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First Interstate BancSystem, Inc. Reports Second Quarter 2012 Results

First Interstate BancSystem, Inc. (NASDAQ:FIBK) reports second quarter 2012 net income available to common shareholders of $12.2 million, or $0.28 per diluted share, as compared to $11.4 million, or $0.26 per diluted share, for first quarter 2012 and $9.0 million, or $0.21 per diluted share, for second quarter 2011.

Significant financial statement items for the second quarter of 2012 include:
  • Total revenues of $88.8 million during the three months ended June 30, 2012 represented a 2.1% increase over the prior quarter and a 5.6% increase over the same quarter of the prior year;
  • Non-performing assets decreased $41.4 million to $226.2 million, or 3.10% of total assets, as of June 30, 2012, compared to 3.60% of total assets as of March 31, 2012 and 4.05% of total assets as of June 30, 2011;
  • Provisions for loan losses were $12.0 million for the three months ended June 30, 2012, compared to $11.3 million for the three months ended March 31, 2012 and $15.4 million for the three months ended June 30, 2011;
  • Net charge-offs were $25.1 million during the three months ended June 30, 2012, compared to $7.9 million during the three months ended March 31, 2012 and $15.3 million during the three months ended June 30, 2011; and
  • The June 26, 2012 redemption of $41.2 million of 30-year floating rate junior subordinated deferrable interest debentures.
 
RESULTS SUMMARY

(Unaudited; $ in thousands, except per share data)
 
  As Of or For the Three Months Ended   Sequential Quarter

% Change
  Year Over Year

% Change
June 30,2012   March 31,2012   June 30,2011    
Net income available to common shareholders $ 12,157   $ 11,361   $ 9,001 7.0 % 35.1 %
Diluted earnings per common share 0.28 0.26 0.21 7.7 % 33.3 %
Dividends paid per common share 0.1200 0.1200 0.1125 0.0 % 6.7 %
Book value per common share 17.03 16.88 16.51 0.9 % 3.1 %
Tangible book value per common share* 12.63 12.47 12.05 1.3 % 4.8 %
Net tangible book value per common share* 14.03 13.87 13.45 1.2 % 4.3 %
Return on average common equity, annualized 6.69 % 6.32 % 5.23 %
Return on average assets, annualized 0.71 % 0.67 % 0.54 %
 
  For the Six Months Ended   Year Over Year

% Change
    June 30,2012   June 30,2011  
Net income available to common shareholders $ 23,518   17,663 33.1 %
Diluted earnings per common share 0.55 0.41 34.1 %
Dividends paid per common share 0.2400 0.2250 6.7 %
Return on average common equity, annualized 6.50 % 5.17 %
Return on average assets, annualized 0.69 % 0.53 %
 

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

“We continue to generate strong year-over-year earnings growth, with our second quarter earnings per share increasing by 33% from the same period last year,” said Ed Garding, President and Chief Executive Officer of First Interstate BancSystem, Inc. “We are seeing stable to positive trends in most areas of the business, including an improving deposit mix, continued steady declines in our level of criticized loans and strong capital ratios. We are also starting to see a higher volume of resolutions to problem loans, which is resulting in an overall improvement in our asset quality,” Garding further noted.
 
REVENUE SUMMARY
(Unaudited; $ in thousands)

 
  For the Three Months Ended   Sequential Quarter

% Change
  Year Over Year

% Change
    June 30,2012   March 31,2012   June 30,2011        
Interest income $ 69,067   $ 69,057   $ 73,551 0.0 %

-6.1

%
Interest expense   7,893     8,423     11,024    

-6.3

%
 

-28.4

%
Net interest income 61,174 60,634 62,527 0.9 %

-2.2

%
Non-interest income:
Income from the origination and sale of loans 9,420 8,384 4,109 12.4 % 129.3 %
Other service charges, commissions and fees 8,254 8,424 7,768

-2.0

%
6.3 %
Service charges on deposit accounts 4,455 4,161 4,385 7.1 % 1.6 %
Wealth management revenues 3,815 3,283 3,689 16.2 % 3.4 %
Investment securities gains, net 198 31 16 538.7 % 1,137.5 %
Other income   1,520     2,099     1,624    

-27.6

%
 

-6.4

%
Total non-interest income   27,662     26,382     21,591     4.9 %   28.1 %
Total revenues   $ 88,836     $ 87,016     $ 84,118     2.1 %   5.6 %
Tax equivalent interest margin ratio   3.74 %   3.72 %   3.84 %            
  For the Six Months Ended   Year Over Year

% Change
    June 30,2012   June 30,2011    
Interest income $ 138,124   $ 147,394

-6.3

%
Interest expense   16,316     23,069    

-29.3

%
Net interest income 121,808 124,325

-2.0

%
Non-interest income:
Income from the origination and sale of loans 17,804 7,554 135.7 %
Other service charges, commissions and fees 16,678 15,148 10.1 %
Service charges on deposit accounts 8,616 8,495 1.4 %
Wealth management revenues 7,098 6,999 1.4 %
Investment securities gains, net 229 18 1,172.2 %
Other income   3,619     3,536     2.3 %
Total non-interest income   54,044     41,750     29.4 %
Total revenues   $ 175,852     $ 166,075     5.9 %
Tax equivalent interest margin ratio   3.73 %   3.78 %      

Net Interest Income

The Company's net interest margin ratio increased to 3.74% during second quarter 2012, as compared to 3.72% during first quarter 2012, primarily due to the recovery of $766 thousand of previously charged-off interest. Exclusive of interest recoveries, the Company's net interest margin ratio would have been approximately 3.70% during second quarter 2012.

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