First Interstate BancSystem Inc. Reports Operating Results (10-Q)

First Interstate BancSystem Inc. (NASDAQ:FIBK) filed Quarterly Report for the period ended 2010-06-30.

First Interstate Bancsystem Inc. has a market cap of $163.1 million; its shares were traded at around $13.13 . The dividend yield of First Interstate Bancsystem Inc. stocks is 3.4%.

Highlight of Business Operations:

We are a financial and bank holding company headquartered in Billings, Montana. As of June 30, 2010, we had consolidated assets of $7,225 million, deposits of $5,802 million, loans of $4,562 million and total stockholders equity of $740 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 and tourism.

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 and internally risk classified loans. Our non-performing assets increased to $200 million, or 4.35% of total loans and OREO, as of June 30, 2010, from $163 million, or 3.57% of total loans and OREO, as of December 31, 2009. Loan charge-offs, net of recoveries, totaled $11.5 million and $20.1million during the three and six months ended June 30, 2010, respectively, compared to $5.5 million and $10.2 million during the same respective periods in 2009, with all major loan categories reflecting increases. Based on our assessment of the adequacy of our allowance for loan losses, we recorded provisions for loan losses of $19.5 million and $31.4 million during the three and six months ended June, 30, 2010, respectively, compared to $11.7 million and $21.3 million during the same respective periods in 2009. Increased provisions for loan losses reflect our estimation of the effect of current economic conditions on our loan portfolio. During the first six months of 2010, we have continued to experience elevated provisions for loan losses and higher levels of non-performing assets, which will continue to affect our earnings. Given the current economic conditions and trends, management believes we will continue to experience higher levels of non-performing loans in future quarters, which will likely have an adverse impact on our business, financial condition, results of operations and prospects.

Net Interest Income. Deposit growth combined with corresponding increases in interest earning assets and stable market interest rates resulted in increases in net interest income, on a fully taxable equivalent, or FTE basis. Our FTE net interest income increased $3.9 million, or 6.4%, to $64.3 million for the three months ended June 30, 2010, as compared to $60.4 million for the same period in 2009 and increased $6.4 million, or 5.3%, to $127.1 million for the six months ended June 30, 2010, as compared to $120.8 million for the same period in 2009.

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