First Interstate BancSystem(FIBK) - 2024 Q1 - Quarterly Report

Financial Performance - Net income increased by $2.1 million to$ 58.4 million, or $0.57 per share, for the three months ended March 31, 2024, compared to$ 56.3 million, or $0.54 per share, for the same period in 2023[151]. - Net interest income decreased by$ 38.8 million to $200.1 million for the three months ended March 31, 2024, compared to$ 238.9 million for the same period in 2023[156]. - Total non-interest income increased by $25.7 million to$ 42.1 million for the three months ended March 31, 2024, compared to $16.4 million in the same period in 2023[164]. - Non-interest expense decreased by$ 5.6 million during the three months ended March 31, 2024, compared to the same period in 2023[165]. - Total non-interest expense decreased by $5.6 million, or 3.4%, to$ 160.2 million for the three months ended March 31, 2024, compared to $165.8 million in the same period of 2023[166]. Interest Rates and Margins - The quarterly yield on interest-earning assets rose to 4.74% as of March 31, 2024, up from 4.69% as of December 31, 2023, and 4.43% as of March 31, 2023[143]. - The cost of funds increased to 1.87% during the three months ended March 31, 2024, from 1.72% during the three months ended December 31, 2023, and 1.10% during the three months ended March 31, 2023[144]. - Net interest margin decreased to 2.91% during the three months ended March 31, 2024, down from 2.99% during the three months ended December 31, 2023, and 3.33% during the three months ended March 31, 2023[144]. - The net interest margin ratio decreased by 42 basis points to 2.91% for the three months ended March 31, 2024, down from 3.33% in the same period in 2023[157]. Loans and Credit Quality - The provision for credit losses was$ 5.3 million for the three months ended March 31, 2024, compared to $15.2 million for the same period in 2023[162]. - The company reported a net loan charge-off of$ 8.4 million, or an annualized 0.18% of average loans outstanding, for the three months ended March 31, 2024[162]. - Non-accrual loans increased by $65.6 million, or 61.7%, to$ 172.0 million as of March 31, 2024, primarily due to a downgrade related to a single $54.4 million commercial loan[178]. - Total non-performing assets increased to$ 189.4 million as of March 31, 2024, compared to $98.7 million as of March 31, 2023[181]. - The allowance for credit losses was$ 227.7 million, or 1.25% of loans held for investment, as of March 31, 2024, unchanged from December 31, 2023[189]. Deposits and Borrowings - The deposit base is diversified, with 66.0% of total deposits being FDIC insured as of March 31, 2024[138]. - Total deposits decreased by $513.1 million, or 2.2%, to$ 22,810.0 million as of March 31, 2024, with declines in all categories except for savings deposits and time deposits[194]. - The estimated amount of deposits in excess of the FDIC insurance limit at March 31, 2024, was $7.9 billion, or 34.6% of total deposits[196]. - The Company accessed borrowings through the Bank Term Funding Program totaling$ 1.0 billion in January 2024, which was used to pay down FHLB advances[139]. - Long-term debt increased by $250.0 million, or 207.0%, to$ 370.8 million as of March 31, 2024, due to 18-month FHLB borrowings[198]. Capital and Equity - Stockholders' equity decreased by $17.8 million, or 0.6%, to$ 3,209.7 million as of March 31, 2024, influenced by unrealized losses on available-for-sale securities and stock repurchases[199]. - As of March 31, 2024, the Company had capital levels exceeding the "well-capitalized" guidelines established by the Federal Reserve and FDIC[201]. Operational Efficiency - The Company operates 304 banking offices across fourteen states, focusing on community banking and strategic acquisitions[134]. - The company experienced a decrease in mortgage banking revenues by 26.1% to $1.7 million for the three months ended March 31, 2024, compared to$ 2.3 million in the same period in 2023[164]. - Employee benefits expense decreased by $3.5 million, primarily due to lower health insurance costs of$ 2.1 million and lower payroll taxes of $1.8 million[166]. Risk Management and Controls - Management assessed that internal control over financial reporting was not effective as of March 31, 2024, due to un-remediated material weaknesses[223]. - The Company expects to complete remediation of the identified control deficiencies during 2024[225]. - The company’s disclosure controls and procedures were evaluated as effective as of March 31, 2024, ensuring timely reporting of required information[222]. - The interest rate risk management strategy includes monitoring net interest income sensitivity through an income simulation model[214]. - The company is enhancing its internal controls, including implementing a quality assurance process for user access reviews[224].