1

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported):
                                October 20, 1998

                              GLACIER BANCORP, INC.

             (Exact name of registrant as specified in its charter)

                                    DELAWARE
                 (State or other jurisdiction of incorporation)

               000-18911                                   81-0468393
        (Commission File Number)                 IRS Employer Identification No.

                                   P.O. Box 27
                                 202 Main Street
                            Kalispell, MT 59903-0027
               (Address of principal executive offices) (zip code)

        Registrant's telephone number, including area code: 406-756-4200

   2

ITEM 5 - OTHER EVENTS

         On October 20, 1998, Glacier Bancorp, Inc., Kalispell, Montana
("Glacier") entered into a definitive agreement (the "Share Exchange Agreement")
with Big Sky Western Bank, a Montana commercial banking corporation ("Big Sky").
Under the terms of the Share Exchange Agreement, all of the outstanding shares
of Big Sky common stock will be exchanged for shares of Glacier common stock and
Big Sky will become a wholly-owned subsidiary of Glacier.

         The Share Exchange Agreement provides that Big Sky's common stock will
be exchanged for up to 250,000 shares of Glacier common stock, as adjusted by
certain transaction and other expenses outlined in the Share Exchange Agreement.
The exact number of shares to be received by each Big Sky shareholder will be
determined by a fixed exchange ratio as set forth in the Share Exchange
Agreement.

         Consummation of the share exchange is subject to several conditions,
including receipt of applicable regulatory approvals and approval by the
shareholders of Big Sky. For information regarding the terms of the proposed
transaction, reference is made to the Share Exchange Agreement and the press
release dated October 20, 1998, which are attached hereto as Exhibits 2, 99,
respectively, and incorporated herein by reference.

ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS

        (a)     Financial statements - not applicable.

        (b)     Pro forma financial information - not applicable.

        (c)     Exhibits:

                (2)     Plan and Agreement of Share Exchange, dated as of
                        October 20, 1998

                (99)    Press Release issued by Glacier, dated October 20, 1998

                                       2
   3

                                   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 hereunto duly authorized.

         Dated:   October 20, 1998

                                            GLACIER BANCORP, INC.

                                            By: /s/ Michael J. Blodnick
                                               ---------------------------------
                                                Michael J. Blodnick
                                                President and Chief Executive 
                                                Officer

   1

                                                                       EXHIBIT 2

                                                                  EXECUTION COPY

================================================================================

                      PLAN AND AGREEMENT OF SHARE EXCHANGE

                                     BETWEEN

                              GLACIER BANCORP, INC.

                                       AND

                              BIG SKY WESTERN BANK

================================================================================

                          DATED AS OF OCTOBER 20, 1998

   2

                                TABLE OF CONTENTS

                                                                                                 Page
                                                                                                 ----
                                                                                              
SECTION 1  TERMS OF TRANSACTION...........................................................        2

         1.1      Transaction.............................................................        2
                  1.1.1    Events of Closing..............................................        2
                  1.1.2    Effect on Glacier Common Stock.................................        2
         1.2      Consideration...........................................................        2
                  1.2.1    Purchase Price.................................................        2
                  1.2.2    Exchange Ratio.................................................        3
                  1.2.4    Big Sky Expense Limitation.....................................        3
                  1.2.5    Change in Equity Capital.......................................        3
                  1.2.6    No Fractional Shares...........................................        3
                  1.2.7    Certificates...................................................        4
         1.3      Payment to Dissenting Stockholders......................................        5
         1.4      Alternative Structures..................................................        5
         1.5      Letter of Transmittal...................................................        5
         1.6      Undelivered Certificates................................................        5

SECTION 2  CLOSING OF THE TRANSACTION.....................................................        5

         2.1      Closing.................................................................        5
         2.2      Events of Closing.......................................................        6
         2.3      Place of Closing........................................................        6

SECTION 3  REPRESENTATIONS AND WARRANTIES.................................................        6

         3.1      Representations of Glacier and Big Sky..................................        6
                  3.1.1    Corporate Organization and Qualification.......................        6
                  3.1.2    Subsidiaries...................................................        6
                  3.1.3    Capital Stock..................................................        6
                  3.1.4    Corporate Authority............................................        8
                  3.1.5    Reports and Financial Statements...............................        8
                  3.1.6    Absence of Certain Events and Changes..........................       10
                  3.1.7    Material Agreements............................................       10
                  3.1.8    Knowledge as to Conditions.....................................       10
                  3.1.9    Brokers and Finders............................................       10
                  3.1.10   Year 2000 Compliance...........................................       11
         3.2      Big Sky's Additional Representations....................................       11
                  3.2.1    Loan and Lease Losses..........................................       11
                  3.2.2    No Stock Option Plans..........................................       11
                  3.2.3    Governmental Filings; No Violations............................       11
                  3.2.4    Asset Classification...........................................       12
                  3.2.5    Investments....................................................       12
                  3.2.6    Properties.....................................................       12
                  3.2.7    Anti-takeover Provisions.......................................       13
                  3.2.8    Compliance with Laws...........................................       13

                                       i
   3

                                                                                              
                  3.2.9    Litigation.....................................................       13
                  3.2.10   Taxes..........................................................       14
                  3.2.11   Insurance......................................................       14
                  3.2.12   Labor Matters..................................................       15
                  3.2.13   Employee Benefits..............................................       15
                  3.2.14   Environmental Matters..........................................       16
         3.3      Exceptions to Representations and Warranties............................       17
                  3.3.1    Disclosure of Exceptions.......................................       17
                  3.3.2    Nature of Exceptions...........................................       17

SECTION 4  CONDUCT AND TRANSACTIONS BEFORE CLOSING........................................       18

         4.1      Conduct of Big Sky's Business Before Closing............................       18
                  4.1.1    Availability of Big Sky's Books, Records and Properties........       18
                  4.1.2    Ordinary and Usual Course......................................       18
                  4.1.3    Conduct Regarding Representations and Warranties...............       20
                  4.1.4    Maintenance of Properties......................................       20
                  4.1.5    Preservation of Business Organization..........................       20
                  4.1.6    Senior Management..............................................       20
                  4.1.7    Compensation and Employment Agreements.........................       20
                  4.1.8    Update of Financial Statements.................................       20
                  4.1.9    No Solicitation................................................       20
                  4.1.10   Title Policies on Leased Property..............................       21
                  4.1.11   Review of Loans................................................       21
         4.2      Registration Statement..................................................       21
                  4.2.1    Preparation of Registration Statement..........................       21
                  4.2.2    Submission to Stockholders.....................................       22
         4.3      Accounting Treatment....................................................       22
                  4.3.1    Pooling of Interests...........................................       22
                  4.3.2    Affiliate List.................................................       22
                  4.3.3    Restrictive Legends............................................       23
                  4.3.4    Retention of Certificates......................................       23
         4.4      Submission to Regulatory Authorities....................................       23
         4.5      Announcements...........................................................       23
         4.6      Consents................................................................       23
         4.7      Further Actions.........................................................       23
         4.8      Notice..................................................................       23
         4.9      Confidentiality.........................................................       24
         4.10     Update of Financial Statements..........................................       24
         4.11     Availability of Glacier's Books, Records and Properties.................       24

SECTION 5  APPROVALS AND CONDITIONS.......................................................       24

         5.1      Required Approvals......................................................       24
         5.2      Conditions to Glacier's Obligations.....................................       24
                  5.2.1    Representations................................................       24
                  5.2.2    Compliance.....................................................       25
                  5.2.3    Equity Capital Requirement.....................................       25

                                       ii
   4

                                                                                              
                  5.2.4    Transaction Fees Statements....................................       25
                  5.2.5    Audit Report...................................................       25
                  5.2.6    No Material Adverse Effect.....................................       25
                  5.2.7    Financial Condition............................................       25
                  5.2.8    No Change in Loan Review.......................................       26
                  5.2.9    No Governmental Proceedings....................................       26
                  5.2.10   Approval by Counsel............................................       26
                  5.2.11   Receipt of Title Policy........................................       26
                  5.2.12   Corporate and Stockholder Action...............................       26
                  5.2.13   Tax Opinion....................................................       26
                  5.2.14   Opinion of Counsel.............................................       26
                  5.2.15   Cash Paid......................................................       27
                  5.2.16   Affiliate Letters..............................................       27
                  5.2.17   Registration Statement.........................................       27
                  5.2.18   Consents.......................................................       27
                  5.2.19   Updated Fairness Opinion.......................................       27
                  5.2.20   Accounting Treatment...........................................       27
                  5.2.21   Solicitation of Employees......................................       27
                  5.2.22   Other Matters..................................................       28
         5.3      Conditions to Big Sky's Obligations.....................................       28
                  5.3.1    Representations................................................       28
                  5.3.2    Compliance.....................................................       28
                  5.3.3    No Material Adverse Effect.....................................       28
                  5.3.4    No Governmental Proceedings....................................       28
                  5.3.5    Corporate and Stockholder Action...............................       28
                  5.3.6    Tax Opinion....................................................       28
                  5.3.7    Opinion of Counsel.............................................       28
                  5.3.8    Fairness Opinion...............................................       29
                  5.3.9    Cash Paid......................................................       29
                  5.3.10   Registration Statement.........................................       29

SECTION 6  DIRECTORS, OFFICERS AND EMPLOYEES..............................................       29

         6.1      Directors...............................................................       29
         6.2      Employment Agreement....................................................       29
         6.3      Employees...............................................................       29
         6.4      Employee Benefit Issues.................................................       30
                  6.4.1    Comparability of Benefits......................................       30
                  6.4.2    Termination and Transfer/Merger of Plans.......................       30
                  6.4.3    No Contract Created............................................       30

SECTION 7  TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION........................       30

         7.1      Termination by Reason of Lapse of Time..................................       30
         7.2      Other Grounds for Termination...........................................       30
                  7.2.1    Mutual Consent.................................................       30
                  7.2.2    Big Sky's Conditions Not Met...................................       30
                  7.2.3    Glacier's Conditions Not Met...................................       30

                                      iii
   5

                                                                                              
                  7.2.4    Big Sky Fails to Recommend Stockholder Approval................       30
                  7.2.5    Impracticability...............................................       31
         7.3      Big Sky Termination Fee.................................................       31
         7.4      Glacier Termination Fee.................................................       31
         7.5      Cost Allocation Upon Termination........................................       31

SECTION 8  MISCELLANEOUS..................................................................       31

         8.1      Notices.................................................................       31
         8.2      Waivers and Extensions..................................................       32
         8.3      General Interpretation..................................................       32
         8.4      Construction and Execution in Counterparts..............................       32
         8.5      Survival of Representations and Covenants...............................       32
         8.6      Attorneys' Fees and Costs...............................................       33
         8.7      Arbitration.............................................................       33
         8.8      Governing Law and Venue.................................................       33
         8.9      Severability............................................................       33

SECTION 9  AMENDMENTS.....................................................................       33

EXHIBITS AND SCHEDULES:

EXHIBIT A                Form Affiliate Letter

TRANSITION PLAN SCHEDULE

SCHEDULE 1               Exceptions to Representations
SCHEDULE 2               Glacier Stock Plans
SCHEDULE 3               Big Sky Stock Options
SCHEDULE 4               Big Sky's Convertible Securities
SCHEDULE 5               Material Contracts
SCHEDULE 6               Big Sky's Required Third Party Consents
SCHEDULE 7               Big Sky's Asset Classification List
SCHEDULE 8               Big Sky's Investments
SCHEDULE 9               Big Sky's Property Encumbrances
SCHEDULE 10              Big Sky's Real Property
SCHEDULE 11              Big Sky's Offices and Branches
SCHEDULE 12              Big Sky's Compliance with Laws
SCHEDULE 13              Big Sky's Litigation Disclosure
SCHEDULE 14              Big Sky's Insurance Policies
SCHEDULE 15              Big Sky's Employee Benefit Plans

                                       iv
   6

                              INDEX OF DEFINITIONS

================================================================================

TERMS                                                      SECTION
- -----                                                      -------
                                                        
Agreement                                                  Intro. Paragraph

Acquisition Proposal                                       4.1.9

ASR                                                        4.3.2

Asset Classification                                       3.2.4

BHCA                                                       Recital A

Big Sky                                                    Intro. Paragraph

Big Sky Common Stock                                       3.1.3(b)(1)

Big Sky Financial Statements                               3.1.5(d)(4)

Closing                                                    1.1.1

Company Common Stock                                       3.1.3(a)(1)

Compensation Plans                                         3.2.13(b)

Continuing Employees                                       6.3

Contracts                                                  3.2.3(b)

Debentures                                                 1.2.3

Determination Date Closing Price                           1.2.3

Dissenting Shares                                          1.3

Effective Date                                             2.1

Employees                                                  3.2.13(b)

Environmental Laws                                         3.2.14(a)(2)

ERISA                                                      3.2.13(a)

Exchange Act                                               3.1.5(b)

Exchange Agent                                             1.2.7(a)

Exchange Ratio                                             1.2.2

================================================================================

                                       v
   7

================================================================================

TERMS                                                      SECTION
- -----                                                      -------
                                                        
Executive Officer                                          3.1.8

Federal Reserve Board                                      Recital D

Financial Statements                                       3.1.5(d)(1) 

GAAP                                                       3.1.5(d) 

Glacier                                                    Intro. Paragraph

Glacier Common Stock                                       3.1.3(a)(1) 

Glacier Financial Statements                               3.1.5(d)(2) 

Glacier Preferred Stock                                    3.1.3(a)(1) 

Glacier Shares                                             1.2.2

Glacier Stock Plans                                        3.1.3(a)(2) 

Governmental Entity                                        3.2.3(a) 

Hazardous Substances                                       3.2.14(a)(3) 

HOLA                                                       Recital A

Information Technology                                     3.1.10

IRC                                                        Recital H

Knowledge                                                  3.2.14(a)

Liens                                                      3.1.3(a)(5) 

Material Adverse Effect                                    3.1.6

MBCA                                                       1.1.1

OTS                                                        Recital D.4

Parties                                                    1.2.3

Pension Plan                                               3.2.13(c) 

Plan/Plans                                                 3.2.13(a) 

Prospectus/Proxy Statement                                 4.2.1(a) 

================================================================================

                                       vi

   8

================================================================================

TERMS                                                      SECTION
- -----                                                      -------
                                                        
Purchase Price                                             1.2.1

Registration Statement                                     4.2.1(a)

Regulatory Approvals                                       Recital D

Reports                                                    3.1.5(b)

SEC                                                        3.1.5(a)

Securities Act                                             3.1.5(b)

Securities Laws                                            3.1.5(b)

Share Exchange                                             Recital B

Subject Property                                           3.2.14(a)(1)

Subsequent Big Sky Financial Statements                    3.1.5(d)(5)

Subsequent Glacier Financial Statements                    3.1.5(d)(3)

Subsidiary/Subsidiaries                                    3.1.2

Tangible Equity Capital                                    5.2.3

Tax                                                        3.2.10

Termination Date                                           2.1

Transaction                                                1.1

Transaction Fees                                           1.2.3

Year 2000 Compliance                                       3.1.10

================================================================================

                                      vii
   9

                      PLAN AND AGREEMENT OF SHARE EXCHANGE
                                     BETWEEN
                              GLACIER BANCORP, INC.
                                       AND
                              BIG SKY WESTERN BANK

         This Plan and Agreement of Share Exchange ("Agreement"), dated as of
October 20, 1998, is between GLACIER BANCORP, INC. ("Glacier"), a Delaware
corporation and BIG SKY WESTERN BANK ("Big Sky"), a Montana commercial banking
corporation.

                                    PREAMBLE

         The management and boards of directors of Glacier and Big Sky,
respectively, believe that the share exchange between Glacier and Big Sky, on
the terms and conditions set forth in this Agreement, is in the best interests
of Glacier's and Big Sky's stockholders.

                                    RECITALS

A.       THE PARTIES. Glacier is a corporation duly organized and validly
         existing under Delaware law and is a registered bank holding company
         under the Bank Holding Company Act of 1956, as amended ("BHCA").
         Glacier's principal office is located in Kalispell, Montana. Glacier
         owns (1) all of the outstanding common stock of Glacier Bank, First
         Security Bank of Missoula, and Valley Bank of Helena; and (2) 94% and
         98% of the outstanding common stock of Glacier Bank of Whitefish and
         Glacier Bank of Eureka, respectively. Big Sky is a state-chartered
         commercial banking corporation duly organized and validly existing
         under Montana law with its principal office located in Big Sky,
         Montana.

B.       THE SHARE EXCHANGE. On the Effective Date, all of the outstanding
         shares of Big Sky common stock will be exchanged for shares of Glacier
         common stock, and Big Sky will become a wholly-owned subsidiary of
         Glacier.

C.       BOARD APPROVALS. Glacier's and Big Sky's respective boards of directors
         have approved this Agreement and authorized its execution and delivery.

D.       OTHER APPROVALS.  The Share Exchange is subject to:

         (a)      satisfaction of the conditions described in this Agreement;

         (b)      approval by Big Sky's stockholders; and

         (c)      approval or acquiescence, as appropriate, by (a) the Board of
                  Governors of the Federal Reserve System ("Federal Reserve
                  Board") and (b) the State of Montana (collectively,
                  "Regulatory Approvals").

E.       EMPLOYMENT AGREEMENT. Big Sky has entered into an employment agreement,
         effective as of the Effective Date, with Michael F. Richards, Big Sky's
         President.

F.       DIRECTOR NONCOMPETITION AGREEMENT. Each Director of Big Sky's board of
         directors has signed a Director Noncompetition Agreement. These
         noncompetition agreements will take effect on the Effective Date.

                                       1
   10

G.       FAIRNESS OPINION. Big Sky has received from Professional Bank Services
         and delivered to Glacier an opinion to the effect that the financial
         terms of the Transaction are financially fair to Big Sky's
         stockholders. As a condition to Closing of the Transaction,
         Professional Bank Services will update this fairness opinion
         immediately before Big Sky mails the Prospectus/Proxy Statement to its
         stockholders and immediately before the Effective Date.

H.       INTENTION OF THE PARTIES--ACCOUNTING AND TAX TREATMENT. The parties
         intend the Share Exchange to qualify, for accounting purposes, as a
         "pooling of interests." The parties intend the Share Exchange to
         qualify, for federal income tax purposes, as a tax-free reorganization
         under Section 368 of the Internal Revenue Code of 1986, as amended
         ("IRC").

                                    AGREEMENT

Glacier and Big Sky agree as follows:

                                    SECTION 1
                              TERMS OF TRANSACTION

1.1      TRANSACTION. Under and subject to this Agreement and the other
         documents referred to in this Agreement, Glacier will acquire all of
         the outstanding common stock shares of Big Sky ("Big Sky Common
         Stock"). All outstanding shares of Big Sky Common Stock will be
         exchanged for common stock shares of Glacier ("Glacier Common Stock").
         The term "Transaction" means the Share Exchange transaction
         contemplated by this Agreement, subject to any modifications Glacier
         elects in accordance with Subsection 1.4.

         1.1.1    EVENTS OF CLOSING. Closing of the Transaction will take place
                  in accordance with Section 2 ("Closing"). All shares, other
                  than Dissenting Shares, of Big Sky Common Stock issued and
                  outstanding immediately before Closing will be exchanged at
                  Closing for shares of Glacier Common Stock in accordance with
                  Subsection 1.2 and in accordance with the Montana Business
                  Corporation Act ("MBCA"), Part 8,Sections 35-1-814, et. seq.
                  by operation of law and without any further action required by
                  the holders of Big Sky Common Stock. At the time of Closing,
                  all then outstanding shares of Big Sky Common Stock will be
                  owned by Glacier. The Board of Directors of Big Sky
                  immediately after the Effective Date will consist of Big Sky's
                  directors immediately before the Share Exchange with the
                  addition of two additional directors designated by Glacier and
                  reasonably acceptable to Big Sky. These individuals will serve
                  on Big Sky's board of directors until the next annual meeting
                  of stockholders or until their successors have been elected
                  and qualified. Nothing in this Agreement is intended to
                  restrict any rights of Big Sky's stockholder and directors at
                  any time after the Effective Date to nominate, elect, select,
                  or remove directors.

         1.1.2    EFFECT ON GLACIER COMMON STOCK. Glacier Common Stock shares
                  issued and outstanding immediately before the Effective Date
                  will remain outstanding and unchanged after the Share
                  Exchange.

1.2      CONSIDERATION.

         1.2.1    PURCHASE PRICE. Except as otherwise provided in this
                  Subsection 1.2 and subject to Subsection 1.3, the aggregate
                  consideration Big Sky's stockholders will be entitled to
                  receive from Glacier in connection with the Transaction (the
                  "Purchase Price") will be 250,000 shares of Glacier Common
                  Stock.

                                       2
   11

         1.2.2    EXCHANGE RATIO. Subject to the conditions and limitations in
                  this Agreement, holders of Big Sky Common Stock will receive
                  Glacier Common Stock in exchange for their Big Sky Common
                  Stock. The number of Glacier Common Stock shares each holder
                  will receive in exchange for each Big Sky Common Stock share
                  he or she holds of record on the Effective Date will be
                  determined according to a ratio (the "Exchange Ratio")
                  computed as follows: the quotient of the Purchase Price
                  divided by the aggregate number of shares of Big Sky Common
                  Stock that on the Effective Date are issued and outstanding
                  (rounded to 2 decimals, rounding down if the third decimal is
                  four or less or up if it is five or more). The shares of
                  Glacier Common Stock to be issued to Big Sky Common
                  Stockholders under this Agreement in connection with the
                  Transaction are referred to as the "Glacier Shares."

         1.2.3    CONVERTIBLE DEBENTURES. Big Sky currently has issued 7.5%
                  Convertible Debentures due December 31, 2001 in the aggregate
                  principal amount of $350,000 (the "Debentures"). If any of the
                  Debentures are not converted into Big Sky Common Stock prior
                  to the Effective Date, then before the Exchange Ratio is
                  calculated, the Purchase Price will be reduced by the number
                  of Glacier Common Stock Shares equal in value to the aggregate
                  principal amount of the Debentures which have not been
                  converted. For purposes of determining this reduction in the
                  Purchase Price, Glacier Common Stock shares will be valued at
                  the Determination Date Closing Price. "Determination Date
                  Closing Price" means the midpoint of the closing bid and ask
                  prices per share of Glacier Common Stock as reported on the
                  Nasdaq National Market or such successor exchange on which
                  Glacier Common Stock may then be traded (as reported in The
                  Wall Street Journal or, if not reported therein, in another
                  mutually agreed upon authoritative source) on the third
                  business day before the Effective Date. Glacier will cause to
                  be mailed to each Debenture holder a copy of the
                  Prospectus/Proxy Statement and will provide to each Debenture
                  holder, on or prior to the Effective Date, its written
                  assurance that it has assumed the obligation to deliver shares
                  of Glacier Common Stock as required pursuant to paragraph
                  4(d)(ii) of the Debentures if the Debentures remain
                  outstanding until their maturity.

         1.2.4    BIG SKY EXPENSE LIMITATION. If Big Sky's Transaction Fees
                  exceed $100,000, then before the Exchange Ratio is calculated,
                  the Purchase Price will be reduced by the number of Glacier
                  Common Stock shares equal in value to the excess, based on the
                  Determination Date Closing Price. "Transaction Fees" means all
                  costs and expenses, not including the exercise of options,
                  incurred by Big Sky or owed or paid by Big Sky to third
                  parties in connection with the preparation, negotiation and
                  execution of this Agreement and related documents and the
                  consummation of the Transaction, including expenses incurred
                  by Big Sky in connection with obtaining approvals for the
                  Transaction from regulators and stockholders, expenses related
                  to the audits of the Big Sky Financial Statements required
                  under this Agreement and expenses related to obtaining a
                  fairness opinion from Professional Bank Services.

         1.2.5    CHANGE IN EQUITY CAPITAL. If, after the date of this Agreement
                  but before the Effective Date, Glacier's or Big Sky's Common
                  Stock issued and outstanding increases or decreases in number
                  or is changed into or exchanged for a different kind or number
                  of securities, through a recapitalization, reclassification,
                  stock dividend, stock split, reverse stock split or other
                  similar change in capitalization (not including increases in
                  number due to issuances of shares upon exercise of any
                  outstanding options to purchase Glacier Common Stock shares)
                  of Glacier or Big Sky, as the case may be, then, as
                  appropriate, the parties will make the proportionate
                  adjustment to the Purchase Price.

         1.2.6    NO FRACTIONAL SHARES. No fractional shares of Glacier
                  Corporation Common Stock will be issued. In lieu of fractional
                  shares, if any, each stockholder of Big Sky who is otherwise
                  entitled 

                                       3
   12

                  to receive a fractional share of Glacier Common Stock will
                  receive an amount of cash equal to the product of such
                  fraction times the Determination Date Closing Price. Such
                  fractional share interest will not include the right to vote
                  or receive dividends or any interest on dividends.

         1.2.7    CERTIFICATES.

                  (a)      Surrender of Certificates. Each certificate
                           evidencing Big Sky Common Stock shares (other than
                           Dissenting Shares) will, on and after the Effective
                           Date, be deemed for all corporate purposes to
                           represent and evidence only the right to receive a
                           certificate representing the Glacier Shares (or to
                           receive the cash for fractional shares) to which the
                           Big Sky Common Stock shares converted in accordance
                           with the provisions of this Subsection 1.2. Following
                           the Effective Date, Big Sky stockholders shall
                           exchange Big Sky Common Stock certificates by
                           surrendering them to the agent ("Exchange Agent")
                           designated by Glacier and Big Sky to effect the
                           exchange of Big Sky Common Stock certificates for
                           certificates representing Glacier Shares (or for cash
                           in lieu of fractional shares), in accordance with any
                           instructions provided by the Exchange Agent and
                           together with a properly completed and executed form
                           of transmittal letter. Until a holder's certificate
                           evidencing Big Sky Common Stock is so surrendered,
                           the holder will not be entitled to receive any
                           certificates evidencing Glacier Shares or cash in
                           lieu of fractional shares.

                  (b)      Issuance of Certificates in Other Names. Any person
                           requesting that any certificate evidencing Glacier
                           Shares be issued in a name other than the name in
                           which the surrendered Big Sky Common Stock
                           certificate is registered, must: (1) establish to the
                           Exchange Agent's satisfaction the right to receive
                           the certificate evidencing Glacier Shares and (2)
                           either pay to the Exchange Agent any applicable
                           transfer or other taxes or establish to the Exchange
                           Agent's satisfaction that all applicable taxes have
                           been paid or are not required.

                  (c)      Lost, Stolen, and Destroyed Certificates. The
                           Exchange Agent will be authorized to issue a
                           certificate representing Glacier Shares in exchange
                           for a Big Sky Common Stock certificate that has been
                           lost, stolen or destroyed, if the holder provides the
                           Exchange Agent with: (1) satisfactory evidence that
                           the holder owns Big Sky Common Stock and that the
                           certificate representing this ownership is lost,
                           stolen, or destroyed, (2) any appropriate affidavit
                           the Exchange Agent may require, and (3) any
                           indemnification assurances that the Exchange Agent
                           may require.

                  (d)      Rights to Dividends and Distributions. After the
                           Effective Date, no holder of a certificate evidencing
                           Big Sky Common Stock shares will be entitled to
                           receive any dividends or other distributions
                           otherwise payable to holders of record of Glacier
                           Common Stock on any date after the Effective Date,
                           unless the holder (1) is entitled by this Agreement
                           to receive a certificate representing Glacier Shares
                           and (2) has surrendered in accordance with this
                           Agreement his or her Big Sky Common Stock
                           certificates (or has met the requirements of
                           Subsection 1.2.7((c)) above) in exchange for
                           certificates representing Glacier Shares. Surrender
                           of Big Sky Common Stock certificates will not deprive
                           the holder of any dividends or distributions that the
                           holder is entitled to receive as a record holder of
                           Big Sky Common Stock on a date before the Effective
                           Date. When the holder surrenders his or her
                           certificates, the holder will receive the amount,
                           without interest, of any cash dividends and any other
                           distributions 

                                       4
   13

                           distributed after the Effective Date on the whole
                           number of shares of Glacier Shares into which the
                           holder's Big Sky Common Stock was converted at the
                           Effective Date.

                  (e)      Checks in Other Names. Any person requesting that a
                           check for cash in lieu of fractional shares be issued
                           in a name other than the name in which the Big Sky
                           Common Stock certificate surrendered in exchange for
                           the cash is registered, must establish to the
                           Exchange Agent's satisfaction the right to receive
                           this cash.

1.3      PAYMENT TO DISSENTING STOCKHOLDERS. For purposes of this Agreement,
         "Dissenting Shares" means those shares of Big Sky Common Stock as to
         which stockholders have properly taken all steps necessary to perfect
         their dissenters' rights under MBCA Sections 35-1-826 through
         35-1-839. Each outstanding Dissenting Share of Big Sky Common Stock
         will be converted at Closing into the rights provided under those
         sections of the MBCA.

1.4      ALTERNATIVE STRUCTURES. Subject to the conditions set forth below,
         Glacier may in its sole discretion elect to consummate the Transaction
         by means other than those specified in this Section 1. If Glacier so
         elects, any means, procedures, or amendments necessary or desirable to
         consummate the Transaction, in the opinion of Glacier's counsel, will
         supersede any conflicting, undesirable or unnecessary provisions of
         this Agreement. But, unless this Agreement is amended in accordance
         with Section 9, the following conditions will apply: (1) the type and
         amount of consideration set forth in Subsection 1.2 will not be
         modified and (2) the tax consequences to Big Sky and its stockholders
         will not be adversely affected. If Glacier elects an alternative
         structure under this Subsection 1.4, Big Sky will cooperate with and
         assist Glacier with the following: (1) any amendments to this Agreement
         necessary or desirable in the opinion of Glacier's counsel and (2) the
         preparation and filing of any applications, documents, instruments and
         notices necessary or desirable, in the opinion of Glacier's counsel, to
         effect the alternative structure and to obtain the necessary
         stockholder; provided, however, that to the extent such alternative
         structure results in Big Sky incurring costs and expenses totaling more
         than $100,000, Glacier shall reimburse Big Sky for such additional
         expenses and costs.

1.5      LETTER OF TRANSMITTAL. Glacier will prepare a transmittal letter form
         reasonably acceptable to Big Sky for use by stockholders holding Big
         Sky Common Stock. Certificates representing shares of Big Sky Common
         Stock must be delivered for payment in the manner provided in the
         transmittal letter form. On or about the Effective Date, Glacier will
         mail the transmittal letter form to Big Sky stockholders.

1.6      UNDELIVERED CERTIFICATES. If outstanding certificates for Big Sky
         Common Stock are not surrendered or the payment for them is not claimed
         before those payments would escheat or become the property of any
         governmental unit or agency, the unclaimed items will, to the extent
         permitted by abandoned property or any other applicable law, become the
         property of Glacier (and to the extent not in its possession will be
         paid over to Glacier), free and clear of all claims or interests of any
         person previously entitled to such items. But, neither Glacier nor Big
         Sky will be liable to any holder of Big Sky Common Stock for any amount
         paid to any governmental unit or agency having jurisdiction over any
         such unclaimed items under the abandoned property or other applicable
         law of the jurisdiction, and Glacier will pay no interest on amounts
         owed to stockholders for shares of Big Sky Common Stock.

                                    SECTION 2
                           CLOSING OF THE TRANSACTION

2.1      CLOSING. Closing will occur on the Effective Date. If Closing does not
         occur on or before June 30, 1999 ("Termination Date"), either Glacier
         or Big Sky may terminate this Agreement in accordance with 

                                       5
   14

         Section 7. Unless Glacier and Big Sky agree upon a later date, the
         Effective Date will be a date mutually acceptable to Glacier and Big
         Sky within 30 calendar days after the following:

         (a)      each condition precedent set forth in Section 5 has been
                  either fulfilled or waived; and

         (b)      each approval required by Section 5 has been granted, and all
                  applicable waiting periods have expired.

2.2      EVENTS OF CLOSING. On the Effective Date, all properly executed
         documents required by this Agreement will be delivered to the proper
         party in form consistent with this Agreement. If any party fails to
         deliver a required document on the Effective Date or otherwise defaults
         under this Agreement on or before the Effective Date, then the
         Transaction will not occur unless the adversely affected party waives
         the default.

2.3      PLACE OF CLOSING. Unless Glacier and Big Sky agree otherwise, Closing
         will occur on the Effective Date at Glacier's main office, 202 Main
         Street, Kalispell, Montana.

                                    SECTION 3
                                 REPRESENTATIONS

3.1      REPRESENTATIONS OF GLACIER AND BIG SKY. Subject to Subsection 3.3 and
         except as expressly set forth in Schedule 1, Glacier represents to Big
         Sky, and Big Sky represents to Glacier, the following:

         3.1.1    CORPORATE ORGANIZATION AND QUALIFICATION.

                  (a)      It is a corporation duly organized and validly
                           existing under the state laws of either Montana or
                           Delaware (as applicable), and its activities do not
                           require it to be qualified in any jurisdiction other
                           than Montana.

                  (b)      It has the requisite corporate power and authority to
                           own or lease its properties and assets and to carry
                           on its businesses as they are now being conducted.

                  (c)      It has made available to the other party to this
                           Agreement a complete and correct copy of its
                           certificate or articles of incorporation and bylaws,
                           each as amended to date and currently in full force
                           and effect.

         3.1.2    SUBSIDIARIES. With respect to Big Sky only, it has no
                  Subsidiaries as of the date of this Agreement. A company is
                  considered to be a "Subsidiary" of a party if that party or
                  any of its Subsidiaries (individually or together with the
                  party) directly or indirectly owns, controls, or has the
                  ability to exercise 50% or more of the voting power of such
                  company. In this Agreement, the term "Subsidiary" with respect
                  to a party means any corporation, partnership, financial
                  institution, trust company, or other entity owned or
                  controlled by that party or any of its subsidiaries or
                  affiliates (or owned or controlled by that party together with
                  one or more of its subsidiaries or affiliates).

         3.1.3    CAPITAL STOCK.

                  (a)      Glacier.  Glacier represents:

                           (1)      as of the date of this Agreement, Glacier's
                                    authorized capital stock consists of 16
                                    million shares divided into two classes: (i)
                                    15 million shares of common stock, par value
                                    $.01 per share ("Company Common Stock"),
                                    8,335,485 shares 

                                       6
   15

                                    of which are issued and outstanding and (ii)
                                    1 million shares of blank-check preferred
                                    stock, par value $.01 per share, none of
                                    which is outstanding ("Glacier Preferred
                                    Stock");

                           (2)      options or rights to acquire not more than
                                    an aggregate of 494,744 Company Common Stock
                                    shares (subject to adjustment on the terms
                                    set forth in the Glacier Stock Plans) are
                                    outstanding under the stock option plans
                                    listed in Schedule 2 ("Glacier Stock
                                    Plans");

                           (3)      No Company Common Stock shares are reserved
                                    for issuance, other than the shares reserved
                                    for issuance under the Glacier Stock Plans,
                                    and Glacier has no shares of Glacier
                                    Preferred Stock reserved for issuance;

                           (4)      all outstanding shares of Company Common
                                    Stock have been duly authorized and validly
                                    issued and are fully paid and nonassessable;

                           (5)      all outstanding shares of capital stock of
                                    each of Glacier's Subsidiaries owned by
                                    Glacier or a Subsidiary of Glacier have been
                                    duly authorized and validly issued and are
                                    fully paid and nonassessable, except to the
                                    extent any assessment is required under
                                    federal law, and are owned by Glacier or a
                                    Subsidiary of Glacier free and clear of all
                                    liens, pledges, security interests, claims,
                                    proxies, preemptive or subscriptive rights
                                    or other encumbrances or restrictions of any
                                    kind (collectively, "Liens"); and

                           (6)      except as set forth in this Agreement or in
                                    the Glacier Stock Plans, there are no
                                    preemptive rights or any outstanding
                                    subscriptions, options, warrants, rights,
                                    convertible securities, or other agreements
                                    or commitments of Glacier or any of its
                                    Subsidiaries of any character relating to
                                    the issued or unissued capital stock or
                                    other equity securities of Glacier
                                    (including those relating to the issuance,
                                    sale, purchase, redemption, conversion,
                                    exchange, registration, voting or transfer
                                    of such stock or securities).

                  (b)      Big Sky.  Big Sky represents:

                           (1)      as of the date this Agreement, Big Sky's
                                    authorized capital stock consists of 22,900
                                    shares of common stock, $40 par value per
                                    share ("Big Sky Common Stock"), 20,400
                                    shares of which are issued and outstanding
                                    and 2,500 of which are reserved for issuance
                                    pursuant to the Debentures;

                           (2)      no options or rights to acquire Big Sky
                                    Common Stock shares are outstanding, except
                                    as expressly set forth in Schedule 3;

                           (3)      Except as expressly set forth in Schedule 4,
                                    Big Sky does not have any stock option
                                    plans, employee stock purchase plans, or
                                    other plans or agreements providing for the
                                    grant of options or other rights to acquire
                                    Big Sky Common Stock shares, and no Big Sky
                                    Common Stock shares are reserved for
                                    issuance, except as expressly set forth in
                                    Schedule 3;

                           (4)      all outstanding Big Sky Common Stock shares
                                    have been duly authorized and validly issued
                                    and are fully paid and nonassessable;

                                       7
   16

                           (5)      There are no preemptive rights or any
                                    outstanding subscriptions, options,
                                    warrants, rights, convertible securities, or
                                    other agreements or commitments of Big Sky
                                    of any character relating to the issued or
                                    unissued capital stock or other equity
                                    securities of Big Sky (including those
                                    relating to the issuance, sale, purchase,
                                    redemption, conversion, exchange,
                                    registration, voting or transfer of such
                                    stock or securities), except as expressly
                                    set forth in Schedules 3 and 4.

         3.1.4    CORPORATE AUTHORITY.

                  (a)      It has the requisite corporate power and authority
                           and has taken all corporate action necessary in order
                           to execute and deliver this Agreement and to complete
                           the Transaction, subject (in Big Sky's case) only to
                           the approval by Big Sky's stockholders of the plan of
                           Share Exchange contained in this Agreement to the
                           extent required by MBCA Section 35-1-815.

                  (b)      This Agreement is a valid and legally binding
                           agreement of it, enforceable in accordance with the
                           terms of this Agreement.

         3.1.5    REPORTS AND FINANCIAL STATEMENTS.

                  (a)      Filing of Reports. Since January 1, 1995, it and each
                           of its Subsidiaries (if any) has filed all reports
                           and statements, together with any required amendments
                           to these reports and statements, that it was required
                           to file with (1) the Securities and Exchange
                           Commission ("SEC"), (2) the Federal Reserve Board,
                           (3) the FDIC, and (4) any other applicable federal or
                           state banking, insurance, securities, or other
                           regulatory authorities. Each of these reports and
                           statements, including the related financial
                           statements and exhibits, complied (or will comply, in
                           the case of reports or statements filed after the
                           date of this Agreement) as to form in all material
                           respects with all applicable statutes, rules and
                           regulations as of their respective dates (and, in the
                           case of reports or statements filed before the date
                           of this Agreement, without giving effect to any
                           amendments or modifications filed after the date of
                           this Agreement).

                  (b)      Delivery to Other Party of Reports. It has delivered
                           to the other party a copy of each registration
                           statement, offering circular, report, definitive
                           proxy statement or information statement under the
                           Securities Act of 1933, as amended, ("Securities
                           Act"), the Securities Exchange Act of 1934, as
                           amended, ("Exchange Act"), and state securities and
                           "Blue Sky" laws (collectively, the "Securities Laws")
                           filed, used or circulated by it with respect to
                           periods since January 1, 1995, through the date of
                           this Agreement. It will promptly deliver to the other
                           party each such registration statement, offering
                           circular, report, definitive proxy statement or
                           information statement filed, used or circulated after
                           the date of this Agreement (collectively, its
                           "Reports"), each in the form (including related
                           exhibits and amendments) filed with the SEC (or if
                           not so filed, in the form used or circulated).

                  (c)      Compliance with Securities Laws. As of their
                           respective dates (and without giving effect to any
                           amendments or modifications filed after the date of
                           this Agreement), each of the Reports, including the
                           related financial statements, exhibits and schedules,
                           filed, used or circulated before the date of this
                           Agreement complied (and each of the Reports filed
                           after the date of this Agreement, will comply) in all
                           material respects with applicable Securities Laws,
                           and did not (or in the case of reports, statements,
                           or circulars 

                                       8
   17

                           filed after the date of this Agreement, will not)
                           contain any untrue statement of a material fact or
                           omit to state a material fact required to be stated
                           therein or necessary to make the statements made
                           therein, in light of the circumstances under which
                           they were made, not misleading.

                  (d)      Financial Statements. Each of its balance sheets
                           included in the Financial Statements fairly presents
                           (or, in the case of Financial Statements for periods
                           ending on a date following the date of this
                           Agreement, will fairly present) the consolidated
                           financial position of it and its Subsidiaries as of
                           the date of the balance sheet. Each of the
                           consolidated statements of income, cash flows and
                           stockholders' equity included in the Financial
                           Statements fairly presents (or, in the case of
                           Financial Statements for periods ending on a date
                           following the date of this Agreement, will fairly
                           present) the consolidated results of operations,
                           retained earnings and cash flows, as the case may be,
                           of it and its Subsidiaries for the periods set forth
                           in these statements (subject, in the case of
                           unaudited statements, to normal year-end audit
                           adjustments), in each case in accordance with
                           generally accepted accounting principles,
                           consistently applied ("GAAP"), except as may be noted
                           in these statements.

                           (1)      "Financial Statements" means: (i) in
                                    Glacier's case, the Glacier Financial
                                    Statements (or for periods ending on a date
                                    following the date of this Agreement, the
                                    Subsequent Glacier Financial Statements);
                                    and (ii) in Big Sky's case, the Big Sky
                                    Financial Statements (or for periods ending
                                    on a date following the date of this
                                    Agreement, the Subsequent Big Sky Financial
                                    Statements).

                           (2)      "Glacier Financial Statements" means
                                    Glacier's (i) audited consolidated
                                    statements of financial condition as of
                                    December 31, 1997 and 1996, and the related
                                    audited statements of income, cashflows and
                                    changes in stockholders' equity for each of
                                    the years ended December 31, 1997 and 1996;
                                    and (ii) unaudited consolidated statements
                                    of financial condition as of the end of each
                                    fiscal quarter following December 31, 1997
                                    but preceding the date of this Agreement,
                                    and the related unaudited statements of
                                    income, cashflows and changes in
                                    stockholders' equity for each such quarter.

                           (3)      "Subsequent Glacier Financial Statements"
                                    means balance sheets and related statements
                                    of income and stockholders' equity for each
                                    of the fiscal quarters ending after the date
                                    of this Agreement and before Closing.

                           (4)      "Big Sky Financial Statements" means (i) Big
                                    Sky's statements of financial condition as
                                    of December 31, 1997 (unaudited as of
                                    execution of this Agreement, audited as of
                                    three days before Glacier files the
                                    Registration Statement with the SEC) and as
                                    of December 31, 1996 and 1995 (unaudited),
                                    and the related statements of income,
                                    cashflows and changes in stockholders'
                                    equity for each of the years ended December
                                    31, 1997 (unaudited as of execution of this
                                    Agreement, audited as of three days before
                                    Glacier files the Registration Statement
                                    with the SEC) and December 31, 1996 and 1995
                                    (unaudited); and (ii) Big Sky's unaudited
                                    statements of financial condition as of the
                                    end of each fiscal quarter following
                                    December 31, 1997 but preceding the date of
                                    this Agreement, 

                                       9
   18

                                    and the related unaudited statements of
                                    income, cashflows and changes in
                                    stockholders' equity for each such quarter.

                           (5)      "Subsequent Big Sky Financial Statements"
                                    means (i) unaudited balance sheets and
                                    related statements of income and
                                    stockholders' equity for each of Big Sky's
                                    fiscal quarters ending after the date of
                                    this Agreement and before Closing, and (ii)
                                    [if the Transaction does not close before
                                    February 15, 1999], Big Sky's audited
                                    statements of financial condition as of
                                    December 31, 1998, and the related audited
                                    statements of income, cashflows, and changes
                                    in stockholders' equity for the year ended
                                    December 31, 1998.

         3.1.6    ABSENCE OF CERTAIN EVENTS AND CHANGES. Except as disclosed in
                  its Financial Statements and Reports, since December 31, 1997:
                  (1) it and its Subsidiaries have conducted their respective
                  businesses only in the ordinary and usual course of the
                  businesses and (2) no change or development or combination of
                  changes or developments has occurred that, individually or in
                  the aggregate, is reasonably likely to result in a Material
                  Adverse Effect with respect to it or its Subsidiaries. For
                  purposes of this Agreement, "Material Adverse Effect" with
                  respect to any corporation means an effect that: (1) is
                  materially adverse to the business, financial condition,
                  results of operations or prospects of the corporation and its
                  Subsidiaries taken as a whole; (2) significantly and adversely
                  affects the ability of the corporation to consummate the
                  transactions contemplated by this Agreement by the Termination
                  Date or to perform its material obligations under this
                  Agreement; or (3) enables any persons to prevent the
                  consummation by the Termination Date of the transactions
                  contemplated by this Agreement. No Material Adverse Effect
                  will be deemed to have occurred on the basis of any effect
                  resulting from actions or omissions of the corporation taken
                  with the explicit prior consent of the other party to this
                  Agreement.

         3.1.7    MATERIAL AGREEMENTS.

                  (a)      Except for the Glacier Stock Plans (in Glacier's
                           case) and arrangements made after the date and in
                           accordance with the terms of this Agreement, it and
                           its Subsidiaries are not bound by any material
                           contract (as defined in Item 601(b)(10) of Regulation
                           S-K under the Securities Act) that: (1) is to be
                           performed after the date of this Agreement and (2)
                           has not been filed with or incorporated by reference
                           in its Reports or set forth in Schedule 5.

                  (b)      Neither it nor any of its Subsidiaries is in default
                           under any contract, agreement, commitment,
                           arrangement, lease, insurance policy, or other
                           instrument.

         3.1.8    KNOWLEDGE AS TO CONDITIONS. Its President, Chief Executive
                  Officer, and Chief Financial Officer (collectively, "Executive
                  Officers") know of no reason the Regulatory Approvals and, to
                  the extent necessary, any other approvals, authorizations,
                  filings, registrations, and notices should not be obtained
                  without the imposition of any condition or restriction that is
                  reasonably likely to have a Material Adverse Effect with
                  respect to it, its Subsidiaries, or the Continuing
                  Corporation, or the opinion of the tax experts referred to in
                  Subsection 5.2.13.

         3.1.9    BROKERS AND FINDERS. Neither it, its Subsidiaries, nor any of
                  their respective officers, directors or employees has employed
                  any broker or finder or incurred any liability for any
                  brokerage fees, commissions or finder's fees in connection
                  with the transactions contemplated in this Agreement, 

                                       10
   19

                  except for payments made by Big Sky to Professional Bank
                  Services pursuant to their brokerage agreement.

         3.1.10   YEAR 2000 COMPLIANCE. It is in full compliance with all
                  applicable regulatory requirements, guidelines and timetables
                  regarding systems assessment, systems testing, third-party
                  assessment, and other matters related to preparation for Year
                  2000 Compliance. Based on its assessment and testing conducted
                  to date, it is not aware of anything that cause it to believe
                  that (1) it will fail in any material way not to timely
                  achieve Year 2000 Compliance, or (2) expenses related to
                  achieving Year 2000 Compliance will have a material effect on
                  its operations or financial condition. For purposes of this
                  Agreement, "Year 2000 Compliance" means that its Information
                  Technology will be capable of use prior to, during, and after
                  the calendar year 2000 A.D., and that the Information
                  Technology used during each such time period will accurately
                  receive, provide and process date/time data (including, but
                  not limited to, calculating, comparing and sequencing) from,
                  into and between the twentieth and twenty-first centuries,
                  including the years 1999 and 2000, and leap year calculations
                  and will not malfunction, cease to function, or provide
                  invalid or incorrect results as a result of date/time data.
                  For purposes of this Agreement, "Information Technology"
                  includes computer software, computer firmware, computer
                  hardware (whether general or specific purpose) or other
                  similar or related automated or computerized items that are
                  used or relied on by it in the conduct of its business.

3.2      BIG SKY'S ADDITIONAL REPRESENTATIONS. Subject to Subsection 3.3 and
         except as expressly set forth in Schedule 1, Big Sky represents to
         Glacier, the following:

         3.2.1    LOAN AND LEASE LOSSES. Its Executive Officers know of no
                  reason why the allowance for loan and lease losses shown in
                  the balance sheets included in the Financial Statements for
                  the periods ended December 31, 1997, March 31, 1998, June 30,
                  1998, and September 30, 1998, was not adequate as of those
                  dates, respectively, to provide for estimable and probable
                  losses, net of recoveries relating to loans not previously
                  charged off, inherent in its loan portfolio.

         3.2.2    NO STOCK OPTION PLANS. It has not adopted any stock option
                  plans or granted any options or rights to acquire any shares
                  of Big Sky Common Stock, except as expressly set forth in
                  Schedules 3 and 4.

         3.2.3    GOVERNMENTAL FILINGS; NO VIOLATIONS.

                  (a)      Filings. Other than the Regulatory Approvals and
                           other than as required under the Securities Act, the
                           Exchange Act, and state securities and "Blue Sky"
                           laws, no notices, reports or other filings are
                           required to be made by it with, nor are any consents,
                           registrations, approvals, permits or authorizations
                           required to be obtained by it from, any governmental
                           or regulatory authority, agency, court, commission or
                           other entity, domestic or foreign ("Governmental
                           Entity"), in connection with the execution, delivery
                           or performance of this Agreement by it and the
                           consummation by it of the Transaction.

                  (b)      Violations. The execution, delivery and performance
                           of this Agreement does not and will not, and the
                           consummation by it of the Transaction will not,
                           constitute or result in: (1) a breach or violation
                           of, or a default under, its articles of incorporation
                           or bylaws; (2) a breach or violation of, or a default
                           under, or the acceleration of or the creation of a
                           Lien (with or without the giving of notice, the lapse
                           of time or both) under, any provision of any
                           agreement, lease, contract, note, mortgage,
                           indenture, arrangement or other obligation
                           ("Contracts") of it; or (3) a violation of any law,
                           rule, ordinance or regulation 

                                       11
   20

                           or judgment, decree, order, award, or governmental or
                           non-governmental permit or license to which it is
                           subject; or (4) any change in the rights or
                           obligations of any party under any of the Contracts.
                           Schedule 6 contains a list of all consents it must
                           obtain from third parties under any Contracts before
                           consummation of the Transaction.

         3.2.4    ASSET CLASSIFICATION.

                  (a)      Schedule 7 sets forth a list, accurate and complete
                           as of September 30, 1998, except as otherwise
                           expressly noted in Schedule 7, and separated by
                           category of classification or criticism ("Asset
                           Classification"), of the aggregate amounts of loans,
                           extensions of credit and other assets of it that have
                           been criticized or classified by any Governmental
                           Entity, by any outside auditor, or by any internal
                           audit.

                  (b)      Except as shown on Schedule 7, no amounts of loans,
                           extensions of credit or other assets that have been
                           classified or criticized by any representative of any
                           Governmental Entity as "Other Assets Especially
                           Mentioned," "Substandard," "Doubtful," "Loss" or
                           words of similar effect are excluded from the amounts
                           disclosed in the Asset Classification, other than
                           amounts of loans, extensions of credit or other
                           assets that were paid off or charged off by it before
                           the date of this Agreement.

         3.2.5    INVESTMENTS. Schedule 8 lists all investments (except
                  investments in securities issued by federal state or local
                  government or any subdivision or agency thereof) made by it in
                  an amount greater than $25,000 or which represent an ownership
                  interest of more than 5% in any corporation, company,
                  partnership, or other entity. All investments comply with all
                  applicable laws and regulations.

         3.2.6    PROPERTIES.

                  (a)      Except as disclosed or reserved against in its
                           Financial Statements or in Schedule 9, it has good
                           and marketable title, free and clear of all Liens
                           (other than Liens for current taxes not yet
                           delinquent or pledges to secure deposits) to all of
                           the properties and assets, tangible or intangible,
                           reflected in its Reports as being owned or leased by
                           it as of the date of this Agreement.

                  (b)      To the knowledge of its Executive Officers, all
                           buildings and all fixtures, equipment and other
                           property and assets that are material to its business
                           and are held under leases or subleases by it are held
                           under valid leases or subleases, enforceable in
                           accordance with their respective terms (except as may
                           be limited by applicable bankruptcy, insolvency,
                           reorganization, moratorium or other laws affecting
                           creditors' rights generally or by general equity
                           principles). Schedule 10 lists all real property
                           which it owns or leases.

                  (c)      Schedule 11 lists all its existing branches and
                           offices and all new branches or offices it has
                           applied to establish or purchase, along with the cost
                           to establish or purchase those branches.

                  (d)      It has provided to Glacier a copy of the existing
                           title policy held in its files on unimproved real
                           estate it owns in Bozeman, Montana, and no
                           exceptions, reservations, or encumbrances have arisen
                           or been created since the date of issuance of that
                           policy. At Closing and upon Glacier's request, Big
                           Sky will provide Glacier with update endorsements,
                           dated as of the Effective Date, to such title policy.

                                       12
   21

         3.2.7    ANTI-TAKEOVER PROVISIONS. It has taken all necessary action to
                  exempt the Transaction and this Agreement from (a) all
                  applicable Montana State law anti-takeover provisions, if any,
                  and (b) any takeover-related provisions of its articles of
                  incorporation or bylaws.

         3.2.8    COMPLIANCE WITH LAWS. Except as disclosed in Schedule 12, Big
                  Sky:

                  (a)      is in material compliance, in the conduct of its
                           business, with all applicable federal, state, local,
                           and foreign statutes, laws, regulations, ordinances,
                           rules, judgments, orders or decrees, including the
                           Bank Secrecy Act, the Truth in Lending Act, the Equal
                           Credit Opportunity Act, the Fair Housing Act, the
                           Community Reinvestment Act, the Home Mortgage
                           Disclosure Act and all applicable fair lending laws
                           or other laws relating to discrimination;

                  (b)      has all permits, licenses, certificates of authority,
                           orders, and approvals of, and has made all filings,
                           applications, and registrations with, federal, state,
                           local, and foreign governmental or regulatory bodies
                           (including the Federal Reserve) that are required in
                           order to permit it to carry on its business as it is
                           presently conducted;

                  (c)      has received since January 1, 1995, no notification
                           or communication from any Governmental Entity
                           (including any bank, insurance and securities
                           regulatory authorities) or its staff (1) asserting a
                           failure to comply with any of the statutes,
                           regulations or ordinances that such Governmental
                           Entity enforces, (2) threatening to revoke any
                           license, franchise, permit or governmental
                           authorization, or (3) threatening or contemplating
                           revocation or limitation of, or that would have the
                           effect of revoking or limiting, FDIC deposit
                           insurance (nor, to the knowledge of its Executive
                           Officers, do any grounds for any of the foregoing
                           exist); and

                  (d)      is not required to notify any federal banking agency
                           before adding directors to its board of directors or
                           employing senior executives.

         3.2.9    LITIGATION. Except as disclosed in its Financial Statements or
                  in Schedule 13, before the date of this Agreement:

                  (a)      no criminal or administrative investigations or
                           hearings, before or by any Governmental Entity, or
                           civil, criminal or administrative actions, suits,
                           claims or proceedings, before or by any person
                           (including any Governmental Entity) are pending or,
                           to the knowledge of its Executive Officers,
                           threatened, against it (including under the Truth in
                           Lending Act, the Equal Credit Opportunity Act, the
                           Fair Housing Act, the Community Reinvestment Act, the
                           Home Mortgage Disclosure Act, or any other fair
                           lending law or other law relating to discrimination);
                           and

                  (b)      neither it (nor any officer, director, controlling
                           person or property of it) is a party to or is subject
                           to any order, decree, agreement, memorandum of
                           understanding or similar arrangement with, or a
                           commitment letter or similar submission to, any
                           Governmental Entity charged with the supervision or
                           regulation of depository institutions or engaged in
                           the insurance of deposits (including the FDIC) or the
                           supervision or regulation of it, and it has not has
                           been advised by any such Governmental Entity that
                           such Governmental Entity is contemplating issuing or
                           requesting (or is considering the appropriateness of
                           issuing or requesting) any such order, decree,
                           agreement, memorandum of understanding, commitment
                           letter or similar submission.

                                       13
   22

         3.2.10   TAXES. For purposes of this Subsection 3.2.10, "Tax" includes
                  any tax or similar governmental charge, impost, or levy
                  (including income taxes, franchise taxes, transfer taxes or
                  fees, stamp taxes, sales taxes, use taxes, excise taxes, ad
                  valorem taxes, withholding taxes, worker's compensation,
                  payroll taxes, unemployment insurance, social security,
                  minimum taxes, or windfall profits taxes), together with any
                  related liabilities, penalties, fines, additions to tax, or
                  interest, imposed by the United States or any state, county,
                  provincial, local or foreign government or subdivision or
                  agency of the United States.

                  (a)      All federal, state and local Tax returns, including
                           all information returns, it is required to file have
                           been timely filed or requests for extensions have
                           been timely filed. If any extensions were filed, they
                           have been or will be granted by Closing and will not
                           have expired. All filed returns are complete and
                           accurate in all material respects.

                  (b)      Except as disclosed in its Financial Statements:

                           (1)      all taxes attributable to it that are or
                                    were due or payable (without regard to
                                    whether such taxes have been assessed) have
                                    been paid in full or have been adequately
                                    provided for in its Financial Statements in
                                    accordance with GAAP;

                           (2)      adequate provision in accordance with GAAP
                                    has been made in its Financial Statements
                                    relating to all Taxes for the periods
                                    covered by such Financial Statements that
                                    were not yet due and payable as of the date
                                    of this Agreement, regardless of whether the
                                    liability for such Taxes is disputed;

                           (3)      as of the date of this Agreement and except
                                    as disclosed in its Financial Statements,
                                    there is no outstanding audit examination,
                                    deficiency, refund litigation or outstanding
                                    waiver or agreement extending the applicable
                                    statute of limitations for the assessment or
                                    collection of any Taxes for any period with
                                    respect to any of its Taxes;

                           (4)      all Taxes with respect to completed and
                                    settled examinations or concluded litigation
                                    relating to it have been paid in full or
                                    have been recorded on its Financial
                                    Statements (in accordance with GAAP);

                           (5)      it is not a party to a Tax sharing or
                                    similar agreement or any agreement under
                                    which it has indemnified any other party
                                    with respect to Taxes; and

                           (6)      the proper and accurate amounts have been
                                    withheld from all employees (and timely paid
                                    to the appropriate Governmental Entity or
                                    set aside in an account for these purposes)
                                    for all periods through the Effective Date
                                    in compliance with all Tax withholding
                                    provisions of applicable federal, state,
                                    local and foreign laws (including income,
                                    social security and employment tax
                                    withholding for all types of compensation).

         3.2.11   INSURANCE. It has taken all requisite action (including the
                  making of claims and the giving of notices) under its
                  directors' and officers' liability insurance policy or
                  policies in order to preserve all rights under such policies
                  with respect to all matters known to it (other than matters
                  arising in connection with, and the transactions contemplated
                  by, this Agreement). Schedule 14 lists all directors' and
                  officers' liability insurance policies and other insurance
                  policies it maintains.

                                       14
   23

         3.2.12   LABOR MATTERS. It is not a party to, or is not bound by, any
                  collective bargaining agreement, contract or other agreement
                  or understanding with any labor union or labor organization.
                  It is not the subject of any proceeding: (1) asserting that it
                  has committed an unfair labor practice or (2) seeking to
                  compel it to bargain with any labor organization as to wages
                  or conditions of employment. No strike involving it is pending
                  or, to the knowledge of its Executive Officers, threatened.
                  Its Executive Officers are not aware of any activity involving
                  its employees seeking to certify a collective bargaining unit
                  or engaging in any other organizational activity.

         3.2.13   EMPLOYEE BENEFITS.

                  (a)      For purposes of this Agreement, "Plan" or "Plans",
                           individually or collectively, means any "employee
                           benefit plan," as defined in Section 3(3) of the
                           Employee Retirement Income Security Act of 1974,
                           ("ERISA"), as amended, maintained by Big Sky. Big Sky
                           is not now nor has it ever been a contributing
                           employer to or sponsor of a multi-employer plan or a
                           single employer plan subject to Title IV of ERISA.

                  (b)      Schedule 15 sets forth a list, as of the date of this
                           Agreement, of (1) all Plans, stock purchase plans,
                           restricted stock and stock option plans, and other
                           deferred compensation arrangements, (2) all other
                           material employee benefit plans that cover employees
                           or former employees of Big Sky (its "Compensation
                           Plans"). True and complete copies of the Compensation
                           Plans (and, as applicable, copies of summary plan
                           descriptions, annual reports on Form 5500, actuarial
                           reports and reports under Financial Accounting
                           Standards Board Statement No. 106 relating to such
                           Compensation Plans) covering current or former
                           employees or directors of Big Sky (its "Employees"),
                           including Plans and related amendments, have been
                           made available to Glacier.

                  (c)      All Plans (other than "multi-employer plans" within
                           the meaning of ERISA Sections 3(37) or 4001(a)(3)),
                           to the extent subject to ERISA, are in substantial
                           compliance with ERISA. Each Plan that is an "employee
                           pension benefit plan" within the meaning of ERISA
                           Section 3(2) ("Pension Plan") and that is intended to
                           be qualified under IRC Section 401(a), has received a
                           favorable determination letter from the Internal
                           Revenue Service, and it is not aware of any
                           circumstances likely to result in revocation of any
                           such favorable determination letter. No litigation
                           relating to Plans is pending or, to the knowledge of
                           its Executive Officers, threatened. Big Sky has not
                           engaged in a transaction with respect to any Plan
                           that could subject it to a Tax or penalty imposed by
                           either IRC Section 4975 or ERISA Section 502(i).

                  (d)      All material contributions that it is or was required
                           to make under the terms of any Plans have been timely
                           made or have been reflected in its Financial
                           Statements. None of its Plans has an "accumulated
                           funding deficiency" (whether or not waived) within
                           the meaning of IRC Section 412 or ERISA Section 302.
                           It has not provided, or is required to provide,
                           security to any Pension Plan under IRC Section
                           401(a)(29), IRC Section 412(f)(3), or ERISA Sections
                           306, 307 or 4204.

                  (e)      Except as disclosed in its Financial Statements, it
                           does not have any obligations for retiree health and
                           life benefits.

                  (f)      No restrictions exist on its rights to amend or
                           terminate any Plan without incurring liability under
                           the Plan in addition to normal liabilities for
                           benefits.

                                       15
   24

                  (g)      Except as disclosed in its Financial Statements or as
                           provided in a Schedule to this Agreement, the
                           transactions contemplated by this Agreement and the
                           Stock Plans will not result in: (1) vesting,
                           acceleration, or increase of any amounts payable
                           under any Compensation Plan, (2) any material
                           increase in benefits under any Compensation Plan or
                           (3) payment of any severance or similar compensation
                           under any Compensation Plan.

         3.2.14   ENVIRONMENTAL MATTERS.

                  (a)      For purposes of this Subsection 3.2.14, the following
                           definitions apply:

                           (1)      "Subject Property" with respect to a party
                                    means (i) all real property at which the
                                    businesses of Big Sky has been conducted,
                                    and any property where under any
                                    Environmental Law it is deemed to be the
                                    owner or operator of the property; (ii) any
                                    facility in which it participates in the
                                    management, including participating in the
                                    management of the owner or operator of the
                                    property; and (iii) all other real property
                                    that it, for purposes of any Environmental
                                    Law, otherwise could be deemed to be an
                                    owner or operator of or as otherwise having
                                    control over.

                           (2)      "Environmental Laws" means any federal,
                                    state, local or foreign law, regulation,
                                    agency policy, order, decree, judgment,
                                    judicial opinion, or any agreement with any
                                    Governmental Entity, presently in effect or
                                    subsequently adopted relating to: (i) the
                                    manufacture, generation, transport, use,
                                    treatment, storage, recycling, disposal,
                                    release, threatened release or presence of
                                    Hazardous Substances, or (ii) the
                                    preservation, restoration or protection of
                                    the environment, natural resources or human
                                    health.

                           (3)      "Hazardous Substances" means any hazardous
                                    or toxic substance, material or waste that
                                    is regulated by any local governmental
                                    authority, any state government or the
                                    United States Government, including any
                                    material or substance that is (a) defined as
                                    a "hazardous substance" in 42 USC Section
                                    9601(14), (b) defined as a "pollutant or
                                    contaminant" in 42 USC Section 9604(a)(2),
                                    or (c) defined as a "hazardous waste" in 42
                                    USC Section 6903(5).

                           (4)      "Knowledge," with respect to a particular
                                    fact, means that (i) a person is actually
                                    aware of such fact or (ii) a prudent person
                                    could be expected to discover or otherwise
                                    become aware of such fact or other matter in
                                    the course of conducting a reasonably
                                    comprehensive investigation concerning the
                                    existence of such fact.

                  (b)      To the Knowledge of its Executive Officers, it and
                           the Subject Property are, and have been, in
                           compliance with all applicable Environmental Laws,
                           and no circumstances exist that with the passage of
                           time or the giving of notice would be reasonably
                           likely to result in noncompliance with such
                           Environmental Laws.

                  (c)      To the Knowledge of its Executive Officers, none of
                           the following, and no reasonable basis for any of the
                           following, exists: pending or threatened claims,
                           actions, investigations, notices of non-compliance,
                           information requests or notices of potential
                           responsibility or proceedings involving it or any
                           Subject Property, relating to:

                           (1)      an asserted liability of Big Sky or any
                                    prior owner, occupier or user of Subject
                                    Property under any applicable Environmental
                                    Law or the terms and conditions of 

                                       16
   25

                                    any permit, license, authority, settlement,
                                    agreement, decree or other obligation
                                    arising under any applicable Environmental
                                    Law;

                           (2)      the handling, storage, use, transportation,
                                    removal or disposal of Hazardous Substances;

                           (3)      the actual or threatened discharge, release
                                    or emission of Hazardous Substances from, on
                                    or under or within Subject Property into the
                                    air, water, surface water, ground water,
                                    land surface or subsurface strata; or

                           (4)      personal injuries or damage to property
                                    related to or arising out of exposure to
                                    Hazardous Substances.

                  (d)      To the Knowledge of its Executive Officers, (i) no
                           storage tanks underground or otherwise are present on
                           the Subject Property or, if present, none of such
                           tanks are leaking and each of them is in full
                           compliance with all applicable Environmental Laws;
                           (ii) it does not own, possess or control any PCBs,
                           PCB-contaminated fluids, wastes or equipment, or any
                           material amount of asbestos or asbestos-containing
                           material, and (iii) no Hazardous Substances have been
                           used, handled, stored, discharged, released or
                           emitted, or are threatened to be discharged, released
                           or emitted, at or on any Subject Property, except for
                           those types and quantities of Hazardous Substances
                           typically used in an office environment and that have
                           not created conditions requiring remediation under
                           any applicable Environmental Law.

                  (e)      Except for the investigation or monitoring by the
                           Environmental Protection Agency or similar state
                           agencies in the ordinary course, no part of the
                           Subject Property has been or is scheduled for
                           investigation or monitoring under any applicable
                           Environmental Law.

3.3      EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES.

         3.3.1    DISCLOSURE OF EXCEPTIONS. Each exception set forth in a
                  Schedule is disclosed only for purposes of the representations
                  and warranties referenced in that exception; but the following
                  conditions apply:

                  (a)      no exception is required to be set forth in a
                           Schedule if its absence would not result in the
                           related representation or warranty being found untrue
                           or incorrect under the standard established by
                           Subsection 3.3.2; and

                  (b)      the mere inclusion of an exception in a Schedule is
                           not an admission by a party that such exception
                           represents a material fact, material set of facts, or
                           material event or would result in a Material Adverse
                           Effect with respect to that party.

         3.3.2    NATURE OF EXCEPTIONS. No representation or warranty contained
                  in Subsections 3.1 or 3.2 will be found untrue or incorrect
                  and no party to this Agreement will have breached a
                  representation or warranty due to the following: the existence
                  of any fact, set of facts, or event, if the fact or event
                  individually or taken together with other facts or events
                  would not, or, in the case of Subsection 3.2.9, is not
                  reasonably likely to, have a Material Adverse Effect with
                  respect to such party.

                                       17
   26

                                    SECTION 4
                            CONDUCT AND TRANSACTIONS
                                 BEFORE CLOSING

4.1      CONDUCT OF BIG SKY'S BUSINESS BEFORE CLOSING. Before Closing, Big Sky
         promises as follows:

         4.1.1    AVAILABILITY OF BIG SKY'S BOOKS, RECORDS AND PROPERTIES.

                  (a)      Big Sky will make its books, records, properties,
                           contracts and documents available at all reasonable
                           times to Glacier and its counsel, accountants and
                           other representatives. These items will be open for
                           inspection, audit and direct verification of: (1)
                           loan or deposit balances, (2) collateral receipts and
                           (3) any other transactions or documentation Glacier
                           may find reasonably relevant to the Transaction. Big
                           Sky will cooperate fully in any such inspection,
                           audit, or direct verification procedures, and Big Sky
                           will make available all information reasonably
                           required by or on behalf of Glacier.

                  (b)      At Glacier's request, Big Sky will request any third
                           parties involved in the preparation or review of (1)
                           Big Sky Financial Statements, (2) Subsequent Big Sky
                           Financial Statements, or (3) any audits of Big Sky's
                           operations, loan portfolios or other assets, to
                           disclose to Glacier the work papers or any similar
                           materials related to these items.

         4.1.2    ORDINARY AND USUAL COURSE. Big Sky will conduct business only
                  in the ordinary and usual course and, without the prior
                  written consent of Glacier, will not do any of the following:

                  (a)      effect any stock split or other recapitalization with
                           respect to Big Sky Common Stock or issue, pledge,
                           redeem, or encumber in any way any shares of Big
                           Sky's capital stock; or grant any option or other
                           right to shares of Big Sky's capital stock;

                  (b)      declare or pay any dividend, or make any other
                           distribution, either directly or indirectly, with
                           respect to Big Sky Common Stock; provided, however,
                           that if the Closing occurs after December 31, 1998,
                           Big Sky will be permitted to declare and pay a
                           dividend consistent with its prior year-end practices
                           so long as it does not affect the treatment of the
                           Share Exchange as a "pooling of interests" for
                           accounting purposes;

                  (c)      acquire, sell, transfer, assign, encumber or
                           otherwise dispose of assets or make any commitment
                           with respect to its assets other than in the ordinary
                           and usual course of business;

                  (d)      solicit or accept deposit accounts of a different
                           type from accounts previously accepted by it or at
                           rates materially in excess of rates previously paid
                           by it, except to reflect changes in prevailing
                           interest rates, or incur any indebtedness greater
                           than $25,000 (except for borrowings from the Federal
                           Home Loan Bank in the ordinary course of business and
                           consistent with past practices);

                  (e)      acquire an ownership interest or a leasehold interest
                           in any Property or any other real property, whether
                           by foreclosure or otherwise, without: (1) making an
                           appropriate environmental evaluation in advance of
                           obtaining the interest and providing the evaluation
                           to Glacier and (2) providing Glacier with at least 30
                           days' advance written notice before it acquires the
                           interest;

                                       18
   27

                  (f)      enter into or recommend the adoption by Big Sky's
                           stockholders of any agreement involving a possible
                           merger or other business combination or asset sale by
                           Big Sky not involving the Transaction;

                  (g)      enter into, renew, or terminate any contracts
                           (including real property leases and data or item
                           processing agreements) with or for a term of one-year
                           or more, except for its contracts of deposit and
                           agreements to lend money not otherwise restricted
                           under this Agreement and (1) entered into in the
                           ordinary course of business, (2) consistent with past
                           practices, and (3) providing for not less (in the
                           case of loans) or more (in the case of deposits) than
                           prevailing market rates of interest;

                  (h)      enter into or amend any contract (other than
                           contracts for deposits or agreements to lend money
                           not otherwise restricted by this Agreement) calling
                           for a payment by it of more than $25,000, unless the
                           contract may be terminated without cause or penalty
                           upon 30 days notice or less;

                  (i)      enter into any personal services contract with any
                           person or firm, except contracts, agreements, or
                           arrangements for legal, accounting, investment
                           advisory, or tax services entered into directly to
                           facilitate the Transaction;

                  (j)      (1) sell any securities, whether held for investment
                           or sale, other than in the ordinary course of
                           business or sell any securities, whether held for
                           investment or sale, even in the ordinary course of
                           business, if the aggregate gain realized from all
                           sales after the date of this Agreement would be more
                           than $25,000 or (2) transfer any investment
                           securities between portfolios of securities available
                           for sale and portfolios of securities to be held to
                           maturity;

                  (k)      amend its articles of incorporation, bylaws, or other
                           formation agreements, or convert its charter or form
                           of entity;

                  (l)      implement or adopt any material changes in its
                           operations, policies, or procedures, including loan
                           loss reserve policies, unless the changes are
                           requested by Glacier or are necessary or advisable,
                           on the advice of legal counsel, to comply with
                           applicable laws, regulations, or regulatory policies;

                  (m)      implement or adopt any change in its accounting
                           principles, practices or methods, other than as may
                           be required (1) by GAAP, (2) for tax purposes, or (3)
                           to take advantage of any beneficial tax or accounting
                           methods;

                  (n)      increase the number of full-time or equivalent
                           employees of Big Sky above 20;

                  (o)      other than in accordance with binding commitments
                           existing on the date of this Agreement, make any
                           capital expenditures in excess of $10,000 per project
                           or related series of projects or $25,000 in the
                           aggregate, except for expenses reasonably related to
                           completion of the Transaction, which expenses may not
                           exceed $100,000; or

                  (p)      enter into any other transaction or make any
                           expenditure other than in the ordinary and usual
                           course of its business and made or entered into in a
                           manner consistent with its well-established practices
                           or as required by this Agreement.

                                       19
   28

         4.1.3    CONDUCT REGARDING REPRESENTATIONS AND WARRANTIES. Big Sky will
                  not do or cause to be done anything that would cause any
                  representation or warranty in Subsection 3.1 or 3.2 to be
                  untrue in any material respect at Closing, except as otherwise
                  contemplated or required by this Agreement or consented to in
                  writing by Glacier.

         4.1.4    MAINTENANCE OF PROPERTIES. Big Sky will maintain its
                  properties and equipment (and related insurance or its
                  equivalent) in accordance with good business practice.

         4.1.5    PRESERVATION OF BUSINESS ORGANIZATION. Big Sky will use all
                  reasonable efforts to:

                  (a)      preserve its business organization;

                  (b)      retain the services of present management; and

                  (c)      preserve the goodwill of suppliers, customers and
                           others with whom it has business relationships.

         4.1.6    SENIOR MANAGEMENT. Big Sky will obtain Glacier's approval
                  before making any change, including hiring of replacements,
                  with respect to present management personnel having the rank
                  of vice-president or higher.

         4.1.7    COMPENSATION AND EMPLOYMENT AGREEMENTS. Big Sky will not
                  permit any increase in the current or deferred compensation
                  payable or to become payable by Big Sky to any of its
                  directors, officers, employees, agents, or consultants other
                  than normal increments in compensation in accordance with Big
                  Sky's past practices with respect to the timing and amounts of
                  such increments. Without the prior written approval of
                  Glacier, Big Sky will not commit to, execute or deliver any
                  employment agreement with any party not terminable upon two
                  weeks' notice and without expense.

         4.1.8    UPDATE OF FINANCIAL STATEMENTS. Big Sky will promptly deliver
                  its Financial Statements to Glacier. Big Sky will deliver
                  Subsequent Big Sky Financial Statements to Glacier by the
                  earlier of: (1) 5 days after Big Sky has prepared and issued
                  them or (2) 60 days after year-end for year-end statements and
                  30 days after the end of the quarter for quarterly statements.
                  The Subsequent Big Sky Financial Statements:

                  (a)      will be prepared from the books and records of Big
                           Sky;

                  (b)      will present fairly the financial position and
                           operating results of Big Sky at the times indicated
                           and for the periods covered;

                  (c)      will be prepared in accordance with GAAP (except for
                           the absence of notes) and with the regulations
                           promulgated by applicable regulatory authorities, to
                           the extent then applicable, subject to normal
                           year-end adjustments; and

                  (d)      will reflect all Big Sky's liabilities, contingent or
                           otherwise, on the respective dates and for the
                           respective periods covered, except for liabilities:
                           (1) not required to be so reflected in accordance
                           with GAAP or (2) not significant in amount.

         4.1.9    NO SOLICITATION.

                                       20
   29

                  (a)      Neither Big Sky nor any of its officers or directors,
                           directly or indirectly, will solicit, encourage,
                           entertain, or facilitate any other proposals or
                           inquiries for an acquisition of the shares or assets
                           of Big Sky or enter into discussions concerning any
                           such acquisition ("Acquisition Proposal"), except as
                           otherwise required to comply with the fiduciary
                           responsibilities of Big Sky's board of directors. No
                           such party will make available to any person not
                           affiliated with Big Sky or Glacier any information
                           about its business or organization that is not either
                           routinely made available to the public generally or
                           required by law.

                  (b)      If (1) an Acquisition Proposal occurs prior to the
                           Termination Date, (2) the approval of the Big Sky
                           shareholders contemplated in this Agreement is not
                           obtained at the special meeting of Big Sky's
                           shareholders, and (3) prior to April 15, 2000, a
                           third party acquires control of Big Sky by merger,
                           purchase of assets, acquisition of stock or
                           otherwise, then unless the representations and
                           warranties of Glacier in this Agreement were false in
                           any material respect as of the date of Big Sky's
                           special meeting of shareholders or Glacier was in
                           material default of its covenants in this Agreement
                           as of such date, Big Sky will promptly pay to Glacier
                           the amount of $400,000. For the purposes of this
                           paragraph, a third party will be deemed to have
                           acquired control of Big Sky when the third party
                           possesses, directly or indirectly, the power to
                           direct or cause the direction of the management and
                           policies of Big Sky, whether through the ownership of
                           voting interests, by contract, or otherwise.

         4.1.10   TITLE POLICIES ON LEASED PROPERTY. At Glacier's request, Big
                  Sky will provide Glacier with leasehold title reports issued
                  by a title insurance company reasonably satisfactory to
                  Glacier. These title reports must show unencumbered leasehold
                  interest in all real property leased by Big Sky, and these
                  title reports may contain only such exceptions, reservations,
                  and encumbrances as may be consented to in writing by Glacier,
                  which consent Glacier may not unreasonably withhold.

         4.1.11   REVIEW OF LOANS. Big Sky will permit Glacier to conduct an
                  examination of its loans to determine credit quality and the
                  adequacy of its allowance for loan losses. Glacier will have
                  continued access to Big Sky's loans through Closing to update
                  the examination. At Glacier's reasonable request, Big Sky will
                  provide Glacier with current reports updating the information
                  set forth in Schedule 7.

4.2      REGISTRATION STATEMENT.

         4.2.1    PREPARATION OF REGISTRATION STATEMENT.

                  (a)      A Registration Statement on Form S-4 ("Registration
                           Statement") will be filed by Glacier with the SEC
                           under the Securities Act for registration of the
                           Glacier Shares, and the parties will prepare a
                           related prospectus/proxy statement ("Prospectus/Proxy
                           Statement") to be mailed together with any amendments
                           and supplements to Big Sky's stockholders.

                  (b)      The parties will cooperate with each other in
                           preparing the Registration Statement and
                           Prospectus/Proxy Statement, and will use their best
                           efforts to: (1) file the Registration Statement with
                           the SEC within 60 days following the date on which
                           this Agreement is executed, and (2) obtain the
                           clearance of the SEC, any appropriate state
                           securities 

                                       21
   30

                           regulators and any other required regulatory
                           approvals, to issue the Prospectus/Proxy Statement.

                  (c)      Nothing will be included in the Registration
                           Statement or the Prospectus/Proxy Statement or any
                           proxy solicitation materials with respect to any
                           party to this Agreement unless approved by that
                           party, which approval will not be unreasonably
                           withheld.

                  (d)      Glacier will pay all costs associated with the
                           preparation by Glacier's counsel and the filing of
                           the Registration Statement. Big Sky will pay all
                           costs associated with the review and preparation by
                           Big Sky's counsel of the Registration Statement and
                           the Prospectus/Proxy. Big Sky will pay the costs
                           associated with the printing and mailing of the
                           Prospectus/Proxy Statement to its stockholders and
                           any other direct costs incurred by it in connection
                           with the Prospectus/Proxy Statement.

         4.2.2    SUBMISSION TO STOCKHOLDERS.

                  (a)      Glacier and Big Sky will submit the Prospectus/Proxy
                           Statement to, and will use their best efforts in good
                           faith to obtain the prompt approval of the
                           Prospectus/Proxy Statement by, all applicable
                           regulatory authorities. The parties will provide each
                           other with copies of such submissions for review.

                  (b)      Big Sky will promptly take the actions necessary in
                           accordance with applicable law and its Articles of
                           Incorporation and Bylaws to convene a stockholders'
                           meeting to consider the approval of this Agreement
                           and to authorize the transactions contemplated by
                           this Agreement. This stockholders' meeting will be
                           held on the earliest practical date after the date
                           the Prospectus/Proxy Statement may first be sent to
                           Big Sky's stockholders without objection by
                           applicable governmental authorities; but Big Sky will
                           have at least 20 business days to solicit proxies.
                           Except as otherwise required to comply with the
                           fiduciary responsibilities of its board of directors,
                           Big Sky's board of directors and officers will
                           recommend approval of the Transaction to Big Sky's
                           stockholders.

4.3      ACCOUNTING TREATMENT.

         4.3.1    POOLING OF INTERESTS. The parties intend the Merger to be
                  treated as a "pooling of interests" for accounting purposes.
                  From the date of this Agreement through the Effective Date,
                  neither Glacier nor Big Sky nor any of their respective
                  Subsidiaries or other affiliates (a) will knowingly take any
                  action or enter into any contract, agreement, commitment or
                  arrangement that would jeopardize the treatment of the Merger
                  as a "pooling of interests;" or (b) will knowingly fail to
                  take any action that would preserve the treatment of the
                  Merger as a "pooling of interests." No action or omission by
                  either party will constitute a breach of this Subsection 4.3.1
                  if the action is permitted or required under this Agreement or
                  is made with the other party's written consent, or is required
                  by applicable laws or regulations.

         4.3.2    AFFILIATE LIST. Certain persons may be deemed "affiliates" of
                  Big Sky under Securities Act Rule 145, the SEC's Accounting
                  Series Releases ("ASR") 130 and 135, or other rules and
                  releases related to "pooling of interests" accounting
                  treatment. Within thirty days following the date this
                  Agreement is signed, Big Sky will deliver to Glacier, after
                  consultation with legal counsel, a list of names and addresses
                  of Big Sky's "affiliates" with respect to the Transaction
                  within the meaning of Rule 145 or ASR 130 and 135. By the
                  Effective Date, Big Sky will deliver, or cause to be
                  delivered, to Glacier a letter from each of these
                  "affiliates," and any additional person who 

                                       22
   31

                  becomes an "affiliate" before the Effective Date and after the
                  date of the list, dated as of the date of its delivery and in
                  the form attached as Exhibit A.

         4.3.3    RESTRICTIVE LEGENDS. Glacier will place a restrictive legend
                  on all certificates representing Glacier Shares to be received
                  by an "affiliate," so as to preclude their transfer or
                  disposition in violation of the affiliate letters. Glacier
                  will also instruct its transfer agent not to permit the
                  transfer of those shares, and to take any other steps
                  reasonably necessary to ensure compliance with the Securities
                  Act Rule 145 or the SEC's ASR 130 and 135 or other rules and
                  releases related to "pooling of interests" accounting
                  treatment.

         4.3.4    RETENTION OF CERTIFICATES. Except as otherwise permitted in
                  Exhibit A, by a date at least 30 days before the Effective
                  Date, all stock certificates evidencing ownership of Big Sky
                  Common Stock by "affiliates" will be delivered to Big Sky. Big
                  Sky (before the Effective Date) and Glacier (after the
                  Effective Date) will retain those certificates, and
                  subsequently the certificates representing Glacier shares for
                  which they are exchanged, until financial results covering at
                  least 30 days of combined operations following the Effective
                  Date have been published, at which time the certificates will
                  be released.

4.4      SUBMISSION TO REGULATORY AUTHORITIES. Representatives of Glacier, at
         Glacier's expense, will prepare and file with applicable regulatory
         agencies, applications for approvals, waivers or other actions their
         counsel finds necessary or desirable in order to consummate the
         Transaction. Glacier will provide copies of these applications for Big
         Sky's review. These applications and filings are expected to include:

         (a)      an application to the Federal Reserve; and

         (b)      any filings required under the MBCA or the Montana Bank Act;

4.5      ANNOUNCEMENTS. The parties will cooperate and consult with each other
         in the development and distribution of all news releases and other
         public information disclosures with respect to this Agreement or the
         Transaction, unless otherwise required by law.

4.6      CONSENTS. Glacier and Big Sky will use their best efforts to obtain the
         consent or approval of any person, organization or other entity whose
         consent or approval is required in order to consummate the Transaction.

4.7      FURTHER ACTIONS. Glacier and Big Sky, respectively, in the name and on
         behalf of those respective parties, will use their best efforts in good
         faith to make all such arrangements, do or cause to be done all such
         acts and things, and execute and deliver all such certificates and
         other instruments and documents as may be reasonably necessary or
         appropriate in order to consummate the Transaction as promptly as
         practicable.

4.8 NOTICE. Big Sky will provide Glacier with prompt written notice of the
following:

         (a)      any events, individually or in the aggregate, that could have
                  a Material Adverse Effect with respect to Big Sky;

         (b)      the commencement of any proceeding against Big Sky, or any of
                  its affiliates, by or before any court or governmental agency
                  that, individually or in the aggregate, might have a Material
                  Adverse Effect with respect to Big Sky; or

                                       23
   32

         (c)      any acquisition of an ownership or leasehold interest in real
                  property, other than an acquisition in good faith of real
                  property to satisfy a debt previously contracted for.

4.9      CONFIDENTIALITY. Glacier and Big Sky each will hold in confidence all
         nonpublic information obtained from the other in connection with the
         Transaction, other than information that: (1) is required by law to be
         disclosed; (2) is otherwise available on a nonconfidential basis; (3)
         has become public without fault of the disclosing party; or (4) is
         necessary to the defense of one of the parties in a legal or
         administrative action brought against that party by the other party. If
         the Transaction is not completed, Glacier and Big Sky will: (1) each
         return to the others all confidential documents obtained from them and
         (2) not use any nonpublic information obtained under this Agreement or
         in connection with the Transaction.

4.10     UPDATE OF FINANCIAL STATEMENTS. Glacier will promptly deliver its
         Financial Statements to Big Sky. Glacier will deliver Subsequent
         Glacier Financial Statements to Big Sky by the earlier of: (1) 5 days
         after Glacier prepares and issues them or (2) 60 days after year-end
         for year-end statements and 30 days after the end of the quarter for
         quarterly statements. The Subsequent Glacier Financial Statements will:

         (a)      be prepared from the books and records of Glacier;

         (b)      present fairly the financial position and operating results of
                  Glacier at the times indicated and for the periods covered;

         (c)      be prepared in accordance with GAAP (except for the absence of
                  notes) and with the regulations promulgated by applicable
                  regulatory authorities, to the extent then applicable, subject
                  to normal year-end adjustments; and

         (d)      reflect all liabilities, contingent or otherwise, of Glacier
                  on the respective dates and for the respective periods
                  covered, except for liabilities not required to be so
                  reflected in accordance with GAAP or not significant in
                  amount.

4.11     AVAILABILITY OF GLACIER'S BOOKS, RECORDS AND PROPERTIES. Glacier will
         make available to Big Sky true and correct copies of its Certificate of
         Incorporation and Bylaws. At Big Sky's reasonable request, Glacier will
         also provide Big Sky with copies of: (1) reports filed with the SEC or
         banking regulators, (2) Glacier's stock option plans, and (3) any other
         information that the parties agree upon.

                                    SECTION 5
                            APPROVALS AND CONDITIONS

5.1      REQUIRED APPROVALS. The obligations of the parties to this Agreement
         are subject to the approval of the Agreement and the Transaction by all
         appropriate regulatory agencies having jurisdiction with respect to the
         Transaction.

5.2      CONDITIONS TO GLACIER'S OBLIGATIONS. All Glacier's obligations under
         this Agreement are subject to satisfaction of the following conditions
         at or before Closing:

         5.2.1    REPRESENTATIONS. Big Sky's representations in this Agreement
                  and in any certificate or other instrument delivered in
                  connection with this Agreement are true and correct in all
                  material respects at Closing (except (i) the representations
                  in Subsections 3.2.8(a) and 3.2.14, which representations are
                  true in all respects at Closing; and (ii) to the extent that
                  the representations expressly relate to an earlier date, in
                  which case they are true in all material respects as of that
                  earlier date). These representations have the same force and
                  effect as if they had been made at Closing. Big Sky has
                  delivered to Glacier its certificate, executed by a duly
                  authorized officer of 

                                       24
   33

                  Big Sky and dated as of Closing, stating that these
                  representations comply with this Subsection 5.2.1.

         5.2.2    COMPLIANCE. Big Sky has performed and complied with all
                  material terms, covenants and conditions of this Agreement.
                  Big Sky has delivered to Glacier its certificate, executed by
                  a duly authorized officer of Big Sky and dated as of Closing,
                  stating that Big Sky is in compliance with this Subsection
                  5.2.2.

         5.2.3    EQUITY CAPITAL REQUIREMENT. The Tangible Equity Capital,
                  determined in accordance with GAAP, of Big Sky as of the
                  Effective Date is at least $2.9 million (not including capital
                  from the conversion of Debentures). Big Sky's certificate
                  referred to in Subsection 5.2.2 must confirm that this
                  condition is satisfied. Tangible Equity Capital means common
                  stock, paid in capital, retained earnings, plus (or minus) net
                  unrealized gain (or loss) on available for sale securities and
                  minus goodwill and any other intangible assets.

         5.2.4    TRANSACTION FEES STATEMENTS. Big Sky has delivered to Glacier
                  a statement, in a form reasonably satisfactory to Glacier,
                  from each third party to whom Big Sky has paid or owes
                  Transaction Fees. Each statement must set forth the total
                  costs and expenses paid or owing to the third party in
                  connection with the Transaction's consummation. Big Sky has
                  delivered to Glacier its certificate, executed by a duly
                  authorized officer of Big Sky and dated as of Closing, stating
                  the total Transaction Fees incurred by Big Sky and certifying
                  that Big Sky is in compliance with Subsection 1.2.3 and this
                  Subsection 5.2.4.

         5.2.5    AUDIT REPORT. Big Sky has delivered (no later than three days
                  before Glacier filed the Registration Statement with the SEC)
                  to Glacier the completed and certified audit report of KPMG
                  Peat Marwick LLP, its independent certified public
                  accountants, with respect to Big Sky's statements of financial
                  condition as of December 31, 1997 (audited) and 1996
                  (unaudited), and the related statements of income, cashflows
                  and changes in stockholders' equity for both of the years
                  ended December 31, 1997 (audited) and 1996 (unaudited).

         5.2.6    NO MATERIAL ADVERSE EFFECT. No damage, destruction, or loss
                  (whether or not covered by insurance) or other event or
                  sequence of events has occurred which, individually or in the
                  aggregate, has had or potentially may have a Material Adverse
                  Effect with respect to Big Sky. Big Sky's certificate referred
                  to in Subsection 5.2.1 states that the conditions identified
                  in this Subsection 5.2.6 are satisfied.

         5.2.7    FINANCIAL CONDITION. The following are true, and Big Sky's
                  certificate referred to in Section 5.2.1 confirms the truth of
                  the following:

                  (a)      Big Sky's allowance for possible loan and lease
                           losses at Closing was and is adequate to absorb the
                           anticipated loan and lease losses (taking into
                           account any recommendations made by Big Sky's
                           certified public accountants);

                  (b)      the reserves set aside for the contingent liabilities
                           reflected in the Subsequent Big Sky Financial
                           Statements are adequate to absorb all reasonably
                           anticipated losses;

                  (c)      Big Sky's deposits at Closing total at least $28
                           million; and

                  (d)      Big Sky has provided Glacier with the audited Big Sky
                           Financial Statements required by this Agreement, and
                           the audit has revealed no required adjustment to
                           previously 

                                       25
   34

                           unaudited Big Sky Financial Statements that would
                           have a Material Adverse Effect upon Big Sky.

         5.2.8    NO CHANGE IN LOAN REVIEW. Big Sky has provided to Glacier the
                  reports reasonably requested by Glacier under Subsection
                  4.1.11, and neither these reports nor any examinations
                  conducted by Glacier under Subsection 4.1.11 reveal a material
                  adverse change in either: (1) the information set forth in
                  Schedule 7 or (2) information revealed during Glacier's
                  previous examinations of Big Sky's loans.

         5.2.9    NO GOVERNMENTAL PROCEEDINGS. No action or proceeding has been
                  commenced or threatened by any governmental agency to restrain
                  or prohibit or invalidate the Transaction.

         5.2.10   APPROVAL BY COUNSEL. All actions, proceedings, instruments,
                  and documents required in connection with this Agreement, the
                  Transaction, and all other related legal matters have been
                  approved by Glacier's counsel.

         5.2.11   RECEIPT OF TITLE POLICY. Glacier has received all title
                  insurance reports requested under Subsection 4.1.10 and the
                  update endorsement required by Subsection 3.2.6.

         5.2.12   CORPORATE AND STOCKHOLDER ACTION. Big Sky's board of directors
                  and stockholders, respectively, have approved the Transaction.

         5.2.13   TAX OPINION. Glacier has, at Glacier's expense, obtained from
                  Graham & Dunn, P.C. and delivered to Big Sky, an opinion
                  addressed to Big Sky and in form and substance reasonably
                  satisfactory to Big Sky and its counsel, to the effect that
                  consummation of the Transaction will not result in a taxable
                  event for Big Sky or Glacier, and otherwise will have each of
                  the effects specified below:

                  (a)      The Transaction will qualify as a reorganization
                           within the meaning of IRC Section 368(a)(1)(B).

                  (b)      Under IRC Section 354(a)(i), Big Sky's stockholders
                           who, in accordance with Section 1, exchange their Big
                           Sky Common Stock shares solely for Glacier Common
                           Stock shares will not recognize gain or loss on the
                           exchange.

                  (c)      Cash payments to Big Sky's stockholders in lieu of a
                           fractional share of Glacier Common Stock will be
                           treated as distributions in redemption of the
                           fractional share interest, subject to the limitations
                           of IRC Section 302.

         5.2.14   OPINION OF COUNSEL. Big Sky has obtained from Crowley,
                  Haughey, Hanson, Toole & Dietrich, P.L.L.P., and delivered to
                  Glacier an opinion of counsel, addressed to Glacier, to the
                  effect that:

                  (a)      Big Sky is a Montana state-chartered commercial bank
                           validly existing and in good standing under Montana
                           law;

                  (b)      Big Sky has the corporate power and authority to
                           execute, deliver, and perform this Agreement;

                  (c)      the execution, delivery, and performance of this
                           Agreement have been duly authorized by all necessary
                           corporate action on the part of Big Sky, and this
                           Agreement constitutes Big Sky's legal, binding, and
                           valid obligation, enforceable in accordance with its
                           terms, 

                                       26
   35

                           except to the extent that enforcement (but not
                           validity) may be limited by bankruptcy, insolvency,
                           reorganization, moratorium, or similar laws generally
                           affecting the enforcement of the rights of creditors
                           and by generally applicable principles of equity;

                  (d)      all issued and outstanding shares of Big Sky's
                           capital stock have been duly authorized and are
                           validly issued, fully paid, non-assessable, free of
                           preemptive or similar rights arising by operation of
                           law or otherwise, and have been issued in compliance
                           with all applicable federal and applicable state
                           securities laws;

                  (e)      No options or other rights to acquire Big Sky Common
                           Stock are outstanding other than as expressly set
                           forth in Schedule 4, and Big Sky does not have any
                           stock option or other plans or agreements granting
                           options or other rights to acquire Big Sky Common
                           Stock; and

                  (f)      execution of this Agreement and consummation of the
                           Transaction will not violate Big Sky's articles of
                           incorporation or bylaws or the terms of any material
                           contract or other obligation entered into before the
                           date of this opinion.

         5.2.15   CASH PAID. The aggregate of the cash paid for fractional
                  shares and Dissenting Shares to holders of Big Sky Common
                  Stock under this Agreement and applicable law will not exceed
                  10% of the cash value of the Purchase Price, as it may be
                  adjusted under this Agreement. The cash value of the purchase
                  price will be determined using the Determination Date Closing
                  Price.

         5.2.16   AFFILIATE LETTERS. Glacier has received the affiliate list and
                  letters specified in 4.3.2.

         5.2.17   REGISTRATION STATEMENT. The Registration Statement, as it may
                  have been amended, required in connection with the Glacier
                  shares to be issued to stockholders under 1.2, and as
                  described in 4.2, has become effective, and no stop order
                  suspending the effectiveness of such Registration Statement
                  has been issued or remains in effect, and no proceedings for
                  that purpose have been initiated or threatened by the SEC the
                  basis for which still exists.

         5.2.18   CONSENTS. Big Sky has obtained the consents as indicated in
                  Schedule 6.

         5.2.19   UPDATED FAIRNESS OPINION. Big Sky has provided to Glacier
                  copies of Professional Bank Services' updated fairness opinion
                  issued by Professional Bank Services to Big Sky, dated
                  immediately before Big Sky mails the Prospectus/Proxy
                  Statement to its stockholders and dated as of or immediately
                  before the Effective Date, to the effect that the financial
                  terms of the Transaction are financially fair to Big Sky's
                  stockholders.

         5.2.20   ACCOUNTING TREATMENT. It has been determined to Glacier's
                  satisfaction that the Transaction will be treated for
                  accounting purposes as a "pooling of interests" in accordance
                  with APB Opinion No. 16, and Glacier has received a letter to
                  this effect from KPMG Peat Marwick LLP, certified public
                  accountants.

         5.2.21   SOLICITATION OF EMPLOYEES. Neither any member of Big Sky's
                  board of directors nor any entity with which any such director
                  is affiliated has solicited any employee of Big Sky or Glacier
                  with the intention of causing the employee to terminate her
                  employment with Big Sky or Glacier, as the case may be.

                                       27
   36

         5.2.22   OTHER MATTERS. Glacier has received any other opinions,
                  certificates, and documents that Glacier reasonably requests
                  in connection with this Agreement and the Transaction.

5.3      CONDITIONS TO BIG SKY'S OBLIGATIONS. All Big Sky's obligations under
         this Agreement are subject to satisfaction of the following conditions
         at or before Closing:

         5.3.1    REPRESENTATIONS. Glacier's representations and warranties in
                  this Agreement and in any certificate or other instrument
                  delivered in connection with this Agreement are true and
                  correct in all material respects at Closing (except to the
                  extent that they expressly relate to an earlier date, in which
                  case they are true in all material respects as of that earlier
                  date). These representations and warranties have the same
                  force and effect as if they had been made at Closing. Glacier
                  has delivered to Big Sky its certificate, executed by a duly
                  authorized officer of Glacier and dated as of Closing, stating
                  that these representations and warranties comply with this
                  Subsection 5.3.1.

         5.3.2    COMPLIANCE. Glacier has performed and complied in all material
                  respects with all terms, covenants and conditions of this
                  Agreement. Glacier has delivered to Big Sky its certificate,
                  executed by a duly authorized officer of Glacier and dated as
                  of Closing, stating that Glacier is in compliance with this
                  Subsection 5.3.2.

         5.3.3    NO MATERIAL ADVERSE EFFECT. No damage, destruction, loss or
                  other event or sequence of events has occurred which,
                  individually or in the aggregate, has had or potentially may
                  have a Material Adverse Effect with respect to Glacier.
                  Glacier's certificate referred to in Subsection 5.3.1 states
                  that the conditions identified in this Subsection 5.3.3 are
                  satisfied.

         5.3.4    NO GOVERNMENTAL PROCEEDINGS. No action or proceeding has been
                  commenced or threatened by any governmental agency to
                  restrain, prohibit or invalidate the Transaction.

         5.3.5    CORPORATE AND STOCKHOLDER ACTION. Glacier's board of directors
                  and Big Sky's stockholders have each approved the Transaction.

         5.3.6    TAX OPINION. The tax opinion specified in Subsection 5.2.13
                  has been delivered to Big Sky.

         5.3.7    OPINION OF COUNSEL. Glacier has obtained from Graham & Dunn,
                  P.C. and delivered to Big Sky an opinion, addressed to Big
                  Sky, to the effect that:

                  (a)      Glacier is a corporation validly existing and in good
                           standing under Delaware law;

                  (b)      Glacier has the corporate power and authority to
                           execute, deliver, and perform this Agreement;

                  (c)      the execution, delivery, and performance of this
                           Agreement have been duly authorized by all necessary
                           corporate action on Glacier's part, and this
                           Agreement constitutes Glacier's legal, binding, and
                           valid obligation, enforceable in accordance with its
                           terms, except to the extent that enforcement (but not
                           validity) may be limited by bankruptcy, insolvency,
                           reorganization, moratorium, or similar laws generally
                           affecting the enforcement of the rights of creditors
                           and by generally applicable principles of equity;

                  (d)      the Glacier Shares have been duly authorized and,
                           when issued as contemplated by this Agreement, will
                           be validly issued, fully paid and nonassessable;

                                       28
   37

                  (e)      the Registration Statement became effective under the
                           Securities Act on ____________, 1998, and, to the
                           best of counsel's knowledge, no stop order suspending
                           the effectiveness of such Registration Statement has
                           been issued and no proceedings for that purpose have
                           been instituted or threatened by the Securities and
                           Exchange Commission;

                  (f)      execution of this Agreement and consummation of the
                           Transaction will not violate Glacier's articles of
                           incorporation or bylaws; and

                  (g)      Counsel's opinion will be governed by and interpreted
                           in accordance with the Legal Opinion Accord of the
                           ABA section of Business Law (1991), together with the
                           related commentary, as published in The Business
                           Lawyer, Volume 47, No. 1, and any amendments or
                           modifications thereto.

         5.3.8    FAIRNESS OPINION. Big Sky has received from Professional Bank
                  Services the updated fairness opinions, dated immediately
                  before Big Sky mails the Prospectus/Proxy Statement to its
                  stockholders and an updated fairness opinion dated as of or
                  immediately before the Effective Date, each to the effect that
                  the financial terms of the Transaction are financially fair to
                  Big Sky's stockholders.

         5.3.9    CASH PAID. The aggregate of the cash paid to holders of Big
                  Sky Common Stock under this Agreement and applicable law will
                  not exceed 10% of the Purchase Price, as it may be adjusted
                  under this Agreement.

         5.3.10   REGISTRATION STATEMENT. The Registration Statement, as it may
                  have been amended, required in connection with the Glacier
                  shares to be issued to stockholders under Subsection 1.2, and
                  as described in Subsection 4.2, has become effective, and no
                  stop order suspending the effectiveness of such Registration
                  Statement has been issued or remains in effect, and no
                  proceedings for that purpose have been initiated or threatened
                  by the SEC the basis for which still exists.

                                    SECTION 6
                        DIRECTORS, OFFICERS AND EMPLOYEES

6.1      DIRECTORS. As a condition to the execution of this Agreement, each
         member of Big Sky's board of directors has entered into a written
         noncompetition agreement with Glacier and Big Sky on or before the date
         this Agreement is signed. These noncompetition agreements will take
         effect on the Effective Date.

6.2      EMPLOYMENT AGREEMENT. As a condition to the execution of this
         Agreement, Glacier has entered into an employment agreement, effective
         as of the Effective Date, with Michael F. Richards, Big Sky's
         President. As part of the employment agreement, Mr. Richards waives all
         rights he may have under any previous employment agreements with Big
         Sky.

6.3      EMPLOYEES. Glacier presently intends to allow Big Sky's employees who
         are employed with Big Sky following the Transaction ("Continuing
         Employees") to participate in certain employee benefit plans in which
         employees of Glacier currently participate. Glacier intends to grant
         Continuing Employees credit for prior service with Big Sky for purposes
         of determining eligibility and vesting, but Continuing Employees will
         not receive this credit for purposes of determining benefit accruals.
         Benefits for Continuing Employees will begin accruing under Glacier's
         plans as soon as practicable after Closing. This expression of intent
         is not a contract with Big Sky's employees and will not be construed to
         create a contract or employment right with Big Sky's employees.

                                       29
   38

6.4      EMPLOYEE BENEFIT ISSUES.

         6.4.1    COMPARABILITY OF BENEFITS. Glacier confirms to Big Sky its
                  present intention to provide Continuing Employees with
                  employee benefit programs which, in the aggregate, are
                  generally competitive with employee benefit programs offered
                  by financial institutions of comparable size located in
                  Glacier's market area.

         6.4.2    TERMINATION AND TRANSFER/MERGER OF PLANS. As soon as
                  practicable after Closing, all employee benefit plans of Big
                  Sky will be terminated and the interests of Continuing
                  Employees in those plans will be transferred or merged into
                  Glacier's employee benefit plans.

         6.4.3    NO CONTRACT CREATED. Nothing in this Agreement gives any
                  employee of Big Sky a right to continuing employment.

                                    SECTION 7
                          TERMINATION OF AGREEMENT AND
                           ABANDONMENT OF TRANSACTION

7.1      TERMINATION BY REASON OF LAPSE OF TIME. If Closing does not occur
         before the Termination Date, either Glacier or Big Sky may terminate
         this Agreement and the Transaction if all of the following conditions
         are present:

         (a)      the terminating party's board of directors decides to
                  terminate by a majority vote of its members;

         (b)      the terminating party delivers to the other party written
                  notice that its board of directors has voted in favor of
                  termination; and

         (c)      the failure to consummate the Transaction by the Termination
                  Date is not due to a breach by the party seeking termination
                  of any of its obligations, covenants, or representations in
                  this Agreement.

7.2      OTHER GROUNDS FOR TERMINATION. This Agreement and the Transaction may
         be terminated at any time before Closing (whether before or after
         applicable approval of this Agreement by Big Sky's stockholders, unless
         otherwise provided) as follows:

         7.2.1    MUTUAL CONSENT. By mutual consent of Big Sky and Glacier, if
                  the boards of directors of each party agrees to terminate by a
                  majority vote of its members.

         7.2.2    BIG SKY'S CONDITIONS NOT MET. By Glacier's board of directors
                  if, by June 30, 1999, any condition set forth in Subsections
                  5.1 or 5.2 has not been satisfied.

         7.2.3    GLACIER'S CONDITIONS NOT MET. By Big Sky's board of directors
                  if, by June 30, 1999, any condition set forth in Subsections
                  5.1 or 5.3 has not been satisfied.

         7.2.4    BIG SKY FAILS TO RECOMMEND STOCKHOLDER APPROVAL. By Glacier's
                  board of directors before Big Sky's stockholders approve the
                  Transaction, if Big Sky's board of directors: (a) fails to
                  recommend to its stockholders the approval of the Transaction
                  or (b) modifies, withdraws or changes in a manner adverse to
                  Glacier its recommendation to stockholders to approve the
                  Transaction.

                                       30
   39

         7.2.5    IMPRACTICABILITY. By either Glacier or Big Sky, upon written
                  notice given to the other party, if the board of directors of
                  the party seeking termination under this Subsection 7.2.5 has
                  determined in its sole judgment, made in good faith and after
                  due consideration and consultation with counsel, that the
                  Transaction has become inadvisable or impracticable by reason
                  of the institution of litigation by the federal government or
                  the government of the State of Montana to restrain or
                  invalidate the Transaction or this Agreement.

7.3      BIG SKY TERMINATION FEE. Big Sky acknowledges that Glacier has incurred
         expenses, direct and indirect, in negotiating and executing this
         Agreement and in taking steps to effect the Transaction. Accordingly,
         subject to Subsection 4.1.9, Big Sky will pay to Glacier $300,000, if
         (1) this Agreement terminates because Big Sky does not use all
         reasonable efforts to consummate the Transaction in accordance with the
         terms of this Agreement; (2) Big Sky terminates this Agreement for any
         reason other than the grounds for termination set forth in Subsections
         7.1, 7.2.1, 7.2.3 or 7.2.5; or (3) Glacier terminates this Agreement
         under Subsection 7.2.2 or 7.2.4. If this termination fee becomes
         payable, it will be payable on Glacier's demand and must be paid by Big
         Sky within 3 business days of the date Glacier makes the demand.

7.4      GLACIER TERMINATION FEE. Due to expenses, direct and indirect, incurred
         by Big Sky in negotiating and executing this Agreement and in taking
         steps to effect the Transaction, Glacier will pay to Big Sky $125,000
         if (1) Glacier terminates this Agreement for any reason other than the
         grounds for termination set forth in Subsections 7.1, 7.2.1, 7.2.2,
         7.2.4 or 7.2.5 or (2) Big Sky terminates this Agreement under
         Subsection 7.2.3 (other than for failure of a condition set forth in
         5.1, 5.3.4, 5.3.6, 5.3.7, 5.3.9 and 5.3.10, unless the failure of any
         of those conditions is due to Glacier's fault). If this termination fee
         becomes payable, it will be payable on Big Sky's demand and must be
         paid by Glacier within 3 business days of the date Big Sky makes the
         demand.

7.5      COST ALLOCATION UPON TERMINATION. In connection with the termination of
         this Agreement under this Subsection 7.5, except as provided in
         Subsections 7.3 and 7.4, Glacier and Big Sky will each pay their own
         out-of-pocket costs incurred in connection with this Agreement, and
         will have no other liability to the other party.

                                    SECTION 8
                                  MISCELLANEOUS

8.1      NOTICES. Any notice, request, instruction or other document given under
         this Agreement must be in writing and must either be delivered
         personally or via facsimile transmission or be sent by registered or
         certified mail, postage prepaid, and addressed as follows (or to any
         other address or person representing any party as designated by that
         party through written notice to the other party):

          Glacier                               Glacier Bancorp, Inc.
                                                P.O. Box 27
                                                202 Main Street
                                                Kalispell, MT  59903-0027
                                                Attn: Michael J. Blodnick

                   with a copy to:              Stephen M. Klein, Esq.
                                                Graham & Dunn, P.C.
                                                1420 Fifth Avenue, 33rd Floor
                                                Seattle, WA  98101-2390

                                       31
   40

          Big Sky                               Big Sky Western Bank
                                                P.O. Box 160489
                                                135 Big Sky Road
                                                Big Sky, MT  59716
                                                Attn: Michael F. Richards

                   with a copy to:              William D. Lamdin III, Esq.
                                                Crowley, Haughey, Hanson, Toole
                                                & Dietrich PLLP 
                                                490 North 31st Street
                                                Billings, Montana  59101

8.2      WAIVERS AND EXTENSIONS. Subject to Section 9, Glacier or Big Sky may
         grant waivers or extensions to the other party, but only through a
         written instrument executed by the Chief Executive Officer or President
         of the party granting the waiver or extension. Waivers or extensions
         which do not comply with the preceding sentence are not effective. In
         accordance with this Section 8, a party may extend the time for the
         performance of any of the obligations or other acts of any other party,
         and may waive:

         (a)      any inaccuracies of any other party in the representations and
                  warranties contained in this Agreement or in any document
                  delivered in connection with this Agreement;

         (b)      compliance with any of the covenants of any other party; and

         (c)      any other party's performance of any obligations under this
                  Agreement and any other condition precedent set out in Section
                  5.

8.3      GENERAL INTERPRETATION. Except as otherwise expressly provided in this
         Agreement or unless the context clearly requires otherwise: (1) the
         defined terms defined in this Agreement include the plural as well as
         the singular and (2) references in this Agreement to Sections,
         Subsections, Schedules, and Exhibits refer to Sections and Subsections
         of and Schedules and Exhibits to this Agreement. Whenever the words
         "include", "includes", or "including" are used in this Agreement, the
         parties intend them to be interpreted as if they are followed by the
         words "without limitation." All accounting terms used in this Agreement
         that are not expressly defined in this Agreement have the respective
         meanings given to them in accordance with GAAP.

8.4      CONSTRUCTION AND EXECUTION IN COUNTERPARTS. Except as otherwise
         expressly provided in this Agreement, this Agreement: (1) contains the
         parties' entire understanding, and no modification or amendment of its
         terms or conditions will be effective unless in writing and signed by
         the parties, or their respective duly authorized agents; (2) will not
         be interpreted by reference to any of the titles or headings to the
         Sections or Subsections, which have been inserted for convenience only
         and are not deemed a substantive part of this Agreement; (3) includes
         all amendments to this Agreement, each of which is made a part of this
         Agreement by this reference; and (4) may be executed in one or more
         counterparts, each of which will be deemed an original, but all of
         which taken together will constitute one and the same document.

8.5      SURVIVAL OF REPRESENTATIONS AND COVENANTS. The representations and
         covenants in this Agreement will not survive Closing or termination of
         this Agreement, except that (1) Subsection 4.9 (confidentiality),
         Subsection 7.3 (termination fee), and Subsection 7.5 (expense
         allocation) will survive termination and Closing, and (2) the covenants
         in this Agreement that impose duties or obligations on the parties
         following Closing will survive Closing.

                                       32
   41

8.6      ATTORNEYS' FEES AND COSTS. In the event of any dispute or litigation
         with respect to the terms and conditions or enforcement of rights or
         obligations arising by reason of this Agreement or the Transaction, the
         prevailing party in any such litigation will be entitled to
         reimbursement from the other party for its costs and expenses,
         including reasonable judicial and extra-judicial attorneys' fees,
         expenses and disbursements, and fees, costs and expenses relating to
         any mediation or appeal.

8.7      ARBITRATION. At either party's request, the parties must submit any
         dispute, controversy or claim arising out of or in connection with, or
         relating to, this Agreement or any breach or alleged breach of this
         Agreement, to arbitration under the American Arbitration Association's
         rules then in effect (or under any other form of arbitration mutually
         acceptable to the parties). A single arbitrator agreed on by the
         parties will conduct the arbitration. If the parties cannot agree on a
         single arbitrator, each party must select one arbitrator and those two
         arbitrators will select a third arbitrator. This third arbitrator will
         hear the dispute. The arbitrator's decision is final (except as
         otherwise specifically provided by law) and binds the parties, and
         either party may request any court having jurisdiction to enter a
         judgment and to enforce the arbitrator's decision. The arbitrator will
         provide the parties with a written decision naming the substantially
         prevailing party in the action. This prevailing party is entitled to
         reimbursement from the other party for its costs and expenses,
         including reasonable attorneys' fees.

8.8      GOVERNING LAW AND VENUE. This Agreement will be governed by and
         construed in accordance with Montana law, except to the extent that
         certain matters may be governed by federal law. The parties must bring
         any legal proceeding arising out of this Agreement in Flathead County,
         Montana.

8.9      SEVERABILITY. If a court determines that any term of this Agreement is
         invalid or unenforceable under applicable law, the remainder of this
         Agreement is not affected, and each remaining term is valid and
         enforceable to the fullest extent permitted by law.

                                    SECTION 9
                                   AMENDMENTS

         At any time before the Effective Date, whether before or after the
parties have obtained any applicable stockholder approvals of the Transaction,
the boards of directors of Glacier and Big Sky may: (1) amend or modify this
Agreement or any attached Exhibit or Schedule and (2) grant waivers or time
extensions in accordance with Subsection 8.2. But, after Big Sky's stockholders
have approved this Agreement, the parties' boards of directors may not without
Big Sky stockholder approval amend or waive any provision of this Agreement if
the amendment or waiver would reduce the amount or change the form of
consideration Big Sky stockholders will receive in the Transaction. All
amendments, modifications, extensions and waivers must be in writing and signed
by the party agreeing to the amendment, modification, extension or waiver.
Failure by any party to insist on strict compliance by the other party with any
of its obligations, agreements or conditions under this Agreement, does not,
without a writing, operate as a waiver or estoppel with respect to that or any
other obligation, agreement, or condition.

                                       33
   42

         Signed as of October 20, 1998:

                                            GLACIER BANCORP, INC.

                                            By /s/ Michael J. Blodnick
                                              ----------------------------------
                                            Name: Michael J. Blodnick
                                            Title: President and CEO
                                            BIG SKY WESTERN BANK

                                            By /s/ Robert L. Kester
                                              ----------------------------------
                                            Name: Robert L. Kester
                                            Title: Chairman and CEO

                                       34
   43

STATE OF MONTANA         )
                         ) ss.
COUNTY OF FLATHEAD       )

         On this 20th day of October, 1998, before me personally appeared
Michael J. Blodnick, to me known to be the President and Chief Executive Officer
of GLACIER BANCORP, INC., the corporation that executed the foregoing
instrument, who acknowledged said instrument to be the free and voluntary act
and deed of said corporation, for the uses and purposes mentioned there, and who
stated on oath that he was authorized to execute said instrument, and that the
seal affixed (if any) was the official seal of said corporation.

         IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.

                                            /s/
                                            ____________________________________
                                            NOTARY PUBLIC in and for the State
                                            of Montana, residing
                                            at_________________________________.
                                            Title:_____________________________.
                                            My commission expires:_____________.

STATE OF MONTANA         )
                         ) ss.
COUNTY OF GALLATIN       )

         On this 20th day of October, 1998, before me personally appeared Robert
L. Kester, to me known to be the Chairman and CEO of BIG SKY WESTERN BANK, the
corporation that executed the foregoing instrument, who acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes mentioned there, and who stated on oath that he was
authorized to execute said instrument, and that the seal affixed (if any) was
the official seal of said corporation.

         IN WITNESS OF THE FOREGOING, I have set my hand and official seal to
this document as of the day and year first written above.

                                            /s/ 
                                            ____________________________________
                                            NOTARY PUBLIC in and for the State
                                            of Montana, residing
                                            at_________________________________.
                                            Title:_____________________________.
                                            My commission expires:_____________.

                                       35
   1

                                                                      EXHIBIT 99

            GLACIER BANCORP, INC. AND BIG SKY WESTERN BANK TO MERGE

         Glacier Bancorp, Inc. today announced the signing of a definitive
agreement to acquire Big Sky Western Bank. Big Sky Western Bank is a commercial
bank with approximately $40 million in assets and two banking offices in Big Sky
and Bozeman, Montana. Glacier is a bank holding company based in Kalispell,
Montana with approximately $670 million in assets and 21 banking offices in 14
Montana communities.

         The combination of Glacier Bancorp and Big Sky Western Bank will create
a banking institution with over $710 million in assets, $515 million in loans,
and $72 million in shareholders' equity. The resulting bank group will have 23
offices in 16 Montana communities. Following the combination, Big Sky, like
Glacier's other subsidiaries, will retain its autonomy and local decision making
authority, which both entities believe will allow for greater responsiveness to
the needs of the community. The Bank will continue operating as "Big Sky Western
Bank" and existing management and employees will be retained.

         "We are very pleased and excited to have Big Sky join our
organization," said Mick Blodnick, President and CEO of Glacier. "It has a
strong management team, an outstanding community service philosophy, and a
growing market position. We believe this acquisition significantly enhances our
banking franchise by giving us access to another rapidly growing market area in
Montana." Glacier recently announced the completion of the acquisition of Valley
Bank of Helena, which augmented Glacier's presence in Helena, the State's
Capital. "The Big Sky transaction not only represents our first entry into the
Gallatin County market, it also strengthens our position as a leading Montana
banking organization," noted Blodnick. Robert Kester, Chairman, and Michael F.
Richards, President of Big Sky Western Bank, noted that the combination will
benefit Big Sky's customers, employees, shareholders and communities. "This
transaction will allow Big Sky to partner with a quality financial institution
that is committed to effectively serving its customers and communities. Our
customers will continue to enjoy local service, while accessing a broader array
of products and services. Moreover, our shareholders will benefit from owning
Glacier common stock, a publicly traded security with an excellent track record
of performance." said Mr. Richards.

Terms of the Combination

         Under the terms of the definitive agreement, Glacier will issue up to
250,000 shares of its common stock to security holders of Big Sky in exchange
for a 100% ownership in the bank. Based on Tuesday's closing price of $20.25 per
share, security holders of Big Sky could receive stock of Glacier worth
approximately $5 million. After the transaction, Glacier will have a market
capitalization of $171.7 million, making it the largest publicly traded banking
institution headquartered in Montana, based upon market capitalization.

   2

Financial Performance

         Glacier Bancorp is one of only a handful of financial institutions
nationwide to receive an A+ rating from Standard & Poor's rating service. Since
going public in 1984, Glacier's shareholders have enjoyed a compound annual
return exceeding 25%. As of June 30, 1998 and including the recent acquisition
of Valley Bank of Helena, Glacier had total assets of $670 million, with over
$495 million in loans and $69 million in shareholders' equity. Big Sky Western
Bank has produced strong and consistent growth over the past several years. Over
the last three calendar years, assets, loans and deposits have increased at
compound annual rates of 32%, 29% and 31%, respectively. As of September 30,
1998, Big Sky had total assets of $40 million, with over $20 million in loans
and $3 million in shareholders' equity.

Glacier Bancorp, Inc.