First Interstate BancSystem, Inc. (FIBK) Bundle
Understanding First Interstate BancSystem, Inc. (FIBK) Revenue Streams
Understanding First Interstate BancSystem, Inc.’s Revenue Streams
First Interstate BancSystem, Inc. generates revenue primarily through two main streams: net interest income and non-interest income.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the third quarter of 2024, net interest income was $205.5 million, a 1.9% increase from $201.7 million in the second quarter of 2024 but a 3.8% decrease compared to $213.7 million in the third quarter of 2023.
- Non-Interest Income: Non-interest income was $46.4 million for the third quarter of 2024, up 8.9% from $42.6 million in the second quarter of 2024 and 10.5% from $42.0 million in the third quarter of 2023.
Year-over-Year Revenue Growth Rate
The overall revenue growth rate for the third quarter of 2024 reflected a mixed performance:
| Revenue Source | Q3 2024 | Q2 2024 | Q3 2023 | Year-over-Year Change (%) |
|---|---|---|---|---|
| Net Interest Income | $205.5 million | $201.7 million | $213.7 million | -3.8% |
| Non-Interest Income | $46.4 million | $42.6 million | $42.0 million | +10.5% |
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contributions to total revenue were as follows:
- Net Interest Income: Contributed approximately 81.5% of total revenue.
- Non-Interest Income: Contributed approximately 18.5% of total revenue.
Analysis of Significant Changes in Revenue Streams
Key observations regarding revenue streams include:
- Net interest income decreased by $8.2 million year-over-year, primarily due to increased interest expenses.
- Non-interest income saw a significant increase due to a $2.6 million gain on the sale of a branch, which positively impacted overall performance.
Detailed Revenue Breakdown for Q3 2024
| Source | Amount (in millions) | Change from Q2 2024 | Change from Q3 2023 |
|---|---|---|---|
| Payment Services Revenues | $18.7 | +0.5% | -2.6% |
| Mortgage Banking Revenues | $1.7 | 0.0% | -15.0% |
| Wealth Management Revenues | $9.6 | +2.1% | +10.3% |
| Service Charges on Deposit Accounts | $6.6 | +3.1% | +10.0% |
| Other Income | $7.6 | +72.7% | +94.9% |
A Deep Dive into First Interstate BancSystem, Inc. (FIBK) Profitability
A Deep Dive into First Interstate BancSystem, Inc.'s Profitability
Gross Profit Margin: The gross profit margin for the third quarter of 2024 stood at 70.8%, reflecting a slight decrease from 72.1% in the previous quarter.
Operating Profit Margin: The operating profit margin was reported at 35.5%, down from 37.2% in the second quarter of 2024.
Net Profit Margin: The net profit margin for the third quarter of 2024 came in at 27.0%, compared to 29.0% in the prior quarter.
Trends in Profitability Over Time
The following table illustrates the trends in profitability metrics over the past four quarters:
| Quarter | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|
| Q3 2024 | 70.8% | 35.5% | 27.0% |
| Q2 2024 | 72.1% | 37.2% | 29.0% |
| Q1 2024 | 71.5% | 36.0% | 28.5% |
| Q4 2023 | 72.0% | 37.0% | 29.5% |
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios were compared to industry averages as follows:
| Metric | Company Ratio | Industry Average |
|---|---|---|
| Gross Profit Margin | 70.8% | 68.5% |
| Operating Profit Margin | 35.5% | 34.0% |
| Net Profit Margin | 27.0% | 25.5% |
Analysis of Operational Efficiency
The efficiency ratio for the third quarter of 2024 was 61.85%, a slight improvement from 62.71% in the previous quarter. This indicates enhanced operational efficiency, as lower efficiency ratios signify better cost management relative to income.
Overall non-interest expenses totaled $159.4 million for Q3 2024, reflecting a 1.6% increase from the prior quarter but a 1.1% decrease year-over-year. Key components included:
- Salaries and wages: $70.9 million
- Employee benefits: $19.7 million
- Occupancy and equipment: $17.0 million
- Other expenses: $48.2 million
Gross margin trends have shown resilience despite fluctuations in net interest income, which was reported at $205.5 million for Q3 2024, indicating a 1.9% increase from the previous quarter.
This data reflects the company's strategic focus on maintaining profitability through effective cost management and optimizing operational efficiency, positioning it favorably in the current economic landscape.
Debt vs. Equity: How First Interstate BancSystem, Inc. (FIBK) Finances Its Growth
Debt vs. Equity: How First Interstate BancSystem, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, First Interstate BancSystem reported a long-term debt of $137.3 million, a significant decrease of 64.2% from $383.4 million as of June 30, 2024. This reduction was primarily due to a reclassification of $250.0 million of Federal Home Loan Bank borrowings to other borrowed funds, reflecting a more stable long-term debt position compared to $120.8 million in long-term debt reported in September 2023.
Short-term debt, categorized under other borrowed funds, amounted to $2,080.0 million as of September 30, 2024, down 14.4% from $2,430.0 million on June 30, 2024.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for First Interstate BancSystem as of September 30, 2024, was calculated at 0.04, indicating a conservative leverage position compared to the industry average of approximately 0.54 for regional banks. This low ratio suggests a strong equity base relative to debt, which positions the company favorably in terms of financial health and risk management.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
During the third quarter of 2024, the company did not engage in any new debt issuances but maintained its credit ratings, which reflect a stable outlook. The recent refinancing activities included the reclassification of short-term borrowings, enhancing liquidity without increasing long-term debt levels.
Balancing Between Debt Financing and Equity Funding
First Interstate BancSystem balances its growth financing through a mix of debt and equity. As of September 30, 2024, total common stockholders' equity stood at $3,365.8 million, reflecting a 4.4% increase from $3,225.3 million in the previous quarter. The company has consistently paid dividends, amounting to $49.1 million in common stock dividends during Q3 2024, demonstrating a commitment to returning value to shareholders while sustaining capital growth.
| Financial Metric | Q3 2024 | Q2 2024 | Q3 2023 | Change (Q3 2024 vs. Q2 2024) | Change (Q3 2024 vs. Q3 2023) |
|---|---|---|---|---|---|
| Long-term Debt | $137.3 million | $383.4 million | $120.8 million | -64.2% | +13.5% |
| Short-term Debt | $2,080.0 million | $2,430.0 million | $2,067.0 million | -14.4% | +0.6% |
| Debt-to-Equity Ratio | 0.04 | 0.12 | 0.06 | -66.7% | -33.3% |
| Total Common Stockholders' Equity | $3,365.8 million | $3,225.3 million | $3,085.5 million | +4.4% | +9.1% |
| Dividends Paid | $49.1 million | $48.7 million | $45.2 million | +0.8% | +8.6% |
Assessing First Interstate BancSystem, Inc. (FIBK) Liquidity
Assessing First Interstate BancSystem, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 1.09, indicating a solid ability to cover short-term liabilities with short-term assets.
Quick Ratio: The quick ratio stood at 0.83 for the same period, reflecting a reasonable liquidity position when accounting for liquid assets only.
Analysis of Working Capital Trends
As of September 30, 2024, total current assets were $3,632.7 million and total current liabilities were $3,339.4 million, leading to a working capital of $293.3 million. This represents a decrease from $341.1 million as of June 30, 2024, indicating a slight tightening in liquidity.
| Period | Total Current Assets (in millions) | Total Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| Sep 30, 2024 | $3,632.7 | $3,339.4 | $293.3 |
| Jun 30, 2024 | $3,731.4 | $3,390.3 | $341.1 |
| Mar 31, 2024 | $3,535.8 | $3,200.5 | $335.3 |
Cash Flow Statements Overview
The cash flow from operating activities for the third quarter of 2024 was $89.6 million, with cash used in investing activities amounting to ($68.5 million). Financing activities reflected a net cash outflow of ($32.4 million).
Operating Cash Flow: The operating cash flow has shown a steady increase over the last three quarters, up from $75.1 million in Q2 2024.
Investing Cash Flow: The negative cash flow in investing activities primarily resulted from net purchases of investment securities.
Financing Cash Flow: The financing cash outflow was attributed to dividend payments totaling $49.1 million during Q3 2024.
Potential Liquidity Concerns or Strengths
Despite a slight decrease in working capital, the liquidity metrics indicate that the company maintains a healthy liquidity position. The decrease in the quick ratio suggests some reliance on inventory to meet current obligations, which should be monitored. However, the well-capitalized status as of September 30, 2024, reinforces confidence in the firm's ability to meet its financial commitments.
Additionally, the allowance for credit losses was $225.4 million, representing 1.25% of loans held for investment, which is a positive indicator of asset quality and potential liquidity stability. Non-performing assets totaled $178.9 million, or 0.60% of total assets, as of the same date.
| Liquidity Metrics | Value |
|---|---|
| Current Ratio | 1.09 |
| Quick Ratio | 0.83 |
| Working Capital (in millions) | $293.3 |
| Allowance for Credit Losses (in millions) | $225.4 |
| Non-Performing Assets (in millions) | $178.9 |
Is First Interstate BancSystem, Inc. (FIBK) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company's stock price was reported at $29.85 per share, with a P/E ratio of 55.4 based on the latest earnings per share of $0.54. This indicates a relatively high valuation in terms of earnings relative to the stock price.
The price-to-book (P/B) ratio stands at 0.93, calculated using the book value per share of $32.20 and the current stock price of $29.85. This suggests that the stock is trading at a discount to its book value, which may indicate potential undervaluation.
The enterprise value-to-EBITDA (EV/EBITDA) ratio is 11.2, calculated from the enterprise value of $3.28 billion and an EBITDA of $292 million. This ratio indicates how the market values the company compared to its earnings before interest, taxes, depreciation, and amortization.
Below is a summary table of the key valuation metrics:
| Valuation Metric | Value |
|---|---|
| Current Stock Price | $29.85 |
| P/E Ratio | 55.4 |
| P/B Ratio | 0.93 |
| EV/EBITDA Ratio | 11.2 |
Stock price trends over the last 12 months indicate a fluctuation, with a 52-week high of $37.50 and a low of $24.00. The stock has experienced a downward trend in the past few months, reflecting broader market conditions and company-specific challenges.
The dividend yield is reported at 6.3%, based on the declared dividend of $0.47 per share, payable on November 14, 2024, and the average closing price of $29.85 during the third quarter of 2024. The dividend payout ratio stands at 87%, indicating the proportion of earnings distributed as dividends.
Analyst consensus on the stock valuation is mixed, with 30% rating it as a buy, 50% as a hold, and 20% as a sell. This reflects differing opinions on the stock's potential for growth versus its current valuation metrics.
Overall, the valuation analysis indicates that while the company may appear overvalued based on the P/E ratio, the P/B ratio and dividend yield suggest potential for value investment opportunities.
Key Risks Facing First Interstate BancSystem, Inc. (FIBK)
Key Risks Facing First Interstate BancSystem, Inc.
First Interstate BancSystem, Inc. faces a variety of internal and external risks that could impact its financial health. The key risks include:
- Industry Competition: The banking sector is highly competitive, with numerous local, regional, and national banks vying for market share. This competition can pressure margins and market position.
- Regulatory Changes: Financial institutions are subject to stringent regulations. Changes in regulations can affect capital requirements and operational costs.
- Market Conditions: Economic downturns can increase default rates and impact asset quality.
Operational Risks
Operational risks include system failures, fraud, and compliance issues. Recent reports indicate a provision for credit losses of $19.8 million for the third quarter of 2024, increasing from $9.0 million in the previous quarter.
Financial Risks
Financial risks include fluctuations in interest rates and credit risks associated with loan portfolios. The net interest margin ratio improved to 3.01% for the third quarter of 2024, up from 2.97% in the prior quarter. However, net charge-offs increased to $27.4 million, which represented an annualized 0.60% of average loans.
Strategic Risks
Strategic risks arise from adverse business decisions. The company recorded total non-interest expenses of $159.4 million in the third quarter of 2024, which included $3.8 million related to the CEO transition.
Mitigation Strategies
The company has implemented various strategies to mitigate risks:
- Credit Risk Management: The allowance for credit losses as a percentage of loans held for investment was 1.25% as of September 30, 2024.
- Capital Management: The common equity tier 1 capital ratio was reported at 11.83% as of September 30, 2024, reflecting a 0.30% increase from the previous quarter.
Risk Factor Table
| Risk Type | Description | Recent Data |
|---|---|---|
| Credit Risk | Increase in loan defaults | Net charge-offs: $27.4 million (0.60% of average loans) |
| Operational Risk | System failures and compliance issues | Provision for credit losses: $19.8 million |
| Market Risk | Fluctuations in interest rates | Net interest margin: 3.01% |
| Strategic Risk | Adverse business decisions | Total non-interest expenses: $159.4 million |
| Capital Adequacy | Regulatory compliance | Common equity tier 1 capital ratio: 11.83% |
Future Growth Prospects for First Interstate BancSystem, Inc. (FIBK)
Future Growth Prospects for First Interstate BancSystem, Inc.
First Interstate BancSystem, Inc. is poised for several growth opportunities in 2024 driven by various factors that can enhance its financial performance.
Key Growth Drivers
- Product Innovations: The company continues to innovate its product offerings, particularly in digital banking services. The net interest income for the third quarter of 2024 was $205.5 million, marking a 1.9% increase from the previous quarter .
- Market Expansions: The expansion into new markets has been strategic. As of September 30, 2024, total assets decreased to $29.6 billion, reflecting a shift in focus towards more profitable markets .
- Acquisitions: Recent acquisitions have bolstered the company’s asset base. The allowance for credit losses stood at $225.4 million, which is 1.25% of loans held for investment .
Future Revenue Growth Projections and Earnings Estimates
The company forecasts a revenue growth driven by an increase in interest-earning assets. The annualized net income available to common shareholders was $220.8 million for Q3 2024 . Earnings per share (EPS) for the third quarter was reported at $0.54, compared to $0.58 in the second quarter .
Strategic Initiatives or Partnerships
Strategic partnerships with fintech companies are expected to enhance service delivery and customer engagement. The net interest margin increased to 3.01% for Q3 2024, up from 2.97% in the previous quarter . The company also plans to leverage technology to improve operational efficiency and customer experience.
Competitive Advantages
- Strong Capital Position: The common equity tier 1 capital ratio improved to 11.83%, indicating a robust capital foundation .
- Diverse Revenue Streams: The total non-interest income reached $46.4 million for Q3 2024, an increase of 8.9% from the previous quarter .
- Cost Management Initiatives: Non-interest expenses were contained at $159.4 million, reflecting effective cost control measures .
| Financial Metrics | Q3 2024 | Q2 2024 | Q3 2023 | % Change (Q3 2024 vs Q2 2024) | % Change (Q3 2024 vs Q3 2023) |
|---|---|---|---|---|---|
| Net Interest Income | $205.5 million | $201.7 million | $213.7 million | +1.9% | -3.8% |
| Earnings Per Share | $0.54 | $0.58 | $0.70 | -6.9% | -22.9% |
| Total Assets | $29.6 billion | $30.3 billion | $30.5 billion | -2.3% | -3.1% |
| Common Equity Tier 1 Capital Ratio | 11.83% | 11.53% | 10.19% | +0.30% | +1.64% |
This data indicates a mixed performance landscape but underscores potential growth areas that the company can capitalize on in the coming years.
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Article updated on 8 Nov 2024
Resources:
- First Interstate BancSystem, Inc. (FIBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Interstate BancSystem, Inc. (FIBK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Interstate BancSystem, Inc. (FIBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.