BILLINGS, Mont.--(BUSINESS WIRE)--First Interstate BancSystem, Inc. (NASDAQ: FIBK), parent company of First Interstate Bank, will report third quarter results after the market closes on Wednesday, October 29, 2025. A conference call for investors is scheduled for Thursday, October 30, 2025, at 9:30 a.m. Eastern (7:30 a.m. Mountain), during which the Company will discuss quarterly results. There will be a question-and-answer session following the presentation. The conference call will be accessi. ...

Part I - Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for First Interstate BancSystem, Inc. show a decrease in total assets to $27.6 billion from $29.1 billion at year-end 2024, with Q2 2025 net income rising to $71.7 million from $60.0 million in the prior-year period. [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet reflects a decrease in total assets primarily due to reductions in loans and investment securities, while stockholders' equity increased. Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $27,566.4 | $29,137.4 | $(1,571.0) | (5.4)% | | Net Loans Held for Investment | $16,143.8 | $17,640.8 | $(1,497.0) | (8.5)% | | Total Investment Securities | $7,312.2 | $7,744.6 | $(432.4) | (5.6)% | | Total Deposits | $22,630.6 | $23,015.6 | $(385.0) | (1.7)% | | Other Borrowed Funds | $250.0 | $1,567.5 | $(1,317.5) | (84.1)% | | Total Stockholders' Equity | $3,421.8 | $3,304.0 | $117.8 | 3.6% | - The decrease in total assets was primarily driven by a reduction in **net loans held for investment** and **total investment securities**. On the liability side, there was a significant decrease in **other borrowed funds** and a modest decline in **total deposits**[7](index=7&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) The income statement shows an increase in net income for Q2 2025 and year-to-date, driven by higher net interest income and a lower provision for credit losses. Quarterly Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $207.2 | $201.7 | +2.7% | | (Reduction of) Provision for Credit Losses | $(0.3) | $9.0 | -103.3% | | Noninterest Income | $41.1 | $42.6 | -3.5% | | Noninterest Expense | $155.1 | $156.9 | -1.1% | | Net Income | $71.7 | $60.0 | +19.5% | | Diluted EPS | $0.69 | $0.58 | +19.0% | Year-to-Date Income Statement Highlights (in millions, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $412.2 | $401.8 | +2.6% | | Provision for Credit Losses | $19.7 | $14.3 | +37.8% | | Noninterest Income | $83.1 | $84.7 | -1.9% | | Noninterest Expense | $315.7 | $317.1 | -0.4% | | Net Income | $121.9 | $118.4 | +3.0% | | Diluted EPS | $1.18 | $1.15 | +2.6% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased in Q2 2025, primarily due to higher net income and positive changes in unrealized gains on available-for-sale securities. - Comprehensive income for Q2 2025 was **$106.3 million**, a significant increase from **$61.4 million** in Q2 2024, driven by higher net income and a **$44.7 million** positive change in net unrealized gains on available-for-sale securities[9](index=9&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity increased, primarily due to net income and other comprehensive income, partially offset by common stock dividends. - Total stockholders' equity increased from **$3.30 billion** at December 31, 2024, to **$3.42 billion** at June 30, 2025, primarily due to net income of **$121.9 million** and other comprehensive income of **$89.0 million**, partially offset by common stock dividends of **$97.1 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows for the six months ended June 30, 2025, show a net increase in cash and cash equivalents, driven by investing activities and partially offset by financing activities. Six Months Ended June 30, 2025 Cash Flow Summary (in millions) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash provided by operating activities | $146.6 | | Net cash provided by investing activities | $1,742.2 | | Net cash used in financing activities | $(1,695.2) | | **Net increase in cash and cash equivalents** | **$193.6** | - Significant cash inflows from investing activities were driven by a net change in loans held for investment (**$1,064.6 million**) and proceeds from investment securities (**$626.4 million**)[14](index=14&type=chunk) - Major cash outflows in financing activities included a net decrease in deposits of **$385.0 million** and a net decrease in other borrowed funds of **$1,317.5 million**[14](index=14&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide details on the company's single operating segment, accounting policies, investment securities, loan portfolio changes, and regulatory capital. - The company operates as a single reporting segment: community banking, with key accounting policies consistent with the 2024 Annual Report on Form 10-K[17](index=17&type=chunk)[21](index=21&type=chunk) - As of June 30, 2025, the company had significant unrealized losses on its investment securities portfolio, primarily due to fluctuations in interest rates, with gross unrealized losses on available-for-sale securities totaling **$306.9 million**[23](index=23&type=chunk)[28](index=28&type=chunk) - Loans held for sale increased substantially to **$335.2 million** from **$0.9 million** at year-end 2024, mainly due to the pending sale of Arizona and Kansas branches[37](index=37&type=chunk) - Non-accrual loans increased by **39.3%** to **$192.7 million** as of June 30, 2025, from **$138.3 million** at year-end 2024, primarily driven by increases in commercial real estate and agricultural loans[196](index=196&type=chunk) - In June 2025, the company issued **$125.0 million** of 7.625% fixed-to-floating rate subordinated notes due 2035, and announced its intention to redeem its outstanding **$100.0 million** 5.25% subordinated notes on August 15, 2025[75](index=75&type=chunk)[119](index=119&type=chunk) - The company and its subsidiary bank exceeded all regulatory capital adequacy requirements to be deemed "well-capitalized" as of June 30, 2025[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a year-over-year increase in Q2 2025 net income to $71.7 million, driven by lower credit loss provisions and reduced interest expense on borrowings. [Executive Overview and Recent Developments](index=44&type=section&id=Executive%20Overview%20and%20Recent%20Developments) The company has undertaken several strategic initiatives in 2025, including exiting indirect lending, selling branches, and outsourcing its consumer credit card portfolio, while maintaining ample liquidity. - The company has undertaken several strategic initiatives in 2025: ceased originating indirect loans as of February 28, 2025; entered an agreement to sell 12 branches in Arizona and Kansas, including approximately **$705 million** in deposits and **$331 million** in loans, expected to close in Q4 2025; and completed the outsourcing of its consumer credit card portfolio in June 2025, selling **$74.2 million** in loans and recognizing a **$4.3 million** gain[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - The company maintains ample liquidity, with **64.6%** of total deposits being FDIC insured as of June 30, 2025, and available borrowing capacity of **$5.2 billion** with the FHLB and **$2.4 billion** with the FRB as of July 31, 2025[139](index=139&type=chunk)[140](index=140&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2025 net income increased due to a lower provision for credit losses and higher net interest income, with the net interest margin expanding to 3.30%. - Q2 2025 net income increased by **$11.7 million** year-over-year to **$71.7 million**, primarily due to a **$9.3 million** lower provision for credit losses and a **$5.5 million** increase in net interest income[150](index=150&type=chunk) Net Interest Margin Analysis | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Margin (GAAP) | 3.30% | 2.97% | | Net FTE Interest Margin (Non-GAAP) | 3.32% | 3.00% | - The provision for credit losses was a net reduction of **$0.3 million** in Q2 2025, compared to a **$9.0 million** provision in Q2 2024, with net charge-offs decreasing to **$5.8 million** from **$13.5 million** in the prior-year quarter[167](index=167&type=chunk) - Noninterest expense decreased by **$1.8 million** year-over-year in Q2 2025, mainly due to lower FDIC insurance premiums (**$2.6 million** decrease) and OREO expense (**$2.0 million** decrease)[176](index=176&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Financial Condition](index=54&type=section&id=Financial%20Condition) Total assets decreased by $1.6 billion, driven by declines in loans and investment securities, while non-performing assets increased. - Total assets decreased by **$1.6 billion (5.4%)** to **$27.6 billion** at June 30, 2025, from year-end 2024, driven by decreases in loans and investment securities[186](index=186&type=chunk) - Loans held for investment decreased by **$1.5 billion (8.4%)** since year-end, impacted by the discontinuation of indirect lending, the sale of the credit card portfolio, and the transfer of loans to held-for-sale for the pending branch divestiture[192](index=192&type=chunk)[194](index=194&type=chunk) Non-Performing Assets (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans | $192.7 | $138.3 | | Total non-performing assets | $197.5 | $145.6 | | NPA to Total Assets | 0.72% | 0.50% | - The allowance for credit losses (ACL) was **$209.6 million**, or **1.28%** of loans held for investment, up from **1.14%** at year-end 2024, reflecting changes in portfolio mix and economic outlook[208](index=208&type=chunk) [Capital Resources and Liquidity Management](index=59&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) Stockholders' equity increased, and the company maintains a "well-capitalized" status with substantial available liquidity. - Stockholders' equity increased by **$117.8 million** to **$3.42 billion** since year-end 2024, benefiting from retained earnings and a decrease in unrealized losses on available-for-sale securities[218](index=218&type=chunk) - The company and its bank subsidiary remain "well-capitalized" under all regulatory guidelines as of June 30, 2025[220](index=220&type=chunk) Available Liquidity (in billions) | Source | June 30, 2025 | | :--- | :--- | | Remaining FHLB Capacity | $4.9 | | Remaining FRB Capacity | $2.5 | | Cash and Deposits in Banks | $1.1 | | **Total Available Liquidity** | **$8.5** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risk, primarily interest rate risk, through its Asset Liability Committee (ALCO), using NII sensitivity analysis and derivatives to model and hedge against interest rate changes. Net Interest Income Sensitivity Analysis (1-Year Horizon) | Change in Interest Rate (bps) | Projected % Change in NII (June 30, 2025) | | :--- | :--- | | +200 | (0.70)% | | +100 | (0.25)% | | -100 | — | | -200 | (0.15)% | - The company utilizes two active interest rate collars with a total notional amount of **$300.0 million**, maturing in August 2025, to manage interest rate risk on variable-rate loans[240](index=240&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter. - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[244](index=244&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, such controls[245](index=245&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters in the normal course of business but does not expect the ultimate disposition of these matters to have a material adverse effect on its financial condition or operating results. - Management does not expect any ongoing or anticipated legal matters to have a material adverse effect on the company's business, financial condition, or operating results[248](index=248&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024. - No material changes in risk factors were reported for the period covered by this quarterly report[249](index=249&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased a small number of shares during the quarter, related to redemptions of vested restricted shares tendered by employees to cover income tax withholding amounts. Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | 258 | $26.79 | | June 2025 | — | $— | | **Total** | **258** | **$26.79** | [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, none of the company's directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements. - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[253](index=253&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, debt indentures, employment agreements, and required SEC certifications

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, which sparked a long-lasting interest in markets and the economy [1] - Recently, the author has been combining long stock positions with covered calls and cash secured puts, indicating a strategic approach to investment [1] - The investment philosophy is fundamentally long-term, with a primary focus on REITs and financials, while occasionally covering ETFs and other stocks influenced by macroeconomic trade ideas [1]

Financial Data and Key Metrics Changes - The company reported net income of $71.7 million or $0.69 per diluted share for the second quarter, compared to $50.2 million or $0.49 per diluted share in the first quarter [10] - Net interest income increased to $207.2 million, up by $2.2 million from the prior period, primarily due to a reduction in interest expense [10][11] - The net interest margin was 3.32% on a fully tax equivalent basis, with an increase of 12 basis points from the prior quarter [11] - Non-interest income decreased to $41.1 million, down by $0.9 million from the prior quarter [11] Business Line Data and Key Metrics Changes - The company experienced a decline in loans held for investment by $1 billion, influenced by strategic moves including the Arizona and Kansas transaction [16] - Non-interest expense declined by $5.5 million to $155.1 million, attributed to lower seasonal payroll taxes and reductions in incentive-based compensation [12] - Net charge-offs totaled $5.8 million, representing 14 basis points of average loans on an annualized basis [14] Market Data and Key Metrics Changes - Deposits declined by $102.2 million in the second quarter, remaining approximately flat compared to the prior year [17] - The company ended the quarter with a 72% loan to deposit ratio, indicating strong liquidity [8] Company Strategy and Development Direction - The company is refocusing capital investment, optimizing the balance sheet, and improving core profitability [6][24] - Strategic actions include outsourcing the consumer credit card product and ceasing new originations in indirect lending [6][7] - The company aims for organic growth through relationship banking and anticipates a high single-digit increase in net interest income in 2026 [8][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing loan balances and returning to growth in the medium term despite near-term declines [16][19] - The company is focused on proactive credit risk management, with stability in nonperforming asset levels and a disciplined approach to repricing maturing assets [7][8] Other Important Information - The common equity tier one capital ratio improved to 13.43%, with expectations for continued accretion [17][19] - The company declared a dividend of $0.47 per share, yielding 7% [17] Q&A Session Summary Question: Timing on loan portfolio stabilization - Management anticipates modestly lower loans in the third quarter but is hopeful for stability in the fourth quarter [28][29] Question: Earning asset levels at year-end - The third quarter is expected to be the bottom for earning asset levels, with a shift towards investment securities [32][33] Question: Capital priorities and CET1 expectations - CET1 is expected to increase by approximately 40 basis points from the branch transaction, with strong capital levels providing flexibility for various options [34][35] Question: Special mention migration in classified loans - The increase in criticized loans was driven by new information on multifamily projects, but management remains confident in the underlying collateral [41][42] Question: Expense guidance and reinvestment of savings - Management anticipates higher reported expenses in the third and fourth quarters due to various timing factors, with no branch divestitures included in the guidance [43][44] Question: High single-digit growth in net interest income for 2026 - This growth expectation does not include the impact of the branch divestiture, which is not expected to materially alter the figure [47][48] Question: Loan portfolio and relationship-based loans - Most deliberate runoff has already occurred, with a focus on replacing loans with production and growth [69] Question: Capital deployment options - The company is considering various capital deployment options, including share buybacks and balance sheet restructuring, to enhance shareholder value [76][77]

Financial Data and Key Metrics Changes - The company reported net income of $71.7 million or $0.69 per diluted share for Q2 2025, an increase from $50.2 million or $0.49 per diluted share in Q1 2025 [10] - Net interest income was $207.2 million in Q2 2025, up by $2.2 million from the previous quarter, primarily due to a reduction in interest expense [10] - The net interest margin improved to 3.32% on a fully tax-equivalent basis, with a 12 basis points increase from the prior quarter [11] - Non-interest income decreased to $41.1 million, down by $0.9 million from the prior quarter [11] - Non-interest expense declined by $5.5 million to $155.1 million, attributed to lower seasonal payroll taxes and reductions in incentive-based compensation [12] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $1 billion, influenced by strategic moves including $338 million related to the Arizona and Kansas transaction [15] - The company experienced a decline in classified loans by $24.4 million or 5.1%, while criticized loans increased by $176.9 million or 17.2% [14] - The yield on average loans increased by 6 basis points to 5.65%, driven by repricing and payoffs of lower-yielding loans [11] Market Data and Key Metrics Changes - The company’s deposit base remains strong, with 93% located in areas where it has top 10 market share, and about 70% in markets growing faster than the national average [9] - Deposits declined by $102.2 million in Q2 2025, remaining approximately flat compared to the prior year [17] Company Strategy and Development Direction - The company is focused on refocusing capital investment, optimizing the balance sheet, and improving core profitability [5][24] - Recent strategic actions include outsourcing the consumer credit card product and ceasing new originations in indirect lending [5] - The company anticipates a high single-digit increase in net interest income in 2026, supported by margin improvement and a disciplined approach to repricing maturing assets [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing loan balances and returning to growth in the medium term despite near-term declines [16] - The company is taking a proactive approach to credit risk management, with stability in nonperforming asset levels and modestly lower classified asset levels [6] - Management noted that they are seeing initial indications of increasing pipeline activity, suggesting a positive outlook for future loan growth [16] Other Important Information - The common equity tier one capital ratio improved by 90 basis points to 13.43% [17] - The company declared a dividend of $0.47 per share, yielding 7% [17] - The guidance reflects a 125 basis point rate cut for the remainder of 2025, with expectations for continued margin improvement [18] Q&A Session Summary Question: Timing on loan portfolio stabilization - Management anticipates modestly lower loans in Q3 but is hopeful for stability in Q4, with growth expected thereafter [30][32] Question: Earning asset levels at year-end - Management believes Q3 will be the bottom for earning asset levels, with a modest step down into Q4 expected [34] Question: Capital priorities and CET1 expectations - CET1 is expected to increase by approximately 40 basis points by year-end, with various capital deployment options being considered [36][37] Question: Increase in special mention loans - The increase in criticized loans was primarily driven by new information on multifamily projects, but management remains confident in the underlying collateral [44][45] Question: Expense guidance and branch divestiture impact - No branch divestitures are included in the current expense guidance, and management anticipates higher reported expenses in Q3 and Q4 due to various timing factors [46][48] Question: NII outlook and branch divestiture impact - The high single-digit growth in NII for 2026 does not include the impact of the branch divestiture, which is not expected to materially alter the figure [50][51] Question: Loan portfolio runoff and relationship-based loans - Management does not foresee significant deliberate runoff left in the loan book, with most larger loans already exited [73] Question: Market share and growth opportunities - The company aims to leverage existing density in growth markets rather than retreating from them, focusing on gaining market share [75]

Financial Performance - Net income was $71.7 million, or $0.69 per share in Q2 2025[18] - Net interest margin (NIM) was 3.30%, an increase of 11 basis points from Q1 2025[18] - Adjusted FTE NIM was 3.26%, an increase of 12 basis points from Q1 2025[18] - Efficiency ratio was 61.1% for Q2 2025[18] Balance Sheet - Loans held for investment decreased by $1,023.9 million from Q1 2025[18] - Deposits decreased by $102.2 million from Q1 2025[18] - Other borrowed funds declined $710.0 million due to decreases in investment securities and loan balances[18] - Total assets amounted to $27.6 billion[8] - Deposits totaled $22.6 billion[8] - Loans held for investment were $16.4 billion[8] Capital and Asset Quality - CET1 was 13.43% and total RBC was 16.49% for Q2 2025[18] - Non-performing loans decreased 0.4% from Q1 2025 to $194.1 million, representing 1.19% of LHFI[18] - Net charge-offs were $5.8 million, or an annualized 14 basis points of average loans outstanding[18] - Classified loans decreased $24.4 million to $458.1 million as of June 30, 2025[18]

Company Performance - First Interstate BancSystem (FIBK) reported quarterly earnings of $0.69 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, and up from $0.58 per share a year ago [1] - The earnings surprise for the quarter was +21.05%, while the previous quarter saw a surprise of -12.5% with actual earnings of $0.49 per share against an expectation of $0.56 [2] - The company posted revenues of $249.7 million for the quarter ended June 2025, which was 1.79% below the Zacks Consensus Estimate, but an increase from $244.3 million year-over-year [3] Market Performance - First Interstate BancSystem shares have declined approximately 8.7% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [4] - The current Zacks Rank for the stock is 4 (Sell), indicating expectations of underperformance in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.61 on revenues of $259.35 million, and for the current fiscal year, it is $2.35 on revenues of $1.03 billion [8] - The outlook for the industry, specifically the Banks - Midwest sector, is currently in the top 16% of over 250 Zacks industries, suggesting a favorable environment for performance [9]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's financial performance and key operational highlights for the quarter [Q2 2025 Financial Performance Overview](index=1&type=section&id=Q2%202025%20Financial%20Performance%20Overview) First Interstate BancSystem, Inc. reported a significant increase in net income and diluted EPS for Q2 2025 compared to both the previous quarter and the prior year, driven by improved net interest margin and prudent expense management | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :---------- | :-------------- | :-------------- | :-------------- | | Net Income | $71.7 million | $50.2 million | $60.0 million | | Diluted EPS | $0.69 | $0.49 | $0.58 | [Key Operational and Financial Highlights](index=1&type=section&id=Key%20Operational%20and%20Financial%20Highlights) The company achieved an improved net interest margin, reduced other borrowed funds, and saw decreases in non-performing assets and net charge-offs, while strategic actions included outsourcing the consumer credit card product and strengthening capital ratios - Net interest margin increased to **3.30%** in Q2 2025, an **11-basis point increase** from Q1 2025 and a **33-basis point increase** from Q2 2024[4](index=4&type=chunk) - Other borrowed funds decreased by **$710.0 million (74.0%)** to **$250.0 million** as of June 30, 2025, from $960.0 million as of March 31, 2025[4](index=4&type=chunk) - Non-performing assets decreased by **$0.9 million (0.5%)** to **$197.5 million** as of June 30, 2025, from $198.4 million as of March 31, 2025[4](index=4&type=chunk) - Net charge-offs decreased by **$3.2 million (35.6%)** to **$5.8 million**, or an annualized **0.14% of average loans outstanding**, in Q2 2025[4](index=4&type=chunk) - Completed the outsourcing of the consumer credit card portfolio, resulting in the sale of **$74.2 million of loans** and a **$4.3 million gain**[4](index=4&type=chunk) - Common equity tier 1 capital ratio increased **90 basis points to 13.43%** in Q2 2025, primarily due to lower risk-weighted assets[4](index=4&type=chunk) [Dividend Declaration](index=2&type=section&id=Dividend%20Declaration) The Board of Directors declared a quarterly dividend of $0.47 per common share, reflecting an annualized yield of 7.0% based on the average Q2 2025 closing price - A dividend of **$0.47 per common share** was declared on July 28, 2025, payable on August 21, 2025, to stockholders of record as of August 11, 2025[5](index=5&type=chunk) - The dividend equates to a **7.0% annualized yield** based on the **$26.95 per share average closing price** during Q2 2025[5](index=5&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section provides a detailed analysis of the company's financial performance, including net interest income, credit losses, and non-interest income and expenses [Net Interest Income](index=2&type=section&id=Net%20Interest%20Income) Net interest income increased sequentially and year-over-year, primarily due to lower interest expense on other borrowed funds, despite decreases in average loan and investment security balances, with the net interest margin also seeing significant improvement | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change | Y-o-Y Change | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :----------- | :----------- | | Net Interest Income | $207.2 million | $205.0 million | $201.7 million | +1.1% | +2.7% | | Net Interest Margin Ratio | 3.30% | 3.19% | 2.97% | +11 bps | +33 bps | | Adjusted Net FTE Interest Margin Ratio | 3.26% | 3.14% | 2.92% | +12 bps | +34 bps | - The increase in net interest income was primarily due to lower interest expense on other borrowed funds, resulting from decreased average balances and rates[6](index=6&type=chunk) - Interest accretion from acquired loans contributed **$4.2 million** in Q2 2025, down from $4.7 million in Q1 2025 and $5.1 million in Q2 2024[7](index=7&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The company recorded a reduction in provision for credit losses in Q2 2025, a significant improvement from prior quarters, while net charge-offs also decreased, and the allowance for credit losses as a percentage of loans remained stable year-over-year | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Provision for Credit Losses | $(0.3) million | $20.0 million | $9.0 million | | Net Charge-offs | $5.8 million | $9.0 million | $13.5 million | | Annualized Net Charge-offs (% of avg loans) | 0.14% | 0.21% | 0.30% | | Allowance for Credit Losses (% of period-end loans) | 1.28% | 1.24% | 1.28% | | Coverage of Non-Performing Loans | 108.0% | 110.5% | 138.4% | - Net loan charge-offs in Q2 2025 were composed of **$13.0 million in charge-offs** offset by **$7.2 million in recoveries**[10](index=10&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) Total non-interest income decreased due to a significant drop in 'other income,' which included a valuation allowance for loans transferred to held-for-sale, partially offset by a gain from the credit card portfolio sale and increased life insurance proceeds | Category | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change | Y-o-Y Change | | :------------------------------------- | :-------------- | :-------------- | :-------------- | :----------- | :----------- | | Payment services revenues | $17.8 million | $17.1 million | $18.6 million | +4.1% | -4.3% | | Mortgage banking revenues | $1.8 million | $1.4 million | $1.7 million | +28.6% | +5.9% | | Wealth management revenues | $9.7 million | $9.8 million | $9.4 million | -1.0% | +3.2% | | Service charges on deposit accounts | $6.9 million | $6.6 million | $6.4 million | +4.5% | +7.8% | | Other service charges, commissions, fees | $2.1 million | $2.3 million | $2.1 million | -8.7% | 0.0% | | Other income | $2.8 million | $4.8 million | $4.4 million | -41.7% | -36.4% | | **Total Non-Interest Income** | **$41.1 million** | **$42.0 million** | **$42.6 million** | **-2.1%** | **-3.5%** | - The decrease in other income was primarily due to a **$7.3 million valuation allowance** for loans transferred to held-for-sale related to the pending sale of Arizona and Kansas branches[12](index=12&type=chunk) - Partially offsetting the decrease was a **$4.3 million gain** from the sale of the consumer credit card loan portfolio and an increase in life insurance proceeds[12](index=12&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) Total non-interest expense decreased both sequentially and year-over-year, mainly driven by lower salaries and wages due to reduced severance and short-term incentive accruals, and a significant reduction in other real estate owned expense | Category | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------------- | :---------------- | :---------------- | :---------------- | :----------- | :----------- | | Salaries and wages | $65.0 million | $68.6 million | $66.3 million | -5.2% | -2.0% | | Employee benefits | $17.9 million | $20.0 million | $16.9 million | -10.5% | +5.9% | | Occupancy and equipment | $18.6 million | $18.7 million | $16.9 million | 0.0% | +10.1% | | Other intangible amortization | $3.4 million | $3.4 million | $3.7 million | 0.0% | -8.1% | | Other expenses | $50.2 million | $49.4 million | $51.1 million | +1.6% | -1.8% | | Other real estate owned expense | $0.0 million | $0.5 million | $2.0 million | -100.0% | -100.0% | | **Total Non-Interest Expense** | **$155.1 million** | **$160.6 million** | **$156.9 million** | **-3.4%** | **-1.1%** | - Salaries and wages decreased primarily due to lower severance and short-term incentive accruals compared to Q1 2025, and lower short-term incentive accruals compared to Q2 2024[14](index=14&type=chunk) - Employee benefit expenses decreased sequentially due to lower payroll taxes and long-term incentives, but increased year-over-year due to higher health insurance costs[15](index=15&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=Balance%20Sheet%20Analysis) This section analyzes the company's balance sheet, focusing on changes in assets, liabilities, and capital ratios [Assets](index=3&type=section&id=Assets) Total assets decreased significantly, primarily driven by reductions in investment securities and loans, with funds used to pay down debt and offset deposit decreases - Total assets decreased by **$713.4 million (2.5%)** to **$27,566.4 million** as of June 30, 2025, from $28,279.8 million as of March 31, 2025[17](index=17&type=chunk) - Total assets decreased by **$2,723.1 million (9.0%)** from $30,289.5 million as of June 30, 2024[17](index=17&type=chunk) [Investment Securities](index=4&type=section&id=Investment%20Securities) Investment securities continued to decline due to normal pay-downs, maturities, and called securities, partially offset by fair market value increases and new purchases | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------- | :--------------- | :--------------- | :--------------- | :----------- | :----------- | | Investment Securities | $7,312.2 million | $7,503.8 million | $8,401.6 million | -2.6% | -13.0% | - The decrease was primarily due to normal pay-downs, maturities, and called securities, partially offset by a **$44.7 million increase in fair market values** and **$25.7 million in purchases** during Q2 2025[18](index=18&type=chunk) [Loans Held for Investment](index=4&type=section&id=Loans%20Held%20for%20Investment) Loans held for investment experienced a notable decline across most categories, particularly in commercial real estate and consumer loans, influenced by the cessation of indirect loan originations, credit card portfolio sale, and branch sales | Category | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------------- | :---------------- | :---------------- | :---------------- | :----------- | :----------- | | Commercial Real Estate | $8,750.9 million | $9,196.1 million | $9,054.5 million | -4.8% | -3.4% | | Construction | $1,004.6 million | $1,097.3 million | $1,519.9 million | -8.4% | -33.9% | | Total Real Estate | $12,548.6 million | $13,132.9 million | $13,544.3 million | -4.4% | -7.4% | | Total Consumer | $741.5 million | $886.8 million | $948.8 million | -16.4% | -21.8% | | Commercial | $2,529.9 million | $2,770.6 million | $3,052.9 million | -8.7% | -17.1% | | **Total Loans Held for Investment** | **$16,353.4 million** | **$17,377.3 million** | **$18,235.0 million** | **-5.9%** | **-10.3%** | - The decline in loans was impacted by **$73.1 million amortization** of the indirect portfolio (originations stopped in Q1 2025), sale of **$74.2 million consumer credit card loans**, and transfer of **$338.3 million loans** to held-for-sale for branch sales[20](index=20&type=chunk) - The ratio of loans held for investment to deposits decreased to **72.3%** as of June 30, 2025, from 76.4% in Q1 2025 and 79.7% in Q2 2024[21](index=21&type=chunk) [Liabilities](index=4&type=section&id=Liabilities) Total liabilities decreased, primarily driven by a significant reduction in other borrowed funds, partially offset by an increase in long-term debt due to new subordinated notes issuance, while deposits saw a slight decrease [Deposits](index=4&type=section&id=Deposits) Total deposits experienced a slight decrease, mainly in interest-bearing savings deposits, while noninterest-bearing deposits also saw a minor reduction | Category | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------- | :---------------- | :---------------- | :---------------- | :----------- | :----------- | | Noninterest bearing | $5,579.0 million | $5,590.2 million | $6,174.0 million | -0.2% | -9.6% | | Total Interest bearing | $17,051.6 million | $17,142.6 million | $16,696.7 million | -0.5% | +2.1% | | **Total Deposits** | **$22,630.6 million** | **$22,732.8 million** | **$22,870.7 million** | **-0.4%** | **-1.0%** | - The sequential decrease in total deposits was primarily due to an **$86.8 million decrease** in interest-bearing savings deposits[22](index=22&type=chunk) [Borrowed Funds and Debt](index=4&type=section&id=Borrowed%20Funds%20and%20Debt) Other borrowed funds significantly decreased, funded by investment securities and loan paydowns, while long-term debt increased due to the issuance of new subordinated notes | Category | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------------- | :--------------- | :--------------- | :--------------- | :----------- | :----------- | | Securities sold under repurchase agreements | $509.3 million | $528.0 million | $741.8 million | -3.5% | -31.3% | | Other borrowed funds | $250.0 million | $960.0 million | $2,430.0 million | -74.0% | -89.7% | | Long-term debt | $252.0 million | $130.2 million | $383.4 million | +93.5% | -34.3% | - Other borrowed funds decreased by **$710.0 million (74.0%)** to **$250.0 million**, funded by cash flows from paydowns and maturities of investment securities and loans[25](index=25&type=chunk) - Long-term debt increased by **$121.8 million** due to the issuance of **$125.0 million of subordinated notes** in Q2 2025[24](index=24&type=chunk) [Capital Ratios](index=4&type=section&id=Capital%20Ratios) The company maintained a 'well-capitalized' status, exceeding all regulatory capital adequacy requirements, with capital ratios, particularly the common equity tier 1 capital ratio, showing improvement due to lower risk-weighted assets - The Company is considered **'well-capitalized'** as of June 30, 2025, exceeding all regulatory capital adequacy requirements[26](index=26&type=chunk) | Capital Ratio | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Common Equity Tier 1 Capital Ratio | 13.43% | 12.53% | 11.53% | | Tier 1 Risk-Based Capital to Total Risk-Weighted Assets | 13.43% | 12.53% | 11.53% | | Total Risk-Based Capital to Total Risk-Weighted Assets | 16.49% | 14.93% | 13.80% | | Leverage Ratio | 9.37% | 9.06% | 8.44% | - The common equity tier 1 capital ratio increased **90 basis points to 13.43%** compared to Q1 2025, primarily due to lower risk-weighted assets[4](index=4&type=chunk) [Credit Quality](index=5&type=section&id=Credit%20Quality) This section details the company's credit quality, including non-performing assets and classified and criticized loans [Non-Performing Assets](index=5&type=section&id=Non-Performing%20Assets) Non-performing assets saw a slight decrease sequentially, driven by reductions in accruing loans past due, while non-accrual loans remained relatively stable | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :----------- | :----------- | | Non-accrual loans | $192.7 million | $191.9 million | $165.6 million | +0.4% | +16.4% | | Accruing loans past due 90 days or more | $1.4 million | $3.0 million | $2.6 million | -53.3% | -46.2% | | Total Non-Performing Loans | $194.1 million | $194.9 million | $168.2 million | -0.4% | +15.4% | | Other real estate owned | $3.4 million | $3.5 million | $6.7 million | -2.9% | -49.3% | | **Total Non-Performing Assets** | **$197.5 million** | **$198.4 million** | **$174.9 million** | **-0.5%** | **+12.9%** | - Non-performing assets decreased by **$0.9 million (0.5%)** to **$197.5 million** as of June 30, 2025, compared to $198.4 million as of March 31, 2025[27](index=27&type=chunk) [Classified and Criticized Loans](index=5&type=section&id=Classified%20and%20Criticized%20Loans) Classified loans decreased sequentially, while criticized loans significantly increased, primarily due to downgrades in the commercial real estate loan portfolio | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q-o-Q Change | Y-o-Y Change | | :----------------- | :---------------- | :---------------- | :---------------- | :----------- | :----------- | | Classified Loans | $458.1 million | $482.5 million | $455.3 million | -5.1% | +0.6% | | Criticized Loans | $1,203.0 million | $1,026.1 million | $618.0 million | +17.2% | +94.7% | - Criticized loans increased by **$176.9 million (17.2%)** to **$1,203.0 million**, primarily due to **$200.3 million of commercial real estate loan downgrades**, partially offset by upgrades, paydowns, and payoffs[28](index=28&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) The report includes several non-GAAP financial measures, such as tangible common stockholders' equity and adjusted net FTE interest margin ratio, which management uses to evaluate performance and provide investors with a consistent view of organic operations, excluding acquisition-related costs and other unpredictable adjustments - Non-GAAP measures include tangible common stockholders' equity, tangible assets, tangible book value per common share, and various adjusted net FTE interest income/margin ratios[29](index=29&type=chunk) - Management believes these non-GAAP measures are useful for investors by complementing regulatory capital ratios and presenting organic continuing operations without regard to acquisition costs and other unpredictable adjustments[30](index=30&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to inherent risks and uncertainties that could cause actual results to differ materially, including regulatory changes, economic conditions, credit quality, interest rate fluctuations, cybersecurity risks, and risks related to acquisitions and competition - Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates, and other important factors that could cause actual results to differ materially[32](index=32&type=chunk) - Key risk factors include changes in governmental regulations, negative developments in the banking industry, economic downturns, loan credit losses, changes in interest rates, cybersecurity risks, and risks related to acquisitions[32](index=32&type=chunk) - The company does not undertake any obligation to publicly update these statements to reflect actual results, new information, or future events, except as required by applicable laws[34](index=34&type=chunk) [Company Information](index=7&type=section&id=Company%20Information) This section provides details about the company, including conference call information, a brief overview, and contact information for investor relations [Conference Call Details](index=7&type=section&id=Conference%20Call%20Details) First Interstate BancSystem, Inc. will host a conference call on July 30, 2025, to discuss Q2 2025 results, accessible via telephone and internet, with a replay available for a month - A conference call to discuss Q2 2025 results will be held on Wednesday, July 30, 2025, at **11:00 a.m. Eastern Time**[35](index=35&type=chunk) - Participants can join by dialing **1-800-549-8228 (access code 98659)** or via **www.FIBK.com**[35](index=35&type=chunk) - A replay will be available from July 30, 2025, to August 29, 2025, by dialing **1-888-660-6264 (access code 98659)** and archived on the website[35](index=35&type=chunk) [About First Interstate BancSystem, Inc.](index=7&type=section&id=About%20First%20Interstate%20BancSystem%2C%20Inc.) First Interstate BancSystem, Inc. is a financial and bank holding company headquartered in Billings, Montana, operating banking offices across 14 states and offering a comprehensive range of banking products and services - First Interstate BancSystem, Inc. is a financial and bank holding company focused on community banking, incorporated in 1971 and headquartered in Billings, Montana[36](index=36&type=chunk) - The company operates banking offices in Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington, and Wyoming[36](index=36&type=chunk) - Through its subsidiary, First Interstate Bank, it provides a comprehensive range of banking products and services to individuals, businesses, and municipalities[36](index=36&type=chunk) [Contact Information](index=7&type=section&id=Contact%20Information) Contact information for investor relations is provided for inquiries regarding First Interstate BancSystem, Inc.'s financial results - Contact: **David P. Della Camera, CFA, Chief Financial Officer**, at **(406) 255-5363** or **investor.relations@fib.com**[37](index=37&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) This section contains the complete set of financial statements, including consolidated statements of income, balance sheets, and detailed breakdowns of loans, deposits, and credit quality metrics [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income provide a detailed breakdown of the company's revenues, expenses, and net income for the second quarter of 2025 and comparative periods - Refer to the table for detailed Consolidated Statements of Income[39](index=39&type=chunk) [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present the company's financial position, including assets, liabilities, and stockholders' equity, as of June 30, 2025, and comparative period-ends - Refer to the table for detailed Consolidated Balance Sheets[41](index=41&type=chunk) [Loans and Deposits](index=10&type=section&id=Loans%20and%20Deposits) This section provides a detailed breakdown of the company's loan portfolio by category and deposit composition, highlighting changes over recent quarters - Refer to the tables for detailed Loans held for investment and Deposits composition[43](index=43&type=chunk)[44](index=44&type=chunk) [Credit Quality Tables](index=11&type=section&id=Credit%20Quality%20Tables) Detailed credit quality metrics, including allowance for credit losses, net loan charge-offs, non-performing assets, and criticized loans, are presented for the current and prior quarters - Refer to the table for detailed Credit Quality metrics[46](index=46&type=chunk) [Selected Ratios - Annualized](index=12&type=section&id=Selected%20Ratios%20-%20Annualized) This section provides key annualized financial ratios, including profitability, efficiency, and capital adequacy ratios, for the current and historical periods - Refer to the table for detailed Selected Ratios - Annualized[48](index=48&type=chunk) [Average Balance Sheets](index=13&type=section&id=Average%20Balance%20Sheets) The average balance sheets provide a breakdown of average interest-earning assets and interest-bearing liabilities, along with associated interest income/expense and rates, for the three months ended June 30, 2025, and comparative periods - Refer to the table for detailed Average Balance Sheets[52](index=52&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=14&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, offering transparency into the adjustments made - Refer to the table for detailed Non-GAAP Financial Measures Reconciliation[54](index=54&type=chunk)

Company Overview - First Interstate BancSystem (FIBK) is expected to report a year-over-year decline in earnings, with a projected EPS of $0.57, reflecting a -1.7% change, while revenues are anticipated to increase by 4.1% to $254.25 million [3][11]. Earnings Expectations - The stock price may increase if the actual earnings exceed expectations in the upcoming report, scheduled for July 29, while a miss could lead to a decline in stock price [2][11]. - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a stable outlook from analysts [4]. Earnings Surprise Prediction - The Most Accurate Estimate for First Interstate BancSystem is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -4.07%, suggesting a bearish sentiment among analysts [11]. - The company currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, First Interstate BancSystem was expected to post earnings of $0.56 per share but only achieved $0.49, resulting in a surprise of -12.50% [12]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [13]. Industry Comparison - In the Zacks Banks - Midwest industry, Associated Banc-Corp (ASB) is expected to report earnings of $0.62 per share, indicating a year-over-year increase of +19.2%, with revenues projected at $362.81 million, up 11.5% [17][18]. - Associated Banc-Corp has a positive Earnings ESP of +0.81% and a Zacks Rank of 2, suggesting a higher likelihood of beating the consensus EPS estimate [19].

Company Overview - First Interstate BancSystem Inc (NASDAQ: FIBK) operates in the western and north-central United States, providing a variety of financial services including checking and savings accounts, time deposits, and loans for commercial, construction, and residential purposes [1]. Analyst Background - The analyst has over five years of experience in the Australian Banking industry, focusing on bank stocks and equity markets, aiming for safe yet substantial returns of over 10% per annum [1]. Investment Philosophy - The investment strategy emphasizes a balanced approach to risk and reward, particularly within the often-overlooked banking sector, which is seen as having significant potential [1]. Community Engagement - The analyst aims to enhance investor awareness and understanding of the banking sector through analysis and writing on Seeking Alpha, fostering a community of knowledgeable investors [1].