First Interstate BancSystem (FIBK) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $55.5 million ($0.54 per share), down from $60.0 million in Q2 2024 and $72.7 million in Q3 2023, mainly due to higher credit loss provisions and lower net interest income.

• Net interest margin (NIM) was 3.04% (FTE), up from Q2 2024, with adjusted NIM at 2.97%; non-interest income rose 8.9% sequentially, driven by a $2.6 million branch sale gain.

• Non-interest expenses included a one-time $3.8 million CEO transition cost; James A. Reuter appointed CEO effective November 1, 2024.

• Asset quality remained stable, with criticized loans declining and proactive charge-offs in the metro office portfolio; non-performing loans rose to $174.5 million.

• Deposits were essentially flat, up 1% excluding a temporary outflow; the company operates 299 offices across 14 states.

Financial highlights

• Net interest income was $205.5 million, up $3.8 million from Q2 2024 but down from $213.7 million in Q3 2023.

• Non-interest income reached $46.4 million, including a $2.6 million branch sale gain.

• Non-interest expense was $159.4 million, up $2.5 million from Q2 2024, but down $1.7 million year-over-year; efficiency ratio was 61.8%.

• Loan balances decreased by $207.9 million; commercial real estate loans increased by $164.8 million.

• Provision for credit losses was $19.8 million; net charge-offs were $27.4 million, mainly from two metro office loans.

Outlook and guidance

• Net interest margin expected to expand further in Q4 and into 2025; Q4 net interest income anticipated to rise 1–2% over Q3.

• Guidance includes two additional 25 basis point Fed rate cuts in Q4, not expected to materially impact earnings.

• Q4 non-interest income expected to be flat, excluding the Q3 branch sale gain; non-interest expense to rise 2–3% over Q3, excluding CEO transition costs.

• Net charge-off guidance for Q4 is 20–25 basis points, excluding a large C&I credit.

• Management expects continued profitability expansion into 2025, citing improved core operating metrics and expense discipline.