First Interstate BancSystem, Inc. Q1 FY2026 earnings call

• Completed redesign of banking organization to a flatter, more streamlined model. - Reoriented branch network, including divestitures, closures, and openings. - Focused on disciplined earning asset growth. - Credit quality generally stable with modest decline in criticized loans. - Invested in digital channels and data management. - Brought new marketing partner and developing creative campaign.

Net income was $60.2 million, or 61 cents per diluted share in the first quarter. Net interest income decreased by $5.7 million to $200.7 million. Non-interest income was $41.1 million, a decrease from the prior quarter. Non-interest expense was $157.6 million, a decrease from the prior quarter. Loans decreased by $473.2 million. Total deposits decreased $205.3 million. Net charge-offs were $2.4 million, or six basis points of average loans. Criticized loans decreased $18.6 million. The ratio of loans held for investment to deposits was 67.3% at quarter end.

• Guidance generally consistent with prior quarter with little change to ranges for net interest income, noninterest income, and noninterest expense. - Anticipates decline in loan balances in second quarter with stabilization and modest growth in back half. - Anticipates benefit from fixed asset repricing over next couple of years with $2.6 billion of fixed and adjustable rate loans to mature or reprice and $2 billion of securities cash flows. - Anticipates sequential improvement in net interest margin each quarter in 2026 and into 2027.

Q: On loan growth and pipeline, A: Saw good pipeline activity, best in 18 months, stronger in Rocky Mountain region.

Q: On NPL interest reversal and loan yields, A: Decline was impact of 4Q rate cuts.

Q: On securities and cash position, A: Cash position may move due to deposit seasonality, will continue to be active in investment space.

Q: On weighted average rate on new loans and securities, A: Loans first quarter low sixes, later in quarter higher; new securities around 60 basis points.

Q: On deposit costs and opportunities, A: March interest-bearing deposit cost 155, expect settlement around that.

Q: On criticized portfolio, A: Stabilization in credit bucket, directionally improvement over long term.

Q: On payment services revenue, A: Bankers bringing deposits and partners, impact of consumer credit card outsourcing and seasonality.

Q: On data management and AI, A: Project to get one clean data source wraps up early summer, piloting business development tool with AI.

Q: On non-performer loan and ag trends, A: Loan called out has been on radar, ag lending had 100 million leave due to annual reviews, mixed impact from energy prices.

Q: On NII guide and earning assets, A: Guide implies range, back half better with deposit seasonality.

Q: On margin lift and movement, A: Sequential expansion expected, back half with tailwind.

Q: On credit and criticized portfolio, A: Not tied renewal to criticized portfolio movement.

Q: On deposits and sale impact, A: Nebraska sold deposits slightly lower, mostly seasonality for deposit range.

Q: On criticized portfolio dynamics, A: Living, breathing part with movement in and out.

Q: On buybacks and capital, A: View buybacks as important tool, active but dollar amount depends on circumstances.

Q: On NII cadence and factors, A: Back half better with branch transaction, day count and seasonality impact.

Q: On deposits and return to guide range, A: Mostly seasonality with slight year-over-year growth.

Q: On criticized portfolio movement, A: Dynamic with movement in and out.

Q: On average earning assets range, A: Guide in 24 to 24.5 range