First Interstate Bancsystem, Inc. · NASDAQ:FIBK
First Interstate Bancsystem — Investor Presentation (July 2020)
65 slides from First Interstate Bancsystem's investor presentation, Jul 28, 2020
Slide 1: Investor Presentation July 2020
Exhibit 99.1 Investor Presentation July 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 historical financial performance • Diversified client base tempers economic volatility • Strong core deposit funding • Conservative credit strategy, limiting exposure to larg
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 Paycheck Protection Program (PPP) • Application process up and running on April 3, 2020 • $1,206 million in applications processed through June 29, 2020 • $1,156 million in loans approved by the SBA through June 29, 2020 • $1,152 million in loans funded through June 2
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 2,425 $1,197 18% Mortgage* 149 $39.9 Consumer 2,782 $56 3% Total 5,207 $1,253 21% *This includes only on-balance sheet portfolio
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 60 30+ Years 7 Years Marcy D. Mutch Chief Financial Officer 60 30+ Years 13 Years Russell A. Lee Chief Banking Officer 64 40+ Years 2 Years Jodi Delahunt Hubbell Chief Op
Slide 10: Current Financial Performance
Current Financial Performance Page 10
Slide 11: Net Interest Margin
Net Interest Margin 4.00% 3.90% Key Performance Drivers 3.80% -0.08% • Fed Funds Rate cuts in March 0.11% • PPP loan yields 3.60% 3.52% • Lower new business yields -0.02% 3.40% -0.02% • Cash balance on hand -0.37% • Interest on newly issued subordinated debt 3.20% 3.00% Decrease Increase 11
Slide 12: Pre-Provision Net Revenue (PPNR)
Pre-Provision Net Revenue (PPNR) $80.0 2.50% $72.7 $70.0 $67.0 $66.5 $66.6 2.00% $60.0 2.04% $52.6 1.90% 1.85% $50.0 1.75% 1.50% 1.52% $40.0 $ Millions$ in 1.00% $30.0 $20.0 0.50% $10.0 - 0.00% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 PPNR 1 PPNR/Avg Assets (annualized) 1 Net Income Before Tax + Prov
Slide 13: Diversified Footprint
Diversified Footprint Page 13
Slide 14: 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 15: Attractive Markets
Attractive Markets Deposit Market Share and Branch Locations by State South State / Metric Idaho Montana Oregon Washington Wyoming Dakota % of Market Deposits 5.13% 17.72% 2.39% .12% .32% 15.43% Deposit Market 6th 2nd 11th 12th 32nd 1st Share Rank Number of Branches 24 48 32 16 18 18 Total Populatio
Slide 16: Attractive Markets: Historically Stable Employment
Attractive Markets: Historically Stable Employment MONTANA WYOMING SOUTH DAKOTA WASHINGTON 7.1% 7.6% 7.2% 9.8% (RANKED 8TH) (RANKED 14TH) (RANKED 9TH) (RANKED 30TH) OREGON 11.2% (RANKED 37TH) IDAHO 5.6% (RANKED 3RD) Best 5 States 1 Kentucky 4.3% 2 Utah 5.1% 3 Idaho 5.6% 4 North Dakota 6.1% 5 M
Slide 17: Solid Funding Base
Solid Funding Base Firstinterstate .BancSystem
Slide 18: Strong Core Deposit Base
Strong Core Deposit Base CDs > $100k 4% Time Other 5% Overview Demand Non- Interest Bearing Total Deposits $13.34 Billion 33% Savings 30% Total Core Deposits $12.85 Billion Cost of Deposits (Q2 2020) 14 basis points Demand Interest Bearing 28% Page 18 As of June 30, 2020
Slide 19: Source of Deposits
Source of Deposits Market Share* Market Share* Location Location Allocation of $13.34B of Deposits by State June 2019 June 2019 Laramie, WY 46% Jackson, WY 15% Oregon 17.4% Riverton, WY 45% Nampa, ID 15% Sheridan, WY 38% Kalispell, MT 14% Montana Missoula, MT 30% Coeur d’Alene, ID 11% Washington 38.
Slide 20: Balance of Consumer and Business Deposits
Balance of Consumer and Business Deposits 100% 90% 80% 45% 43% 43% 44% 44% 45% 45% 1 53% 70% 60% 50% Percent Percent (%) 40% 30% 55% 57% 57% 56% 56% 55% 55% 47% 20% 10% 0% 2014 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 Total Consumer Deposits Total Business Deposits 1 Shift due to PPP funds Page 20
Slide 21: Deposit Pricing Strategy
Deposit Pricing Strategy Cumulative deposit beta in the declining interest rate environment of 21% Beta Summary Beta Last 100bps Rate Cut 1% Cuts Last 150bps Rate Cuts 9% Last 225bps Rate Cuts 21% Last 25bps Rate Cut 42% Last 50bps Rate Cuts 31% Hikes Last 75bps Rate Cuts 30% Last 100bps Rate Cuts 2
Slide 22: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME CHANGE ($) NET INTEREST INCOME CHANGE (%) Net Interest Income Volatility - 12 Month Horizon Net Interest Income (NII) - Shocks $600 +400 bps 17.73% $550 $541 $521 +300 bps 13.41% $501 $500 $481 +200 bps $460 8.99% LIABILITY SENSITIVE ASSET SENSITIVE $450
Slide 23: Credit Portfolio
Credit Portfolio Firstinterstate -BancSystem
Slide 24: Diversified Loan Portfolio by Industry
Diversified Loan Portfolio by Industry Loan Mix Commercial All Other Construction $10.0 Billion in Loans 28% 11% Health Care and Agriculture RE Social Assistance 2% Wholesale Trade 11% 3% Commercial 26% Real Estate and Rental and Leasing Other Services (except Public 11% Administration) Commercial R
Slide 25: Loan Portfolio by State
Loan Portfolio by State As of June 30, 2020 Idaho 9% Other* 20% Montana 27% Wyoming 13% Washington 9% Oregon South Dakota 17% 5% * “Other” is an aggregation of central lines of business that includes residential mortgages, credit cards, and indirect consumer loans. Page 25
Slide 26: Trends in Unfunded Commitments
Trends in Unfunded Commitments Unfunded as a % of Commitment 65.0% 62.6% 60.7% 60.0% 59.4% 58.9% 59.1% 57.6% 57.9% 58.2% 56.5% 55.0% 52.1% 50.9% 50.0% 50.0% 49.4% 49.8% 49.3% 49.9% 48.8% 48.6% 45.0% 40.0% 39.5% 38.5% 38.2% 37.9% 37.3% 36.7% 36.9% 36.8% 35.0% 35.6% 30.0% Jun '18 Sep '18 Dec '18 Mar '
Slide 27: Trends in Unfunded Revolving Commitments
Trends in Unfunded Revolving Commitments Percentage Used / Unused (Revolving) Top Commitments by Loan Portfolio 70.0% (Revolving) 62.6% 1,200 60.7% 58.9% 59.1% 58.2% 60.0% 56.5% 1,000 50.0% 800 $859.2 600 40.0% 43.5% $353.7 41.1% 40.9% 41.8% Millions 39.3% 37.4% 400 30.0% $125.4 $62.9 $39.7 $27.2 $5
Slide 28: Stable Asset Quality
Stable Asset Quality Non-Performing Assets to Total Assets The improvement in asset quality ratios as of June 30, 0.80% 0.74% 2020 is partially attributable to the addition of PPP 0.70% 0.63% Loans. 0.60% 0.55% 0.54% 0.51% 0.51% 0.50% 0.50% 0.39% 0.39% 0.40% Excluding these loans, ratios would have
Slide 29: Criticized and Classified Loans
Criticized and Classified Loans Criticized Loans to Total Loans 6.00% 4.96% 5.01% 5.00% 4.74% 4.76% 4.60% 4.63% 4.34% 4.48% 4.00% 3.65% The decline in Criticized and Classified 3.00% ratios as of June 30, 2020 is partially attributed to the addition of PPP Loans. 2.00% 1.00% Excluding these loans, J
Slide 30: Top Borrowers
Top 10 Borrowers Borrower Industry Outstandings Unfunded Commitments Residential Property Managers $53,563,936 $32,150,945 $85,714,881 New Multifamily Housing Construction (except For-Sale Builders) $12,493,211 $46,476,926 $58,970,137 Support Activities for Oil and Gas Operations $46,858,101 $6,679,
Slide 31: Hospitality: Portfolio Exposure
Hospitality: Portfolio Exposure • 7.4% of total loan portfolio • $91.0 million in unfunded commitments • Hotels (except Casino Hotels) and Motels accounting for 57% of total portfolio NAICS Net Principal Month Description Unfunded Commitment Code Balance 721110Hotels (except Casino Hotels) and Motel
Slide 32: Hospitality: Industry Performance
Hospitality: Industry Performance • $70.7 million in criticized loan categories • $3.7 million in impaired loan categories • $12.1 million or 1.6% in allowance for credit losses • $21 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Hotels
Slide 33: Hotel Exposure by State
Hotel Exposure by State $180 • No hotel loan with a balance $162.1 greater than $20 Million. $160 $140 $133.8 • Approximately $94 Million of Hotel Portfolio Commitments are $120 currently in the construction $108.4 $105.5 phase. Millions $93.1 $100 $89.6 $80.0 $ in • Based on approval observations,
Slide 34: Hotel Outstandings by Risk Distribution
Hotel Outstandings by Risk Distribution Substandard 9% Special Mention 3% Pass-Watch 8% Pass 80% As of June 30, 2020 Page 34
Slide 35: Indirect Auto: Lending
Indirect Auto: Lending Consumer Indirect Production Indirect Loan Portfolio As of June 30, 2020 $400 7.0% New Auto, 6.8% 25.46% $350 6.6% 6.55% Used Auto, $300 43.61% 6.4% $250 6.2% Millions Other, 8.79% $200 5.99% 6.0% $ in 5.8% $150 5.74% $122.60 5.6% RV, 22.13% $104.0 $100 $78.40 5.4% $50 • Total
Slide 36: Indirect Auto: Delinquency
Indirect Auto: Delinquency Originations from a credit quality perspective • Approximately 58% of our originations are above a 750 FICO score • Approximately 86% 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 37: Agriculture: Portfolio Exposure
Agriculture: Portfolio Exposure • 5.1% of total loan portfolio • $140.8 million in unfunded commitments • Beef Cattle Ranching/Farming accounting for 44% of total portfolio NAICS Net Principal Month Description Unfunded Commitment Code Balance 112111 Beef Cattle Ranching and Farming $221,340,589 $65
Slide 38: Agriculture: Industry Performance
Agriculture: Industry Performance • $76.8 million in criticized loan categories • $10.5 million in impaired loan categories • $4.1 million or 0.8% allowance for credit losses • $99 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Beef Catt
Slide 39: Mall and Retail Trade: Portfolio Exposure
Mall and Retail Trade: Portfolio Exposure • $52.8 million direct exposure to Malls (0.5% of total loan portfolio) • None in criticized loan categories • $37.6 million direct exposure to Retail Trade (0.4% of total loan portfolio) • $3.8 million in criticized loan categories Net Principal Month NAICS
Slide 40: Oil and Gas: Industry Exposure
Oil and Gas: Industry Exposure • $62.4 million in direct exposure (0.6% of total loan portfolio) • $21.6 million in unfunded commitments • $11.5 million in criticized loans category NAICS Net Principal Month Description Unfunded Commitment Code Balance 213112Support Activities for Oil and Gas Operat
Slide 41: Oil and Gas: Industry Performance
Oil and Gas: Industry Performance • $4.2 million in impaired loan categories • $3.6 million or 5.7% allowance for credit losses • $2.0 million in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Support Activities for Oil and Gas Operations $2,258,229
Slide 42: Current Expected Credit Loss (CECL)
Current Expected Credit Loss (CECL) Page 42
Slide 43: CECL Results
CECL Results Moody’s Baseline Forecast Primary Economic Considerations Qualitative Factor Inputs • Reviewed and affirmed June 2020 Baseline • Unemployment Rate worsens – increase • Portfolio Characteristics forecast to 14% vs. 8.7% in Q1 • Industry Exposure – Energy • New infections peak in April –
Slide 44: ACL Allocation by Segment
ACL Allocation by Segment ($000) 1Q20 2Q20 Outstanding Outstanding Segments ACL ACL Rate ACL ACL Rate Balances* Balances* Agricultural $256,746 $1,128 0.44% $269,690 $970 0.36% Agricultural Credit Cards 1,659 4 0.24% $1,666 $8 0.48% Agriculture RE 225,831 2,605 1.15% $224,916 $3,088 1.37% CRE Non-Ow
Slide 45: Investment Portfolio
Investment Portfolio Page 45
Slide 46: Investment Portfolio
Investment Portfolio Portfolio Composition ($3.3B) Quarterly New Purchases: Average Yield 2.31% 2.38% 2.50% Fixed MBS 38% 1.97% 2.00% CMO 29% 1.49% 1.50% Treasury / Agency 8% 1.00% Corporate 8% 0.50% CMBS 6% 0.00% Q3-19 Q4-19 Q1-20 Q2-20 Municipal 5% Quarterly New Purchases: Duration A/L Floating MB
Slide 47: Non-Interest Income
Non-Interest Income Firstinterstate -BancSystem
Slide 48: Non-Interest Income
Non-Interest Income 24.5% of TOTAL REVENUE Other Income 10.8% Other Service Charges and Fees 7.3% Payment Services 23.4% Deposit Service Charges 9.1% Wealth Management 13.6% Mortgage Banking 35.8% Page 48 Quarter Ended June 30, 2020
Slide 49: Mortgage Production
Mortgage Production QUARTERLY PRODUCTION VOLUME $518.10 $700 $600 $500 $127.55 $400 $158.42 millions $161.39 $ in $53.05 $300 $57.42 $83.18 $53.65 $38.78 $48.45 $41.39 $69.35 $76.42 $200 $33.61 $247.61 $212.11 $214.30 $222.79 $228.37 $212.10 $100 $177.24 $183.28 $191.35 $195.86 $148.94 $163.65 $108.
Slide 50: Wealth Management
Wealth Management Total: $5.006 Billion Assets Under Administration $6,100 $5,600 $5,522 $975 $5,204 $5,100 $5,006 $2,554 millions $4,737 $ in $912 $4,600 $565 $4,100 $3,600 Q3 2019 Q4 2019 Q1 2020 Q2 2020 (in millions) Discretionary Non-Discretionary Brokerage Retirement Plan Page 50 As of March 31
Slide 51: Growth Strategies and Capital Allocation
Growth Strategies and Capital Allocation Page 51
Slide 52: 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 52
Slide 53: We are Delivering Results
We are Delivering Results Since the IPO in March 2010, FIBK has delivered a 194% total return to shareholders FIBK: TOTAL RETURN (03/23/2010 THROUGH 06/30/2020) 350 300 250 200 193.89 % 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 S
Slide 54: Appendix
Appendix First Interstate ~BancSystem
Slide 55: 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 56: 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 57: 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 58: 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 59: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) (Dollars in millions) Pre-Provision Net Revenue (PPNR) Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Net interest income (GAAP) $125.3 $125.5 $128.2 $123.1 $122.5 Plus: Noninterest income (GAAP) $37.6 $38.2 $35.1 $38.4 $39.7 Total revenues (GAAP) $162.9 $163.7 $163.3 $1
Slide 60: Idaho State GDP Overview
Idaho State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status ID GDP: Industry % Contribution Strengths Index Rank ➔ EXPANSION • Prominent drivers in high tech, agriculture. RECOVERY Government 101% 21 • Above-average population growth AT RISK Other services
Slide 61: Montana State GDP Overview
Montana State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status Strengths MT GDP: Industry % Contribution Index Rank ➔ EXPANSION • Year-round tourist attractions, including popular national parks. RECOVERY Government 100% 25 AGRICULTURE TOURIST ENERGY & • Re
Slide 62: Oregon State GDP Overview
Oregon State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status OR GDP: Industry % Contribution Strengths Index Rank ➔ EXPANSION • Diverse economy with strong export RECOVERY Government focus. 101% 22 • Low energy costs courtesy of a AT RISK TOURIST HIGH-TECH
Slide 63: 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 ➔ EXPANSION • Favorable business climate, low RECOVERY Government costs. 85% 50 TOURIST MEDICAL FINANCIAL • No state tax on personal inc
Slide 64: Washington State GDP Overview
Washington State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status WA GDP: Industry % Contribution Strengths Index Rank ➔ EXPANSION • Fast-growing software and IT RECOVERY industries. Government 96% 35 • Top-ranked public university that AT RISK Other servic
Slide 65: Wyoming State GDP Overview
Wyoming State GDP Overview Economic Drivers Strengths & Weaknesses Business Costs Business Cycle Status Strengths WY GDP: Industry % Contribution Index Rank EXPANSION • Abundant natural energy resources. • National parks, a magnet for ➔ RECOVERY Government domestic and international tourism. 99% 2
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