First Interstate二季度电话会指引三季度平均盈利资产见底但下调近端收入增长预期

Earnings Call Insights: First Interstate BancSystem, Inc. (FIBK) Q2 2026
James Reuter (President, CEO & Director) said the quarter extended several operating and balance-sheet trends, including that “Net interest margin expanded for the ninth consecutive quarter,” while “deposit costs continued to decline” and “criticized loans declined meaningfully.” He also flagged a near-term headwind: “reported loan balances declined more than expected, primarily due to elevated payoffs,” adding that the company “anticipate[s] continued payoff pressure in the near term.”
Reuter emphasized capital return and discipline on growth, saying, “We continue to repurchase shares and maintain a disciplined approach to long-term value creation,” and that the bank has “chosen not to seek avenues for near-term balance growth that are not consistent with the relationship-based focus.”
David Camera (Executive VP & CFO) reported profitability and drivers, stating, “The company reported net income of $83.9 million or $0.87 per diluted share in the second quarter compared to $60.2 million or $0.61 per diluted share in the first quarter,” and “Our fully taxable equivalent net interest margin was 3.48% for the second quarter compared to 3.43% during the first quarter.”
Camera highlighted a one-time uplift in fees and continued buybacks, saying, “Noninterest income was $61.7 million, an increase of $20.6 million from the prior quarter… driven by a gain of $19.5 million from the branch transaction,” and “We have increased our repurchase authorization by an additional $150 million… bringing the cumulative total authorization to $450 million.”
Camera said guidance now assumes a smaller near-term balance sheet: “Our balance sheet expectations now reflect lower ending loans and a smaller earning asset base compared to the prior quarter,” tied to “accelerated payoffs… through the rest of 2026.”
Camera said the mix shift is expected to weigh near-term revenue growth, noting, “Together, these expectations result in both a smaller near-term balance sheet and higher composition of investment securities lowering our near-term revenue growth expectations,” partially offset by “a more favorable deposit mix and cost trend.”
In Q&A, Camera provided timing on stabilization: “Based on our guide, we think 3Q would be the bottom from an average earning asset perspective,” with “ending earning assets flat to improving from here and then higher into the back half.”
Compared with Q1, management’s message shifted from “stabilization and modest growth in the back half of the year” (Q1) toward explicit emphasis on payoff acceleration and mix-driven pressure on near-term revenue growth expectations (Q2).
Camera reported net interest income and key rate/mix trends: “Net interest income increased by $1.5 million… to $202.2 million,” while “Yield on average loans increased 2 basis points to 5.62% and total deposit costs declined 3 basis points compared to the prior quarter.”
Balance-sheet contraction was driven by payoffs and portfolio runoff: “Loans decreased by $447 million in the second quarter,” and Camera said payoffs “included criticized loans and loans we would view as nonrelationship in nature,” while deposits fell following the Nebraska transaction: “Total deposits decreased $441.7 million to $21.4 billion… driven by the sale of $244 million of deposits in the Nebraska branch transaction.”
Credit metrics were mixed quarter-to-quarter, with Camera stating, “Net charge-offs increased… to $9.7 million,” while “Criticized loans decreased $95.8 million or 9.3% from the prior quarter,” and “The company recorded a $3.2 million reduction of provision for credit losses.”
Capital and shareholder return actions remained prominent: “We repurchased approximately 1.9 million shares… approximately $69 million,” and “Finally, we declared a dividend of $0.47 per common share.”
Matthew Clark, Piper Sandler & Co., Research Division: asked how much of the book lacks deposit relationships and when earning assets stabilize; David Camera (Executive VP & CFO): said “3Q would be the bottom,” cited an “out-of-market portfolio… about a mid-$600 million number,” and said payoffs were “really non-relationship in manner during the quarter.”
Clark, Piper Sandler & Co., Research Division: asked about 2027 ROA; Camera: “we're probably too early to talk about '27 guidance,” but said returns “continue[] to move higher from here over time.”
Kelly Motta, Keefe, Bruyette, & Woods, Inc., Research Division: asked about improved production and whether reorg/RM adds can offset payoffs; James Reuter (President, CEO & Director): said there was a “significant positive movement in step-up in production,” “added 14 additional RMs,” and “July is off to a good start.”
Motta, Keefe, Bruyette, & Woods, Inc., Research Division: asked whether criticized improvement is workouts vs. normal movement; Camera: described an implied “$600-ish million decline at the midpoint” in loans from current levels in the back half, with continued runoff expected in out-of-market and indirect portfolios, plus “higher payoff and higher secondary market activity.”
Motta, Keefe, Bruyette, & Woods, Inc., Research Division: asked about prepay fees and new loan yields; Camera: “no notable prepay fees,” and “New loan yields kind of low to mid-6s, depending on type.”
Timur Braziler, UBS Investment Bank, Research Division: pressed on why NII should grow if it has been flat despite margin gains; Camera: pointed to “a couple of branch sales” and framed “downside protection” plus “upside optionality” if production improves.
Jeff Rulis, D.A. Davidson & Co., Research Division: asked if accelerating payoffs improves odds for 2027 growth; Camera: reiterated “we're too early to give a guide for loans in '27,” while Reuter said, “we have just great optionality” but will be “smart with how we grow the bank.”
Analysts were slightly negative in tone, focusing on persistent balance-sheet contraction and questioning the earnings algorithm; Braziler’s NII question highlighted skepticism about the fixed-asset repricing narrative given that “NII has essentially been flat.”
Management tone was slightly positive but cautious on specifics, repeatedly declining 2027 targets; Camera said, “we're probably too early to talk about '27 guidance,” while Reuter maintained confidence: “We remain confident in our ability to deliver improving returns over time.” Compared with Q1’s emphasis on post-reorg momentum and “meaningful improvement to our return profile,” Q2 kept the long-term confidence but added more explicit near-term variability from payoffs.
Q2 introduced a sharper narrative around payoff acceleration and near-term variability: Reuter said “reported loan balances declined more than expected,” and Camera guided to “accelerated payoff activity… through the rest of 2026,” versus Q1’s framing of a Q2 decline followed by “stabilization and modest growth in the back half of the year.”
Capital return escalated quarter-over-quarter, with Q2 increasing authorization by $150 million (total $450 million) versus Q1 describing ongoing repurchases without an authorization increase.
Analysts’ focus shifted from pipeline build, deposit cost trajectory, and payments/AI (Q1) to “ring fence” runoff exposure, timing of earning-asset stabilization, and whether fixed-asset repricing can translate into NII growth (Q2).
Management flagged continued runoff risk: Reuter said payoffs were “elevated,” and Camera said accelerated payoffs are expected to “continue through the rest of 2026,” creating “variability in near-term reported balance growth.”
Camera cited mortgage weakness and mix pressure: “Mortgage production has trailed our expectations,” and a “higher composition of investment securities” is “lowering our near-term revenue growth expectations.”
Deposit pressure remains tied to exiting higher-cost money: Camera said the bank is “allow[ing] some higher cost money to exit,” and guidance assumes “continued pressure in higher cost deposit categories,” even as management pointed to improved mix and relationship growth efforts.
Management described Q2 as a quarter of improved margin, lower deposit costs, and a meaningful reduction in criticized loans, while acknowledging that accelerated, largely non-relationship payoffs drove a larger-than-expected loan decline and are expected to persist through 2026. The company increased its buyback authorization to $450 million, reiterated a relationship-focused growth posture, and positioned 3Q as the low point for average earning assets, with an improving trajectory expected into the back half as the balance sheet transitions.