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First Interstate BancSystem, Inc. Reports Strong Third Quarter Earnings On Improved Credit Quality

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.

 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

Consolidated Financial Summary

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

 
  2013   2012

CONDENSED INCOME STATEMENTS

3rd Qtr   2nd Qtr   1st Qtr 4th Qtr   3rd Qtr
Net interest income $ 58,956 $ 58,760 $ 59,277 $ 60,973 $ 61,005
Net interest income on a fully-taxable equivalent ("FTE") basis 60,066 59,879 60,405 62,143 62,165
Provision for loan losses (3,000 ) 375 500 8,000 9,500
Non-interest income:
Income from the origination and sale of loans 7,934 10,043 10,675 12,321 11,665
Other service charges, commissions and fees 9,286 8,977 8,256 8,774 8,774
Service charges on deposit accounts 4,360 4,323 4,068 4,401 4,395
Wealth management revenues 4,581 4,020 4,134 3,659 3,557
Investment securities gains (losses), net 30 (12 ) 8 53 66
Other Income 1,416   2,228   1,678   1,427   1,725  
Total non-interest income 27,607 29,579 28,819 30,635 30,182
Non-interest expense:
Salaries and wages 22,806 23,470 23,405 23,288 23,341
Employee benefits 7,328 7,546 8,175 6,113 7,447
Occupancy, net 4,292 4,063 4,026 3,968 3,793
Furniture and equipment 3,147 3,163 3,052 3,301 3,231
Outsourced technology services 2,295 2,195 2,157 2,199 2,182
Other real estate owned (income) expense, net 18 (915 ) 1,896 3,877 2,612
Other expenses 12,693   15,498   13,974   15,086   14,458  
Total non-interest expense 52,579   55,020   56,685   57,832   57,064  
Income before taxes 36,984 32,944 30,911 25,776 24,623
Income taxes 13,172   11,439   10,867   8,931   8,468  
Net income 23,812 21,505 20,044 16,845 16,155
Preferred stock dividends       731   863  
Net income available to common shareholders $ 23,812   $ 21,505   $ 20,044   $ 16,114   $ 15,292  
 

PER COMMON SHARE DATA

Net income - basic $ 0.54 $ 0.49 $ 0.46 $ 0.37 $ 0.36
Net income - diluted 0.54 0.49 0.46 0.37 0.35
Cash dividend paid 0.14 0.13 0.25 0.12
Book value at quarter end 17.98 17.56 17.69 17.35 17.29
Tangible book value at quarter end* 13.71 13.25 13.35 12.97 12.90
 

OUTSTANDING COMMON SHARES

At period-end 44,089,962 43,835,881 43,614,942 43,290,323 43,252,383
Weighted average shares - basic 43,699,566 43,480,502 43,140,409 43,032,697 42,989,564
Weighted-average shares - diluted 44,284,844 43,908,287 43,428,382 43,198,076 43,120,077
 

SELECTED ANNUALIZED RATIOS

Return on average assets 1.28 % 1.17 % 1.08 % 0.88 % 0.86 %
Return on average common equity 12.13 11.08 10.68 8.55 8.22
Return on average tangible common equity* 16.01 14.63 14.23 11.45 11.07
Net FTE interest income to average earning assets 3.52 3.56 3.55 3.55 3.63
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

Consolidated Financial Summary - continued

(Unaudited, $ in thousands)

 
  2013   2012

BALANCE SHEET SUMMARIES

Sep 30   Jun 30   Mar 31 Dec 31   Sep 30
Assets:
Cash and cash equivalents $ 542,343 $ 368,217 $ 498,543 $ 801,332 $ 611,335
Investment securities 2,145,083 2,138,539 2,221,595 2,203,481 2,166,727
Loans held for investment:
Commercial real estate 1,441,297 1,447,145 1,469,302 1,497,272 1,513,784
Construction real estate 341,284 337,211 330,886 334,529 340,074
Residential real estate 841,707 804,200 758,480 708,339 639,235
Agricultural real estate 176,594 176,799 172,522 177,244 175,395
Consumer 672,184 652,944 636,364 636,794 629,757
Commercial 681,416 680,751 688,844 688,753 672,100
Agricultural 123,565 121,530 111,411 113,627 135,467
Other 1,912 2,498 1,307 912 1,359
Mortgage loans held for sale 52,133   74,286   55,443   66,442   72,880  
Total loans 4,332,092 4,297,364 4,224,559 4,223,912 4,180,051
Less allowance for loan losses 92,990   98,528   97,904   100,511   99,006  
Net loans 4,239,102   4,198,836   4,126,655   4,123,401   4,081,045  
Premises and equipment, net 179,785 181,940 185,237 187,565 188,851
Goodwill and intangible assets (excluding mortgage servicing rights) 188,569 188,925 189,281 189,637 189,994
Company owned life insurance 76,701 77,602 77,158 76,729 76,371
Other real estate owned, net 18,537 22,782 32,470 32,571 39,971
Mortgage servicing rights, net 13,518 13,304 13,006 12,653 12,334
Other assets 96,462   101,363   95,372   94,392   94,524  
Total assets $ 7,500,100   $ 7,291,508   $ 7,439,317   $ 7,721,761   $ 7,461,152  
 
Liabilities and stockholders' equity:
Deposits:
Non-interest bearing $ 1,503,969 $ 1,393,732 $ 1,406,892 $ 1,495,309 $ 1,443,773
Interest bearing 4,604,656   4,536,600   4,621,453   4,745,102   4,591,959  
Total deposits 6,108,625   5,930,332   6,028,345   6,240,411   6,035,732  
Securities sold under repurchase agreements 428,110 421,314 467,205 505,785 460,805
Accounts payable, accrued expenses and other liabilities 50,900 50,292 52,767 54,742 47,098
Long-term debt 37,128 37,139 37,150 37,160 37,170
Preferred stock pending redemption 50,000
Subordinated debentures held by subsidiary trusts 82,477   82,477   82,477   82,477   82,477  
Total liabilities 6,707,240   6,521,554   6,667,944   6,970,575   6,663,282  
Stockholders' equity:
Preferred stock 50,000
Common stock 283,352 279,232 274,929 271,335 270,553
Retained earnings 517,456 499,761 483,904 463,860 458,506
Accumulated other comprehensive income (loss) (7,948 ) (9,039 ) 12,540   15,991   18,811  
Total stockholders' equity 792,860   769,954   771,373   751,186   797,870  
Total liabilities and stockholders' equity $ 7,500,100   $ 7,291,508   $ 7,439,317   $ 7,721,761   $ 7,461,152  
 

CONSOLIDATED CAPITAL RATIOS

Total risk-based capital 16.68 %

(a)

16.29 % 15.91 % 15.59 % 16.52 %
Tier 1 risk-based capital 14.85

(a)

14.45 14.07 13.60 14.53
Tier 1 common capital to total risk-weighted assets 13.33

(a)

12.83 12.41 11.94 11.81
Leverage Ratio 10.01

(a)

9.73 9.24 8.81 9.56

Tangible common stockholders' equity to tangible assets(b)

8.26 8.18 8.03 7.46 7.67
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

Consolidated Financial Summary - continued

(Unaudited, $ in thousands)

 
  2013   2012

ASSET QUALITY

Sep 30   Jun 30   Mar 31 Dec 31   Sep 30
Allowance for loan losses $ 92,990 $ 98,528 $ 97,904 $ 100,511 $ 99,006
As a percentage of period-end loans 2.15 % 2.29 % 2.32 % 2.38 % 2.37 %
 
Net charge-offs during quarter $ 2,538 $ (249 ) $ 3,107 $ 6,495 $ 13,288
Annualized as a percentage of average loans 0.23 % (0.02 )% 0.30 % 0.62 % 1.26 %
 
Non-performing assets:
Non-accrual loans $ 94,015 $ 103,729 $ 98,594 $ 107,799 $ 122,931
Accruing loans past due 90 days or more 2,188   1,742   1,941   2,277   4,339  
Total non-performing loans 96,203 105,471 100,535 110,076 127,270
Other real estate owned 18,537   22,782   32,470   32,571   39,971  
Total non-performing assets 114,740 128,253 133,005 142,647 167,241
As a percentage of:
Total loans and OREO 2.64 % 2.97 % 3.12 % 3.35 % 3.96 %
Total assets 1.53 % 1.76 % 1.79 % 1.85 % 2.24 %
 

ASSET QUALITY TRENDS

  Provision for Loan Losses   Net Charge-offs   Allowance for Loan Losses  

Accruing Loans 30-89

Days Past Due

  Accruing TDRs   Non-Performing Loans   Non-Performing Assets
Q3 2010

$

18,000

$

12,092

$

120,236

$

47,966

$

26,630

$

175,378

$

210,674

Q4 2010 17,500 17,256 120,480 57,011 13,490 197,194 230,822
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
 

CRITICIZED LOANS

  Special Mention   Substandard   Doubtful   Total
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
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
 

(a) Preliminary estimate - may be subject to change.

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