First Interstate BancSystem(US:FIBK)2025-10-30 14:30Financial Data and Key Metrics Changes - The company reported net income of $71.4 million, or $0.69 per diluted share, compared to $71.7 million or $0.69 per diluted share in the previous quarter [13] - Net interest income decreased by $0.4 million, or 0.2%, to $206.8 million compared to the prior quarter, but increased by $1.3 million, or 0.6%, compared to the third quarter of 2024 [13] - The fully taxable equivalent net interest margin was 3.36% for the third quarter, up from 3.32% in the second quarter [14] - Total deposits decreased by $25.6 million to $22.6 billion as of September 30, 2025 [17] Business Line Data and Key Metrics Changes - Loan balances decreased by $519 million in the third quarter, including $66.8 million from the indirect portfolio and larger loan paydowns [16] - Non-interest income was $43.7 million, an increase of $2.6 million from the prior quarter [14] - Non-interest expense increased by $2.8 million to $157.9 million, including costs related to branch divestitures [15] Market Data and Key Metrics Changes - The ratio of loans held for investment to deposits was 70.1% at the end of the quarter, down from 72.3% in the prior quarter [17] - Credit quality stabilized, with non-performing assets decreasing by $11.9 million, or 6%, to $185.6 million [10] Company Strategy and Development Direction - The company is focused on organic growth, optimizing its branch network, and improving core profitability [5] - Recent divestitures of branches in Arizona, Kansas, and Nebraska are aimed at enhancing market density and operational efficiency [6][7] - The company plans to continue investing in areas with strong market share and growth potential, including opening new locations [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in loan growth due to muted demand for real estate lending and increased competition [9] - The company anticipates a decline in loan balances in the fourth quarter but remains optimistic about growth opportunities in 2026 [32] - Management emphasized a disciplined approach to growth, focusing on credit quality and risk management [10][26] Other Important Information - The company declared a dividend of $0.47 per common share, equating to a 6% annualized yield based on the average closing price [17] - The CET1 capital ratio increased to 13.9%, driven by lower risk-weighted assets [17] Q&A Session Summary Question: Loan growth outlook for 2026 - Management indicated that loan growth is a primary focus and expressed optimism about returning to net loan growth in 2026, despite recent challenges [32][33] Question: Capital management and buyback strategy - Management confirmed that the current buyback program is a priority, but they are also considering other options for capital allocation as they assess market conditions [34][39] Question: Expectations for net interest income growth - Management provided guidance for mid-single-digit net interest income growth in 2026, with expectations for sequential improvement throughout the year [42][44] Question: Credit quality and charge-off expectations - Management reiterated a long-term charge-off guidance of 20 to 30 basis points, emphasizing that quarterly results may fluctuate based on specific credit resolutions [60][62] Question: Margin outlook and loan repricing - Management discussed the impact of loan repricing and anticipated that the margin could improve as the loan portfolio adjusts to market conditions [64][66]