First Interstate BancSystem(US:FIBK)2020-05-01 20:42Financial Data and Key Metrics Changes - The company reported a decrease in net interest income of $5.1 million from the previous quarter, primarily due to a $1.4 million decrease in accretion income and a lower level of earning assets [26] - The net interest margin decreased by 4 basis points to 3.9%, while the operating net interest margin remained unchanged at 3.77% [27] - Non-interest income increased by $6.5 million quarter-over-quarter to $43.7 million, driven mainly by higher mortgage banking revenue [29] Business Line Data and Key Metrics Changes - Mortgage banking revenue increased by $5.5 million from the prior quarter due to higher demand for refinancing, with a balanced mix of new purchases and refinancing [30] - Wealth management revenue also saw an increase over the prior quarter despite market volatility affecting assets under management [8] Market Data and Key Metrics Changes - The company has $369 million in outstanding loans to the hotel industry, representing 4.1% of total loans, with less than 1% of this portfolio impaired as of March 31 [20] - Agricultural loans totaled $483 million, representing 5.4% of total loans, with only 2.3% impaired [21] - The company has reduced its exposure to the oil and gas industry, which now represents just 1.5% of the portfolio, with only $4 million of those loans impaired [23] Company Strategy and Development Direction - The company aims to maintain a fortress balance sheet with strong asset quality based on conservative underwriting criteria, high reserves, excess capital, and ample liquidity [44] - The management is focused on enhancing technology infrastructure to support remote work and digital banking, with 72% of retail clients now utilizing the digital platform [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather the current economic storm, citing a strong credit culture and diversified loan portfolio [42] - The company anticipates that the impact of the COVID-19 pandemic on its portfolio will be better understood in the coming months, with a focus on maintaining strong asset quality [41] Other Important Information - The company has granted loan deferrals on approximately $1 billion of commercial and CRE loans and $45 million of consumer loans [16] - The management has suspended stock repurchase activity and will reevaluate this decision as conditions warrant in the coming quarters [48] Q&A Session Summary Question: Can you provide insight into the qualitative factors that influenced the provision increase? - Management confirmed that most of the increase in the provision was due to qualitative factors that became more severe than the Moody's baseline [50][51] Question: How sensitive are your customers to potential slowdowns in tourism? - Management indicated that warning signs may appear going into the third quarter, with tourism being a significant industry in Montana [52][53] Question: What is the current status of M&A activity? - Management stated that M&A discussions have stalled due to the current crisis, but could resume if conditions stabilize [57] Question: How do you expect the expense run rate to progress through the year? - Management expects to bring down the expense run rate as they tighten control over discretionary spending [94]