Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong EPS growth driven by lower non-interest and credit loss expense.
- Net income increased by $12.1 million or 37% from the prior quarter.
- Net interest margin grew 9 basis points from 2.59% to 2.68%.
- Non-interest bearing deposits increased by $38.4 million or 3% annualized.
- Declared a quarterly dividend of $0.33 per share, marking 157 consecutive quarterly dividends.
Negative Points
- Net interest income remained flat compared to the prior quarter.
- Core deposits of $20 billion were down versus the prior quarter.
- Borrowing costs increased by 14 basis points.
- Provision expense included $5.1 million of credit loss expense.
- Non-interest expense ended the quarter at $141 million, down $10.9 million or 7% versus the prior quarter, indicating cost-cutting measures.
Q & A Highlights
Q: Can you update us on the balances of the Heartland loan to deposits that are coming over this evening?
A: Sure. We ended up with $403 million in deposits and about $280 million in loans. (Randall Chesler, President, Chief Executive Officer, Director)
Q: Any update on the accretion expected to come through from the Heartland acquisition?
A: The current estimate is $16 million over five years, which is still very positive. (Randall Chesler, President, Chief Executive Officer, Director)
Q: What's your outlook for deposit costs in the upcoming quarter?
A: We had success in stabilizing our costs and believe we can hold that. We continue to test customer acceptance of lower rates and are seeing some success. Overall, we expect cost stabilization in our total deposit costs. (Byron Pollan, Treasurer & SVP)
Q: Any update on the 3% net interest margin (NIM) guide for Q4?
A: We expect to see growth and as we exit the year, we do think we'll be in the neighborhood of 3%. (Byron Pollan, Treasurer & SVP)
Q: Can you quantify the amount of securities repricing next year and their yield?
A: We have around $250 million in treasury securities maturing in the fourth quarter of next year, and they are considered to be low-yielding. (Byron Pollan, Treasurer & SVP)
Q: What are your updated thoughts on the expense run rate guidance for Q3?
A: For Q3, we expect expenses to be between $145 million to $147 million, considering the additional non-interest expense from the acquisition of six branches and ongoing investments in control functions. (Ronald Copher, Chief Financial Officer, Executive Vice President, Secretary)
Q: Can you discuss the sustainability of the fee income growth rate?
A: The growth is sustainable, driven by active tourism, new account openings, and service charges. However, gains on sale of residential loans may remain flat. (Ronald Copher, Chief Financial Officer, Executive Vice President, Secretary)
Q: What is the outlook for loan growth in the second half of the year?
A: We expect low to mid-single-digit growth, with some seasonality effects. The pipeline remains constant, but there is less focus on construction and development loans. (Tom Dolan, Chief Credit Officer)
Q: How do you plan to manage excess liquidity?
A: If we have excess liquidity, we will first reduce wholesale funding balances. Organically, we expect a stable balance sheet through the end of the year, plus the incremental loans from the Rocky Mountain branch acquisition. (Byron Pollan, Treasurer & SVP)
Q: What are your expectations for core deposit growth and pricing trends?
A: We expect slight growth in the third quarter and flat in the fourth quarter. Non-interest bearing deposits showed growth in May and June, which is encouraging for cost stabilization. (Byron Pollan, Treasurer & SVP)
Q: What are your thoughts on the M&A front and your appetite for larger transactions?
A: We are seeing moderate activity and expect it to pick up if stock prices hold. We are open to deals ranging from under $1 billion to $4 billion or $5 billion, depending on strategic fit. (Randall Chesler, President, Chief Executive Officer, Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
