First Interstate BancSystem(FIBK) - 2024 Q2 - Quarterly Report

Financial Performance - Net income decreased by $7.0 million to$60.0 million, or $0.58 per share, for the three months ended June 30, 2024, compared to$67.0 million, or $0.65 per share, for the same period in 2023[167]. - For the six months ended June 30, 2024, net income decreased by$4.9 million to $118.4 million, or$1.15 per share, compared to $123.3 million, or$1.19 per share, for the same period in 2023[168]. - Net interest income decreased by $16.7 million for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to increased interest expenses from higher costs of interest-bearing liabilities[172]. - Net interest income decreased by$55.5 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increased interest expense from higher costs of interest-bearing deposits[175]. - Total non-interest income decreased by $1.5 million for the three months ended June 30, 2024, compared to the same period in 2023, but increased by$24.2 million for the six months ended June 30, 2024[183]. Interest Rates and Margins - The quarterly yield on interest-earning assets increased to 4.80% as of June 30, 2024, up from 4.74% as of March 31, 2024, and 4.52% as of June 30, 2023[158]. - The Company's cost of funds decreased slightly to 1.86% during the three months ended June 30, 2024, from 1.87% during the three months ended March 31, 2024, and increased from 1.43% during the three months ended June 30, 2023[159]. - The net interest margin increased to 2.97% during the three months ended June 30, 2024, from 2.91% during the three months ended March 31, 2024, but decreased from 3.09% for the three months ended June 30, 2023[159]. - The interest rate spread decreased to 2.38% for the three months ended June 30, 2024, compared to 2.81% for the same period in 2023[174]. - The net FTE interest margin ratio decreased to 2.96% for the three months ended June 30, 2024, down from 3.24% for the same period in 2023[174]. Assets and Liabilities - Total assets decreased by $381.7 million, or 1.2$30,289.5 million as of June 30, 2024, from $30,671.2 million as of December 31, 2023[189]. - Total liabilities decreased by$379.5 million, or 1.4%, to $27,064.2 million as of June 30, 2024, from$27,443.7 million as of December 31, 2023[214]. - Total deposits decreased by $452.4 million, or 1.9$22,870.7 million as of June 30, 2024, from $23,323.1 million as of December 31, 2023[216]. - Long-term debt increased by$262.6 million, or 217.4%, to $383.4 million as of June 30, 2024, from$120.8 million as of December 31, 2023[219]. Credit Quality - The provision for credit losses was $9.0 million for the three months ended June 30, 2024, which included$18.6 million on loans held for investment and a reduction of $9.6 million for unfunded commitments[180]. - Net loan charge-offs for the three months ended June 30, 2024, were$13.5 million, or an annualized 0.30% of average loans outstanding, compared to $11.4 million, or 0.25$59.2 million, or 55.6%, to $165.6 million as of June 30, 2024, from$106.4 million as of December 31, 2023[196]. - Non-performing loans totaled $168.2 million as of June 30, 2024, compared to$111.3 million at December 31, 2023, marking a 51% increase[200]. - The allowance for credit losses was $232.8 million, or 1.28$227.7 million, or 1.25%, at December 31, 2023[209]. Operational Efficiency - Non-interest expense decreased by $7.0 million, or 4.3$156.9 million for the three months ended June 30, 2024, compared to $163.9 million in the same period of 2023[184]. - Salaries and wages decreased by$1.8 million, or 2.6%, to $66.3 million for the three months ended June 30, 2024, compared to$68.1 million in the same period of 2023[184]. - Employee benefits expense decreased by $2.4 million, or 12.4$16.9 million for the three months ended June 30, 2024, compared to $19.3 million in the same period of 2023[185]. Strategic Initiatives - The Company operates 304 banking offices across fourteen states, focusing on community banking and strategic acquisitions[152]. - The Company continues to evaluate bank acquisitions and other strategic opportunities as part of its normal course of business[154]. - The company has completed remediation activities to address previously identified material weaknesses in internal controls over financial reporting[235]. - The effectiveness of the company's disclosure controls and procedures was confirmed by the Chief Executive Officer and Chief Financial Officer as of June 30, 2024[234]. Market and Economic Conditions - Inflation decreased to 3.0$8.1 billion, or 35.4% of total deposits as of June 30, 2024[217]. - The company expects future provisions for credit losses to be subject to ongoing evaluations of risks in the loan portfolio, indicating potential for material additional provisions if economic conditions decline[211].