UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [x] | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2003
OR
| [ ] | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
COMMISSION FILE NUMBER 000-49733
First Interstate BancSystem, Inc.
Montana |
81-0331430 |
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(State
or other jurisdiction of |
(IRS Employer |
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| incorporation or organization) | Identification No.) |
| PO Box 30918, 401 North 31st Street, Billings, MT | 59116-0918 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 406/255-5390
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The Registrant had 7,909,211 shares of common stock outstanding on September 30, 2003.
1
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
| Index | Page | |||||
| Part I. | Financial Information | |||||
| Item 1 – | Financial Statements (unaudited) | |||||
| Consolidated Balance Sheets September 30, 2003 and December 31, 2002 | 3 | |||||
| Consolidated Statements of Income Three and nine months ended September 30, 2003 and 2002 | 4 | |||||
| Consolidated Statements of Stockholders’ Equity and Comprehensive Income Nine months ended September 30, 2003 and 2002 | 5 | |||||
| Consolidated Statements of Cash Flows Nine months ended September 30, 2003 and 2002 | 6 | |||||
| Notes to Unaudited Consolidated Financial Statements | 8 | |||||
| Item 2 – | Management’s Discussion and Analysis of Financial Condition And Results of Operations | 14 | ||||
| Item 3 – | Quantitative and Qualitative Disclosures about Market Risk | 19 | ||||
| Item 4 – | Disclosure Controls and Procedures | 19 | ||||
| Part II. | Other Information | |||||
| Item 1 – | Legal Proceedings | 20 | ||||
| Item 2 – | Changes in Securities and Use of Proceeds | 20 | ||||
| Item 3 – | Defaults Upon Senior Securities | 20 | ||||
| Item 4 – | Submission of Matters to a Vote of Security Holders | 20 | ||||
| Item 5 – | Other Information | 20 | ||||
| Item 6 – | Exhibits and Reports on Form 8-K | 20 | ||||
| Signatures | 21 | |||||
2
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
| September 30, | December 31, | ||||||||||
| 2003 | 2002 | ||||||||||
Assets |
|||||||||||
Cash and due from banks |
$ | 221,344 | $ | 234,187 | |||||||
Federal funds sold |
57,310 | 50,890 | |||||||||
Interest bearing deposits in banks |
695 | 25,815 | |||||||||
Investment securities: |
|||||||||||
Trading |
1,540 | 799 | |||||||||
Available-for-sale |
677,367 | 716,267 | |||||||||
Held-to-maturity |
91,971 | 83,025 | |||||||||
Total investment securities |
770,878 | 800,091 | |||||||||
Loans |
2,566,288 | 2,236,550 | |||||||||
Less allowance for loan losses |
38,782 | 36,309 | |||||||||
Net loans |
2,527,506 | 2,200,241 | |||||||||
Premises and equipment, net |
108,438 | 92,907 | |||||||||
Accrued interest receivable |
21,805 | 20,702 | |||||||||
Goodwill |
37,626 | 33,031 | |||||||||
Core deposit intangible, net of accumulated amortization |
3,742 | 4,396 | |||||||||
Mortgage servicing rights, net of accumulated amortization and impairment reserve |
13,682 | 8,406 | |||||||||
Other real estate owned, net |
1,627 | 458 | |||||||||
Deferred tax assets, net |
5,629 | 3,044 | |||||||||
Other assets |
86,836 | 84,800 | |||||||||
Total assets |
$ | 3,857,118 | $ | 3,558,968 | |||||||
Liabilities and Stockholders’ Equity |
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Deposits: |
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Non-interest bearing |
$ | 676,319 | $ | 571,932 | |||||||
Interest bearing |
2,447,857 | 2,339,915 | |||||||||
Total deposits |
3,124,176 | 2,911,847 | |||||||||
Securities sold under repurchase agreements |
335,012 | 300,234 | |||||||||
Accrued interest payable |
12,372 | 14,588 | |||||||||
Accounts payable and accrued expenses |
20,585 | 16,830 | |||||||||
Other borrowed funds |
9,190 | 7,970 | |||||||||
Long-term debt |
49,401 | 23,645 | |||||||||
Trust preferred securities |
40,000 | 40,000 | |||||||||
Total liabilities |
3,590,736 | 3,315,114 | |||||||||
Stockholders’ equity: |
|||||||||||
Nonvoting noncumulative preferred stock without par value;
authorized 100,000 shares; no shares issued or outstanding as of
September 30, 2003 or December 31, 2002 |
— | — | |||||||||
Common stock without par value; authorized 20,000,000 shares;
issued and outstanding 7,909,211 shares as of September 30, 2003
and 7,799,748 shares as of December 31, 2002 |
33,099 | 3,085 | |||||||||
Retained earnings |
234,945 | 236,724 | |||||||||
Accumulated other comprehensive income, net |
(1,662 | ) | 4,045 | ||||||||
Total stockholders’ equity |
266,382 | 243,854 | |||||||||
Total liabilities and stockholders’ equity |
$ | 3,857,118 | $ | 3,558,968 | |||||||
See accompanying notes to unaudited consolidated financial statements.
3
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
| For the three months | For the nine months | ||||||||||||||||||
| ended September 30, | ended September 30, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Interest income: |
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Interest and fees on loans |
$ | 39,992 | $ | 41,319 | $ | 118,881 | $ | 123,680 | |||||||||||
Interest and dividends on investment securities: |
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Taxable |
5,765 | 8,428 | 19,518 | 25,026 | |||||||||||||||
Exempt from Federal taxes |
992 | 953 | 2,951 | 2,860 | |||||||||||||||
Interest on deposits in banks |
1 | 63 | 19 | 174 | |||||||||||||||
Interest on Federal funds sold |
105 | 506 | 346 | 943 | |||||||||||||||
Total interest income |
46,855 | 51,269 | 141,715 | 152,683 | |||||||||||||||
Interest expense: |
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Interest on deposits |
9,809 | 14,269 | 32,144 | 42,881 | |||||||||||||||
Interest on Federal funds purchased |
6 | — | 47 | 3 | |||||||||||||||
Interest on securities sold under repurchase agreements |
502 | 918 | 1,727 | 2,692 | |||||||||||||||
Interest on other borrowed funds |
10 | 20 | 41 | 67 | |||||||||||||||
Interest on long-term debt |
633 | 491 | 1,799 | 1,588 | |||||||||||||||
Interest on trust preferred securities |
429 | 883 | 2,034 | 2,647 | |||||||||||||||
Total interest expense |
11,389 | 16,581 | 37,792 | 49,878 | |||||||||||||||
Net interest income |
35,466 | 34,688 | 103,923 | 102,805 | |||||||||||||||
Provision for loan losses |
2,422 | 2,132 | 7,422 | 6,739 | |||||||||||||||
Net interest income after provision for loan losses |
33,044 | 32,556 | 96,501 | 96,066 | |||||||||||||||
Non-interest income: |
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Income from fiduciary activities |
1,271 | 1,199 | 3,760 | 3,452 | |||||||||||||||
Service charges on deposit accounts |
4,776 | 3,980 | 12,926 | 11,621 | |||||||||||||||
Technology services |
3,006 | 2,800 | 8,611 | 8,121 | |||||||||||||||
Other service charges, commissions and fees |
8,370 | 5,201 | 24,204 | 14,765 | |||||||||||||||
Investment securities gains (losses) |
(1,594 | ) | 2,102 | (86 | ) | 2,291 | |||||||||||||
Other real estate income (expense) |
(10 | ) | (14 | ) | (64 | ) | 191 | ||||||||||||
Other income |
1,472 | 2,439 | 4,176 | 4,360 | |||||||||||||||
Total non-interest income |
17,291 | 17,707 | 53,527 | 44,801 | |||||||||||||||
Non-interest expense: |
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Salaries, wages and employee benefits |
17,831 | 17,686 | 51,924 | 51,911 | |||||||||||||||
Occupancy, net |
2,521 | 2,667 | 8,037 | 7,892 | |||||||||||||||
Furniture and equipment |
3,316 | 3,361 | 9,756 | 9,933 | |||||||||||||||
FDIC insurance |
116 | 112 | 355 | 341 | |||||||||||||||
Core deposit intangibles amortization |
305 | 321 | 915 | 962 | |||||||||||||||
Other expenses |
7,681 | 13,050 | 30,839 | 29,272 | |||||||||||||||
Total non-interest expense |
31,770 | 37,197 | 101,826 | 100,311 | |||||||||||||||
Income before income taxes |
18,565 | 13,066 | 48,202 | 40,556 | |||||||||||||||
Income tax expense |
6,735 | 4,709 | 17,300 | 14,660 | |||||||||||||||
Net income |
$ | 11,830 | $ | 8,357 | $ | 30,902 | $ | 25,896 | |||||||||||
Basic earnings per common share |
$ | 1.51 | $ | 1.07 | $ | 3.93 | $ | 3.31 | |||||||||||
Diluted earnings per common share |
$ | 1.50 | $ | 1.07 | $ | 3.92 | $ | 3.31 | |||||||||||
Dividends per common share |
$ | 0.32 | $ | 0.33 | $ | 0.98 | $ | 0.97 | |||||||||||
See accompanying notes to unaudited consolidated financial statements.
4
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
| Accumulated | |||||||||||||||||||
| other | Total | ||||||||||||||||||
| Common | Retained | comprehensive | stockholders’ | ||||||||||||||||
| stock | earnings | income | equity | ||||||||||||||||
Balance at December 31, 2002 |
$ | 3,085 | $ | 236,724 | $ | 4,045 | $ | 243,854 | |||||||||||
Comprehensive income: |
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Net income |
— | 30,902 | — | 30,902 | |||||||||||||||
Unrealized losses on available-for-sale investment
securities, net of income tax benefit of $3,683 |
— | — | (5,759 | ) | (5,759 | ) | |||||||||||||
Less reclassification adjustment for losses included in
net income, net of income tax benefit of $34 |
— | — | 52 | 52 | |||||||||||||||
Other comprehensive income |
(5,707 | ) | |||||||||||||||||
Total comprehensive income |
25,195 | ||||||||||||||||||
Common stock transactions: |
|||||||||||||||||||
48,326 shares retired |
(2,219 | ) | — | — | (2,219 | ) | |||||||||||||
157,789 shares issued |
7,233 | — | — | 7,233 | |||||||||||||||
Recapitalization of common stock from retained earnings |
25,000 | (25,000 | ) | — | — | ||||||||||||||
Cash dividends declared: |
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Common ($0.98 per share) |
— | (7,681 | ) | — | (7,681 | ) | |||||||||||||
Balance at September 30, 2003 |
$ | 33,099 | $ | 234,945 | $ | (1,662 | ) | $ | 266,382 | ||||||||||
Balance at December 31, 2001 |
$ | 5,184 | $ | 212,314 | $ | 4,571 | $ | 222,069 | |||||||||||
Comprehensive income: |
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Net income |
— | 25,896 | — | 25,896 | |||||||||||||||
Unrealized gains on available-for-sale investment
securities, net of income tax expense of $632 |
— | — | 990 | 990 | |||||||||||||||
Less reclassification adjustment for gains included in
net income, net of income tax expense of $893 |
— | — | (1,398 | ) | (1,398 | ) | |||||||||||||
Other comprehensive income</ | |||||||||||||||||||