First Interstate BancSystem, Inc. (NASDAQ: FIBK) (the “Company”)
today reported financial results for the second quarter of 2024.
For the quarter, the Company reported net income of $60.0 million,
or $0.58 per share, which compares to net income of $58.4 million,
or $0.57 per share, for the first quarter of 2024 and net income of
$67.0 million, or $0.65 per share, for the second quarter of
2023.
HIGHLIGHTS
- Criticized loans decreased $12.0 million at June 30, 2024,
compared to March 31, 2024, driven by loan upgrades, payoffs, and
charge-offs.
- Non-performing assets decreased $14.5 million at June 30, 2024,
compared to March 31, 2024, driven primarily by the paydown of
nonaccrual loans and disposal of OREO properties in the second
quarter of 2024.
- Net interest margin increased to 2.97% for the second quarter
of 2024, a 6 basis point increase from the first quarter of 2024.
Net interest margin, on a fully taxable equivalent (“FTE”) basis1,
increased to 3.00% for the second quarter of 2024, or a 7 basis
point increase from the first quarter of 2024.
- Loans held for investment increased $32.2 million at June 30,
2024, compared to March 31, 2024.
- Total deposits increased $60.7 million at June 30, 2024 from
March 31, 2024.
- Non-interest expense decreased $3.3 million for the second
quarter of 2024, compared to the first quarter of 2024 and
decreased $7.0 million compared to the second quarter of 2023.
“We continued executing well in the second quarter, with results
generally in-line with expectations. We were pleased to see our net
interest margin expansion, as expected, a reduction in
non-performing assets, and continued expense control. Given our
strong levels of capital and liquidity, adequate allowance for
credit losses, and continued expectations for net interest margin
expansion and expense control, we believe we are well positioned
for the remainder of 2024 into 2025 and remain confident in our
ability to generate solid returns,” said Kevin P. Riley, President
and Chief Executive Officer of First Interstate BancSystem,
Inc.
1 Represents a Non-GAAP Financial Measure. See Non-GAAP
Financial Measures included below for a reconciliation to this
measure’s most directly comparable GAAP financial measure.
DIVIDEND DECLARATION
On July 24, 2024, the Company’s board of directors declared a
dividend of $0.47 per common share, payable on August 15, 2024, to
common stockholders of record as of August 5, 2024. The dividend
equates to a 7.1% annualized yield based on the $26.48 per share
average closing price of the Company’s common stock as reported on
NASDAQ during the second quarter of 2024.
NET INTEREST INCOME
Net interest income increased $1.6 million, or 0.8%, to $201.7
million, during the second quarter of 2024, compared to net
interest income of $200.1 million during the first quarter of 2024,
primarily due to a decrease in interest expense resulting from a
decrease in average other borrowed funds during the second quarter
of 2024. Net interest income decreased $16.7 million, or 7.6%,
during the second quarter of 2024 compared to the second quarter of
2023, primarily due to an increase in interest expense resulting
from higher costs of interest-bearing deposits, partially offset be
an increase in interest and fees on loans in the second quarter of
2024.
- Interest accretion attributable to the fair valuation of
acquired loans from acquisitions contributed to net interest income
during the second quarter of 2024, the first quarter of 2024, and
the second quarter of 2023, in the amounts of $5.1 million, $6.5
million, and $4.6 million, respectively.
The net interest margin ratio was 2.97% for the second quarter
of 2024, compared to 2.91% during the first quarter of 2024, and
3.09% during the second quarter of 2023. The net FTE interest
margin ratio2, was 3.00% for the second quarter of 2024, compared
to 2.93% during the first quarter of 2024, and 3.12% during the
second quarter of 2023. Excluding interest accretion from the fair
value of acquired loans, on a quarter-over-quarter basis, the
adjusted net interest margin ratio (FTE)2, was 2.92%, an increase
of 8 basis points from the prior quarter, primarily driven by lower
interest expense as a result of decreased borrowings. Excluding
interest accretion from the fair value of acquired loans, on a
year-over-year basis, the adjusted net interest margin ratio (FTE)
decreased 13 basis points, primarily as a result of higher
interest-bearing deposit costs, which was partially offset by loan
yield expansion and a modestly favorable change in the mix of
earning assets.
2 Represents a Non-GAAP Financial Measure. See Non-GAAP
Financial Measures included below for a reconciliation to this
measure’s most directly comparable GAAP financial measure.
PROVISION FOR CREDIT LOSSES
During the second quarter of 2024, the Company recorded a
provision for credit losses of $9.0 million. This compares to a
provision for credit losses of $5.3 million during the first
quarter of 2024 and $11.7 million during the second quarter of
2023.
For the second quarter of 2024, the allowance for credit losses
included net charge-offs of $13.5 million, or an annualized 0.30%
of average loans outstanding, compared to net charge-offs of $8.4
million, or an annualized 0.18% of average loans outstanding, for
the first quarter of 2024 and net charge-offs of $11.4 million, or
an annualized 0.25% of average loans outstanding, for the second
quarter of 2023. Net loan charge-offs in the second quarter of 2024
were composed of charge-offs of $16.3 million, including the
charge-off of a $6.8 million specific allocation related to a
construction real estate loan, and recoveries of $2.8 million.
The Company’s allowance for credit losses as a percentage of
period-end loans held for investment was 1.28% at June 30, 2024,
compared to 1.25% at March 31, 2024 and 1.23% at June 30, 2023.
Coverage of non-performing loans increased to 138.4% at June 30,
2024, compared to 130.1% at March 31, 2024 and 242.0% at June 30,
2023.
NON-INTEREST INCOME
For the Quarter Ended
Jun 30, 2024
Mar 31, 2024
$ Change
% Change
Jun 30, 2023
$ Change
% Change
(Dollars in millions)
Payment services revenues
$
18.6
$
18.4
$
0.2
1.1
%
$
20.1
$
(1.5
)
(7.5
)%
Mortgage banking revenues
1.7
1.7
—
—
2.6
(0.9
)
(34.6
)
Wealth management revenues
9.4
9.2
0.2
2.2
8.8
0.6
6.8
Service charges on deposit accounts
6.4
6.0
0.4
6.7
5.8
0.6
10.3
Other service charges, commissions, and
fees
2.1
2.2
(0.1
)
(4.5
)
2.4
(0.3
)
(12.5
)
Investment securities loss
—
—
—
—
(0.1
)
0.1
(100.0
)
Other income
4.4
4.6
(0.2
)
(4.3
)
4.5
(0.1
)
(2.2
)
Total non-interest income
$
42.6
$
42.1
$
0.5
1.2
%
$
44.1
$
(1.5
)
(3.4
)%
Non-interest income was $42.6 million for the second quarter of
2024, increasing $0.5 million and decreasing $1.5 million compared
to the first quarter of 2024 and the second quarter of 2023,
respectively.
NON-INTEREST EXPENSE
For the Quarter Ended
Jun 30, 2024
Mar 31, 2024
$ Change
% Change
Jun 30, 2023
$ Change
% Change
(Dollars in millions)
Salaries and wages
$
66.3
$
65.2
$
1.1
1.7
%
$
68.1
$
(1.8
)
(2.6
)%
Employee benefits
16.9
19.3
(2.4
)
(12.4
)
19.3
(2.4
)
(12.4
)
Occupancy and equipment
16.9
17.3
(0.4
)
(2.3
)
17.3
(0.4
)
(2.3
)
Other intangible amortization
3.7
3.7
—
—
3.9
(0.2
)
(5.1
)
Other expenses
51.1
52.7
(1.6
)
(3.0
)
54.7
(3.6
)
(6.6
)
Other real estate owned expense
2.0
2.0
—
—
0.6
1.4
233.3
Total non-interest expense
$
156.9
$
160.2
$
(3.3
)
(2.1
)%
$
163.9
$
(7.0
)
(4.3
)%
The Company’s non-interest expense was $156.9 million for the
second quarter of 2024, a decrease of $3.3 million from the first
quarter of 2024 and a decrease of $7.0 million from the second
quarter of 2023.
Salary and wages expense increased $1.1 million during the
second quarter of 2024 compared to the first quarter of 2024,
primarily due to a reversal of short-term incentives in the first
quarter for the over accrual of short-term incentives at December
31, 2024. Salaries and wages expense decreased $1.8 million during
the second quarter of 2024 compared to the second quarter of 2023,
primarily due to lower salaries and wages and net severance costs
from expense reduction initiatives undertaken by the Company in
2023, which were partially offset by higher short-term incentive
accruals in the second quarter of 2024.
Employee benefit expenses decreased $2.4 million during the
second quarter of 2024 compared to the first quarter of 2024,
primarily due to a decrease of $2.5 million of the seasonal reset
of payroll taxes. Employee benefit expenses decreased $2.4 million
during the second quarter of 2024 compared to the second quarter of
2023, primarily due to lower health insurance costs, partially
offset by higher long-term incentive accruals.
Other expenses decreased $1.6 million during the second quarter
of 2024 compared to the first quarter of 2024, primarily due to a
decrease in professional fees and a decrease in FDIC insurance
related the special assessment fee accrued in the first quarter of
2024. Other expenses decreased $3.6 million during the second
quarter of 2024 compared to the second quarter of 2023, primarily
as a result of decreases in software and software maintenance
costs, credit card reward accruals, and new market tax credit
amortization expenses as a result of the adoption of ASU
2023-02.
Other real estate owned expenses were stable during the second
quarter of 2024 compared to the first quarter of 2024 and increased
$1.4 million compared to the second quarter of 2023. The
year-over-year increase was primarily due to the write down of a
commercial property in the second quarter of 2024.
BALANCE SHEET
Total assets increased $144.7 million, or 0.5%, to $30,289.5
million as of June 30, 2024, from $30,144.8 million as of March 31,
2024, primarily due to increases in cash and cash equivalents,
loans, and other assets, which was partially offset by a decrease
in investment securities. Total assets decreased $686.8 million, or
2.2%, from $30,976.3 million as of June 30, 2023, primarily due to
decreases in investment securities which funded declines in
deposits and securities sold under repurchase agreements, which was
partially offset by an increase in cash and cash equivalents.
Investment securities decreased $224.5 million, or 2.6%, to
$8,401.6 million as of June 30, 2024, from $8,626.1 million as of
March 31, 2024, primarily as a result of normal pay-downs and
maturities. Investment securities decreased $774.0 million, or
8.4%, from $9,175.6 million as of June 30, 2023, primarily as a
result of normal pay-downs and maturities, partially offset by a
$100.2 million increase in fair market values and a reduction of
$1.3 million in allowance for credit losses on available-for-sale
investment securities during the period.
The following table presents the composition and comparison of
loans held for investment as of the quarters-ended:
Jun 30, 2024
Mar 31, 2024
$ Change
% Change
Jun 30, 2023
$ Change
% Change
Real Estate:
Commercial
$
9,054.5
$
9,060.4
$
(5.9
)
(0.1
)%
$
8,813.9
$
240.6
2.7
%
Construction
1,519.9
1,609.2
(89.3
)
(5.5
)
1,836.5
(316.6
)
(17.2
)
Residential
2,246.4
2,258.4
(12.0
)
(0.5
)
2,198.3
48.1
2.2
Agricultural
723.5
719.7
3.8
0.5
755.7
(32.2
)
(4.3
)
Total real estate
13,544.3
13,647.7
(103.4
)
(0.8
)
13,604.4
(60.1
)
(0.4
)
Consumer:
Indirect
733.7
739.9
(6.2
)
(0.8
)
764.1
(30.4
)
(4.0
)
Direct and advance lines
139.0
136.7
2.3
1.7
144.0
(5.0
)
(3.5
)
Credit card
76.1
72.6
3.5
4.8
72.1
4.0
5.5
Total consumer
948.8
949.2
(0.4
)
—
980.2
(31.4
)
(3.2
)
Commercial
3,052.9
2,922.2
130.7
4.5
3,002.7
50.2
1.7
Agricultural
698.2
696.0
2.2
0.3
688.0
10.2
1.5
Other, including overdrafts
3.1
0.2
2.9
NM
1.7
1.4
82.4
Deferred loan fees and costs
(12.3
)
(12.5
)
0.2
(1.6
)
(13.6
)
1.3
(9.6
)
Loans held for investment, net of deferred
loan fees and costs
$
18,235.0
$
18,202.8
$
32.2
0.2
%
$
18,263.4
$
(28.4
)
(0.2
)%
The ratio of loans held for investment to deposits was 79.7%, as
of June 30, 2024, compared to 79.8% as of March 31, 2024 and 77.5%
as of June 30, 2023.
Total deposits increased $60.7 million, or 0.3%, to $22,870.7
million as of June 30, 2024, from $22,810.0 million as of March 31,
2024, with increases in non-interest bearing and demand deposits,
which were partially offset by decreases in all other categories.
Total deposits decreased $708.5 million, or 3.0%, from $23,579.2
million as of June 30, 2023, with decreases in all types of
deposits except for time deposits $250 thousand and over.
Securities sold under repurchase agreements decreased $52.4
million, or 6.6%, to $741.8 million as of June 30, 2024, from
$794.2 million as of March 31, 2024, and decreased $188.1 million,
or 20.2%, from $929.9 million as of June 30, 2023, resulting from
normal fluctuations in the liquidity needs of the Company’s
clients.
Other borrowed funds is comprised of Federal Home Loan Bank and
Bank Term Funding Program variable-rate, overnight and fixed-rate
borrowings with contractual tenors of up to one year. Other
borrowed funds increased $88.0 million, or 3.8%, to $2,430.0
million as of June 30, 2024, from $2,342.0 million as of March 31,
2024, as a result of higher cash balances held at quarter end, and
decreased $159.0 million from June 30, 2023, as a result of
adjusting the funding mix between other borrowed funds and
long-term debt related to $250.0 million of 18-month Federal Home
Loan Bank borrowing in the first quarter of 2024.
The Company is considered to be “well-capitalized” as of June
30, 2024, having exceeded all regulatory capital adequacy
requirements. During the second quarter of 2024, the Company paid
regular common stock dividends of approximately $49.0 million, or
$0.47 per share.
CREDIT QUALITY
As of June 30, 2024, non-performing assets decreased $14.5
million, or 7.7%, to $174.9 million, compared to $189.4 million as
of March 31, 2024, primarily due to a reduction of non-accrual
loans and disposal of OREO properties.
Criticized loans decreased $12.0 million, or 1.9%, to $618.0
million as of June 30, 2024, from $630.0 million as of March 31,
2024, driven primarily by upgrades and paydowns in the agricultural
real estate and construction real estate portfolios and a $6.8
million charge-off of a construction real estate loan. The decrease
was partially offset by downgrades in the commercial real estate
portfolio.
NON-GAAP FINANCIAL MEASURES
In addition to results presented in accordance with accounting
principles generally accepted in the United States of America, or
GAAP, this press release contains the following non-GAAP financial
measures that management uses to evaluate our performance relative
to our capital adequacy standards: (i) tangible common
stockholders’ equity; (ii) tangible assets; (iii) tangible book
value per common share; (iv) tangible common stockholders’ equity
to tangible assets; (v) average tangible common stockholders’
equity; (vi) return on average tangible common stockholders’
equity; (vii) net FTE interest income; (viii) net FTE interest
margin ratio; (ix) adjusted net FTE interest income; and (x)
adjusted net FTE interest margin ratio. Tangible common
stockholders’ equity is calculated as total common stockholders’
equity less goodwill and other intangible assets (excluding
mortgage servicing rights). Tangible assets are calculated as total
assets less goodwill and other intangible assets (excluding
mortgage servicing rights). Tangible book value per common share is
calculated as tangible common stockholders’ equity divided by
common shares outstanding. Tangible common stockholders’ equity to
tangible assets is calculated as tangible common stockholders’
equity divided by tangible assets. Average tangible common
stockholders’ equity is calculated as average stockholders’ equity
less average goodwill and other intangible assets (excluding
mortgage servicing rights). Return on average tangible common
stockholders’ equity is calculated as net income available to
common shareholders divided by average tangible common
stockholders’ equity. Net FTE interest income is calculated as net
interest income, adjusted to include its FTE interest income. Net
FTE interest margin ratio is calculated as net FTE interest income
divided by average interest-earning assets. Adjusted net FTE
interest income is calculated as net GTE interest income excluding
purchase accounting interest accretion on acquired loans. Adjusted
net FTE interest margin ratio is calculated as adjusted net FTE
interest income divided by average interest earning assets. These
non-GAAP financial measures may not be comparable to similarly
titled measures reported by other companies because other companies
may not calculate these non-GAAP measures in the same manner. They
also should not be considered in isolation or as a substitute for
measures prepared in accordance with GAAP.
The Company adjusts the most directly comparable capital
adequacy GAAP financial measures to the non-GAAP financial measures
described in subclauses (i) through (vi) above to exclude goodwill
and other intangible assets (except mortgage servicing rights).
Management believes these non-GAAP financial measures, which are
intended to complement the capital ratios defined by banking
regulators and to present on a consistent basis our and our
acquired companies’ organic continuing operations without regard to
acquisition costs and other adjustments that we consider to be
unpredictable and dependent on a significant number of factors that
are outside our control, are useful to investors in evaluating the
Company’s performance because, as a general matter, they either do
not represent an actual cash expense and are inconsistent in amount
and frequency depending upon the timing and size of our
acquisitions (including the size, complexity and/or volume of past
acquisitions, which may drive the magnitude of acquisition related
costs, but may not be indicative of the size, complexity and/or
volume of future acquisitions or related costs), or they cannot be
anticipated or estimated in a particular period (in particular as
it relates to unexpected recovery amounts). This impacts the ratios
that are important to analysts and allows investors to compare
certain aspects of the Company’s capitalization to other
companies.
See the Non-GAAP Financial Measures table included herein and
the textual discussion for a reconciliation of the above described
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
Cautionary Note Regarding Forward-Looking Statements and
Factors that Could Affect Future Results
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Rule 175 promulgated thereunder, and Section 21E of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and Rule 3b-6 promulgated thereunder, that involve inherent
risks and uncertainties. Any statements about our plans,
objectives, expectations, strategies, beliefs, or future
performance or events constitute forward-looking statements. Such
statements are identified by words or phrases such as “believes,”
“expects,” “anticipates,” “plans,” “trends,” “objectives,”
“continues” or similar expressions, or future or conditional verbs
such as “will,” “would,” “should,” “could,” “might,” “may,” or
similar expressions. Forward-looking statements involve known and
unknown risks, uncertainties, assumptions, estimates and other
important factors that change over time and could cause actual
results to differ materially from any results, performance or
events expressed or implied by such forward-looking statements.
Furthermore, the following factors, among others, may cause actual
results to differ materially from current expectations in the
forward-looking statements, including those set forth in this press
release:
- new or changes in existing, governmental regulations;
- negative developments in the banking industry and increased
regulatory scrutiny;
- tax legislative initiatives or assessments;
- more stringent capital requirements, to the extent they may
become applicable to us;
- changes in accounting standards;
- any failure to comply with applicable laws and regulations,
including, but not limited to, the Community Reinvestment Act and
fair lending laws, the USA PATRIOT ACT of 2001, the Office of
Foreign Asset Control guidelines and requirements, the Bank Secrecy
Act, and the related Financial Crimes Enforcement Network and
Federal Financial Institutions Examination Council Guidelines and
regulations;
- federal deposit insurance increases;
- lending risks and risks associated with loan sector
concentrations;
- a decline in economic conditions that could reduce demand for
our products and services and negatively impact the credit quality
of loans;
- loan credit losses exceeding estimates;
- exposure to losses in collateralized loan obligation
securities;
- changes to United States trade policies, including the
imposition of tariffs and retaliatory tariffs;
- the soundness of other financial institutions;
- the ability to meet cash flow needs and availability of
financing sources for working capital and other needs;
- a loss of deposits or a change in product mix that increases
the Company’s funding costs;
- inability to access funding or to monetize liquid assets;
- changes in interest rates;
- interest rate effect on the value of our investment
securities;
- cybersecurity risks, including “denial-of-service attacks,”
“hacking,” and “identity theft” that could result in the disclosure
of confidential information;
- privacy, information security, and data protection laws, rules,
and regulations that affect or limit how we collect and use
personal information;
- the potential impairment of our goodwill and other intangible
assets;
- our reliance on other companies that provide key components of
our business infrastructure;
- events that may tarnish our reputation;
- main stream and social media contagion;
- the loss of the services of key members of our management team
and directors;
- our ability to attract and retain qualified employees to
operate our business;
- costs associated with repossessed properties, including
environmental remediation;
- the effectiveness of our systems of internal operating and
accounting controls;
- our ability to implement technology-facilitated products and
services or be successful in marketing these products and services
to our clients;
- difficulties we may face in combining the operations of
acquired entities or assets with our own operations or assessing
the effectiveness of businesses in which we make strategic
investments or with which we enter into strategic contractual
relationships;
- competition from new or existing financial institutions and
non-banks;
- investing in technology;
- incurrence of significant costs related to mergers and related
integration activities;
- the volatility in the price and trading volume of our common
stock;
- “anti-takeover” provisions in our certificate of incorporation
and regulations, which may make it more difficult for a third party
to acquire control of us even in circumstances that could be deemed
beneficial to stockholders;
- changes in our dividend policy or our ability to pay
dividends;
- our common stock not being an insured deposit;
- the potential dilutive effect of future equity issuances;
- the subordination of our common stock to our existing and
future indebtedness;
- the impact of the combined deficiencies resulting in a material
weakness in our internal control over financial reporting;
- the effect of global conditions, earthquakes, volcanoes,
tsunamis, floods, fires, drought, and other natural catastrophic
events; and
- the impact of climate change and environmental sustainability
matters.
These factors are not necessarily all the factors that could
cause our actual results, performance, or achievements to differ
materially from those expressed in or implied by any of our
forward-looking statements. Other unknown or unpredictable factors
also could harm our results.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements set forth above and included and
described in more detail in our periodic reports filed with the
Securities and Exchange Commission, or SEC, under the Securities
Exchange Act of 1934, as amended, under the caption “Risk Factors.”
Interested parties are urged to read in their entirety such risk
factors prior to making any investment decision with respect to the
Company. Forward-looking statements speak only as of the date they
are made, and we do not undertake or assume any obligation to
update publicly any of these statements to reflect actual results,
new information or future events, changes in assumptions or changes
in other factors affecting forward-looking statements, except to
the extent required by applicable laws. If we update one or more
forward-looking statements, no inference should be drawn that we
will make additional updates with respect to those or other
forward-looking statements.
Second Quarter 2024 Conference Call for Investors
First Interstate BancSystem, Inc. will host a conference call to
discuss the results for the second quarter of 2024 at 11:00 a.m.
Eastern Time (9:00 a.m. Mountain Time) on Friday, July 26, 2024.
The conference call will be accessible by telephone and through the
Internet. Participants may join the call by dialing 1-800-274-8461;
the access code is FIBANC. To participate via the Internet, visit
www.FIBK.com. The call will be recorded and made available for
replay on July 26, 2024, after 1:00 p.m. Eastern Time (11:00 a.m.
Mountain Time), through August 25, 2024, prior to 9:00 a.m. Eastern
Time (7:00 a.m. Mountain Time), by dialing 1-800-753-9146; the
access code is 24978. The call will also be archived on our
website, www.FIBK.com, for one year.
About First Interstate BancSystem, Inc.
First Interstate BancSystem, Inc. is a financial and bank
holding company focused on community banking. Incorporated in 1971
and headquartered in Billings, Montana, the Company operates
banking offices, including detached drive-up facilities, in
communities across Arizona, Colorado, Idaho, Iowa, Kansas,
Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South
Dakota, Washington, and Wyoming, in addition to offering online and
mobile banking services. Through our bank subsidiary, First
Interstate Bank, the Company delivers a comprehensive range of
banking products and services to individuals, businesses,
municipalities, and others throughout the Company’s market
areas.
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Consolidated Statements of
Income
(Unaudited)
Quarter Ended
% Change
(In millions, except % and per share
data)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
2Q24 vs 1Q24
2Q24 vs 2Q23
Net interest income
$
201.7
$
200.1
$
207.8
$
213.7
$
218.4
0.8
%
(7.6
)%
Net interest income on a fully-taxable
equivalent ("FTE") basis
203.4
201.8
209.5
215.4
220.2
0.8
(7.6
)
Provision for (reduction in) credit
losses
9.0
5.3
5.4
(0.1
)
11.7
69.8
(23.1
)
Non-interest income:
Payment services revenues
18.6
18.4
18.4
19.2
20.1
1.1
(7.5
)
Mortgage banking revenues
1.7
1.7
1.5
2.0
2.6
—
(34.6
)
Wealth management revenues
9.4
9.2
8.8
8.7
8.8
2.2
6.8
Service charges on deposit accounts
6.4
6.0
6.0
6.0
5.8
6.7
10.3
Other service charges, commissions, and
fees
2.1
2.2
2.5
2.2
2.4
(4.5
)
(12.5
)
Total fee-based revenues
38.2
37.5
37.2
38.1
39.7
1.9
(3.8
)
Investment securities loss
—
—
—
—
(0.1
)
—
(100.0
)
Other income
4.4
4.6
7.3
3.9
4.5
(4.3
)
(2.2
)
Total non-interest income
42.6
42.1
44.5
42.0
44.1
1.2
(3.4
)
Non-interest expense:
Salaries and wages
66.3
65.2
64.0
65.4
68.1
1.7
(2.6
)
Employee benefits
16.9
19.3
13.5
19.7
19.3
(12.4
)
(12.4
)
Occupancy and equipment
16.9
17.3
17.4
17.0
17.3
(2.3
)
(2.3
)
Other intangible amortization
3.7
3.7
3.9
3.9
3.9
—
(5.1
)
Other expenses
51.1
52.7
67.0
54.6
54.7
(3.0
)
(6.6
)
Other real estate owned expense
2.0
2.0
0.2
0.5
0.6
—
233.3
Total non-interest expense
156.9
160.2
166.0
161.1
163.9
(2.1
)
(4.3
)
Income before income tax
78.4
76.7
80.9
94.7
86.9
2.2
(9.8
)
Provision for income tax
18.4
18.3
19.4
22.0
19.9
0.5
(7.5
)
Net income
$
60.0
$
58.4
$
61.5
$
72.7
$
67.0
2.7
%
(10.4
)%
Weighted-average basic shares
outstanding
102,937
102,844
103,629
103,822
103,821
0.1
%
(0.9
)%
Weighted-average diluted shares
outstanding
103,093
103,040
103,651
103,826
103,823
0.1
(0.7
)
Earnings per share - basic
$
0.58
$
0.57
$
0.59
$
0.70
$
0.65
1.8
(10.8
)
Earnings per share - diluted
0.58
0.57
0.59
0.70
0.65
1.8
(10.8
)
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Consolidated Balance
Sheets
(Unaudited)
% Change
(In millions, except % and per share
data)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
2Q24 vs 1Q24
2Q24 vs 2Q23
Assets:
Cash and due from banks
$
390.2
$
315.8
$
378.2
$
371.5
$
479.0
23.6
%
(18.5
)%
Interest-bearing deposits in banks
568.2
319.1
199.7
219.5
201.4
78.1
182.1
Federal funds sold
0.1
0.1
0.1
2.1
0.1
—
—
Cash and cash equivalents
958.5
635.0
578.0
593.1
680.5
50.9
40.9
Investment securities, net
8,401.6
8,626.1
9,049.4
8,887.2
9,175.6
(2.6
)
(8.4
)
Investment in Federal Home Loan Bank and
Federal Reserve Bank stock
182.3
178.4
223.2
189.5
210.4
2.2
(13.4
)
Loans held for sale, at fair value
22.3
22.7
47.4
59.1
76.5
(1.8
)
(70.8
)
Loans held for investment
18,235.0
18,202.8
18,279.6
18,213.3
18,263.4
0.2
(0.2
)
Allowance for credit losses
(232.8
)
(227.7
)
(227.7
)
(226.7
)
(224.6
)
2.2
3.7
Net loans held for investment
18,002.2
17,975.1
18,051.9
17,986.6
18,038.8
0.2
(0.2
)
Goodwill and intangible assets (excluding
mortgage servicing rights)
1,202.9
1,206.6
1,210.3
1,214.1
1,218.0
(0.3
)
(1.2
)
Company owned life insurance
507.6
504.7
502.4
500.8
502.0
0.6
1.1
Premises and equipment
436.5
439.9
444.3
446.3
443.7
(0.8
)
(1.6
)
Other real estate owned
6.7
14.4
16.5
11.6
14.4
(53.5
)
(53.5
)
Mortgage servicing rights
27.0
27.6
28.3
29.1
29.8
(2.2
)
(9.4
)
Other assets
541.9
514.3
519.5
623.4
586.6
5.4
(7.6
)
Total assets
$
30,289.5
$
30,144.8
$
30,671.2
$
30,540.8
$
30,976.3
0.5
%
(2.2
)%
Liabilities and stockholders' equity:
Deposits
$
22,870.7
$
22,810.0
$
23,323.1
$
23,679.5
$
23,579.2
0.3
%
(3.0
)%
Securities sold under repurchase
agreements
741.8
794.2
782.7
889.5
929.9
(6.6
)
(20.2
)
Long-term debt
383.4
370.8
120.8
120.8
120.8
3.4
217.4
Other borrowed funds
2,430.0
2,342.0
2,603.0
2,067.0
2,589.0
3.8
(6.1
)
Subordinated debentures held by subsidiary
trusts
163.1
163.1
163.1
163.1
163.1
—
—
Other liabilities
475.2
455.0
451.0
535.4
473.1
4.4
0.4
Total liabilities
27,064.2
26,935.1
27,443.7
27,455.3
27,855.1
0.5
(2.8
)
Stockholders' equity:
Common stock
2,453.9
2,450.7
2,448.9
2,484.9
2,481.4
0.1
(1.1
)
Retained earnings
1,156.9
1,145.9
1,135.1
1,122.3
1,098.8
1.0
5.3
Accumulated other comprehensive loss
(385.5
)
(386.9
)
(356.5
)
(521.7
)
(459.0
)
(0.4
)
(16.0
)
Total stockholders' equity
3,225.3
3,209.7
3,227.5
3,085.5
3,121.2
0.5
3.3
Total liabilities and stockholders'
equity
$
30,289.5
$
30,144.8
$
30,671.2
$
30,540.8
$
30,976.3
0.5
%
(2.2
)%
Common shares outstanding at period
end
104,561
104,572
103,942
105,011
105,021
—
%
(0.4
)%
Book value per common share at period
end
$
30.85
$
30.69
$
31.05
$
29.38
$
29.72
0.5
3.8
Tangible book value per common share at
period end**
19.34
19.16
19.41
17.82
18.12
0.9
6.7
**Non-GAAP financial measure - see
Non-GAAP Financial Measures included herein for a reconciliation of
book value per common share (GAAP) at period end to tangible book
value per common share (non-GAAP) at period end.
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Loans and Deposits
(Unaudited)
% Change
(In millions, except %)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
2Q24 vs 1Q24
2Q24 vs 2Q23
Loans held for investment:
Real Estate:
Commercial
$
9,054.5
$
9,060.4
$
8,869.2
$
8,766.2
$
8,813.9
(0.1
)%
2.7
%
Construction
1,519.9
1,609.2
1,826.5
1,930.3
1,836.5
(5.5
)
(17.2
)
Residential
2,246.4
2,258.4
2,244.3
2,212.2
2,198.3
(0.5
)
2.2
Agricultural
723.5
719.7
716.8
731.5
755.7
0.5
(4.3
)
Total real estate
13,544.3
13,647.7
13,656.8
13,640.2
13,604.4
(0.8
)
(0.4
)
Consumer:
Indirect
733.7
739.9
740.9
751.7
764.1
(0.8
)
(4.0
)
Direct
139.0
136.7
141.6
142.3
144.0
1.7
(3.5
)
Credit card
76.1
72.6
76.5
71.6
72.1
4.8
5.5
Total consumer
948.8
949.2
959.0
965.6
980.2
—
(3.2
)
Commercial
3,052.9
2,922.2
2,906.8
2,925.1
3,002.7
4.5
1.7
Agricultural
698.2
696.0
769.4
690.5
688.0
0.3
1.5
Other
3.1
0.2
0.1
5.0
1.7
NM
82.4
Deferred loan fees and costs
(12.3
)
(12.5
)
(12.5
)
(13.1
)
(13.6
)
(1.6
)
(9.6
)
Loans held for investment
$
18,235.0
$
18,202.8
$
18,279.6
$
18,213.3
$
18,263.4
0.2
%
(0.2
)%
Deposits:
Non-interest-bearing
$
6,174.0
$
5,900.3
$
6,029.6
$
6,402.6
$
6,518.2
4.6
%
(5.3
)%
Interest-bearing:
Demand
6,122.3
6,103.6
6,507.8
6,317.9
6,481.9
0.3
(5.5
)
Savings
7,733.6
7,872.2
7,775.8
7,796.3
7,836.7
(1.8
)
(1.3
)
Time, $250 and over
786.1
819.3
811.6
817.1
657.9
(4.1
)
19.5
Time, other
2,054.7
2,114.6
2,198.3
2,345.6
2,084.5
(2.8
)
(1.4
)
Total interest-bearing
16,696.7
16,909.7
17,293.5
17,276.9
17,061.0
(1.3
)
(2.1
)
Total deposits
$
22,870.7
$
22,810.0
$
23,323.1
$
23,679.5
$
23,579.2
0.3
%
(3.0
)%
Total core deposits (1)
$
22,084.6
$
21,990.7
$
22,511.5
$
22,862.4
$
22,921.3
0.4
%
(3.7
)%
(1) Core deposits are defined as total
deposits less time deposits, $250 thousand and over, and brokered
deposits.
NM - not meaningful
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Credit Quality
(Unaudited)
% Change
(In millions, except %)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
2Q24 vs 1Q24
2Q24 vs 2Q23
Allowance for Credit Losses:
Allowance for credit losses
$
232.8
$
227.7
$
227.7
$
226.7
$
224.6
2.2
%
3.7
%
As a percentage of loans held for
investment
1.28
%
1.25
%
1.25
%
1.24
%
1.23
%
As a percentage of non-accrual loans
140.58
132.38
214.00
278.50
260.86
Net loan charge-offs during quarter
$
13.5
$
8.4
$
4.8
$
1.1
$
11.4
60.7
%
18.4
%
Annualized as a percentage of average
loans
0.30
%
0.18
%
0.10
%
0.02
%
0.25
%
Non-Performing Assets:
Non-accrual loans
$
165.6
$
172.0
$
106.4
$
81.4
$
86.1
(3.7
)%
92.3
%
Accruing loans past due 90 days or
more
2.6
3.0
4.9
3.2
6.7
(13.3
)
(61.2
)
Total non-performing loans
168.2
175.0
111.3
84.6
92.8
(3.9
)
81.3
Other real estate owned
6.7
14.4
16.5
11.6
14.4
(53.5
)
(53.5
)
Total non-performing assets
$
174.9
$
189.4
$
127.8
$
96.2
$
107.2
(7.7
)%
63.2
%
Non-performing assets as a percentage
of:
Loans held for investment and OREO
0.96
%
1.04
%
0.70
%
0.53
%
0.59
%
Total assets
0.58
0.63
0.42
0.31
0.35
Non-accrual loans to loans held for
investment
0.91
0.94
0.58
0.45
0.47
Accruing Loans 30-89 Days Past Due
$
46.4
$
62.8
$
67.3
$
51.2
$
49.5
(26.1
)%
(6.3
)%
Criticized Loans:
Special Mention
$
162.7
$
160.1
$
210.5
$
197.3
$
221.9
1.6
%
(26.7
)%
Substandard
409.3
405.8
457.1
414.6
386.9
0.9
5.8
Doubtful
46.0
64.1
20.7
21.0
32.8
(28.2
)
40.2
Total
$
618.0
$
630.0
$
688.3
$
632.9
$
641.6
(1.9
)%
(3.7
)%
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Selected Ratios -
Annualized
(Unaudited)
At or for the Quarter ended:
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Annualized Financial Ratios
(GAAP)
Return on average assets
0.80
%
0.77
%
0.80
%
0.94
%
0.86
%
Return on average common stockholders'
equity
7.55
7.28
7.77
9.20
8.44
Yield on average earning assets
4.80
4.74
4.69
4.63
4.52
Cost of average interest-bearing
liabilities
2.39
2.39
2.24
2.09
1.88
Interest rate spread
2.41
2.35
2.45
2.54
2.64
Efficiency ratio
62.71
64.62
64.25
61.48
60.95
Loans held for investment to deposit
ratio
79.73
79.80
78.38
76.92
77.46
Annualized Financial Ratios -
Operating** (Non-GAAP)
Net FTE interest margin ratio
3.00
%
2.93
%
3.01
%
3.07
%
3.12
%
Tangible book value per common share
$
19.34
$
19.16
$
19.41
$
17.82
$
18.12
Tangible common stockholders' equity to
tangible assets
6.95
%
6.92
%
6.85
%
6.38
%
6.40
%
Return on average tangible common
stockholders' equity
12.12
11.63
12.65
15.04
13.69
Consolidated Capital Ratios
Total risk-based capital to total
risk-weighted assets
13.80
%
*
13.64
%
13.28
%
13.19
%
12.90
%
Tier 1 risk-based capital to total
risk-weighted assets
11.53
*
11.37
11.08
11.02
10.76
Tier 1 common capital to total
risk-weighted assets
11.53
*
11.37
11.08
11.02
10.76
Leverage Ratio
8.44
*
8.28
8.22
8.22
7.99
*Preliminary estimate - may be subject to
change. The regulatory capital ratios presented include the
assumption of the transitional method as a result of legislation by
the United States Congress to provide relief for the economy and
financial institutions in the United States from the COVID‑19
pandemic. The referenced relief ends on December 31, 2024, which
allows a total five-year phase-in of the impact of CECL on capital
and relief over the next two years for the impact on the allowance
for credit losses resulting from the COVID‑19 pandemic.
**Non-GAAP financial measures - see
Non-GAAP Financial Measures included herein for a reconciliation of
net interest margin to net FTE interest margin, book value per
common share to tangible book value per common share, return on
average common stockholders’ equity (GAAP) to return on average
tangible common stockholders’ equity, and tangible common
stockholders’ equity to tangible assets (non-GAAP).
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Average Balance Sheets
(Unaudited)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
(In millions, except %)
Average
Balance
Interest(2)
Average
Rate
Average
Balance
Interest(2)
Average
Rate
Average
Balance
Interest(2)
Average
Rate
Interest-earning assets:
Loans (1)
$
18,253.9
$
254.4
5.61
%
$
18,289.2
$
253.6
5.58
%
$
18,351.5
$
243.2
5.32
%
Investment securities
Taxable
8,311.6
62.3
3.01
8,726.3
64.5
2.97
9,139.2
66.1
2.90
Tax-exempt
187.8
0.8
1.71
189.0
0.9
1.92
192.9
1.0
2.08
Investment in FHLB and FRB stock
185.5
3.3
7.16
198.3
3.3
6.69
225.2
3.4
6.06
Interest-bearing deposits in banks
348.0
4.9
5.66
296.7
4.1
5.56
419.4
5.4
5.16
Federal funds sold
0.1
—
—
0.1
—
—
0.6
—
—
Total interest-earning assets
$
27,286.9
$
325.7
4.80
%
$
27,699.6
$
326.4
4.74
%
$
28,328.8
$
319.1
4.52
%
Non-interest-earning assets
2,853.7
2,825.6
2,958.8
Total assets
$
30,140.6
$
30,525.2
$
31,287.6
Interest-bearing liabilities:
Demand deposits
$
6,142.9
$
13.9
0.91
%
$
6,150.2
$
12.9
0.84
%
$
6,417.2
$
9.9
0.62
%
Savings deposits
7,760.3
40.8
2.11
7,781.8
39.1
2.02
7,951.3
28.4
1.43
Time deposits
2,863.4
26.2
3.68
2,972.3
27.1
3.67
2,517.1
15.3
2.44
Repurchase agreements
775.5
1.9
0.99
802.1
2.3
1.15
1,020.6
1.5
0.59
Other borrowed funds
2,501.9
31.8
5.11
2,771.9
35.6
5.17
2,966.4
39.3
5.31
Long-term debt
377.2
4.4
4.69
356.8
4.3
4.85
120.8
1.4
4.65
Subordinated debentures held by subsidiary
trusts
163.1
3.3
8.14
163.1
3.3
8.14
163.1
3.1
7.62
Total interest-bearing liabilities
$
20,584.3
$
122.3
2.39
%
$
20,998.2
$
124.6
2.39
%
$
21,156.5
$
98.9
1.88
%
Non-interest-bearing deposits
5,868.7
5,832.2
6,521.9
Other non-interest-bearing liabilities
492.3
466.4
426.3
Stockholders’ equity
3,195.3
3,228.4
3,182.9
Total liabilities and stockholders’
equity
$
30,140.6
$
30,525.2
$
31,287.6
Net FTE interest income (non-GAAP)(3)
$
203.4
$
201.8
$
220.2
Less FTE adjustments (2)
(1.7
)
(1.7
)
(1.8
)
Net interest income from consolidated
statements of income
$
201.7
$
200.1
$
218.4
Interest rate spread
2.41
%
2.35
%
2.64
%
Net interest margin
2.97
2.91
3.09
Net FTE interest margin (non-GAAP)(3)
3.00
2.93
3.12
Cost of funds, including
non-interest-bearing demand deposits (4)
1.86
1.87
1.43
(1)
Average loan balances include loans held
for sale and loans held for investment, net of deferred fees and
costs, which include non-accrual loans. Interest income includes
amortization of deferred loan fees net of deferred loan costs,
which is not material.
(2)
Management believes fully taxable
equivalent, or FTE, interest income is useful to investors in
evaluating the Company’s performance as a comparison of the returns
between a tax-free investment and a taxable alternative. The
Company adjusts interest income and average rates for tax exempt
loans and securities to an FTE basis utilizing a 21.00% tax
rate.
(3)
Non-GAAP financial measure - see Non-GAAP
Financial Measures included herein for a reconciliation to GAAP
measures.
(4)
Calculated by dividing total annualized interest on
interest-bearing liabilities by the sum of total interest-bearing
liabilities plus non-interest-bearing deposits.
FIRST INTERSTATE BANCSYSTEM,
INC. AND SUBSIDIARIES
Non-GAAP Financial
Measures
(Unaudited)
As of or For the Quarter
Ended
(In millions, except % and per share
data)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Total common stockholders' equity
(GAAP)
(A)
$ 3,225.3
$ 3,209.7
$ 3,227.5
$ 3,085.5
$ 3,121.2
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
1,202.9
1,206.6
1,210.3
1,214.1
1,218.0
Tangible common stockholders' equity
(Non-GAAP)
(B)
$ 2,022.4
$ 2,003.1
$ 2,017.2
$ 1,871.4
$ 1,903.2
Total assets (GAAP)
$ 30,289.5
$ 30,144.8
$ 30,671.2
$ 30,540.8
$ 30,976.3
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
1,202.9
1,206.6
1,210.3
1,214.1
1,218.0
Tangible assets (Non-GAAP)
(C)
$ 29,086.6
$ 28,938.2
$ 29,460.9
$ 29,326.7
$ 29,758.3
Average Balances:
Total common stockholders' equity
(GAAP)
(D)
$ 3,195.3
$ 3,228.4
$ 3,140.3
$ 3,133.8
$ 3,182.9
Less goodwill and other intangible assets
(excluding mortgage servicing rights)
1,204.6
1,208.4
1,212.1
1,216.0
1,219.8
Average tangible common stockholders'
equity (Non-GAAP)
(E)
$ 1,990.7
$ 2,020.0
$ 1,928.2
$ 1,917.8
$ 1,963.1
Net interest income
(F)
$ 201.7
$ 200.1
$ 207.8
$ 213.7
$ 218.4
FTE interest income
1.7
1.7
1.7
1.7
1.8
Net FTE interest income (Non-GAAP)
(G)
203.4
201.8
209.5
215.4
220.2
Less purchase accounting accretion
5.1
6.5
5.4
5.2
4.6
Adjusted net FTE interest income
(Non-GAAP)
(H)
$ 198.3
$ 195.3
$ 204.1
$ 210.2
$ 215.6
Average interest-earning assets
(I)
$ 27,286.9
$ 27,699.6
$ 27,569.4
$ 27,796.8
$ 28,328.8
Total quarterly average assets
(J)
30,140.6
30,525.2
30,507.7
30,752.3
31,287.6
Annualized net income available to common
shareholders
(K)
241.3
234.9
244.0
288.4
268.7
Common shares outstanding
(L)
104,561
104,572
103,942
105,011
105,021
Return on average assets (GAAP)
(K) / (J)
0.80 %
0.77 %
0.80 %
0.94 %
0.86 %
Return on average common stockholders'
equity (GAAP)
(K) / (D)
7.55
7.28
7.77
9.20
8.44
Average common stockholders' equity to
average assets (GAAP)
(D) / (J)
10.60
10.58
10.29
10.19
10.17
Book value per common share (GAAP)
(A) / (L)
$ 30.85
$ 30.69
$ 31.05
$ 29.38
$ 29.72
Tangible book value per common share
(Non-GAAP)
(B) / (L)
19.34
19.16
19.41
17.82
18.12
Tangible common stockholders' equity to
tangible assets (Non-GAAP)
(B) / (C)
6.95 %
6.92 %
6.85 %
6.38 %
6.40 %
Return on average tangible common
stockholders' equity (Non-GAAP)
(K) / (E)
12.12
11.63
12.65
15.04
13.69
Net interest margin (GAAP)
(F*) / (I)
2.97
2.91
2.99
3.05
3.09
Net FTE interest margin (Non-GAAP)
(G*) / (I)
3.00
2.93
3.01
3.07
3.12
Adjusted FTE net interest margin
(Non-GAAP)
(H*) / (I)
2.92
2.84
2.94
3.00
3.05
*Annualized
(FIBK-ER)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725569971/en/
David Della Camera, CFA Deputy Chief Financial Officer First
Interstate BancSystem, Inc. (406) 255-5363
investor.relations@fib.com www.FIBK.com
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