First Interstate Bancsystem, Inc. · NASDAQ:FIBK
First Interstate Bancsystem — Investor Presentation (April 2021)
57 slides from First Interstate Bancsystem's investor presentation, Apr 27, 2021
Slide 1: Investor Presentation April 2021
Investor Presentation April 2021 Exhibit 99.2
Slide 2: Safe Harbor
Safe Harbor Page 2 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
Slide 3: FIBK Overview
FIBK Overview Overview Headquarters Billings, MT Kroll Rating (Subordinated Notes) BBB Total Assets $18.4 Billion Trust Assets Under Management $5.7 Billion Total Deposits $15.1 Billion Description • Headquartered in Billings, MT and focused on regional community banking in Idaho, Montana, Oregon, S
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: Experienced Leadership Team
Name Title Age Industry Experience Years at 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 Operating Officer 55 30+ Years
Slide 6: The First Interstate Franchise
The First Interstate Franchise 1968 Mr. Homer Scott establishes First Interstate Bank with the purchase of the Bank of Commerce in Sheridan, Wyoming 2015 Absarokee Bancorporation, Inc. 2017 Bank of the Cascades $3.2 Billion 46 branches 2014 Mountain West Financial Corp. 2016 Flathead Bank of Bigfork
Slide 7: Attractive Markets
Attractive Markets Page 7 Deposit Market Share and Branch Locations by State Idaho % of Market Deposits 4.7% 17.7% 2.3% 0.1% 0.3% 14.9% Deposit Market Share Rank 8th 2nd 11th 12th 31st 2nd Number of Branches 23 49 33 16 18 16 Total Population 1,832,352 1,081,656 4,281,747 894,793 7,765,146 578,413 P
Slide 8: Attractive Markets: Historically Stable Employment
Attractive Markets: Historically Stable Employment Page 8 B est 5 States 1 Nebraska 2.9% 2 South Dakota 2.9% 3 Utah 2.9% 4 Vermont 2.9% 5 New Hampshire 3% Wo rst 5 States 50 Hawaii 9% 49 New York 8.5% 48 New M exico 8.3% 47 Connecticut 8.3% 46 California 8.3% 0.0% to 3.0% 3.0% to 4.0% 4.0% to 6.0% S
Slide 9: Solid Funding Base
Solid Funding Base First interstate -BancSystem Page 9
Slide 10: Strong Core Deposit Base
Strong Core Deposit Base Page 10 As of March 31, 2021 Overview Total Deposits $15.1 Billion Total Core Deposits* $14.9 Billion Cost of Interest-bearing deposits, incl. repos (Q1 2021) 9 basis points Demand Non- Interest Bearing 33% Demand Interest Bearing 29% Savings 31% Time, Other 6% Time, $250K a
Slide 11: Source of Deposits
Source of Deposits Allocation of $15.1B of Deposits by State Page 11 *The market share percentages are per the FDIC, not including Credit Union Deposits within each community. As of March 31, 2021 Montana 38% South Dakota 8% Wyoming 21% Idaho 11% Washington 5% Oregon 17% LOCATION MARKET SHARE* JUNE
Slide 12: Balance of Consumer and Business Deposits
Balance of Consumer and Business Deposits 57% 56% 56% 54% 52% 51% 43% 44% 44% 46% 48% 49% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2016 2017 2018 2019 2020 Q1 2021 Total Consumer Deposits Total Business Deposits Page 12 P e rc e n t (% )
Slide 13: Credit Portfolio
Credit Portfolio First interstate -BancSystem
Slide 14: Diversified Loan Portfolio by Industry
Diversified Loan Portfolio by Industry Loan Mix Commercial Commercial Real Estate & Construction Agriculture RE 2% Commercial RE 38% Residential RE 15% Construction RE 11% Consumer 10% Agriculture 2% Commercial 22% $9.9 Billion in Loans Real Estate and Rental and Leasing 13% Construction 11% Health
Slide 15: Loan Portfolio by State
Loan Portfolio by State Idaho 8% Montana 25% Oregon 17% South Dakota 5% Washington 11% Wyoming 11% Other* 23% Page 15 * “Other” is an aggregation of central lines of business that includes residential mortgages, credit cards, and indirect consumer loans. As of March 31, 2021
Slide 16: Trends in Unfunded Commitments
Trends in Unfunded Commitments Page 16 54.1% 67.3% 38.1% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% Apr '20 May '20 Jun '20 Jul '20 Aug '20 Sep '20 Oct '20 Nov '20 Dec '20 Jan '21 Feb '21 Mar '21 Unfunded as a % of Commitment Revolving and Non-Revolving Lines of Credit Revolving Non-Revol
Slide 17: Trends in Unfunded Revolving Commitments
Trends in Unfunded Revolving Commitments Page 17 67.3% 32.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020 Mar 2021 Percentage Used / Unused (Revolving) Total Unfunded Commitments % Total Funded Commitments % 0 200 400 600 800 1,000 1,200
Slide 18: Deferrals and Forbearances
Deferrals and Forbearances Page 18 Type # Approved $ Approved (in millions) Commercial 28 $ 16.5 Consumer 75 $ 1.6 Total 103 $ 18.1 Commercial Booked Deferrals by Industry Type # Approved $ Approved (in millions) Mortgage 23 $ 5.7 Forbearances As of 03/31/2021 Deferrals Arts, Entertainment, and Recr
Slide 19: Improving Asset Quality
Improving Asset Quality Non-Performing Loans to Total Loans Non-Performing Assets to Total Assets Non-Performing Assets to Total Loans + OREO 0.54% 0.51% 0.51% 0.39% 0.49% 0.39% 0.35% 0.29% 0.24% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 202
Slide 20: Criticized and Classified Loans
Criticized and Classified Loans 4.76% 4.60% 4.63% 4.34% 4.49% 3.65% 3.74% 3.49% 3.16% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 2.56% 2.57% 2.69% 2.58% 2.80% 2.43% 2.19% 1.96% 1.62% 0.00% 0.50% 1.00% 1.50
Slide 21: Top Relationships
Top 10 Relationships Page 21 Borrower Industry Outstandings Unfunded Commitments Risk Rating % Tier 1 Capital + ACL Other Activities Related to Real Estate $55,220,783 $21,403,246 $76,624,029 Acceptable 5.0% Lessors of Residential Buildings and Dwellings $30,072,736 $35,847,001 $65,919,737 Acceptabl
Slide 22: Hospitality: Portfolio Exposure
Hospitality: Portfolio Exposure • 8.3% of total loan portfolio • $42.5 million in unfunded commitments • Hotel (except Casino Hotels) and Motel accounting for 58.9% of total portfolio Month NAICS Code Description Net Principal Balance Unfunded Commitment March 2021 721110 Hotels (except Casino Hotel
Slide 23: Hospitality: Industry Performance
Hospitality: Industry Performance • $94.8 million in criticized loan categories • $6.2 million in impaired loan categories • $11.9 million or 1.5% in allowance for credit losses • $20 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Hotels
Slide 24: Hotel Exposure by State
Hotel Exposure by State Page 24 $14.5 $126.4 $138.0 $24.6 $80.6 $97.2 $0.7 $14.5 $133.1 $153.3 $26.9 $82.5 $102.5 $0.7 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 ID MT OR SD WA WY Other Outstanding Commitment • No hotel loan with a balance greater than $23 Million. • Approximately $85 Million of Ho
Slide 25: Hotel Outstandings by Risk Distribution
Hotel Outstandings by Risk Distribution Page 25 Pass 58% Pass-Watch 27% Special Mention 7% Substandard 8% As of March 31, 2021
Slide 26: Indirect Auto: Lending
Indirect Auto: Lending Consumer Indirect Production Indirect Loan Portfolio Page 26 As of March 31, 2021 • Total Portfolio Yield: 5.89% • Est. Average Life of RV: 45 months • Est. Average Life of Auto: 32 months $ i n M il li o n s New Auto 25% Other 9% RV 23% Used Auto 43% $78.12 $86.90 $78.02 5.99
Slide 27: Indirect Auto: Delinquency
Indirect Auto: Delinquency Originations from a credit quality perspective • Approximately 59% of our originations are above a 750 FICO score • Approximately 88% 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 28: Agriculture: Portfolio Exposure
Agriculture: Portfolio Exposure • 4.4% of total loan portfolio • $197.7 million in unfunded commitments • Beef Cattle Ranching/Farming accounting for 41.9% of total portfolio Month NAICS Code Description Net Principal Balance Unfunded Commitment March 2021 112111 Beef Cattle Ranching and Farming $ 1
Slide 29: Agriculture: Industry Performance
Agriculture: Industry Performance • $56.9 million in criticized loan categories • $8.6 million in impaired loan categories • $3.4 million or 0.8% allowance for credit losses • $98 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Beef Cattl
Slide 30: Oil and Gas: Industry Exposure
Oil and Gas: Industry Exposure • $52.7 million in direct exposure (0.5% of total loan portfolio) • $13.8 million in unfunded commitments • $7.0 million in criticized loans category Month NAICS Code Description Net Principal Balance Unfunded Commitment March 2021 213112 Support Activities for Oil and
Slide 31: Oil and Gas: Industry Performance
Oil and Gas: Industry Performance • $2.3 million in impaired loan categories • $1.7 million or 3.2% allowance for credit losses • $22 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Support Activities for Oil and Gas Operations $ 2,866,80
Slide 32: Mall and Retail Trade: Portfolio Exposure
Mall and Retail Trade: Portfolio Exposure • $54.1 million direct exposure to Malls (0.5% of total loan portfolio) o None in criticized loan categories • $33.3 million direct exposure to Retail Trade (0.3% of total loan portfolio) o $1.8 million in criticized loan categories Month NAICS Code Descript
Slide 33: Mall and Retail Trade: Portfolio Performance
Mall and Retail Trade: Portfolio Performance • $1.8 million in criticized loan categories • $0.2 million in impaired loan categories • $0.9 million or 1.0% allowance for credit losses • $85 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired
Slide 34: Current Expected Credit Loss (CECL)
Page 34 Current Expected Credit Loss (CECL)
Slide 35: CECL Results
CECL Results Page 35 • Reviewed and affirmed March 2021 Baseline forecast, noted convergence with Consensus • Herd immunity achieved by summer • Fed rates remain low • Oil rises to $50-60 / Barrel through 2022 • Stimulus provides additional boost to economy • Last quarter baseline assumed only $900m
Slide 36: ACL Allocation by Segment
ACL Allocation by Segment Page 36 *Variance between modeled loan outstanding balances and total loans are primarily Paycheck Protection Program Loans, New Market Tax Credits and overdrafts. Totals may not sum due to rounding and/or non-disclosed segments. As of March 31, 2021 Allowance for Credit Lo
Slide 37: Investment Portfolio
Page 37 Investment Portfolio
Slide 38: Investment Portfolio
Investment Portfolio Quarterly New Purchases: Average Yield Quarterly New Purchases: Duration A/L Page 38 Portfolio Composition ($4.93 Billion) 1.2% 1.4% 1.5%1.5% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% Q1-21Q4-20Q3-20Q2-20 4.45 8.70 8.05 5.06 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 1
Slide 39: Interest Rate Sensitivity
Interest Rate Sensitivity Page 39 NET INTEREST INCOME CHANGE ($) NET INTEREST INCOME CHANGE (%) *Base Case assumes static balance sheet as of 3/31/21. Parallel rate shifts. 25.50% 19.16% 12.76% 6.46% 0.00% -7.54% -11.99% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% +400 bps +300 b
Slide 40: Well Positioned to Benefit from Higher Rates
Well Positioned to Benefit from Higher Rates Page 40 • 31.6% Increase in Core Deposits (Q1-21 vs. Q1-20) • 9 BPS Interest Bearing Deposit Costs, incl. repos (Q1 2021) • $1.9B Excess Liquidity (03-31-21) Deposit Betas P o te n ti a l In c re a s e i n In v e s tm e n t S e c u ri ti e s 10% 20% 30%*
Slide 41: Current Financial Performance
Page 41 Current Financial Performance
Slide 42: Pre-Provision Net Revenue (PPNR)
Pre-Provision Net Revenue (PPNR) Page 42 $66.5 $66.6 $68.2 $64.9 $60.4 1.85% 1.75% 1.73% 1.60% 1.37% 1.20% 1.40% 1.60% 1.80% 2.00% 2.20% 2.40% $58.0 $60.0 $62.0 $64.0 $66.0 $68.0 $70.0 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 $ i n M il li o n s PPNR PPNR/Avg Assets (annualized) 1 Net Income Before T
Slide 43: Net Interest Margin Analysis: Contribution to Change
Net Interest Margin Analysis: Contribution to Change Page 43 3.25% 3.04%-10 BPS -4 BPS -1 BPS 3 BPS -15 BPS 6 BPS 0 BPS 0 BPS 2.00% 2.20% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% Q4-20 Loan Rate Investment Rate Cash Rate Deposit Rate Loans Investments Cash Deposits Q1-21 NET INTEREST MARGIN CONTRIBUTION:
Slide 44: Non-Interest Income
Non-Interest Income Payment Services 26.8% Mortgage Banking 30.4% Wealth Management 16.5% Deposit Service Charges 10.0% Other Service Charges and Fees 5.5% Other Income 10.8% 24.0% of TOTAL REVENUE Page 44 Quarter Ended March 31, 2021
Slide 45: Mortgage Production
Mortgage Production QUARTERLY PRODUCTION VOLUME 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% $- $100 $200 $300 $400 $500 $600 $700 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Purchase Refinance % Sold to the Secondary Market Page 45 As of March 31, 2021 M il
Slide 46: Wealth Management
Wealth Management $3,509 $600 $1,040 $506 Total: $5,655 Million Discretionary Non-Discretionary Brokerage Retirement Plan $3,600 $4,100 $4,600 $5,100 $5,600 $6,100 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Assets Under Administration As of March 31, 2021 (in millions) Page 46 $ i n m il li o n s
Slide 47: Growth Strategies and Capital Allocation
Page 47 Growth Strategies and Capital Allocation
Slide 48: Maximizing Shareholder Value
Maximizing Shareholder Value Management’s priority is to deploy capital through: Page 48 Return on Capital Organic Growth M&A Share Repurchases Special Dividend Dividends
Slide 49: We are Delivering Results
Page 49 351.28 % -100 -50 0 50 100 150 200 250 300 350 400 450 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 P e rc e n t (% ) FIBK: TOTAL RETURN (03/23/2010 THROUGH 03/31/2021) We are Delivering Results Since the IPO in March 2010, FIBK has delivered a 351% tot
Slide 50: Appendix
Appendix First Interstate « BancSystem Page 50
Slide 51: Non-GAAP Reconciliation
Non-GAAP Reconciliation Page 51 (Dollars in millions) Pre-Provision Net Revenue (PPNR) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Net interest income (GAAP) $123.1 $122.5 $123.0 $128.4 $120.7 Plus: Noninterest income (GAAP) $38.4 $39.7 $44.7 $33.9 $38.1 Total revenues (GAAP) $161.5 $162.2 $167.7 $162.3
Slide 52: Idaho Economic Overview
Business Cycle Status RECOVERY MID EXPANSION LATE EXPANSION AT RISKIN RECESSION Idaho Economic Drivers Strengths & Weaknesses Business Costs Vitality U.S.=100% Best=1, Worst=51 Summary of Key Indicators: Idaho State GDP Overview Economic Growth U.S.=100% Highest=1, Lowest=51 0% 5% 10% 15% Agricultur
Slide 53: Montana
Montana ENERGY & RESOURCES Strengths • Year-round tourist attractions, including popular national parks. • Relatively low cost of doing business. • Population growth is stronger for longer; housing and consumer industries benefit. Weaknesses • Far from major markets. • Below-average incomes. • Agric
Slide 54: Oregon
Strengths • Diverse economy with export focus. • Low energy costs courtesy of a network of hydroelectric plants. • Leader in semiconductor production, for which • global demand is strong. Weaknesses • Strict environmental regulations that raise business costs. • Above-average employment volatility.
Slide 55: South Dakota
South Dakota U.S.=100% Best=1, Worst=51 U.S.=100% Highest=1, Lowest=51 0% 5% 10% 15% Agriculture Mining Utilities Construction Manufacturing Wholesale Retail Transportation Information Finance/Insurance Real Estate Professional Educational Health Arts Accommodation Other services Government SD GDP:
Slide 56: Washington
Washington U.S.=100% Best=1, Worst=51 U.S.=100% Highest=1, Lowest=51 0% 5% 10% 15% Agriculture Mining Utilities Construction Manufacturing Wholesale Retail Transportation Information Finance/Insurance Real Estate Professional Educational Health Arts Accommodation Other services Government WA GDP: In
Slide 57: Wyoming
Wyoming U.S.=100% Best=1, Worst=51 U.S.=100% Highest=1, Lowest=51 0% 5% 10% 15% 20% 25% Agriculture Mining Utilities Construction Manufacturing Wholesale Retail Transportation Information Finance/Insurance Real Estate Professional Educational Health Arts Accommodation Other services Government WY GD
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