First Interstate BancSystem Q2 2026 Earnings Call Summary
First Interstate BancSystem, Inc. (FIBK) reported continued expansion of its net interest margin for the ninth consecutive quarter in Q2 2026, driven by disciplined fixed asset repricing and reduced deposit costs. However, loan balances declined more than expected due to elevated payoffs concentrated in non-relationship credits and divested markets. Management is proactively accelerating these payoffs to transition toward a core relationship-based portfolio. The bank's post-reorganization operating model has led to efficiency gains that allowed for the hiring of 14 additional revenue-generating relationship managers without increasing overall staffing levels. Credit quality improved significantly, with criticized loans declining by 9.3% sequentially as previously reserved credits were resolved. Non-interest-bearing deposits also returned to year-over-year growth. Looking ahead, management expects continued payoff pressure through the remainder of 2026 due to exiting approximately $600 million in out-of-market and non-core credits. Average earning assets are projected to reach their lowest point in Q3 before recovering in Q4 as commercial production pipelines improve.
Topics: balance sheet transition credit quality earnings net interest margin