First Interstate BancSystem (FIBK) Q4 2024 earnings summary

Executive summary

• Q4 2024 net income was $52.1 million ($0.50/share), down from Q3, as focus shifted to organic growth and relationship banking, with indirect lending originations discontinued and portfolio runoff freeing capital for core growth.

• Deposits increased by $151.5 million in Q4 2024, while loans declined by $182.2 million, mainly outside of Commercial Real Estate and Credit Card categories.

• Leadership transition completed with James A. Reuter appointed President and CEO, emphasizing community engagement and operational strengths.

• Asset quality saw criticized loans rise by $170 million, but non-performing loans fell 19% to $141.3 million, or 0.79% of loans held for investment.

• Quarterly dividend of $0.47/share (5.8% yield) declared.

Financial highlights

• Net interest income rose 4.3% sequentially to $214.3 million in Q4 2024; net interest margin (FTE) increased to 3.20%, up 16-17 bps sequentially.

• Non-interest income was $47.0 million, up 1.3% sequentially, driven by higher wealth management revenues.

• Non-interest expense was $160.9 million, up $1.5 million from Q3 2024 but down $5.1 million from Q4 2023.

• Provision for credit losses increased to $33.7 million in Q4 2024, mainly due to a large C&I credit.

• Tangible book value per share was $20.16 at December 31, 2024.

Outlook and guidance

• Expecting low single-digit deposit growth and modest loan growth in 2025, mainly in the second half, with overall loans potentially flat due to indirect portfolio runoff.

• Net interest income projected to rise 5%-7% in 2025, with sequential NIM expansion.

• Non-interest income (excluding 2024 property gains) expected to be modestly higher in 2025; non-interest expenses to increase 3%-5% due to higher advertising and medical insurance costs.

• Net charge-offs expected at 20-30 bps for 2025, balanced throughout the year.

• Effective tax rate expected at 23.5%-24.0%.