First Interstate BancSystem (FIBK) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $60.0 million ($0.58 per share), up from Q1 2024 but down from Q2 2023, with net interest margin at 3.00%, up 7 basis points sequentially.

• Asset quality improved sequentially as criticized and non-performing loans declined, and capital ratios strengthened for the sixth consecutive quarter.

• Non-interest expense declined both sequentially and year-over-year, aided by expense control initiatives and prudent salary management.

• CEO Kevin Riley announced his retirement, with a search for a successor underway and new risk management hires made.

• The company operates 304 banking offices across 14 states, focusing on community banking and a diversified deposit base.

Financial highlights

• Net interest income was $201.7 million, up from Q1 2024 but down from Q2 2023; non-interest income was $42.6 million, up sequentially but down year-over-year.

• Total assets at June 30, 2024, were $30.29 billion, loans held for investment at $18.24 billion, and deposits at $22.87 billion.

• Efficiency ratio improved to 62.7% for Q2 2024; non-interest expense/average assets was 2.09%.

• Dividend of $0.47 per share declared, yielding 7.1% annualized.

• Allowance for credit losses was $232.8 million (1.28% of loans held for investment) as of June 30, 2024.

Outlook and guidance

• Net interest margin is expected to increase sequentially in Q3 and Q4, with net interest income projected to rise 3%-5% in the second half of 2024.

• Loans and deposits are anticipated to remain relatively flat through year-end 2024.

• Non-interest income and expense both expected to rise 1-3% in the second half, excluding special FDIC assessment and CEO transition costs.

• Effective tax rate anticipated at 23.5%-24.0% for full year; net charge-offs expected between 20-25 basis points, excluding a specific C&I loan.

• Management expects continued expense control and strong capital and liquidity levels to support future performance.