Q4 2024 Glacier Bancorp Inc Earnings Call
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I would now like to hand, the conference over to your speaker today Randy.
Randy Chesler, President and CEO. Please go ahead.
Yeah.
Speaker Change: Good morning, and thank you for joining us today with me here in Kalispell is Ron Copher, our Chief Financial Officer, Byron Pollan, our treasurer, and Tom Dolan, our chief credit administrator.
Speaker Change: I'd like to point out that the discussion today is subject to the same forward looking considerations outlined starting on page 14 of our press release and we encourage you to review this section.
Speaker Change: Overall, the glacier team delivered a very strong fourth quarter and full year performance.
Speaker Change: The positive trend of margin expansion, driven by increasing interest income and a lower deposit cost continued in the fourth quarter.
Speaker Change: Credit performance remains very good and we believe we are very well positioned for a strong 2025.
Speaker Change: Diluted earnings per share for the current quarter was 54 per share an increase of 20% from the prior quarter diluted earnings per share of <unk> 45.
Speaker Change: And an increase of 10% from the prior year fourth quarter diluted earnings per share.
Speaker Change: Net income was $61 8 million for the current quarter, an increase of $10 7 million or 21% from the prior quarter net income of $51 1 million.
Credit performance remains very good and we believe we are very well positioned for a strong 2025.
Diluted earnings per share for the current quarter was 54 cents per share an increase of 20% from the prior quarter diluted earnings per share of <unk> 45, and an increase of 10% from the prior year fourth quarter diluted earnings per share.
Speaker Change: And an increase of seven 4 million or 14% from the prior year fourth quarter net income.
Speaker Change: The net interest margin as a percentage of earning assets on a tax equivalent basis for the current quarter was 297% an increase of 14 basis points from the prior quarter net interest margin of 283% and in it.
Net income was 61 8 million for the current quarter, an increase of $10 7 million or 21% from the prior quarter and net income of $51 1 million.
Speaker Change: Increase of 41 basis points from the prior year fourth quarter net interest margin.
An increase of seven 4 million or 14% from the prior year fourth quarter net income.
Speaker Change: Net interest income was $191 million for the current quarter, an increase of $11 2 million or 6% from the prior quarter net interest income up $180 million and an increase of $25 million or 15% from.
The net interest margin as a percentage of earning assets on a tax equivalent basis for the current quarter was 297%.
Increase of 14 basis points from the prior quarter net interest margin of 2.83% and an increase of 41 basis points from the prior year fourth quarter net interest margin.
Speaker Change: The prior year fourth quarter net interest income.
Speaker Change: The loan portfolio of $17 3 billion increased $81 million or 2% annualized during the current quarter.
Net interest income was $191 million for the current quarter, an increase of $11 2 million or 6% from the prior quarter net interest income up $180 million.
Speaker Change: The loan yield of five 7% and 2% in the current quarter increased three basis points from the prior quarter loan yields of $5 six 9% and increased 38 basis points from the prior year fourth quarter loan yield.
And an increase of $25 million or 15% from the prior year fourth quarter net interest income.
The loan portfolio of $17 3 billion increased $81 million or 2% annualized during the current quarter.
Speaker Change: Total deposits of 25 billion at the end of the year 2024 decreased $168 million or 1% from the prior quarter and increased $618 million or 3% from the prior year end.
The loan yield of five 7% and 2% in the current quarter increased three basis points from the prior quarter loan yield of 569% and increased 38 basis points from the prior year fourth quarter loan yield.
Speaker Change: <unk>.
Speaker Change: Non interest bearing deposits represented 30% of total deposits, which remains unchanged from the prior year end.
Total deposits up 25 billion at the end of the year 2024 decreased $168 million or 1% from the prior quarter and increased $618 million or 3% from the prior year.
Speaker Change: The total core deposit cost, including noninterest bearing deposits of $1 two 9% in the current quarter decreased eight basis points from the prior quarter total core deposit cost of $1 three 7%.
And.
Speaker Change: The total cost of funding also including noninterest bearing deposits of $1 seven 1% in the current quarter decreased eight basis points from the prior quarter total cost of funding of $1, 79%.
Non interest bearing deposits represented 30% of total deposits, which remains unchanged from the prior year end.
The total core deposit cost, including noninterest bearing deposits of $1 two 9% in the current quarter decreased eight basis points from the prior quarter total core deposit cost.
Speaker Change: Noninterest expense was $141 million for the current quarter, a decrease of $3 7 million or 3% from prior quarter.
137%.
Speaker Change: Non interest income for the current quarter totaled 31, 5 million, which was a decrease of $3 2 million or 9% over the prior quarter and an increase of 684000 or 2% over the prior year fourth quarter.
The total cost of funding also including noninterest bearing deposits of $1 seven 1% in the current quarter decreased eight basis points from the prior quarter total cost of funding of $1 seven 9%.
Noninterest expense was $141 million for the current quarter, a decrease of $3 7 million or 3% from prior quarter.
Gain on sale of residential loans of $3 9 million for the current quarter decreased 972000, or 20% compared to the prior quarter and increased $1 7 million or 76% from the prior year fourth quarter.
Non interest income for the current quarter totaled 31, 5 million, which was a decrease of $3 2 million or 9% over the prior quarter and an increase of 684000 or 2% over the prior year fourth quarter.
Speaker Change: Our credit portfolio continues to perform at near record levels with no material negative trends emerging.
Speaker Change: Tangible stockholders' equity of $2 1 billion at December 31, 2024 decreased.
Gain on sale of residential loans of $3 9 million for the current quarter decreased 972000, or 20% compared to the prior quarter.
$17 $4 million or 1% compared to the prior quarter and increased $118 million or 6% compared to the prior year.
<unk> increased $1 $7 million or 76% from the prior year fourth quarter.
Our credit portfolio continues to perform at near record levels with no material negative trends emerging.
Speaker Change: On November 22024 of the company's board of directors declared a quarterly cash dividend of 33 per share paid in December the.
Tangible stockholders' equity of $2 1 billion at December 31, 2024 decreased $17 4 million or 1% compared to the prior quarter and increased $118 million or 6% compared to the prior year.
Speaker Change: Dividend was the company's $150 ninth consecutive regular dividend.
Speaker Change: The Glacier team has done an excellent job taking care of our customers, while growing the business organically and welcoming our new acquisitions.
<unk>.
Speaker Change: In 2024, we closed and converted two transactions during the year.
On November 22024 of the company's board of directors declared a quarterly cash dividend of <unk> 33 per share paid in December.
Speaker Change: Our purchase of the Rocky Mountain branches in Montana, and the acquisition of Wheatland Bank in Eastern Washington, totaling approximately $1 2 billion in assets.
The dividend was the company's $150 ninth consecutive regular dividend.
The Glacier team has done an excellent job taking care of our customers, while growing the business organically and welcoming our new acquisitions.
Speaker Change: And last week, we announced the proposed acquisition of bank of Idaho.
Speaker Change: One $3 billion bank with locations in eastern Idaho, Boise and Eastern Washington.
In 2024, we closed and converted two transactions during the year.
Speaker Change: This is a great transaction for glacier, because it strategically expands our presence in several high growth markets, where we already have a presence finish.
Our purchase of the Rocky Mountains branches in Montana, and the acquisition of Wheatland Bank in Eastern Washington, totaling approximately $1 2 billion in assets.
Speaker Change: Financially the transaction is very attractive reflective of our disciplined approach to M&A with minimal tangible book value dilution immediate accretion conservative cost savings assumptions and a pay to trade ratio of only 76%.
And last week, we announced the proposed acquisition of bank of Idaho.
One $3 billion bank with locations in eastern Idaho, Boise and Eastern Washington.
This is a great transaction for glacier, because it strategically expands our presence in several high growth markets, where we already have a presence.
Speaker Change: Bank of Idaho has a solid record of high performance.
Speaker Change: And this was a negotiated transaction between glacier and bank of Idaho.
Financially the transaction is very attractive reflective of our disciplined approach to M&A with minimal tangible book value dilution immediate accretion conservative cost savings assumptions.
Speaker Change: So that ends my formal remarks, and I'd now like to open the lines for any questions that our analysts may have.
Speaker Change: As a reminder.
Speaker Change: Ask a question. Please press star one on your telephone.
The trade ratio of only 76%.
Speaker Change: Wait for your name to be announced.
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Bank of Idaho has a solid record of high performance.
Speaker Change: Please standby, while we compile the Q&A roster.
And this was a negotiated transaction between glacier and bank of Idaho.
So that ends my formal remarks, and I'd now like to open the lines for any questions that our analysts may have.
Speaker Change: And our first question comes from Jessica <unk> with da Davidson. Your line is open.
Jessica: Thanks, Good morning, Randy and team good morning, Jeff.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone.
Speaker Change: Maybe.
Speaker Change: Just to check in on the margin and maybe loan growth, but first margin.
Speaker Change: Wait for your name to be announced to withdraw your question. Please press star one again please.
Speaker Change: <unk> really gave pretty good transparency in 'twenty four as you approach.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: 3%.
Speaker Change: And I guess the question is kind of.
The initial look at the path this year.
Speaker Change: And our first question comes from Jeff <unk> with D. A Davidson your line is open.
Speaker Change: Assuming.
Speaker Change: Hello.
Speaker Change: December average with north of 3%, but wanted to check in on the kind of the guard rails.
Jeff: Hi, Thanks, Good morning, Randy and team morning, Jeff.
Speaker Change: How you frame up 25% relative to 2004.
Speaker Change: Maybe.
Speaker Change: Just to check in on the margin and maybe loan growth, but first margin.
Speaker Change: Yes, I appreciate that and we've had a lot of discussions about it so Byron is.
Speaker Change: You guys really gave pretty good transparency in 'twenty four as you approach.
Byron Pollan: Ready to talk about margin.
Byron Pollan: Sure Jeff one of the thing.
Speaker Change: 3%.
Speaker Change: And I guess the question is kind of.
Byron Pollan: That we see going going forward, we do see continued growth.
Speaker Change: The initial look at the path this year.
Byron Pollan: So one of the things that we're looking at when we look at Q1, we do expect to see continued growth, but at a slower pace.
Speaker Change: I'm assuming yes.
Speaker Change: Maybe the December average was north of 3%, but wanted to check in on kind of the <unk>.
Speaker Change: Card rails.
Speaker Change: How you frame up.
Byron Pollan: If you look back at kind of where we have been recently at Q3 of last year that was that margin growth was supported by a Rocky Mountain with branch acquisition. If you look at Q4 the growth there. The 14 basis point that Randy noted in his remarks that was supported by fed rate cut leading to lower deposit costs.
Speaker Change: <unk> five relative to 'twenty four.
Byron: Okay I appreciate that and we've had a lot of discussions about it so byron is.
Byron: Ready to talk about margin.
Byron: Sure, Jeff one of the things.
Byron: That we see going going forward, we do see continued growth.
Byron: So one of the things that we're looking at it.
Byron Pollan: I think in Q1 as we look ahead, we're going to lean a little bit more on asset repricing.
Byron: We look at Q1, we do expect to see continued growth, but at a slower pace.
Byron Pollan: So we do expect growth in Q1, but at a slower pace.
Byron: You look back at kind of where we have been recently at Q3 of last year that was that margin growth was supported by a Rocky Mountain branch acquisition. If you look at Q4 the growth there. The 14 basis point that Randy noted in his remarks that was supported by fed rate cut leading to lower deposit costs.
Byron Pollan: Would say our margin does have the potential if the growth does have the potential to accelerate.
Byron Pollan: Through the rest of the year and while we will see in 2025, and we will see increased security runoff from our investment securities portfolio I think that will be helpful for margin we have.
Byron Pollan: Some high cost <unk> borrowings that will be maturing through the year, so that will be an opportunity for us to lift margins and then of course, we have to think of Idaho transaction that will provide a little bit of a boost.
Byron: In Q1, as we look ahead, we're going to lean a little bit more on asset repricing.
Byron: So we do expect growth in Q1, but at a slower pace.
Byron: I'd say our margin does have the potential of the growth does have the potential to accelerate.
Byron Pollan: As well.
Byron Pollan: When I look at the full year 2025, I think our margin will land somewhere in the range of three two to three to five per quarter.
Byron: Through the rest of the year and what we'll see in 2025, and we will see increased security runoff from our investment securities portfolio, I think that will be helpful to margin.
Byron Pollan: Really good color. Thanks Barrett.
Byron: <unk>.
Byron: Some high cost <unk> borrowings that will be maturing through the year, so that will be an opportunity for us to let Martin as well and then of course, we have to think of Idaho transaction that will provide a little bit of a boost as well.
Speaker Change: And then im going to chase down the growth side of it.
Speaker Change: I believe a little seasonally slower.
Speaker Change: But also given what the market's giving you I guess.
Byron: And I look at the full year 2025, I think our margin will land somewhere in the range of $3 two out of three to five.
Speaker Change: Any thoughts on the big picture growth.
Speaker Change: Maybe any commentary about.
Speaker Change: Any shifts.
Speaker Change: <unk> customer.
Speaker Change: Customer demand that Youre seeing.
Speaker Change: Trying to get a sense for what your what you guys are budgeting 25 on the growth front organically.
Byron: Really good color. Thanks Barrett.
Byron: And then im going to chase down the growth.
Jeff: Hey, good morning, Jeff.
Byron: I believe a little seasonally slower.
Speaker Change: For <unk>.
Speaker Change: Looking forward, we're looking at low to mid single digit loan growth overall pipelines over the last quarter were stable.
But also given what the market's giving you I guess.
Speaker Change: But we did see growth in early stage opportunities.
Byron: Any thoughts on the big picture growth.
Maybe any commentary about.
Speaker Change: There is growing optimism among the customer base, but we've yet to see it translate to actual deal flow yet.
Byron: Any shifts.
Byron: <unk> customer.
Byron: Customer demand that Youre seeing.
Byron: Trying to get a sense for what your what you guys are budgeting 25 on the growth front.
Speaker Change: With what we see today, we're looking at low to mid single digits or 'twenty five.
Byron: <unk>.
Jeff: Hey, good morning, Jeff.
Speaker Change: Okay. Thanks, I'll step back.
Byron: For <unk>.
Speaker Change: Looking forward, we're looking at low to mid single digit loan growth overall pipelines over the last quarter were stable.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matthew Clark with Piper Sandler Your line is open.
Speaker Change: But we did see growth in early stage opportunities.
Yes.
Matthew Clark: Hey, good morning.
Speaker Change: Good morning.
Speaker Change: There is growing optimism among the customer base, but we've yet to see it translate to actual deal flow yet.
Speaker Change: <unk>.
Speaker Change: Just a few more around the margins the spot rate on deposits at the end of the year and the average margin in the month of December.
Speaker Change: With what we see today, we're looking at low to mid single digits for two five.
Matthew Clark: Sure Matthew this is our spot rate on deposit.
Speaker Change: Okay. Thanks, I'll step back.
Matthew Clark: Total deposits at the end of December was one 6%.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matthew Clark with Piper Sandler Your line is open.
Matthew Clark: And our December margin, we did have some noise within the quarter and what you're familiar that that noise. Our December spot margin was 299%.
Speaker Change: Yes.
Matthew Clark: Hey, good morning.
Speaker Change: Good morning.
Speaker Change: <unk>.
Matthew Clark: Okay.
Speaker Change: Just a few more around the margin the spot rate on deposits at the end of the year and the average margin in the month of December.
Matthew Clark: And then the guide of $3 20 to $3 25 for the year.
Matthew Clark: Okay.
Matthew Clark: That seems like it implies like a $343 45 exit rate in <unk> is that fair.
Speaker Change: Sure Matthew this is our spot rate on deposit.
Speaker Change: Total deposits at the end of December was one 6%.
Matthew Clark: 345, okay.
Speaker Change: And our December margin, we did have some noise within the quarter and what you're familiar that that noise. Our December spot margin was 299%.
Matthew Clark: Spot on that.
Matthew Clark: Okay.
Matthew Clark: And then on the loan yields they were up.
Matthew Clark: Excluding accretion there up four bps to $5 65.
Speaker Change: Okay.
Speaker Change: And then the guide of $3 20 to $3 25 for the year.
Can you just give us a sense for youre able to mitigate the rate cuts with the floating.
Speaker Change: Uh huh.
Yes.
Speaker Change: That seems like it implies like a 340 345 exit rate in <unk> is that fair.
Matthew Clark: Portion of your portfolio, which is relatively small.
Matthew Clark: But give us a sense for your.
Speaker Change: 35 to 345, okay.
Matthew Clark: Your outlook on core.
Matthew Clark: Core loan yields or if you want to including accretion Thats fine too.
Speaker Change: You're spot on there.
Speaker Change: Okay.
Matthew Clark: I'm, just trying to get a sense for whether that loan yields can continue to expand if we get another rate cut given the back book.
Speaker Change: And then on the loan yields they were up.
Speaker Change: Excluding accretion there up four bps to $5 65.
Matthew Clark: Yes, I do think we'll continue to see expanding loan yields one of the things that you noted we have that relatively small percentage of our loans are floating rate.
Speaker Change: Can you just give us a sense for youre able to mitigate the rate cuts with the floating.
Speaker Change: A portion of your portfolio, which is relatively small.
Matthew Clark: But one of the things that we we are looking at is we'll have about $2 billion of loans repricing in 2025, and there'll be a repricing based on today's market environment W. Repricing up a 100 to 125 basis points or so.
Speaker Change: But give us a sense for you.
Speaker Change: Your outlook on.
Speaker Change: Core loan yields or if you want to including accretion Thats fine too.
Speaker Change: I'm, just trying to get a sense for whether that loan yields can continue to expand if we get another rate cut given the back book.
Matthew Clark: That repricing dynamic is going to be very helpful plus new new production rates I think the volatility.
Speaker Change: Yes, I do think we'll continue to see expanding loan yields one of the things that you noted we have that relatively small percentage of our loans are floating rate.
Matthew Clark: Glad to be healthy as well.
Matthew Clark: Got it.
Speaker Change: Our outlook for that those are the drivers behind our outlook for increased demand.
Speaker Change: But one of the things that we are looking at is we'll have about $2 billion of loans repricing in 2025, and there'll be repricing based on today's market environment they'll be repricing up a 100 to 125 basis points. So.
Speaker Change: Great and last one just on expenses, Ron you want to take a stab at the run rate, even though you beat it again.
Speaker Change: For the year.
Speaker Change: Thank you for the acknowledgment already.
Speaker Change: Yes.
Speaker Change: Just put that into perspective, the reported $141 million and we.
Speaker Change: I think that repricing dynamic is going to be very helpful plus new new production rates I think are going to be.
Speaker Change: Earnings release.
Speaker Change: Going to be healthy as well.
Speaker Change: For a couple of adjustments when you add that back you get to 143 were just below that low end.
Speaker Change: Got it.
Speaker Change: Our outlook for that those are the drivers behind our outlook for increased demand.
Speaker Change: And when we gave that guide we were aware that we would probably need to true up performance related compensation that was.
Speaker Change: Great and last one just on expenses Ron do you want to take a stab at the run rate, even though you beat it again.
Speaker Change: For the year.
Speaker Change: $5 million rounded.
Speaker Change: Thank you for the acknowledgment.
Speaker Change: Put it all into perspective at the $148 million.
Speaker Change: Yes.
Speaker Change: Just put that into perspective, the reported $141 million and we.
Speaker Change: We have not had that expected.
Speaker Change: Performance related to the adoption.
Speaker Change: Earnings release.
Speaker Change: So that but the guide.
Speaker Change: For a couple of adjustments when you add that back you get to a 143 were just below that low end.
Speaker Change: The guy.
Speaker Change: Excluding bank of Idaho.
Speaker Change: So the guide for 2025 per quarter will range from $151 million to $154 million.
Speaker Change: And when we gave that guide we were aware that we would probably need to true up performance related compensation that was.
Speaker Change: And as you would expect FERC.
Speaker Change: $5 million rounded.
Speaker Change: First quarter skewed.
Speaker Change: Put it all into perspective at the $148 million.
Speaker Change: Typically higher and then.
Speaker Change: So call that towards the $154 million.
Speaker Change: We had not had that expected.
Speaker Change: And then as we go through the <unk>.
Speaker Change: Performance related to the adoption.
Speaker Change: So that but the guide.
Speaker Change: Each of the quarters.
Speaker Change: Become flat as we grow into our expense base and the numbers that I. Just gave include the cost savings that remain.
Speaker Change: Hey, guys.
Speaker Change: 13 bank of Idaho.
Speaker Change: So the guide for 2025 per quarter will range from $151 million to $154 million.
Speaker Change: Wheatland Bank, which.
Speaker Change: I would tell you is about to $2 1 million roughly and then the Rocky Mountain Bank acquisition.
Speaker Change: And as you would expect FERC.
Speaker Change: First quarter skewed is typically higher.
Speaker Change: Any of that to come in 2025, and that's about $2 8 million of total about $5 million of cost savings that we built in and very much are achievable in.
Speaker Change: <unk>.
Speaker Change: Call that towards the $154 million.
Speaker Change: And then as we go through the <unk>.
Speaker Change: Each of the quarters.
Speaker Change: Become flat as we grow into our expense base and the numbers that I. Just gave include the cost savings that remain.
Speaker Change: In 2025.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from David Feaster with Raymond James Your line is open.
Speaker Change: Wheatland Bank, which.
Speaker Change: I would tell you is about to $2 1 million roughly and then the Rocky Mountain Bank acquisition.
David Feaster: Hey, good morning, everybody.
Speaker Change: Morning.
Speaker Change: Any of that to come in 2025, and that's about $2 8 million of total about $5 million of cost savings that we built in and.
Speaker Change: Maybe touching on.
Speaker Change: The deposit side I mean, you guys have been active reducing deposit costs working with your clients. You guys are I mean, youre coming off an already low level, but I just wanted to touch on how client reception has been.
Speaker Change: And very much are achievable.
Speaker Change: 2025.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: To that end and additional opportunities to reduce core deposit costs and then just.
Speaker Change: Thank you. Our next question comes from David Feaster with Raymond James Your line is open.
Speaker Change: Also hoping you could touch on some of the niv in DDA trends, how much of that was seasonal versus.
Hey, good morning, everybody.
Speaker Change: Good morning.
Speaker Change: Versus migration between accounts and just thoughts on deposit growth broadly.
Speaker Change: Maybe touching on.
Speaker Change: The deposit side I mean, you guys have been active reducing deposit costs working with your clients. You guys are I mean, youre coming off an already low level.
Byron Pollan: Sure. David This is Byron I can touch on that.
Byron Pollan: Yes, we're very pleased with the deposit cost reduction that we saw in the fourth quarter in terms of customer reception I think they've been understanding of.
I just wanted to touch on how client reception has been.
Speaker Change: To that end and additional opportunities to reduce core deposit costs and then just.
The rate reduction I think our customers are aware of.
Speaker Change: Also hoping you could touch on some of the niv in DDA trends, how much of that was seasonal versus.
Byron Pollan: The rate environment and that they see the headlines with what the fed is doing and help us.
Byron Pollan: What other banks are doing as well and so.
Speaker Change: Versus migration between accounts and just thoughts on deposit growth broadly.
Byron Pollan: That that I think has gone very well for us.
Speaker Change: Sure. David This is Byron I can touch on that.
Byron Pollan: Think in terms of ongoing opportunity.
Byron Pollan: One of the things one of the places where I think we could see a little bit more progress is in our CD portfolio. Our CD portfolio remains fairly short over 60% of our Cds will rollover again in Q1 and those renewal rates are coming in around 10 to 20 basis points.
Speaker Change: Yes, we're very pleased with the deposit cost reduction that we saw in the fourth quarter in terms of customer reception I think they've been understanding.
Speaker Change: The rate reduction I think he and our customers are aware of.
Speaker Change: The rate environment and that they see the headlines.
Speaker Change: That is doing and empathy.
Speaker Change: What other banks are doing as well and so.
Byron Pollan: Lower than the maturing rate.
Byron Pollan: By the end of Q1 will be mostly repriced to the current rate environment.
Speaker Change: That that I think has gone very well for us I think in terms of ongoing opportunity.
Byron Pollan: That's a little bit of an opportunity.
Speaker Change: One of the things one of the places where I think we could see a little bit more progress is in our CD portfolio. Our CD portfolio remains fairly short over 60% of our Cds will rollover again in Q1 and those renewal rates are coming in around 10 to 20 basis points.
Byron Pollan: For us as well.
Byron Pollan: When I think about the noninterest bearing flows.
I do think that those were.
Byron Pollan: Seasonally in Florida, So we typically do see some outflow in the fourth quarter.
Byron Pollan: And so.
Byron Pollan: And potentially what we thought a little bit of an unwind and.
Speaker Change: Lower than the maturing rate.
Speaker Change: By the end of Q1 will be mostly repriced to the current rate environment.
Byron Pollan: In Florida, we saw in Q3, but definitely.
Byron Pollan: It was directionally consistent with what we typically see in the fourth quarter.
Speaker Change: That's a little bit of an opportunity.
Speaker Change: For us as well.
Byron Pollan: Okay. That's helpful and just back to the margin I just want to be cleared so that $323 25 that is exclusive of bank Idaho in.
Speaker Change: When I think about the noninterest bearing flows.
Speaker Change: I do think that those were.
Speaker Change: Seasonally.
Speaker Change: We typically do see some outflow in the fourth quarter.
Byron Pollan: That would be additive to that margin guidance correct.
Speaker Change: And so.
Byron Pollan: Guide does include that.
And potentially what we thought a little bit of an unwind.
Byron Pollan: That is with bank of items got it got it okay.
Speaker Change: In Florida, we saw in Q3, but definitely.
Byron Pollan: And then.
Byron Pollan: Just touching on credit I mean, obviously credit's still benign and your book I Am curious whats you are watching closely what youre seeing.
Speaker Change: It was directionally consistent with what we typically see in the fourth quarter.
Speaker Change: Okay. That's helpful and just back to the margin I just want to be cleared so that $323 25 that is exclusive of bank, Idaho and.
Byron Pollan: Is there anything thats concerning we've seen some pressure in it.
Byron Pollan: Some other banks on the small business side, but just kind of curious what youre seeing on the credit front.
Speaker Change: That would be additive to that margin guidance correct.
David Feaster: Yes, David.
Speaker Change: I don't think <unk> seen the same pressures that others have.
Speaker Change: Guide does include bank of Okay that is with bank of items got it got it okay.
David Feaster: I can't point to any one specific geography or industry.
David Feaster: And even rewinding back a couple of quarters certain commodities on for our <unk> <unk>.
Speaker Change: And then.
Speaker Change: Just touching on credit I mean, obviously credit's still benign and your book I Am curious whats you are watching closely what youre seeing.
David Feaster: A little bit in 2024, but quite frankly, I think the end result of the 24 growing season was stronger than we had anticipated.
Speaker Change: Is there anything thats concerning we've seen some pressure in it.
Speaker Change: Some other banks on the small business side, but just kind of curious what youre seeing on the credit front.
David Feaster: That's encouraging.
David Feaster: So.
David Feaster: Again, no specific industry no specific geography that stands out as.
Speaker Change: Yes, David.
David Feaster: I don't think we've seen the fee pressures that others have.
David Feaster: The only thing I'd add there David is weak operators continues to.
David Feaster: Can't point to any one specific geography or industry.
David Feaster: And even rewinding back a couple of quarters certain commodities on for our growers.
David Feaster: The one thing that we see develop.
David Feaster: We did a lot of those folks out.
David Feaster: Over the last couple of years.
David Feaster: A little bit in 2024, but quite frankly.
David Feaster: But there we still see people struggling in an environment, where they shouldnt be so more.
David Feaster: I think the end result of the 24 growing season was stronger than we had anticipated.
David Feaster: So thats encouraging.
David Feaster: Individually focused not trend related but operators that struggle in an environment, where they really shouldnt. That's business. She got good businessmen and then you have.
David Feaster: So.
David Feaster: Again, no specific industry no specific geography that stands out.
Speaker Change: I would add there David is weak operators continues to.
David Feaster: Men and women and you have some some weaker ones. So the only thing we're really seeing is.
David Feaster: B the one thing that we see develop.
David Feaster: And watching our operators, we think are struggling when they shouldnt be in there is there is a few but not many.
Speaker Change: We did a lot of those folks out.
David Feaster: Over the last couple of years.
David Feaster: But.
David Feaster: We still see people struggling again in an environment, where they shouldnt be so more.
Speaker Change: And what about on the competitive landscape I know you talked about Tom just kind of an increased optimism hasnt necessarily shown up into the pipeline yet hopefully that's on the come but just kind of curious what are you seeing from the competitive landscape from.
David Feaster: Individually focused not trend related but operators that struggle in an environment, where they really shouldnt business you got good businessmen and then you have.
David Feaster: Other banks across your footprint.
David Feaster: Well I mean, you have some some weaker ones. So the only thing we're really saying is.
David Feaster: And.
David Feaster: We're a new origination yields today.
David Feaster: And watching our operators, we think are struggling when they shouldn't be in there is there is a few but not many.
Speaker Change: Yes ill start at the end of our new origination yields for the quarter was $7 34.
David Feaster: And.
David Feaster: Scott.
David Feaster: The trend with that.
David Feaster: And what about on the competitive landscape I know you talked about Tom just kind of an increased optimism hasnt necessarily shown up into the pipeline yet hopefully that's on the come but just kind of curious what are you seeing from the competitive landscape from.
David Feaster: I think a lot of the competitors are seeing the same thing that we are growing optimism, but not seeing a lot translating to actual deal flow and so what that means is those the view there is increased pricing competition and that's what we're seeing so we're having a sharp sharpen the pencil on stronger deals we're really not seeing.
David Feaster: Other banks across your footprint.
David Feaster: And kind of where new origination yields today.
David Feaster: Any concerning competition from a structure perspective, it tends to still be more around the pricing element.
David Feaster: Yes, I'll start at the end of their new origination yields for the quarter was 734.
David Feaster: Okay.
David Feaster: And.
David Feaster: Alright thats helpful. Thanks, everybody.
David Feaster: The trend with that.
David Feaster: Welcome.
David Feaster: I think a lot of the competitors are seeing the same thing that we are growing optimism, but not seeing a lot translating to actual deal flow and so what that means is those the view there is increased pricing competition and that's what we're seeing so we're having a sharp sharpen the pencil on stronger deals, where we're really not seeing.
David Feaster: Thank you our.
Speaker Change: Our next question comes from Andrew Charles with Stephens. Your line is open.
David Feaster: Okay.
Andrew Charles: Hey, good morning.
David Feaster: Yeah.
David Feaster: I wanted to go back to some of the margin just quickly.
David Feaster: Any concerning competition from a structure perspective, it tends to still be more around the pricing element.
Speaker Change: Brian I think you made a comment earlier about experiencing some some pick up in securities cash flow and repricing ability in 2025 can you just re ask that a little bit and maybe if you could talk about just the cash flow you would expect on a quarterly basis out of the bond book.
David Feaster: Okay.
David Feaster: Alright thats helpful. Thanks, everybody.
David Feaster: Welcome.
David Feaster: Thank you art.
Operator: Our next question comes from Andrew Charles with Stephens. Your line is open.
David Feaster: Sure.
David Feaster: We have been seeing about $250 million per quarter.
Andrew Charles: Hey, good morning, good morning.
David Feaster: <unk>.
David Feaster: Cash flow is principal and interest from the securities portfolio I do see a little bit of a bump in Q1, I'm going to increase that guidance at $275 million in Q1, and then we start to kind of come into some subtreasury maturities will have a $50 million treasury maturities in the second quarter.
David Feaster: I wanted to go back to some of the margin just quickly.
David Feaster: Alright, I think you made a comment earlier about experiencing some some pick up in securities cash flow and repricing ability in 2025 can you just re ask that a little bit and maybe if you could talk about just the cash flow you'd expect on a quarterly basis out of the bond book.
David Feaster: And then really where we are where we will start to see this.
David Feaster: Sure.
David Feaster: Treasury maturities will be in the fourth quarter, we have $270 million maturing of treasury in Q4 that would be incremental to the typical $250 million of cash flow.
David Feaster: We have been seeing about $250 million per quarter.
David Feaster: Cash flow is principal and interest on the securities portfolio I do see a little bit of a bump in Q1, I am going to increase that guidance at $275 million in Q1, and then we start to kind of come into seven Subtreasury maturities will have a $50 million treasury maturities in the second quarter and then really.
David Feaster: That we typically see and then we will have meaningful quarterly treasury maturities throughout 2006 and into 'twenty.
David Feaster: Where we are where we will start to see this.
Speaker Change: Got it okay. So I guess fair to say kind of segue center, when I was going to ask Max.
David Feaster: Measuring maturities will be in the fourth quarter were up $270 million maturing of treasury in Q4 that would be incremental to the typical $250 million of cash flow.
Speaker Change: You've got what looks like a really nice margin progression throughout 2025 on this fixed asset repricing dynamic.
Speaker Change: It seems like Thats.
Speaker Change: Even though it's really good in 2025 kind of set to accelerate in 2020, thanks, Elyse from fixed asset perspective correct.
David Feaster: That we typically see and then we will have meaningful quarterly treasury maturities throughout 2006 and into 'twenty.
Speaker Change: I think Thats fair to say, we really haven't done much in terms of looking at 2006, we're focused on 25 for now but those those trend.
David Feaster: Got it okay.
Speaker Change: I guess fair to say a kind of a segue center when I was going to ask Max just.
Speaker Change: At least from the securities runoff definitely depth.
Speaker Change: You've got what looks like a really nice margin progression throughout 2025 on this fixed asset repricing dynamic.
Speaker Change: Definitely go into 'twenty.
Speaker Change: Got it okay.
Not to get maybe too technical but you did mentioned a minute ago. The 2 billion of loans kind of repricing there.
Speaker Change: It seems like Thats.
Speaker Change: Even though it's really good in 2025 kind of set to accelerate in 2020, thanks delays from fixed asset perspective correct.
Speaker Change: Throughout the year I think you mentioned 100 or 125 basis point pickup in I'm, just curious if I.
Speaker Change: I think Thats fair to say, we really haven't done much in terms of looking at 2006, where we're focused on 25 for now but those those trend.
Speaker Change: When you said 100 to 125 basis points do you mean, new.
Speaker Change: New origination yields are above current.
Speaker Change: At least from the securities runoff definitely that.
Speaker Change: Average book yields or I would assume that the pick up just given the move in the five year is more than like the back book front book is more than 100 basis points on some of those loans.
Definitely go into 'twenty.
Speaker Change: Got it okay.
Speaker Change: Not to get maybe too technical but you did mentioned a minute ago, the 2 billion of loans repricing through.
Speaker Change: Yes, what we're looking at there we're looking at the yield that those loans are where they currently sit in the portfolio and where they will reprice, we expect the repricing to lift those yield 100 to 125 basis points.
Speaker Change: Throughout the year I think you mentioned 100 or 125 basis point pick up and I'm just curious if I.
Speaker Change: When you said 100 to 125 basis points do you mean, new.
Speaker Change: New origination yields are above current.
Speaker Change: Okay.
Average book yields or I would assume that the pick up just given the move in the five year is more than like the back book front book is more than 100 basis points on some of those loans.
Speaker Change: Got it.
Speaker Change: And then I wanted to ask around just some of the noninterest bearing deposit flows if I just look at the end of period versus the average it looks like a lot of the compression was late.
Speaker Change: Yes, what we're looking at there we're looking at the yield that those loans are where they are currently fit in the portfolio and where they will reprice, we expect the repricing to lift those yield 100 to 125 basis points.
Speaker Change: Late in the quarter.
Speaker Change: Curious if you could speak to any trends youre seeing so far in January.
Speaker Change: You are right.
A lot of the outflow was late in the quarter.
Speaker Change: And typically we are starting to see some of the some of the seasonality come back into back into the deposit portfolio I wouldn't say, we're normal yet, but we're normalizing or kind of getting back to some of those.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: And then I wanted to ask around just some of the noninterest bearing deposit flows if I just look at the end of period versus the average it looks like a lot of the compression was late.
Speaker Change: Normal seasonal trend Q1 can be somewhat of a mixed bag, what we typically see.
Speaker Change: Late in the quarter.
Speaker Change: I'm just curious if you could speak to trends you're seeing so far in January.
Speaker Change: We typically see a little bit of runoff enter January recovery in February March and so far I would say the flows that we've seen in December and so far in January have been consistent with that.
Speaker Change: You are right.
Speaker Change: A lot of the outflow was late in the quarter.
And typically we are starting to see some of the some of the seasonality come back into back into the deposit portfolio I wouldn't say, we're at normal yet.
Speaker Change: <unk>.
Speaker Change: Historical data.
Speaker Change: <unk> are kind of getting back to some of the normal seasonal trend Q1 can be somewhat of a mixed bag. We've hit what we typically see it.
Okay.
Speaker Change: Understood. Okay. Thank you for taking my questions.
Speaker Change: Welcome.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone.
Speaker Change: We typically see a little bit of runoff enter January recovery in February March and so far I would say the flows that we've seen in December and so far in January have been consistent with the hip.
Speaker Change: Again that is star one to ask a question.
Speaker Change: Our next question comes from Kelly Motta with <unk>. Your line is open.
Speaker Change: Historical data.
Speaker Change: Yes.
Kelly Motta: Hi, good morning, Thanks for the question good morning.
Speaker Change: Okay.
<unk>.
I wanted to get.
Speaker Change: Understood. Okay. Thank you for taking the questions.
Kelly Motta: I'll circle back.
Speaker Change: Welcome.
Kelly Motta: So your outlook for growth ahead, I believe you said low to mid single digit loan growth.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone.
Kelly Motta: Just a couple of points of clarification does that include the.
Speaker Change: And that is star one to ask a question.
Kelly Motta: The acquisition.
Speaker Change: Our next question comes from Kelly Motta with <unk>. Your line is open.
Think of Idaho, and it would that be additive to that.
Kelly Motta: Think about it it would be additive.
Kelly Motta: Hi, good morning, Thanks for the question.
Kelly Motta: The mid single digit is organic.
Meaning.
Kelly Motta: Got it and then.
Kelly Motta: I wanted to get.
Speaker Change: I think you mentioned that there is still some <unk> borrowings to be paid down.
Circle back.
Kelly Motta: To your outlook for for growth ahead, I believe you said low to mid single digit loan growth.
Speaker Change: Putting together kind of your outlook there for for the size of the balance sheet.
Kelly Motta: Just a couple of points of clarification does that include.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: And kind of that potential payoff of.
Kelly Motta: The acquisition.
Kelly Motta: Think of Idaho, and it would that be additive to that.
Speaker Change: Borrowings and securities roll off I'm wondering how we should be thinking overall about the size of the balance sheet for the year kind of exiting 2025 given.
Kelly Motta: Yes think about it it would be additive.
Kelly Motta: Low to mid single digits as organic.
Kelly Motta: Got it and then.
Speaker Change: I think you mentioned that there is still some <unk> borrowings to be paid down.
Speaker Change: There's multiple moving parts in that.
Speaker Change: There are multiple moving parts and so big.
Speaker Change: Putting together kind of your outlook there for the size of the balance sheet.
Speaker Change: Big picture some of the things that we say accelerated securities cash flow runoff, we've talked about that we will have.
Speaker Change: Okay.
Speaker Change: And kind of that potential payoff of.
Speaker Change: Our $1 8 billion of FHL advance of term advances that we currently have outstanding 136 billion will mature in 'twenty five and so I do expect that we'll we'll make meaningful progress in paying down that debt I don't know that well pad all the way up but I do think we'll we'll make progress in pain.
Speaker Change: Borrowings and securities roll off I'm wondering how we should be thinking overall about the size of the balance sheet for the year kind of exiting 2025, given dose there's multiple moving parts in that.
Speaker Change: There are multiple moving parts and so.
Speaker Change: Some of that down.
Speaker Change: <unk> the.
Speaker Change: Picture some of the things I would say accelerated securities cash flows.
Speaker Change: Securities runoff thats going to give us the cash to pay down the wholesale borrowing we could see some delevering and the balance sheet and so organically, we could see a little bit of a decline in the size of the overall balance sheet. Once we add think of Idaho, then Ics exiting 'twenty five.
Speaker Change: Talked about that we will have.
Speaker Change: Our $1 8 billion of FHA advances term advances that we currently have outstanding 136 billion will mature in 'twenty five and so I do expect that we'll we'll make meaningful progress in paying down that debt I don't know that well pad all the way up but I do think we'll we'll make progress in paying some.
Speaker Change: At a with a larger balance sheet than we exited 24, so a little bit of run off a little bit of Delevering there.
Speaker Change: Adding back of Idaho will get us back above that line.
Speaker Change: Of that down between the two.
Speaker Change: Securities runoff thats going to give us the cash to pay down the wholesale borrowings we could see some de levering in the balance sheet and so organically, we could see a little bit of decline.
Speaker Change: Got it that's helpful. Thank you and then I was hoping to clarify I apologize.
Speaker Change: Total following.
The expense commentary that $151 million to $154 million per quarter.
Speaker Change: And the size of the overall balance sheet. Once we add think of auto then then Ics exiting 'twenty five.
Speaker Change: And just to clarify does that include.
Speaker Change: At a with a larger balance sheet than we exited 24, so a little bit of run off a little bit of Delevering there.
Speaker Change: Is that Standalone, and then think of Idaho would be additive to that and things are commentary suggested some higher expenses to start out the year some im hoping.
Speaker Change: Adding bank of Idaho will get us back above that line.
Speaker Change: Got it that's helpful. Thank you and then.
Speaker Change: You could provide some clarity there.
Speaker Change: I was hoping to clarify I apologize I was having.
Speaker Change: Yes.
Speaker Change: Brian here So the guide was.
Speaker Change: Total following the.
Per quarter 151 to 154.
Speaker Change: Expense commentary that $151 million to $154 million per quarter.
Speaker Change: Per quarter and tips.
Speaker Change: Typical of the first quarter was skewed towards the high side the $1 54.
Speaker Change: And just to clarify does that include.
Is that Standalone, and then think of Idaho would be additive to that and these are commentary suggested some higher expenses to start out the year, So I'm, hoping.
Speaker Change: And that.
Speaker Change: Those savings as I said with stair step down as we continue to achieve the savings from that remain for the Wheatland Bank about $2, one Rocky Mountain followed to about 5 million all all in.
Speaker Change: You could provide some clarity there.
Speaker Change: Yes.
Speaker Change: Brian here So the guide was.
Speaker Change: And so void bank of Idaho appointed pardon me.
Speaker Change: Per quarter 151 to 154.
Speaker Change: Is not included in there we do expect.
Speaker Change: Per quarter and tip.
Speaker Change: To close the deal in the second quarter of 'twenty five.
Speaker Change: Typical of the first quarter was skewed towards the high side the $1 54.
Speaker Change: And the run rate for that would be a $9 million to $10 million per quarter, and certainly the third quarter and fourth quarter again, we're going to close on June 30 are we going to close on April 30 thoughts I'll, let you factor in.
Speaker Change: And that.
Speaker Change: Those savings as I said with stair step down.
Speaker Change: We continue to achieve the savings from that remain for the Wheatland Bank about $2. One Rocky Mountain followed two eight about $5 million all in.
Speaker Change: Yes per year per quarter, kidney to $9 million to $10 million per quarter.
Speaker Change: And so void bank of Idaho power.
<unk> is not included in there we do expect.
Speaker Change: Okay. Thank you I appreciate that.
Speaker Change: To close the deal in the second quarter of 'twenty five.
Speaker Change: Thank you.
Speaker Change: And the run rate for that would be a $9 million to $10 million per quarter, and certainly the third quarter and fourth quarter again, we're going to close on June 30 are we going to close on April 30, I'll, let you factor in yes.
Speaker Change: And our next question comes from Jeff <unk> with da Davidson. Your line is open.
Speaker Change: Thanks.
Speaker Change: Just to follow up on the just wanted to check in on the credit side.
Speaker Change: I think the charge offs came up a little bit, but that's certainly not a big number and given the non performers really comfortable level.
Speaker Change: Yes per year per quarter, excuse me, the $9 million to $10 million per quarter.
Just the.
Speaker Change: The pickup in the provision.
Speaker Change: Okay. Thank you I appreciate that.
Speaker Change: Particularly with the little slower growth wanted to just check in on the approach.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Jeffrey split D. A Davidson your line is open.
Speaker Change: <unk> view here.
Speaker Change: Anything kind of under foot.
Speaker Change: I think maybe the charge offs there was a few in the construction bucket just checking back in on the.
Jeffrey: Thanks, Hey, just.
Speaker Change: Just to follow up on the just wanted to check on the credit side.
Speaker Change: <unk> of credit from your view.
Speaker Change: I think the charge offs came up a little bit, but that's certainly not a big number and given the non performers really comfortable level.
Speaker Change: Yes, Jeff this is Tom.
Speaker Change: The charge off yeah, Youre right up a little bit in the fourth quarter that was primarily end of year cleanup something we go through on an annual basis.
Speaker Change: Yes.
Speaker Change: The pickup in the provision.
Speaker Change: Particularly with the little slower growth wanted to just.
Speaker Change: And to your point nothing nothing overly material there the change in the provision expense was centered in the unfunded side.
Speaker Change: Just check in on the approach a conservative view here.
Speaker Change: Kind of under foot.
So in the third quarter, we had a release on the unfunded side.
Speaker Change: I think maybe the charge offs there was a few in the construction bucket just checking back in on.
Speaker Change: In the fourth quarter, we had a provision with some some new unfunded commitments that were booked.
Speaker Change: The pulse of credit from your view.
Speaker Change: Yes, Jeff this is Tom.
Speaker Change: So that's the driver of the provision expense on the funded side no material change in outlook or anything like that.
Speaker Change: The charge off yeah, Youre right up a little bit in the fourth quarter that was primarily end of year cleanup something we go through on an annual basis.
Tom Dolan: Got you, Tom So maybe tying together.
Speaker Change: And to your point nothing nothing overly material there.
Tom Dolan: When we talked about some growth you kind of said some maybe some early stage relationships developing is that tie those two together and on the.
Speaker Change: Change in the provision expense was centered in the unfunded side.
Speaker Change: So in the third quarter, we had a release on the unfunded side.
Tom Dolan: Unfunded or are those separate entities.
Speaker Change: In the fourth quarter, we had a provision with some some new unfunded commitments that were booked.
Tom Dolan: Those are separate entities.
Tom Dolan: The unfunded commitments booked in the fourth quarter, primarily on the construction side were primarily deals that we have been working on for a few months prior to the fourth quarter. Those came through went through underwriting approval booking so the increased optimism and kind of the growth in that sector of the pipeline is in addition to that okay.
Speaker Change: So thats the driver of the provision expense on the funded side no material change in outlook or anything like that.
Speaker Change: Got you, Tom So maybe tying together.
Speaker Change: When we talked about some growth you kind of said some maybe some early stage relationships developing is that tying those two together on that.
Tom Dolan: Okay.
Tom Dolan: Great. Thank you.
Tom Dolan: Welcome.
Speaker Change: Unfunded or are those separate entities.
Tom Dolan: Thank you.
Tom Dolan: I am showing no further questions at this time I would now like to turn it back to Randy Chesler for closing remarks.
Speaker Change: Those are separate entities.
Speaker Change: The unfunded commitments booked in the fourth quarter, primarily on the construction side were primarily deal that we have been working on for a few months prior to the fourth quarter. Those came through went through underwriting approval booking so the increased optimism and kind of the growth in that sector of the pipeline is in addition to that.
Randy Chesler: Thank you Danielle and we appreciate everybody dialing in today have a great.
Speaker Change: Great Friday, and a fantastic weekend. Thank you.
Speaker Change: This concludes today's conference call.
Speaker Change: Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Great. Thank you.
Speaker Change: Welcome.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions at this time I would now like to turn it back to Randy Chesler for closing remarks.
Randy Chesler: Thank you Danielle and we appreciate everybody dialing in today and have a great.
Randy Chesler: Great Friday, and a fantastic weekend. Thank you.
Randy Chesler: This concludes today's conference call.
Randy Chesler: Thank you for participating you may now disconnect.
Randy Chesler: Okay.
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