First Interstate BancSystem (FIBK) Q4 2024 earnings summary

Executive summary

• Q4 2024 net income was $52.1 million ($0.50 per share), down from $55.5 million in Q3; net interest margin rose to 3.20% and deposits increased by $151.5 million.

• Discontinued indirect lending originations to align with core strategy; portfolio to amortize over time.

• Leadership transition completed with James A. Reuter appointed President and CEO effective November 1, 2024, emphasizing community engagement and operational strengths.

• Asset quality saw criticized loans rise by $170 million, mainly in commercial real estate, but non-performing loans fell 19% to $141.3 million (0.79% of loans held for investment).

• Quarterly dividend declared at $0.47 per share, annualized yield of 5.8%.

Financial highlights

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

• Deposits grew by $151.5 million in Q4, reaching $23.0 billion; loan balances declined by $182.2 million, with a loan-to-deposit ratio of 77.5%.

• Net charge-offs totaled $55.2 million, mainly due to a $49.3 million commercial and industrial loan charge-off; provision expense was $33.7 million.

• Allowance for credit losses coverage at 1.14% of loans, down from 1.25% in Q3 due to a specific reserve release.

• Efficiency ratio improved to 60.2% in Q4 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; non-interest income to see modest growth, excluding 2024 property sales.

• Non-interest expense expected to increase 3%-5% in 2025 due to higher advertising and medical insurance costs.

• Net charge-offs anticipated at 20-30 basis points in 2025; effective tax rate expected at 23.5%-24.0%.

• Management expects to build on operational strengths to drive long-term shareholder value.