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FIBK

First Interstate BancSystem NasdaqGS:FIBK Stock Report

Last Price

US$41.49

Market Cap

US$4.4b

7D

-0.8%

1Y

6.7%

Updated

24 Sep, 2022

Data

Company Financials +
FIBK fundamental analysis
Snowflake Score
Valuation2/6
Future Growth4/6
Past Performance1/6
Financial Health6/6
Dividends4/6

FIBK Stock Overview

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States.

First Interstate BancSystem Competitors

Price History & Performance

Summary of all time highs, changes and price drops for First Interstate BancSystem
Historical stock prices
Current Share PriceUS$41.49
52 Week HighUS$45.33
52 Week LowUS$32.40
Beta0.95
1 Month Change1.99%
3 Month Change9.39%
1 Year Change6.66%
3 Year Change3.16%
5 Year Change8.47%
Change since IPO164.27%

Recent News & Updates

Aug 06

First Interstate BancSystem: Benefits From Acquisition, Organic Growth Appear Priced-In

Apart from the acquisition in the first quarter, First Interstate BancSystem's organic growth will also boost the loan portfolio size in 2022 and 2023. Higher interest rates will lift the margin. However, higher rates will also reduce the equity book value. I’ve revised downwards my book value per share estimate. The December 2022 target price suggests a small downside from the current market price. Further, FIBK is offering a decent dividend yield. Earnings of First Interstate BancSystem, Inc. (FIBK) will most probably benefit from the first quarter's acquisition of Great Western Bancorp. Further, decent organic loan growth will likely support the bottom line. Moreover, the margin will benefit from the rising rate environment and the topline’s moderate rate sensitivity. Overall, I'm expecting First Interstate BancSystem to report adjusted earnings of $2.72 per share for 2022, up 6% year-over-year. For 2023, I'm expecting earnings to grow by 52% to $4.12 per share. The year-end target price is close to the current market price. Therefore, I'm downgrading First Interstate BancSystem to a hold rating. Following The Outsized Acquisition, Organic Growth Will Boost The Loan Portfolio First Interstate BancSystem reported decent organic loan growth of 1.5% in the second quarter, or 5.9% annualized, following the merger of equals in the first quarter of 2022. The management is optimistic that it can achieve mid-single-digit annualized loan growth for the second half of 2022, as mentioned in the July presentation. Given that loan growth, excluding acquisitions, has remained in the mid-single-digit range in the past, the management's target appears achievable. Strong job markets will also make the loan growth target easy to achieve. First Interstate operates in several states; therefore, the national average for the unemployment rate is appropriate to gauge the company's product demand. As shown below, the unemployment rate is near record lows. This near-full employment will support loan growth. US Unemployment Rate data by YCharts However, the U.S. leading economic indicator maintained by the Conference Board continued its downtrend in June 2022, which is bad news for loan growth. Further, high interest rates will naturally dampen borrowers’ appetite for credit. Considering the factors mentioned above, I'm expecting organic loan growth to return to the mid-single-digit range during the second half of 2022 and the full year of 2023. I'm expecting the loan portfolio to grow by 88% in 2022 (including 86 percentage points from the Great Western bank acquisition) and 4% in 2023. Revising Downwards The TBVPS Estimate The growth of other balance sheet items will most probably trail loan growth. Tangible book value per share declined by 4.3% in the second quarter mostly because the rising interest rates reduced the value of securities. Going forward, the value of securities will decline further which will pressurize the tangible book value per share. In my last report on First Interstate BancSystem which was published back in December 2021, I estimated a tangible book value per share of $25.8 per share for December 2022. I've now slashed it because the interest rate trend so far this year has been different from what I anticipated at the end of 2021. The tangible book value per share has already fallen from $20.83 at the end of December 2021 to $18.92 at the end of June 2022, and I'm expecting it to suffer further from the rising rate environment. The following table shows my balance sheet estimates. FY18 FY19 FY20 FY21 FY22E FY23E Financial Position Net Loans 8,431 8,858 9,663 9,209 17,283 17,984 Growth of Net Loans 11.8% 5.1% 9.1% (4.7%) 87.7% 4.1% Other Earning Assets 3,255 3,988 6,150 8,714 12,072 12,563 Deposits 10,681 11,664 14,217 16,270 27,404 28,516 Borrowings and Sub-Debt 815 798 1,291 1,251 1,549 1,612 Common equity 1,694 2,014 1,960 1,987 3,186 3,456 Book Value Per Share ($) 29.1 31.5 30.8 32.2 29.2 31.7 Tangible BVPS ($) 18.7 21.8 21.0 21.0 17.9 20.4 Source: SEC Filings, Author's Estimates (In USD million unless otherwise specified) Net Interest Income Appears Moderately Rate Sensitive Around half of the loan portfolio will mature or re-price within a year, according to details given in the July presentation. In comparison, around 63% of the deposit book will re-price soon after every rate hike as it comprises savings and interest-bearing demand accounts. Nevertheless, the management was confident that the increase in earning asset yields will exceed any increase in the funding cost, as mentioned in the conference call. The management’s expectation is not unreasonable because currently there is a lot of liquidity industrywide, which gives banks higher-than-usual power to price deposits. This pricing power will wane in the next two quarters as businesses will chase yields and shift their cash in the bank into treasury securities. The management’s income simulation model predicted that net interest income could increase by 2.78% over twelve months on an immediate 100 basis points shock, assuming a static balance sheet, as mentioned in the second quarter’s 10-Q Filing. I'm expecting the fed funds rate to increase by a further 75 basis points in the remainder of the year and then to start declining by the mid of 2023. Considering these factors, I'm expecting the net interest margin to grow by 30 basis points in the second half of 2022 and then remain mostly stable next year. Economic Factors To Lift Provisioning For Expected Loan Losses Allowances were 200.5% of non-performing loans at the end of June 2022, which is a comfortable position when compared with peer banks. However, historically First Interstate has kept a large cushion. In the second quarter of 2021 for instance, the allowances were 380.6% of non-performing loans. Therefore, there is reason to believe that First Interstate will want to bolster its reserves especially because of heightened interest rates and the possibility of a recession. Fortunately, a majority of the portfolio is backed by real estate; therefore, the asset quality cannot dip too low. I'm expecting the provisioning to be a bit higher than the historical norm in the second half of 2022 and the full year of 2023. I'm expecting the net provision expense to make up 0.20% of total loans (on an annualized basis) in the last two quarters of 2022 and throughout 2023. In comparison, the net provision expense averaged 0.17% in the last five years. Expecting Earnings To Grow By 6% The first quarter's acquisition, organic loan growth, and slight margin expansion will likely lift earnings this year. On the other hand, higher provision expenses will likely drag the bottom line. Overall, I'm expecting First Interstate BancSystem to report earnings of $2.72 per share for 2022 after adjusting for merger-related expenses, up 6% year-over-year. On a GAAP basis, I’m expecting FIBK to report earnings of $2.15 per share in 2022. For 2023, I'm expecting earnings to grow by 52% to $4.12 per share. The following table shows my income statement estimates. FY18 FY19 FY20 FY21 FY22E FY23E Income Statement Net interest income 433 495 497 488 931 1,061 Provision for loan losses 9 14 57 (15) 76 32 Non-interest income 139 143 157 151 202 207 Non-interest expense 356 389 388 406 757 660 Net income - Common Sh. 160 181 161 192 235 449 EPS - Diluted ($) 2.75 2.83 2.53 3.11 2.15 4.12 Normalized EPS - Diluted ($) 2.35 2.50 2.15 2.56 2.72 4.12 Source: SEC Filings, Earnings Releases, Author's Estimates, Seeking Alpha for Historical Normalized EPS (In USD million unless otherwise specified)

Shareholder Returns

FIBKUS BanksUS Market
7D-0.8%-5.8%-5.2%
1Y6.7%-21.7%-23.0%

Return vs Industry: FIBK exceeded the US Banks industry which returned -21.7% over the past year.

Return vs Market: FIBK exceeded the US Market which returned -23.1% over the past year.

Price Volatility

Is FIBK's price volatile compared to industry and market?
FIBK volatility
FIBK Average Weekly Movement2.6%
Banks Industry Average Movement3.4%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: FIBK is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: FIBK's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19712,358Kevin Rileyhttps://www.fibk.com

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans.

First Interstate BancSystem Fundamentals Summary

How do First Interstate BancSystem's earnings and revenue compare to its market cap?
FIBK fundamental statistics
Market CapUS$4.43b
Earnings (TTM)US$128.90m
Revenue (TTM)US$787.40m

34.4x

P/E Ratio

1.4x

P/B Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
FIBK income statement (TTM)
RevenueUS$787.40m
Cost of RevenueUS$0
Gross ProfitUS$787.40m
Other ExpensesUS$658.50m
EarningsUS$128.90m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.21
Gross Margin100.00%
Net Profit Margin16.37%
Debt/Equity Ratio49.4%

How did FIBK perform over the long term?

See historical performance and comparison

Dividends

4.0%

Current Dividend Yield

104%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is FIBK undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FIBK?

Other financial metrics that can be useful for relative valuation.

FIBK key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenuen/a
Enterprise Value/EBITDAn/a
PEG Ratio0.7x

Price to Earnings Ratio vs Peers

How does FIBK's PE Ratio compare to its peers?

FIBK PE Ratio vs Peers
The above table shows the PE ratio for FIBK vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average16.5x
HOMB Home Bancshares (Conway AR)
20.6x45.6%US$4.7b
ONB Old National Bancorp
23.5x66.2%US$4.9b
FNB F.N.B
11.4x22.2%US$4.1b
UMPQ Umpqua Holdings
10.4x36.6%US$3.8b
FIBK First Interstate BancSystem
34.4x50.8%US$4.4b

Price-To-Earnings vs Peers: FIBK is expensive based on its Price-To-Earnings Ratio (34.4x) compared to the peer average (16.5x).


Price to Earnings Ratio vs Industry

How does FIBK's PE Ratio compare vs other companies in the US Banks Industry?

Price-To-Earnings vs Industry: FIBK is expensive based on its Price-To-Earnings Ratio (34.4x) compared to the US Banks industry average (9.7x)


Price to Earnings Ratio vs Fair Ratio

What is FIBK's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FIBK PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio34.4x
Fair PE Ratio28x

Price-To-Earnings vs Fair Ratio: FIBK is expensive based on its Price-To-Earnings Ratio (34.4x) compared to the estimated Fair Price-To-Earnings Ratio (28x).


Share Price vs Fair Value

What is the Fair Price of FIBK when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FIBK ($41.49) is trading below our estimate of fair value ($94.88)

Significantly Below Fair Value: FIBK is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is First Interstate BancSystem forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


50.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FIBK's forecast earnings growth (50.8% per year) is above the savings rate (1.9%).

Earnings vs Market: FIBK's earnings (50.8% per year) are forecast to grow faster than the US market (14.7% per year).

High Growth Earnings: FIBK's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: FIBK's revenue (19.5% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: FIBK's revenue (19.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FIBK's Return on Equity is forecast to be low in 3 years time (13.2%).


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Past Performance

How has First Interstate BancSystem performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


7.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FIBK has a large one-off loss of $119.2M impacting its June 30 2022 financial results.

Growing Profit Margin: FIBK's current net profit margins (16.4%) are lower than last year (29.8%).


Past Earnings Growth Analysis

Earnings Trend: FIBK's earnings have grown by 7% per year over the past 5 years.

Accelerating Growth: FIBK's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FIBK had negative earnings growth (-31.8%) over the past year, making it difficult to compare to the Banks industry average (8.7%).


Return on Equity

High ROE: FIBK's Return on Equity (3.9%) is considered low.


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Financial Health

How is First Interstate BancSystem's financial position? (This company is analysed differently as a bank or financial institution)

Financial Health Score

6/6

Financial Health Score 6/6

  • Asset Level

  • Allowance for Bad Loans

  • Low Risk Liabilities

  • Loan Level

  • Low Risk Deposits

  • Level of Bad Loans

Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet


Financial Institutions Analysis

Asset Level: FIBK's Assets to Equity ratio (9.8x) is low.

Allowance for Bad Loans: FIBK has a sufficient allowance for bad loans (201%).

Low Risk Liabilities: 93% of FIBK's liabilities are made up of primarily low risk sources of funding.

Loan Level: FIBK has an appropriate level of Loans to Assets ratio (53%).

Low Risk Deposits: FIBK's Loans to Deposits ratio (63%) is appropriate.

Level of Bad Loans: FIBK has an appropriate level of bad loans (0.6%).


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Dividend

What is First Interstate BancSystem current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Future Dividend Coverage


3.95%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: FIBK's dividend (3.95%) is higher than the bottom 25% of dividend payers in the US market (1.65%).

High Dividend: FIBK's dividend (3.95%) is low compared to the top 25% of dividend payers in the US market (4.57%).


Stability and Growth of Payments

Stable Dividend: FIBK's dividends per share have been stable in the past 10 years.

Growing Dividend: FIBK's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Earnings Coverage: With its high payout ratio (103.5%), FIBK's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FIBK's dividends in 3 years are forecast to be well covered by earnings (42.6% payout ratio).


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

Kevin Riley (62 yo)

7yrs

Tenure

US$3,201,243

Compensation

Mr. Kevin P. Riley has been the Chief Executive Officer and President of First Interstate Bancsystem, Inc. since September 23, 2015. Mr. Riley served as the Chief Financial Officer and Executive Vice Presi...


CEO Compensation Analysis

Compensation vs Market: Kevin's total compensation ($USD3.20M) is below average for companies of similar size in the US market ($USD6.95M).

Compensation vs Earnings: Kevin's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: FIBK's management team is considered experienced (3 years average tenure).


Board Members

Experienced Board: FIBK's board of directors are considered experienced (4.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: FIBK insiders have only sold shares in the past 3 months.


Recent Insider Transactions

NasdaqGS:FIBK Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
16 Aug 22SellUS$105,075James ScottIndividual2,500US$42.03
11 Aug 22SellUS$102,525James ScottIndividual2,500US$41.01
03 Aug 22SellUS$40,710John HeynemanIndividual1,000US$40.71
01 Aug 22SellUS$56,504Russell LeeIndividual1,400US$40.36
01 Jun 22BuyUS$593,530Kevin RileyIndividual15,899US$37.50
17 May 22SellUS$41,833Philip GagliaIndividual1,199US$34.89
11 Mar 22SellUS$196,250Jonathan ScottIndividual5,000US$39.25
10 Mar 22SellUS$72,095Philip GagliaIndividual1,863US$38.70
10 Mar 22SellUS$499,865Ixl Limited Liability CompanyCompany12,850US$38.90
08 Mar 22SellUS$195,000Jonathan ScottIndividual5,000US$39.00
23 Feb 22SellUS$74,794Philip GagliaIndividual1,921US$38.94
02 Feb 22BuyUS$36,795Ross LeckieIndividual1,000US$36.81
14 Dec 21SellUS$7,373John HeynemanIndividual180US$40.96
13 Dec 21BuyUS$113,442Kevin RileyIndividual2,880US$39.58
26 Nov 21BuyUS$41,918Ross LeckieIndividual1,000US$43.25
18 Nov 21SellUS$58,739Philip GagliaIndividual1,350US$43.51

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 71.6%.


Top Shareholders

Top 25 shareholders own 71.72% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
7.99%
The Vanguard Group, Inc.
8,530,198$353.9m10.11%0.01%
7.59%
BlackRock, Inc.
8,106,722$336.3m-6.93%0.01%
7.44%
First Interstate Bank, Asset Management Arm
7,951,944$329.9m5153.63%25.54%
6.24%
James Scott
6,667,812$276.6m64.09%no data
5.33%
Macquarie Investment Management Business Trust
5,691,848$236.2m2.16%0.26%
3.4%
State Street Global Advisors, Inc.
3,626,585$150.5m-16.52%0.01%
3.34%
FMR LLC
3,564,361$147.9m145.66%0.01%
3.2%
Nbar5 Limited Partnership
3,416,108$141.7m0%no data
3.19%
Massachusetts Financial Services Company
3,405,104$141.3m3.41%0.04%
2.77%
Dimensional Fund Advisors LP
2,957,049$122.7m-15.78%0.03%
2.5%
Wellington Management Group LLP
2,668,996$110.7m-1.44%0.02%
2.02%
Janus Henderson Group plc
2,153,176$89.3m-4.43%0.05%
1.88%
Homer Scott
2,006,459$83.2m0.59%no data
1.52%
BNY Mellon Asset Management
1,625,866$67.5m17.85%0.02%
1.52%
Geode Capital Management, LLC
1,618,471$67.2m9.74%0.01%
1.41%
Franklin Resources, Inc.
1,508,202$62.6m68.81%0.03%
1.28%
Diamond Hill Capital Management, Inc.
1,369,673$56.8m-4.15%0.26%
1.23%
Teachers Insurance and Annuity Association-College Retirement Equities Fund
1,312,076$54.4m10.29%0.02%
1.21%
abrdn plc
1,295,152$53.7m-21.55%0.06%
1.19%
Manulife Asset Management
1,270,390$52.7m1.42%0.05%
1.19%
Citadel Advisors LLC
1,266,613$52.6m-30.03%0.08%
1.17%
John Heyneman
1,252,780$52.0m-0.08%no data
1.15%
J.P. Morgan Asset Management, Inc.
1,229,657$51.0m467.6%0.01%
1.05%
Cramer Rosenthal McGlynn, LLC
1,123,375$46.6m-11.44%2.16%
0.93%
Millennium Management LLC
997,518$41.4m-20.62%0.05%

Company Information

First Interstate BancSystem, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: First Interstate BancSystem, Inc.
  • Ticker: FIBK
  • Exchange: NasdaqGS
  • Founded: 1971
  • Industry: Regional Banks
  • Sector: Banks
  • Implied Market Cap: US$4.432b
  • Shares outstanding: 106.82m
  • Website: https://www.fibk.com

Number of Employees


Location

  • First Interstate BancSystem, Inc.
  • 401 North 31st Street
  • Billings
  • Montana
  • 59116-0918
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FIBKNasdaqGS (Nasdaq Global Select)YesClass A Common StockUSUSDMar 2010
4FBDB (Deutsche Boerse AG)YesClass A Common StockDEEURMar 2010

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/24 00:00
End of Day Share Price2022/09/23 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.