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Share Name | Share Symbol | Market | Type |
---|---|---|---|
First Interstate BancSystem Inc | NASDAQ:FIBK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.76 | -2.92% | 25.23 | 21.06 | 25.99 | 25.80 | 25.07 | 25.25 | 571,629 | 01:00:00 |
First Interstate BancSystem, Inc. (NASDAQ: FIBK) (the “Company”) today reported financial results for the third quarter of 2023. For the quarter, the Company reported net income of $72.7 million, or $0.70 per share, which compares to net income of $67.0 million, or $0.65 per share, for the second quarter of 2023, and net income of $85.7 million, or $0.80 per share, for the third quarter of 2022.
There were no pre-tax acquisition costs in the second and third quarters of 2023, compared to pre-tax acquisition costs of $4.0 million in the third quarter of 2022, which were related to the acquisition of Great Western Bancorp, Inc. (“Great Western”), the parent company of Great Western Bank (“GWB”), which reduced earnings by $0.03 per share during the third quarter of 2022.
HIGHLIGHTS
“The strength of the franchise and balance sheet we have built enabled us to deliver another quarter of strong financial performance despite the impact of larger macroeconomic trends that continue to present challenges for the broader banking industry,” said Kevin P. Riley, President and Chief Executive Officer of First Interstate BancSystem, Inc. “We are executing well on our strategic priorities in the current environment, which enabled us to generate positive trends in a number of key areas including an increase in our total deposits, more stability in our net interest margin, lower expenses, improved asset quality, and an increase in regulatory capital ratios.
“While we will remain conservative in our new loan production, we continue to believe that this is a favorable environment to add new commercial and retail customers throughout our markets given the financial strength, breadth of products and services, and superior level of service that we offer. We believe our continued success in adding new relationships will enhance our ability to generate long-term profitable growth and create additional value for our shareholders in the years to come,” said Mr. Riley.
____________________________
1
Non-GAAP financial measure - see Non-GAAP Financial Measures included herein for a reconciliation to GAAP measures.
2
Preliminary estimate - may be subject to change.
DIVIDEND DECLARATION
On October 24, 2023, the Company’s board of directors declared a dividend of $0.47 per common share, payable on November 16, 2023, to common stockholders of record as of November 6, 2023. The dividend equates to a 7.2% annualized yield based on the $26.10 per share average closing price of the Company’s common stock as reported on NASDAQ during the third quarter of 2023.
NET INTEREST INCOME
Net interest income decreased $4.7 million, or 2.2%, to $213.7 million, during the third quarter of 2023, compared to net interest income of $218.4 million during the second quarter of 2023 and decreased $53.1 million, or 19.9%, during the third quarter of 2023 from the third quarter of 2022, primarily due to an increase in interest expense as a result of a higher levels and costs of interest-bearing liabilities.
The net interest margin ratio, on an FTE basis, was 3.07% for the third quarter of 2023, compared to 3.12% during the second quarter of 2023, and 3.71% during the third quarter of 2022. Excluding interest accretion from the fair value of acquired loans, on a quarter-over-quarter basis, the net interest margin ratio was 3.00%, a decrease of 5 basis points from the prior quarter, primarily driven by higher interest-bearing deposit costs, which was partially offset by loan yield expansion. Excluding interest accretion from the fair value of acquired loans, on a year-over-year basis, the net interest margin ratio decreased 47 basis points, primarily as a result of higher short-term borrowing costs, and higher interest-bearing deposit costs, which was partially offset by loan yield expansion and a modestly favorable change in the mix of earning assets.
(REDUCTION OF) PROVISION FOR CREDIT LOSSES
During the third quarter of 2023, the Company recorded a reduction of credit losses of $0.1 million, which included a provision for credit losses of $3.2 million on loans held for investment, reduction of credit losses for unfunded commitments of $2.0 million, and reduction of credit losses for investment securities of $1.3 million. This compares to a provision for credit losses of $11.7 million during the second quarter of 2023 and a provision for credit losses of $8.4 million during the third quarter of 2022.
For the third quarter of 2023, the allowance for credit losses included net charge-offs of $1.1 million, or an annualized 0.02% of average loans outstanding, compared to net charge-offs of $11.4 million, or an annualized 0.25% of average loans outstanding, for the second quarter of 2023, and net charge-offs of $12.0 million, or an annualized 0.27% of average loans outstanding, for the third quarter of 2022. Net loan charge-offs in the third quarter of 2023 were composed of charge-offs of $6.2 million and recoveries of $5.1 million.
The Company’s allowance for credit losses as a percentage of period-end loans held for investment increased to 1.24% at September 30, 2023 from 1.23% at June 30, 2023, and from 1.21% at September 30, 2022. Coverage of non-performing loans increased to 268.0% at September 30, 2023, compared to 242.0% at June 30, 2023 and increased from 247.7% at September 30, 2022.
NON-INTEREST INCOME
For the Quarter Ended
Sep 30, 2023
Jun 30, 2023
$ Change
% Change
Sep 30, 2022
$ Change
% Change
(Dollars in millions)
Payment services revenues
$
19.2
$
20.1
$
(0.9
)
(4.5
)%
$
20.4
$
(1.2
)
(5.9
)%
Mortgage banking revenues
2.0
2.6
(0.6
)
(23.1
)
2.7
(0.7
)
(25.9
)
Wealth management revenues
8.7
8.8
(0.1
)
(1.1
)
8.5
0.2
2.4
Service charges on deposit accounts
6.0
5.8
0.2
3.4
5.7
0.3
5.3
Other service charges, commissions, and fees
2.2
2.4
(0.2
)
(8.3
)
4.7
(2.5
)
(53.2
)
Investment securities loss
—
(0.1
)
0.1
100.0
(24.2
)
24.2
100.0
Other income
3.9
4.5
(0.6
)
(13.3
)
5.1
(1.2
)
(23.5
)
Total non-interest income
$
42.0
$
44.1
$
(2.1
)
(4.8
)%
$
22.9
$
19.1
83.4
%
Non-interest income was $42.0 million for the third quarter of 2023, decreasing $2.1 million compared to the second quarter of 2023. Compared to the third quarter of 2022, non-interest income increased $19.1 million. The increase was primarily due to the realized loss of $24.2 million on the disposition of available-for-sale investment securities during the third quarter of 2022 when there were no such losses realized in the third quarter of 2023.
NON-INTEREST EXPENSE
For the Quarter Ended
Sep 30, 2023
Jun 30, 2023
$ Change
% Change
Sep 30, 2022
$ Change
% Change
(Dollars in millions)
Salaries and wages
$
65.4
$
68.1
$
(2.7
)
(4.0
)%
$
71.9
$
(6.5
)
(9.0
)%
Employee benefits
19.7
19.3
0.4
2.1
19.6
0.1
0.5
Occupancy and equipment
17.0
17.3
(0.3
)
(1.7
)
17.1
(0.1
)
(0.6
)
Other intangible amortization
3.9
3.9
—
—
4.1
(0.2
)
(4.9
)
Other expenses
54.6
54.7
(0.1
)
(0.2
)
56.5
(1.9
)
(3.4
)
Other real estate owned expense
0.5
0.6
(0.1
)
(16.7
)
—
0.5
100.0
Acquisition related expenses
—
—
—
—
4.0
(4.0
)
(100.0
)
Total non-interest expense
$
161.1
$
163.9
$
(2.8
)
(1.7
)%
$
173.2
$
(12.1
)
(7.0
)%
The Company’s non-interest expense was $161.1 million for the third quarter of 2023, a decrease of $2.8 million from the second quarter of 2023. The quarter-over-quarter decrease was primarily due to decreases in severance costs and incentive accruals included within salaries and wages during the second quarter of 2023.
Compared to the third quarter of 2022, non-interest expense decreased by $12.1 million. The decrease is partially due to the acquisition expenses incurred during the third quarter of 2022 related to the acquisition of GWB and partially due to lower severance and incentive accruals included within salaries and wages and lower advertising and donation expenses included within other expenses during the third quarter of 2023.
BALANCE SHEET
Total assets decreased $435.5 million, or 1.4%, to $30,540.8 million as of September 30, 2023, from $30,976.3 million as of June 30, 2023, primarily due to a decrease in investment securities and cash and cash equivalents which were used to paydown other borrowed funds. Total assets decreased $803.9 million, or 2.6%, from $31,344.7 million as of September 30, 2022, primarily due to a decrease in investment securities, partially offset by increases in loans held for investment.
Investment securities decreased $288.4 million, or 3.1%, to $8,887.2 million as of September 30, 2023, from $9,175.6 million as of June 30, 2023, primarily as a result of normal cash flow activity and declines in fair market values. Investment securities decreased $1,381.9 million, or 13.5%, from $10,269.1 million as of September 30, 2022, which was primarily the result of the disposition of $853.0 million of investment securities during the first quarter of 2023, normal cash flow activity, and declines in fair market values during the period.
The following table presents the composition and comparison of loans held for investment as of the quarters-ended:
September 30, 2023
June 30, 2023
$ Change
% Change
September 30, 2022
$ Change
% Change
Real Estate:
Commercial
$
8,766.2
$
8,813.9
$
(47.7
)
(0.5
)%
$
8,026.9
$
739.3
9.2
%
Construction
1,930.3
1,836.5
93.8
5.1
2,023.0
(92.7
)
(4.6
)
Residential
2,212.2
2,198.3
13.9
0.6
2,127.7
84.5
4.0
Agricultural
731.5
755.7
(24.2
)
(3.2
)
800.9
(69.4
)
(8.7
)
Total real estate
13,640.2
13,604.4
35.8
0.3
12,978.5
661.7
5.1
Consumer:
Indirect
751.7
764.1
(12.4
)
(1.6
)
780.8
(29.1
)
(3.7
)
Direct and advance lines
142.3
144.0
(1.7
)
(1.2
)
155.0
(12.7
)
(8.2
)
Credit card
71.6
72.1
(0.5
)
(0.7
)
74.2
(2.6
)
(3.5
)
Total consumer
965.6
980.2
(14.6
)
(1.5
)
1,010.0
(44.4
)
(4.4
)
Commercial
2,925.1
3,002.7
(77.6
)
(2.6
)
2,966.1
(41.0
)
(1.4
)
Agricultural
690.5
688.0
2.5
0.4
658.2
32.3
4.9
Other, including overdrafts
5.0
1.7
3.3
194.1
3.8
1.2
31.6
Deferred loan fees and costs
(13.1
)
(13.6
)
0.5
(3.7
)
(13.1
)
—
—
Loans held for investment, net of deferred loan fees and costs
$
18,213.3
$
18,263.4
$
(50.1
)
(0.3
)%
$
17,603.5
$
609.8
3.5
%
The ratio of loans held for investment to deposits decreased modestly to 76.9%, as of September 30, 2023, compared to 77.5% as of June 30, 2023, and increased from 68.0% as of September 30, 2022.
Total deposits increased $100.3 million, or 0.4%, to $23,679.5 million as of September 30, 2023, from $23,579.2 million as of June 30, 2023. Total deposits decreased $2,205.3 million, or 8.5%, from $25,884.8 million as of September 30, 2022, with decreases in all categories with the exception of time deposits.
Securities sold under repurchase agreements decreased $40.4 million, or 4.3%, to $889.5 million as of September 30, 2023, from $929.9 million as of June 30, 2023, and decreased $186.1 million, or 17.3%, from $1,075.6 million as of September 30, 2022, as a result of normal fluctuations in the liquidity needs of the Company’s clients.
Other borrowed funds is comprised of Federal Home Loan Bank variable rate overnight and fixed rate borrowings with contractual tenors of up to five-months. Other borrowed funds decreased $522.0 million, or 20.2%, to $2,067.0 million as of September 30, 2023, from $2,589.0 million as of June 30, 2023, and increased $1,442.0 million from September 30, 2022, as a result of changes in total deposits and cash and cash equivalents.
The Company is considered to be “well-capitalized” as of September 30, 2023, having exceeded all regulatory capital adequacy requirements. During the third quarter of 2023, the Company paid regular common stock dividends of approximately $49.2 million, or $0.47 per share.
CREDIT QUALITY
As of September 30, 2023, non-performing assets decreased $11.0 million, or 10.3%, to $96.2 million, compared to $107.2 million as of June 30, 2023, primarily due to a decrease in non-accrual loans of $4.7 million, a decrease in accruing loans past due 90 days or more of $3.5 million, and a decrease in property classified as other real estate owned of $2.8 million.
Criticized loans decreased $8.7 million, or 1.4%, to $632.9 million as of September 30, 2023, from $641.6 million as of June 30, 2023.
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; and (vii) adjusted net interest margin ratio (FTE). 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. Adjusted net interest margin ratio (FTE) is calculated as adjusted net FTE interest income divided by adjusted 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). To derive the non-GAAP financial measure identified in subclause (vii) above, the Company adjusts its net interest income to include its FTE interest income and exclude purchase accounting interest accretion on acquired loans. 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, Great Western’s or the combined company’s 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:
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.
Third Quarter 2023 Conference Call for Investors
First Interstate BancSystem, Inc. will host a conference call to discuss the results for the third quarter of 2023 at 11 a.m. Eastern Time (9 a.m. Mountain Time) on Thursday, October 26, 2023. The conference call will be accessible by telephone and through the Internet. Participants may join the call by dialing 1-888-259-6580; the access code is 19044427. To participate via the Internet, visit www.FIBK.com. The call will be recorded and made available for replay on October 26, 2023, after 1 p.m. Eastern Time (11 a.m. Mountain Time), through November 25, 2023, prior to 9 a.m. Eastern Time (7 a.m. Mountain Time), by dialing 1-877-674-7070. The replay access code is 044427. 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)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
3Q23 vs 2Q23
3Q23 vs 3Q22
Net interest income
$
213.7
$
218.4
$
238.9
$
258.4
$
266.8
(2.2
)%
(19.9
)%
Net interest income on a fully-taxable equivalent ("FTE") basis
215.4
220.2
240.7
260.7
268.9
(2.2
)
(19.9
)
(Reduction in) provision for credit losses
(0.1
)
11.7
15.2
14.7
8.4
(100.9
)
NM
Non-interest income:
Payment services revenues
19.2
20.1
18.7
19.4
20.4
(4.5
)
(5.9
)
Mortgage banking revenues
2.0
2.6
2.3
2.6
2.7
(23.1
)
(25.9
)
Wealth management revenues
8.7
8.8
9.0
8.4
8.5
(1.1
)
2.4
Service charges on deposit accounts
6.0
5.8
5.2
4.9
5.7
3.4
5.3
Other service charges, commissions, and fees
2.2
2.4
2.4
2.9
4.7
(8.3
)
(53.2
)
Total fee-based revenues
38.1
39.7
37.6
38.2
42.0
(4.0
)
(9.3
)
Investment securities loss
—
(0.1
)
(23.4
)
—
(24.2
)
100.0
100.0
Other income
3.9
4.5
2.2
3.4
5.1
(13.3
)
(23.5
)
Total non-interest income
42.0
44.1
16.4
41.6
22.9
(4.8
)
83.4
Non-interest expense:
Salaries and wages
65.4
68.1
65.6
75.4
71.9
(4.0
)
(9.0
)
Employee benefits
19.7
19.3
22.8
17.3
19.6
2.1
0.5
Occupancy and equipment
17.0
17.3
18.4
17.9
17.1
(1.7
)
(0.6
)
Other intangible amortization
3.9
3.9
4.0
4.1
4.1
—
(4.9
)
Other expenses
54.6
54.7
54.8
54.5
56.5
(0.2
)
(3.4
)
Other real estate owned expense
0.5
0.6
0.2
2.2
—
(16.7
)
100.0
Acquisition related expenses
—
—
—
3.9
4.0
—
(100.0
)
Total non-interest expense
161.1
163.9
165.8
175.3
173.2
(1.7
)
(7.0
)
Income before income tax
94.7
86.9
74.3
110.0
108.1
9.0
(12.4
)
Provision for income tax
22.0
19.9
18.0
24.2
22.4
10.6
(1.8
)
Net income
$
72.7
$
67.0
$
56.3
$
85.8
$
85.7
8.5
%
(15.2
)%
Weighted-average basic shares outstanding
103,822
103,821
103,738
104,445
106,526
—
%
(2.5
)%
Weighted-average diluted shares outstanding
103,826
103,823
103,819
104,548
106,590
—
(2.6
)
Earnings per share - basic
$
0.70
$
0.65
$
0.54
$
0.82
$
0.80
7.7
(12.5
)
Earnings per share - diluted
0.70
0.65
0.54
0.82
0.80
7.7
(12.5
)
NM - not meaningful
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
% Change
(In millions, except % and per share data)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
3Q23 vs 2Q23
3Q23 vs 3Q22
Assets:
Cash and due from banks
$
371.5
$
479.0
$
332.9
$
349.2
$
390.4
(22.4
)%
(4.8
)%
Interest-bearing deposits in banks
219.5
201.4
747.7
521.2
201.4
9.0
9.0
Federal funds sold
2.1
0.1
0.1
0.1
0.1
NM
NM
Cash and cash equivalents
593.1
680.5
1,080.7
870.5
591.9
(12.8
)
0.2
Investment securities, net
8,887.2
9,175.6
9,425.5
10,397.9
10,269.1
(3.1
)
(13.5
)
Investment in Federal Home Loan Bank and Federal Reserve Bank stock
189.5
210.4
214.5
198.6
131.9
(9.9
)
43.7
Loans held for sale, at fair value
59.1
76.5
80.9
79.9
93.6
(22.7
)
(36.9
)
Loans held for investment
18,213.3
18,263.4
18,245.7
18,099.2
17,603.5
(0.3
)
3.5
Allowance for credit losses
(226.7
)
(224.6
)
(226.1
)
(220.1
)
(213.0
)
0.9
6.4
Net loans held for investment
17,986.6
18,038.8
18,019.6
17,879.1
17,390.5
(0.3
)
3.4
Goodwill and intangible assets (excluding mortgage servicing rights)
1,214.1
1,218.0
1,221.9
1,225.9
1,229.0
(0.3
)
(1.2
)
Company owned life insurance
500.8
502.0
499.4
497.9
495.6
(0.2
)
1.0
Premises and equipment
446.3
443.7
443.4
444.7
445.4
0.6
0.2
Other real estate owned
11.6
14.4
13.4
12.7
16.4
(19.4
)
(29.3
)
Mortgage servicing rights
29.1
29.8
30.1
31.1
31.8
(2.3
)
(8.5
)
Other assets
623.4
586.6
608.3
649.5
649.5
6.3
(4.0
)
Total assets
$
30,540.8
$
30,976.3
$
31,637.7
$
32,287.8
$
31,344.7
(1.4
)%
(2.6
)%
Liabilities and stockholders' equity:
Deposits
$
23,679.5
$
23,579.2
$
24,107.0
$
25,073.6
$
25,884.8
0.4
%
(8.5
)%
Securities sold under repurchase agreements
889.5
929.9
970.8
1,052.9
1,075.6
(4.3
)
(17.3
)
Long-term debt
120.8
120.8
120.8
120.8
120.7
—
0.1
Other borrowed funds
2,067.0
2,589.0
2,710.0
2,327.0
625.0
(20.2
)
230.7
Subordinated debentures held by subsidiary trusts
163.1
163.1
163.1
163.1
163.1
—
—
Other liabilities
535.4
473.1
405.7
476.6
470.0
13.2
13.9
Total liabilities
27,455.3
27,855.1
28,477.4
29,214.0
28,339.2
(1.4
)
(3.1
)
Stockholders' equity:
Common stock
2,484.9
2,481.4
2,478.7
2,478.2
2,477.4
0.1
0.3
Retained earnings
1,122.3
1,098.8
1,080.7
1,072.7
1,035.8
2.1
8.4
Accumulated other comprehensive loss
(521.7
)
(459.0
)
(399.1
)
(477.1
)
(507.7
)
13.7
2.8
Total stockholders' equity
3,085.5
3,121.2
3,160.3
3,073.8
3,005.5
(1.1
)
2.7
Total liabilities and stockholders' equity
$
30,540.8
$
30,976.3
$
31,637.7
$
32,287.8
$
31,344.7
(1.4
)%
(2.6
)%
Common shares outstanding at period end
105,011
105,021
104,382
104,442
104,451
—
%
0.5
%
Book value per common share at period end
$
29.38
$
29.72
$
30.28
$
29.43
$
28.77
(1.1
)
2.1
Tangible book value per common share at period end**
17.82
18.12
18.57
17.69
17.01
(1.7
)
4.8
**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 %)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
3Q23 vs 2Q23
3Q23 vs 3Q22
Loans held for investment:
Real Estate:
Commercial
$
8,766.2
$
8,813.9
$
8,680.8
$
8,528.6
$
8,026.9
(0.5
)%
9.2
%
Construction
1,930.3
1,836.5
1,893.0
1,944.4
2,023.0
5.1
(4.6
)
Residential
2,212.2
2,198.3
2,191.1
2,188.3
2,127.7
0.6
4.0
Agricultural
731.5
755.7
769.7
794.9
800.9
(3.2
)
(8.7
)
Total real estate
13,640.2
13,604.4
13,534.6
13,456.2
12,978.5
0.3
5.1
Consumer:
Indirect
751.7
764.1
817.3
829.7
780.8
(1.6
)
(3.7
)
Direct
142.3
144.0
146.9
152.9
155.0
(1.2
)
(8.2
)
Credit card
71.6
72.1
71.5
75.9
74.2
(0.7
)
(3.5
)
Total consumer
965.6
980.2
1,035.7
1,058.5
1,010.0
(1.5
)
(4.4
)
Commercial
2,925.1
3,002.7
3,028.0
2,882.6
2,966.1
(2.6
)
(1.4
)
Agricultural
690.5
688.0
660.4
708.3
658.2
0.4
4.9
Other
5.0
1.7
1.6
9.2
3.8
194.1
31.6
Deferred loan fees and costs
(13.1
)
(13.6
)
(14.6
)
(15.6
)
(13.1
)
(3.7
)
—
Loans held for investment
$
18,213.3
$
18,263.4
$
18,245.7
$
18,099.2
$
17,603.5
(0.3
)%
3.5
%
Deposits:
Non-interest-bearing
$
6,402.6
$
6,518.2
$
6,861.1
$
7,560.0
$
8,163.3
(1.8
)%
(21.6
)%
Interest-bearing:
Demand
6,317.9
6,481.9
6,714.1
7,205.9
7,595.1
(2.5
)
(16.8
)
Savings
7,796.3
7,836.7
8,282.9
8,379.3
8,497.2
(0.5
)
(8.2
)
Time, $250 and over
817.1
657.9
526.5
438.0
319.3
24.2
155.9
Time, other
2,345.6
2,084.5
1,722.4
1,490.4
1,309.9
12.5
79.1
Total interest-bearing
17,276.9
17,061.0
17,245.9
17,513.6
17,721.5
1.3
(2.5
)
Total deposits
$
23,679.5
$
23,579.2
$
24,107.0
$
25,073.6
$
25,884.8
0.4
%
(8.5
)%
Total core deposits (1)
$
22,862.4
$
22,921.3
$
23,580.5
$
24,635.6
$
25,565.5
(0.3
)%
(10.6
)%
(1) Core deposits are defined as total deposits less time deposits, $250 and over, and brokered deposits.
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Credit Quality
(Unaudited)
% Change
(In millions, except %)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
3Q23 vs 2Q23
3Q23 vs 3Q22
Allowance for Credit Losses:
Allowance for credit losses
$
226.7
$
224.6
$
226.1
$
220.1
$
213.0
0.9
%
6.4
%
As a percentage of loans held for investment
1.24
%
1.23
%
1.24
%
1.22
%
1.21
%
As a percentage of non-accrual loans
278.50
260.86
279.83
371.79
268.26
Net loan charge-offs during quarter
$
1.1
$
11.4
$
6.2
$
1.1
$
12.0
(90.4
)%
(90.8
)%
Annualized as a percentage of average loans
0.02
%
0.25
%
0.14
%
0.02
%
0.27
%
Non-Performing Assets:
Non-accrual loans
$
81.4
$
86.1
$
80.8
$
59.2
$
79.4
(5.5
)%
2.5
%
Accruing loans past due 90 days or more
3.2
6.7
4.5
6.4
6.6
(52.2
)
(51.5
)
Total non-performing loans
84.6
92.8
85.3
65.6
86.0
(8.8
)
(1.6
)
Other real estate owned
11.6
14.4
13.4
12.7
16.4
(19.4
)
(29.3
)
Total non-performing assets
$
96.2
$
107.2
$
98.7
$
78.3
$
102.4
(10.3
)%
(6.1
)%
Non-performing assets as a percentage of:
Loans held for investment and OREO
0.53
%
0.59
%
0.54
%
0.43
%
0.58
%
Total assets
0.31
0.35
0.31
0.24
0.33
Non-accrual loans to loans held for investment
0.45
0.47
0.44
0.33
0.45
Accruing Loans 30-89 Days Past Due
$
51.2
$
49.5
$
52.3
$
62.3
$
52.5
3.4
%
(2.5
)%
Criticized Loans:
Special Mention
$
197.3
$
221.9
$
243.8
$
290.4
$
273.7
(11.1
)%
(27.9
)%
Substandard
414.6
386.9
355.0
316.2
277.7
7.2
49.3
Doubtful
21.0
32.8
22.8
8.5
25.5
(36.0
)
(17.6
)
Total
$
632.9
$
641.6
$
621.6
$
615.1
$
576.9
(1.4
)%
9.7
%
NM - not meaningful
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Selected Ratios - Annualized
(Unaudited)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Annualized Financial Ratios (GAAP)
Return on average assets
0.94
%
0.86
%
0.71
%
1.07
%
1.07
%
Return on average common stockholders' equity
9.20
8.44
7.25
11.16
10.49
Yield on average earning assets
4.63
4.52
4.43
4.24
3.99
Cost of average interest-bearing liabilities
2.09
1.88
1.46
0.89
0.40
Interest rate spread
2.54
2.64
2.97
3.35
3.59
Net FTE interest margin ratio
3.07
3.12
3.36
3.61
3.71
Efficiency ratio
61.48
60.95
63.38
57.07
58.37
Loans held for investment to deposit ratio
76.92
77.46
75.69
72.18
68.01
Annualized Financial Ratios - Operating** (Non-GAAP)
Tangible book value per common share
$
17.82
$
18.12
$
18.57
$
17.69
$
17.01
Tangible common stockholders' equity to tangible assets
6.38
%
6.40
%
6.37
%
5.95
%
5.90
%
Return on average tangible common stockholders' equity
15.04
13.69
11.87
18.67
16.93
Consolidated Capital Ratios
Total risk-based capital to total risk-weighted assets
13.18
%
*
12.90
%
12.63
%
12.48
%
12.50
%
Tier 1 risk-based capital to total risk-weighted assets
11.02
*
10.76
10.52
10.45
10.49
Tier 1 common capital to total risk-weighted assets
11.02
*
10.76
10.52
10.45
10.49
Leverage Ratio
8.22
*
7.99
7.72
7.75
7.67
*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 U.S. 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 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
September 30, 2023
June 30, 2023
September 30, 2022
(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)
$
18,317.4
$
251.5
5.45
%
$
18,351.5
$
243.2
5.32
%
$
17,543.8
$
220.2
4.98
%
Investment securities
Taxable
8,877.6
66.0
2.95
9,139.2
66.1
2.90
10,581.1
64.7
2.43
Tax-exempt
190.4
0.9
1.88
192.9
1.0
2.08
238.5
1.2
2.00
Investment in FHLB and FRB stock
202.6
2.9
5.68
225.2
3.4
6.06
121.7
1.3
4.24
Interest-bearing deposits in banks
208.5
3.0
5.71
419.4
5.4
5.16
244.4
1.4
2.27
Federal funds sold
0.3
—
—
0.6
—
—
1.7
—
—
Total interest-earning assets
$
27,796.8
$
324.3
4.63
%
$
28,328.8
$
319.1
4.52
%
$
28,731.2
$
288.8
3.99
%
Non-interest-earning assets
2,955.5
2,958.8
2,922.5
Total assets
$
30,752.3
$
31,287.6
$
31,653.7
Interest-bearing liabilities:
Demand deposits
$
6,361.5
$
13.3
0.83
%
$
6,417.2
$
9.9
0.62
%
$
7,824.3
$
5.1
0.26
%
Savings deposits
7,838.4
33.6
1.70
7,951.3
28.4
1.43
8,689.0
7.0
0.32
Time deposits
2,938.0
21.9
2.96
2,517.1
15.3
2.44
1,502.3
1.2
0.32
Repurchase agreements
895.2
1.7
0.75
1,020.6
1.5
0.59
1,107.7
0.8
0.29
Other borrowed funds
2,396.3
33.6
5.56
2,966.4
39.3
5.31
370.9
2.4
2.57
Long-term debt
120.8
1.5
4.93
120.8
1.4
4.65
120.4
1.5
4.94
Subordinated debentures held by subsidiary trusts
163.1
3.3
8.03
163.1
3.1
7.62
163.1
1.9
4.62
Total interest-bearing liabilities
$
20,713.3
$
108.9
2.09
%
$
21,156.5
$
98.9
1.88
%
$
19,777.7
$
19.9
0.40
%
Non-interest-bearing deposits
6,401.2
6,521.9
8,212.6
Other non-interest-bearing liabilities
504.0
426.3
423.7
Stockholders’ equity
3,133.8
3,182.9
3,239.7
Total liabilities and stockholders’ equity
$
30,752.3
$
31,287.6
$
31,653.7
Net FTE interest income (non-GAAP)(3)
$
215.4
$
220.2
$
268.9
Less FTE adjustments (2)
(1.7
)
(1.8
)
(2.1
)
Net interest income from consolidated statements of income
$
213.7
$
218.4
$
266.8
Interest rate spread
2.54
%
2.64
%
3.59
%
Net interest margin
3.05
3.09
3.68
Net FTE interest margin (non-GAAP)(3)
3.07
3.12
3.71
Cost of funds, including non-interest-bearing demand deposits (4)
1.59
1.43
0.28
(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 a FTE basis utilizing a 21.00% and 26.25% tax rate for 2023 and 2022, respectively.
(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)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Total common stockholders' equity (GAAP)
(A)
$
3,085.5
$
3,121.2
$
3,160.3
$
3,073.8
$
3,005.5
Less goodwill and other intangible assets (excluding mortgage servicing rights)
1,214.1
1,218.0
1,221.9
1,225.9
1,229.0
Tangible common stockholders' equity (Non-GAAP)
(B)
$
1,871.4
$
1,903.2
$
1,938.4
$
1,847.9
$
1,776.5
Total assets (GAAP)
$
30,540.8
$
30,976.3
$
31,637.7
$
32,287.8
$
31,344.7
Less goodwill and other intangible assets (excluding mortgage servicing rights)
1,214.1
1,218.0
1,221.9
1,225.9
1,229.0
Tangible assets (Non-GAAP)
(C)
$
29,326.7
$
29,758.3
$
30,415.8
$
31,061.9
$
30,115.7
Average Balances:
Total common stockholders' equity (GAAP)
(D)
$
3,133.8
$
3,182.9
$
3,147.0
$
3,050.1
$
3,239.7
Less goodwill and other intangible assets (excluding mortgage servicing rights)
1,216.0
1,219.8
1,223.8
1,226.9
1,230.9
Average tangible common stockholders' equity (Non-GAAP)
(E)
$
1,917.8
$
1,963.1
$
1,923.2
$
1,823.2
$
2,008.8
Net interest income
$
213.7
$
218.4
$
238.9
$
258.4
$
266.8
FTE interest income
1.7
1.8
1.8
2.3
2.1
Net FTE interest income
(F)
215.4
220.2
240.7
260.7
268.9
Less purchase accounting accretion
5.2
4.6
5.2
8.4
17.7
Adjusted net FTE interest income
(G)
$
210.2
$
215.6
$
235.5
$
252.3
$
251.2
Average interest-earning assets
(H)
$
27,796.8
$
28,328.8
$
29,059.4
$
28,680.9
$
28,731.2
Total quarterly average assets
(J)
30,752.3
31,287.6
32,010.9
31,716.0
31,653.7
Annualized net income available to common shareholders
(K)
288.4
268.7
228.3
340.4
340.0
Common shares outstanding
(L)
105,011
105,021
104,382
104,442
104,451
Return on average assets (GAAP)
(K) / (J)
0.94
%
0.86
%
0.71
%
1.07
%
1.07
%
Return on average common stockholders' equity (GAAP)
(K) / (D)
9.20
8.44
7.25
11.16
10.49
Average common stockholders' equity to average assets (GAAP)
(D) / (J)
10.19
10.17
9.83
9.62
10.23
Book value per common share (GAAP)
(A) / (L)
$
29.38
$
29.72
$
30.28
$
29.43
$
28.77
Tangible book value per common share (Non-GAAP)
(B) / (L)
17.82
18.12
18.57
17.69
17.01
Tangible common stockholders' equity to tangible assets (Non-GAAP)
(B) / (C)
6.38
%
6.40
%
6.37
%
5.95
%
5.90
%
Return on average tangible common stockholders' equity (Non-GAAP)
(K) / (E)
15.04
13.69
11.87
18.67
16.93
Net interest margin ratio (FTE) (Non-GAAP)
(F*) / (H)
3.07
3.12
3.36
3.61
3.71
Adjusted net interest margin ratio (FTE) (Non-GAAP)
(G*) / (H)
3.00
3.05
3.29
3.49
3.47
*Annualized
(FIBK-ER)
View source version on businesswire.com: https://www.businesswire.com/news/home/20231025795657/en/
David Della Camera, CFA Director of Financial Planning and Analysis First Interstate BancSystem, Inc. (406) 255-5363 david.dellacamera@fib.com www.FIBK.com
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