First Interstate Bancsystem, Inc. · NASDAQ:FIBK
First Interstate Bancsystem — Investor Presentation (October 2020)
64 slides from First Interstate Bancsystem's investor presentation, Oct 27, 2020
Slide 1: Investor Presentation October 2020
Investor Presentation October 2020
Slide 2: Safe Harbor
Safe Harbor This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve
Slide 3: FIBK Overview
FIBK Overview Overview Description • Headquartered in Billings, MT and focused on regional community banking in Idaho, Montana, Oregon, South Dakota, Washington, and Headquarters Billings, MT Wyoming: • Over 150 banking offices Kroll Rating (Subordinated Notes) BBB • 238 ATMs, plus 24,000 MoneyPass
Slide 4: Investment Highlights
Investment Highlights • Pandemic response: Our people, our clients and our communities • Experienced leadership team • Strong financial performance • Diversified client base tempers economic volatility • Strong core deposit funding • Conservative credit strategy, limiting exposure to large losses •
Slide 5: Pandemic Response – Our People
Pandemic Response – Our People • Continue with regular monitoring of state and local outbreaks and health-related orders • Continue to pay employees impacted by COVID-19 related issues (personal or family illness, etc.) • Continue with modified cleaning schedules, provided masks, hand sanitizers and
Slide 6: Pandemic Response – Our Clients (PPP)
Pandemic Response – Our Clients PPP Loan Balances Outstanding at 9/30/20 PPP by State Number of Total Dollars Average Loan Size Loans As of 9/30/2020 Under $150K 10,166 $370 million $ 36,000 South Dakota, Other, 2% 8% $150 - $350K 972 $219 million $ 225,000 Washington, $350K - $2MM 559 $421 million
Slide 7: Pandemic Response – Our Clients (Deferrals)
Pandemic Response – Our Clients Deferrals Forbearances $ Approved % of Portfolio $ Approved Type # Approved Type # Approved (in millions) Balance (in millions) Commercial 71 $71 .7% Mortgage* 24 $6 Consumer 277 $6 .3% Total 348 $77 .7% *Mortgage count and amounts includes retained and serviced loans
Slide 8: Pandemic Response – Our Communities
Pandemic Response – Our Communities • Additional $1 million pledged to support communities in addition to annual commitment of 2% of net income before taxes • Neighbors Feeding Neighbors program focused on addressing food insecurity; funds double matched by Foundation • Double match of money and vol
Slide 9: Experienced Leadership Team
Experienced Leadership Team Industry Years at Name Title Age Experience FIBK Kevin P. Riley President and Chief Executive Officer 61 30+ Years 7 Years Marcy D. Mutch Chief Financial Officer 61 30+ Years 14 Years Russell A. Lee Chief Banking Officer 64 40+ Years 5 Years Jodi Delahunt Hubbell Chief Op
Slide 10: Current Financial Performance
Current Financial Performance Page 10
Slide 11: Pre-Provision Net Revenue (PPNR)
Pre-Provision Net Revenue (PPNR) $74.0 2.50% $72.7 2.40% $72.0 2.30% $70.0 2.20% $68.2 2.10% $68.0 $67.0 2.00% 2.04% $66.5 $66.6 $ Millions$ in $66.0 1.90% 1.90% 1.85% 1.80% $64.0 1.75% 1.73% 1.70% $62.0 1.60% Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 PPNR 1 PPNR/Avg Assets (annualized) 1 Net Income B
Slide 12: Diversified Footprint
Diversified Footprint Page 12
Slide 13: The First Interstate Franchise
The First Interstate Franchise 2018 Inland Northwest Bank, filling in April 2019 footprint in the PNW $826.8 million 20 Branches Idaho Independent Bank (IIBK) $725 million 11 Branches Community 1st Bank (CMYF) 2016 $130 million 3 Branches Flathead Bank of Bigfork $225 million 7 Branches FIBK IIBK 20
Slide 14: Attractive Markets
Attractive Markets Deposit Market Share and Branch Locations by State South State / Metric Idaho Montana Oregon Washington Wyoming Dakota % of Market Deposits 4.66% 17.69% 2.34% .13% .32% 14.89% Deposit Market 8th 2nd 11th 12th 31st 2nd Share Rank Number of Branches 23 49 33 16 18 16 Total Populatio
Slide 15: Attractive Markets: Historically Stable Employment
Attractive Markets: Historically Stable Employment MONTANA WYOMING SOUTH DAKOTA WASHINGTON 5.3% 6.1% 4.1% 7.8% (RANKED 9TH) (RANKED 18TH) (RANKED 2ND) (RANKED 34TH) OREGON 8% (RANKED 35TH) IDAHO 6.1% (RANKED 16TH) Best 5 States 1 Nebraska 3.5% 2 South Dakota 4.1% 3 Vermont 4.2% 4 North Dakota
Slide 16: Solid Funding Base
Solid Funding Base Firstinterstate .BancSystem
Slide 17: Strong Core Deposit Base
Strong Core Deposit Base CDs > $100k Time Other 3% 5% Overview Demand Non- Total Deposits $13.88 Billion Savings Interest Bearing 30% 35% Total Core Deposits $13.45 Billion Cost of Deposits (Q2 2020) 10 basis points Demand Interest Bearing 27% Page 17 As of September 30, 2020
Slide 18: Source of Deposits
Source of Deposits MARKET MARKET Allocation of $13.88B of Deposits by State LOCATION SHARE* LOCATION SHARE* JUNE 2020 JUNE 2020 Laramie, WY 44% Jackson, WY 14% Oregon 17.4% Riverton, WY 45% Nampa, ID 13% Montana Sheridan, WY 37% Kalispell, MT 17% 37.6% Missoula, MT 29% Coeur d’Alene, ID 8% Washingto
Slide 19: Balance of Consumer and Business Deposits
Balance of Consumer and Business Deposits 100% 90% 80% 45% 43% 43% 44% 44% 46% 46% 50% 51% 70% 60% 50% Percent Percent (%) 40% 30% 55% 57% 57% 56% 56% 54% 54% 50% 49% 20% 10% 0% 2014 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 Total Consumer Deposits Total Business Deposits Page 19
Slide 20: Credit Portfolio
Credit Portfolio Firstinterstate -BancSystem Page 20
Slide 21: Diversified Loan Portfolio by Industry
Diversified Loan Portfolio by Industry Loan Mix Commercial All Other Construction $10.2 Billion in Loans 26% 12% Agriculture RE Wholesale Trade Health Care and 2% 3% Social Assistance 11% Commercial 25% Other Services (except Public Real Estate and Administration) Rental and Leasing 4% 11% Commercia
Slide 22: Loan Portfolio by State
Loan Portfolio by State Idaho 9% Other* 20% Montana 26% Wyoming 12% Washington 10% Oregon South Dakota 18% 5% * “Other” is an aggregation of central lines of business that includes residential mortgages, credit cards, and indirect consumer loans. As of September 30, 2020 Page 22
Slide 23: Trends in Unfunded Commitments
Trends in Unfunded Commitments Unfunded as a % of Commitment 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 35.0% 30.0% Sep '19 Oct '19 Nov '19 Dec '19 Jan '20 Feb '20 Mar '20 Apr '20 May '20 Jun '20 Jul '20 Aug '20 Sep '20 Revolving and Non-Revolving Lines of Credit Revolving Non-Revolving As of September 30,
Slide 24: Trends in Unfunded Revolving Commitments
Trends in Unfunded Revolving Commitments Percentage Used / Unused (Revolving) Commitments by Loan Portfolio (Revolving) 70.0% 1,200 62.6% 63.3% 60.7% 58.9% 59.1% 58.2% 1,000 60.0% 56.5% 800 50.0% 600 40.0% 43.5% Millions 41.1% 40.9% 41.8% 39.3% 400 37.4% 36.7% 30.0% 200 20.0% 0 10.0% 0.0% Mar 2019 J
Slide 25: Stable Asset Quality
Stable Asset Quality Non-Performing Assets to Total Assets The improvement in asset quality ratios between Q1 and 0.70% 0.63% Q2 is largely attributable to the addition of PPP Loans. 0.60% 0.55% 0.54% 0.51% 0.51% 0.50% 0.50% The slight improvement between Q2 and Q3 is primarily 0.39% 0.39% 0.40% 0.3
Slide 26: Criticized and Classified Loans
Criticized and Classified Loans Criticized Loans to Total Loans 6.00% 5.01% 5.00% 4.74% 4.76% 4.60% 4.63% 4.34% 4.48% 4.00% 3.65% 3.74% The decline in Criticized and Classified 3.00% ratios as between Q1 and Q2 is partially attributed to the addition of PPP Loans. 2.00% 1.00% The increase in Critici
Slide 27: Top Borrowers
Top 10 Borrowers Borrower Industry Outstandings Unfunded Commitments Residential Property Managers $51,079,873 $25,956,518 $77,036,391 New Multifamily Housing Construction (except For-Sale Builders) $18,901,111 $40,104,447 $59,005,558 Support Activities for Oil and Gas Operations $44,155,797 $6,548,
Slide 28: Hospitality: Portfolio Exposure
Hospitality: Portfolio Exposure • 7.5% of total loan portfolio • $74.4 million in unfunded commitments • Hotels (except Casino Hotels) and Motels accounting for 58% of total portfolio NAICS Net Principal Month Description Unfunded Commitment Code Balance 721110 Hotels (except Casino Hotels) and Mote
Slide 29: Hospitality: Portfolio Performance
Hospitality: Portfolio Performance • $94.2 million in criticized loan categories • $3.3 million in impaired loan categories • $13.1 million or 1.7% in allowance for credit losses • $20 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Hotel
Slide 30: Hotel Exposure by State
Hotel Exposure by State $180 • No hotel loan with a balance $159.5 greater than $20 Million. $160 $140 $135.5 • Approximately $93 Million of Hotel Portfolio Commitments are $120 $116.9 currently in the construction $102.4 $102.0 phase. Millions $100 $93.2 $ in $79.2 • Based on approval observations,
Slide 31: Hotel Outstandings by Risk Distribution
Hotel Outstandings by Risk Distribution Substandard 9% Special Mention 4% Pass Pass-Watch 65% 22% As of September 30, 2020 Page 31
Slide 32: Indirect Auto: Lending
Indirect Auto: Lending Consumer Indirect Production Indirect Loan Portfolio As of September 30, 2020 $400 7.0% New Auto, 6.8% 24.63% $350 Used Auto, 6.6% 43.54% $300 6.4% 6.32% $250 6.2% Millions $200 6.0% Other, $ in 9.00% 5.74% 5.65% 5.8% $150 $122.60 $110.60 5.6% $98.0 RV, $100 22.82% 5.4% $50 5.
Slide 33: Indirect Auto: Delinquency
Indirect Auto: Delinquency Originations from a credit quality perspective • Approximately 59% of our originations are above a 750 FICO score • Approximately 87% of our originations are above a 700 FICO score • Not participating in the subprime space; less than 1% of the portfolio has a score below 6
Slide 34: Agriculture: Portfolio Exposure
Agriculture: Portfolio Exposure • 4.9% of total loan portfolio • $151.4 million in unfunded commitments • Beef Cattle Ranching/Farming accounting for 43% of total portfolio NAICS Net Principal Month Description Unfunded Commitment Code Balance 112111 Beef Cattle Ranching and Farming $216,460,735 $71
Slide 35: Agriculture: Portfolio Performance
Agriculture: Portfolio Performance • $86.2 million in criticized loan categories • $10.7 million in impaired loan categories • $3.8 million or 0.8% allowance for credit losses • $99 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Beef Cat
Slide 36: Oil and Gas: Portfolio Exposure
Oil and Gas: Portfolio Exposure • $68.3 million in direct exposure (0.7% of total loan portfolio) • $21.5 million in unfunded commitments • $13.4 million in criticized loans category NAICS Net Principal Month Description Unfunded Commitment Code Balance 211120 Crude Petroleum Extraction $33,255,925
Slide 37: Oil and Gas: Portfolio Performance
Oil and Gas: Portfolio Performance • $5.4 million in impaired loan categories • $4.4 million or 6.4% allowance for credit losses • $2.7 million in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Crude Petroleum Extraction $9,534,084 28.7% $6,770,279
Slide 38: Mall and Retail Trade: Portfolio Exposure
Mall and Retail Trade: Portfolio Exposure • $53.7 million direct exposure to Malls (0.5% of total loan portfolio) • None in criticized loan categories • $36.2 million direct exposure to Retail Trade (0.4% of total loan portfolio) • $3.8 million in criticized loan categories Net Principal Month NAICS
Slide 39: Mall and Retail Trade: Portfolio Performance
Mall and Retail Trade: Portfolio Performance • $3.8 million in criticized loan categories • $0.3 million in impaired loan categories • $1.0 million or 1.1% allowance for credit losses • $85 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired
Slide 40: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL) Page 40
Slide 41: CECL Results
CECL Results Moody’s Baseline Forecast Primary Economic Considerations Qualitative Factor Inputs • Reviewed and affirmed September 2020 Baseline • Unemployment Rate stable but elevated • Portfolio Characteristics forecast – range bound at 8-9% until 2022 • Industry Exposure – Energy • New infections
Slide 42: ACL Allocation by Segment
ACL Allocation by Segment ($000) 2Q20 3Q20 Segments Outstandings* ACL ACL Rate Outstandings* ACL ACL Rate Agricultural $269,690 $970 0.36% $282,132 $943 0.33% Agricultural Credit Cards $1,666 $8 0.48% $1,605 $12 0.76% Agriculture RE $224,916 $3,088 1.37% $224,369 $2,870 1.28% CRE Non-Owner Occupied
Slide 43: Investment Portfolio
Investment Portfolio Page 43
Slide 44: Investment Portfolio
Investment Portfolio Portfolio Composition ($3.5B) Quarterly New Purchases: Average Yield 2.38% 2.50% Fixed MBS 37% 1.97% 2.00% CMO 27% 1.49% 1.49% 1.50% Treasury / Agency 8% 1.00% Corporate 8% 0.50% CMBS 6% 0.00% Q4-19 Q1-20 Q2-20 Q3-20 Municipal 8% Quarterly New Purchases: Duration A/L Floating MB
Slide 45: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME CHANGE ($) NET INTEREST INCOME CHANGE (%) NET INTEREST INCOME VOLATILITY - 12 MONTH HORIZON NET INTEREST INCOME (NII) - Shocks $600 +400 bps 25.61% $565 $550 $537 +300 bps 19.36% $508 +200 bps 13.03% $500 $480 $450 +100 bps 6.66% $450 LIABILITY SENSITIVE
Slide 46: Non-Interest Income
Non-Interest Income Firstinterstate .BancSystem
Slide 47: Non-Interest Income
Non-Interest Income 26.7% of TOTAL REVENUE Other Income 10.5% Other Service Charges and Fees Payment Services 11.2% 23.5% Deposit Service Charges 9.6% Wealth Management Mortgage Banking 13.2% 32.0% Page 47 Quarter Ended September 30, 2020
Slide 48: Mortgage Production
Mortgage Production QUARTERLY PRODUCTION VOLUME $518.19 $700 $296.84 $600 $500 $127.55 $400 $158.42 $161.39 $53.05 $300 $57.42 $83.18 $53.65 $38.78 $41.39 $48.45 $69.35 $76.42 $200 $33.61 $283.00 $247.61 $212.11 $214.30 $222.79 $228.37 $212.09 $100 $177.24 $183.28 $191.35 $195.86 $148.94 $163.65 $10
Slide 49: Wealth Management
Wealth Management Total: $4.935 Billion Assets Under Administration $6,100 $743 $5,600 $5,522 $5,006 $5,100 $4,935 $944 $2,691 millions $4,737 $ in $4,600 $557 $4,100 $3,600 Q4 2019 Q1 2020 Q2 2020 Q3 2020 (in millions) Discretionary Non-Discretionary Brokerage Retirement Plan Page 49 As of Septembe
Slide 50: Growth Strategies and Capital Allocation
Growth Strategies and Capital Allocation Page 50
Slide 51: Maximizing Shareholder Value
Maximizing Shareholder Value Management’s priority is to deploy capital through: Organic Growth Dividends M&A Return on Capital Special Share Dividend Repurchases Page 51
Slide 52: We are Delivering Results
We are Delivering Results Since the IPO in March 2010, FIBK has delivered a 206% total return to shareholders FIBK: TOTAL RETURN (03/23/2010 THROUGH 09/30/2020) 350 300 250 205.80 % 200 150 Percent (%) Percent 100 50 0 -50 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Slide 53: Appendix
Appendix First Interstate ~BancSystem
Slide 54: Historical Financial Performance Summary Results
Historical Financial Performance Summary Results Gross Loans ($000) Total Deposits ($000) vs. Loan/Deposits (%) Total Revenue ($000) $11,663,500 $9,031,600 $10,680,700 $644,900 $8,503,700 $9,934,871 $575,800 $7,614,355 $491,596 $7,376,110 $416,261 $5,478,544 74.27% 76.64% 79.62% 77.43% 2016Y 2017Y 2
Slide 55: Historical Financial Performance Summary Results
Historical Financial Performance Summary Results Net Income ($000) Earnings per Share ($) Tangible Book Value per Share ($) $2.83 $181,000 $2.75 $160,200 $19.96 $2.13 $2.05 $17.52 $16.92 $16.04 $106,521 $95,636 2016Y 2017Y 2018Y 2019Y 2016Y 2017Y 2018Y 2019Y 2016Y 2017Y 2018Y 2019Y ROAA (%) ROAE (%)
Slide 56: Historical Financial Performance Summary Results
Historical Financial Performance Summary Results NPAs / Assets (%) Texas Ratio (%) NPLs ($000) vs. NCOs/Avg. Loans (%) 10.36% $76,600 0.96% $72,500 8.45% $58,100 0.68% 6.39% $48,600 0.55% 0.23% 0.39% 4.15% 0.20% 0.16% 0.10% 2016Y 2017Y 2018Y 2019Y 2016Y 2017Y 2018Y 2019Y 2016Y 2017Y 2018Y 2019Y Tang
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation (Dollars in millions, except per share date) As of December 31, 2016 2017 2018 2019 Total common stockholders' equity (GAAP) $982.6 $1,427.6 $1,693.9 $2,013.9 Less goodwill and other intangible assets (excluding MSRs) $222.5 $521.8 $631.6 $711.7 Tangible Common Equity (Non-GA
Slide 58: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) (Dollars in millions) Pre-Provision Net Revenue (PPNR) Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net interest income (GAAP) $125.5 $128.2 $123.1 $122.5 $123.0 Plus: Noninterest income (GAAP) $38.2 $35.1 $38.4 $39.7 $44.7 Total revenues (GAAP) $163.7 $163.3 $161.5 $1
Slide 59: Idaho State GDP Overview
Idaho State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status ID GDP: Industry % Contribution Strengths Index Rank • Prominent drivers in high tech, MID EXPANSION Government agriculture. 103% LATE • Above-average population growth 17 RECOVERY Other services AG
Slide 60: Montana State GDP Overview
Montana State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status MT GDP: Industry % Contribution Strengths Index Rank • Year-round tourist attractions, MID including popular national parks. EXPANSION Government • Relatively low cost of doing 102% 21 LATE AGRICU
Slide 61: Oregon State GDP Overview
Oregon State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status OR GDP: Industry % Contribution Strengths Index Rank MID • Diverse economy with export focus. EXPANSION • Low energy costs courtesy of a Government 101% 22 LATE network of hydroelectric plants. REC
Slide 62: South Dakota State GDP Overview
South Dakota State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status SD GDP: Industry % Contribution Strengths Index Rank Favorable business climate, low MID • EXPANSION costs. Government 86% 50 LATE TOURIST MEDICAL FINANCIAL • No state tax on personal income.
Slide 63: Washington State GDP Overview
Washington State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status WA GDP: Industry % Contribution Strengths Index Rank Fast-growing software and IT MID • EXPANSION industries. Government 95% 37 LATE • Top-ranked public university that RECOVERY HIGH-TECH MANUF
Slide 64: Wyoming State GDP Overview
Wyoming State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status WY GDP: Industry % Contribution Strengths Index Rank • Abundant natural energy resources. MID • National parks, a magnet for EXPANSION Government domestic and international tourism. 100% 25 LATE A
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