First Interstate BancSystem, Inc.

Second-quarter 2026 net income was $83.9 million, or $0.87 per diluted share, versus $60.2 million, or $0.61 per diluted share, in Q1 2026. Net interest income increased $1.5 million, or 0.7%, to $202.2 million. FTE net interest margin was 3.48% versus 3.43% in Q1 2026 and 3.32% in Q2 2025. Noninterest income was $61.7 million, up $20.6 million sequentially, mainly from a $19.5 million gain on the branch transaction. Noninterest expense was $158.9 million, up $1.3 million sequentially. Loans declined $447 million and total deposits declined $441.7 million to $21.4 billion. Net charge-offs were $9.7 million, or 27 basis points of average loans, and criticized loans fell $95.8 million, or 9.3%. The company recorded a $3.2 million reduction in provision for credit losses, and the funded allowance declined to 1.28% of loans held for investment from 1.33%. Guidance points to continued payoff pressure through the rest of 2026, a smaller near-term balance sheet and lower near-term revenue growth expectations, partly offset by a better deposit mix and lower funding costs. Management said the average earning asset base should bottom in Q3, while ending earning assets should improve later in the year; they also expect margin benefits and return improvement to continue into 2027.

Jim Reuter framed the quarter as continued progress on earnings power and efficiency, emphasizing the ninth straight quarter of NIM expansion, lower deposit costs, improving criticized loans, and ongoing share repurchases. He said the bank is prioritizing relationship-based growth, disciplined underwriting, and capital returns rather than chasing balance-sheet growth that does not fit the franchise. His tone was constructive and confident, with repeated references to optionality, long-term value creation, and improving returns over time.

David Camera walked through the key financial drivers: net income of $83.9 million, EPS of $0.87, NII of $202.2 million, and FTE NIM of 3.48%. He highlighted lower deposit costs at 1.17%, loan yield of 5.62%, and a strong capital position with CET1 at 14.54% and leverage at 9.59%. He also noted $1.9 million shares repurchased for about $69 million in the quarter, $270 million returned since program inception, and a higher authorization of $450 million total. On outlook, he said payoffs should stay elevated through the rest of 2026, loan and earning-asset balances will likely be smaller near term, and near-term revenue growth expectations were reduced, while NIM and returns should improve further into 2027.

Analysts focused on how much of the loan book is tied to nonrelationship credits, when earning assets and loans might stabilize, and whether management’s acceleration of payoffs is simply pulling forward future runoff. Management said the out-of-market portfolio is about $600 million, that roughly $100 million of this quarter’s payoff activity was from that bucket, and that most payoffs were nonrelationship in nature rather than core customer relationships. They also said Q3 should be the trough for average earning assets, while ending assets should improve later, and that the added relationship managers and stronger pipelines are helping production. On margin and NII, management said there were no notable prepay fees, new loan yields are in the low-to-mid 6% range, and the fixed-asset repricing story should support stronger NII and returns over time, especially into 2027.