First Interstate BancSystem Q4 Earnings Call Highlights

Core Viewpoint - First Interstate BancSystem is undergoing significant restructuring, including branch divestitures and a focus on improving core profitability while consolidating its operational footprint from 14 states to 10 contiguous states [1][7][4]. Branch Closures and Sales - The company plans to close its branches in North Dakota and Minnesota in the first quarter, following the sale of branches in Arizona and Kansas in the fourth quarter of 2025 [1][2]. - First Interstate announced the sale of 11 branches in Nebraska, expected to close early in the second quarter of 2026, and will consolidate four additional branches in Nebraska [2][7]. Financial Performance - In the fourth quarter, net income rose to $108.8 million, aided by a $62.7 million gain from the sale of branches in Arizona and Kansas [6][10]. - Net interest income was reported at $206.4 million, a slight decrease of 0.2% from the prior quarter, and net interest margin improved to 3.38% [11][12]. Capital Management - The company prioritized capital return, repurchasing approximately $118 million of stock in 2025 and authorizing an additional $150 million for buybacks, totaling $300 million [5][17]. - Tangible book value per share increased by 2.9% to $22.40, with a declared dividend of $0.47 per share, reflecting a 5.7% annualized yield [18]. Credit Quality and Balance Sheet - Credit quality showed improvement, with criticized loans declining by $112.3 million (9.6%) and non-performing assets falling by $47.3 million (26%) [14]. - Total loans decreased by $632.8 million in the fourth quarter, while total deposits declined by $516.7 million to $22.1 billion [15]. Organizational Changes - The company is transforming its banking organization to a flatter model to enhance local decision-making and align with organic growth [8]. - Investments are being made to support growth, including building a new commercial banking team in Colorado and opening new branches in Montana [9]. 2026 Outlook - For 2026, the company anticipates low single-digit deposit growth and expects loans to be roughly flat to slightly lower, with a modest increase in the second half of the year [5][23]. - Management expects continued net interest margin expansion, projecting it to be "north of 350" basis points by year-end 2026 [20].