First Interstate BancSystem (FIBK) Q2 2025 earnings summary

Executive summary

• Net income for Q2 2025 was $71.7 million ($0.69 per diluted share), up 42.8% sequentially and 19.5% year-over-year, supported by lower provision for credit losses and higher net interest income.

• Net interest margin rose to 3.30%, up 11 basis points from Q1 2025 and 33 basis points from Q2 2024.

• Loans held for investment declined by $1.02 billion, mainly due to branch sales, credit card outsourcing, and indirect lending runoff.

• Deposits declined by $102.2 million from Q1 2025, with a continued focus on maintaining low deposit costs.

• Strong capital and liquidity positions, with CET1 at 13.43% and total risk-based capital at 16.49%.

Financial highlights

• Net interest income for Q2 2025 was $207.2 million, up 1.1% from Q1 2025 and 2.7% year-over-year, driven by lower interest expense.

• Net interest margin was 3.32% (3.26% excluding purchase accounting accretion), up 12 basis points sequentially.

• Noninterest income was $41.1 million, down 2.1% sequentially and 3.5% year-over-year, impacted by a $7.3 million valuation allowance and a $4.3 million gain from credit card outsourcing.

• Noninterest expense declined by $5.5 million to $155.1 million, reflecting lower payroll taxes and incentive compensation.

• Allowance for credit losses was $209.6 million (1.28% of loans), up from $204.1 million (1.14%) at year-end.

Outlook and guidance

• High single-digit net interest income growth expected in 2026, with Q4 net interest margin (excluding purchase accounting accretion) projected at approximately 3.4%.

• Noninterest expense guidance for 2025 reduced to a 0%-1% increase year-over-year.

• 2025 ending deposits expected to be flat to up low single digits; loans projected to decline 6-8% excluding indirect lending runoff.

• Guidance assumes a 125 basis point rate cut for the remainder of 2025; balance sheet now mostly neutral to rate changes.

• Management expects continued economic volatility, with potential recessionary pressures and impacts from U.S. trade policy changes.