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].

Financial Data and Key Metrics Changes - The company reported net income of $108.8 million or $1.08 per diluted share in Q4 2025, compared to $71.4 million or $0.69 per diluted share in Q3 2025 [15] - Net interest income decreased by $0.4 million or 0.2% to $206.4 million compared to the prior quarter, and decreased by $7.9 million or 3.7% compared to Q4 2024 [15][16] - Non-interest income was $106.6 million, an increase of $62.9 million from the prior quarter, driven by a gain on sale of $62.7 million associated with divestitures [17] - Non-interest expense was $166.7 million for Q4 2025, an increase of $8.8 million from the prior quarter [17] - The fully tax-equivalent net interest margin was 3.38% for Q4 2025, compared to 3.36% in Q3 2025 and 3.20% in Q4 2024 [16][22] Business Line Data and Key Metrics Changes - Loans decreased by $632.8 million in Q4 2025, including $62.8 million of continued amortization of the indirect portfolio and $72.5 million in loans moving to held for sale [19] - Total deposits decreased by $516.7 million to $22.1 billion as of December 31, 2025, driven by the sale of $641.6 million of deposits in the Arizona and Kansas transaction [19] - Criticized loans decreased by $112.3 million or 9.6% in Q4 2025, and non-performing assets decreased by $47.3 million or 26% [9][18] Market Data and Key Metrics Changes - The ratio of loans held for investment to deposits was 68.8% at the end of Q4 2025, compared to 70.1% at the end of Q3 2025 and 77.5% at the end of December 2024 [20] - The company maintained a proactive approach to credit, with net charge-offs for the full year of 2025 at 24 basis points of average loans, in line with long-term expectations [18] Company Strategy and Development Direction - The company has focused on improving core profitability, optimizing the balance sheet, and refocusing capital investment in geographies with strong market share and growth potential [6][10] - Strategic actions included branch divestitures in Arizona, Kansas, and Nebraska, outsourcing the consumer credit card product, and discontinuing originations and indirect lending [6][10] - A new, flatter organizational structure was implemented to enhance decision-making and support organic growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for organic growth following the restructuring of the banking organization and the addition of new team members in growth markets [32][54] - The company anticipates a slight decline in total loans for 2026, with expectations for modest growth in the latter half of the year [24][25] - Management highlighted the importance of maintaining disciplined credit management while pursuing profitable growth opportunities [56] Other Important Information - The company declared a dividend of $0.47 per common share, equating to a 5.7% annualized yield based on the average closing price during Q4 2025 [22] - The share repurchase authorization was increased to $300 million, with approximately $180 million of capacity remaining under the program [21] Q&A Session Summary Question: Loan balances and production outlook - Management noted that a significant portion of the decline in loan balances was due to payoffs of criticized loans, which is viewed positively [31] - There was improved loan production in December, and management is optimistic about the reorganization's impact on growth [32] Question: Margin expectations - Management expects net interest margin to improve sequentially, with a target of north of 3.5% by the end of 2026 [34] Question: Reinvestment rates on new loans and securities - New loan production is currently in the low- to mid-6% range, while securities have seen a slight decrease in reinvestment rates [38] Question: Buyback activity and capital management - Management plans to continue executing share buybacks, with a focus on approaching peer median capital levels [39] Question: Credit quality and criticized loans - Management is optimistic about continued improvement in credit quality, with proactive management strategies in place [40] Question: Expense guidance and seasonality - Management anticipates flat to slightly lower expenses in 2026, with a focus on maintaining discipline across controllable expenses [44][46] Question: Market opportunities in Colorado - Management expressed confidence in the current branch network and team in Colorado, with potential for future expansion [61][62]

Financial Data and Key Metrics Changes - The company reported net income of $108.8 million or $1.08 per diluted share in Q4 2025, compared to $71.4 million or $0.69 per diluted share in Q3 2025 [12] - Net interest income decreased by $0.4 million or 0.2% to $206.4 million compared to the prior quarter, and decreased by $7.9 million or 3.7% compared to Q4 2024 [12][13] - Non-interest income was $106.6 million, an increase of $62.9 million from the prior quarter, driven by a gain on sale of $62.7 million associated with divestitures [14] - Non-interest expense increased by $8.8 million to $166.7 million, including costs related to branch closures and severance [14] Business Line Data and Key Metrics Changes - Loans decreased by $632.8 million in Q4 2025, including $62.8 million from the indirect portfolio and $72.5 million from loans moving to held for sale [16] - Total deposits decreased by $516.7 million to $22.1 billion, primarily due to the sale of deposits in the Arizona and Kansas transaction [16] - Criticized loans decreased by $112.3 million or 9.6%, while non-performing assets decreased by $47.3 million or 26% [6][15] Market Data and Key Metrics Changes - The ratio of loans held for investment to deposits was 68.8% at the end of Q4 2025, down from 70.1% in the prior quarter [17] - The company maintained a proactive approach to credit, resulting in improved credit quality metrics in Q4 2025 [5][6] Company Strategy and Development Direction - The company is refocusing capital investment and optimizing its balance sheet by exiting markets with lower growth potential and enhancing its presence in high-growth areas [4][8] - A new, flatter organizational structure is being implemented to improve decision-making and support organic growth [9][10] - The company plans to continue share repurchases as a priority for capital allocation, with an increased authorization of $300 million [5][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for organic growth due to recent organizational changes and improved credit culture [27][28] - The company anticipates a slight decline in loans in the first half of 2026, with modest growth expected in the latter half [20][22] - The net interest margin is expected to improve sequentially, driven by a favorable rate environment and loan repricing dynamics [21][22] Other Important Information - The company declared a dividend of $0.47 per common share, equating to a 5.7% annualized yield [19] - Regulatory capital ratios improved, with the Common Equity Tier 1 capital ratio ending at 14.38% [19] Q&A Session Summary Question: Loan balances and production outlook - Management noted that the decline in loan balances was primarily due to payoffs of criticized loans, which is viewed positively, and indicated improved loan production in December [25][26] Question: Margin expectations - Management expects net interest margin to improve sequentially, with a target of over 3.5% by the end of 2026 [29][30] Question: Reinvestment rates on new loans and securities - Current reinvestment rates for new loans are in the low- to mid-6% range, while securities have seen a slight decrease in rates [33] Question: Buyback activity and capital management - The company plans to continue active buyback activity, aligning capital levels with peer averages [34][35] Question: Credit quality and criticized loans - Management expressed confidence in continued improvement in credit quality, although predicting specific reductions in criticized loans remains challenging [36] Question: Expense guidance and management - The company anticipates flat to slightly lower expenses in 2026, with a focus on maintaining discipline across controllable expenses [40][41] Question: Market opportunities and growth strategy - Management highlighted Colorado as a key growth market, with plans to expand branch locations and enhance customer relationships [56][57]

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]

Core Insights - GBank Financial reported a decline in earnings per share (EPS) for Q2 2025, with EPS at $0.33, missing the consensus forecast of $0.39 and down from $0.36 a year earlier [1][2] - Despite the EPS decline, net revenue increased to $17.8 million, up 14.8% from $15.5 million in Q2 2024 [1][2] - The company faced challenges with net interest margins and non-interest income, alongside rising credit loss provisions [1] Financial Performance - EPS (GAAP, Diluted) for Q2 2025 was $0.33, down 8.3% year-over-year [2] - Net revenue reached $17.8 million, a 14.8% increase from $15.5 million in Q2 2024 [2] - Net interest income was $12.4 million, up 9.7% from $11.3 million a year earlier [2] - Non-interest income increased to $5.4 million, a rise of 28.6% from $4.2 million in Q2 2024 [2] - The efficiency ratio improved to 58.5%, down from 58.9% [2] Business Model and Strategy - GBank Financial operates as a regional bank and digital fintech provider, focusing on traditional banking services and innovative financial technology [3] - The bank serves customers primarily in Nevada, California, Utah, and Arizona, with two full-service branches in Las Vegas [3] - Recent strategic focus includes expanding the lending portfolio and enhancing the digital banking interface, particularly in gaming and sports-related fintech [4] Loan and Deposit Growth - Deposits increased by $189.0 million year-over-year in Q1 2025, with total loans reaching $871.6 million [5] - Small Business Administration and commercial loan originations hit a quarterly record of $160.5 million [5] - Loan growth was strongest in commercial real estate, although multifamily and residential portfolios saw declines [5] Digital Banking and Credit Card Program - The consumer credit card program experienced mixed results, with a 22% decline in transaction volume due to a pause in new credit card issuances for system upgrades [6] - Net interchange fees also fell, but management indicated that credit card applications have resumed and transaction volume is trending higher for the next quarter [6] Asset Quality and Credit Loss Provisions - Non-performing assets represented 0.37% of total assets, down from the previous quarter but higher than last year's 0.22% [7] - Net charge-offs increased to $870,000 from $29,000 in Q2 2024, with provisions for credit losses raised to $1.1 million [7] - Some increases in nonaccrual loans were noted in government-guaranteed portfolios, which provide partial loss protection [7] Expense Management - Expenses remained elevated but declined compared to the prior quarter, with earlier periods seeing higher legal and regulatory costs [8] - The efficiency ratio improved to 58.5%, indicating better cost management [8] Future Outlook - Management provided a cautious but optimistic outlook, expecting a rebound in credit card volume and interchange fees in Q3 2025 [10] - The pipeline for SBA and business lending remains strong, with ongoing monitoring of loan sale margins and asset quality trends [10] - The company continues to invest in digital platforms, particularly in gaming and online payment products, pending regulatory approvals [10]