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First Interstate BancSystem, Inc. Reports Second Quarter 2012 Results

Stocks in this article: FIBK

Non-performing loans decreased 23% as of June 30, 2012, as compared to March 31, 2012, primarily due to the movement of non-accrual loans out of the loan portfolio through charge-off or foreclosure.

Net charged-off loans increased during second quarter 2012, as compared to first quarter 2012 and second quarter 2011. Nine borrowers accounted for 73% of loans charged-off during second quarter 2012. Charge-offs during second quarter 2012 were primarily comprised of land development, commercial construction and commercial real estate loans.

During second quarter 2012, the Company recorded additions to OREO of $20 million. Approximately 75% of these additions were attributable to the loans of five borrowers. Second quarter 2012 OREO additions were partially offset by write downs of the fair value of OREO properties of $568 thousand and sales of OREO with a net book value of $10 million at a slight gain.

 
CREDIT QUALITY TRENDS

(Unaudited; $ in thousands)

 
   

Provision for

Loan Losses

  Net Charge-offs  

Allowance for

Loan Losses

 

Accruing Loans

30-89 Days

Past Due

 

Non-Performing

Loans

 

Non-Performing

Assets

Q1 2009   $ 9,600   $ 4,693   $ 92,223   $ 98,980   $ 103,653   $ 122,300
Q2 2009 11,700 5,528 98,395 88,632 135,484 167,273
Q3 2009 10,500 7,147 101,748 91,956 125,083 156,958
Q4 2009 13,500 12,218 103,030 63,878 124,678 163,078
Q1 2010 11,900 8,581 106,349 62,675 133,042 177,022
Q2 2010 19,500 11,521 114,328 99,334 158,113 200,451
Q3 2010 18,000 12,092 120,236 47,966 202,008 237,304
Q4 2010 17,500 17,256 120,480 57,011 210,684 244,312
Q1 2011 15,000 11,034 124,446 68,021 249,878 281,873
Q2 2011 15,400 15,267 124,579 70,145 263,467 291,790
Q3 2011 14,000 18,276 120,303 62,165 262,578 287,658
Q4 2011 13,751 21,473 112,581 75,603 241,470 278,922
Q1 2012 11,250 7,929 115,902 58,531 222,765 267,521
Q2 2012   12,000     25,108     102,794     55,074     172,333     226,150
CRITICIZED LOANS

(Unaudited; $ in thousands)

 
   

Other Assets

Especially

Mentioned

  Substandard   Doubtful   Total
Q1 2009   $ 163,402   $ 231,861   $ 40,356   $ 435,619
Q2 2009 230,833 242,751 48,326 521,910
Q3 2009 239,320 271,487 60,725 571,532
Q4 2009 279,294 271,324 69,603 620,221
Q1 2010 312,441 311,866 64,113 688,420
Q2 2010 319,130 337,758 92,249 749,137
Q3 2010 340,075 340,973 116,003 797,051
Q4 2010 305,925 303,653 133,353 742,931
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
 
LOANS

(Unaudited; $ in thousands)

 
    June 30,2012   March 31,2012   June 30,2011   Sequential Quarter

% Change

  Year Over Year

% Change

Real estate:          
Commercial $ 1,517,400 $ 1,533,624 $ 1,555,964 -1.1 % -2.5 %
Construction:
Land acquisition & development 240,550 272,874 312,690 -11.8 % -23.1 %
Residential 51,193 50,332 63,364 1.7 % -19.2 %
Commercial   59,911     65,196     76,740     -8.1 %   -21.9 %
Total construction loans   351,654     388,402     452,794     -9.5 %   -22.3 %
Residential 572,018 562,588 578,739 1.7 % -1.2 %
Agricultural   171,087     171,685     177,728     -0.3 %   -3.7 %
Total real estate loans   2,612,159     2,656,299     2,765,225     -1.7 %   -5.5 %
Consumer:
Indirect consumer loans 418,604 407,389 413,825 2.8 % 1.2 %
Other consumer loans 144,442 142,144 152,704 1.6 % -5.4 %
Credit card loans   58,166     56,540     59,655     2.9 %   -2.5 %
Total consumer loans   621,212     606,073     626,184     2.5 %   -0.8 %
Commercial 720,010 708,397 724,158 1.6 % -0.6 %
Agricultural 138,115 128,599 133,898 7.4 % 3.1 %
Other loans, including overdrafts   2,319     568     3,297     308.3 %   -29.7 %
Loans held for investment 4,093,815 4,099,936 4,252,762 -0.1 % -3.7 %
Mortgage loans held for sale   76,148     58,680     28,498     29.8 %   167.2 %
Total loans   $ 4,169,963     $ 4,158,616     $ 4,281,260     0.3 %   -2.6 %

Total loans increased as of June 30, 2012, compared to March 31, 2012, with all major categories of loans except real estate showing growth. Decreases in real estate loans as of June 30, 2012, as compared to March 31, 2012, are primarily attributable to the movement of lower quality loans out of the loan portfolio through charge-off or foreclosure combined with low loan demand. Growth in residential real estate loans as of June 30, 2012, compared to March 31, 2012, is attributable to the retention of some loan production that has typically been sold in the secondary market.

 
DEPOSITS

(Unaudited; $ in thousands)

 
    June 30,2012   March 31,2012   June 30,2011   Sequential Quarter

% Change

  Year Over Year

% Change

Non-interest bearing demand   $ 1,337,777   $ 1,284,823   $ 1,109,905   4.1 %   20.5 %
Interest bearing:
Demand 1,586,962 1,618,174 1,233,039 -1.9 % 28.7 %
Savings 1,495,230 1,480,435 1,703,548 1.0 % -12.2 %
Time, $100 and over 641,070 671,014 772,567 -4.5 % -17.0 %
Time, other   840,340     856,388     975,606     -1.9 %   -13.9 %
Total interest bearing   4,563,602     4,626,011     4,684,760     -1.3 %   -2.6 %
Total deposits   $ 5,901,379     $ 5,910,834     $ 5,794,665     -0.2 %   1.8 %

Total deposits remained stable as of June 30, 2012, as compared to March 31, 2012, and increased slightly compared to June 30, 2011. As a result of a regulatory change allowing businesses to receive interest on checking accounts, the Company discontinued its savings sweep product resulting in a shift of approximately $300 million from savings deposits into interest-bearing demand deposits during first quarter 2012. During second quarter 2012, the Company continued to experience a favorable shift in the composition of deposits away from higher-costing time deposits into non-interest bearing demand deposits.

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