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Earnings call: Glacier Bancorp reports strong Q4 amid acquisitions

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Glacier Bancorp (NYSE:) delivered robust fourth-quarter financial results, showcasing a steady rise in earnings per share and net income. The bank’s earnings per share increased to $0.49, marking a $0.02 rise from the previous quarter, while net income grew by 4% to $54.3 million.

Despite a slight dip in net interest margin, the bank saw an uptick in interest income and loan yields. The acquisition of Wheatland Bank received regulatory approval, positioning Glacier Bancorp for continued growth in 2024.

Key Takeaways

  • Earnings per share rose to $0.49, up $0.02 from the prior quarter.
  • Net income increased by 4% to $54.3 million.
  • Interest income climbed by $8.6 million, or 3%.
  • Net interest margin experienced a minor decrease to 2.56%.
  • Non-performing assets fell by 39%, and net charge-offs were only six basis points.
  • The company declared a quarterly dividend of $0.33 per share.
  • Regulatory approval was granted for the acquisition of Wheatland Bank.
  • The company anticipates stable deposits and a potential increase in net interest margin in the second quarter of 2024.

Company Outlook

  • Glacier Bancorp ended the year strong and is well-positioned for 2024.
  • The acquisition of Wheatland Bank is expected to contribute to the company’s growth.
  • Full-year net interest income (NII) is projected to be between $280 million and $290 million, assuming three rate cuts throughout the year.

Bearish Highlights

  • Core deposits and retail purchase agreements saw a slight decrease.
  • The company experienced a decline in non-interest-bearing balances, attributed to seasonal outflows and a drop in business-related housing market balances.

Bullish Highlights

  • Portfolio loan yield and new loan production yields both increased.
  • The company successfully sold Visa (NYSE:) B shares and has no plans to sell more portfolio assets.
  • Strong pricing on deals is anticipated, with expected low to mid-single-digit loan growth for 2024.

Misses

  • The company is facing an increase in core expenses for the first quarter due to higher talent costs and inflation.

Q&A Highlights

  • Byron Pollan noted signs of margin stabilization with an expected inflection point in Q2.
  • Full-year NIM is forecasted to be in the range of $280 million to $290 million.
  • Q1 expenses are projected to be $144 million to $146 million, inclusive of Wheatland’s impact.
  • A 20% reduction in non-interest expense from Wheatland is anticipated, with half to be realized in 2024 and the full effect in 2025.
  • The current dividend rate is expected to remain unchanged.
  • The potential impact of CFPB’s proposed overdraft fee regulations is being monitored, with no anticipated changes at this time.

Glacier Bancorp’s fourth-quarter performance reflects a solid financial position and strategic growth through acquisitions. The company’s management remains optimistic about the future, with a focus on maintaining stability and capitalizing on opportunities for expansion. Investors will likely watch for the anticipated improvements in net interest margin and the successful integration of Wheatland Bank into Glacier Bancorp’s operations.

InvestingPro Insights

Glacier Bancorp (GBCI) has shown a strong performance in the last quarter, and the InvestingPro data and tips provide further insights into the company’s financial health and future prospects.

InvestingPro Data indicates that Glacier Bancorp has a market capitalization of $4.65 billion USD, with a P/E ratio sitting at 18.79, which is slightly adjusted from the last twelve months as of Q3 2023 to 18.62. This valuation comes in the context of a revenue decrease of 3.29% over the last twelve months as of Q3 2023, signaling some challenges in top-line growth.

An InvestingPro Tip points out that Glacier Bancorp has maintained dividend payments for an impressive 39 consecutive years, which is a testament to the company’s commitment to shareholder returns. This consistency in dividends is particularly notable given that the company’s net income is expected to drop this year, another tip from InvestingPro suggests.

Additionally, despite weak gross profit margins, analysts predict the company will remain profitable this year, and Glacier Bancorp has been profitable over the last twelve months. The stock also experienced a large price uptick over the last six months, with a 3-month price total return of 37.58% as of the most recent data, highlighting strong recent performance in the market.

For readers looking to delve deeper into Glacier Bancorp’s financials and future outlook, InvestingPro+ offers a wealth of additional tips. Currently, there are 7 additional InvestingPro Tips available for GBCI, which can be accessed with a subscription now on a special New Year sale with a discount of up to 50%. To get an even better deal, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.

These insights from InvestingPro underline the importance of considering both the achievements and the challenges faced by Glacier Bancorp as it moves forward with its strategic growth plans, including the acquisition of Wheatland Bank.

Full transcript – Glacier Bancorp (GBCI) Q4 2023:

Operator: Good day, and thank you for standing by. Welcome to Glacier Bancorp’s Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Randy Chesler, President and Chief Executive Officer of Glacier Bancorp. Mr. Chesler, please begin.

Randy Chesler: All right. Thank you very much. Sorry for the technical difficulties. I think, we’re ready to go. So, good morning, and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Angela Dose, our Chief Accounting Officer; Byron Pollan, our Treasurer; Tom Dolan, our Chief Credit Administrator and Don Chery, our Chief Administrative Officer. I’d like to point out that the discussion today is subject to the same forward-looking considerations found on Page 14 of our press release, and we encourage you to take a careful review of this section. We released our fourth quarter and full year 2023 earnings after the close of the market yesterday, and the Glacier Bancorp team wrapped up a challenging year with a very strong quarter. We achieved earnings per share of $0.49, which increased $0.02 per share from the prior quarter. Net income was $54.3 million for the current quarter, an increase of $1.9 million, or 4%, from the prior quarter. Interest income of $273 million in the current quarter increased 8.6 million, or 3%, over the prior quarter. Net interest margin on a tax equivalent basis was 2.56% versus 2.58% in the prior quarter, our smallest quarterly decrease this year. Total non-interest expense of $132 million for the current quarter, including a one-time $6 million FDIC special assessment, increased only $2.6 million, or 2%, over the prior quarter. The portfolio loan yield of 5.34% increased seven basis points from the prior quarter. New loan production yields were 8.24%, up 32 basis points from the last quarter. Non-performing assets to bank assets decreased $16.7 million, or 39% from the prior quarter to 9% or nine basis points of assets. Net charge-offs to total loans ended the year at only six basis points. Provision expense for the quarter was $3 million, which was stable, compared to the prior quarter provision expense of $3.5 million. The allowance for credit losses, as a percentage of total loans outstanding at year-end was 1.19%, flat to the prior quarter, and relatively unchanged, compared to the 1.2% in the prior – year fourth quarter. While the industry saw a significant outflow of deposits during the year, the company’s core deposits and retail purchase agreements only decreased $108 million, or 50 basis points from the prior year-end. The company ended the year with $1.3 billion in cash, which was an increase of $952 million over the prior year-end. Stockholders’ equity of $3 billion increased $146 million for the quarter, or 5%, and increased $177 million, or 6%, over the prior year-end. The company declared a quarterly dividend of $0.33 a share, and the company has declared 155 consecutive quarterly dividends, and has increased the dividend 49 times. And we received all regulatory approvals for the acquisition of Wheatland Bank, a leading Eastern Washington community bank headquartered in Spokane, with total assets of $728 million as of the end of the year. This will be our 25th acquisition since 2000, and we will close the transaction on January 31. We welcome the Wheatland team to Glacier Bancorp. Despite the significant volatility in the banking industry in 2023, with two of the largest bank failures in history, depositors’ fear of bank safety and historic interest rate increases, the Glacier team did an excellent job taking care of customers and communities across the West, and ended 2023 well-positioned for a strong 2024. So that ends my formal remarks, and I would now like Norma to open the line for any questions that our analysts may have.

Operator: Thank you. [Operator Instructions] One moment for our first question, please. Our first question comes from the line of Matthew Clark with Piper Sandler. Your line is now open.

Matthew Clark: Hi, good morning, guys.

Randy Chesler: Good morning, Matthew.

Matthew Clark: Starting on expenses, the run rate, well below the prior guidance of $132 million to $134 million. Can you speak to not only the run rate that you expect going forward, excluding Wheatland, but also maybe provide some color behind the staffing efficiencies that you gained? Just maybe speak to what exactly was done there?

Ron Copher: Yes, Matthew, Ron here. So yes, what you recognize, we’re proud to be recognized for that, but in terms of the staffing especially, but – so the guide, it was $132 million to $134 million, and if you remove the FDIC, $6 million and some M&A of $500,000 you get down to the roughly $126,000. But our compensation was down by about $6 million. And I want to normalize for that, because that included the performance-related, performance-based pay that totals about $6 million. So when you bring it all back, $132 million is basically what we came in at. And then when you look forward for the guidance for Q1, excluding Wheatland, we would be at $138 million to $140 million. And then when you add in $6 million for Wheatland, the guide for the full first quarter, $144 million to $146 million. That should be the high for each of the quarters in 2024. It’s typical the first quarter runs high. You get the full impact of the – pay increases, the FICA tax, the employer portion kicks in. And so that’s how that reconciles there. So the FTE count has continued to migrate down, particularly in the second and third quarters. The division, the teams, the corporate departments all did an outstanding job. Continuing into the fourth quarter, we had another 20 FTE reduction. So, overall for the full year was a 96 FTE reduction. And a lot of that is attributable to the technologies that we’ve talked about, I think, on each of the calls. As we continue to implement those, think of the account opening process, cut that in half, even doing better now. The – instead of doing end of day closing, we’ve gone to real time adjustments. That’s greatly set up that process, but construction program we added built, been very, very good. Treasury management’s making great strides. It’s all very positive. We do continue to believe that we’ll have some additional reductions in staffing. Probably not to that same degree. Remember, we’re bringing on Wheatland and they’ve got 14 branches. So, we feel pretty good about what we’re able to achieve, certainly for the year, but in particular the fourth quarter.

Matthew Clark: Okay. That’s great, thank you. And shifting gears to the margin, the three part question there. If you had the spot rate on deposits at the end of the year, the average NIM in the month of December, and then what’s your deposit beta assumption, on the way down with rate cuts at this stage?

Byron Pollan: Hi, Matthew, this is Byron. I can address that. So spot rate for total deposits in December, this is a December 31 total deposit spot rate, 1.30%. You asked for the margin, the December margin, that was 2.59%. And beta on the way down. I think what we’ll likely see, as the Fed begins to cut rates, I think what we’ll likely see is an adjustment period. Maybe a lag in customer expectations as well, as in the competitive deposit environment. I think for the first few cuts, we’re expecting a lower beta on the way down, maybe less than 10%. I think we will see some opportunities, some near term opportunities to reduce rate. Our first rate reduction opportunity will be really with a higher cost CD that, we’ve ramped up in recent quarters. I’m thinking of our CD specials that, we have in place. We’ve kept our CD specials intentionally short. Almost 60% of our CDs mature in the first quarter. And so that will afford us an opportunity to reprice those CDs as they mature, and as market rates are falling. And so that’s our expectation. I think, it’ll take a little bit of time for the down rate beta to gain some traction. And for the first few cuts, we’re thinking less than 10% on the way down.

Matthew Clark: Okay. Great. And then on the loan portfolio, particularly within residential construction and land lots and other construction that’s come down the last couple of quarters, I assume those are just projects being completed. But maybe speak to the trend there. Is it maybe being a little more cautious on that front, or is it just tough to get things, find workers and get things done?

Tom Dolan: Yes Matt, this is Tom. Yes, the reduction in the Construction segments, that you’re absolutely right. That’s a function of projects getting completed and – moving into the perm functions, which is why you saw one to four family, multi-family, some other CRE segments lift in the quarter. In terms of volume in the Construction segments, we’re definitely seeing a reduction there, really across the board, residential and commercial construction. And I think – it’s really twofold. We are being more selective and cautious than we normally are, even more so than our existing conservative underwriting standards. But we’ve also seen customers waiting on the sidelines to get a little bit more clarity on what’s going to happen. And so, there definitely is some pent up demand out there. With the current interest rate environment, especially on the commercial side, it takes certainly more cash equity to make a deal pencil, to our underwriting standards. So, I think all those things combined or, have the construction production muted a bit.

Matthew Clark: Okay. And then last one from me, bit of a two part question around M&A. Great to see you guys getting the regulatory approvals here. Does this elongated approval process change your appetite in wanting to do deals? And if not, can you speak to kind of the incremental change in conversations you’ve had over the last quarter?

Randy Chesler: Sure. Well, we’re 30 days longer than what we expected. So, I think that we are very, very happy to get all the approvals and get it closed. No, I don’t think this will change our appetite one bit. I think it will change our expectations that we set at the beginning of these and allow more time for the regulatory approval. Terms of activity, yes, the market has picked up. We are getting more inbound calls and a lot of very interesting opportunities. So, I think coming out of ’23, there is just a little more of an increase in inquiries, interest, as well as different types of opportunities, be it whole banks, or branches, or just quite a bit of more activity picking up. We’ll see if it continues, Matthew, but at the start here, market increase.

Matthew Clark: Okay. Thank you.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of David Feaster with Raymond James. Your line is now open.

David Feaster: Hi, good morning, everybody?

Randy Chesler: Good morning, David.

David Feaster: Maybe just starting on the deposit front, I’m curious some of the dynamics that you’re seeing there. And if you could help us think about like – how much of the deposit flows that you saw in the quarter would you attribute to maybe client activation, or perhaps some seasonality? Hoping you could quantify that and just kind of how you think about deposit growth going forward and really, I guess, the overall balance sheet size. Obviously, probably targeting core deposit growth, but would you expect the balance sheet to remain relatively stable and just remix the book?

Byron Pollan: Sure, David, this is Byron. I’ll start with deposits. Our deposit flows in Q4 were primarily driven by our non-interest bearing decline. We also had some decline in our brokered CDs. We just let those mature and run off. In terms of our outlook for total deposits, for ’24, we do think we’ll be reverting back to some typical seasonal patterns. I think, we’ll be down in the first quarter. But on the year, I think we’ll be likely flat versus where we ended in ’23. That’s in terms of total deposits. Digging into the non-interest-bearing a little bit, the majority of our non-interest-bearing decline came from typical seasonal outflows. Another driver that we looked at, though, the bulk of the outflow of non-interest-bearing came from business accounts. And so, we looked at what type of businesses saw balance decline. The top three categories were all related to the housing market. So title company balances were down. Construction accounts, contractor accounts, those kinds of things. And so, no surprise there, given recent headlines, that housing activity is at a very, very slow pace, a low point. I think I’ve seen a 30-year low in some headlines. I would say, on the other hand, when we’re talking about non-interest-bearing balances. The rate motivated migration is slowing. That trend has been slowing in recent quarters. And in Q4, it was half of what it was in Q3. So, there is still some rate-seeking migration there, but it’s much slower than it has been in previous quarters. And I think that trend will continue to slow. In terms of the outlook for non-interest bearing, I think we could continue to see some outflow of non-interest-bearing balances, some remix there. I would say this is where Wheatland will give us a real boost. They’re very strong on the non-interest-bearing balances. Their total deposit base is over – 45% non-interest-bearing, which is very strong. Now, there’s some seasonality to that. It is influenced by the Ag cycle and what’s going on there, but very encouraged by the strong deposit base that Wheatland, is bringing to the balance sheet.

David Feaster: Okay. That’s helpful. And then maybe just touching on the securities book, could you first remind us the cash flows that you’re expecting off that book near term? And I know you sold some securities again this quarter. Curious your thoughts on maybe being more active on managing that book, and at what point you’d maybe be interested in restructuring. And then just to your point on Wheatland, whether there’s any – rates have come down since that deal was announced. Just curious if there’s any additional opportunity – for balance sheet optimization, inclusive of that deal?

Randy Chesler: Yes, Byron could comment on the investment portfolio. The gain there, David, was the sale of the Visa B shares. And so, we’ve been holding on to those for quite a while, 1.7 million. We thought this was a good time based on a lot of factors to exit those shares. So that was the gain that you saw this quarter.

David Feaster: Got it, got it.

Byron Pollan: Sure, David, back to cash flow on the securities portfolio. We are expecting about $250 million a quarter in securities cash flow that’s through the end of this year. In terms of restructuring, I don’t think, as Randy mentioned, we didn’t sell anything in the fourth quarter. I don’t think, we’ll be looking to – sell anything out of our portfolio. When Wheatland does come to us, we are looking to sell those securities. And so, the securities currently in their portfolio will be liquidated in February and will just become part of our overall part of liquidity.

David Feaster: Got it. Perfect. And then maybe just touching on the loan growth side. Obviously, loan growth slowed and I know you’re very conservative. You’ve done a great job pushing pricing. I’m curious, how much of that slowdown would you attribute to being strategic on your end, and just less appetite for growth versus maybe weaker market demand, or just a less certain backdrop for the borrowers? And just any thoughts, on how you think about loan growth going forward?

Operator: Please stand by. They just dropped. Ladies and gentlemen, please remain on your line. The call will resume momentarily. Again, ladies and gentlemen, please stand by. Your call will resume momentarily.

Operator: David, you might want to ask your question again.

David Feaster: Yes, sure. The question was just kind of on the loan growth side. Loan growth slowed in the quarter. I know you guys have a pretty conservative posture. You guys have done a great job pushing, improving loan yields. I’m curious how much of the slowdown in loan growth was strategic on your end and you all just having less appetite for growth versus weaker market demand, and maybe a less certain economic backdrop as your clients are looking out, and just how you think about loan growth more broadly going forward?

Tom Dolan: Sure, yes David. This is Tom. I really think it’s twofold. We have been more selective, especially around higher risk areas, especially in uncertain economic times, speculative repayment, cash out refi based on market appreciation. Those are things that we’re even more conservative on now than we have been. I think that’s a portion of it. I think the other side of it is, we do still have a lot of borrowers, a lot of developers waiting on the sidelines until they’re comfortable with kind of the market outlook. And as Byron mentioned, the slowdown in the residential side, we’ve seen our – builder finance and subdivision finance is not a big business line for us. But we do make some very well-heeled multi-recession tested developers and they’ve proactively scaled down as well, just kind of seeing what was coming on the forefront. So, I really think it’s twofold, us being more selective, borrowers being more cautious. In terms of the production yield that we saw, you know, we have done, that our bank division has done a phenomenal job getting strong pricing on our deals. That hasn’t really slowed growth that much. You know, I’m constantly talking to our bank divisions. So, I’m not hearing that we’re losing deals over pricing. It’s generally just overall pipelines, are muted from where they were back in the heyday, although they have been somewhat stable in the last couple of quarters. And the tailwinds we saw at the first half of ’23 with a lot of construction draws, as those deals have moved through to completion and into the perm category, we’re just not replacing the construction volume at the same pace that we were as expected. And then to answer your last question on our go forward outlook for 2024, we’re thinking low to mid-single-digits for the year.

David Feaster: Perfect. Thanks everybody.

Randy Chesler: All right, thank you.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Kelly Mota with KBW. Your line is now open.

Kelly Motta: Hi, good morning. Thanks for the question.

Randy Chesler: Good morning, Kelly.

Kelly Motta: I wanted to ask about the, about $2.7 billion of BTFP that you guys have. Just wondering what your plans are there with replacing that amount and how we should be thinking about that in context of the balance sheet overall?

Byron Pollan: Sure, Kelly, this is Byron. As we have $2.74 billion of BTFP balances, those mature in March. The rate curve in Q4 allowed us to lock in some forward starting FHLB advances. We locked in $1.8 billion of forward starting advances, at a very similar rate, as we have our BTFP borrowing rate. That’s on a dividend adjusted basis. Those forward starting advances will begin in March, to coincide with the maturity of the BTFP borrowing. And we ladder those maturities from 12 to 24 months. And so, we spread the refinancing of that over five quarters. So, we locked in the $1.8 billion. That leaves us with $940 million left to refinance in March. And we’ve got some flexibility and options there. We’ve got a little bit of extra cash right now. We could use some of that to paydown that $940 million. We’ll look at what the overnight borrowing environment is then. We’ll look at what the curve looks like, in terms of term FHLB advances. And so, we’ll keep our options open. We’ll evaluate that last $940 million as we get closer to maturity.

Kelly Motta: Got it. That’s super helpful. Thank you. And you alluded to the higher levels of liquidity you have. Can you remind us where you’re comfortable running those cash balances for what more normalized level?

Byron Pollan: Sure. We could bring our cash down to somewhere in the $500 million to $750 million range. Somewhere in that zone, is probably a more comfortable level.

Kelly Motta: Okay. Super helpful. And then just on the margin overall, it’s really encouraging the – future around about the spot rates and what not. It seems like we’ve – somewhat reached the bottom. But I was just wondering what you guys are expecting in terms of the glide path of NII this year and margins really, especially considering potential rate cuts may be given the forward curve?

Byron Pollan: Sure, yes. Q4 margin was down only two basis points. That was a significant improvement over the pace of decline that we have seen in prior quarters. So very encouraged by that. We are seeing signs of stabilization. The biggest driver of that, is the slowing of our deposit cost increase. So in terms of our outlook, I think we do see Q1 continued stabilization. I think from there we’ll see an inflection point, likely somewhere in the second quarter. And then we see growing NIM from there. We are also encouraged by, again, Wheatland and the list that they will help provide on the margin side. That will be helpful to put a range, in terms of our expectations for the full year. I think, we’ll come in on the full year ’24 somewhere in the range of $280 million to $290 million. And so – that’s given our current rate outlook that includes three cuts in ’24. Spread evenly throughout quarters two, three, and four later this year.

Kelly Motta: Got it. That’s super helpful. And if we were to get more rate cuts more in line with the forward curve, just directionally, what would you anticipate? That would, how would you anticipate that, would impact that expectation?

Byron Pollan: I think – it would be helpful. So, I think our margin could improve even above the range that I mentioned previously.

Kelly Motta: Okay. Awesome, that’s really helpful. Last question I wanted to ask was on expenses. I think you had said inclusive of Wheatland’s $144 million to $146 million in Q1. That was a little higher than where I was. Can you remind us, and that’s a partial impact of Wheatland. Can you just remind us the dollar amount of cost that, you anticipate expecting for Wheatland and overall core expenses? It seems like from the release and your commentary, you’re looking to control. I’m just wondering, if what you’re anticipating in terms of kind of core expense outlook there?

Ron Copher: Yes Kelly, Ron. Let me go back. I just want to make sure. The $144 million to $146 million guide that includes Wheatland. So just to go back to the core, ignoring Wheatland, we’re going to go from $132 million in the fourth quarter. We’ll go up to $138 million to $140 million, just on the divisions we already had. And then you add another $6 million so the guide, becomes $144 million to $146 million. And on the expenses, we are – in the model that we built, we assumed a 20% reduction of their non-interest expense. And that would be layered in 50% in ’24 and then 100% in ’25. And we feel that’s very, very achievable. I don’t have the exact dollar amount. I just remember it’s 20% based in 50% ’24, 100% ’25.

Kelly Motta: Got it. And if you’re adding, that $6 million that they’re adding for the quarter, is that inclusive of any one-time, non-operating kind of just merger charges in that? And that’s a 16-month contribution?

Ron Copher: Yes so, it’s in there, but it’s not a really big number. So, we just are giving the guide $144 million to $146 million.

Kelly Motta: Okay. And that’s a two-month contribution from them?

Ron Copher: Yes, two months, thank you.

Kelly Motta: Got it, awesome. Thank you so much. I really appreciate all the color today. I’ll step back.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Jeff Rulis with D.A. Davidson. Your line is now open.

Jeff Rulis: Thanks, good morning.

Randy Chesler: Good morning, Jeff.

Jeff Rulis: Hi, Randy. Not to chase down the margin too much, and I think you framed up really well, Byron, particularly that last piece. I just wanted to get sensitivity. You do screen fairly liability sensitive, so I just want to make sure if, in that three-cut scenario and kind of upward trending. And you talked about kind of the beta on the way down on deposits. Is that would that extend into ’25 then, some of that favorable kind of tailwind in a three-cut environment, and then conversely, kind of margin expectations, should there be no cuts this year? Is there kind of a core lift, or is – trying to chase that down? Thanks.

Byron Pollan: Sure. I’ll start with expectations, if we don’t see cuts. I think we could still see margin growth. The pace of that growth will be a lot slower, and the key to that is stabilization of our deposit costs. We’re already seeing good signs there. And so, we’re kind of flattening out the curve of that deposit cost increase. And so, I think that will happen even without cuts. It may push out that inflection point. I mentioned second quarter. It may push that inflection point out further in the year, but I still think we could see some growth, although more limited, even if the Fed doesn’t cut rates this year.

Jeff Rulis: Okay. And I guess the not so clear question that was, into ’25, you talked about that three-cut lift to kind of $280 million, $290 million range. As we progress into ’25, can we see further lift? Is there sort of a tail of that beta down scenario where you foresee an environment where margin can continue to propel higher in ’25, a long time from now, but just thoughts on that?

Byron Pollan: Sure, I do think we’ll see some tailwind into ’25. The way our balance sheet is structured, we get most of the benefit kind of in year two of a rate move. And so, with three rate cuts in ’24, we’ll gain momentum into ’25. If there are further cuts beyond that, it’ll be even better, so yes, I do think the outlook for ’25 is really positive.

Jeff Rulis: Okay. I appreciate it, thank you. And Randy, I appreciate the M&A just kind of appetite and conversation. The dividend rate has been flat for a little while now, and I know that’s a Board discussion, but – we read anything into that in terms of holding capital for maybe a more active M&A, or is that a separate channel that looking at the dividend, you can kind of do both, just more specifically asking about the dividend? Thanks.

Randy Chesler: Sure, we’re comfortable where the dividend is. I don’t see it changing, and I think this is still an environment where capital is king. And so, we’ll stay the course with the dividends in the foreseeable future. Again, that’s up to the Board, but that’s my expectation.

Jeff Rulis: Okay. Maybe some of those hikes were kind of – post-pandemic kind of, there was some moves there, I suppose. Anyway, I think you answered it, I appreciate it. The last one from me, is just to check in on that tax rate, kind of where you see in ’24 where we settle in?

Ron Copher: Yes, Ron here. The settle in, it will range from 18% to 18.5% somewhere in that ballpark is the, we achieve the net interest income, the NIM, all of that occurring as well.

Jeff Rulis: Okay. Thank you.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Brandon King with Truist. Your line is now open.

Brandon King: Hi, good morning.

Randy Chesler: Good morning, Brandon.

Brandon King: So could you quantify the amount of loans, fixed rate and adjustable rate loans you expect to reprice in 2024 and what the runoff yields are?

Randy Chesler: The answer is, we’re going to have to check on that for you, Brandon.

Brandon King: Okay.

Randy Chesler: So let us get back to you with the exact numbers. We do – that was one thing I was going to add to the margin discussion. We do continue to get some lift with portfolio repricing. It’s a lag repricing. And so, there is some lift there and it is accelerating into ’25, but we’ll get to the actual numbers.

Brandon King: Okay. And then on the CDs, if I remember correctly, was what I heard, 60% mature in the first quarter. And I wanted to know what rates those CDs are coming off that, and what you’re looking to reprice those CDs at?

Byron Pollan: Sure, those CDs are priced at a little under 4.5%. And it will depend on the rate environment, when those CDs come up for maturity. But we’re already starting to test, kind of peeling back those renewal rates a little bit, and we’re having good success there. So, I would expect the renewal of those CDs to come in, just a little bit below where they are.

Brandon King: Okay. That’s helpful. And then lastly, with the CFPB proposal and overdraft fees, are you considering any proactive changes to your overdraft policy?

Randy Chesler: No, we’re watching that carefully and looking at it. At this point in time, we don’t anticipate any changes. I think it’s still early. So, there’s a lot of discussion to be had about that. If you read the full report, pretty extensive. The industry is got a very strong point of view. So at this point, we’re watching the discussion and too early to really anticipate any changes.

Brandon King: Okay. That’s all I had. Thanks for taking my questions.

Randy Chesler: Welcome.

Operator: Thank you. [Operator Instructions] And our next question comes from the line of Andrew Terrell with Stephens. Your line is now open.

Andrew Terrell: Hi, good morning.

Randy Chesler: Good morning, Andrew.

Andrew Terrell: Maybe just to start, Byron, I appreciate all the commentary you gave earlier on the deposit side. It was helpful. I just want to clarify, when you discuss kind of year-on-year, ’24 versus ’23 deposit balance is kind of flat on the year. Is that inclusive or exclusive of Wheatland?

Byron Pollan: That is exclusive of Wheatland. So that would be – the organic trajectory of our deposit base.

Andrew Terrell: Yes. Okay. I thought so, just wanted to make sure there. And then if I could clarify, Ron, on the – just to go back to the core expense guide. So, before the Wheatland deal, you’re talking to kind of a $138 million to $140 million core expense in 1Q. So call it even a pretty significant build from the 4Q, even if you normalize for the $6 million that sound like a true-up benefit this quarter. I guess I’m struggling to figure out how you get from what I call like a $132 million core in 4Q up to $138 million to $140 million on a core basis in the first quarter. Just given some of the expense commentary, it sounds pretty positive. And you had some FTE reduction in the fourth quarter. It sounds like a lot of expense management focus. I guess I’m just struggling to figure out how we get from $132 million to $138 million to $140 million?

Ron Copher: Yes, certainly a good chunk of that is the mere increase, talent costs. And so, layered in a 5% increase. So, we’re still seeing higher inflation out there. And so just being conservative, but still very comfortable with the $138 million to $140 million. And the team, the colleagues, everybody’s looking at it, but we continue to have – negotiate and see 5% absolutely could happen, no doubt about it.

Andrew Terrell: Yes. Okay. Got it. And then if I could just clarify one point on the margin guidance that you guys provided that the $280 million to $290 million range for the full year, inclusive of, it sounds like three cuts in the last three quarters of the year. I guess if the margin, the commentary for the NIM into 1Q is a pretty stable level versus the fourth quarter. And then maybe some inflection in 2Q, but then building in the back half of the year as you get the benefit of those cuts, it kind of implies you got to move to like a 3% plus NIM exiting the year. Is that kind of a fair assessment, or would you walk that back a little bit?

Ron Copher: That’s a fair assessment.

Andrew Terrell: Okay. Well, thanks for taking the questions this morning. I appreciate it.

Randy Chesler: You’re welcome.

Operator: Thank you. And I’m currently showing no further questions at this time. I’d like to hand the conference back to Mr. Randy Chesler for closing remarks.

Randy Chesler: Right, well, thank you, Norma. Thank you everyone for joining us this morning. And that – concludes our call. So, we appreciate everyone taking time out of your busy day to listen in. Have a great Friday and a great weekend.

Operator: Ladies and gentlemen, thank you for your participation in today’s conference. You may now disconnect. Everyone have a wonderful day.

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