UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________________________________________________________________________________________________ 

FORM 10-Q

_____________________________________________________________________________________________________________________________________________________ 

☒    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2021

OR

 ☐    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                   to                   

COMMISSION FILE NUMBER 001-34653

________________________________________________________________________________________________________ 

FIRST INTERSTATE BANCSYSTEM, INC.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________ 

Montana		81-0331430
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
401 North 31st Street
Billings,	MT	59116-0918
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (406) 255-5390

_________________________________________________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, no par value	FIBK	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐ No  ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

June 30, 2021 – Class A common stock	41,720,638
June 30, 2021 – Class B common stock	20,519,593

Quarterly Report on Form 10-Q

	FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
	Index
	June 30, 2021
		Page Nos.
	Part I - Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Unaudited Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 4.	Controls and Procedures	53
	Part II - Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
Signatures		57

2

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

	June 30, 2021		December 31, 2020
Assets
Cash and due from banks	$	238.8	$	261.4
Interest bearing deposits in banks	1,709.5		2,015.3
Federal funds sold	0.1		0.1
Total cash and cash equivalents	1,948.4		2,276.8
Investment securities:
Available-for-sale	3,957.8		4,008.7
Held-to-maturity, net (estimated fair values of $1,701.9 and $55.0 at June 30, 2021 and December 31, 2020, respectively)	1,685.5		51.6
Total investment securities	5,643.3		4,060.3
Mortgage loans held for sale, at fair value	48.8		74.0
Loans held for investment, net of deferred fees and costs	9,834.7		9,807.5
Allowance for credit losses	135.5		144.3
Net loans held for investment	9,699.2		9,663.2
Goodwill	621.6		621.6
Company-owned life insurance	299.0		296.4
Premises and equipment, net of accumulated depreciation	299.1		312.3
Core deposit intangibles, net of accumulated amortization	46.1		51.2
Accrued interest receivable	50.9		51.1
Mortgage servicing rights, net of accumulated amortization and impairment reserve	27.4		24.0
Other real estate owned (“OREO”)	2.0		2.5
Other assets	254.7		215.3
Total assets	$	18,940.5	$	17,648.7
Liabilities and Stockholders’ Equity
Deposits:
Non-interest bearing	$	5,416.8	$	4,633.5
Interest bearing	10,148.9		9,583.5
Total deposits	15,565.7		14,217.0
Securities sold under repurchase agreements	1,038.7		1,091.4
Accounts payable and accrued expenses	132.2		144.4
Accrued interest payable	5.0		5.8
Deferred tax liability, net	25.2		27.2
Long-term debt	112.4		112.4
Allowance for credit losses on off-balance sheet credit exposures	3.4		3.7
Subordinated debentures held by subsidiary trusts	87.0		87.0
Total liabilities	16,969.6		15,688.9
Stockholders’ equity:
Nonvoting noncumulative preferred stock without par value; authorized 100,000 shares; no shares issued and outstanding as of June 30, 2021 or December 31, 2020	—		—
Common stock	941.6		941.1
Retained earnings	1,005.2		962.1
Accumulated other comprehensive income, net	24.1		56.6
Total stockholders’ equity	1,970.9		1,959.8
Total liabilities and stockholders’ equity	$	18,940.5	$	17,648.7

See accompanying notes to unaudited consolidated financial statements.

3

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Interest income:
Interest and fees on loans	$	105.4	$	112.1	$	213.2	$	224.1
Interest and dividends on investment securities:
Taxable	15.8		15.7		31.6		32.9
Exempt from federal taxes	1.4		0.5		2.8		1.0
Interest on deposits in banks	0.7		0.5		1.0		3.0
Total interest income	123.3		128.8		248.6		261.0
Interest expense:
Interest on deposits	2.2		4.5		4.5		11.8
Interest on securities sold under repurchase agreements	0.1		0.1		0.2		0.6
Interest on other debt	1.5		1.0		3.0		1.3
Interest on subordinated debentures held by subsidiary trusts	0.7		0.7		1.4		1.7
Total interest expense	4.5		6.3		9.1		15.4
Net interest income	118.8		122.5		239.5		245.6
(Reversal of) provision for credit losses	—		19.5		(5.1)		48.5
Net interest income after provision for (reversal of) credit losses	118.8		103.0		244.6		197.1
Non-interest income:
Payment services revenues	11.4		9.3		21.6		19.5
Mortgage banking revenues	9.6		14.2		21.2		25.1
Wealth management revenues	6.3		5.4		12.6		11.6
Service charges on deposit accounts	3.9		3.6		7.7		9.0
Other service charges, commissions, and fees	1.6		2.9		3.7		5.0
Investment securities gains (losses), net	(0.1)		—		(0.1)		—
Other income	2.6		4.3		6.7		7.9
Total non-interest income	35.3		39.7		73.4		78.1
Non-interest expense:
Salaries and wages	41.6		44.2		80.6		84.1
Employee benefits	14.7		10.4		30.8		24.6
Outsourced technology services	8.4		8.3		16.5		16.1
Occupancy, net	7.1		6.8		14.4		14.1
Furniture and equipment	4.1		4.2		8.5		7.0
OREO expense, net of income	—		0.1		(0.1)		(0.4)
Professional fees	3.2		3.0		6.6		5.7
FDIC insurance premiums	1.5		1.6		3.1		3.2
Core deposit intangibles amortization	2.5		2.7		5.0		5.6
Other expenses	15.9		14.3		32.0		30.6
Total non-interest expense	99.0		95.6		197.4		190.6
Income before income tax expense	55.1		47.1		120.6		84.6
Income tax expense	12.6		10.4		26.7		18.6
Net income	$	42.5	$	36.7	$	93.9	$	66.0
Earnings per common share (Basic)	$	0.69	$	0.57	$	1.52	$	1.02
Earnings per common share (Diluted)	0.69		0.57		$	1.52	$	1.02
Weighted average common shares outstanding (Basic)	61,657,593		64,004,455		61,624,917		64,397,320
Weighted average common shares outstanding (Diluted)	61,727,821		64,082,489		61,723,142		64,513,886

See accompanying notes to unaudited consolidated financial statements.

4

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	42.5	$	36.7	$	93.9	$	66.0
Other comprehensive (loss) income, before tax:
Investment securities available-for sale:
Change in net unrealized (losses) gains during period	(0.8)		34.9		(67.6)		74.1
Reclassification adjustment for net gains included in income	0.1		—		0.1		—
Net change in unamortized gains on available-for-sale securities transferred into held-to-maturity	24.8		—		24.8		—
Unrealized (gain) loss on derivatives	(0.8)		0.2		(0.9)		0.2
Defined benefit post-retirement benefits plans:
Change in net actuarial loss	—		(0.2)		—		(0.4)
Other comprehensive income (loss), before tax	23.3		34.9		(43.6)		73.9
Changes in deferred taxes related to other comprehensive (loss) income	(5.9)		(9.5)		11.1		(19.7)
Other comprehensive (loss) income, net of tax	17.4		25.4		(32.5)		54.2
Comprehensive income, net of tax	$	59.9	$	62.1	$	61.4	$	120.2

See accompanying notes to unaudited consolidated financial statements.

5

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (In millions, except share and per share data) (Unaudited)
	Three Months Ended June 30,
	Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total stockholders’ equity
Balance at March 31, 2021	$	938.5	$	988.2	$	6.7	$	1,933.4
Net income	—		42.5		—		42.5
Other comprehensive income, net of tax expense	—		—		17.4		17.4
Common stock transactions:
284 common shares purchased and retired	—		—		—		—
18,477 common shares issued	—		—		—		—
8,305 non-vested common shares forfeited or canceled	—		—		—		—
Stock-based compensation expense	3.1		—		—		3.1
Common cash dividends declared ($0.41 per share)	—		(25.5)		—		(25.5)
Balance at June 30, 2021	$	941.6	$	1,005.2	$	24.1	$	1,970.9
Balance at March 31, 2020	$	1,018.7	$	897.6	$	39.8	$	1,956.1
Net income	—		36.7		—		36.7
Other comprehensive income, net of tax expense	—		—		25.4		25.4
Common stock transactions:
482 common shares purchased and retired	—		—		—		—
19,200 common shares issued	—		—		—		—
733 non-vested common shares issued	—		—		—		—
23,018 non-vested common shares forfeited or canceled	—		—		—		—
10,917 stock options exercised, net of 2,949 shares tendered in payment of option price and income tax withholding amounts	0.1		—		—		0.1
Stock-based compensation expense	2.4		—		—		2.4
Common cash dividends declared ($0.34 per share)	—		(21.8)		—		(21.8)
Balance at June 30, 2020	$	1,021.2	$	912.5	$	65.2	$	1,998.9

6

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (continued) (In millions, except share and per share data) (Unaudited)
	Six Months Ended June 30,
	Common stock		Retained earnings		Accumulated other comprehensive income (loss)		Total stockholders’ equity
Balance at December 31, 2020	$	941.1	$	962.1	$	56.6	$	1,959.8
Net income	—		93.9		—		93.9
Other comprehensive loss, net of tax expense	—		—		(32.5)		(32.5)
Common stock transactions:
127,464 common shares purchased and retired	(5.4)		—		—		(5.4)
19,081 common shares issued	—		—		—		—
239,525 non-vested common shares issued	—		—		—		—
27,373 non-vested common shares forfeited or canceled	—		—		—		—
40,663 stock options exercised, net of 6,177 shares tendered in payment of option price and income tax withholding amounts	0.4		—		—		0.4
Stock-based compensation expense	5.5		—		—		5.5
Common cash dividends declared ($0.82 per share)	—		(50.8)		—		(50.8)
Balance at June 30, 2021	$	941.6	$	1,005.2	$	24.1	$	1,970.9
Balance at December 31, 2019	$	1,049.3	$	953.6	$	11.0	$	2,013.9
Cumulative change related to the adoption of ASU 2016-13	—		(24.1)		—		(24.1)
Adjusted balance at January 1, 2020	1,049.3		929.5		11.0		1,989.8
Net income	—		66.0		—		66.0
Other comprehensive income, net of tax expense	—		—		54.2		54.2
Common stock transactions:
1,093,741 common shares purchased and retired	(32.6)		—		—		(32.6)
19,491 common shares issued	—		—		—		—
328,100 non-vested common shares issued	—		—		—		—
25,588 non-vested common shares forfeited or canceled	—		—		—		—
84,268 stock options exercised, net of 26,124 shares tendered in payment of option price and income tax withholding amounts	0.7		—		—		0.7
Stock-based compensation expense	3.8		—		—		3.8
Common cash dividends declared ($1.28 per share)	—		(83.0)		—		(83.0)
Balance at June 30, 2020	$	1,021.2	$	912.5	$	65.2	$	1,998.9

See accompanying notes to unaudited consolidated financial statements.

7

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	93.9	$	66.0
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) credit losses	(5.1)		48.5
Net gain on disposal of premises and equipment	(0.4)		(0.1)
Depreciation and amortization	22.3		21.2
Net premium amortization on investment securities	18.3		5.7
Net gain on investment securities transactions	0.1		—
Realized and unrealized net gains on mortgage banking activities	(10.7)		(24.9)
Net gain on sale of investments in unrelated entities	—