First Interstate Bancsystem, Inc. · NASDAQ:FIBK
First Interstate Bancsystem — Investor Presentation (January 2021)
60 slides from First Interstate Bancsystem's investor presentation, Jan 28, 2021
Slide 1: Investor Presentation January 2021
Investor Presentation January 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 $17.7 Billion Trust Assets Under Management $5.2 Billion Total Deposits $14.2 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: 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 Page 6 Original PPP by State Original PPP Loan Balances Montana, 30% Oregon, 24%Wyoming, 17% Idaho, 11% Washington, 8% South Dakota, 8% Other, 2% Number of Loans Total Dollars Average Loan Size Under $150K 10,166 $ 370 million $ 36,000 $150K - $350K 972 $ 219 million
Slide 7: Pandemic Response – Our Clients (Deferrals)
Pandemic Response – Our Clients Page 7 Type # Approved $ Approved (in millions) Commercial 40 $ 17.5 Consumer 255 6.2 Total 295 $ 23.7 Commercial Booked Deferrals by Industry Type # Approved $ Approved (in millions) Mortgage 29 $ 9.0 Forbearances As of 12/31/2020 Deferrals Full-Service Restaurants,
Slide 8: Pandemic Response – Our Communities
Pandemic Response – Our Communities Page 8 • In 2020, an 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 mat
Slide 9: 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 10: Current Financial Performance
Page 10 Current Financial Performance
Slide 11: Pre-Provision Net Revenue (PPNR)
Pre-Provision Net Revenue (PPNR) Page 11 1 Net Income Before Tax + Provision Expense Decrease in PPNR in Q4 2020 is mainly due to a decrease in non-interest income of $10.8 million, partially offset by an $5.4 million increase in net interest income and $2.1 million decrease of non-interest expense.
Slide 12: Diversified Footprint
Page 12 Diversified Footprint
Slide 13: 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 branches2014 Mountain West Financial Corp. 2016 Flathead Bank of Bigfork
Slide 14: Attractive Markets
Attractive Markets Page 14 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
Slide 15: Attractive Markets: Historically Stable Employment
Attractive Markets: Historically Stable Employment Page 15 Best 5 States 1 Nebraska 3.1% 2 Vermont 3.1% 3 South Dakota 3.5% 4 Iowa 3.6% 5 New Hampshire 3.8% Worst 5 States 50 New Jersey 10.2% 49 Nevada 10.1% 48 Hawaii 10.1% 47 New York 8.4% 46 Louisiana 8.3% 0.0% to 4.0% 4.0% to 6.0% 6.0% to 8.0% So
Slide 16: Solid Funding Base
solid Funding Base Firstinterstate »BancSystem Page 16
Slide 17: Strong Core Deposit Base
Strong Core Deposit Base Page 17 As of December 31, 2020 Overview Total Deposits $14.2 Billion Total Core Deposits* $13.8 Billion Cost of Deposits (Q4 2020) 8 basis points Demand Non- Interest Bearing 33% Demand Interest Bearing 29% Savings 31% Time Other 4% CDs > $100k 3% *Core Deposits defined as
Slide 18: Source of Deposits
Source of Deposits Allocation of $14.2B of Deposits by State Page 18 *The market share percentages are per the FDIC, not including Credit Union Deposits within each community. As of December 31, 2020 Montana 38% South Dakota 8% Wyoming 21% Idaho 11% Washington 5% Oregon 17% LOCATION MARKET SHARE* JU
Slide 19: Balance of Consumer and Business Deposits
Balance of Consumer and Business Deposits 57% 57% 56% 56% 54% 54% 50% 49% 52% 43% 43% 44% 44% 46% 46% 50% 51% 48% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Total Consumer Deposits Total Business Deposits Page 19 Pe rc en t (% )
Slide 20: Credit Portfolio
Credit Portfolio Firstinterstate »BancSystem
Slide 21: 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 14% Construction RE 11% Consumer 10% Agriculture 3% Commercial 22% $9.8 Billion in Loans Real Estate and Rental and Leasing 13% Construction 11% Health
Slide 22: Loan Portfolio by State
Loan Portfolio by State Idaho 9% Montana 25% Oregon 17% South Dakota 5% Washington 10% Wyoming 12% Other* 22% Page 22 * “Other” is an aggregation of central lines of business that includes residential mortgages, credit cards, and indirect consumer loans. As of December 31, 2020
Slide 23: Trends in Unfunded Commitments
Trends in Unfunded Commitments Page 23 53.0% 65.7% 37.4% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% Jan '20 Feb '20 Mar '20 Apr '20 May '20 Jun '20 Jul '20 Aug '20 Sep '20 Oct '20 Nov '20 Dec '20 Unfunded as a % of Commitment Revolving and Non-Revolving Lines of Credit Revolving Non-Revol
Slide 24: Trends in Unfunded Revolving Commitments
Trends in Unfunded Revolving Commitments Page 24 65.7% 34.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020 Percentage Used / Unused (Revolving) Total Unfunded Commitments % Total Funded Commitments % 0 200 400 600 800 1,000 1,200 1,400
Slide 25: 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 0.55% 0.54% 0.51% 0.51% 0.39% 0.49% 0.39% 0.35% 0.29% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 202
Slide 26: Criticized and Classified Loans
Criticized and Classified Loans 4.74% 4.76% 4.60% 4.63% 4.34% 4.48% 3.65% 3.74% 3.49% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2.63% 2.56% 2.57% 2.69% 2.58% 2.80% 2.43% 2.19% 1.96% 0.00% 0.50% 1.00% 1.50
Slide 27: Top Relationships
Top 10 Relationships Page 27 Borrower Industry Outstandings Unfunded Commitments Other Activities Related to Real Estate $ 49,488,896 23,684,303 $ 73,173,199 Lessors of Residential Buildings and Dwellings $ 26,116,622 41,196,208 $ 67,312,830 Engineering Services $ 27,105,184 32,900,000 $ 60,005,184
Slide 28: Hospitality: Portfolio Exposure
Hospitality: Portfolio Exposure • 7.7% of total loan portfolio • $57.9 million in unfunded commitments • Hotel (except Casino Hotels) and Motel accounting for 60.6% of total portfolio Month NAICS Code Description Net Principal Balance Unfunded Commitment Dec 2020 721110 Hotels (except Casino Hotels)
Slide 29: Hospitality: Industry Performance
Hospitality: Industry Performance • $105.3 million in criticized loan categories • $3.4 million in impaired loan categories • $12.8 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 Page 30 $14.5 $115.4 $130.7 $23.9 $78.6 $94.2 $0.7 $14.5 $126.1 $149.2 $28.2 $82.1 $102.8 $0.7 $0 $20 $40 $60 $80 $100 $120 $140 $160 ID MT OR SD WA WY Other Outstanding Commitment • No hotel loan with a balance greater than $22 Million. • Approximately $84 Million of Hotel P
Slide 31: Hotel Outstandings by Risk Distribution
Hotel Outstandings by Risk Distribution Page 31 Pass 58% Pass-Watch 26% Special Mention 7% Substandard 9% As of December 31, 2020
Slide 32: Indirect Auto: Lending
Indirect Auto: Lending Consumer Indirect Production Indirect Loan Portfolio Page 32 As of December 31, 2020 • Total Portfolio Yield: 5.9% • Est. Average Life of RV: 44 months • Est. Average Life of Auto: 32 months $ in M il li on s New Auto 25% Other 9% RV 23% Used Auto 43% 6.0% 5.7% 5.4% 5.0% 5.2%
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 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 34: Agriculture: Portfolio Exposure
Agriculture: Portfolio Exposure • 4.8% of total loan portfolio • $163.9 million in unfunded commitments • Beef Cattle Ranching/Farming accounting for 41.1% of total portfolio Month NAICS Code Description Net Principal Balance Unfunded Commitment Dec 2020 112111 Beef Cattle Ranching and Farming $ 192
Slide 35: Agriculture: Industry Performance
Agriculture: Industry Performance • $65.5 million in criticized loan categories • $9.3 million in impaired loan categories • $3.4 million or 0.7% allowance for credit losses • $99 thousand in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Beef Cattl
Slide 36: Oil and Gas: Industry Exposure
Oil and Gas: Industry Exposure • $57.3 million in direct exposure (0.6% of total loan portfolio) • $18.6 million in unfunded commitments • $11.3 million in criticized loans category Month NAICS Code Description Net Principal Balance Unfunded Commitment Dec 2020 211120 Crude Petroleum Extraction $ 23
Slide 37: Oil and Gas: Industry Performance
Oil and Gas: Industry Performance • $3.7 million in impaired loan categories • $3.3 million or 5.8% allowance for credit losses • $1.7 million in specific reserves Description Criticized % Criticized Classified % Classified Impaired % Impaired Crude Petroleum Extraction $ 8,328,930 34.9% $ 6,258,689
Slide 38: Mall and Retail Trade: Portfolio Exposure
Mall and Retail Trade: Portfolio Exposure • $54.1 million direct exposure to Malls (0.6% of total loan portfolio) • None in criticized loan categories • $33.1 million direct exposure to Retail Trade (0.3% of total loan portfolio) • $4.3 million in criticized loan categories Month NAICS Code Descript
Slide 39: Mall and Retail Trade: Portfolio Performance
Mall and Retail Trade: Portfolio Performance • $4.3 million in criticized loan categories • $0.2 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)
Page 40 Current Expected Credit Loss (CECL)
Slide 41: CECL Results
CECL Results Page 41 • Reviewed and affirmed December 2020 Baseline forecast • 47.3M COVID-19 cases in total (21.7M currently) • 4x more cases than September forecast • Infections peak in December 2020. • Effective vaccine by February 2021 • Infections abate by September 2021 • Unemployment remains
Slide 42: ACL Allocation by Segment
ACL Allocation by Segment Page 42 ($000) 3Q20 4Q20 Segments Outstanding Balances* ACL ACL Rate Outstanding Balances* ACL ACL Rate Agricultural $ 282,132 $ 943 0.33% $ 246,190 $ 736 0.30% Agricultural Credit Cards 1,605 12 0.76% 1,593 6 0.36% Agriculture RE 224,369 2,870 1.28% 221,630 2,645 1.19% CRE
Slide 43: Investment Portfolio
Page 43 Investment Portfolio
Slide 44: Investment Portfolio
Investment Portfolio Quarterly New Purchases: Average Yield Quarterly New Purchases: Duration A/L Page 44 Portfolio Composition ($3.5 Billion) 1.4%1.5%1.5% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Q4-20Q3-20Q2-20Q1-20 8.70 8.05 5.06 6.65 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Q4-20Q3-20Q2
Slide 45: Interest Rate Sensitivity
Interest Rate Sensitivity Page 45 NET INTEREST INCOME CHANGE ($) NET INTEREST INCOME CHANGE (%) *Base Case assumes static balance sheet as of 12/31/20. Parallel rate shifts. $555 $526 $498 $467 $436 $406 $390 $300 $350 $400 $450 $500 $550 $600 +400 bps+300 bps+200 bps+100 bpsBase-100 bps-200 bps M i
Slide 46: Non-Interest Income
Non-Interest Income Firstinterstate »BancSystem
Slide 47: Non-Interest Income
Non-Interest Income Payment Services 33% Mortgage Banking 23% Wealth Management 19% Deposit Service Charges 13% Other Service Charges and Fees 6% Other Income 6% 20.9% of TOTAL REVENUE Page 47 Quarter Ended December 31, 2020
Slide 48: Mortgage Production
Mortgage Production QUARTERLY PRODUCTION VOLUME $- $100 $200 $300 $400 $500 $600 $700 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Purchase Refinance Page 48 As of December 31, 2020 M il li on s
Slide 49: Wealth Management
Wealth Management $2,832 $593 $976 $809 Total: $5,210 Million Discretionary Non-Discretionary Brokerage Retirement Plan $3,600 $3,800 $4,000 $4,200 $4,400 $4,600 $4,800 $5,000 $5,200 $5,400 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Assets Under Administration As of December 31, 2020 (in millions) Page 49 $ in
Slide 50: Growth Strategies and Capital Allocation
Page 50 Growth Strategies and Capital Allocation
Slide 51: Maximizing Shareholder Value
Maximizing Shareholder Value Management’s priority is to deploy capital through: Page 51 Return on Capital Organic Growth M&A Share Repurchases Special Dividend Dividends
Slide 52: We are Delivering Results
Page 52 295.78 % -50 0 50 100 150 200 250 300 350 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Pe rc en t (% ) FIBK: TOTAL RETURN (03/23/2010 THROUGH 12/31/2020) We are Delivering Results Since the IPO in March 2010, FIBK has delivered a 296% total return to sharehold
Slide 53: Appendix
Appendix FirstInterstate BancSystem
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation Page 54 (Dollars in millions) Pre-Provision Net Revenue (PPNR) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Net interest income (GAAP) $128.2 $123.1 $122.5 $123.0 $128.4 Plus: Noninterest income (GAAP) $35.1 $38.4 $39.7 $44.7 $33.9 Total revenues (GAAP) $163.3 $161.5 $162.2 $167.7
Slide 55: 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 56: Montana Economic Overview
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 57: Oregon Economic Overview
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 58: South Dakota Economic Overview
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 59: Washington Economic Overview
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 60: Wyoming Economic Overview
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
First Interstate Bancsystem — Investor Presentation (January 2021) on 6ix