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Sep 30, 2021
First Interstate Q3 2021 Earnings Report
Reported strong financial results driven by quality balance sheet growth, higher revenue, and disciplined expense management.
Key Takeaways
First Interstate BancSystem, Inc. reported a net income of $47.1 million, or $0.76 per share, for the third quarter of 2021. This compares to a net income of $42.5 million, or $0.69 per share, for the second quarter of 2021, and $48.3 million, or $0.76 per share, for the third quarter of 2020. The third quarter 2021 earnings include pre-tax acquisition costs of $6.6 million related to the pending acquisition of Great Western Bancorp, Inc., and accrued expenses of $1.2 million related to a settlement of a legal claim.
Entered into a definitive agreement to acquire all of the outstanding stock of Great Western, the parent company of GWB.
Total deposits increased $441.6 million, or 2.8%, to $16,007.3 million as of September 30, 2021 from $15,565.7 million as of June 30, 2021, resulting in a 11.1% annualized growth rate in deposits.
Asset quality further improved in the third quarter of 2021. Criticized loans were $251.2 million, as of September 30, 2021, resulting in a $22.2 million, or 8.1%, decrease from $273.4 million as of June 30, 2021, and a decrease of $128.1 million, or 33.8%, from $379.3 million as of September 30, 2020.
Net charge-offs decreased $0.5 million, or 45.5%, to $0.6 million, or an annualized 0.02% of average loans outstanding, as of September 30, 2021, from $1.1 million, or an annualized 0.04% of average loans outstanding, as of June 30, 2021, and decreased $4.0 million, or 87.0%, from $4.6 million, or an annualized 0.18% of average loans outstanding, as of September 30, 2020.
Forward Guidance
The Company expects to close the merger with Great Western Bancorp during the first quarter of 2022.
Positive Outlook
- Increase scale and efficiencies
- Improve diversification
- Provide exposure to many attractive markets that are experiencing strong growth
- Significant earnings accretion
- Improved returns resulting from the synergies projected from the merger
Challenges Ahead
- New, or changes in, governmental regulations or policies
- Tax legislative initiatives or assessments
- Changes in accounting standards
- Lending risks and risks associated with loan sector concentrations
- Supply-chain disruptions, labor shortages, and any other decline in economic conditions that could reduce demand for our products and services and negatively impact the credit quality of loans
Historical Earnings Impact
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Avg. Return Before/After Earnings
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