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First Interstate BancSystem, Inc. Reports First Quarter 2012 Results

First Interstate BancSystem, Inc. (NASDAQ:FIBK) reports first quarter 2012 net income available to common shareholders of $11.4 million, or $0.26 per diluted share, as compared to $12.4 million, or $0.29 per diluted share, for fourth quarter 2011 and $8.7 million, or $0.20 per diluted share, for first quarter 2011.

Significant financial statement items for the first quarter of 2012 include:

  • Non-performing assets to total assets declined to 3.60% as of March 31, 2012, compared to 3.81% as of December 31, 2011 and 3.79% as of March 31, 2011;
  • Provisions for loan losses were $11.3 million for the three months ended March 31, 2012, compared to $13.8 million for the three months ended December 31, 2011 and $15.0 million for the three months ended March 31, 2011;
  • Net interest margin ratio decreased to 3.72% for the three months ended March 31, 2012, as compared to 3.79% for the three months ended December 31, 2011, primarily due to a 9 basis point decrease in the yield on interest earning assets largely due to reductions in average loans outstanding during the period. This decrease was partially offset by a decline of 3 basis points in the cost of interest bearing liabilities during the three months ended March 31, 2012, as compared to the three months ended December 31, 2011;
  • Estimated collection and settlement costs of $3.0 million related to one borrower were recorded as other expense during the three months ended March 31, 2012.

RESULTS SUMMARY

(Unaudited; $ in thousands, except per share data)

    Three Months Ended    

SequentialQuarter% Change

   

Year OverYear% Change

       

March 31,2012

   

December 31,2011

   

March 31,2011

         
Net income available to common shareholders $ 11,361     $ 12,402     $ 8,662

-8.4

%

31.2 %
Diluted earnings per common share 0.26 0.29 0.20

-10.3

%

30.0 %
Dividends paid per common share 0.1200 0.1125 0.1125 6.7 % 6.7 %
Book value per common share 16.88 16.77 16.10 0.7 % 4.8 %
Tangible book value per common share* 12.47 12.33 11.63 1.1 % 7.2 %
Net tangible book value per common share* 13.87 13.74 13.04 0.9 % 6.4 %
Return on average common equity, annualized 6.32 % 6.84 % 5.11 %
Return on average assets, annualized 0.67 % 0.72 % 0.52 %
 

* See Non-GAAP Financial Measures included herein for a discussion regarding tangible and net tangible book value per common share.

 

“Our first quarter results reflect strong improvement over the prior year period, with earnings per share increasing by 30%,” said Ed Garding, President and Chief Executive Officer of First Interstate BancSystem, Inc. “During the first quarter, we saw a continuation of the mixed trends we have seen over the past few quarters: improving credit quality and healthy deposit flows being offset by weak loan demand and compression in our net interest margin. We are encouraged by the steady decline we are seeing in our level of criticized loans and non-performing assets, which is translating into lower levels of charge-offs and provision for credit loss expense,” Garding further noted.

REVENUE SUMMARY

             

(Unaudited; $ in thousands)

Three Months Ended

SequentialQuarter% Change

Year OverYear% Change

        March 31,2012     December 31,2011     March 31,2011            
Interest income $ 69,057   $ 72,006     $ 73,843

-4.1

%

-6.5

%

Interest expense       8,423     8,971       12,045      

-6.1

%

   

-30.1

%

Net interest income 60,634 63,035 61,798

-3.8

%

-1.9

%

Non-interest income:
Other service charges, commissions and fees 8,424 8,062 7,380 4.5 % 14.1 %
Income from the origination and sale of loans 8,384 8,087 3,445 3.7 % 143.4 %
Service charges on deposit accounts 4,161 4,543 4,110 -8.4

%

1.2 %
Wealth management revenues 3,283 3,177 3,295 3.3 % -0.4

%

Investment securities gains, net 31 1,488 2 -97.9

%

1,450.0 %
Other income       2,099     1,640       1,927       28.0 %     8.9 %
Total non-interest income       26,382     26,997       20,159      

-2.3

%

    30.9 %
Total revenues       $ 87,016     $ 90,032       $ 81,957      

-3.3

%

    6.2 %
Tax equivalent interest margin ratio       3.72 %   3.79 %     3.73 %                
 

Net Interest Income

Net interest margin decreased 7 basis points during first quarter to 3.72%, as compared to 3.79% during fourth quarter 2011, primarily due to lower outstanding loan balances and lower yields earned on the Company's loan and investment portfolios. These decreases were partially offset by further reductions in funding costs, along with a continued shift from higher-costing savings and time deposits to lower-costing demand deposits.

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