Glacier Bancorp Inc

F:GLC

Earnings Call Analysis

Glacier Bancorp Q4 Shows Resilience and Growth

Glacier Bancorp has emerged from a turbulent period in the banking sector, concluding 2023 with a strong fourth quarter which included an earnings per share increase to $0.49, up from the previous quarter by $0.02. Net income saw a 4% increase to $54.3 million, while interest income rose by 3% to $273 million. Despite a marginal decline in the net interest margin to 2.56%, the company reported a stable noninterest expense at $132 million, inclusive of a $6 million one-time fee, and lower nonperforming assets, which shrank by 39%. The bank's loan portfolio performed well with increased yields and low charge-offs. Glacier Bancorp declared a $0.33 dividend per share and successfully pursued their 25th acquisition with Wheatland Bank, readying them for robust operations in 2024. For the next quarter, noninterest expenses are projected to be between $144 million to $146 million, factoring in the acquisition.

Facing the Winds: A 2024 Outlook with Moderate Growth and Strategic Financing

As we navigate through the tides of economic variability, the performance of the company in Q4 has been significantly driven by the decline in noninterest-bearing deposits, coupled with the conscious let-off of matured brokered CDs. Despite the observed patterns, the organization is bracing for a reversion to more typical seasonal patterns in deposit flows. Looking ahead at the broader horizon of the full year 2024, we anticipate our deposit volumes to sculpt a consistent landscape as compared to the end of 2023.

Selective Financing and Borrower Caution—Decelerating Construction Lending

On the forefront of construction finance, a rather non-dominant business line for the company, we've observed a proactive downsizing by seasoned developers, foreshadowing a cautious approach to market changes. A substantial impact was made by our banking division which established formidable pricing, thereby not significantly hindering growth. Although deal closures have not considerably faded, the shadow of lower construction volumes lingers from the past, and we expect to trace low to mid-single-digit growth as the year unfolds.

Refinancing Gathers Momentum with Strategic Debt Management

Addressing the maturity of $2.74 billion in borrowings, the company judiciously capitalized on the favorable rate curve of Q4, securing $1.8 billion in forward starting FHLB (Federal Home Loan Bank) advances. These advances, strikingly aligned with our borrowing rates, are set to initiate in March and extend over five quarters, showcasing a prudent step in debt management. This leaves $940 million in borrowings to be addressed with a palette of options ranging from utilizing extra cash to assessing overnight borrowing environments and term FHLB advances, affirming the company’s adaptability and strategic foresight.

Navigating Through Marginal Stabilization and Revenue Predictions

The pinnacle of our financial trajectory is reflected in the marginal stability achieved in Q4, a significant slowdown from the earlier declining pace. With Q1 expecting to mirror this stability, the second quarter likely marks an inflection point projected to steer Net Interest Margin (NIM) towards growth. Infused with optimism from the integration of Wheatland, we place our forecast for full-year 2024's NIM within the sector of $280 million to $290 million. This prediction carves a path for even brighter prospects in 2025, enhanced further by potential rate cuts.

The '25 Projections: Capitalizing on Interest Rate Cuts for Margin Growth

Marching into 2025, the structural design of our balance sheet positions us to harness the most energy in the second year of rate movements. With three rate cuts anticipated in 2024, we expect the momentum to surge into 2025, and additional rate cuts could propel this even further. Refreshing capital stability enhances the company's strength and outlook as we steady the helm toward burgeoning horizons.

Steadying the Deposit Cost Curve: A Preemptive Strategy Amidst Uncertain Rate Cuts

Diving into the figures, our deposit cost increase is showing signs of a slowdown. This crucial indicator is flattening, suggesting a stabilizing trend which is envisaged to proceed even without intervention from federal rate cuts. Although the ideal inflection point might drift further into the year, it's projected that the margin growth, despite being more restrained, could emerge unaided from federal monetary policies.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and thank you for standing by. Welcome to the Glacier Bancorp Fourth Quarter Earnings Conference Call. [Operator Instructions] After the speaker's 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.

Ladies and gentlemen, please stand by. Mr. Chesler, you may begin. Again, ladies and gentlemen, we are experiencing technical difficulties. Mr. Chesler, you may begin.

[Randall Chesler, executive]

All right. We 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 noninterest expense of $132 million for the current quarter, including a onetime $6 million FDIC special assessment increased only $2.6 million or 2% over the prior quarter. The portfolio loan yield of 5.34% increased 7 basis points from the prior quarter. New loan production yields were 8.24%, up 32 basis points from the last quarter. Nonperforming assets to bank assets decreased $16.7 million or 39% from the prior quarter to 9% -- or 9 basis points of assets.

Net charge-offs to total loans ended the year at only 6 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 fourth quarter -- 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 49x. 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 welcomed the Wheatland team to Glacier Bancorp.

Despite the significant volatility in the banking industry in 2023, with 2 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]

[Operator Instructions] Our first question comes from the line of Matthew Clark with Piper Sandler.

[Matthew Clark, analyst]

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 ex excluding Wheatland, but also maybe provide some color behind the staffing efficiencies that you gained just maybe speak to what exactly was done there?

[Randall Chesler, executive]

Yes, Matthew, Ron here. So yes, what you recognize we're proud to be recognized for that, but in terms of the staffing specially. But -- so the guide was $ 132 million to $134 million, And if you remove the FDIC, $6 million and some M&A have $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. This is typical, the first quarter runs high. We get the full impact of the merit 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 department, all did an outstanding job. Continuing into the fourth quarter, we had another 20 FTE reduction. So overall, for the full year, it 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 adjustment that's greatly set up that process. The construction program, we added built been very, very good. Treasury management 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 particularly the fourth quarter.

[Matthew Clark, analyst]

Okay. That's great. And shifting gears to the margin. I have a 3-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, executive]

Matthew, this is Byron. I can address that. So spot rate for total deposits in December -- this is a December 31, total deposits probably 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 the 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 will take a little bit of time for the down rate beta to gain some traction. And for the first few cut, we're thinking less than 10% on the way down.

[Matthew Clark, analyst]

Okay. Great. And then on the loan portfolio, particularly within residential construction and land locks 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, executive]

Yes, Matthew, this is Tom. Yes. The reduction in the construction segment, that's -- you're absolutely right. That's a function of projects getting completed and moving into the primary functions, which is why you saw 1 to 4 family, multifamily, 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. 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 penciled to our underwriting standards. So I think all those things combined are -- have the construction production muted a bit.

[Matthew Clark, analyst]

Okay. And then last one for me, a bit of a 2-part question around M&A. Great to see you guys getting the regulatory approvals here. Does this elongated approval process change your appetite and 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?

[Randall Chesler, executive]

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 said at the beginning of these and allow more time for the regulatory approval.

In 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 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.

[Operator]

Our next question comes from the line of David Feaster with Raymond James.

[David Feaster, analyst]

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 can quantify that. And then 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, executive]

Sure. David, this is Byron. I'll start with deposits. Our deposit flows in Q4 were primarily driven by our noninterest-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, and that's in terms of total deposits. Digging into the noninterest bearing a little bit. The majority of our noninterest-bearing decline came from typical seasonal outflows. Another driver that we looked at, though, the bulk of the outflow of noninterest-bearing came from business accounts.

And so we looked at what type of businesses saw balance decline. The top 3 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, saw a low point. I think that's seen a 30-year low in some headlines. I would say, on the other hand, when we're talking about noninterest-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 lower than it has been in previous quarters. And I think that trend will continue to slow. In terms of the outlook for noninterest bearing, I think we could continue to see some outflow of noninterest-bearing balances, some remix there. I would say this is where Wheatland will give us a real boost. They're very strong on the noninterest-bearing balances. Their total deposit base is over 90 -- is over 45% noninterest-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, analyst]

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 and gains this quarter. Curious your thoughts on maybe being more active on managing that book? And at what point you maybe be interested in restructuring? And then just -- to your point on Wheatland, whether there's any -- rates had come down since that deal was announced. Just curious if there's any additional opportunity for balance sheet optimization inclusive of that deal.

[Randall Chesler, executive]

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.

[Byron Pollan, executive]

Sure. David, back to cash flow in the securities portfolio. We are expecting about $250 million a quarter in securities cash flow that 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 path of liquidity.

[David Feaster, analyst]

Okay. Perfect. And then maybe just touching on the loan growth side. Obviously, loan growth slowed. And I know you're very conservative. You've been -- 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. Again, ladies and gentlemen, please remain on your line. The call will resume momentarily. David, you might want to ask your question again.

[David Feaster, analyst]

Yes, sure. 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 work out just how you think about loan growth more broadly going forward.

[Tom Dolan, executive]

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 multirecession 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, we have -- our bank division has done a phenomenal job getting strong pricing on our deals. That has really slowed growth that much. I'm constantly talking to our bank divisions. 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 [ A ] day, although they have been somewhat stable 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.

[Operator]

Our next question comes from the line of Kelly Motta with KBW.

[Kelly Motta, analyst]

I wanted to ask about the $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, executive]

Sure, Kelly. This is Byron. As you know, 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 borrowings, and we laddered those maturities from 12 to 24 months. And so we spread the refinancing of that over 5 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 pay down 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, analyst]

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

[Byron Pollan, executive]

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, analyst]

Okay. Super helpful. And then just on the margin overall, it's really encouraging the stack feature out about spot rates and whatnot. It seems like we 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 incidental rate cuts, maybe given the forward curve.

[Byron Pollan, executive]

Sure. Yes. Q4 margin was down only 2 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 lift 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 3 cuts in '24 spread evenly throughout quarters 2, 3 and 4 later this year.

[Kelly Motta, analyst]

Got it. That's super helpful. And if we were to get more rate cuts and 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, executive]

I think that would be helpful. So I think our margin could improve even above the range that I mentioned previously.

[Kelly Motta, analyst]

Okay. Awesome. That's really helpful. Last question I wanted to ask was on expenses. I think you had said inclusive of Wheatland $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 savings you anticipate expecting for Wheatland and overall core expenses. It seems like from the release in your commentary, you're looking to control. I'm just wondering what you're anticipating in terms of kind of core expense outlook there.

[Ron Copher, executive]

Yes. Kelly, Ron. Let me go back. I just want to make sure, the $144 million to $146 million guide, that included 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 expense saves, we are in the model that we built. We assumed the 20% reduction of their noninterest 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, analyst]

Got it. And if they're adding that $6 million that we're adding for the quarter, is that inclusive of any onetime nonoperating kind of merger charges in that? And that's the 2 months contribution...

[Ron Copher, executive]

It's in there, but it's not a really big number, but we just are giving the guide $144 million to $146 million.

[Kelly Motta, analyst]

Okay. And that's the 2-month contribution from them?

[Ron Copher, executive]

Yes, 2 months. Thank you.

[Operator]

Our next question comes from the line of Jeff Rulis with D.A. Davidson.

[Jeff Rulis, analyst]

Not to chase down the margin too much. And I think you framed it up really well, Byron particularly that last piece. So just wanted to get sensitivity you do screen fairly liability sensitive. So I just want to make sure if in that 3 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 3 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 that just trying to chase that down?

[Byron Pollan, executive]

Sure. I'll start with expectations if we don't see cuts. I think we could still see margin growth. It will -- 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 of this year.

[Jeff Rulis, analyst]

Okay. And I guess the not so clear question there was into '25, you talked about that 3 cut lift to kind of $280 million, $290 million range. in -- as we progress into '25, can we see further lift? Is there sort of a tale 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, executive]

Sure. I do think we'll see some tailwinds into '25. The way our balance sheet is structured, we get most of the benefit kind of in year 2 of a rate move. And so with 3 rate cuts in '24, we'll gain momentum into '25. If there are further cuts beyond that, it will be even better. So yes, I do think the outlook for '25 is really positive.

[Jeff Rulis, analyst]

Okay. I appreciate it. And Randy, I appreciate the M&A 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 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.

[Randall Chesler, executive]

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're -- 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, analyst]

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

[Ron Copher, executive]

Yes, Ron here. Settle in, it will range from 18% to 18.5%, somewhere in that ballpark is the -- we achieved the net interest income, the NIM, all of that occurring as well.

[Operator]

Our next question comes from the line of Brandon King with Truist.

[Brandon King, analyst]

So could you quantify the amount of loan [indiscernible] rate and the adjustable rate loans you expect to reprice in 2024? And what the runoff yields are?

[Randall Chesler, executive]

The answer is we're going to have to check on that for you, Brandon. 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 you the actual numbers.

[Brandon King, analyst]

Okay. And then on the CDs, if I remember correctly, with 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, executive]

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, analyst]

Okay. That's helpful. And then lastly, with the CFPB proposal on overdraft fees, are you considering any proactive changes to your overdraft policy?

[Randall Chesler, executive]

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 has got a very strong point of view. So at this point, we're watching the discussion and too early to really anticipate any changes.

[Operator]

[Operator Instructions] And our next question comes from the line of Andrew Terrell with Stephens.

[Andrew Terrell, analyst]

Maybe just to start, Byron, I appreciate the commentary you gave earlier on the deposit side. It was helpful. I just want to clarify when you discussed kind of year-on-year '24 versus '23 deposit balances kind of flat on the year, is that inclusive or exclusive of Wheatland?

[Byron Pollan, executive]

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

[Andrew Terrell, analyst]

Yes. Okay. I thought so. I 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 sounds like a true-up benefit this quarter.

I guess I'm struggling to figure out how you get from what I'm -- 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 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, executive]

Yes. Certainly, a good chunk of that is the merit increase talent cost. 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 the $138 million to $140 million. And the team, the colleagues, everybody is looking at it, but we continue to negotiate and see 5% absolutely could happen. No doubt about it.

[Andrew Terrell, analyst]

Yes. Okay. Got it. And then if I could just clarify one point on the margin guidance that you guys provided the $280 million to $290 million range for the full year, inclusive of -- it sounds like 3 cuts in the last 3 quarters of the year. I guess if the margin -- the commentary for the NIM until 1Q is a pretty stable level versus the fourth quarter. And then maybe some inflection to keep it in 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?

[Byron Pollan, executive]

That's a fair assessment.

[Operator]

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.

[Randall Chesler, executive]

All right. Well, thank you, Norma. Thank you, everyone, for joining us this morning. And that is -- concludes our call. So we appreciate everyone taking time out of your busy days 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.