8-K
FIRST INTERSTATE BANCSYSTEM INC (FIBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (date of earliest event reported): April 28, 2022
FIRST INTERSTATE BANCSYSTEM, INC.
(Exact name of registrant as specified in its charter)
| Montana | 001-34653 | 81-0331430 | |
|---|---|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (Commission<br>File No.) | (IRS Employer<br>Identification No.) | |
| 401 North 31st Street | |||
| Billings, | MT | 59116-0918 | |
| (Address of principal executive offices) | (zip code) | ||
| (406) | 255-5311 | ||
| --- | --- | --- | |
| (Registrant’s telephone number, including area code) | |||
| Not Applicable | |||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
* * * * *
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
|---|---|---|
| Class A common stock, no par value | FIBK | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
* * * * *
Item 2.02 Results of Operations and Financial Condition.
On April 28, 2022, First Interstate BancSystem, Inc. (the “Company”) issued a press release regarding its financial results for the quarter ended March 31, 2022. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein. Neither the information included or incorporated by reference under this Item 2.02, nor the press release furnished herewith, shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
On April 28, 2022, the Company posted a new corporate presentation (the “Presentation”) on the News and Events page of the Company’s website at https://www.fibk.com. The Presentation, which is furnished with this Current Report as Exhibit 99.2 and incorporated herein by reference, updates previously furnished presentations and provides an overview of the Company and its operations. Neither the information included or incorporated by reference under this Item 7.01, nor the Presentation furnished herewith, shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act or incorporated by reference into any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01 Other Events.
On April 28, 2022, the Company also announced that the Board of Directors of the Company declared, on April 27, 2022, a dividend of $0.41 per share, that is payable May 20, 2022 to shareholders of record of the Company as of May 10, 2022.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibit Number | Description |
|---|---|---|
| 99.1 | Press Release dated April 28, 2022. | |
| 99.2 | Presentation | |
| 104 | Cover Page Interactive Data File (embedded within Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 28, 2022
| FIRST INTERSTATE BANCSYSTEM, INC. | |
|---|---|
| By: | /s/ KEVIN P. RILEY |
| Kevin P. Riley | |
| President and Chief Executive Officer |
Document
Exhibit 99.1
For Immediate Release
First Interstate BancSystem, Inc. Reports First Quarter Earnings
Billings, MT - April 28, 2022 - First Interstate BancSystem, Inc. (NASDAQ: FIBK) today reported financial results for the first quarter of 2022. For the quarter, the Company reported a net loss of $33.4 million, or $0.36 per share, which compares to net income of $51.1 million, or $0.83 per share, for the fourth quarter of 2021, and net income of $51.4 million, or $0.83 per share, for the first quarter of 2021.
The first quarter of 2022 and the fourth quarter of 2021 earnings include pre-tax acquisition costs of $65.2 million and $5.0 million, respectively, related to the acquisition of Great Western Bancorp, Inc. (“Great Western”), the parent company of Great Western Bank (“GWB”), which reduced earnings by $0.57 and $0.06 per common share for the first and fourth quarters, respectively. The first quarter of 2021 did not include comparable costs.
HIGHLIGHTS
•We successfully completed the acquisition of Great Western on February 1, 2022, for consideration of approximately $1.7 billion, consisting of the issuance of 46.9 million shares of the Company’s Class A common stock valued at $36.76 per share. Following the acquisition, the Company’s dual class share structure was eliminated on March 25, 2022.
•Total assets increased $13,490.3 million, or 68.6%, to $33,162.2 million as of March 31, 2022, from $19,671.9 million as of December 31, 2021, primarily as a result of assets acquired from GWB.
•Net interest margin ratio, on a fully taxable equivalent basis, increased to 2.80% for the first quarter of 2022, an 11 basis point increase from the fourth quarter of 2021. Excluding income related to the Payroll Protection Program (PPP) and interest accretion income, the net interest margin, on a fully taxable equivalent basis, increased to 2.65% for the first quarter of 2022, a 19 basis point increase from the fourth quarter of 2021.
•First quarter 2022 provision expense of $61.3 million includes $68.3 million attributable to non-purchase credit deteriorated loans acquired in the transaction, which reduced earnings $0.59 per share, for the first quarter of 2022.
•Total deposits increased $11,818.7 million, or 72.6%, to $28,088.3 million as of March 31, 2022 from $16,269.6 million as of December 31, 2021, resulting in a 294.43% annualized growth rate in deposits. Excluding deposits acquired as a result of the GWB acquisition (as of February 1, 2022), annualized deposit growth was 3.24% for the first quarter of 2022.
•All credit metrics for the legacy FIBK loan portfolio again showed sequential improvement at March 31, 2022 from December 31, 2021. At the same time, credit metrics for the acquired GWB loan portfolio showed meaningful improvement when compared with announced expectations at deal announcement. Purchased credit deteriorated loans for the GWB loans acquired were $722.4 million at February 1, 2022, down from $1,201.0 million as disclosed with the announcement of the transaction on September 16, 2021.
•Net charge-offs in the first quarter of 2022 were $16.7 million, or an annualized 0.47% of average loans outstanding, of which net charge-offs of $15.4 million was attributable to the loans acquired from GWB in order to facilitate accelerated restructuring of several credits. Exclusive of charge-offs related to the acquired loans, net charge-offs were $1.3 million, or a decrease of $1.4 million as of March 31, 2022, from $2.7 million, or an annualized 0.11% of average loans outstanding, as of December 31, 2021, and decreased $1.6 million, from $2.9 million, or an annualized 0.12% of average loans outstanding, as of March 31, 2021.
•Tangible book value per common share of $19.78 as of March 31, 2022, compared to $20.83 as of December 31, 2021 and $19.85 as of March 31, 2021. Quarter over quarter, tangible book value decreased $1.05 per share driven by the change in accumulated other comprehensive income of $191.0 million, or $1.74 per share.
“We are excited to capitalize on some of the most vibrant, fastest growing markets in the country. This quarter, we continued to deploy our excess liquidity into higher yielding earning assets and saw expansion in our net interest margin. Excluding the impact created by the purchase accounting provision and transaction costs, we had another quarter of strong earnings” said Kevin P. Riley, President and Chief Executive Officer of First Interstate BancSystem, Inc. “The completion of our merger with Great Western Bancorp at the beginning of February has further increased our exposure to attractive markets, while adding a talented team of commercial bankers that will benefit from the greater resources and support they will have as part of First Interstate. The integration is proceeding smoothly and we remain on track to realize the cost savings projected for the transaction during the second half of the year.
“As a result of the strong progress that Great Western made in resolving its problem loans prior to the completion of the merger and the pro-active resolution efforts we have taken since the closing, we now expect the resolution of credit quality issues to be less of a headwind to total loan growth in our first year of combined operations than we initially anticipated. Our loan pipeline remains strong, which should lead to continued favorable shifts in our mix of earning assets and positive trends in our level of profitability,” said Mr. Riley.
DIVIDEND DECLARATION
On April 27, 2022, the Company’s board of directors declared a dividend of $0.41 per common share, payable on May 20, 2022, to common stockholders of record as of May 10, 2022. The dividend equates to a 4.2% annualized yield based on the $39.40 per share average closing price of the Company’s common stock as reported on NASDAQ during the first quarter of 2022.
RECENT ACQUISITION
On February 1, 2022, the Company completed its acquisition of Great Western, the parent company of GWB, a Sioux Falls, South Dakota based community bank with 174 banking offices across Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. GWB was merged with our existing bank subsidiary, First Interstate Bank, contemporaneously with the closing of the parent company merger. The core system conversion is expected to occur over the weekend of May 21, 2022.
Consideration for the acquisition totaled approximately $1.7 billion consisting of the issuance of 46.9 million shares of the Company’s Class A common stock valued at $36.76 per share, the opening price of the Company’s Class A common stock as quoted on the NASDAQ stock exchange on the acquisition date. As of the acquisition date, Great Western had total assets with fair values of $13,311.2 million, loans held for investment with fair values of $7,713.3 million and deposits with fair values of $11,682.6 million. The Company has recorded provisionally the fair values of the assets and liabilities acquired from GWB provisionally and will finalize the amounts during the year. In conjunction with the acquisition, the Company recorded provisional goodwill of $516.0 million, customer relationship intangible assets of $22.8 million, and core deposit intangible assets of $49.1 million.
NET INTEREST INCOME
Net interest income increased $56.2 million, or 46.1%, to $178.0 million, during the first quarter of 2022, compared to $121.8 million during the fourth quarter of 2021, primarily as a result of the impact of the GWB acquisition and an expansion in our net interest margin, which was partially offset by a decrease of $6.9 million in PPP loan income during the first quarter of 2022. Net interest income increased $57.3 million, or 47.5%, during the first quarter of 2022, from $120.7 million during the first quarter of 2021, primarily as a result of the impact of the GWB acquisition, which was partially offset by a decrease of $9.5 million in PPP loan income compared to the first quarter of 2021.
•Interest accretion attributable to the fair valuation of acquired loans from acquisitions contributed $7.6 million, $1.9 million, and $2.3 million to net interest income during the first quarter of 2022, the fourth quarter of 2021, and the first quarter of 2021, respectively. Interest accretion attributable to the GWB acquisition accounted for $6.0 million during the first quarter of 2022.
•The Company earned a total of $2.8 million of interest income, including loan fees, on PPP loans with average balances of $91.6 million during the first quarter of 2022 as compared to $9.7 million of interest income, including loan fees, on PPP loans with average balances of $200.1 million during the fourth quarter of 2021 and $12.3 million of interest income, including loan fees, on PPP loans with average balances of $764.0 million during the first quarter of 2021. The Company had $1.3 million of unearned deferred fees related to PPP loans accrued as of March 31, 2022.
The net interest margin ratio was 2.80% for the first quarter of 2022 compared to 2.69% reported during the fourth quarter of 2021 and 3.04% during the first quarter of 2021. Excluding interest accretion from the fair value of acquired loans and PPP income, on a quarter-over-quarter basis the net interest margin expanded 19 basis points primarily the result of a shift in the mix of earning assets toward loans, and an increase in the yield on investment securities and cash. On the same basis year-over-year, the decrease in net interest margin was the result of a reduction in yields on earning assets, due to a shift in the mix of earning assets toward investment securities, and lower yields on both loans and investment securities.
PROVISION FOR (REDUCTION OF) CREDIT LOSSES
During the first quarter of 2022, the Company recorded a provision for credit losses of $61.3 million, compared to a reduction of $9.5 million during the fourth quarter of 2021, and a reduction of $5.1 million during the first quarter of 2021. The provision during the first quarter of 2022 includes $70.4 million related to the day two GWB acquisition impact, of which $68.3 million is related to the acquired non-PCD funded loans and $2.1 million is related to the unfunded commitments.
The allowance for credit losses is updated quarterly based on the current loan portfolio, asset quality metrics, and the results of the current economic outlook. For the first quarter of 2022, the allowance for credit losses was impacted by net charge-offs of $16.7 million, or an annualized 0.47% of average loans outstanding, compared to net charge-offs of $2.7 million, or an annualized 0.11% of average loans outstanding, for the fourth quarter of 2021, and net charge-offs of $2.9 million, or an annualized 0.12% of average loans outstanding, for the first quarter of 2021.
The Company’s allowance for credit losses as a percentage of period-end loans was 1.46%, 1.31%, and 1.38% at March 31, 2022, December 31, 2021, and March 31, 2021, respectively. The increase in the percentage from December 31, 2021 is primarily a result of GWB acquired loans, which included a higher percentage of criticized assets than the Company’s legacy loans. Coverage of non-performing loans decreased to 203.3% at March 31, 2022, compared to 441.5% at December 31, 2021 and 330.0% at March 31, 2021, as a result of higher levels of non-performing loans related to the GWB acquisition.
NON-INTEREST INCOME
Non-interest income increased $11.8 million, or 31.6%, to $49.2 million during the first quarter of 2022, as compared to $37.4 million during the fourth quarter of 2021 and increased $11.1 million, or 29.1%, from $38.1 million during the first quarter of 2021, primarily as a result of the GWB acquisition.
Payment services revenues increased $3.5 million, or 31.0%, to $14.8 million during the first quarter of 2022, when compared to the $11.3 million during the fourth quarter of 2021. Payment services revenues increased $4.6 million, or 45.1%, during the first quarter of 2022, when compared to the $10.2 million during the first quarter of 2021. These increases are mainly the result of increased revenue from the GWB acquisition and higher business credit card volume during the first quarter of 2022 as compared to the fourth quarter of 2021 and the first quarter of 2021.
Mortgage banking revenues increased $0.4 million, or 5.0%, to $8.4 million during the first quarter of 2022, as compared to $8.0 million during the fourth quarter of 2021. Included in the first quarter of 2022 was a $3.4 million recovery of mortgage servicing rights impairment compared to a $1.0 million recovery of impairment during the fourth quarter of 2021. Excluding the impairment recovery from both quarters, the decrease in revenues was driven by lower net realized gain-on-sale margins and a decline in the volume of loans sold when compared to the fourth quarter of 2021. Mortgage banking revenues decreased $3.2 million, or 27.6%, during the first quarter of 2022 from $11.6 million during the first quarter of 2021. Included in the first quarter of 2022 was a $3.4 million recovery of mortgage servicing rights impairment compared to a $5.9 million recovery of impairment during the first quarter of 2021. Excluding the impairment recovery in both quarters, year-over-year revenues decreased $0.7 million as a result of lower refinance volumes. During the first quarter of 2022, loans originated for home purchases accounted for approximately 63.3% of loan production, as compared to 59.0% during the fourth quarter of 2021 and 44.4% during the first quarter of 2021.
Service charges on deposit accounts increased $3.3 million, or 75.0%, to $7.7 million during the first quarter of 2022, as compared to $4.4 million during the fourth quarter of 2021 and increased $3.9 million, or 102.6%, during the first quarter of 2022 from $3.8 million during the first quarter of 2021. These increases are primarily due to the GWB acquisition.
Other service charges, commissions, and fees increased $1.5 million, or 53.6%, to $4.3 million during the first quarter of 2022, when compared to $2.8 million during the fourth quarter of 2021 and increased $2.2 million, or 104.8%, during the first quarter of 2022 from $2.1 million during the first quarter of 2021. The increases were primarily due to the acquisition of GWB and increases in swap fee revenues.
Other income increased $3.2 million, or 114.3%, to $6.0 million during the first quarter of 2022, as compared to $2.8 million during the fourth quarter of 2021, primarily due to a $1.4 million gain on the disposition of the GWB acquired subordinated debt and an increase in the cash surrender value of life insurance during the first quarter of 2022. Other income increased $1.9 million, or 46.3%, during the first quarter of 2022 from $4.1 million during the first quarter of 2021, primarily due to a $1.4 million gain on the disposition of the GWB acquired subordinated debt.
NON-INTEREST EXPENSE
Non-interest expense increased $105.0 million, or 102.7%, to $207.2 million during the first quarter of 2022, as compared to $102.2 million during the fourth quarter of 2021, primarily due to an increase of $60.2 million in acquisition related costs and operating expenses of GWB. Exclusive of acquisition related expenses, non-interest expense increased $44.8 million during the first quarter of 2022, compared to the fourth quarter of 2021, primarily as a result of the operating expenses of GWB. Non-interest expense increased $108.8 million, or 110.6%, from $98.4 million during the first quarter of 2021, primarily due to $65.2 million in acquisition related costs and the operating expenses of GWB. Exclusive of acquisition related expenses, non-interest expense increased $43.6 million during the first quarter of 2022, compared to the first quarter of 2021, primarily as a result of the operating expenses of GWB.
Salaries and wages expenses increased $17.7 million, or 41.8%, to $60.0 million during the first quarter of 2022, compared to $42.3 million during the fourth quarter of 2021, primarily as a result of the additional employee-related expenses as a result of the acquisition of GWB, partially offset by lower commission expenses. Salaries and wages expenses increased $21.0 million, or 53.8%, from $39.0 million in the first quarter of 2021, primarily as a result of the additional employee-related expenses as a result of the acquisition of GWB, which were partially offset by lower commission expenses.
Employee benefit expenses increased $9.1 million, or 75.2%, to $21.2 million during the first quarter of 2022, as compared to $12.1 million during the fourth quarter of 2021, primarily due to an increase in expense related to the GWB acquisition and seasonal first quarter reset of payroll taxes. Employee benefit expenses increased $5.1 million, or 31.7%, from $16.1 million during the first quarter of 2021, primarily due to an increase in expense related to the GWB acquisition.
Occupancy and equipment expenses increased $3.8 million, or 32.8%, to $15.4 million during the first quarter of 2022, compared to $11.6 million during the fourth quarter of 2021 and increased $3.7 million, or 31.6%, from $11.7 million during the first quarter of 2021, due to the expansion of our branch network related to the GWB acquisition.
Other intangible amortization expense increased $1.1 million, or 44.0%, to $3.6 million during the first quarter of 2022, as compared to $2.5 million during the fourth quarter of 2021 and increased $1.1 million, or 44.0%, during the first quarter of 2022 from $2.5 million during the first quarter of 2021. These increases are attributable to the amortization of the $49.1 million of core deposit intangibles and $22.8 million customer relationship intangibles acquired in the GWB acquisition.
Other expenses increased $12.9 million, or 44.8%, to $41.7 million during the first quarter of 2022, as compared to $28.8 million during the fourth quarter of 2021 and increased $12.5 million, or 42.8%, during the first quarter of 2022 from $29.2 million during the first quarter of 2021. The increases are primarily due to increases in technology services, debit and credit card processing fees, FDIC insurance premiums, loan expenses, credit card rewards, professional fees, and other normal increases as a result of the GWB acquisition during the first quarter of 2022.
BALANCE SHEET
Total assets increased $13,490.3 million, or 68.6%, to $33,162.2 million as of March 31, 2022, from $19,671.9 million as of December 31, 2021, primarily due to $13,311.2 million of assets acquired in the acquisition of GWB.
Investment securities increased $2,994.4 million, or 46.0%, to $9,502.5 million as of March 31, 2022, from $6,508.1 million as of December 31, 2021. The increase was primarily due to $2,698.9 million of securities acquired in the GWB acquisition.
Loans held for sale increased $148.0 million, or 491.7%, to $178.1 million as of March 31, 2022, from $30.1 million as of December 31, 2021, primarily due to $181.9 million of loans held for sale acquired from GWB, which were offset by a decrease in originations of mortgage loans held for sale.
The following table presents the composition and comparison of loans held for investment, including the February 1, 2022 loans acquired from GWB:
| GWB Acquired Loans as of February 1, 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | December 31,<br>2021 | Change | % Change | ||||||
| Real estate loans: | |||||||||
| Commercial | $ | 7,805.7 | $ | 3,971.5 | 96.5 | % | $ | 3,977.1 | |
| Construction loans: | |||||||||
| Land acquisition & development | 344.8 | 247.8 | 97.0 | 39.1 | 116.4 | ||||
| Residential | 406.0 | 262.0 | 144.0 | 55.0 | 122.1 | ||||
| Commercial | 844.8 | 498.0 | 346.8 | 69.6 | 245.1 | ||||
| Total construction loans | 1,595.6 | 1,007.8 | 587.8 | 58.3 | 483.6 | ||||
| Residential | 1,997.5 | 1,538.2 | 459.3 | 29.9 | 495.0 | ||||
| Agricultural | 833.6 | 213.9 | 619.7 | 289.7 | 631.8 | ||||
| Total real estate loans | 12,232.4 | 6,731.4 | 5,501.0 | 81.7 | 5,587.5 | ||||
| Consumer loans: | |||||||||
| Indirect | 739.6 | 737.6 | 2.0 | 0.3 | 13.5 | ||||
| Direct and advance lines | 142.5 | 129.2 | 13.3 | 10.3 | 17.0 | ||||
| Credit card | 73.5 | 64.9 | 8.6 | 13.3 | 11.9 | ||||
| Total consumer loans | 955.6 | 931.7 | 23.9 | 2.6 | 42.4 | ||||
| Commercial | 3,017.9 | 1,475.5 | 1,542.4 | 104.5 | 1,503.2 | ||||
| Agricultural | 744.3 | 203.9 | 540.4 | 265.0 | 580.2 | ||||
| Other, including overdrafts | 4.6 | 1.5 | 3.1 | 206.7 | — | ||||
| Deferred loan fees and costs | (9.8) | (12.3) | 2.5 | (20.3) | — | ||||
| Loans held for investment, net of deferred loan fees and costs | 16,945.0 | 9,331.7 | 7,613.3 | 81.6 | % | 7,713.3 |
All values are in US Dollars.
Loans held for investment, net of deferred loan fees and costs increased $7,613.3 million, or 81.6%, to $16,945.0 million as of March 31, 2022, from $9,331.7 million as of December 31, 2021, primarily due to $7,713.3 million of loans acquired held for investment in the GWB acquisition. Loans held for investment included PPP loans, net of deferred fees, of $56.7 million and $96.3 million as of March 31, 2022 and December 31, 2021, respectively. Excluding the impact of GWB acquired loans and PPP loans, loans held for investment as of March 31, 2022, decreased from December 31, 2021, primarily due to charge-offs and pay downs of GWB acquired loans.
The loans held for investment to deposit ratio increased to 60.3%, as of March 31, 2022, compared to 57.4% as of December 31, 2021.
As of March 31, 2021, goodwill and intangible assets, excluding mortgage servicing rights, company owned life insurance, premises and equipment, other real estate owned, and other assets, increased from December 31, 2021 primarily attributable to provisional balances acquired in the GWB acquisition.
Total deposits increased $11,818.7 million, or 72.6%, to $28,088.3 million as of March 31, 2022, from $16,269.6 million as of December 31, 2021, primarily due to $11,682.6 million in deposits acquired as a result of the GWB acquisition and organic increases in interest-bearing demand and non-interest bearing business deposits. These increases were partially offset by decreases in savings deposits and interest-bearing time deposits.
Securities sold under repurchase agreements increased $19.9 million, or 1.9%, to $1,071.0 million as of March 31, 2022, from $1,051.1 million as of December 31, 2021. Exclusive of $74.0 million in such securities acquired from GWB, securities sold under repurchase agreements decreased $54.1 million, or 5.1% from December 31, 2021. Fluctuations in repurchase agreement balances correspond with fluctuations in the liquidity of the Company’s clients.
Subordinated debentures held by subsidiary trusts increased $76.1 million, or 87.5%, to $163.1 million as of March 31, 2022, from $87.0 million as of December 31, 2021, due to $76.1 million of subordinated debentures held by subsidiary trusts acquired from Great Western.
The Company is considered to be “well-capitalized” as of March 31, 2022, having exceeded all regulatory capital adequacy requirements. During the first quarter of 2022, the Company paid regular common stock dividends of approximately $44.7 million, or $0.41 per share, and did not make any share repurchases of common stock pursuant to its previously announced stock repurchase program.
CREDIT QUALITY
As of March 31, 2022, non-performing assets increased $109.4 million, or 368.4%, to $139.1 million, compared to $29.7 million as of December 31, 2021, primarily driven by loans acquired from GWB. This resulted in an increase in non-accrual loans of $94.0 million, or 377.5%, an increase in other real estate owned of $15.5 million, or 775.0% as a result of the GWB acquisition, and a decrease in loans past due 90 days or more of $0.1 million. Non-accrual loans acquired from GWB totaled $100.7 million as of March 31, 2022.
Criticized loans increased $636.4 million, or 293.7%, to $853.1 million as of March 31, 2022, from $216.7 million as of December 31, 2021, driven by loans acquired from GWB and the down grade of a commercial real estate loan. This increase in criticized loans was partially offset by the pay downs in commercial loans and commercial real estate loans. Criticized loans acquired from GWB totaled $655.0 million as of March 31, 2022.
Net loan charge-offs increased $14.0 million, or 518.5%, to $16.7 million during the first quarter of 2022 as compared to $2.7 million during the fourth quarter of 2021. The net loan charge-offs in the first quarter of 2022 were composed of charge-offs of $19.9 million and recoveries of $3.2 million. Net charge-offs related to loans acquired from GWB amounted to $15.4 million during the first quarter of 2022.
NON-GAAP FINANCIAL MEASURES
In addition to results presented in accordance with accounting principles generally accepted in the United States of America, or GAAP, this press release contains the following non-GAAP financial measures that management uses to evaluate our performance relative to our capital adequacy standards: (i) tangible common stockholders’ equity; (ii) tangible assets; (iii) tangible book value per common share; (iv) tangible common stockholders’ equity to tangible assets; (v) average tangible common stockholders’ equity; and (vi) return on average tangible common stockholders’ equity. Tangible common stockholders’ equity is calculated as total common stockholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights). Tangible assets are calculated as total assets less goodwill and other intangible assets (excluding mortgage servicing rights). Tangible book value per common share is calculated as tangible common stockholders’ equity divided by common shares outstanding. Tangible common stockholders’ equity to tangible assets is calculated as tangible common stockholders’ equity divided by tangible assets. Average tangible common stockholders’ equity is calculated as average stockholders’ equity less average goodwill and other intangible assets (excluding mortgage servicing rights). Return on average tangible common stockholders’ equity is calculated as net income available to common shareholders divided by average tangible common stockholders’ equity. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies because other companies may not calculate these non-GAAP measures in the same manner. They also should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.
The Company adjusts the foregoing capital adequacy measures to exclude goodwill and other intangible assets (except mortgage servicing rights), adjusts its non-interest expense to exclude acquisition related expenses, and adjusts its net interest margin ratio to exclude the impact of the recovery of charged-off interest and interest accretion on acquired loans. Management believes these non-GAAP financial measures, which are intended to complement the capital ratios defined by banking regulators and to present on a consistent basis our and our acquired companies’ organic continuing operations without regard to the acquisition costs and adjustments that we consider to be unpredictable and dependent on a significant number of factors that are outside our control, are useful to investors in evaluating the Company’s performance because, as a general matter, they either do not represent an actual cash expense and are inconsistent in amount and frequency depending upon the timing and size of our acquisitions (including the size, complexity and/or volume of past acquisitions, which may drive the magnitude of acquisition related costs, but may not be indicative of the size, complexity and/or volume of future acquisitions or related costs), or they cannot be anticipated or estimated in a particular period (in particular as it relates to unexpected recovery amounts). This impacts the ratios that are important to analysts and allows investors to compare certain aspects of the Company’s capitalization to other companies.
See the Non-GAAP Financial Measures table included herein and the textual discussion for a reconciliation of the above described non-GAAP financial measures to their most directly comparable GAAP financial measures.
Cautionary Note Regarding Forward-Looking Statements and Factors that Could Affect Future Results
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. Any statements about our, Great Western’s or the combined company’s plans, objectives, expectations, strategies, beliefs, or future performance or events constitute forward-looking statements. Such statements are identified by words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trends,” “objectives,” “continues” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “may,” or similar expressions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other important factors that change over time and could cause actual results to differ materially from any results, performance or events expressed or implied by such forward-looking statements. Such forward-looking statements include statements about the business combination transaction between FIBK and Great Western (the “Transaction”), including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Furthermore, the following factors, among others, may cause actual results to differ materially from current expectations in the forward-looking statements, including those set forth in this press release:
•new, or changes in, governmental regulations or policies;
•tax legislative initiatives or assessments;
•more stringent capital requirements, to the extent they may become applicable to us;
•changes in accounting standards;
•any failure to comply with applicable laws and regulations, including the Community Reinvestment Act and fair lending laws, the USA PATRIOT ACT, Office of Foreign Asset Control guidelines and requirements, the Bank Secrecy Act, and the related Financial Crimes Enforcement Network and Federal Financial Institutions Examination Council’s guidelines and regulations;
•lending risks and risks associated with loan sector concentrations;
•supply-chain disruptions, labor shortages, and any other decline in economic conditions that could reduce demand for our products and services and negatively impact the credit quality of loans;
•loan credit losses exceeding estimates;
•the soundness of other financial institutions;
•changes in oil and gas prices, and declining demand for coal could negatively impact the demand and credit quality of loans;
•the availability of financing sources for working capital and other needs;
•a loss of deposits or a change in product mix that increases the Company’s funding costs;
•changes in interest rates;
•changes in inflationary pressures;
•changes to United States trade policies, including the imposition of tariffs and retaliatory tariffs;
•competition from new or existing competitors;
•variable interest rates tied to London Interbank Offered Rate that may no longer be available or may become unreliable;
•cyber-security risks, including “denial-of-service attacks,” “hacking,” and “identity theft” that could result in the disclosure of confidential information;
•privacy, information security, and data protection laws, rules, and regulations that affect or limit how we collect and use personal information;
•the potential impairment of our goodwill;
•exposure to losses in collateralized loan obligation securities;
•our reliance on other companies that provide key components of our business infrastructure;
•events that may tarnish our reputation;
•the loss of the services of our management team and directors;
•our ability to attract and retain qualified employees to operate our business;
•costs associated with repossessed properties, including environmental remediation;
•the effectiveness of our systems of internal operating controls;
•our ability to implement new technology-driven products and services or be successful in marketing these products and services to our clients;
•our ability to execute on our intended expansion plans;
•difficulties we may face in combining the operations of acquired entities or assets with our own operations or assessing the effectiveness of businesses in which we make strategic investments or with which we enter into strategic contractual relationships;
•the volatility in the price and trading volume of our common stock;
•“anti-takeover” provisions and the regulations, which may make it more difficult for a third party to acquire control of us even in circumstances that could be deemed beneficial to stockholders;
•changes in our dividend policy or our ability to pay dividends;
•our common stock not being an insured deposit;
•the potential dilutive effect of future equity issuances;
•the subordination of our common stock to our existing and future indebtedness;
•the COVID-19 pandemic and the U.S. government’s response to the pandemic; and
•the effect of global conditions, geopolitical conflicts, earthquakes, tsunamis, floods, fires, and other natural catastrophic events.
These factors are not necessarily all the factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above and included and described in more detail in our periodic reports filed with the Securities and Exchange Commission, or SEC, under the Securities Exchange Act of 1934, as amended, under the caption “Risk Factors.” Interested parties are urged to read in their entirety such risk factors prior to making any investment decision with respect to the Company. Forward-looking statements speak only as of the date they are made and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
First Quarter 2022 Conference Call for Investors
First Interstate BancSystem, Inc. will host a conference call to discuss the results for the first quarter of 2022 at 11 a.m. Eastern Time (9 a.m. Mountain Time) on Friday, April 29, 2022. The conference call will be accessible by telephone and through the Internet. Participants may join the call by dialing 1-844-200-6205; the access code is 242604. To participate via the Internet, visit https://events.q4inc.com/attendee/727321968. The call will be recorded and made available for replay after 1 p.m. Eastern Time (11 a.m. Mountain Time) on April 29, 2022 through 9 a.m. Eastern Time (7 a.m. Mountain Time) on May 29, 2022, by dialing 1-866-813-9403. The replay access code is 095480. The call will also be archived on our website, www.FIBK.com, for one year.
About First Interstate BancSystem, Inc.
First Interstate BancSystem, Inc. is a financial and bank holding company focused on community banking. Incorporated in 1971 and headquartered in Billings, Montana, the Company operates banking offices, including detached drive-up facilities, in communities across Arizona, Colorado, Idaho, Iowa, Kansas, Montana, Nebraska, Missouri, Minnesota, North Dakota, Oregon, South Dakota, Washington, and Wyoming, in addition to offering online and mobile banking services. Through our bank subsidiary, First Interstate Bank, the Company delivers a comprehensive range of banking products and services to individuals, businesses, municipalities, and others throughout the Company’s market areas.
| Contact: | John R. Stewart, CFA | NASDAQ: FIBK |
|---|---|---|
| Deputy Chief Financial Officer<br>First Interstate BancSystem, Inc.<br>(406) 255-5311<br>john.stewart@fib.com | www.FIBK.com<br><br><br>(FIBK-ER) |
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
| Quarter Ended | % Change | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except % and per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | 1Q22 vs 4Q21 | 1Q22 vs 1Q21 | |||||||||
| Net interest income | $ | 178.0 | $ | 121.8 | $ | 126.9 | $ | 118.8 | $ | 120.7 | 46.1 | % | 47.5 | % | ||
| Net interest income on a fully-taxable equivalent ("FTE") basis | 179.6 | 122.3 | 127.5 | 119.2 | 121.4 | 46.9 | 47.9 | |||||||||
| Provision for (reduction in) credit losses | 61.3 | (9.5) | — | — | (5.1) | NM | NM | |||||||||
| Non-interest income: | ||||||||||||||||
| Payment services revenues | 14.8 | 11.3 | 12.2 | 11.4 | 10.2 | 31.0 | 45.1 | |||||||||
| Mortgage banking revenues | 8.4 | 8.0 | 11.6 | 9.6 | 11.6 | 5.0 | (27.6) | |||||||||
| Wealth management revenues | 8.1 | 7.2 | 6.5 | 6.3 | 6.3 | 12.5 | 28.6 | |||||||||
| Service charges on deposit accounts | 7.7 | 4.4 | 4.4 | 3.9 | 3.8 | 75.0 | 102.6 | |||||||||
| Other service charges, commissions, and fees | 4.3 | 2.8 | 1.4 | 1.6 | 2.1 | 53.6 | 104.8 | |||||||||
| Total fee-based revenues | 43.3 | 33.7 | 36.1 | 32.8 | 34.0 | 28.5 | 27.4 | |||||||||
| Investment securities (loss) gain | (0.1) | 0.9 | 0.3 | (0.1) | — | (111.1) | NM | |||||||||
| Other income | 6.0 | 2.8 | 3.3 | 2.6 | 4.1 | 114.3 | 46.3 | |||||||||
| Total non-interest income | 49.2 | 37.4 | 39.7 | 35.3 | 38.1 | 31.6 | 29.1 | |||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and wages | 60.0 | 42.3 | 42.0 | 41.6 | 39.0 | 41.8 | 53.8 | |||||||||
| Employee benefits | 21.2 | 12.1 | 12.9 | 14.7 | 16.1 | 75.2 | 31.7 | |||||||||
| Occupancy and equipment | 15.4 | 11.6 | 11.8 | 11.2 | 11.7 | 32.8 | 31.6 | |||||||||
| Other intangible amortization | 3.6 | 2.5 | 2.4 | 2.5 | 2.5 | 44.0 | 44.0 | |||||||||
| Other expenses | 41.7 | 28.8 | 30.2 | 29.0 | 29.2 | 44.8 | 42.8 | |||||||||
| Other real estate owned (income) expense | 0.1 | (0.1) | — | — | (0.1) | NM | NM | |||||||||
| Acquisition related expenses | 65.2 | 5.0 | 6.6 | — | — | NM | NM | |||||||||
| Total non-interest expense | 207.2 | 102.2 | 105.9 | 99.0 | 98.4 | 102.7 | 110.6 | |||||||||
| (Loss) income before income tax | (41.3) | 66.5 | 60.7 | 55.1 | 65.5 | (162.1) | (163.1) | |||||||||
| (Benefit from) provision for income tax | (7.9) | 15.4 | 13.6 | 12.6 | 14.1 | (151.3) | (156.0) | |||||||||
| Net (loss) income | $ | (33.4) | $ | 51.1 | $ | 47.1 | $ | 42.5 | $ | 51.4 | (165.4) | % | (165.0) | % | ||
| Weighted-average basic shares outstanding | 92,855 | 61,677 | 61,674 | 61,658 | 61,592 | 50.6 | % | 50.8 | % | |||||||
| Weighted-average diluted shares outstanding | 92,855 | 61,763 | 61,748 | 61,728 | 61,714 | 50.3 | 50.5 | |||||||||
| (Loss) earnings per share - basic | $ | (0.36) | $ | 0.83 | $ | 0.76 | $ | 0.69 | $ | 0.83 | (143.4) | (143.4) | ||||
| (Loss) earnings per share - diluted | (0.36) | 0.83 | 0.76 | 0.69 | 0.83 | (143.4) | (143.4) | NM - not meaningful | ||||||||
| --- |
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
| % Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except % and per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | 1Q22 vs 4Q21 | 1Q22 vs 1Q21 | |||||||
| Assets: | ||||||||||||||
| Cash and due from banks | $ | 387.6 | $ | 168.6 | $ | 227.6 | $ | 238.8 | $ | 254.0 | 129.9 | % | 52.6 | % |
| Interest bearing deposits in banks | 3,423.6 | 2,176.1 | 2,005.8 | 1,709.5 | 1,941.9 | 57.3 | 76.3 | |||||||
| Federal funds sold | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | — | — | |||||||
| Cash and cash equivalents | 3,811.3 | 2,344.8 | 2,233.5 | 1,948.4 | 2,196.0 | 62.5 | 73.6 | |||||||
| Securities purchased under agreement to resell | 102.0 | — | — | — | — | 100.0 | 100.0 | |||||||
| Investment securities, net | 9,502.5 | 6,508.1 | 6,021.7 | 5,643.3 | 4,886.4 | 46.0 | 94.5 | |||||||
| Loans held for sale, at fair value | 178.1 | 30.1 | 42.5 | 48.8 | 57.2 | 491.7 | 211.4 | |||||||
| Loans held for investment | 16,945.0 | 9,331.7 | 9,622.5 | 9,834.7 | 9,863.2 | 81.6 | 71.8 | |||||||
| Allowance for credit losses | 247.2 | 122.3 | 135.1 | 135.5 | 136.6 | 102.1 | 81.0 | |||||||
| Net loans held for investment | 16,697.8 | 9,209.4 | 9,487.4 | 9,699.2 | 9,726.6 | 81.3 | 71.7 | |||||||
| Goodwill and intangible assets (excluding mortgage servicing rights) | 1,275.2 | 690.9 | 693.3 | 695.7 | 698.2 | 84.6 | 82.6 | |||||||
| Company owned life insurance | 490.1 | 301.5 | 300.5 | 299.0 | 297.6 | 62.6 | 64.7 | |||||||
| Premises and equipment | 444.4 | 299.6 | 297.3 | 299.1 | 305.5 | 48.3 | 45.5 | |||||||
| Other real estate owned | 17.5 | 2.0 | 2.3 | 2.0 | 2.2 | 775.0 | 695.5 | |||||||
| Mortgage servicing rights | 32.7 | 28.2 | 27.0 | 27.4 | 28.0 | 16.0 | 16.8 | |||||||
| Other assets | 610.6 | 257.3 | 266.7 | 277.6 | 270.5 | 137.3 | 125.7 | |||||||
| Total assets | $ | 33,162.2 | $ | 19,671.9 | $ | 19,372.2 | $ | 18,940.5 | $ | 18,468.2 | 68.6 | % | 79.6 | % |
| Liabilities and stockholders' equity: | ||||||||||||||
| Deposits | $ | 28,088.3 | $ | 16,269.6 | $ | 16,007.3 | $ | 15,565.7 | $ | 15,094.0 | 72.6 | % | 86.1 | % |
| Securities sold under repurchase agreements | 1,071.0 | 1,051.1 | 1,007.5 | 1,038.7 | 1,052.6 | 1.9 | 1.7 | |||||||
| Long-term debt | 120.4 | 112.4 | 112.4 | 112.4 | 112.4 | 7.1 | 7.1 | |||||||
| Subordinated debentures held by subsidiary trusts | 163.1 | 87.0 | 87.0 | 87.0 | 87.0 | 87.5 | 87.5 | |||||||
| Other liabilities | 278.3 | 165.2 | 173.2 | 165.8 | 188.8 | 68.5 | 47.4 | |||||||
| Total liabilities | 29,721.1 | 17,685.3 | 17,387.4 | 16,969.6 | 16,534.8 | 68.1 | 79.7 | |||||||
| Stockholders' equity: | ||||||||||||||
| Common stock | 2,669.4 | 945.0 | 943.6 | 941.6 | 938.5 | 182.5 | 184.4 | |||||||
| Retained earnings | 973.7 | 1,052.6 | 1,026.9 | 1,005.2 | 988.2 | (7.5) | (1.5) | |||||||
| Accumulated other comprehensive (loss) income | (202.0) | (11.0) | 14.3 | 24.1 | 6.7 | NM | NM | |||||||
| Total stockholders' equity | 3,441.1 | 1,986.6 | 1,984.8 | 1,970.9 | 1,933.4 | 73.2 | 78.0 | |||||||
| Total liabilities and stockholders' equity | $ | 33,162.2 | $ | 19,671.9 | $ | 19,372.2 | $ | 18,940.5 | $ | 18,468.2 | 68.6 | % | 79.6 | % |
| Common shares outstanding at period end | 109,503 | 62,200 | 62,231 | 62,240 | 62,230 | 76.0 | % | 76.0 | % | |||||
| Book value per common share at period end | $ | 31.42 | $ | 31.94 | $ | 31.89 | $ | 31.67 | $ | 31.07 | (1.6) | 1.1 | ||
| Tangible book value per common share at period end** | 19.78 | 20.83 | 20.75 | 20.49 | 19.85 | (5.0) | (0.4) | |||||||
| **Non-GAAP financial measure - see Non-GAAP Financial Measures included herein for a reconciliation of book value per common share at period end (GAAP) to tangible book value per common share at period end (non-GAAP). |
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Loans and Deposits
(Unaudited)
| % Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except %) | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | 1Q22 vs 4Q21 | 1Q22 vs 1Q21 | |||||||
| Loans: | |||||||||||||
| Real Estate: | |||||||||||||
| Commercial real estate | 7,805.7 | $ | 3,971.5 | $ | 3,883.2 | $ | 3,753.4 | $ | 3,718.7 | 96.5 | % | 109.9 | % |
| Construction: | |||||||||||||
| Land acquisition and development | 247.8 | 260.2 | 261.1 | 263.2 | 39.1 | 31.0 | |||||||
| Residential | 262.0 | 268.4 | 263.5 | 242.1 | 55.0 | 67.7 | |||||||
| Commercial | 498.0 | 610.2 | 632.0 | 581.0 | 69.6 | 45.4 | |||||||
| Total construction | 1,007.8 | 1,138.8 | 1,156.6 | 1,086.3 | 58.3 | 46.9 | |||||||
| Residential real estate | 1,538.2 | 1,554.9 | 1,577.7 | 1,488.8 | 29.9 | 34.2 | |||||||
| Agricultural real estate | 213.9 | 229.9 | 223.5 | 218.8 | 289.7 | 281.0 | |||||||
| Total real estate | 6,731.4 | 6,806.8 | 6,711.2 | 6,512.6 | 81.7 | 87.8 | |||||||
| Consumer: | |||||||||||||
| Indirect | 737.6 | 756.8 | 773.7 | 782.9 | 0.3 | (5.5) | |||||||
| Direct | 129.2 | 132.9 | 134.8 | 139.7 | 10.3 | 2.0 | |||||||
| Credit card | 64.9 | 64.1 | 64.4 | 64.6 | 13.3 | 13.8 | |||||||
| Total consumer | 931.7 | 953.8 | 972.9 | 987.2 | 2.6 | (3.2) | |||||||
| Commercial | 1,475.5 | 1,668.7 | 1,959.4 | 2,181.1 | 104.5 | 38.4 | |||||||
| Agricultural | 203.9 | 212.4 | 217.7 | 214.7 | 265.0 | 246.7 | |||||||
| Other | 1.5 | 1.3 | 6.0 | 1.5 | 206.7 | 206.7 | |||||||
| Deferred loan fees and costs | (12.3) | (20.5) | (32.5) | (33.9) | (20.3) | (71.1) | |||||||
| Loans held for investment | 16,945.0 | $ | 9,331.7 | $ | 9,622.5 | $ | 9,834.7 | $ | 9,863.2 | 81.6 | % | 71.8 | % |
| Deposits: | |||||||||||||
| Non-interest bearing | 8,240.6 | $ | 5,568.3 | $ | 5,617.9 | $ | 5,416.8 | $ | 5,004.0 | 48.0 | % | 64.7 | % |
| Interest bearing: | |||||||||||||
| Demand | 4,753.2 | 4,496.5 | 4,389.0 | 4,327.0 | 73.5 | 90.5 | |||||||
| Savings | 4,981.6 | 4,904.9 | 4,748.4 | 4,726.7 | 100.8 | 111.7 | |||||||
| Time, 250 and over | 186.7 | 186.3 | 185.8 | 185.5 | 92.7 | 94.0 | |||||||
| Time, other | 779.8 | 801.7 | 825.7 | 850.8 | 58.8 | 45.6 | |||||||
| Total interest bearing | 10,701.3 | 10,389.4 | 10,148.9 | 10,090.0 | 85.5 | 96.7 | |||||||
| Total deposits | 28,088.3 | $ | 16,269.6 | $ | 16,007.3 | $ | 15,565.7 | $ | 15,094.0 | 72.6 | % | 86.1 | % |
| Total core deposits (1) | 27,728.5 | $ | 16,082.9 | $ | 15,821.0 | $ | 15,379.9 | $ | 14,908.5 | 72.4 | % | 86.0 | % |
| (1) Core deposits are defined as total deposits less time deposits, 250 and over, and brokered deposits. |
All values are in US Dollars.
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Credit Quality
(Unaudited)
| % Change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except %) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | 1Q22 vs 4Q21 | 1Q22 vs 1Q21 | ||||||||||||
| Allowance for Credit Losses: | |||||||||||||||||||
| Allowance for credit losses | $ | 247.2 | $ | 122.3 | $ | 135.1 | $ | 135.5 | $ | 136.6 | 102.1 | % | 81.0 | % | |||||
| As a percentage of loans held for investment | 1.46 | % | 1.31 | % | 1.40 | % | 1.38 | % | 1.38 | % | |||||||||
| As a percentage of non-accrual loans | 207.91 | 491.16 | 451.84 | 445.72 | 369.19 | ||||||||||||||
| Net charge-offs during quarter | $ | 16.7 | $ | 2.7 | $ | 0.6 | $ | 1.1 | $ | 2.9 | 518.5 | % | 475.9 | % | |||||
| Annualized as a percentage of average loans | 0.47 | % | 0.11 | % | 0.02 | % | 0.04 | % | 0.12 | % | |||||||||
| Non-Performing Assets: | |||||||||||||||||||
| Non-accrual loans | $ | 118.9 | $ | 24.9 | $ | 29.9 | $ | 30.4 | $ | 37.0 | 377.5 | % | 221.4 | % | |||||
| Accruing loans past due 90 days or more | 2.7 | 2.8 | 5.2 | 5.2 | 4.4 | (3.6) | (38.6) | ||||||||||||
| Total non-performing loans | 121.6 | 27.7 | 35.1 | 35.6 | 41.4 | 339.0 | 193.7 | ||||||||||||
| Other real estate owned | 17.5 | 2.0 | 2.3 | 2.0 | 2.2 | 775.0 | 695.5 | ||||||||||||
| Total non-performing assets | $ | 139.1 | $ | 29.7 | $ | 37.4 | $ | 37.6 | $ | 43.6 | 368.4 | % | 219.0 | % | |||||
| Non-performing assets as a percentage of: | |||||||||||||||||||
| Loans held for investment and OREO | 0.82 | % | 0.32 | % | 0.39 | % | 0.38 | % | 0.44 | % | |||||||||
| Total assets | 0.42 | 0.15 | 0.19 | 0.20 | 0.24 | ||||||||||||||
| Non-accrual loans to loans held for investment | 0.70 | 0.27 | 0.31 | 0.31 | 0.38 | ||||||||||||||
| Accruing Loans 30-89 Days Past Due | $ | 54.4 | $ | 26.7 | $ | 27.3 | $ | 22.1 | $ | 26.3 | 103.7 | % | 106.8 | % | |||||
| Accruing troubled debt restructurings (TDRs) | 14.7 | 2.3 | 2.1 | 2.2 | 3.1 | 539.1 | 374.2 | ||||||||||||
| Criticized Loans: | |||||||||||||||||||
| Special Mention | $ | 274.6 | $ | 86.6 | $ | 99.1 | $ | 129.1 | $ | 152.0 | 217.1 | % | 80.7 | % | |||||
| Substandard | 553.9 | 130.1 | 149.7 | 141.2 | 157.4 | 325.7 | 251.9 | ||||||||||||
| Doubtful | 24.6 | — | 2.4 | 3.1 | 2.0 | — | NM | ||||||||||||
| Total | $ | 853.1 | $ | 216.7 | $ | 251.2 | $ | 273.4 | $ | 311.4 | 293.7 | % | 174.0 | % |
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Selected Ratios - Annualized
(Unaudited)
| Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annualized Financial Ratios (GAAP) | |||||||||||||||||
| Return on average assets | (0.48) | % | 1.03 | % | 0.98 | % | 0.91 | % | 1.17 | % | |||||||
| Return on average common stockholders' equity | (4.44) | 10.14 | 9.41 | 8.77 | 10.60 | ||||||||||||
| Yield on average earning assets | 2.89 | 2.77 | 3.00 | 2.93 | 3.15 | ||||||||||||
| Cost of average interest-bearing liabilities | 0.14 | 0.13 | 0.14 | 0.16 | 0.17 | ||||||||||||
| Interest rate spread | 2.75 | 2.64 | 2.86 | 2.77 | 2.98 | ||||||||||||
| Net interest margin ratio | 2.80 | 2.69 | 2.91 | 2.82 | 3.04 | ||||||||||||
| Efficiency ratio | 89.61 | 62.63 | 62.12 | 62.62 | 60.39 | ||||||||||||
| Loans held for investment to deposit ratio | 60.33 | 57.36 | 60.11 | 63.18 | 65.35 | ||||||||||||
| Annualized Financial Ratios - Operating** (Non-GAAP) | |||||||||||||||||
| Tangible book value per common share | $ | 19.78 | $ | 20.83 | $ | 20.75 | $ | 20.49 | $ | 19.85 | |||||||
| Tangible common stockholders' equity to tangible assets | 6.79 | % | 6.83 | % | 6.91 | % | 6.99 | % | 6.95 | % | |||||||
| Return on average tangible common stockholders' equity | (6.88) | 15.51 | 14.48 | 13.67 | 16.46 | ||||||||||||
| Consolidated Capital Ratios: | |||||||||||||||||
| Total risk-based capital to total risk-weighted assets | 14.27 | % | * | 14.11 | % | 14.00 | % | 13.89 | % | 14.15 | % | ||||||
| Tier 1 risk-based capital to total risk-weighted assets | 11.91 | * | 12.49 | 12.30 | 12.17 | 12.37 | |||||||||||
| Tier 1 common capital to total risk-weighted assets | 11.91 | * | 11.77 | 11.59 | 11.45 | 11.60 | |||||||||||
| Leverage Ratio | 8.97 | * | 7.68 | 7.81 | 7.84 | 8.12 | |||||||||||
| *Preliminary estimate - may be subject to change. The regulatory capital ratios presented above include the assumption of the transitional method relative to legislation by Congress to provide relief for the economy and financial institutions in the United States from the COVID‑19 pandemic. The referenced relief allows a total five-year phase-in of the CECL impact on capital and relief over the next two years for the impact on the allowance for credit losses resulting from COVID‑19. | |||||||||||||||||
| **Non-GAAP financial measures - see Non-GAAP Financial Measures included herein for a reconciliation of book value per common share to tangible book value per common share, return on average common stockholders’ equity (GAAP) to return on average tangible common stockholders’ equity, and tangible common stockholders’ equity to tangible assets (non-GAAP). | |||||||||||||||||
| FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Average Balance Sheets | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| December 31, 2021 | March 31, 2021 | ||||||||||||||||
| (In millions, except %) | Interest | Average<br>Rate | Average<br>Balance | Interest | Average<br>Rate | Average<br>Balance | Interest | Average<br>Rate | |||||||||
| Interest earning assets: | |||||||||||||||||
| Loans (1) (2) | 14,460.6 | $ | 153.0 | 4.29 | % | $ | 9,512.3 | $ | 105.3 | 4.39 | % | $ | 9,873.1 | $ | 108.1 | 4.44 | % |
| Investment securities (2) | 30.9 | 1.51 | 6,241.0 | 20.1 | 1.28 | 4,445.2 | 17.6 | 1.61 | |||||||||
| Interest bearing deposits in banks | 1.7 | 0.21 | 2,308.0 | 0.9 | 0.15 | 1,880.5 | 0.3 | 0.06 | |||||||||
| Federal funds sold | — | — | 0.1 | — | — | 0.1 | — | — | |||||||||
| Total interest earning assets | 26,003.1 | $ | 185.6 | 2.89 | % | $ | 18,061.4 | $ | 126.3 | 2.77 | % | $ | 16,198.9 | $ | 126.0 | 3.15 | % |
| Non-earning assets | 1,681.7 | 1,692.4 | |||||||||||||||
| Total assets | 28,495.1 | $ | 19,743.1 | $ | 17,891.3 | ||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Demand deposits | 6,901.8 | $ | 0.9 | 0.05 | % | $ | 4,787.5 | $ | 0.4 | 0.03 | % | $ | 4,177.7 | $ | 0.5 | 0.05 | % |
| Savings deposits | 1.1 | 0.05 | 4,951.1 | 0.4 | 0.03 | 4,531.3 | 0.3 | 0.03 | |||||||||
| Time deposits | 1.0 | 0.29 | 976.7 | 0.9 | 0.37 | 1,039.3 | 1.5 | 0.59 | |||||||||
| Repurchase agreements | 0.3 | 0.11 | 1,038.2 | 0.1 | 0.04 | 1,067.7 | 0.1 | 0.04 | |||||||||
| Long-term debt | 1.7 | 5.41 | 112.4 | 1.5 | 5.29 | 112.4 | 1.5 | 5.41 | |||||||||
| Subordinated debentures held by subsidiary trusts | 1.0 | 2.96 | 87.0 | 0.7 | 3.19 | 87.0 | 0.7 | 3.26 | |||||||||
| Total interest-bearing liabilities | 17,973.1 | $ | 6.0 | 0.14 | % | $ | 11,952.9 | $ | 4.0 | 0.13 | % | $ | 11,015.4 | $ | 4.6 | 0.17 | % |
| Non-interest-bearing deposits | 5,617.9 | 4,704.2 | |||||||||||||||
| Other non-interest-bearing liabilities | 173.0 | 205.2 | |||||||||||||||
| Stockholders’ equity | 1,999.3 | 1,966.5 | |||||||||||||||
| Total liabilities and stockholders’ equity | 28,495.1 | $ | 19,743.1 | $ | 17,891.3 | ||||||||||||
| Net FTE interest income | $ | 179.6 | $ | 122.3 | $ | 121.4 | |||||||||||
| Less FTE adjustments (2) | (1.6) | (0.5) | (0.7) | ||||||||||||||
| Net interest income from consolidated statements of income | $ | 178.0 | $ | 121.8 | $ | 120.7 | |||||||||||
| Interest rate spread | 2.75 | % | 2.64 | % | 2.98 | % | |||||||||||
| Net FTE interest margin (3) | 2.80 | % | 2.69 | % | 3.04 | % | |||||||||||
| Cost of funds, including non-interest-bearing demand deposits (4) | 0.10 | % | 0.09 | % | 0.12 | % | |||||||||||
| (1) Average loan balances include loans held for sale and non-accrual loans. Interest income on loans includes amortization of deferred loan fees net of deferred loan costs of 3.5 million, 9.9 million, and 10.7 million at March 31, 2022, December 31, 2021, and March 31, 2021, respectively. | |||||||||||||||||
| (2) Interest income and average rates for tax exempt loans and securities are presented on an FTE basis. | |||||||||||||||||
| (3) Net FTE interest margin during the period equals (i) the difference between annualized interest income on interest earning assets and the annualized interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period. | |||||||||||||||||
| (4) Calculated by dividing total annualized interest on interest bearing liabilities by the sum of total interest-bearing liabilities plus non-interest-bearing deposits. |
All values are in US Dollars.
| FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Non-GAAP Financial Measures | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| As of or For the Quarter Ended | ||||||||||||||||
| (In millions, except % and per share data) | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | |||||||||||
| Total common stockholders' equity (GAAP) | (A) | $ | 3,441.1 | $ | 1,986.6 | $ | 1,984.8 | $ | 1,970.9 | $ | 1,933.4 | |||||
| Less goodwill and other intangible assets (excluding mortgage servicing rights) | 1,275.2 | 690.9 | 693.3 | 695.7 | 698.2 | |||||||||||
| Tangible common stockholders' equity (Non-GAAP) | (B) | $ | 2,165.9 | $ | 1,295.7 | $ | 1,291.5 | $ | 1,275.2 | $ | 1,235.2 | |||||
| Total assets (GAAP) | $ | 33,162.2 | $ | 19,671.9 | $ | 19,372.2 | $ | 18,940.5 | $ | 18,468.2 | ||||||
| Less goodwill and other intangible assets (excluding mortgage servicing rights) | 1,275.2 | 690.9 | 693.3 | 695.7 | 698.2 | |||||||||||
| Tangible assets (Non-GAAP) | (C) | $ | 31,887.0 | $ | 18,981.0 | $ | 18,678.9 | $ | 18,244.8 | $ | 17,770.0 | |||||
| Average Balances: | ||||||||||||||||
| Total common stockholders' equity (GAAP) | (D) | $ | 3,050.1 | $ | 1,999.3 | $ | 1,985.3 | $ | 1,944.3 | $ | 1,966.5 | |||||
| Less goodwill and other intangible assets (excluding mortgage servicing rights) | 1,081.2 | 692.0 | 694.5 | 696.9 | 699.5 | |||||||||||
| Average tangible common stockholders' equity (Non-GAAP) | (E) | $ | 1,968.9 | $ | 1,307.3 | $ | 1,290.8 | $ | 1,247.4 | $ | 1,267.0 | |||||
| Total quarterly average assets | (F) | $ | 28,495.1 | $ | 19,743.1 | $ | 19,081.2 | $ | 18,665.2 | $ | 17,891.3 | |||||
| Annualized net income available to common shareholders | (G) | (135.5) | 202.7 | 186.9 | 170.5 | 208.5 | ||||||||||
| Common shares outstanding | (H) | 109,503 | 62,200 | 62,231 | 62,240 | 62,230 | ||||||||||
| Return on average assets (GAAP) | (G)/(F) | (0.48) | % | 1.03 | % | 0.98 | % | 0.91 | % | 1.17 | % | |||||
| Return on average common stockholders' equity (GAAP) | (G)/(D) | (4.44) | 10.14 | 9.41 | 8.77 | 10.60 | ||||||||||
| Average common stockholders' equity to average assets (GAAP) | (D)/(F) | 10.70 | 10.13 | 10.40 | 10.42 | 10.99 | ||||||||||
| Book value per common share (GAAP) | (A)/(H) | $ | 31.42 | $ | 31.94 | $ | 31.89 | $ | 31.67 | $ | 31.07 | |||||
| Tangible book value per common share (Non-GAAP) | (B)/(H) | 19.78 | 20.83 | 20.75 | 20.49 | 19.85 | ||||||||||
| Tangible common stockholders' equity to tangible assets (Non-GAAP) | (B)/(C) | 6.79 | % | 6.83 | % | 6.91 | % | 6.99 | % | 6.95 | % | |||||
| Return on average tangible common stockholders' equity (Non-GAAP) | (G)/(E) | (6.88) | 15.51 | 14.48 | 13.67 | 16.46 |
First Interstate BancSystem, Inc.
P.O. Box 30918 Billings, Montana 59116 (406) 255-5311
www.FIBK.com
15
apr2022ip
1Q 2022 Investor Presentation Exhibit 99.2 April 28, 2022
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. Any statements about our plans, objectives, expectations, strategies, beliefs, or future performance or events constitute forward-looking statements. Such statements are identified by words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trends,” “objectives,” “continues” or similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “may” or similar expressions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other important factors that could cause actual results to differ materially from any results, performance or events expressed or implied by such forward-looking statements. The following factors, among others, may cause actual results to differ materially from current expectations in the forward-looking statements, including those set forth in this presentation: new, or changes in, governmental regulations; tax legislative initiatives or assessments; more stringent capital requirements, to the extent they may become applicable to us; changes in accounting standards; any failure to comply with applicable laws and regulations; lending risks and risks associated with loan sector concentrations; a decline in economic conditions that could reduce demand for our products and services and negatively impact the credit quality of loans; loan credit losses exceeding estimates; the soundness of other financial institutions; declining oil and gas prices, and declining demand for coal could negatively impact the demand and credit quality of loans; the availability of financing sources for working capital and other needs; a loss of deposits or a change in product mix that increases the Company’s funding costs; changes in interest rates; changes to United States trade policies, including the imposition of tariffs and retaliatory tariffs; competition from new or existing competitors; variable interest rates tied to the London Interbank Offered Rate (LIBOR) that may no longer be available, or may become unreliable, to us; cyber- security risks, including “denial-of-service attacks,” “hacking,” and “identity theft” that could result in the disclosure of confidential information; privacy, information security, and data protection laws, rules, and regulations that affect or limit how we collect and use personal information; the potential impairment of our goodwill; exposure to losses in collateralized loan obligation securities; our reliance on other companies that provide key components of our business infrastructure; events that may tarnish our reputation; the loss of the services of our management team and directors; our ability to attract and retain qualified employees to operate our business, including retaining qualified employees; costs associated with repossessed properties, including environmental remediation; the effectiveness of our systems of internal operating controls; our ability to implement new technology-driven products and services or be successful in marketing these products and services to our clients; our ability to execute on our intended expansion plans; difficulties we may face in combining the operations of acquired entities or assets with our own operations or assessing the effectiveness of businesses in which we make strategic investments or with which we enter into strategic contractual relationships, including the difficulties we may face following the merger with Great Western; incurrence of significant costs related to the merger with Great Western and related integration; the volatility in the price and trading volume of our common stock; “anti-takeover” provisions and the regulations, which may make it more difficult for a third party to acquire control of us even in circumstances that could be deemed beneficial to stockholders; changes in our dividend policy or our ability to pay dividends; our common stock not being an insured deposit; the potential dilutive effect of future equity issuances; the subordination of our common stock to our existing and future indebtedness; the ongoing impact of the COVID-19 pandemic and the U.S. government’s response to the pandemic; and the effect of global conditions, earthquakes, tsunamis, floods, fires, and other natural catastrophic events. The foregoing factors are not all of the factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward- looking statements. Other unknown or unpredictable factors also could harm our results. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above and included in our periodic reports filed with the Securities and Exchange Commission under the caption “Risk Factors”. Interested parties are urged to read in their entirety such risk factors prior to making any investment decision with respect to the Company. Forward-looking statements speak only as of the date they are made and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. 2
FIRST INTERSTATE BANCSYSTEM, INC. OVERVIEW Premier community banking franchise in growing markets throughout the Midwest and Pacific Northwest Financial Highlights Balance Sheet Capital Assets $33.2 Billion Total RB2 14.27% Loans HFI $16.9 Billion CET12 11.91% Deposits $28.1 Billion Leverage2 8.97% ACL/LHFI 1.46% TCE 6.79% Corporate Overview Headquarters Billings, MT Exchange/Listing NASDAQ: FIBK Market Capitalization $4.0 Billion1 Dividend Yield 4.2% Branch Network 319 banking offices Sub Debt Rating Kroll BBB 3 319 banking offices in 14 states 1 as of 3/31/22 closing stock price of $36.77 2 preliminary estimates - may be subject to change
GWB ACQUISITION UPDATE Governance Update • Five independent board members from Great Western joined our board as of 2/1/2022 • FIBK dual share-class was eliminated as of March 25, 2022 • FIBK no longer a “controlled company” under NASDAQ rules Integration / Conversion • Core system conversion and bank re-branding May 20-22, 2022 • Great Western CIO and CRO both joined FIBK’s Executive Team as of 2/1/22 • Regional and senior leadership in place across the footprint as of February 1st Balance Sheet / Credit Update • Credit improvement resulted in $229MM in credit valuation & HFS LOCOM marks v. $341MM in diligence1 • $241MM of loans moved to HFS and marked by $61.6MM • Changes in interest rate environment resulted in ~$34MM of loan marks that will accrete in to EPS over time • Legacy GWB fair value loan accounting and accompanying swap positions terminated at close EPS Accretion / Cost Savings • Optimistic for net loan growth in GWB footprint based on progress made to resolve problem credits ahead of plan • Expect to deliver the previously announced cost saves; clean run-rate expenses expected by Q4 2022 • 10 branches will be consolidated in conjunction with the system conversion Deposits / Funding • $120MM in outstanding FHLB borrowings and $35MM of subordinated debt redeemed in February 2022 • NSF/OD changes live for FIBK footprint and will roll out for GWB footprint at system conversion 4 1 Diligence marks, at announcement of the transaction on 9/16/21 = $238 million PCD + $80 million non-PCD + $23 million in credit write-downs against loans elected for fair value (now included in the credit mark with FV election terminated)
PRELIMINARY ACQUIRED LOAN MARKS Preliminary acquired loan marks as of legal close on February 1, 2022 5 Credit Mark Other Adjustments $ amounts in millions Acquired Loan Balance $ Total (Pre-tax) % of O/S Rate Mark Allowance Established Amortizable Cost Basis PCD loans $722 $(91) (13) % $(25) $84 $690 Non-PCD loans 1 7,108 (76) (1) % (9) 68 7,023 HFS2 241 (62) (26) % 0 0 0 Total Loans $8,071 $(229) (3) % $(34) $152 $7,713 Loan Mark Notes: • Preliminary net credit and rate marks of $117 million will accrete to interest income over the life of the loans; $6.0 million realized in Q1 2022 from acquired GWB loans • Moved $241 million in outstanding loans to held-for-sale at deal close, which was not part of the initial deal assumptions 1 Allowance established - Day 2 through income statement provision for loan loss expense 2 HFS outstanding balances of $241 million are pre-LOCOM write downs
PCD Loan Mix All Other 56% Healthcare 12% Hospitality 16% Ag- Non-Dairy 15% Ag- Dairy 1% PCD ACTIVELY MANAGING ACQUIRED CREDIT RISK 6 $ amounts in millions Acquired PCD Book Balances ($MM) % Total PCD Credit Valuation Mark ($MM) % Mark Against PCD Portfolio Agriculture - Dairy $9 1% $0 2% Agriculture - Non-Dairy 106 15% 17 16% Hospitality 113 16% 31 27% Healthcare 84 12% 3 4% All Other 410 56% 40 10% Total PCD Outstandings $722 100% $91 13% Acquired Loan Attribution ¹ PCD loan balances and marks as of legal close on February 1, 2022 1 Percentages based on acquired total loans, incl HFS, pre-marks of ~$8.1B
Q1 2022 RESULTS Earnings • Acquisition of Great Western Bank completed on February 1, 2022 • Net loss of $33.4 million, or $0.36 per share, driven by $68.3 million of day 2 LLP expense and $65.2 million of merger exp. • Net interest margin of 2.80%; adjusted NIM of 2.65%1, up 19 basis points from the prior quarter • Adjusted efficiency ratio of 62.2%1 • Reported ROAE of (4.44)% in Q1; Adjusted ROAE of 9.41%1 Balance Sheet • Standalone FIBK ex-PPP loan growth of $37 million, or 1.6% annualized; branch network grew $89 million, or 5.2% annualized • Organic deposit growth, excluding acquired balances, of 3.2% annualized • GWB added $7,713 million in loans, ex-HFS, and $11,683 million in deposits as of legal close, net of fair value marks • 3/31 loan/deposit ratio increased to 60.3%, from 57.4% in the prior quarter, driving a positive earning asset mix shift Asset Quality • Acquired PCD loans down to $722 million at 2/1, from $1.2 billion disclosed with the transaction on 9/16/21 • Acquired criticized loans down to $655 million at 3/31 • Q1 included around $15 million of NCOs on acquired loans to facilitate restructuring efforts in coming quarters • Standalone FIBK credit metrics all continued to improve; NCOs of 6 bps annualized in Q1 • 3/31 Total non-performing loans of $121.6 million, or 72 basis points of loans, with an ACL coverage ratio of 203% Capital • Tangible book value per share of $19.781 declined 5% in the quarter, or $1.05; changes in OCI had a $1.74 negative impact • Redeemed $120 million in FHLB borrowings and $35 million in subordinated debt; lost T1 treatment for TRUPs at deal close • Maintain strong regulatory capital levels; CET1 of 11.9%2 and Total Risk-based of 14.3%2 7 1 See non-GAAP table in appendix for reconciliation 2 preliminary estimates - may be subject to change
FIRST QUARTER 2022 HIGHLIGHTS Summary of Q1 2022 Results $ amounts in millions, except per share data 1Q22 Net interest income (non-FTE) $178.0 Provision for (reduction in) credit losses $61.3 Non-interest income $49.2 Non-interest expense $207.2 Income before taxes $(41.3) Income taxes $(7.9) Net loss $(33.4) Diluted EPS $(0.36) Q1 2022 Selected items impact $ amounts in millions, except per share data Income Statement Geography Pre-tax (in MM) After-tax (in MM) Reported EPS Impact Non-PCD CECL Day 2 provision Provision $(68.3) $(55.2) $(0.59) Merger-related expenses Acquisition expense (65.2) (52.7) (0.57) MSR fair value adjustments Mortgage banking 3.4 2.7 0.03 Gain on early extinguishment of debt Other income 1.4 1.1 0.01 Investment securities (loss) gain (0.1) (0.1) — Totals $(128.8) $(104.2) $(1.12) 8 Quarterly Highlights: • FIBK aligned GWB to our reporting practices, resulting in both fees and expenses being grossed up by $1.8 million for the quarter, and ~$13 million for the calendar year 2022 • Day 2 LLP expense on acquired non-PCD GWB loan balances of $68.3 million • Realized pre-tax transaction costs of $65.2 million. Anticipate another $60-70 million pre-tax, mostly in Q2 2022 results. • Effective tax rate for full-year 2022 expected to be in the range of 20-21%
DIVERSIFIED LOAN PORTFOLIO Loans Held for Investment Commercial RE, 46% Construction RE, 9% Residential RE, 12% Agriculture RE, 5% Consumer, 6% Commercial, 18% Agriculture, 4% Loans by Geography OR, 10% WA, 7% MT, 14% ID, 5% WY, 5% SD, 12%ND, 1% IA, 11% NE, 7% KS, 1% AZ, 6% CO, 7% Other, 14% Total Funded Commitments 32.7% 32.9% 32.9% 33.4% 41.7% 35.6% Total Funded Commitments FIBK only 1Q21 2Q21 3Q21 4Q21 1Q22 9 Loan Highlights: • Growth headwinds from credit resolution of GWB loan book meaningfully diminished as a result of active portfolio management and the migration of $241 million of acquired loan balances to HFS • FIBK branch network loan growth of $89 million, or 5.2% annualized in a seasonally slow quarter • Unfunded commitments of $3.2 billion at 3/31 • Optimistic outlook for growth above initial low single- digit expectations for the combined company $16.9B
STRONG DEPOSIT BASE Total Deposits Non-interest bearing, 29% Demand, 29% Savings, 36% Time, 6% Deposits by State OR, 11% MT, 22% ID, 7% WA, 2% WY, 11% SD, 16% IA, 11% NE, 10% KS, 1% MO, 1% AZ, 3% CO, 5% Mix of Consumer and Business Deposits ¹ 51% 50% 50% 50% 49% 49% 50% 50% 50% 51% Total Consumer Deposits Total Business Deposits 1Q21 2Q21 3Q21 4Q21 1Q22 10 1 Prior periods represent FIBK standalone $28.1B
CAPITAL AND LIQUIDITY Highly liquid and flexible balance sheet with strong capital position Tangible Common Equity ¹ $19.85 $20.49 $20.75 $20.83 $19.78 6.95% 6.99% 6.91% 6.83% 6.79% TBVPS TCE Ratio 1Q21 2Q21 3Q21 4Q21 1Q22 Total Risk-Based Capital Ratios 14.15% 13.89% 14.00% 14.11% 14.27% 11.60% 11.45% 11.59% 11.77% 11.91% 0.77% 0.72% 0.71% 0.72% 1.78% 1.72% 1.70% 1.62% 2.36% CET1 Non-common Tier1 Total Capital 1Q21 2Q21 3Q21 4Q21 1Q22 11 Loans HFI to Deposit Ratio 65.4% 63.2% 60.1% 57.4% 60.3% 1Q21 2Q21 3Q21 4Q21 1Q22 Capital and Liquidity Highlights: • Dividend yield of 4.2%, based on Q1 average share price of $39.40 • TBV accretion from the GWB acquisition offset by $1.74/share in OCI marks in the quarter • Combined $163 million of TRUPs eliminated from T1 capital at deal close, remain as part of T2 capital • All capital ratios remain above internal Company capital policy guidelines 1 See Non-GAAP table in appendix for reconciliation
ALLOWANCE FOR CREDIT LOSSES (ACL) Funded ACL and ACL/Loans HFI % $136.6 $135.5 $135.1 $122.3 $247.2 $108.5 $138.7 1.38% 1.38% 1.40% 1.31% 1.46% Total Funded ACL GWB Contribution As a % of loans HFI 1Q21 2Q21 3Q21 4Q21 1Q22 12 Reserve release offset by CECL Day 2 provision of $68.3 million on acquired GWB loans ACL Highlights: • ACL net release of $10.9 million during the quarter, resulting primarily from improved credit performance and qualitative adjustments based on historical performance of specific portfolios in the legacy FIBK book • Acquired GWB portfolio accounted for $138.7 million of funded ACL at 3/31, a decline from the closing balance on 2/1 following charge-offs of specific reserves to facilitate restructuring selected relationships ACL Roll-forward ACL 12/31/21 (FIBK-only): $122.3 PCD CECL 84.2 Non-PCD CECL (Day 2 LLP)1 68.3 FIBK NCOs (1.3) GWB NCOs (15.4) Q1 net ACL release (10.9) ACL 3/31/22: $247.2 1Q1 LLP expense includes an additional $2.1 million for unfunded GWB commitments, for a total non-PCD Day 2 income statement charge of $70.4 million
ASSET QUALITY AND RESERVE TRENDS Net Charge-off Ratio $2.9 $1.1 $0.6 $2.7 $16.7 $1.3 $15.4 0.12% 0.04% 0.02% 0.11% 0.47% 0.06% Net Charge-offs GWB Charge-offs % of Average Loans % FIBK Only 1Q21 2Q21 3Q21 4Q21 1Q22 Underlying asset quality trends positive, overall metrics impacted by acquired GWB portfolio Total Non-Performing Loans and ACL/NPL Ratios $41.4 $35.6 $35.1 $27.7 $121.6 $20.9 $100.7 330.0% 380.6% 384.9% 441.5% 203.3% FIBK Standalone NPL GWB Acquired NPL ACL / NPL Ratio 1Q21 2Q21 3Q21 4Q21 1Q22 Criticized Loans and Crit. Loan Ratio $311.4 $273.4 $251.2 $216.7 $853.1 $198.1 $655.0 3.16% 2.78% 2.61% 2.32% 5.03% FIBK Standalone GWB Acquired % of Total Loans 1Q21 2Q21 3Q21 4Q21 1Q22 13 Credit Highlights: • Around $15 million in partial charge-offs on a handful of GWB relationships with $31 million in remaining loan balances at 3/31 in preparation for restructuring, which should result in lower criticized loans in future quarters
NET INTEREST INCOME Net Interest Income¹ and Net Interest Margin¹ $121.4 $119.2 $127.5 $122.3 $179.6 12.3 7.8 14.2 9.7 2.8 2.3 2.5 2.3 1.9 7.6 3.04% 2.82% 2.91% 2.69% 2.80% 2.81% 2.70% 2.60% 2.46% 2.65% Adjusted NII ² PPP Income Loan PAA Net Interest Margin Adjusted NIM ² 1Q21 2Q21 3Q21 4Q21 1Q22 14 Net-interest Income Highlights: • $7.6 million in total loan purchase accounting accretion in Q1 2022 ◦ $6.0 million from acquired GWB loans • PPP income of $2.8 million in Q1 2022, will be immaterial going forward. Unearned PPP fees of $1.3 million remain • Q1 2022 adjusted NIM expanded 19 bps, driven by the favorable mix shift in earning assets to loans combined with the 23 bps sequential improvement in investment security yields • Q2 2022 adjusted NIM is expected to be positively influenced by a favorable earning asset mix shift, new securities yields above book yields and the benefit of the March FOMC rate increase 1 Reported on a fully-taxable equivalent (“FTE”) basis 2 See Non-GAAP table in appendix for reconciliation
NET INTEREST INCOME (cont’d) 15 NIM Waterfall Analysis 2.69 (0.14) 0.07 — 0.01 0.08 0.13 (0.04) — — 2.80 4Q21 Loans ex- PAA ¹ Investments Cash Deposits Loan PAA Loans Investments Cash Deposits 1Q22 Scheduled Purchase Accounting Accretion from GWB Acquisition $30.5 ² $(6.9) $23.6 $22.1 $(7.4) $14.6 $16.8 $(7.3) $9.4 Purchase Accounting Accretion Amortization of Intangibles (Non-Interest Expense) Pre-tax Net Impact of Purchase Accounting 2022 2023 2024 RATE IMPACT MIX IMPACT 1 Includes impact of lower PPP income 2 Includes YTD actual, plus remaining scheduled
WELL POSITIONED TO BENEFIT FROM HIGHER RATES Loan Repricing Gap Schedule ¹ $8,118 $4,021 $2,919 $1,887 Maturity / Repricing Buckets <= 1 Yr > 1 Yr < 3 Yr < 3 Yr <= 5 Yr > 5 Yr 16 Loan Repricing Characteristics Variable, 16% Libor 1M, 11% Adjustable (Excl: 1M Libor), 21% Fixed, 52% 1 Contractual repricing benchmarks
INVESTMENT PORTFOLIO Quarterly New Purchases: Weighted Avg Yield 1.3% 1.0% 1.2% 1.5% 2.2% 1Q21 2Q21 3Q21 4Q21 1Q22 17 Investment Portfolio Highlights: • During the quarter, FIBK repositioned $645 million of acquired securities, eliminating those that did not align with FIBK’s policies, credit risk profile or other portfolio tolerances ◦ Redeployment of proceeds benefited from upward movement in rates post-sale • New money portfolio yields continue to be accretive to on balance sheet yields in the current environment Quarterly New Purchases: Weighted Avg Duration 4.83 4.28 3.35 2.29 3.05 3.03 2.20 4.83 1.25 1.15 2.29 3.05 Duration A/L Net of Fair Value Hedge 1Q21 2Q21 3Q21 4Q21 1Q22 Total Portfolio Duration at Quarter End 4.33 4.02 3.86 3.60 3.773.75 3.48 3.27 3.56 Securities Duration Securities + Fair Value Hedge Duration 1Q21 2Q21 3Q21 4Q21 1Q22
18 Noninterest Income by Type ¹ Payment Services, 34% Mortgage Banking, 11% Wealth Management, 18% Deposit Service Charges, 17% Other Service Charges & Fees, 10% Other Income, 10% 1Q21 4Q21 1Q22 Payment Services $ 10.2 $ 11.3 $ 14.8 Mortgage Banking 11.6 8.0 8.4 Wealth Management 6.3 7.2 8.1 Deposit Service Charges 3.8 4.4 7.7 Other Service Charges & Fees 2.1 2.8 4.3 Investment securities (loss) gain — 0.9 (0.1) Other income 4.1 2.8 6.0 Total $ 38.1 $ 37.4 $ 49.2 Selected Items: MSR recovery (impairment) 5.9 1.0 3.4 Investment securities (loss) gain — 0.9 (0.1) Other income — — 1.4 Adj. Noninterest Revenue $ 32.2 $ 35.5 $ 44.5 Non-interest Income Highlights: • Q4 2022 operating run-rate expected to be in the range of $52-54 million, excluding any impact from MSR valuation changes • As previously announced, the reduction to NSF/OD fees will have an estimated pre-tax impact of $3 million in Q2 2022, with another $1 million impact in Q3 2022 as the GWB footprint changes begin in late May, post-system conversion NON-INTEREST INCOME 1 Excludes selected items
NON-INTEREST EXPENSE 19 Non-interest Expense Highlights: • Q2 2022 operating expense expected to add around $20 million in GWB expenses from one extra month compared with Q1 2022 results • Merger expenses of approximately $60-70 million remaining, most of which should be incurred in Q2 2022 • Q4 2022 operating expense run-rate expected to be around $160 million, including roughly $4 million of total intangible amortization expense, as well as $4 million of re-classified expense to align with FIBK’s reporting practices 1Q21 4Q21 1Q22 Salaries and wages $ 39.0 $ 42.3 $ 60.0 Employee benefits 16.1 12.1 21.2 Occupancy and equipment 11.7 11.6 15.4 Other intangible amortization 2.5 2.5 3.6 Other expenses 29.2 28.8 41.7 Other real estate owned (income) expense (0.1) (0.1) 0.1 Acquisition related expenses — 5.0 65.2 Total 98.4 102.2 207.2 Selected Items: Merger-related expense — 5.0 65.2 Litigation Accrual (Recovery) — (0.2) — Adj. Noninterest Expense2 $ 98.4 $ 97.4 $ 142.0 Noninterest Expense and Efficiency Ratio 98.4 99.0 105.9 102.2 207.2 98.4 99.0 98.1 97.4 142.0 60.4% 62.6% 62.1% 62.6% 89.6% 62.8% 62.6% 57.5% 60.4% 62.2% Total Expenses Adjusted Expenses ² Efficiency Ratio ¹ Adjusted Efficiency Ratio ² 1Q21 2Q21 3Q21 4Q21 1Q22 1 FDIC definition 2 See Non-GAAP table in appendix for reconciliation
NON-GAAP FINANCIAL MEASURES 20 In addition to results presented in accordance with accounting principles generally accepted in the United States of America, or GAAP, this press release contains the following non- GAAP financial measures that management uses to evaluate our performance relative to our capital adequacy standards: (i) tangible common stockholders’ equity; (ii) tangible assets; (iii) tangible book value per common share; (iv) tangible common stockholders’ equity to tangible assets; (v) adjusted net interest margin; (vi) adjusted efficiency ratio; and (vii) adjusted return on average common stockholders’ equity. Tangible common stockholders’ equity is calculated as total common stockholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights). Tangible assets are calculated as total assets less goodwill and other intangible assets (excluding mortgage servicing rights). Tangible book value per common share is calculated as tangible common stockholders’ equity divided by common shares outstanding. Tangible common stockholders’ equity to tangible assets is calculated as tangible common stockholders’ equity divided by tangible assets. Adjusted net interest margin is calculated as adjusted net income divided by adjusted average earning assets (as such non-gaap financial measures are calculated on the reconciliation pages below). Adjusted efficiency ratio is calculated as adjusted cash non-interest expense divided by adjusted revenue (as such non-gaap financial measures are calculated on the reconciliation pages below). Adjusted return on average assets is calculated as adjusted net income (as calculated on the reconciliation pages below) divided by average stockholders’ equity. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies because other companies may not calculate these non-GAAP measures in the same manner. They also should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. The Company adjusts the foregoing capital adequacy measures to exclude goodwill and other intangible assets (except mortgage servicing rights), adjusts its non-interest expense to exclude intangible amortization expenses, acquisition related expenses, other real estate owned expense or income, and litigation expenses, adjusts its net interest income to include non-interest income and exclude net gains or losses from investment securities, mortgage servicing rights impairments and recoveries, and other income, adjusts its net interest margin (FTE) to exclude the impact of the recovery of charged-off interest and interest accretion on acquired loans and payroll protection program (PPP) loan income and adjusts average assets to exclude PPP average balances, and adjusts net income to exclude non-PCD CECL day two provision expense, acquisition related expenses, mortgage servicing rights fair value adjustments, gains or losses on early extinguishment of debt, investment security gains and losses, and other expense items. Management believes these non-GAAP financial measures, which are intended to complement the capital ratios defined by banking regulators and to present on a consistent basis our and our acquired companies’ organic continuing operations without regard to the acquisition costs and adjustments that we consider to be unpredictable and dependent on a significant number of factors that are outside our control, are useful to investors in evaluating the Company’s performance because, as a general matter, they either do not represent an actual cash expense and are inconsistent in amount and frequency depending upon the timing and size of our acquisitions (including the size, complexity and/or volume of past acquisitions, which may drive the magnitude of acquisition related costs, but may not be indicative of the size, complexity and/or volume of future acquisitions or related costs), or they cannot be anticipated or estimated in a particular period (in particular as it relates to unexpected recovery amounts). This impacts the ratios that are important to analysts and allows investors to compare certain aspects of the Company’s capitalization to other companies. See the Non-GAAP Financial Measures tables included below and the textual discussion for a reconciliation of the above described non-GAAP financial measures to their most directly comparable GAAP financial measures.
1Q22 4Q21 3Q21 2Q21 1Q21 (Dollars in millions) Total common stockholders' equity (GAAP) (A) $ 3,441.1 $ 1,986.6 $ 1,984.8 $ 1,970.9 $ 1,933.4 Less goodwill and other intangible assets (excluding mortgage servicing rights) 1,275.2 690.9 693.3 695.7 698.2 Tangible common stockholders' equity (Non-GAAP) (B) $ 2,165.9 $ 1,295.7 $ 1,291.5 $ 1,275.2 $ 1,235.2 Total assets (GAAP) $ 33,162.2 $ 19,671.9 $ 19,372.2 $ 18,940.5 $ 18,468.2 Less goodwill and other intangible assets (excluding mortgage servicing rights) 1,275.2 690.9 693.3 695.7 698.2 Tangible assets (Non-GAAP) (C) $ 31,887.0 $ 18,981.0 $ 18,678.9 $ 18,244.8 $ 17,770.0 Common shares outstanding (H) 109,503 62,200 62,231 62,240 62,230 Book value per common share (GAAP) (A)/(H) $ 31.42 $ 31.94 $ 31.89 $ 31.67 $ 31.07 Tangible book value per common share (Non-GAAP) (B)/(H) 19.78 20.83 20.75 20.49 19.85 Tangible common stockholders' equity to tangible assets (Non-GAAP) (B)/(C) 6.79 % 6.83 % 6.91 % 6.99 % 6.95 % NON-GAAP RECONCILIATION 21 * Line items may not sum due to rounding
1Q22 4Q21 3Q21 2Q21 1Q21 (Dollars in millions) Total noninterest expense $ 207.2 $ 102.2 $ 105.9 $ 99.0 $ 98.4 Less: Merger-related expense 65.2 5.0 6.6 — — Less: Litigation accrual (recovery) — (0.2) 1.2 — — Adjusted noninterest expense $ 142.0 $ 97.4 $ 98.1 $ 99.0 $ 98.4 Less: Intangible amortization 3.6 2.5 2.4 2.5 2.5 Less: Other real estate owned (income) 0.1 (0.1) — — (0.1) Adjusted expense for efficiency ratio (A) $ 138.3 $ 95.0 $ 95.7 $ 96.5 $ 96.0 Net interest income $ 178.0 $ 121.8 $ 126.9 $ 118.8 $ 120.7 Add: Total noninterest income 49.2 37.4 39.7 35.3 38.1 Less: Net gain (loss) from investment securities (0.1) 0.9 0.3 (0.1) — Less: MSR recovery (impairment) 3.4 1.0 — — 5.9 Less: Other income 1.4 — — — — Adjusted revenue (B) $ 222.5 $ 157.3 $ 166.3 $ 154.2 $ 152.9 Adjusted Efficiency Ratio (A)/(B) 62.2 % 60.4 % 57.5 % 62.6 % 62.8 % NON-GAAP RECONCILIATION 22 * Line items may not sum due to rounding
1Q22 4Q21 3Q21 2Q21 1Q21 (Dollars in millions) Net interest income on a fully-taxable equivalent ("FTE") basis 179.6 122.3 127.5 119.2 121.4 Less: Purchase accounting accretion 7.6 1.9 2.3 2.5 2.3 Less: PPP Income 2.8 9.7 14.2 7.8 12.3 Adjusted net interest income (A) 169.2 110.6 111.0 108.9 106.8 Average interest-earning assets 26,003.1 18,061.4 17,392.5 16,958.4 16,198.9 Less: Avg PPP 91.6 200.1 462.1 750.4 764.0 Adjusted Avg Earning Assets (B) 25,911.5 17,861.3 16,930.4 16,208.0 15,434.9 Net interest margin (FTE), as reported 2.80 % 2.69 % 2.91 % 2.82 % 3.04 % Adjusted net interest margin (FTE) (A annualized)/(B) 2.65 % 2.46 % 2.60 % 2.70 % 2.81 % NON-GAAP RECONCILIATION 23 * Line items may not sum due to rounding
1Q22 4Q21 3Q21 2Q21 1Q21 (Dollars in millions); all adjustments are after-tax Reported net (loss) income (33.4) 51.1 47.1 42.5 51.4 Plus: Non-PCD CECL Day 2 provision 55.2 — — — — Plus: Merger-related expenses 52.7 3.8 5.1 — — Plus: MSR fair value adjustments (2.7) (0.8) — — (4.6) Plus: Gain on early extinguishment of debt (1.1) — — — — Plus: Investment securities (loss) gain 0.1 (0.7) (0.2) 0.1 — Plus: Other expense items — (0.2) 0.9 — — Adjusted net income (A) 70.8 53.3 52.9 42.6 46.8 Average stockholders' equity (B) 3,050.1 1,999.3 1,985.3 1,944.3 1,966.5 Return on average equity (4.44) % 10.14 % 9.41 % 8.77 % 10.60 % Adjusted return on average equity (A annualized)/(B) 9.41 % 10.57 % 10.58 % 8.78 % 9.65 % NON-GAAP RECONCILIATION 24 * Line items may not sum due to rounding