First Interstate BancSystem(FIBK) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company recorded net income of $55.5 million in Q3 2024, or$0.54 per share [4] - Net interest margin, excluding purchase accounting accretion, increased by 5 basis points to 2.97% [4][8] - Noninterest income rose to $46.4 million, with a 3$2.6 million gain from a branch sale [10] - Noninterest expenses increased by $2.5 million, primarily due to a one-time CEO transition cost of$3.8 million [12] - Total charge-offs for the quarter were $27.4 million, with$5.3 million excluding two metro office loans [17] Business Line Data and Key Metrics Changes - Net interest income was $205.5 million, an increase of$3.8 million from the previous quarter [7] - Loan balances decreased by $207.9 million, with a notable decline in construction loans [13] - Commercial real estate loans increased by$164.8 million, reflecting a transition from construction loans [13] Market Data and Key Metrics Changes - Deposits ended the quarter essentially flat, but increased approximately 1% when excluding a large temporary deposit [6][15] - The company anticipates continued margin expansion and improved profitability into 2025 [6] Company Strategy and Development Direction - The company is focused on expense discipline and anticipates an earnings inflection [6] - Management is addressing challenges in the metro office portfolio proactively, with expectations of no further material losses [16][34] - The company aims to maintain a strong relationship with customers, focusing on full relationships rather than transactional loans [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current economic environment, with expectations of margin expansion and improved profitability [6][9] - There is a belief that pent-up demand for loans exists, but timing for this demand is uncertain [48] Other Important Information - The common equity Tier 1 capital ratio increased by 30 basis points to 11.83% [18] - A dividend of $0.47 per share was declared, yielding 6.3$20 million, and management is comfortable with a 20 to 25 basis point charge-off guidance for Q4 [24] Question: Dynamics of swap termination in Q3 - The company terminated $550 million of swaps to reduce exposure going into 2025 [26] Question: Loan demand outlook for 2025 - Management noted uncertainty in timing for increased loan demand but indicated readiness to respond [48]