For Immediate Release | ||||
Contact: | Marcy Mutch | NASDAQ: FIBK | ||
Investor Relations Officer First Interstate BancSystem, Inc. (406) 255-5322 investor.relations@fib.com | www.FIBK.com | |||
First Interstate BancSystem, Inc. Reports Solid First Quarter Earnings
Billings, MT - April 23, 2014 - First Interstate BancSystem, Inc. (NASDAQ: FIBK) reports first quarter 2014 net income of $21.4 million, or $0.48 per diluted share, a 3% increase over fourth quarter 2013 net income of $20.8 million, or $0.47 per diluted share, and a 7% increase over first quarter 2013 net income of $20.0 million, or $0.46 per diluted share.
FIRST QUARTER FINANCIAL HIGHLIGHTS
• | 3.52% net interest margin ratio remained unchanged from the third and fourth quarters of 2013 |
• | 4.5% growth in commercial loans from December 31, 2013 |
• | Non-performing assets of $106 million, a decrease of $6 million from December 31, 2013 |
• | Net recoveries of charged-off loans of $1 million, or 0.1% annualized |
• | $5 million reversal of provision for loan losses |
“We delivered solid year-over-year growth in earnings, driven by lower operating expenses and further reduction in our credit costs,” said Ed Garding, President and Chief Executive Officer of First Interstate BancSystem, Inc. “Overall loan growth remains relatively flat, although we had good commercial loan production, which resulted in a 4.5% increase in our commercial portfolio during the first quarter," Mr. Garding continued.
“The most significant development of the quarter was the signing of a definitive agreement to acquire Mountain West Financial Corp. We believe that the addition of Mountain West’s strong franchise will enhance our market positioning in Montana, improve our ability to serve customers, and drive synergies that will increase the earning power of the Company,” said Mr. Garding.
RESULTS OF OPERATIONS
Net Interest Income. The Company's net interest income, on a fully taxable equivalent, or FTE, basis, decreased $1.9 million to $59.2 million during first quarter 2014, as compared to $61.1 million during fourth quarter 2013, primarily due to two fewer accrual days during first quarter 2014 and a reduction in loan yield. The impact of the reduction in loan yield was partially offset by an increase in average loans outstanding and a one basis point reduction in funding costs during first quarter 2014, as compared to fourth quarter 2013. The Company's interest margin ratio remained stable at 3.52% during first quarter 2014.
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Non-Interest Income. Non-interest income decreased $1.6 million to $24.1 million during first quarter 2014, as compared to $25.7 million during fourth quarter 2013, primarily due to lower income from the origination and sale of mortgage loans. The dollar amount of the Company's mortgage loan production decreased 18% during first quarter 2014, as compared to fourth quarter 2013, resulting in a reduction in income from the origination and sale of loans of $942 thousand to $4.7 million during first quarter 2014, as compared to $5.6 million during fourth quarter 2013. Loans originated for home purchases accounted for approximately 68% of the Company's mortgage loan production during first quarter 2014, as compared to 33% during first quarter 2013. Inclement weather in the Company's market areas delayed the closing of some residential mortgages, which contributed to the decrease in income from the origination and sale of loans during first quarter 2014, as compared to fourth quarter 2013.
Other service charges, commissions and fees decreased $302 thousand to $9.2 million during first quarter 2014, as compared to $9.5 million during fourth quarter 2013, primarily due to reductions in interchange fees earned on debit and credit card transactions, the result of normal seasonal declines in transaction volumes.
Non-Interest Expense. Non-interest expense decreased $3.5 million to $54.3 million during first quarter 2014, as compared to $57.8 million during fourth quarter 2013.
Salaries and wages expense decreased $1.9 million to $22.4 million during first quarter 2014, as compared to $24.3 million during fourth quarter 2013, primarily due to lower incentive compensation accruals.
Employee benefits expense increased $1.0 million to $8.3 million during first quarter 2014, as compared to $7.3 million during fourth quarter 2013, primarily due to higher payroll taxes typically occurring during the first part of the year until annual compensation tax limits are met and an increase in group health insurance expense.
The Company recorded net OREO income of $19 thousand during first quarter 2014, as compared to net OREO expense of $1.3 million during fourth quarter 2013. Variation in net OREO income/expense between periods was primarily due to fluctuations in fair value write-downs and net gains recorded on the sale of OREO properties. First quarter 2014 net OREO income included net gains of $435 thousand on the sale of OREO properties, which were offset by $416 thousand of net operating expenses. This compares to net gains of $37 thousand on the sale of OREO properties, which were more than offset by $381 thousand of net operating expenses and fair value write-downs of $948 thousand during fourth quarter 2013.
Other expenses decreased $1.2 million to $13.9 million during first quarter 2014, as compared to $15.1 million during fourth quarter 2013, primarily due to lower advertising expense due to fluctuations in the timing of advertising campaigns. The Company's other expenses typically trend higher during the fourth quarter of each year and then return to a more normalized level in the first quarter.
BALANCE SHEET
Total loans increased $20 million to $4,365 million as of March 31, 2014, from $4,345 million as of December 31, 2013.
Commercial loans grew $30 million to $707 million as of March 31, 2014, from $677 million as of December 31, 2013. Management attributes this growth to business expansion in the Company's market areas.
Residential real estate loans remained flat at $868 million as of March 31, 2014 and December 31, 2013. During first quarter 2014, nearly all of the Company's residential loan production was sold to investors in the secondary market.
Consumer loans decreased $2 million to $670 million as of March 31, 2014, from $672 million as of December 31, 2013. Decreases in credit card and other consumer loans typically experienced by the Company during the first quarter of the year, were largely offset by increases in indirect consumer loans. Indirect consumer loans increased $5 million to $481 million as of March 31, 2014, from $476 million as of December 31, 2013. Management attributes this increase to continued expansion of the Company's indirect lending program within existing markets.
Agricultural loans decreased $4 million to $108 million as of March 31, 2014, from $112 million as of December 31, 2013. Management attributes this decrease to seasonal reductions in credit lines that typically occur during the first part of the year. In addition, agricultural real estate loans decreased $13 million to $161 million as of March 31, 2014, from $174 million as of December 31, 2013, primarily due to scheduled repayments of the loans of one borrower.
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Total deposits increased $1 million to $6,135 million as of March 31, 2014, from $6,134 million as of December 31, 2013. During first quarter 2014, the mix of deposits continued to shift away from higher costing time deposits to lower costing demand and savings deposits, the result of sustained low interest rates. As of March 31, 2014, time deposits comprised 18.9% of total deposits, as compared to 19.4% as of December 31, 2013 and 22.3% as of March 31, 2013.
OREO increased $1 million to $17 million as of March 31, 2014, from $16 million as of December 31, 2013. During first quarter 2014, the Company added new properties with aggregate carrying values of $3 million to OREO. Approximately 88% of the first quarter 2014 additions relate to the properties of one commercial and one residential real estate borrower. Offsetting first quarter 2014 additions were sales of OREO properties with aggregate carrying values of $2 million at a net gain of $435 thousand. As of March 31, 2014, the composition of OREO properties was 49% land and land development, 33% commercial and 18% residential real estate.
Company-owned life insurance increased $16 million to $138 million as of March 31, 2014, from $122 million as of
December 31, 2013, due to the January 2014 purchase of $15 million of life insurance covering select officers and directors of the Company's banking subsidiary.
ASSET QUALITY
Non-performing loans decreased $7 million to $90 million as of March 31, 2014, from $97 million as of December 31, 2013, primarily due to pay-downs aggregating $4 million on the loans of five borrowers and, to a lesser extent, the movement of non-accrual loans out of the loan portfolio through foreclosure or charge-off.
During first quarter 2014, the Company recorded net recoveries of charged-off loans of $1 million, which was comprised of gross charge-offs of $3 million and gross recoveries of $4 million. This compares to gross charge-offs of $6 million and gross recoveries of $2 million recorded during fourth quarter 2013.
Accruing loans past due 30-89 days increased $14 million to $41 million as of March 31, 2014, from $27 million as of December 31, 2013. Approximately 71% of the increase related to two loans in the process of renewal. The remaining increase was attributable to four adequately collateralized loans in process of collection.
During first quarter 2014, the Company reversed $5 million of provision for loan losses. This reversal of provision for loan losses was primarily due to the combined impact of reductions in specific reserves on impaired loans and lower general reserves reflective of improvement in economic conditions in the Company's market areas, improvement in loss history trends used to estimate required reserves and decreases in the level of criticized real estate and construction loans, which typically require higher reserves based on loss history.
STOCK REPURCHASE
Pursuant to a stock repurchase program approved by the Company's Board of Directors on November 25, 2013, during first quarter 2014 the Company repurchased and retired 100,355 of its shares of Class A common stock in a privately negotiated transaction at an aggregate purchase price of $2.5 million. Under the stock repurchase program, the Company may repurchase up to an additional 1,899,645 shares of its Class A common stock prior to expiration of the plan on November 25, 2014.
First Quarter 2014 Conference Call for Investors
First Interstate BancSystem, Inc. will host a conference call to discuss first quarter 2014 results at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time ) on Thursday, April 24, 2014. The conference call will be accessible by telephone and through the Internet. Participants may join the call by dialing 1-888-317-6016 or by logging on to www.FIBK.com. The call will be recorded and made available for replay after 1:00 p.m. Eastern Time (11:00 a.m. Mountain Time) on April 24, 2014 through 9:00 a.m Eastern Time (7:00 a.m. Mountain Time) on May 23, 2014, by dialing 1-877-344-7529 (using conference ID 10043138). The call will also be archived on our website, www.FIBK.com, for one year.
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About First Interstate BancSystem, Inc.
First Interstate BancSystem, Inc. is a financial and bank holding company incorporated in 1971 and headquartered in Billings, Montana. The Company operates 74 banking offices, including detached drive-up facilities, in 41 communities in Montana, Wyoming and western South Dakota. Through First Interstate Bank, the Company delivers a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout the Company's market areas.
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, 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 as those that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue” 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 report: continuing or worsening business and economic conditions, adverse economic conditions affecting Montana, Wyoming and western South Dakota, credit losses, lending risk, adequacy of the allowance for loan losses, impairment of goodwill, changes in interest rates, access to low-cost funding sources, dependence on the Company’s management team, ability to attract and retain qualified employees, governmental regulation and changes in regulatory, tax and accounting rules and interpretations, failure of technology, inability to meet liquidity requirements, failure to manage growth, competition, ineffective internal operational controls, environmental remediation and other costs, reliance on external vendors, litigation pertaining to fiduciary responsibilities, failure to effectively implement technology-driven products and services, soundness of other financial institutions, inability of our bank subsidiary to pay dividends, implementation of new lines of business or new product or service offerings, change in dividend policy, volatility of Class A common stock, decline in market price of Class A common stock, dilution as a result of future equity issuances, uninsured nature of any investment in Class A common stock, voting control of Class B stockholders, anti-takeover provisions, controlled company status, and subordination of common stock to Company debt.
These factors are not necessarily 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. 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.
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FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Financial Summary
(Unaudited, $ in thousands, except per share data)
2014 | 2013 | |||||||||||||||||||
CONDENSED INCOME STATEMENTS | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | |||||||||||||||
Net interest income | $ | 58,136 | $ | 59,974 | $ | 58,956 | $ | 58,760 | $ | 59,277 | ||||||||||
Net interest income on a fully-taxable equivalent ("FTE") basis | 59,243 | 61,109 | 60,066 | 59,879 | 60,405 | |||||||||||||||
Provision for loan losses | (5,000 | ) | (4,000 | ) | (3,000 | ) | 375 | 500 | ||||||||||||
Non-interest income: | ||||||||||||||||||||
Other service charges, commissions and fees | 9,156 | 9,458 | 9,286 | 8,977 | 8,256 | |||||||||||||||
Income from the origination and sale of loans | 4,660 | 5,602 | 7,934 | 10,043 | 10,675 | |||||||||||||||
Wealth management revenues | 4,455 | 4,350 | 4,581 | 4,020 | 4,134 | |||||||||||||||
Service charges on deposit accounts | 3,875 | 4,086 | 4,360 | 4,323 | 4,068 | |||||||||||||||
Investment securities gains (losses), net | 71 | (25 | ) | 30 | (12 | ) | 8 | |||||||||||||
Other income | 1,889 | 2,203 | 1,416 | 2,228 | 1,678 | |||||||||||||||
Total non-interest income | 24,106 | 25,674 | 27,607 | 29,579 | 28,819 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Salaries and wages | 22,411 | 24,321 | 22,806 | 23,470 | 23,405 | |||||||||||||||
Employee benefits | 8,313 | 7,289 | 7,328 | 7,546 | 8,175 | |||||||||||||||
Occupancy, net | 4,239 | 4,206 | 4,292 | 4,063 | 4,026 | |||||||||||||||
Furniture and equipment | 3,201 | 3,192 | 3,147 | 3,163 | 3,052 | |||||||||||||||
Outsourced technology services | 2,300 | 2,382 | 2,295 | 2,195 | 2,157 | |||||||||||||||
Other real estate owned (income) expense, net | (19 | ) | 1,292 | 18 | (915 | ) | 1,896 | |||||||||||||
Other expenses | 13,893 | 15,103 | 12,693 | 15,498 | 13,974 | |||||||||||||||
Total non-interest expense | 54,338 | 57,785 | 52,579 | 55,020 | 56,685 | |||||||||||||||
Income before taxes | 32,904 | 31,863 | 36,984 | 32,944 | 30,911 | |||||||||||||||
Income taxes | 11,511 | 11,088 | 13,172 | 11,439 | 10,867 | |||||||||||||||
Net income | $ | 21,393 | $ | 20,775 | $ | 23,812 | $ | 21,505 | $ | 20,044 | ||||||||||
PER COMMON SHARE DATA | ||||||||||||||||||||
Net income - basic | $ | 0.49 | $ | 0.47 | $ | 0.54 | $ | 0.49 | $ | 0.46 | ||||||||||
Net income - diluted | 0.48 | 0.47 | 0.54 | 0.49 | 0.46 | |||||||||||||||
Cash dividend paid | 0.16 | 0.14 | 0.14 | 0.13 | — | |||||||||||||||
Book value at period end | 18.60 | 18.15 | 17.98 | 17.56 | 17.69 | |||||||||||||||
Tangible book value at period end** | 14.37 | 13.89 | 13.71 | 13.25 | 13.35 | |||||||||||||||
OUTSTANDING COMMON SHARES | ||||||||||||||||||||
At period-end | 44,390,095 | 44,155,063 | 44,089,962 | 43,835,881 | 43,614,942 | |||||||||||||||
Weighted average shares - basic | 43,997,815 | 43,888,261 | 43,699,566 | 43,480,502 | 43,140,409 | |||||||||||||||
Weighted-average shares - diluted | 44,620,776 | 44,541,497 | 44,284,844 | 43,908,287 | 43,428,382 | |||||||||||||||
SELECTED ANNUALIZED RATIOS | ||||||||||||||||||||
Return on average assets | 1.16 | % | 1.10 | % | 1.28 | % | 1.17 | % | 1.08 | % | ||||||||||
Return on average common equity | 10.74 | 10.31 | 12.13 | 11.08 | 10.68 | |||||||||||||||
Return on average tangible common equity** | 14.00 | 13.49 | 16.01 | 14.63 | 14.23 | |||||||||||||||
Net FTE interest income to average earning assets | 3.52 | 3.52 | 3.52 | 3.56 | 3.55 | |||||||||||||||
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FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Financial Summary - continued
(Unaudited, $ in thousands)
2014 | 2013 | |||||||||||||||||||
BALANCE SHEET SUMMARIES | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 610,531 | $ | 534,827 | $ | 542,343 | $ | 368,217 | $ | 498,543 | ||||||||||
Investment securities | 2,095,088 | 2,151,543 | 2,145,083 | 2,138,539 | 2,221,595 | |||||||||||||||
Loans held for investment: | ||||||||||||||||||||
Commercial real estate | 1,452,967 | 1,449,174 | 1,441,297 | 1,447,145 | 1,469,302 | |||||||||||||||
Construction real estate | 354,349 | 351,635 | 341,284 | 337,211 | 330,886 | |||||||||||||||
Residential real estate | 868,836 | 867,912 | 841,707 | 804,200 | 758,480 | |||||||||||||||
Agricultural real estate | 160,570 | 173,534 | 176,594 | 176,799 | 172,522 | |||||||||||||||
Consumer | 670,406 | 671,587 | 672,184 | 652,944 | 636,364 | |||||||||||||||
Commercial | 707,237 | 676,544 | 681,416 | 680,751 | 688,844 | |||||||||||||||
Agricultural | 108,376 | 111,872 | 123,565 | 121,530 | 111,411 | |||||||||||||||
Other | 3,626 | 1,734 | 1,912 | 2,498 | 1,307 | |||||||||||||||
Mortgage loans held for sale | 38,471 | 40,861 | 52,133 | 74,286 | 55,443 | |||||||||||||||
Total loans | 4,364,838 | 4,344,853 | 4,332,092 | 4,297,364 | 4,224,559 | |||||||||||||||
Less allowance for loan losses | 81,371 | 85,339 | 92,990 | 98,528 | 97,904 | |||||||||||||||
Net loans | 4,283,467 | 4,259,514 | 4,239,102 | 4,198,836 | 4,126,655 | |||||||||||||||
Premises and equipment, net | 179,942 | 179,690 | 179,785 | 181,940 | 185,237 | |||||||||||||||
Goodwill and intangible assets (excluding mortgage servicing rights) | 187,858 | 188,214 | 188,569 | 188,925 | 189,281 | |||||||||||||||
Company owned life insurance | 138,027 | 122,175 | 76,701 | 77,602 | 77,158 | |||||||||||||||
Other real estate owned, net | 16,594 | 15,504 | 18,537 | 22,782 | 32,470 | |||||||||||||||
Mortgage servicing rights, net | 13,474 | 13,546 | 13,518 | 13,304 | 13,006 | |||||||||||||||
Other assets | 92,844 | 99,638 | 96,462 | 101,363 | 95,372 | |||||||||||||||
Total assets | $ | 7,617,825 | $ | 7,564,651 | $ | 7,500,100 | $ | 7,291,508 | $ | 7,439,317 | ||||||||||
Liabilities and stockholders' equity: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing | $ | 1,458,460 | $ | 1,491,683 | $ | 1,503,969 | $ | 1,393,732 | $ | 1,406,892 | ||||||||||
Interest bearing | 4,676,677 | 4,642,067 | 4,604,656 | 4,536,600 | 4,621,453 | |||||||||||||||
Total deposits | 6,135,137 | 6,133,750 | 6,108,625 | 5,930,332 | 6,028,345 | |||||||||||||||
Securities sold under repurchase agreements | 488,898 | 457,437 | 428,110 | 421,314 | 467,205 | |||||||||||||||
Accounts payable, accrued expenses and other liabilities | 48,770 | 52,489 | 50,900 | 50,292 | 52,767 | |||||||||||||||
Long-term debt | 36,905 | 36,917 | 37,128 | 37,139 | 37,150 | |||||||||||||||
Subordinated debentures held by subsidiary trusts | 82,477 | 82,477 | 82,477 | 82,477 | 82,477 | |||||||||||||||
Total liabilities | 6,792,187 | 6,763,070 | 6,707,240 | 6,521,554 | 6,667,944 | |||||||||||||||
Stockholders' equity: | ||||||||||||||||||||
Common stock | 286,553 | 285,535 | 283,352 | 279,232 | 274,929 | |||||||||||||||
Retained earnings | 546,444 | 532,087 | 517,456 | 499,761 | 483,904 | |||||||||||||||
Accumulated other comprehensive income (loss) | (7,359 | ) | (16,041 | ) | (7,948 | ) | (9,039 | ) | 12,540 | |||||||||||
Total stockholders' equity | 825,638 | 801,581 | 792,860 | 769,954 | 771,373 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 7,617,825 | $ | 7,564,651 | $ | 7,500,100 | $ | 7,291,508 | $ | 7,439,317 | ||||||||||
CONSOLIDATED CAPITAL RATIOS | ||||||||||||||||||||
Total risk-based capital | 16.83 | % | * | 16.75 | % | 16.68 | % | 16.29 | % | 15.91 | % | |||||||||
Tier 1 risk-based capital | 15.16 | * | 14.93 | 14.85 | 14.45 | 14.07 | ||||||||||||||
Tier 1 common capital to total risk-weighted assets | 13.55 | * | 13.31 | 13.33 | 12.83 | 12.41 | ||||||||||||||
Leverage Ratio | 10.27 | * | 10.08 | 10.01 | 9.73 | 9.24 | ||||||||||||||
Tangible common stockholders' equity to tangible assets** | 8.58 | 8.32 | 8.26 | 8.18 | 8.03 | |||||||||||||||
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FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Financial Summary - continued
(Unaudited, $ in thousands)
2014 | 2013 | |||||||||||||||||||
ASSET QUALITY | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | |||||||||||||||
Allowance for loan losses | $ | 81,371 | $ | 85,339 | $ | 92,990 | $ | 98,528 | $ | 97,904 | ||||||||||
As a percentage of period-end loans | 1.86 | % | 1.96 | % | 2.15 | % | 2.29 | % | 2.32 | % | ||||||||||
Net charge-offs (recoveries) during quarter | $ | (1,032 | ) | $ | 3,651 | $ | 2,538 | $ | (249 | ) | $ | 3,107 | ||||||||
Annualized as a percentage of average loans | (0.10 | )% | 0.34 | % | 0.23 | % | (0.02 | )% | 0.30 | % | ||||||||||
Non-performing assets: | ||||||||||||||||||||
Non-accrual loans | $ | 88,114 | $ | 94,439 | $ | 94,015 | $ | 103,729 | $ | 98,594 | ||||||||||
Accruing loans past due 90 days or more | 1,664 | 2,232 | 2,188 | 1,742 | 1,941 | |||||||||||||||
Total non-performing loans | 89,778 | 96,671 | 96,203 | 105,471 | 100,535 | |||||||||||||||
Other real estate owned | 16,594 | 15,504 | 18,537 | 22,782 | 32,470 | |||||||||||||||
Total non-performing assets | 106,372 | 112,175 | 114,740 | 128,253 | 133,005 | |||||||||||||||
As a percentage of: | ||||||||||||||||||||
Total loans and OREO | 2.43 | % | 2.57 | % | 2.64 | % | 2.97 | % | 3.12 | % | ||||||||||
Total assets | 1.40 | % | 1.48 | % | 1.53 | % | 1.76 | % | 1.79 | % | ||||||||||
ASSET QUALITY TRENDS | Provision for Loan Losses | Net Charge-offs (Recoveries) | Allowance for Loan Losses | Accruing Loans 30-89 Days Past Due | Accruing TDRs | Non-Performing Loans | Non-Performing Assets | ||||||||||||||||||||
Q1 2011 | $ | 15,000 | $ | 11,034 | $ | 124,446 | $ | 68,021 | $ | 33,344 | $ | 216,534 | $ | 248,529 | |||||||||||||
Q2 2011 | 15,400 | 15,267 | 124,579 | 70,145 | 31,611 | 231,856 | 260,179 | ||||||||||||||||||||
Q3 2011 | 14,000 | 18,276 | 120,303 | 62,165 | 35,616 | 226,962 | 252,042 | ||||||||||||||||||||
Q4 2011 | 13,751 | 21,473 | 112,581 | 75,603 | 37,376 | 204,094 | 241,546 | ||||||||||||||||||||
Q1 2012 | 11,250 | 7,929 | 115,902 | 58,531 | 36,838 | 185,927 | 230,683 | ||||||||||||||||||||
Q2 2012 | 12,000 | 25,108 | 102,794 | 55,074 | 35,959 | 136,374 | 190,191 | ||||||||||||||||||||
Q3 2012 | 9,500 | 13,288 | 99,006 | 48,277 | 35,428 | 127,270 | 167,241 | ||||||||||||||||||||
Q4 2012 | 8,000 | 6,495 | 100,511 | 34,602 | 31,932 | 110,076 | 142,647 | ||||||||||||||||||||
Q1 2013 | 500 | 3,107 | 97,904 | 41,924 | 35,787 | 100,535 | 133,005 | ||||||||||||||||||||
Q2 2013 | 375 | (249 | ) | 98,528 | 39,408 | 23,406 | 105,471 | 128,253 | |||||||||||||||||||
Q3 2013 | (3,000 | ) | 2,538 | 92,990 | 39,414 | 21,939 | 96,203 | 114,740 | |||||||||||||||||||
Q4 2013 | (4,000 | ) | 3,651 | 85,339 | 26,944 | 21,780 | 96,671 | 112,175 | |||||||||||||||||||
Q1 2014 | (5,000 | ) | (1,032 | ) | 81,371 | 41,034 | 19,687 | 89,778 | 106,372 | ||||||||||||||||||
CRITICIZED LOANS | Special Mention | Substandard | Doubtful | Total | |||||||||||
Q1 2011 | $ | 293,899 | $ | 299,072 | $ | 135,862 | $ | 728,833 | |||||||
Q2 2011 | 268,450 | 309,029 | 149,964 | 727,443 | |||||||||||
Q3 2011 | 261,501 | 305,145 | 134,367 | 701,013 | |||||||||||
Q4 2011 | 240,903 | 269,794 | 120,165 | 630,862 | |||||||||||
Q1 2012 | 242,071 | 276,165 | 93,596 | 611,832 | |||||||||||
Q2 2012 | 220,509 | 243,916 | 81,473 | 545,898 | |||||||||||
Q3 2012 | 223,306 | 229,826 | 66,179 | 519,311 | |||||||||||
Q4 2012 | 209,933 | 215,188 | 42,459 | 467,580 | |||||||||||
Q1 2013 | 197,645 | 197,095 | 43,825 | 438,565 | |||||||||||
Q2 2013 | 192,390 | 161,786 | 52,266 | 406,442 | |||||||||||
Q3 2013 | 180,850 | 168,278 | 42,415 | 391,543 | |||||||||||
Q4 2013 | 159,081 | 154,100 | 45,308 | 358,489 | |||||||||||
Q1 2014 | 174,834 | 161,103 | 31,672 | 367,609 | |||||||||||
*Preliminary estimate - may be subject to change.
**See Non-GAAP Financial Measures included herein for a discussion regarding tangible book value per common share, return on average tangible common equity and tangible common stockholders' equity to tangible assets.
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FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Average Balance Sheets
(Unaudited, $ in thousands)
Three Months Ended | ||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||||
Loans (1) (2) | $ | 4,344,993 | $ | 54,192 | 5.06 | % | $ | 4,323,504 | $ | 55,920 | 5.13 | % | $ | 4,216,934 | $ | 55,913 | 5.38 | % | ||||||||
Investment securities (2) | 2,108,643 | 9,370 | 1.80 | 2,134,052 | 9,649 | 1.79 | 2,204,458 | 9,980 | 1.84 | |||||||||||||||||
Interest bearing deposits in banks | 368,784 | 231 | 0.25 | 430,912 | 275 | 0.25 | 476,856 | 298 | 0.25 | |||||||||||||||||
Federal funds sold | 1,099 | 1 | 0.37 | 789 | 1 | 0.50 | 2,521 | 4 | 0.64 | |||||||||||||||||
Total interest earnings assets | 6,823,519 | 63,794 | 3.79 | 6,889,257 | 65,845 | 3.79 | 6,900,769 | 66,195 | 3.89 | |||||||||||||||||
Non-earning assets | 664,441 | 601,996 | 598,283 | |||||||||||||||||||||||
Total assets | $ | 7,487,960 | $ | 7,491,253 | $ | 7,499,052 | ||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||
Demand deposits | $ | 1,837,714 | $ | 512 | 0.11 | % | $ | 1,807,865 | $ | 510 | 0.11 | % | $ | 1,728,813 | $ | 473 | 0.11 | % | ||||||||
Savings deposits | 1,639,484 | 595 | 0.15 | 1,600,723 | 592 | 0.15 | 1,550,146 | 653 | 0.17 | |||||||||||||||||
Time deposits | 1,172,866 | 2,317 | 0.80 | 1,219,796 | 2,484 | 0.81 | 1,365,232 | 3,229 | 0.96 | |||||||||||||||||
Repurchase agreements | 456,557 | 66 | 0.06 | 431,397 | 62 | 0.06 | 512,180 | 100 | 0.08 | |||||||||||||||||
Other borrowed funds | 6 | — | — | 14 | — | — | 7 | — | — | |||||||||||||||||
Long-term debt | 36,909 | 473 | 5.20 | 36,983 | 486 | 5.21 | 37,153 | 480 | 5.24 | |||||||||||||||||
Preferred stock pending redemption | — | — | — | — | — | — | 9,444 | 159 | 6.83 | |||||||||||||||||
Subordinated debentures held by subsidiary trusts | 82,477 | 588 | 2.89 | 82,477 | 602 | 2.90 | 82,477 | 696 | 3.42 | |||||||||||||||||
Total interest bearing liabilities | 5,226,013 | 4,551 | 0.35 | 5,179,255 | 4,736 | 0.36 | 5,285,452 | 5,790 | 0.44 | |||||||||||||||||
Non-interest bearing deposits | 1,403,822 | 1,461,126 | 1,398,850 | |||||||||||||||||||||||
Other non-interest bearing liabilities | 50,185 | 51,674 | 53,810 | |||||||||||||||||||||||
Stockholders’ equity | 807,940 | 799,198 | 760,940 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,487,960 | $ | 7,491,253 | $ | 7,499,052 | ||||||||||||||||||||
Net FTE interest income | 59,243 | 61,109 | 60,405 | |||||||||||||||||||||||
Less FTE adjustments (2) | (1,107 | ) | (1,135 | ) | (1,128 | ) | ||||||||||||||||||||
Net interest income from consolidated statements of income | $ | 58,136 | $ | 59,974 | $ | 59,277 | ||||||||||||||||||||
Interest rate spread | 3.44 | % | 3.43 | % | 3.45 | % | ||||||||||||||||||||
Net FTE interest margin (3) | 3.52 | % | 3.52 | % | 3.55 | % | ||||||||||||||||||||
Cost of funds, including non-interest bearing demand deposits (4) | 0.28 | % | 0.28 | % | 0.35 | % | ||||||||||||||||||||
(1) | Average loan balances include non-accrual loans. Interest income on loans includes amortization of deferred loan fees net of deferred loan costs, which is not material. |
(2) | Interest income and average rates for tax exempt loans and securities are presented on a FTE basis. |
(3) | Net FTE interest margin during the period equals the difference between annualized interest income on interest earning assets and the annualized interest expense on interest bearing liabilities, divided by 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. |
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Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principals in the United States of America, or GAAP, this release contains the following non-GAAP financial measures that management uses to evaluate capital adequacy: (i) tangible book value per common share; (ii) tangible common stockholders' equity to tangible assets; (iii) tangible assets, (iv) tangible common stockholders' equity, and (v) return on average tangible common equity.
For purposes of computing tangible book value per common share, tangible book value equals common stockholders' equity less goodwill and other intangible assets (except mortgage servicing rights). Tangible book value per common share is calculated as tangible common stockholders' equity divided by shares of common stock outstanding. For purposes of computing tangible common stockholders' equity to tangible assets, tangible assets equals total assets less goodwill and other intangible assets (except mortgage servicing rights). Tangible common stockholders' equity to tangible assets is calculated as tangible common stockholders' equity divided by tangible assets. For purposes of computing return on average tangible common equity, average tangible common equity equals average common stockholders' equity less average goodwill and average other intangible assets (except mortgage servicing rights). Return on average tangible common equity is calculated by dividing net income available to common shareholders by average tangible common equity.
Management believes that these non-GAAP financial measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of unrealized losses on securities and other components of accumulated other comprehensive income (loss) in stockholders' equity. Management also believes that such financial measures, which are intended to complement the capital ratios defined by banking regulators, are useful to investors in evaluating the Company's performance due to the importance that analysts place on these ratios and also allow investors to compare certain aspects of our capitalization to other companies. These non-GAAP financial measures, however, 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. As a result, the usefulness of these measures to investors may be limited, and they should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.
The following tables reconcile the above described non-GAAP financial measures to their most directly comparable GAAP financial measures as of the dates indicated.
(Unaudited, $ in thousands, except per share data)
2014 | 2013 | |||||||||||||||||||
Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | ||||||||||||||||
Total stockholders’ equity (GAAP) | $ | 825,638 | $ | 801,581 | $ | 792,860 | $ | 769,954 | $ | 771,373 | ||||||||||
Less goodwill and other intangible assets (excluding mortgage servicing rights) | 187,858 | 188,214 | 188,569 | 188,925 | 189,281 | |||||||||||||||
Tangible common stockholders’ equity (Non-GAAP) | $ | 637,780 | $ | 613,367 | $ | 604,291 | $ | 581,029 | $ | 582,092 | ||||||||||
Total assets (GAAP) | $ | 7,617,825 | $ | 7,564,651 | $ | 7,500,100 | $ | 7,291,508 | $ | 7,439,317 | ||||||||||
Less goodwill and other intangible assets (excluding mortgage servicing rights) | 187,858 | 188,214 | 188,569 | 188,925 | 189,281 | |||||||||||||||
Tangible assets (Non-GAAP) | $ | 7,429,967 | $ | 7,376,437 | $ | 7,311,531 | $ | 7,102,583 | $ | 7,250,036 | ||||||||||
Quarterly averages: | ||||||||||||||||||||
Total stockholders' equity (GAAP) | $ | 807,940 | $ | 799,198 | $ | 778,809 | $ | 778,760 | $ | 760,940 | ||||||||||
Less goodwill and other intangible assets (excluding mortgage servicing rights) | 188,078 | 188,415 | 188,778 | 189,135 | 189,503 | |||||||||||||||
Average tangible common stockholder's equity (Non-GAAP) | $ | 619,862 | $ | 610,783 | $ | 590,031 | $ | 589,625 | $ | 571,437 | ||||||||||
Common shares outstanding | 44,390,095 | 44,155,063 | 44,089,962 | 43,835,881 | 43,614,942 | |||||||||||||||
Annualized net income | $ | 86,761 | $ | 82,423 | $ | 94,472 | $ | 86,256 | $ | 81,290 | ||||||||||
Book value per common share | $ | 18.60 | $ | 18.15 | $ | 17.98 | $ | 17.56 | $ | 17.69 | ||||||||||
Tangible book value per common share | 14.37 | 13.89 | 13.71 | 13.25 | 13.35 | |||||||||||||||
Tangible common stockholders’ equity to tangible assets (Non-GAAP) | 8.58 | % | 8.32 | % | 8.26 | % | 8.18 | % | 8.03 | % | ||||||||||
Return on average tangible common equity (Non-GAAP) | 14.00 | 13.49 | 16.01 | 14.63 | 14.23 | |||||||||||||||
First Interstate BancSystem, Inc.
P.O. Box 30918 Billings, Montana 59116 (406) 255-5390
www.FIBK.com
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