First Interstate BancSystem(US:FIBK)2022-01-28 18:51Financial Data and Key Metrics Changes - The company reported net income of $51.2 million or $0.83 per diluted share, which is $0.03 higher than the operating earnings per share in the prior quarter [8] - Net interest income decreased by $5.1 million primarily due to a $4.5 million decrease in PPP loan income, with net interest margin declining 22 basis points to 2.69% [20] - Non-interest income decreased by $2.3 million quarter-over-quarter to $37.4 million, primarily due to lower mortgage banking revenues [21] - Total non-interest expense declined by $900,000, excluding acquisition-related expenses [22] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $291 million from the end of the prior quarter, including a net decline in PPP loans of approximately $190 million [23] - Deposits increased by $262 million from the end of the prior quarter, with most growth in interest-bearing demand deposits [24] - Non-performing assets declined by 16% in the quarter, and criticized loans declined by 14% [24] Market Data and Key Metrics Changes - The company experienced strong deposit inflows and new loan production, particularly in the Mountain Division, with Montana leading all markets [9] - The company noted that supply chain disruptions and labor shortages are causing delays in projects and investments [9] Company Strategy and Development Direction - The company is focused on executing a smooth integration with Great Western Bancorp, with the merger expected to be completed on or about February 1 [13] - The company aims to maintain a strong culture while expanding its footprint to over $32 billion in assets across 14 states [32] - The company announced significant changes in consumer overdraft practices, including the elimination of NSF fees, to better serve the underbanked [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth but remains cautious, projecting mid-single digit loan growth excluding PPP [27] - The company expects net interest margin to be relatively flat in the first quarter, with the first quarter anticipated to be the low point of the year [27] - Management highlighted the importance of balancing growth with risk management, particularly in light of potential rising interest rates [11] Other Important Information - The company plans to realize cost synergies from the merger shortly after the system conversion scheduled for May 20 [14] - The company anticipates a reduction of around $5 million in NSF and overdraft fees in 2022 due to changes in practices [18] Q&A Session Summary Question: Loan growth outlook compared to peers - Management acknowledged the optimism but emphasized a conservative approach to projecting loan growth, citing the need to avoid overestimating [38] Question: Update on payoff activity and expectations - Management indicated that the current payoffs might subside as the market becomes less aggressive in booking low-rate deals [45] Question: Guidance on deposit growth - Management expects relatively flat deposit growth year-over-year, influenced by the absence of PPP loan impacts and seasonal trends [54] Question: Dividend strategy and potential buybacks - Management indicated that buybacks are unlikely at current levels, but dividends may increase if the merger integration is successful [59]