52	 	 	 	0.43	 	 	 	0.98	 	 	 	0.80	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Diluted earnings per share	 	$	0.51	 	 	 	0.42	 	 	 	0.96	 	 	 	0.79	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
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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 JUNE 30, 2003 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Dollars in thousands)
	 	Weighted	 	Amortized	 	Gross Unrealized	 	Estimated
Fair	
 	 	 	 	Yield	 	Cost	 	Gains	 	Losses	 	Value	
 	 	 	 		 		 		 		 		
U.S. Government and Federal Agencies	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing after ten years	 	 	3.05	%	 	 	1,007	 	 	 	12	 	 	 	(1	)	 	 	1,018	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	3.05	%	 	 	1,007	 	 	 	12	 	 	 	(1	)	 	 	1,018	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
State and Local Governments and other issues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	maturing within one year	 	 	5.96	%	 	 	3,218	 	 	 	92	 	 	 	—	 	 	 	3,310	 	
 	maturing one year through five years	 	 	4.42	%	 	 	5,838	 	 	 	110	 	 	 	(90	)	 	 	5,858	 	
 	maturing five years through ten years	 	 	5.43	%	 	 	3,089	 	 	 	192	 	 	 	—	 	 	 	3,281	 	
 	maturing after ten years	 	 	5.31	%	 	 	226,523	 	 	 	14,190	 	 	 	(66	)	 	 	240,647	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	5.30	%	 	 	238,668	 	 	 	14,584	 	 	 	(156	)	 	 	253,096	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Mortgage-Backed Securities	 	 	5.23	%	 	 	74,951	 	 	 	2,027	 	 	 	(2	)	 	 	76,976	 	
Real Estate Mortgage Investment Conduits	 	 	3.58	%	 	 	549,141	 	 	 	4,220	 	 	 	—	 	 	 	553,361	 	
FHLB and FRB stock, at cost	 	 	6.17	%	 	 	44,681	 	 	 	—	 	 	 	—	 	 	 	44,681	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total Investments	 	 	4.30	%	 	$	908,448	 	 	 	20,843	 	 	 	(159	)	 	 	929,132	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
INVESTMENTS AS OF DECEMBER 31, 2002 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Dollars in thousands)
	 	Weighted	 	Amortized	 	Gross Unrealized	 	Estimated
Fair	
 	 	 	 	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 six months ended June 30, 2003 and 2002 of $5,179,000 and $3,457,000, respectively, and the three months ended June 30, 2003 and 2002 of $2,589,000 and $1,968,000, respectively.	
 		
 	 	Gross proceeds from sales of investment securities for the six months ended June 30, 2003 and 2002 were $19,597,000, and $24,428,000, respectively, resulting in gross gains of 	
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 	 	approximately $3,497,000, and $2,000, respectively. Gross proceeds from sales of investment securities for the three months ended June 30, 2003 and 2002 were $17,566,000, and $24,428,000, respectively, resulting in gross gains of approximately $3,480,000, and $2,000, respectively. The cost of any investment sold is determined by specific identification.	
 		
 	 	There was an impairment charge for the three and six months ended June 30, 2003, of $1,795,000 and $2,249,000, respectively, for the impairment of value on collateralized mortgage obligations. The impairment charge is included in the net gain on sale of investments.	
 		
8)	 	Loans	
 		
 	 	The following table summarizes the Company’s loan portfolio. The loans mature or are repriced at various times.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
TYPE OF LOAN	 	At	 	At	
(Dollars in Thousands)	 	06/30/03	 	12/31/2002	
	 		 		
 	 	 	Amount	 	Percent	 	Amount	 	Percent	
 	 	 		 		 		 		
Real Estate Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Residential first mortgage loans	 	$	290,844	 	 	 	21.0	%	 	$	310,205	 	 	 	23.8	%	
 	Loans held for sale	 	 	48,831	 	 	 	3.5	%	 	 	51,987	 	 	 	4.0	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total	 	 	339,675	 	 	 	24.5	%	 	 	362,192	 	 	 	27.8	%	
Commercial Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	447,315	 	 	 	32.3	%	 	 	397,803	 	 	 	30.6	%	
 	Other commercial loans	 	 	334,236	 	 	 	24.2	%	 	 	276,675	 	 	 	21.3	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total	 	 	781,551	 	 	 	56.5	%	 	 	674,478	 	 	 	51.9	%	
Consumer and Other Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Consumer loans	 	 	97,627	 	 	 	7.1	%	 	 	112,893	 	 	 	8.7	%	
 	Home equity loans	 	 	187,885	 	 	 	13.6	%	 	 	174,033	 	 	 	13.4	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total	 	 	285,512	 	 	 	20.7	%	 	 	286,926	 	 	 	22.1	%	
 	Net deferred loan fees, premiums and discounts	 	 	(1,949	)	 	 	-0.1	%	 	 	(1,999	)	 	 	-0.2	%	
 	Allowance for Losses	 	 	(22,354	)	 	 	-1.6	%	 	 	(20,944	)	 	 	-1.6	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
Net Loans	 	$	1,382,435	 	 	 	100.0	%	 	$	1,300,653	 	 	 	100.0	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
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 	 	 	The following table sets forth information regarding the Company’s non-performing assets at the dates indicated:	
 	 	 	 	 	 	 	 	 	 	 	 	
(Dollars in Thousands)	 	At	 	At	
 	 	6/30/2003	 	12/31/2002	
 	 	 	 	 		 		
Non-accrual loans:	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	$	2,035	 	 	 	2,476	 	
 	 	Commercial loans	 	 	6,189	 	 	 	5,157	 	
 	 	Consumer and other loans	 	 	317	 	 	 	409	 	
 	 	 	 	 		 	 	 		 	
 	 	 	Total	 	$	8,541	 	 	 	8,042	 	
Accruing Loans 90 days or more overdue:	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	 	351	 	 	 	846	 	
 	 	Commercial loans	 	 	1,014	 	 	 	968	 	
 	 	Consumer and other loans	 	 	87	 	 	 	184	 	
 	 	 	 	 		 	 	 		 	
 	 	 	Total	 	$	1,452	 	 	 	1,998	 	
Real estate and other assets owned, net	 	 	682	 	 	 	1,542	 	
 	 	 	 	 		 	 	 		 	
Total non-performing loans, and real estate and other assets owned, net	 	$	10,675	 	 	 	11,582	 	
 	 	 	 	 		 	 	 		 	
 	As a percentage of total assets	 	 	0.42	%	 	 	0.51	%	
Interest Income (1)	 	$	292	 	 	 	596	 	

(1)	 	This is the amount of interest that would have been recorded on loans accounted for on a non-accrual basis for the six months ended June 30, 2003 and the year ended December 31, 2002, if such loans had been current for the entire period.	
 	 	 	The following table illustrates the loan loss experience:	
 	 	 	 	 	 	 	 	 	 	 	 	
ALLOWANCE FOR LOAN LOSS	 	Six months ended
June 30,	 	Year ended
December 31,	
(Dollars in Thousands)	 	2003	 	2002	
	 		 		
Balance at beginning of period	 	$	20,944	 	 	 	18,654	 	
 	Charge offs:	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	 	(184	)	 	 	(887	)	
 	 	Commercial loans	 	 	(293	)	 	 	(2,522	)	
 	 	Consumer and other loans	 	 	(429	)	 	 	(1,328	)	
 	 	 		 	 	 		 	
 	 	 	Total charge offs	 	$	(906	)	 	 	(4,737	)	
 	 	 		 	 	 		 	
 	Recoveries:	 	 	 	 	 	 	 	 	
 	 	Real estate loans	 	 	137	 	 	 	276	 	
 	 	Commercial loans	 	 	118	 	 	 	326	 	
 	 	Consumer and other loans	 	 	169	 	 	 	680	 	
 	 	 		 	 	 		 	
 	 	 	Total recoveries	 	$	424	 	 	 	1,282	 	
 	 	 		 	 	 		 	
 	Chargeoffs, net of recoveries	 	 	(482	)	 	 	(3,455	)	
 	Provision	 	 	1,892	 	 	 	5,745	 	
 	 	 		 	 	 		 	
Balance at end of period	 	$	22,354	 	 	 	20,944	 	
 	 	 		 	 	 		 	
Ratio of net charge offs to average loans outstanding during the period	 	 	0.03	%	 	 	0.26	%	
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 	 	 	The following table summarizes the allocation of the allowance for loan losses:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	June 30, 2003	 	December 31, 2002	
 	 	 		 		
 	 	 	 	 	 	 	Percent	 	 	 	 	 	Percent	
 	 	 	 	 	 	 	of loans in	 	 	 	 	 	of loans in	
(Dollars in thousands)	 	Allowance	 	category	 	Allowance	 	category	
	 		 		 		 		
Real estate loans	 	$	2,085	 	 	 	24.1	%	 	 	2,334	 	 	 	27.4	%	
Commercial real estate	 	 	6,686	 	 	 	31.8	%	 	 	7,088	 	 	 	30.1	%	
Other commercial	 	 	9,242	 	 	 	23.8	%	 	 	7,670	 	 	 	20.9	%	
Consumer and other loans	 	 	4,341	 	 	 	20.3	%	 	 	3,852	 	 	 	21.6	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	22,354	 	 	 	100.0	%	 	 	20,944	 	 	 	100.0	%	
 	 	 		 	 	 		 	 	 		 	 	 		 	
9)   Intangible Assets 
 	 	 	The following table sets forth information regarding the Company’s core deposit intangibles and mortgage servicing rights as of June 30, 2003:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Core Deposit	 	Mortgage	 	 	 	 	
(Dollars in thousands)	 	Intangible	 	Servicing Rights (1)	 	Total	
	 		 		 		
 	Gross carrying value	 	$	9,836	 	 	 	 	 	 	 	 	 	
 	Accumulated Amortization	 	 	(3,643	)	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	
 	Net carrying value	 	$	6,193	 	 	 	1,596	 	 	 	7,789	 	
 	 	 		 	 	 	 	 	 	 	 	 	
Weighted-Average amortization period	 	 	 	 	 	 	 	 	 	 	 	 	
 	(Period in years)	 	 	10.0	 	 	 	8.8	 	 	 	9.8	 	
Aggregate Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 	
 	For the three months ended June 30, 2003	 	$	291	 	 	 	252	 	 	 	543	 	
 	For the six months ended June 30, 2003	 	$	629	 	 	 	419	 	 	 	1,048	 	
Estimated Amortization Expense	 	 	 	 	 	 	 	 	 	 	 	 	
 	For the year ended December 31, 2003	 	$	1,219	 	 	 	692	 	 	 	1,911	 	
 	For the year ended December 31, 2004	 	 	1,011	 	 	 	259	 	 	 	1,270	 	
 	For the year ended December 31, 2005	 	 	847	 	 	 	246	 	 	 	1,093	 	
 	For the year ended December 31, 2006	 	 	779	 	 	 	233	 	 	 	1,012	 	
 	For the year ended December 31, 2007	 	 	766	 	 	 	221	 	 	 	987	 	

(1)	 	The mortgage servicing rights are included in other assets and the gross carrying value and accumulated amortization are not readily available.	
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10)   Deposits 
 	 	 	The following table illustrates the amounts outstanding for deposits greater than $100,000 at June 30, 2003, according to the time remaining to maturity:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Certificates	 	Non-Maturity	 	 	 	 	
(Dollars in thousands)	 	of Deposit	 	Deposits	 	Totals	
	 		 		 		
Within three months	 	$	29,034	 	 	 	452,169	 	 	 	481,203	 	
Three to six months	 	 	16,728	 	 	 	—	 	 	 	16,728	 	
Seven to twelve months	 	 	15,562	 	 	 	—	 	 	 	15,562	 	
Over twelve months	 	 	13,969	 	 	 	—	 	 	 	13,969	 	
 	 	 		 	 	 		 	 	 		 	
 	Totals	 	$	75,293	 	 	 	452,169	 	 	 	527,462	 	
 	 	 		 	 	 		 	 	 		 	
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 six	 	for the twelve	
(Dollars in thousands)	 	months ended	 	months ended	
 	 	 	June 30, 2003	 	December 31, 2002	
 	 	 		 		
FHLB Advances	 	 	 	 	 	 	 	 	
 	Amount outstanding at end of period	 	$	625,670	 	 	 	483,660	 	
 	Average balance	 	$	515,349	 	 	 	409,168	 	
 	Maximum outstanding at any month-end	 	$	625,670	 	 	 	483,660	 	
 	Weighted average interest rate	 	 	3.25	%	 	 	4.15	%	
Repurchase Agreements:	 	 	 	 	 	 	 	 	
 	Amount outstanding at end of period	 	$	74,808	 	 	 	46,206	 	
 	Average balance	 	$	59,710	 	 	 	35,479	 	
 	Maximum outstanding at any month-end	 	$	74,808	 	 	 	46,206	 	
 	Weighted average interest rate	 	 	1.12	%	 	 	1.46	%	
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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 June 30, 2003:	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
CONSOLIDATED	 	Tier 1 (Core)	 	Tier 2 (Total)	 	Leverage	
(Dollars in thousands)	 	Capital	 	Capital	 	Capital	
	 		 		 		
GAAP Capital	 	$	230,265	 	 	 	230,265	 	 	 	230,265	 	
Less: Goodwill and intangibles	 	 	(39,382	)	 	 	(39,382	)	 	 	(39,382	)	
 	Accumulated other comprehensive gain on AFS securities	 	 	(12,537	)	 	 	(12,537	)	 	 	(12,537	)	
Plus: Allowance for loan losses	 	 	—	 	 	 	20,419	 	 	 	—	 	
 	Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	
 	Other adjustments	 	 	—	 	 	 	266	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	
Regulatory capital computed	 	$	213,346	 	 	 	234,031	 	 	 	213,346	 	
 	 	 		 	 	 		 	 	 		 	
Risk weighted assets	 	$	1,633,522	 	 	 	1,633,522	 	 	 	 	 	
 	 	 		 	 	 		 	 	 		 	
Total average assets	 	 	 	 	 	 	 	 	 	$	2,330,151	 	
 	 	 	 	 	 	 	 	 	 	 		 	
Capital as % of defined assets	 	 	13.06	%	 	 	14.33	%	 	 	9.16	%	
Regulatory “well capitalized” requirement	 	 	6.00	%	 	 	10.00	%	 	 	5.00	%	
 	 	 		 	 	 		 	 	 		 	
Excess over “well capitalized” requirement	 	 	7.06	%	 	 	4.33	%	 	 	4.16	%	
 	 	 		 	 	 		 	 	 		 	
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	 	For the six months	
 	 	 	 	ended June 30,	 	ended June 30,	
 	 	 	 		 		
Dollars in thousands	 	2003	 	2002	 	2003	 	2002	
	 		 		 		 		
Net earnings	 	$	9,932	 	 	 	8,128	 	 	 	18,780	 	 	 	15,025	 	
Unrealized holding gain arising during the period	 	 	2,663	 	 	 	9,199	 	 	 	544	 	 	 	8,365	 	
Tax expense	 	 	(1,048	)	 	 	(3,634	)	 	 	(251	)	 	 	(3,306	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net after tax	 	 	1,615	 	 	 	5,565	 	 	 	293	 	 	 	5,059	 	
Reclassification adjustment for gains included in net income	 	 	3,480	 	 	 	2	 	 	 	3,497	 	 	 	2	 	
Tax expense	 	 	(1,357	)	 	 	(1	)	 	 	(1,364	)	 	 	(1	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Net after tax	 	 	2,123	 	 	 	1	 	 	 	2,133	 	 	 	1	 	
 	Net unrealized gain on securities	 	 	3,738	 	 	 	5,566	 	 	 	2,426	 	 	 	5,060	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total comprehensive earnings	 	$	13,670	 	 	 	13,694	 	 	 	21,206	 	 	 	20,085	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	
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	
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 	 	 	option itself at the grant date for its stock options and earnings per share 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 June 30,	 	Six months ended June 30,	
 	 	 	 	 	 		 		
 	 	 	 	 	 	2003	 	2002	 	2003	 	2002	
 	 	 	 	 	 		 		 		 		
Net earnings (in thousands):	 	As reported	 	$	9,932	 	 	 	8,128	 	 	 	18,780	 	 	 	15,025	 	
 	 	 	 	Compensation cost	 	 	(187	)	 	 	(144	)	 	 	(374	)	 	 	(288	)	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	 	Pro forma	 	 	9,745	 	 	 	7,984	 	 	 	18,406	 	 	 	14,737	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Basic earnings per share:	 	As reported	 	 	0.52	 	 	 	0.43	 	 	 	0.98	 	 	 	0.80	 	
 	 	 	 	Compensation cost	 	 	(0.01	)	 	 	(0.01	)	 	 	(0.02	)	 	 	(0.02	)	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	 	Pro forma	 	 	0.51	 	 	 	0.42	 	 	 	0.96	 	 	 	0.78	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
Diluted earnings per share:	 	As reported	 	 	0.51	 	 	 	0.42	 	 	 	0.96	 	 	 	0.79	 	
 	 	 	 	Compensation cost	 	 	(0.01	)	 	 	—	 	 	 	(0.02	)	 	 	(0.02	)	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	 	Pro forma	 	 	0.50	 	 	 	0.42	 	 	 	0.94	 	 	 	0.77	 	
 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	
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.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Six months ended and as of June 30, 2003	
 	 	 	 		
 	 	 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	18,041	 	 	 	17,154	 	 	 	12,957	 	 	 	15,413	 	 	 	5,973	 	
Intersegment revenues	 	 	102	 	 	 	12	 	 	 	1	 	 	 	3	 	 	 	—	 	
Expenses	 	 	(13,053	)	 	 	(12,213	)	 	 	(9,914	)	 	 	(12,505	)	 	 	(4,671	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	5,090	 	 	 	4,953	 	 	 	3,044	 	 	 	2,911	 	 	 	1,302	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	551,650	 	 	 	539,435	 	 	 	439,631	 	 	 	450,821	 	 	 	192,697	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	 	 	 	 	Consolidated	
 	 	 	 		 		 		 	 	 	 	 		
Revenues from external customers	 	 	7,390	 	 	 	3,931	 	 	 	141	 	 	 	 	 	 	 	81,000	 	
Intersegment revenues	 	 	65	 	 	 	1	 	 	 	23,442	 	 	 	 	 	 	 	23,626	 	
Expenses	 	 	(5,538	)	 	 	(2,954	)	 	 	(1,372	)	 	 	 	 	 	 	(62,220	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(23,626	)	 	 	 	 	 	 	(23,626	)	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	 	Net income	 	 	1,917	 	 	 	978	 	 	 	(1,415	)	 	 	 	 	 	 	18,780	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	Total Assets	 	 	200,035	 	 	 	141,915	 	 	 	(4,823	)	 	 	 	 	 	 	2,511,361	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
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Table of Contents
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Six months ended and as of June 30, 2002	
 	 	 	 		
 	 	 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	18,656	 	 	 	17,018	 	 	 	13,661	 	 	 	12,453	 	 	 	6,285	 	
Intersegment revenues	 	 	170	 	 	 	49	 	 	 	8	 	 	 	—	 	 	 	—	 	
Expenses	 	 	(13,953	)	 	 	(13,174	)	 	 	(11,070	)	 	 	(10,616	)	 	 	(5,007	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	4,873	 	 	 	3,893	 	 	 	2,599	 	 	 	1,837	 	 	 	1,278	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	477,777	 	 	 	449,117	 	 	 	388,613	 	 	 	361,464	 	 	 	169,094	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	 	 	 	 	Consolidated	
 	 	 	 		 		 		 	 	 	 	 		
Revenues from external customers	 	 	6,417	 	 	 	4,183	 	 	 	95	 	 	 	 	 	 	 	78,768	 	
Intersegment revenues	 	 	70	 	 	 	—	 	 	 	19,017	 	 	 	 	 	 	 	19,314	 	
Expenses	 	 	(5,327	)	 	 	(3,168	)	 	 	(1,428	)	 	 	 	 	 	 	(63,743	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(19,314	)	 	 	 	 	 	 	(19,314	)	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	 	Net income	 	 	1,160	 	 	 	1,015	 	 	 	(1,630	)	 	 	 	 	 	 	15,025	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	Total Assets	 	 	176,176	 	 	 	124,319	 	 	 	(8,495	)	 	 	 	 	 	 	2,138,065	 	

 	 	 	 	Three months ended and as of June 30, 2003	
 	 	 	 		
 	 	 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	8,961	 	 	 	8,794	 	 	 	6,795	 	 	 	8,357	 	 	 	2,879	 	
Intersegment revenues	 	 	51	 	 	 	12	 	 	 	1	 	 	 	3	 	 	 	—	 	
Expenses	 	 	(6,514	)	 	 	(6,252	)	 	 	(5,068	)	 	 	(6,775	)	 	 	(2,297	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	2,498	 	 	 	2,554	 	 	 	1,728	 	 	 	1,585	 	 	 	582	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	551,650	 	 	 	539,435	 	 	 	439,631	 	 	 	450,821	 	 	 	192,697	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	 	 	 	 	Consolidated	
 	 	 	 		 		 		 	 	 	 	 		
Revenues from external customers	 	 	4,144	 	 	 	1,914	 	 	 	81	 	 	 	 	 	 	 	41,925	 	
Intersegment revenues	 	 	32	 	 	 	1	 	 	 	12,284	 	 	 	 	 	 	 	12,384	 	
Expenses	 	 	(2,972	)	 	 	(1,452	)	 	 	(663	)	 	 	 	 	 	 	(31,993	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(12,384	)	 	 	 	 	 	 	(12,384	)	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	 	Net income	 	 	1,204	 	 	 	463	 	 	 	(682	)	 	 	 	 	 	 	9,932	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	Total Assets	 	 	200,035	 	 	 	141,915	 	 	 	(4,823	)	 	 	 	 	 	 	2,511,361	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
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Table of Contents
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Three months ended and as of June 30, 2002	
 	 	 	 		
 	 	 	 	 	 	 	 	First	 	 	 	 	 	Mountain	 	 	 	 	
(Dollars in thousands)	 	Glacier	 	Security	 	Western	 	West	 	Big Sky	
	 		 		 		 		 		
Revenues from external customers	 	$	9,499	 	 	 	8,536	 	 	 	6,809	 	 	 	6,503	 	 	 	3,066	 	
Intersegment revenues	 	 	69	 	 	 	42	 	 	 	2	 	 	 	—	 	 	 	—	 	
Expenses	 	 	(6,984	)	 	 	(6,554	)	 	 	(5,408	)	 	 	(5,416	)	 	 	(2,399	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Net income	 	$	2,584	 	 	 	2,024	 	 	 	1,403	 	 	 	1,087	 	 	 	667	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	477,777	 	 	 	449,117	 	 	 	388,613	 	 	 	361,464	 	 	 	169,094	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	
 	 	 	 	Valley	 	Whitefish	 	Other	 	 	 	 	 	Consolidated	
 	 	 	 		 		 		 	 	 	 	 		
Revenues from external customers	 	 	3,270	 	 	 	2,128	 	 	 	30	 	 	 	 	 	 	 	39,841	 	
Intersegment revenues	 	 	51	 	 	 	—	 	 	 	10,144	 	 	 	 	 	 	 	10,308	 	
Expenses	 	 	(2,711	)	 	 	(1,574	)	 	 	(667	)	 	 	 	 	 	 	(31,713	)	
Intercompany eliminations	 	 	—	 	 	 	—	 	 	 	(10,308	)	 	 	 	 	 	 	(10,308	)	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	 	Net income	 	 	610	 	 	 	554	 	 	 	(801	)	 	 	 	 	 	 	8,128	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
 	Total Assets	 	 	176,176	 	 	 	124,319	 	 	 	(8,495	)	 	 	 	 	 	 	2,138,065	 	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	 	 		 	
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.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	Six Months Ended June 30,	
(Dollars in Thousands)	 	 	 	 	 	2003 vs. 2002	 	 	 	 	
 	 	 	Increase (Decrease) due to:	
 	 	 		
Interest Income	 	Volume	 	Rate	 	Net	
	 		 		 		
Real Estate Loans	 	$	(2,226	)	 	 	(736	)	 	 	(2,962	)	
Commercial Loans	 	 	3,226	 	 	 	(2,328	)	 	 	898	 	
Consumer and Other Loans	 	 	(222	)	 	 	(1,145	)	 	 	(1,367	)	
Investment Securities	 	 	5,556	 	 	 	(5,035	)	 	 	521	 	
 	 	 		 	 	 		 	 	 		 	
 	Total Interest Income	 	 	6,334	 	 	 	(9,244	)	 	 	(2,910	)	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
NOW Accounts	 	 	13	 	 	 	(185	)	 	 	(172	)	
Savings Accounts	 	 	22	 	 	 	(213	)	 	 	(191	)	
Money Market Accounts	 	 	217	 	 	 	(1,565	)	 	 	(1,348	)	
Certificates of Deposit	 	 	(903	)	 	 	(2,123	)	 	 	(3,026	)	
FHLB Advances	 	 	2,820	 	 	 	(2,887	)	 	 	(67	)	
Other Borrowings and Repurchase Agreements	 	 	757	 	 	 	(691	)	 	 	66	 	
 	 	 		 	 	 		 	 	 		 	
 	Total Interest Expense	 	 	2,926	 	 	 	(7,664	)	 	 	(4,738	)	
 	 	 		 	 	 		 	 	 		 	
Net Interest Income	 	$	3,408	 	 	 	(1,580	)	 	 	1,828	 	
 	 	 		 	 	 		 	 	 		 	
17 

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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.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
AVERAGE BALANCE SHEET	 	For the Six months ended 6-30-03	 	For the Six months ended 6-30-02	
 	 		 		
(Dollars in Thousands)	 	 	 	 	 	Interest	 	Average	 	 	 	 	 	Interest	 	Average	
 	 	Average	 	and	 	Yield/	 	Average	 	and	 	Yield/	
ASSETS	 	Balance	 	Dividends	 	Rate	 	Balance	 	Dividends	 	Rate	
	 		 		 		 		 		 		
 	Real Estate Loans	 	$	331,572	 	 	 	12,101	 	 	 	7.30	%	 	$	389,073	 	 	 	15,063	 	 	 	7.74	%	
 	Commercial Loans	 	 	714,976	 	 	 	23,979	 	 	 	6.76	%	 	 	627,319	 	 	 	23,081	 	 	 	7.42	%	
 	Consumer and Other Loans	 	 	284,430	 	 	 	10,132	 	 	 	7.18	%	 	 	290,026	 	 	 	11,499	 	 	 	8.00	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Loans	 	 	1,330,978	 	 	 	46,212	 	 	 	7.00	%	 	 	1,306,418	 	 	 	49,643	 	 	 	7.66	%	
 	Tax -Exempt Investment Securities (1)	 	 	203,138	 	 	 	5,179	 	 	 	5.10	%	 	 	132,547	 	 	 	3,457	 	 	 	5.22	%	
 	Investment Securities	 	 	620,453	 	 	 	12,284	 	 	 	3.96	%	 	 	487,649	 	 	 	13,485	 	 	 	5.53	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Earning Assets	 	 	2,154,569	 	 	 	63,675	 	 	 	5.91	%	 	 	1,926,614	 	 	 	66,585	 	 	 	6.91	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Non-Earning Assets	 	 	171,235	 	 	 	 	 	 	 	 	 	 	 	167,809	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL ASSETS	 	$	2,325,804	 	 	 	 	 	 	 	 	 	 	$	2,094,423	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	NOW Accounts	 	$	210,461	 	 	 	226	 	 	 	0.22	%	 	$	204,046	 	 	 	399	 	 	 	0.39	%	
 	Savings Accounts	 	 	132,485	 	 	 	273	 	 	 	0.42	%	 	 	126,514	 	 	 	464	 	 	 	0.74	%	
 	Money Market Accounts	 	 	361,092	 	 	 	2,149	 	 	 	1.20	%	 	 	339,964	 	 	 	3,496	 	 	 	2.07	%	
 	Certificates of Deposit	 	 	464,141	 	 	 	6,730	 	 	 	2.92	%	 	 	511,466	 	 	 	9,756	 	 	 	3.85	%	
 	FHLB Advances	 	 	515,349	 	 	 	8,299	 	 	 	3.25	%	 	 	385,473	 	 	 	8,366	 	 	 	4.38	%	
 	Repurchase Agreements and Other Borrowed Funds	 	 	99,202	 	 	 	2,202	 	 	 	4.48	%	 	 	73,238	 	 	 	2,136	 	 	 	5.88	%	
 	 	 		 	 	 		 	 	 	 	 	 	 		 	 	 		 	 	 	 	 	
 	 	Total Interest Bearing Liabilities	 	 	1,782,730	 	 	 	19,879	 	 	 	2.25	%	 	 	1,640,701	 	 	 	24,617	 	 	 	3.03	%	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	 	Non-interest Bearing Deposits	 	 	292,322	 	 	 	 	 	 	 	 	 	 	 	236,299	 	 	 	 	 	 	 	 	 	
 	 	Other Liabilities	 	 	27,347	 	 	 	 	 	 	 	 	 	 	 	30,790	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Liabilities	 	 	2,102,399	 	 	 	 	 	 	 	 	 	 	 	1,907,790	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Common Stock	 	 	179	 	 	 	 	 	 	 	 	 	 	 	171	 	 	 	 	 	 	 	 	 	
 	Paid-In Capital	 	 	185,616	 	 	 	 	 	 	 	 	 	 	 	169,027	 	 	 	 	 	 	 	 	 	
 	Retained Earnings	 	 	26,229	 	 	 	 	 	 	 	 	 	 	 	14,178	 	 	 	 	 	 	 	 	 	
 	Accumulated Other Comprehensive Earnings	 	 	11,381	 	 	 	 	 	 	 	 	 	 	 	3,257	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	Total Stockholders’ Equity	 	 	223,405	 	 	 	 	 	 	 	 	 	 	 	186,633	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	 	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	 	$	2,325,804	 	 	 	 	 	 	 	 	 	 	$	2,094,423	 	 	 	 	 	 	 	 	 	
 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	
 	Net Interest Income	 	 	 	 	 	$	43,796	 	 	 	 	 	 	 	 	 	 	$	41,968	 	 	 	 	 	
 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	
 	Net Interest Spread	 	 	 	 	 	 	 	 	 	 	3.66	%	 	 	 	 	 	 	 	 	 	 	3.88	%	
 	Net Interest Margin on average earning assets	 	 	 	 	 	 	 	 	 	 	4.10	%	 	 	 	 	 	 	 	 	 	 	4.36	%	
 	Return on Average Assets	 	 	 	 	 	 	 	 	 	 	1.63	%	 	 	 	 	 	 	 	 	 	 	1.41	%	
 	Return on Average Equity	 	 	 	 	 	 	 	 	 	 	16.95	%	 	 	 	 	 	 	 	 	 	 	15.78	%	

(1)	 	Excludes tax effect on non-taxable investment security income	
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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 June 30, 2002 and December 31, 2002, to June 30, 2003.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	 	June 30,	 	December 31,	 	June 30,	 	December 31,	 	June 30,	
Assets ($ in thousands)	 	2003	 	2002	 	2002	 	2002	 	2002	
	 		 		 		 		 		
Cash on hand and in banks	 	$	71,738	 	 	 	74,624	 	 	 	59,812	 	 	 	(2,886	)	 	 	11,926	 	
Investment securities and interest bearing deposits	 	 	940,519	 	 	 	787,578	 	 	 	665,534	 	 	 	152,941	 	 	 	274,985	 	
Loans:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Real estate	 	 	339,057	 	 	 	361,522	 	 	 	372,318	 	 	 	(22,465	)	 	 	(33,261	)	
 	Commercial	 	 	780,321	 	 	 	673,256	 	 	 	650,749	 	 	 	107,065	 	 	 	129,572	 	
 	Consumer	 	 	285,411	 	 	 	286,819	 	 	 	292,639	 	 	 	(1,408	)	 	 	(7,228	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans	 	 	1,404,789	 	 	 	1,321,597	 	 	 	1,315,706	 	 	 	83,192	 	 	 	89,083	 	
 	Allowance for loan losses	 	 	(22,354	)	 	 	(20,944	)	 	 	(19,941	)	 	 	(1,410	)	 	 	(2,413	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	Total loans net of allowance for loan losses	 	 	1,382,435	 	 	 	1,300,653	 	 	 	1,295,765	 	 	 	81,782	 	 	 	86,670	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Other assets	 	 	116,669	 	 	 	118,489	 	 	 	116,954	 	 	 	(1,820	)	 	 	(285	)	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total Assets	 	$	2,511,361	 	 	 	2,281,344	 	 	 	2,138,065	 	 	 	230,017	 	 	 	373,296	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	At June 30, 2003 total assets were $2.511 billion which is $373 million greater than the June 30, 2002 assets of $2.138 billion, an increase of 17 percent, of which $230 million of the increase occurred during 2003.	
 		
 	 	 	Total loans, net of the allowance for loan losses, have increased $87 million from June 30, 2002, with an increase of $91 million occurring during the current quarter. Commercial loans have increased $130 million, or 20 percent, and continue to be the focus of our lending. Approximately 83 percent, or $107 million of the increase in commercial loans has occurred since December 31, 2002. Our real estate loan origination volume has been at record levels, some of which refinanced loans previously held by our banks. The refinancing of loans coupled with our decision to sell the majority of the real estate loan production has resulted in a reduction in real estate loans of $22 million from December 31, 2002 and $33 million from June 30, 2002. Consumer loans have declined $7 million with a significant portion of the decline attributed to the low rate or zero interest financing of auto loans by auto manufacturers. Home-equity loans continue to be the primary source of our consumer loan originations and have increased approximately $26 million, or 16 percent, from a year ago. Home equity loans comprise 66 percent of consumer loans at June 30, 2003.	
 		
 	 	 	Investment securities, including interest bearing deposits in other financial institutions, have increased $153 million since December 31, 2002 and $275 million from June 30, 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, in increasing interest rate environments, than retaining 30 year loans. Additional investments were made to utilize funding liquidity that exceeds loan growth opportunities, and to pre-invest expected principal reductions on mortgage related investments.	
 		
 	 	 	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. Mortgage loans sold for the six months ended June 30, 2003 and 2002 were $293 million and $156 million, respectively, and for the three months ended June 30, 2003 and 2002 were $148 million and $65 million, respectively. 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 June 30, 2003 was approximately $212 million.	
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 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
 	 	 	June 30,	 	December 31,	 	June 30,	 	December 31,	 	June 30,	
Liabilities ($ in thousands)	 	2003	 	2002	 	2002	 	2002	 	2002	
	 		 		 		 		 		
Deposits — non-interest bearing	 	$	337,193	 	 	 	295,016	 	 	 	256,519	 	 	 	42,177	 	 	 	80,674	 	
Deposits — interest bearing	 	 	1,165,386	 	 	 	1,164,907	 	 	 	1,175,893	 	 	 	479	 	 	 	(10,507	)	
Advances from Federal Home Loan Bank	 	 	625,670	 	 	 	483,660	 	 	 	406,603	 	 	 	142,010	 	 	 	219,067	 	
Other borrowed funds	 	 	87,191	 	 	 	61,293	 	 	 	43,201	 	 	 	25,898	 	 	 	43,990	 	
Other liabilities	 	 	30,656	 	 	 	29,219	 	 	 	25,743	 	 	 	1,437	 	 	 	4,913	 	
Trust preferred securities	 	 	35,000	 	 	 	35,000	 	 	 	35,000	 	 	 	—	 	 	 	—	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total liabilities	 	$	2,281,096	 	 	 	2,069,095	 	 	 	1,942,959	 	 	 	212,001	 	 	 	338,137	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	 	 	Total deposits have increased $43 million from December 31, 2002 and $70 million from the June 30, 2002 balances. There was a significant increase of $81 million, or 31 percent, in non-interest bearing deposits, of which approximately 52 percent, or $42 million of the increase occurred since December 31, 2002. This growth in low cost stable funding gives us increased flexibility in managing our asset mix. During the quarter the High Performance Checking program was started in the four banks not previously enrolled in the program. This is expected to increase our base of customers, provide additional low cost deposit balances and enhance fee income. Interest-bearing deposits are down $11 million, or 1 percent, most of which was a reduction in certificates of deposit. Federal Home Loan Bank advances, other borrowed funds, and repurchase agreements, have also increased $168 from December 31, 2002 and $263 million from June 31, 2002 as we continue to take advantage of the flexibility of these funding sources in this current period of low interest rates.	
 		
 	 	 	Acquisition and additional location	
 		
 	 	 	On July 15, 2003, Glacier Bancorp, Inc. completed its acquisition of Pend Oreille Bancorp, and its subsidiary Pend Oreille Bank which operates from two locations in Sandpoint, Idaho and one location in Newport, Washington. The bank has approximately $66 million in total assets with deposits of $59 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. Since this acquisition was completed on July 15th, the results of operation will be reflected in future earnings and is expected to 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 June 30, 2003, the Company had $802 million of available FHLB line of which $626 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.	
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 	 	 	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.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$ change from	 	$ change from	
Stockholders' equity	 	June 30,	 	December 31,	 	June 30,	 	December 31,	 	June 30,	
($ in thousands except per share data)	 	2003	 	2002	 	2002	 	2002	 	2002	
	 		 		 		 		 		
Common equity	 	$	217,728	 	 	 	202,138	 	 	 	188,290	 	 	 	15,590	 	 	 	29,438	 	
Net unrealized gain on securities	 	 	12,537	 	 	 	10,111	 	 	 	6,816	 	 	 	2,426	 	 	 	5,721	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
 	Total stockholders’ equity	 	$	230,265	 	 	 	212,249	 	 	 	195,106	 	 	 	18,016	 	 	 	35,159	 	
 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	
Stockholders’ equity to total assets	 	 	 	 	 	 	 	 	 	 	9.17	%	 	 	9.30	%	 	 	9.13	%	
Tangible equity to total assets	 	 	 	 	 	 	 	 	 	 	7.72	%	 	 	7.68	%	 	 	7.36	%	
Book value per common share	 	$	11.94	 	 	 	11.16	 	 	 	10.32	 	 	 	0.78	 	 	 	1.62	 	
Tangible book value per common share	 	$	9.90	 	 	 	9.05	 	 	 	8.17	 	 	 	0.85	 	 	 	1.73	 	
Market price per share at end of quarter	 	$	24.62	 	 	 	21.42	 	 	 	22.27	 	 	 	3.20	 	 	 	2.35	 	
 	 	 	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 providing flexibility for dividend increases, expansion opportunities, and stock repurchase.	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	June 30,	 	March 31,	 	December 31,	 	June 30,	
 	 		 		 		 		
Credit quality information ($ in thousands)	 	2003	 	2003	 	2002	 	2002	
	 		 		 		 		
Allowance for loan losses	 	$	22,354	 	 	 	21,627	 	 	 	20,944	 	 	 	19,941	 	
Non-performing assets	 	$	10,675	 	 	 	10,026	 	 	 	11,582	 	 	 	9,214	 	
Allowance as a percentage of non performing assets	 	 	209.41	%	 	 	215.71	%	 	 	180.83	%	 	 	216.42	%	
Non-performing assets as a percentage of total assets	 	 	0.42	%	 	 	0.43	%	 	 	0.51	%	 	 	0.43	%	
Allowance as a percentage of total loans	 	 	1.59	%	 	 	1.65	%	 	 	1.58	%	 	 	1.52	%	
Net charge-offs as a percentage of loans	 	 	0.034	%	 	 	0.012	%	 	 	0.261	%	 	 	0.097	%	
 	 	 	Allowance for Loan Loss and Non-Performing Assets	
 		
 	 	 	Non-performing assets as a percentage of total assets at June 30, 2003 were at      .42 percent, a slight decrease from .43 percent at June 30, 2002 and from the December 31, 2002 .51 percent. This compares to the Peer Group average of .65 percent at March 31, 2003, the most recent information available. The reserve for loan losses was 209 percent of non-performing assets at June 30, 2003, compared to 216 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 continued to increase the balance in the reserve for loan losses account. The reserve balance has increased $2.413 million, or 12 percent, to $22.354 million, which is 1.59 percent of total loans outstanding, up from 1.52 percent a year ago. The provision expense for loan losses was $1.892 million which is a decrease of $668 thousand from the prior years’ six month provision. Net charge off loans as a percentage of loans outstanding were .034 percent for the first six months of 2003 which is down from .097 percent for the same period in 2002.	
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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 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 June 30, 2003 compared to the three months ended June 30, 2002. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in thousands)	 	Three months ended June 30,	
 	 		
 	 	 	 	2003	 	2002	 	$ change	 	% change	
 	 	 	 		 		 		 		
Net interest income	 	$	21,964	 	 	 	21,601	 	 	 	363	 	 	 	1.7	%	
Fees and other revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges, loan fees, and other fees	 	 	4,978	 	 	 	4,542	 	 	 	436	 	 	 	9.6	%	
 	Gain on sale of loans	 	 	3,211	 	 	 	1,258	 	 	 	1,953	 	 	 	155.2	%	
 	Gain on sale of investments, net of impairment charge	 	 	1,685	 	 	 	2	 	 	 	1,683	 	 	 	84150.0	%	
 	Other income	 	 	439	 	 	 	532	 	 	 	(93	)	 	 	-17.5	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	 	Total non-interest income	 	 	10,313	 	 	 	6,334	 	 	 	3,979	 	 	 	62.8	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total revenue	 	$	32,277	 	 	 	27,935	 	 	 	4,342	 	 	 	15.5	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Tax equivilent net interest margin	 	 	4.17	%	 	 	4.57	%	 	 	 	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	 	 	 	 	
Net Interest Income
Net interest income for the quarter increased $363 thousand, or 2 percent, over the same period in 2002. Total interest income is $1.894 million, or 6 percent lower than the same quarter in 2002, while total interest expense is $2.257 million or 19 percent lower. The increase in non-interest bearing deposits reduced the need to borrow additional funds and helped reduce interest expense. The net interest margin as a percentage of earning assets, on a tax equivalent basis, decreased from 4.57 percent for the 2002 quarter, 4.35 for the first quarter of 2003, to 4.17 percent in the current quarter. We continue to deploy a strategy of investing in short term securities that carry lower current yields. We believe it is inappropriate in this rate environment to extend maturities in order to achieve higher yields. This strategy in the near term will put pressure on our net interest margin, however from a longer term perspective we are more comfortable with this approach. 
Non-interest Income
Fee income increased 10 percent over the same period last year, driven primarily by increased account activity. Gain on sale of loans increased $1.953 million reflecting the low level of mortgage interest rates and resulting purchase and refinancing activity. The income from mortgage origination activity serves as a counter-balance to net interest income reductions from low interest rates. Other income was lower in the current years’ quarter by $93 thousand primarily the result of reduced loan servicing income. 
Gains on sale of investments of $3.480 million were realized during the quarter from the sale of approximately $14 million of long term corporate bonds. These bonds were acquired two years ago with the intent of exercising put options available in the bond structures. Market conditions provided an opportunity to sell the bonds, record a 
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significant gain, reinvest the principal and gain proceeds into similar maturity municipal bonds, and retain the investment yield. There was an impairment charge in the current quarter of $1.795 million for impairment of value on collateralized mortgage obligations. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-interest expense summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in thousands)	 	Three months ended June 30,	
 	 		
 	 	 	2003	 	2002	 	$ change	 	% change	
 	 	 		 		 		 		
Compensation and employee benefits	 	$	9,050	 	 	 	7,533	 	 	 	1,517	 	 	 	20.1	%	
Occupancy and equipment expense	 	 	2,295	 	 	 	2,324	 	 	 	(29	)	 	 	-1.2	%	
Outsourced data processing expense	 	 	266	 	 	 	515	 	 	 	(249	)	 	 	-48.3	%	
Core deposit intangible amortization	 	 	291	 	 	 	360	 	 	 	(69	)	 	 	-19.2	%	
Other expenses	 	 	4,417	 	 	 	3,610	 	 	 	807	 	 	 	22.4	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total non-interest expense	 	$	16,319	 	 	 	14,342	 	 	 	1,977	 	 	 	13.8	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Non-interest Expense
Non-interest expense increased by $1.977 million, or 14 percent, from the same quarter of 2002. Compensation and benefit expense increased $1.517 million, or 20 percent from the second quarter of 2002, with commissions for loan originators, other incentives, additional support staff for increased volumes, and two additional branches in operation in Boise accounting for the majority of the increase. Occupancy and equipment expense decreased $29 thousand, or 1 percent, the net result of adding additional facilities and fully depreciating an investment in computer systems in prior periods. Outsourced data processing expense decreased by $249 thousand, or 48 percent, resulting from bringing the core processing for each subsidiary bank onto our in-house data system. Other expenses increased $807 thousand, or 22 percent, resulting primarily from charges for data conversion of Mountain West Bank to the in-house data system, and start up expenses on implementing the High Performance Checking program at the four banks not previously on the program. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 51 percent for the 2003 quarter which is comparable to the 51 percent for the 2002 quarter. 
Results of Operations – The six months ended June 30, 2003 compared to the six months ended June 30, 2002. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in thousands)	 	Six months ended June 30,	
 	 		
 	 	 	 	2003	 	2002	 	$ change	 	% change	
 	 	 	 		 		 		 		
Net interest income	 	$	43,796	 	 	 	41,968	 	 	 	1,828	 	 	 	4.4	%	
Fees and other revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Service charges, loan fees, and other fees	 	 	9,597	 	 	 	8,470	 	 	 	1,127	 	 	 	13.3	%	
 	Gain on sale of loans	 	 	5,482	 	 	 	2,433	 	 	 	3,049	 	 	 	125.3	%	
 	Gain on sale of investments, net of impairment charge	 	 	1,248	 	 	 	2	 	 	 	1,246	 	 	 	62300.0	%	
 	Other income	 	 	999	 	 	 	1,278	 	 	 	(279	)	 	 	-21.8	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	 	Total non-interest income	 	 	17,326	 	 	 	12,183	 	 	 	5,143	 	 	 	42.2	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total revenue	 	$	61,122	 	 	 	54,151	 	 	 	6,971	 	 	 	12.9	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Tax equivilent net interest margin	 	 	4.26	%	 	 	4.48	%	 	 	 	 	 	 	 	 	
 	 	 		 	 	 		 	 	 	 	 	 	 	 	 	
Net Interest Income
Net interest income increased $1.828 thousand, or 4 percent, over the same period in 2002. Total interest income is $2.910 million, or 4 percent lower than in 2002, while total interest expense is $4.738 million or 19 percent lower. Lower interest rates were the main reason for the reduction in interest income and interest 
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expense. The net interest margin as a percentage of earning assets, on a tax equivalent basis, decreased from 4.48 percent in 2002 to 4.26 percent in 2003. 
Non-interest Income
Fee income increased $1.127 million, or 13 percent, over the same period last year, driven primarily by increased account activity. Gain on sale of loans increased $3.049 million reflecting the low level of mortgage interest rates and resulting purchase and refinancing activity. Other income was lower in the current year by $279 thousand primarily the result of reduced loan servicing income. 
Gain on sale of investments of $3.497 million were realized from the sale of approximately $16 million of long term corporate bonds. Market conditions provided an opportunity to realize currently the interest income that would have been generated over several years. The proceeds of the sale were reinvested in municipal securities of like maturity with similar future interest income. There was an impairment charge in the first six months of 2003 of $2.249 million for impairment of value on collateralized mortgage obligations. 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-interest expense summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in thousands)	 	Six months ended June 30,	
 	 		
 	 	 	2002	 	2001	 	$ change	 	% change	
 	 	 		 		 		 		
Compensation and employee benefits	 	$	17,029	 	 	 	15,315	 	 	 	1,714	 	 	 	11.2	%	
Occupancy and equipment expense	 	 	4,730	 	 	 	4,625	 	 	 	105	 	 	 	2.3	%	
Outsourced data processing expense	 	 	828	 	 	 	961	 	 	 	(133	)	 	 	-13.8	%	
Core deposit intangible amortization	 	 	629	 	 	 	721	 	 	 	(92	)	 	 	-12.8	%	
Other expenses	 	 	7,986	 	 	 	7,085	 	 	 	901	 	 	 	12.7	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
 	Total non-interest expense	 	$	31,202	 	 	 	28,707	 	 	 	2,495	 	 	 	8.7	%	
 	 	 		 	 	 		 	 	 		 	 	 	 	 	
Non-interest Expense
Non-interest expense increased by $2.495 million, or 9 percent, from 2002. Compensation and benefit expense increased $1.714 million, or 11 percent from 2002, with commissions for loan originators, other incentives, additional support staff for increased volumes, and two additional branches in operation in Boise accounting for the majority of the increase. Occupancy and equipment expense increased $105 thousand, or 2 percent, the net result of adding additional facilities and fully depreciating an investment in computer systems in prior periods. Outsourced data processing expense decreased by $133 thousand, or 14 percent, resulting from bringing the core processing for each subsidiary bank onto our in-house data system. Other expenses increased $901 thousand, or 13 percent, resulting from charges for data conversion of Mountain West Bank to the in-house data system, start up expenses on implementing the High Performance Checking program at the four banks not previously on the program, loan collection expenses, operations losses on deposit accounts, losses on other real estate sales, and volume related increases. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 51 percent for 2003 which is down from the 53 percent for 2002. 
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 
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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 sensitivity. The table illustrates the estimated change in net interest income over a twelve month period based on the six months activity ended June 30, 2003. 
 	 	 	 	 	 	 	 	 	
Interest Rate Sensitivity	 	 	 	 	 	 	 	 	
 	 	+200 bp	 	-100 bp	
 	 		 		
Estimated sensitivity	 	 	-1.37	%	 	 	0.46	%	
Estimated increase (decrease) in net interest income	 	$	(1,210	)	 	 	406	 	
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 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. 
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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 
Item 4. Submission of Matters to a Vote of Securities Holders 
 	(a)	 	The Company’s Annual Shareholders’ Meeting was held on April 30, 2003	
 		
 	(b)	 	Not Applicable	
 		
 	(c)	 	A brief description of each matter voted upon at the Annual Meeting and number of votes cast for, against or withheld, including a separate tabulation with respect to each nominee to serve on the Board is presented below:	
 		
 	 	 	(1) Election of three Directors for three year terms expiring in 2006 or until their successors have been elected and qualified.	
     Directors: 
 	 	 	 	 	 	 	 	 	 	
William L. Bouchee –
Votes Cast For:	 	 	13,959,690	 		
 	Votes Cast Against/Witheld:	 	 	480,809	 		
L. Peter Larson –
Votes Cast For:	 	 	14,009,204	 		
 	Votes Cast Against/Witheld:	 	 	431,296	 		
Everit A. Sliter –
Votes Cast For:	 	 	13,687,472	 		
 	Votes Cast Against/Witheld:	 	 	753,027	 		
 	(d)	 	None	
Item 5. Other Information 
     None 
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Item 6. Exhibits and Reports on Form 8-K. 
 	(a)	 	Exhibits	
 		
 	 	 	Exhibit 31.1 – Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002	
 		
 	 	 	Exhibit 31.2 – Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002	
 		
 	 	 	Exhibit 32 – Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002	
 		
 	(b)	 	Current Report on Form 8-K	
                     On May 5, 2003, a Form 8-K was filed announcing first quarter financial results for 2003. 
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	
 	 	 	
August 12, 2003	 	/s/ Michael J. Blodnick	
 	 		
 	 	Michael J. Blodnick
President/CEO	
 	 	 	
August 12, 2003	 	/s/ James H. Strosahl	
 	 		
 	 	James H. Strosahl
Executive Vice President/CFO	
27 

                                                                    EXHIBIT 31.1

                                 CERTIFICATIONS

I, Michael J. Blodnick, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp,
         Inc

2.       Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
         control over financial reporting (as defined in Exchange Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         (a)      Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         (b)      Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting an
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

         (c)      Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         (d)      Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors:

         (a)      All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         (b)      Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

August 12, 2003

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

                                                                    EXHIBIT 31.2

                                 CERTIFICATIONS

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 report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
         control over financial reporting (as defined in Exchange Act Rules
         13a-15(f) and 15d-15(f)) for the registrant and have:

         (a)      Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         (b)      Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting an
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

         (c)      Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         (d)      Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors:

         (a)      All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         (b)      Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

August 12, 2003

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

                                                                      EXHIBIT 32

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

In connection with the Quarterly Report of Glacier Bancorp, Inc. (the "Company")
on form 10-Q for the period ended June 30, 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.

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

August 12, 2003

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

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