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First Interstate BancSystem Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 02:19PM
First Interstate BancSystem Inc. (FIBK) filed Quarterly Report for the period ended 2011-03-31.
Highlight of Business Operations:
We are a financial and bank holding company headquartered in Billings, Montana. As of March 31, 2011, we had consolidated assets of $7,429 million, deposits of $5,931 million, loans of $4,264 million and total stockholders equity of $742 million. We currently operate 72 banking offices in 42 communities located in Montana, Wyoming and western South Dakota. Through our bank subsidiary, First Interstate Bank, or the Bank, we deliver a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout our market areas. Our customers participate in a wide variety of industries, including energy, healthcare and professional services, education and governmental services, construction, mining, agriculture, retail and wholesale trade.
Challenging economic conditions continue to have a negative impact on businesses and consumers in some of our market areas. General declines in the real estate and housing markets resulted in continued deterioration in the credit quality of our loan portfolio, which is reflected by increases in non-performing loans. Our non-performing assets increased to $282 million, or 6.56% of total loans and OREO, as of March 31, 2011, from $244 million, or 5.55% of total loans and OREO, as of December 31, 2010. Loan charge-offs, net of recoveries, totaled $11 million during the three months ended March 31, 2011, as compared to $9 million during first quarter 2010, with the most significant increase occurring in commercial loans. Based on our assessment of the adequacy of our allowance for loan losses, we recorded provisions for loan losses of $15 million during first quarter 2011, compared to $12 million during first quarter 2010. Increased provisions for loan losses reflect our estimation of the effect of current economic conditions on and potential losses inherent in our loan portfolio. Given the current economic conditions and trends, management believes we will continue to experience high levels of non-performing loans in the near-term, which will likely have an adverse impact on our business, financial condition, results of operations and prospects.
Net Interest Income. Net interest income, on a fully taxable equivalent, or FTE, basis, increased $110 thousand, or 0.2%, to $62.9 million for the three months ended March 31, 2011, as compared to $62.8 million for the same period in 2010. Our net FTE interest margin decreased 27 basis points to 3.73% for the three months ended March 31, 2011, from 4.00% during the same period in the prior year. Compression in our net FTE interest margin ratio during first quarter 2011, as compared first quarter 2010, was largely attributable to a shift in the mix of interest earning assets from higher-yielding loans to lower-yielding investment securities, the effects of which were partially offset by a 46 basis point reduction in funding costs from March 31, 2010 to March 31, 2011.