First Interstate BancSystem Reports $71.7 Million Net Income for Q2 2025

First Interstate BancSystem, Inc. reported its financial results for the second quarter of 2025, revealing a net income of $71.7 million, or $0.69 per diluted share, an increase from $60.0 million, or $0.58 per diluted share, in the same period last year. For the first half of 2025, net income rose to $121.9 million, compared to $118.4 million in the prior year. The growth in net income was primarily driven by a reduction in the provision for credit losses, which decreased to $0.3 million from $9.0 million year-over-year, alongside an increase in net interest income, which reached $207.2 million, up from $201.7 million.

The company's total assets decreased by $1.57 billion, or 5.4%, to $27.57 billion as of June 30, 2025, primarily due to declines in investment securities and loans. Investment securities fell to $7.31 billion from $7.74 billion, while loans held for investment decreased to $16.35 billion from $17.84 billion. The reduction in loans was attributed to the discontinuation of indirect loans and the pending sale of branches in Arizona and Kansas, which involved transferring $338.3 million of loans to held-for-sale status.

In terms of operational metrics, First Interstate BancSystem's total deposits decreased by $385 million, or 1.7%, to $22.63 billion, with declines across all deposit types except for interest-bearing time deposits. The company’s allowance for credit losses increased to $209.6 million, representing 1.28% of loans held for investment, compared to 1.14% at the end of 2024. Non-performing loans rose to $194.1 million, with non-accrual loans increasing by 39.3% to $192.7 million, reflecting challenges in the commercial real estate sector.

Strategically, the company is undergoing significant changes, including the planned sale of its Arizona and Kansas branches to Enterprise Bank & Trust, which is expected to close in early Q4 2025, pending regulatory approvals. Additionally, First Interstate has outsourced its consumer credit card portfolio, resulting in a $4.3 million gain. The company continues to maintain a strong liquidity position, with available borrowing capacity of $5.2 billion from the Federal Home Loan Bank and $2.4 billion from the Federal Reserve Bank.

Looking ahead, First Interstate BancSystem anticipates continued economic volatility, which may impact deposit levels and credit quality. The company remains focused on managing its capital and liquidity effectively, with capital ratios exceeding regulatory requirements. The management is closely monitoring economic conditions and their potential effects on the bank's operations and financial performance.