Market Overview

First Interstate BancSystem, Inc. Reports Fourth Quarter Earnings and Announces 16.7% Increase in Quarterly Cash Dividend to $0.28 Per Share

Share:

First Interstate BancSystem, Inc. (NASDAQ:FIBK) reports fourth quarter
2017 net income of $34.3 million, or $0.61 per share. This compares to
net income of $27.3 million, or $0.48 per share, during the third
quarter of 2017, and $24.8 million, or $0.55 per share, during the
fourth quarter of 2016.

For the year ending December 31, 2017, the Company reports net income of
$106.5 million, or $2.05 per share, compared to $95.6 million, or $2.13
per share, in 2016, which includes acquisition costs of $27.2 million
and $2.8 million, respectively.

HIGHLIGHTS

  • Fourth quarter loan growth of $62.2 million, or 3.3% annualized. The
    increase was primarily driven by commercial and commercial real estate
    loans; offset by seasonal declines in agriculture loans.
  • Asset quality improved in the fourth quarter of 2017, with a $7.9
    million, or 8.7%, decrease in non-performing assets and a $22.2
    million decrease in criticized loans, as compared to the third quarter
    of 2017.
  • Net interest margin ratio of 3.71% in the fourth quarter of 2017
    remained consistent with the prior quarter and reflects a nine basis
    point increase from the same period in the prior year.
  • Quarterly cash dividends increased 16.7%, from $0.24 to $0.28 per
    share of common stock in January 2018.
  • A decrease in income tax expense of $2.2 million was recorded during
    the fourth quarter of 2017, primarily related to the re-measurement of
    deferred tax balances.

"In what is typically a seasonally slow quarter for the Company, our
team did an excellent job of business development which resulted in a
solid quarter of loan growth," said Kevin P. Riley, President and Chief
Executive Officer of First Interstate BancSystem, Inc. "We had strong
increases in commercial and commercial real estate loans, with both our
Mountain and West divisions making significant contributions. We entered
2018 with strong pipelines and we expect to see healthy loan growth as
the year progresses."

"We anticipate that 2018 will be a very positive year for First
Interstate, driven by the continued benefits of the Bank of the Cascades
acquisition and a higher level of organic balance sheet growth than we
have experienced in recent years. Due to our increased earnings power
and the lowering of our effective tax rate, we are pleased to announce a
16.7% increase in our quarterly cash dividend, which continues our long
track record of returning increasing earnings to our shareholders," said
Mr. Riley.

DIVIDEND DECLARATION

On January 30, 2018, the Company's board of directors declared a
dividend of $0.28 per common share, payable on February 22, 2018, to
owners of record as of February 12, 2018. The dividend equates to a 2.9%
annual yield based on the $38.85 average closing pricing of the
Company's common stock during the fourth quarter of 2017, and reflects a
16.7% increase from dividends paid during fourth quarter 2017 of $0.24
per common share.

ANNUAL MEETING DATE SET

On January 18, 2018, the Company's Board of Directors voted to hold the
Annual Meeting of Shareholders on May 2, 2018, at the First Interstate
Bank Operations Center, 1800 Sixth Avenue North, Billings, Montana at 4
p.m. Mountain Daylight Time. The record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting
is March 8, 2018.

ACQUISITION

The acquisition of Cascade Bancorp, parent company of Bank of the
Cascades ("BOTC"), was completed on May 30, 2017, and the Company merged
BOTC with its existing bank subsidiary, First Interstate Bank, on August
11, 2017. As of the acquisition date, Cascade Bancorp had total assets
with fair values of $3.0 billion, total loans with fair values of $2.1
billion and deposits with fair values of $2.7 billion. In conjunction
with the acquisition, the Company recorded provisional goodwill of
$231.9 million and core deposit intangible assets of $48.0 million.

NET INTEREST INCOME

The Company's net interest income, on a fully taxable equivalent basis,
remained stable, increasing $0.1 million, or 0.1%, to $102.0 million
during the fourth quarter of 2017. Compares to $101.9 million during the
third quarter of 2017, and $74.7 million during the fourth quarter of
2016, an increase of $27.2 million, or 36.5%.

Net interest income was positively impacted this quarter by the recovery
of previously charged-off interest of $1.4 million, compared to $2.0
million during the third quarter of 2017 and $0.2 million during the
fourth quarter of 2016.

Interest accretion attributable to the fair valuation of acquired loans
contributed $3.8 million to interest income during the fourth quarter of
2017, of which approximately $2.0 million was related to early payoffs.
This compares to interest accretion of $4.0 million during the third
quarter of 2017, of which approximately $2.1 million was related to
early payoffs.

The Company's net interest margin remained stable, as compared to the
third quarter, at 3.71%. Exclusive of the impact of the recovery of
charged-off interest and the impact of interest accretion on acquired
loans, the Company's net interest margin ratio was 3.52% during the
fourth quarter of 2017, compared to 3.49% during the third quarter of
2017, and 3.44% during the fourth quarter of 2016.

PROVISION FOR LOAN LOSSES

The Company recorded a provision for loan losses of $3.5 million during
the fourth quarter of 2017, compared to $3.4 million during the third
quarter of 2017, and $1.1 million during the fourth quarter of 2016.
Fluctuations in the provision for loan losses reflect management's
estimate of possible loan losses based upon evaluation of the borrowers'
ability to repay, collateral value securing loans, loan loss trends, and
estimated effects of current economic conditions on our loan portfolio.

NON-INTEREST INCOME

Total non-interest income decreased $1.1 million, or 2.8%, to $37.2
million during the fourth quarter of 2017, as compared to $38.3 million
during the third quarter of 2017. Total non-interest income increased
$2.4 million, or 6.8%, from $34.8 million during the fourth quarter of
2016.

Payment services revenues remained stable at $12.3 million during the
fourth quarter of 2017, as compared to $12.4 million during the third
quarter of 2017, and increased $3.6 million, or 40.8%, from $8.7 million
during the fourth quarter of 2016. The increase is driven by increased
debit card and credit card volume in addition to the BOTC acquisition.

Mortgage banking revenues decreased $1.8 million, or 21.8%, to $6.5
million during the fourth quarter of 2017, as compared to $8.3 million
during the third quarter of 2017, due to seasonal declines in mortgage
loan production. During the fourth quarter of 2017, loans originated for
home purchases accounted for approximately 68.8% of loan production, as
compared to 78.7% during the third quarter of 2017, which includes
construction and lot purchase activity in the West Division, and 49.8%
during the fourth quarter of 2016. Mortgage banking revenues decreased
$2.5 million, or 27.6%, to $6.5 million during the fourth quarter of
2017, as compared to $8.9 million during the fourth quarter of 2016.
This decrease was primarily due to the lack of demand for refinancing
loans, which was strong post-election during the fourth quarter of 2016.

Service charges on deposit accounts increased $0.1 million, or 1.0%, to
$6.0 million during the fourth quarter of 2017, as compared to $5.9
million during the third quarter of 2017, and increased $1.3 million, or
28.4%, from $4.6 million during the fourth quarter of 2016. The
year-over-year increase in service charges is attributable to the BOTC
acquisition.

Other income increased $0.4 million, or 14.1%, to $3.4 million during
the fourth quarter of 2017, as compared to $3.0 million during the third
quarter of 2017, and increased $0.4 million, or 14.2%, from $3.0 million
during the fourth quarter of 2016. These increases are due to normal
fluctuations in operating income.

NON-INTEREST EXPENSE

Non-interest expense decreased $9.6 million, or 10.1%, to $85.1 million
during the fourth quarter of 2017, as compared to $94.7 million during
the third quarter of 2017. Non-interest expense increased $15.5 million,
or 22.3%, from $69.6 million during the fourth quarter of 2016. Included
in non-interest expenses for the fourth quarter of 2017, the third
quarter of 2017, and the fourth quarter of 2016 are $3.3 million, $13.0
million, and $1.6 million, respectively, of acquisition related
expenses. The after-tax impact of acquisition related expenses on
earnings per share was $0.04, $0.15, and $0.02 per share for the
respective quarterly periods or $0.34 and $0.04 for 2017 and 2016,
respectively. Acquisition related costs are detailed below for the
periods presented:

 
Quarter Ended

December 31,
2017

 

September 30,
2017

 

June 30,
2017

 

March 31,
2017

 

December 31,
2016

Legal and Professional Fees $ 611   $   2,498     $   5,926     $   571     $   1,459
Employee Expenses 10 1,755 3,286
Technology Conversion and Contract Terminations 2,425 7,090 689
Other 255     1,673       232       134       165
Total Acquisition Related Expenses $ 3,301     $   13,016       $   10,133       $   705       $   1,624
 

Exclusive of acquisition related expenses, non-interest expense was
$81.8 million during the fourth quarter of 2017, compared to $81.6
million during the third quarter of 2017, as a result of higher
advertising and promotional expenses in the West Division, along with
certain consultant payments. Exclusive of acquisition related expenses,
non-interest expense was $68.0 million during the fourth quarter of
2016, with the year-over-year increase primarily attributable to the
BOTC transaction.

Salary and wage expenses decreased $0.4 million, or 1.0%, to $34.3
million during the fourth quarter of 2017, as compared to $34.7 million
during the third quarter of 2017, as decreased salaries were offset by
an increase in incentive compensation, due to improved performance.
Salaries and wage expense increased $5.4 million, or 18.6%, from $28.9
million in the fourth quarter of 2016, as a result of the BOTC
acquisition.

Employee benefit expenses decreased $2.2 million, or 22.0%, to $7.9
million during the fourth quarter of 2017, as compared to $10.2 million
during the third quarter of 2017, and decreased $1.0 million, or 10.8%,
from $8.9 million during the fourth quarter of 2016. Benefits expenses
decreased quarter-over-quarter, as end of year medical claims were
significantly lower than historical averages.

Occupancy and equipment expenses increased $0.5 million, or 5.2%, to
$9.7 million during the fourth quarter of 2017, as compared to $9.2
million during the third quarter of 2017, as a result of a catch up in
property tax accruals in the West Division. This represents a $2.9
million increase, or 42.0%, from $6.8 million during the fourth quarter
of 2016, as a result of the BOTC acquisition.

Core deposit intangible amortization expense remained stable over the
linked quarter and increased $1.0 million, to $1.9 million, during the
fourth quarter of 2017, from $0.9 million during the fourth quarter of
2016. The increase in amortization expense is directly attributable to
the higher level of core deposit intangibles recorded as a result of the
BOTC acquisition.

Other expenses increased $2.3 million, or 8.9%, to $27.7 million during
the fourth quarter of 2017, as compared to $25.5 million during the
third quarter of 2017. This increase is primarily due to higher
advertising and promotional expenses incurred to promote the Company's
brand awareness in its new markets in the West Division, along with
consultant fees related to our client experience program. These fourth
quarter increases are outside of the normal run rate of expenses.
Year-over-year, other expenses increased $5.2 million, or 22.9%, from
$22.6 million during the fourth quarter of 2016, primarily due to the
acquisition of BOTC.

A decrease in income tax expense of $2.2 million was recorded during the
fourth quarter of 2017, primarily related to the re-measurement of
deferred tax balances.

BALANCE SHEET

Total assets remained stable quarter over the linked-quarter and
increased $3,149.4 million, or 34.7%, to $12,213.3 million as of
December 31, 2017, from $9,063.9 million as of December 31, 2016,
primarily due to the BOTC acquisition.

Total loans increased $62.2 million, or 0.8%, to $7,614.4 million as of
December 31, 2017, from $7,552.1 million as of September 30, 2017,
primarily due to commercial and commercial real estate loans and offset
by seasonal declines in agricultural loans. Total loans increased
$2,135.8 million, from $5,478.5 million at December 31, 2016, primarily
due to the BOTC acquisition.

Total real estate loans increased $55.7 million, or 1.1%, to $5,176.8
million as of December 31, 2017, from $5,121.1 million as of
September 30, 2017. Within the portfolio, construction loans increased
$5.0 million, or 0.7%, to $708.3 million and commercial real estate
loans increased $64.4 million, or 2.3%, to $2,822.9 million as of
December 31, 2017. This growth was offset by declines in residential and
agricultural real estate loans of $11.6 million and $2.1 million,
respectively. Total real estate loans increased $1,662.7 million, or
47.3%, from December 31, 2016, primarily due to the BOTC acquisition.

Compared to September 30, 2017, total consumer loans remained stable at
$1,034.4 million as of December 31, 2017 and increased $64.1 million, or
6.6%, from December 31, 2016. The year-over-year increase is
attributable to growth in the indirect portfolio in the legacy
footprint, along with consumer loans acquired in the BOTC acquisition.

Commercial loans increased $29.2 million, or 2.5%, to $1,215.4 million
as of December 31, 2017, from $1,186.2 million as of September 30, 2017,
as a result of organic growth across our footprint. This represents an
increase of $417.5 million, or 52.3%, from $797.9 million as of
December 31, 2016, primarily due to the BOTC acquisition.

Agricultural loans decreased $16.5 million, or 10.8%, to $136.2 million
as of December 31, 2017, from $152.7 million as of September 30, 2017,
due to seasonal reductions in operating lines that typically occur
during the fourth quarter of the year. This represents an increase of
$3.3 million, or 2.5%, from $132.9 million as of December 31, 2016,
primarily due to organic growth.

Goodwill and intangible assets, excluding mortgage servicing rights,
decreased $2.2 million, from $524.0 million as of September 30, 2017, to
$521.8 million as of December 31, 2017. The decrease is attributable to
intangible amortization of $1.9 million during the quarter as well as an
adjustment of $0.3 million to the provisional amount related to goodwill
acquired in the BOTC acquisition.

Total deposits remained stable at $9,934.9 million as of December 31,
2017, compared to September 30, 2017, and increased $2,558.8 million,
from $7,376.1 million, as of December 31, 2016 as a result of the BOTC
acquisition. As of December 31, 2017, the mix of total deposits was
29.0% non-interest bearing demand, 28.0% interest bearing demand, 31.0%
savings and 12.0% time deposits.

The Company's loan to deposit ratio remains strong at 76.6%, up from
76.0% as of September 30, 2017 and 74.3% as of December 31, 2016.

The Company exceeded all "well-capitalized" regulatory capital adequacy
requirements as of December 31, 2017. The Company continues to increase
tangible common equity to tangible assets to 7.75% as of December 31,
2017, compared to 7.66% at the end of the third quarter. During the
fourth quarter of 2017, the Company paid common stock dividends of
approximately $13.5 million, or $0.24 per share.

CREDIT QUALITY

As of December 31, 2017, non-performing assets decreased by $7.9
million, or 8.7% to $82.6 million, compared to $90.5 million as of
September 30, 2017. Non-accrual loans decreased approximately $5.0
million to $69.5 million as of December 31, 2017, as compared to $74.5
million during the third quarter of 2017. Accruing loans past due 90
days or more decreased $2.6 million, or 45.5%, and other real estate
owned decreased $0.3 million, or 2.8%, from September 30, 2017. The
improvement in non-performing assets is primarily attributed to the
charge-off of specific reserves previously identified on three loans in
the commercial, commercial real estate, and land acquisition and
development categories along, with the payoff of two commercial real
estate and one agricultural real estate non-accrual loans.

Criticized loans decreased $22.2 million, or 5.3%, to $400.4 million as
of December 31, 2017, from $422.6 million as of September 30, 2017,
driven primarily by several upgrades and pay downs within the
agricultural and commercial real estate categories along with the
changes noted above. Criticized loans increased $28.1 million from
$372.2 million as of December 31, 2016 as a result of the loans acquired
in the BOTC acquisition.

Net loan charge-offs increased $1.4 million to $6.0 million during the
fourth quarter of 2017, as compared to $4.6 million during the third
quarter of 2017, as the Company continued to work through the resolution
of non-performing loans. Included in net loan charge-offs were $2.2
million related to consumer loans, which are typically higher in the
fourth quarter, and $3.1 million related to loans for which there were
specific reserves allocated. Net charge-offs during the fourth quarter
of 2016 were similar, at $6.1 million.

NON-GAAP FINANCIAL MEASURES

In addition to results presented in accordance with generally accepted
accounting principles in the United States of America, or GAAP, this
release contains the following non-GAAP financial measures that
management uses to evaluate capital adequacy: (i) tangible book value
per common share; (ii) tangible common stockholders' equity to tangible
assets; (iii) tangible assets; (iv) tangible common stockholders'
equity; and (v) return on average tangible common equity. These non-GAAP
financial measures may not be comparable to similarly titled measures
reported by other companies because other companies may not calculate
these non-GAAP measures in the same manner. As a result, the usefulness
of these measures to investors may be limited, and they should not be
considered in isolation or as a substitute for measures prepared in
accordance with GAAP.

The Company adjusts certain capital adequacy measures to exclude
intangible assets except mortgage servicing rights. Management believes
these non-GAAP financial measures, which are intended to complement the
capital ratios defined by banking regulators, are useful to investors in
evaluating the Company's performance due to the importance that analysts
place on these ratios and also allow investors to compare certain
aspects of the Company's capitalization to other companies.

See the Non-GAAP Financial Measures table included herein for a
reconciliation of the above described non-GAAP financial measures to
their most directly comparable GAAP financial measures.

Cautionary Note Regarding Forward-Looking Statements and Factors that
Could Affect Future Results

This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Rule 175 promulgated thereunder, and Section 21E of the Securities
Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder,
that involve inherent risks and uncertainties. Any statements about our
plans, objectives, expectations, strategies, beliefs, or future
performance or events constitute forward-looking statements. Such
statements are identified as those that include words or phrases such as
"believes," "expects," "anticipates," "plans," "trend," "objective,"
"continue" or similar expressions or future or conditional verbs such as
"will," "would," "should," "could," "might," "may" or similar
expressions. Forward-looking statements involve known and unknown risks,
uncertainties, assumptions, estimates and other important factors that
could cause actual results to differ materially from any results,
performance or events expressed or implied by such forward-looking
statements. The following factors, among others, may cause actual
results to differ materially from current expectations in the
forward-looking statements, including those set forth herein: declining
business and economic conditions, adverse economic conditions affecting
Idaho, Montana, Oregon, South Dakota, Washington, and Wyoming, lending
risk, changes in interest rates, credit losses, adequacy of the
allowance for loan losses, declining oil and gas prices, declining
demand for coal, additional regulatory requirements now that our assets
exceed $10 billion, failure to integrate or profitably operate acquired
organizations, access to low-cost funding sources, impairment of
goodwill, changes in accounting standards, dependence on the Company's
management team, ability to attract and retain qualified employees,
governmental regulation and changes in regulatory, tax and accounting
rules and interpretations, stringent capital requirements, future FDIC
insurance premium increases, CFPB restrictions on our ability to
originate and sell mortgage loans, failure of technology,
cyber-security, unfavorable resolution of litigation, inability to meet
liquidity requirements, environmental remediation and other costs,
ineffective internal operational controls, competition, reliance on
external vendors, soundness of other financial institutions, failure to
effectively implement technology-driven products and services, inability
of our bank subsidiary to pay dividends, risks associated with
introducing new lines of business, products or services, implementation
of new lines of business or net product or services offerings,
successful completion of the merger and integration of Cascade Bancorp
and BOTC, uninsured nature of any investment in Class A and Class B
common stock, volatility of Class A and Class B common stock, decline in
market price of Class A common stock, litigation pertaining to fiduciary
responsibilities, change in dividend policy, voting control of Class B
stockholders, anti-takeover provisions, dilution as a result of future
equity issuances, controlled company status, and subordination of common
stock to Company debt.

These factors are not necessarily all of the factors that could cause
our actual results, performance or achievements to differ materially
from those expressed in or implied by any of our forward-looking
statements. Other unknown or unpredictable factors also could harm our
results.

All forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary
statements set forth above. Forward-looking statements speak only as of
the date they are made and we do not undertake or assume any obligation
to update publicly any of these statements to reflect actual results,
new information or future events, changes in assumptions or changes in
other factors affecting forward-looking statements, except to the extent
required by applicable laws. If we update one or more forward-looking
statements, no inference should be drawn that we will make additional
updates with respect to those or other forward-looking statements.

Fourth Quarter 2017 Conference Call for Investors

First Interstate BancSystem, Inc. will host a conference call to discuss
fourth quarter 2017 results at 11 a.m. Eastern Time (9 a.m. Mountain
Time) on Wednesday, January 31, 2018. The conference call will be
accessible by telephone and through the Internet. Participants may join
the call by dialing 1-877-507-0356 or by logging on to www.FIBK.com.
The call will be recorded and made available for replay after 1 p.m.
Eastern Time (11 a.m. Mountain Time) on January 31, 2018 through 9 a.m.
Eastern Time (7 a.m. Mountain Time) on March 2, 2018, by dialing
1-877-344-7529 (using conference ID 10115648). The call will also be
archived on our website, www.FIBK.com,
for one year.

About First Interstate BancSystem, Inc.

First Interstate BancSystem, Inc. is a financial and bank holding
company incorporated in 1971 and headquartered in Billings, Montana. The
Company operates banking offices, including detached drive-up
facilities, in communities across Idaho, Montana, Oregon, South Dakota,
Washington, and Wyoming. Through First Interstate Bank, the Company
delivers a comprehensive range of banking products and services to
individuals, businesses, municipalities and other entities throughout
the Company's market areas.

 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
   

 

Quarter Ended % Change
(In thousands, except % and per share data)  

Dec 31,
2017

Sep 30,
2017

Jun 30,
2017

Mar 31,
2017

Dec 31,
2016

4Q17 vs
3Q17

 

4Q17 vs
4Q16

 
Net interest income $ 100,836 $ 100,791 $ 79,323 $ 68,893 $ 73,601 % 37.0 %
Net interest income on a fully-taxable equivalent ("FTE") basis 101,967 101,903 80,378 69,950 74,724 0.1 36.5
Provision for loan losses 3,525 3,443 2,355 1,730 1,078 2.4 227.0
Non-interest income:
Payment services revenues 12,272 12,366 10,225 8,445 8,716 (0.8 ) 40.8
Mortgage banking revenues 6,454 8,251 7,643 6,548 8,911 (21.8 ) (27.6 )
Wealth management revenues 5,426 5,544 5,084 5,013 5,724 (2.1 ) (5.2 )
Service charges on deposit accounts 5,962 5,904 5,060 4,350 4,645 1.0 28.4
Other service charges, commissions and fees 3,740   3,584   3,358   2,676   3,425   4.4   9.2  
Total fee-based revenues 33,854 35,649 31,370 27,032 31,421 (5.0 ) 7.7
Investment securities gains (losses) (64 ) (357 ) 5 2 18 (82.1 ) (455.6 )
Other income 3,402 2,982 5,805 2,073 2,979 14.1 14.2
Litigation recovery        

400

 

 

NM   NM  
Total non-interest income 37,192 38,274 37,180 29,107 34,818 (2.8 ) 6.8
Non-interest expense:
Salaries and wages 34,311 34,662 28,037 25,741 28,929 (1.0 ) 18.6
Employee benefits 7,949 10,185 9,811 9,616 8,908 (22.0 ) (10.8 )
Occupancy and equipment 9,686 9,210 7,919 7,062 6,823 5.2 42.0
Core deposit intangible amortization 1,861 1,885 1,062 630 898 (1.3 ) 107.2
Other expenses 27,725 25,456 23,403 19,987 22,557 8.9 22.9
Other real estate owned (income) expense 239 242 34 (48 ) (153 ) (1.2 ) (256.2 )
Acquisition related expenses 3,302   13,016   10,133   705   1,624   (74.6 ) 103.3  
Total non-interest expense 85,073   94,656   80,399   63,693   69,586   (10.1 ) 22.3  
Income before taxes 49,430 40,966 33,749 32,577 37,755 20.7 30.9
Income taxes 15,162   13,707   11,881   9,451   12,990   10.6   16.7  
Net income $ 34,268   $ 27,259   $ 21,868   $ 23,126   $ 24,765   25.7 % 38.4 %
 
Weighted-average basic shares outstanding 56,022 56,094 47,613 44,680 44,530 (0.1 )% 25.8 %
Weighted-average diluted shares outstanding 56,479 56,531 48,074 45,239 44,953 (0.1 ) 25.6
Earnings per share - basic $ 0.61 $ 0.49 $ 0.46 $ 0.52 $ 0.56 24.5 8.9
Earnings per share - diluted 0.61 0.48 0.45 0.51 0.55 27.1 10.9
 
 
NM - not meaningful
 
   
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
 
Year Ended December 31, % Change
(In thousands, except % and per share data)   2017 2016 2017 vs 2016
Net interest income $ 349,843 $ 279,765 25.0 %
Net interest income on a fully-taxable equivalent ("FTE") basis 354,198 284,217 24.6
Provision for loan losses 11,053 9,991 10.6
Non-interest income:
Payment services revenues 43,308 34,374 26.0
Mortgage banking revenues 28,896 37,222 (22.4 )
Wealth management revenues 21,067 20,460 3.0
Service charges on deposit accounts 21,276 18,426 15.5
Other service charges, commissions and fees 13,358   11,506   16.1  
Total fee-based revenues 127,905 121,988 4.9
Investment securities gains (losses) (414 ) 330 (225.5 )
Other income 14,262 10,028 42.2
Litigation recovery   4,150   NM  
Total non-interest income 141,753 136,496 3.9
Non-interest expense:
Salaries and wages 122,751 108,684 12.9
Employee benefits 37,561 35,193 6.7
Occupancy and equipment 33,877 27,298 24.1
Core deposit intangible amortization 5,438 3,427 58.7
Other expenses 96,571 83,632 15.5
Other real estate owned (income) expense 467 (44 ) (1,161.4 )
Acquisition related expenses 27,156   2,821   862.6  
Total non-interest expense 323,821   261,011   24.1  
Income before taxes 156,722 145,259 7.9
Income taxes 50,201   49,623   1.2  
Net income $ 106,521   $ 95,636   11.4 %
 
Weighted-average basic shares outstanding 51,429 44,512 15.5 %
Weighted-average diluted shares outstanding 51,903 44,910 15.6
Earnings per share - basic $ 2.07 $ 2.15 (3.7 )
Earnings per share - diluted 2.05 2.13 (3.8 )
 
 
NM - not meaningful
 
   
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
 
% Change
(In thousands, except % and per share data)  

Dec 31,
2017

Sep 30,
2017

Jun 30,
2017

Mar 31,
2017

Dec 31,
2016

4Q17 vs
3Q17

4Q17 vs
4Q16

Assets:
Cash and cash equivalents $ 758,985 $ 882,834 $ 919,775 $ 807,952 $ 782,023 (14.0 )% (2.9 )%
Investment securities 2,693,207 2,617,682 2,609,636 2,148,559 2,124,468 2.9 26.8
Loans held for investment 7,567,720 7,502,387 7,525,590 5,376,542 5,416,750 0.9 39.7
Mortgage loans held for sale 46,635   49,729   30,383   23,237   61,794   (6.2 ) (24.5 )
Total loans 7,614,355 7,552,116 7,555,973 5,399,779 5,478,544 0.8 39.0
Less allowance for loan losses 72,147   74,572   75,701   76,231   76,214   (3.3 ) (5.3 )
Net loans 7,542,208   7,477,544   7,480,272   5,323,548   5,402,330   0.9   39.6  
Premises and equipment 241,862 242,940 243,152 195,472 194,457 (0.4 ) 24.4
Goodwill and intangible assets (excluding mortgage servicing rights) 521,833 524,015 526,289 249,851 222,468 (0.4 ) 134.6
Company owned life insurance 260,551 258,929 257,538 199,262 198,116 0.6 31.5
Other real estate owned 10,053 10,344 11,286 9,428 10,019 (2.8 ) 0.3
Mortgage servicing rights 24,770 24,372 23,715 19,454 18,457 1.6 34.2
Other assets 159,786   167,813   164,679   107,708   111,557   (4.8 ) 43.2  
Total assets $ 12,213,255   $ 12,206,473   $ 12,236,342   $ 9,061,234   $ 9,063,895   0.1 % 34.7 %
 
Liabilities and stockholders' equity:
Deposits $ 9,934,871 $ 9,933,468 $ 10,020,000 $ 7,300,179 $ 7,376,110 % 34.7 %
Securities sold under repurchase agreements 642,961 635,288 579,772 587,570 537,556 1.2 19.6
Long-term debt 13,126 8,039 28,017 27,994 27,970 63.3 (53.1 )
Subordinated debentures held by subsidiary trusts 82,477 82,477 82,477 82,477 82,477
Other liabilities 112,204   127,791   120,698   61,418   57,189   (12.2 ) 96.2  
Total liabilities 10,785,639   10,787,063   10,830,964   8,059,638   8,081,302     33.5  
Stockholders' equity:
Common stock 686,991 686,508 685,289 297,173 296,071 0.1 132.0
Retained earnings* 752,588 731,879 718,093 707,016 694,650 2.8 8.3
Accumulated other comprehensive income (loss)* (11,963 ) 1,023   1,996   (2,593 ) (8,128 ) (1,269.4 ) 47.2  
Total stockholders' equity 1,427,616   1,419,410   1,405,378   1,001,596   982,593   0.6   45.3  
Total liabilities and stockholders' equity $ 12,213,255   $ 12,206,473   $ 12,236,342   $ 9,061,234   $ 9,063,895   0.1 % 34.7 %
 
Common shares outstanding at period end 56,466 56,456 56,445 45,144 44,926 % 25.7 %
Book value at period end $ 25.28 $ 25.14 $ 24.90 $ 22.19 $ 21.87 0.6 15.6
Tangible book value at period end** 16.04 15.86 15.57 16.65 16.91 1.1 (5.1 )
 
*Retained earnings and accumulated other comprehensive income (loss)
amounts included herein are exclusive of reclassifications required
by the proposed Accounting Standard Update, "Income
Statement—Reporting Comprehensive Income (Topic 220)
" issued
January 18, 2018 by the FASB.
**Non-GAAP financial measure - see Non-GAAP Financial Measures
included herein for a reconciliation of book value at period end
(GAAP) to tangible book value at period end (non-GAAP).
 
   
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Loans and Deposits
(Unaudited)
 
% Change
(In thousands, except %)  

Dec 31,
2017

Sep 30,
2017

Jun 30,
2017

Mar 31,
2017

Dec 31,
2016

4Q17 vs
3Q17

4Q17 vs
4Q16

 
Loans:
Real Estate:
Commercial real estate* $ 2,822,934 $ 2,758,551 $ 2,759,672 $ 1,819,654 $ 1,834,445 2.3 % 53.9 %
Construction:
Land acquisition and development 348,693 352,168 339,884 200,412 208,512 (1.0 ) 67.2
Residential 240,211 234,051 219,756 143,852 147,896 2.6 62.4
Commercial 119,366   117,017   121,605   121,154   125,589   2.0   (5.0 )
Total construction 708,270 703,236 681,245 465,418 481,997 0.7 46.9
Residential real estate* 1,487,405 1,499,027 1,522,868 1,004,045 1,027,393 (0.8 ) 44.8
Agricultural real estate 158,201   160,297   163,175   167,749   170,248   (1.3 ) (7.1 )
Total real estate 5,176,810 5,121,111 5,126,960 3,456,866 3,514,083 1.1 47.3
Consumer
Indirect 784,672 788,785 779,026 762,477 752,409 (0.5 ) 4.3
Other 175,084 177,590 175,737 145,443 148,087 (1.4 ) 18.2
Credit card 74,649   72,209   75,631   65,241   69,770   3.4   7.0  
Total consumer 1,034,405 1,038,584 1,030,394 973,161 970,266 (0.4 ) 6.6
Commercial 1,215,392 1,186,207 1,210,869 817,841 797,942 2.5 52.3
Agricultural 136,165 152,681 149,129 125,492 132,858 (10.8 ) 2.5
Other 4,948   3,804   8,238   3,182   1,601   30.1   209.1  
Loans held for investment 7,567,720 7,502,387 7,525,590 5,376,542 5,416,750 0.9 39.7
Loans held for sale 46,635   49,729   30,383   23,237   61,794   (6.2 ) (24.5 )
Total loans $ 7,614,355   $ 7,552,116   $ 7,555,973   $ 5,399,779   $ 5,478,544   0.8 % 39.0 %
 
*Certain reclassifications, none of which were material, have been
made to conform certain June 30, 2017 amounts to the September 30
and December 31, 2017 presentation. These reclassifications did not
change previously reported total loans.
 
Deposits:
Non-interest bearing $ 2,900,042 $ 2,965,332 $ 2,897,813 $ 1,840,647 $ 1,906,257 (2.2 )% 52.1 %
Interest bearing:
Demand 2,787,531 2,693,266 2,853,362 2,266,017 2,276,494 3.5 22.4
Savings 3,095,448 3,092,697 3,066,036 2,192,679 2,141,761 0.1 44.5
Time, $100 and over 431,969 452,853 469,556 425,870 461,368 (4.6 ) (6.4 )
Time, other 719,881   729,320   733,233   574,966   590,230   (1.3 ) 22.0  
Total interest bearing 7,034,829   6,968,136   7,122,187   5,459,532   5,469,853   1.0   28.6  
Total deposits $ 9,934,871   $ 9,933,468   $ 10,020,000   $ 7,300,179   $ 7,376,110   % 34.7 %
 
Total core deposits(1) $ 9,502,902 $ 9,480,615 $ 9,550,444 $ 6,874,309 $ 6,914,742 0.2 % 37.4 %
 
(1) Core deposits are defined as total deposits less time
deposits, $100 and over
 
   
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Credit Quality
(Unaudited)
 
% Change
(In thousands, except %)  

Dec 31,
2017

Sep 30,
2017

Jun 30,
2017

Mar 31,
2017

Dec 31,
2016

4Q17 vs
3Q17

 

4Q17 vs
4Q16

 
Allowance for Loan Losses:
Allowance for loan losses $ 72,147 $ 74,572 $ 75,701 $ 76,231 $ 76,214 (3.3 )% (5.3 )%
As a percentage of period-end loans 0.95 % 0.99 % 1.00 % 1.41 % 1.39 %
 
Net charge-offs during quarter $ 5,950 $ 4,572 $ 2,885 $ 1,713 $ 6,099 30.1 % (2.4 )%
Annualized as a percentage of average loans 0.31 % 0.24 % 0.19 % 0.13 % 0.45 %
 
 
Non-Performing Assets:
Non-accrual loans $ 69,495 $ 74,480 $ 76,687 $ 74,580 $ 72,793 (6.7 )% (4.5 )%
Accruing loans past due 90 days or more 3,090   5,665   9,362   4,527   3,789   (45.5 )   (18.4 )
Total non-performing loans 72,585 80,145 86,049 79,107 76,582 (9.4 ) (5.2 )
Other real estate owned 10,053   10,344   11,286   9,428   10,019   (2.8 )   0.3  
Total non-performing assets $ 82,638   $ 90,489   $ 97,335   $ 88,535   $ 86,601   (8.7 )%   (4.6 )%
 
Non-performing assets as a percentage of:
Total loans and OREO 1.08 % 1.20 % 1.29 % 1.64 % 1.58 %
Total assets 0.68 0.74 0.80 0.98 0.96
 
Accruing Loans 30-89 Days Past Due $ 49,047 $ 53,516 $ 44,554 $ 33,996 $ 35,407 (8.4 )% 38.5 %
Accruing TDRs 12,598 10,862 14,956 16,379 22,343 16.0 (43.6 )
 
 
Criticized Loans:
Special Mention $ 155,071 $ 147,121 $ 163,076 $ 144,806 $ 163,581 5.4 % (5.2 )%
Substandard 217,111 239,326 222,411 200,347 172,325 (9.3 ) 26.0
Doubtful 28,192   36,142   44,189   38,409   36,336   (22.0 )   (22.4 )
Total $ 400,374   $ 422,589   $ 429,676   $ 383,562   $ 372,242   (5.3 )%   7.6 %
 
   
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Selected Ratios - Annualized
(Unaudited)
 
 

Dec 31,
2017

 

Sep 30,
2017

  Jun 30,
2017
 

Mar 31,
2017

 

Dec 31,
2016

   
Annualized Financial Ratios (GAAP)
Return on average assets 1.11 % 0.88 % 0.88 % 1.05 % 1.09 %
Return on average common equity 9.52 7.67 7.68 9.48 9.95
Yield on average earning assets 4.00 4.00 3.89 3.77 3.84
Cost of average interest bearing liabilities 0.40 0.40 0.40 0.37 0.30
Interest rate spread 3.60 3.60 3.49 3.40 3.54
Net interest margin ratio 3.71 3.71 3.60 3.49 3.62
Efficiency ratio (1) 60.29 66.71 68.10 64.35 63.35
Loan to deposit ratio 76.64 76.03 75.41 73.97 74.27
 
 
Annualized Financial Ratios - Operating** (Non-GAAP)
Return on average tangible common equity 15.04 12.23 10.97 12.54 12.84
Tangible common stockholders' equity to tangible assets 7.75 7.66 7.51 8.53 8.59
 
 
Consolidated Capital Ratios:
Total risk-based capital to total risk-weighted assets

12.76

% * 12.76 % 12.56 % 14.94 % 15.13 %
Tier 1 risk-based capital to total risk-weighted assets 11.90 * 11.90 11.69 13.75 13.89
Tier 1 common capital to total risk-weighted assets

11.04

* 11.02 10.77 12.50 12.65
Leverage Ratio

8.85

* 8.71 10.65 10.09 10.11
 

(1) In fourth quarter 2017, the Company has
conformed our efficiency ratio definition to the FDIC definition
for all periods presented as noninterest expense less amortization
of intangible assets as a percent of net interest income plus
noninterest income from our historical presentation of noninterest
expense as a percent of net interest income plus noninterest
income.

*Preliminary estimate - may be subject to change.
**Non-GAAP financial measures - see Non-GAAP Financial Measures
included herein for a reconciliation of return on average common
equity (GAAP) to return on average tangible common equity, and
tangible common stockholders' equity to tangible assets (non-GAAP).
 
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Selected Ratios
(Unaudited)
 
For the Year Ended

Dec 31,
2017

Dec 31,
2016

 
Annualized Financial Ratios (GAAP)
Return on average assets 0.98 % 1.10 %
Return on average common equity 8.57 9.93
Yield on average earning assets 3.93 3.80
Cost of average interest bearing liabilities 0.39 0.30
Interest rate spread 3.54 3.50
Net interest margin ratio 3.64 3.57
Efficiency ratio (1) 64.77 61.88
 
 
Annualized Financial Ratios - Operating* (Non-GAAP)
Return on average tangible common equity 12.76 12.81
 

(1) In fourth quarter 2017, the Company has conformed
our efficiency ratio definition to the FDIC definition for all
periods presented as noninterest expense less amortization of
intangible assets as a percent of net interest income plus
noninterest income from our historical presentation of noninterest
expense as a percent of net interest income plus noninterest
income.

*Non-GAAP financial measures - see Non-GAAP Financial Measures
included herein for a reconciliation of return on average common
equity (GAAP) to return on average tangible common equity (non-GAAP).
 
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Average Balance Sheets
(Unaudited)
 
Three Months Ended
December 31, 2017   September 30, 2017   December 31, 2016
(In thousands, except %)  

Average
Balance

Interest

Average
Rate

Average
Balance
Interest

Average
Rate

Average
Balance
Interest Average
Rate
Interest earning assets:
Loans (1) (2) $ 7,539,839 $ 93,844 4.94 % $ 7,579,350 $ 94,716 4.96 % $ 5,493,911 $ 68,771 4.98 %
Investment securities (2) 2,666,575 13,686 2.04 2,601,781 12,844 1.96 2,132,551 9,647 1.80
Interest bearing deposits in banks 686,810

2,287

1.32 709,815 2,314 1.29 589,584 855 0.58
Federal funds sold 151   1   2.63   783   3   1.52   938   2   0.85  
Total interest earnings assets 10,893,375 109,818 4.00 % 10,891,729 109,877 4.00 % 8,216,984 79,275 3.84 %
Non-earning assets 1,340,365       1,359,476       799,117      
Total assets $ 12,233,740       $ 12,251,205       $ 9,016,101      
Interest bearing liabilities:
Demand deposits $ 2,752,076 $ 1,528 0.22 % $ 2,785,911 $ 1,637 0.23 % $ 2,226,871 $ 595 0.11 %
Savings deposits 3,101,110 2,267 0.29 3,209,712 2,286 0.28 2,124,672 728 0.14
Time deposits 1,166,881 2,247 0.76 1,194,265 2,274 0.76 1,073,297 1,904 0.71
Repurchase agreements 624,452 383 0.24 597,629 350 0.23 510,345 147 0.11
Other borrowed funds 23,607 414 6.96 20,015 350 6.94 9
Long-term debt 8,082 181 8.89 19,854 258 5.16 27,938 458 6.52
Subordinated debentures held by subsidiary trusts 82,477   831   4.00   82,477   819   3.94   82,477   719   3.47  
Total interest bearing liabilities 7,758,685 7,851 0.40 % 7,909,863 7,974 0.40 % 6,045,609 4,551 0.30 %
Non-interest bearing deposits 2,946,556 2,826,522 1,911,601
Other non-interest bearing liabilities 100,736 105,009 68,835
Stockholders' equity 1,427,763       1,409,811       990,056      
Total liabilities and stockholders' equity $ 12,233,740       $ 12,251,205       $ 9,016,101      
Net FTE interest income $ 101,967 $ 101,903 $ 74,724
Less FTE adjustments (2)   (1,130 )     (1,112 )     (1,123 )  
Net interest income from consolidated statements of income   $ 100,837       $ 100,791       $ 73,601    
Interest rate spread 3.60 % 3.60 % 3.54 %
Net FTE interest margin (3) 3.71 % 3.71 % 3.62 %
Cost of funds, including non-interest bearing demand deposits (4) 0.29 % 0.29 % 0.23 %
 

(1) Average loan balances include non-accrual loans.
Interest income on loans includes amortization of deferred loan
fees net of deferred loan costs, which is not material.

(2) Interest income and average rates for tax exempt
loans and securities are presented on an FTE basis.

(3) Net FTE interest margin during the period equals
the difference between annualized interest income on interest
earning assets and the annualized interest expense on interest
bearing liabilities, divided by average interest earning assets
for the period.

(4) Calculated by dividing total annualized interest on
interest bearing liabilities by the sum of total interest bearing
liabilities plus non-interest bearing deposits.

 
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Average Balance Sheets
(Unaudited)
 

 

Twelve Months Ended
December 31, 2017   December 31, 2016
(In thousands, except %)  

Average
Balance

Interest

Average
Rate

Average
Balance

Interest Average
Rate
Interest earning assets:
Loans (1) (2) $ 6,675,382 $ 327,390 4.90 % $ 5,378,298 $ 261,681 4.87 %
Investment securities (2) 2,417,544 47,587 1.97 2,093,549 37,597 1.80
Interest bearing deposits in banks 634,211 7,146 1.13 478,909 2,589 0.54
Federal funds sold 710   9   1.27   1,575   11   0.70  
Total interest earnings assets

9,727,847

382,132 3.93 % 7,952,331 301,878 3.80 %
Non-earning assets 1,133,710       772,064      
Total assets $ 10,861,557       $ 8,724,395      
Interest bearing liabilities:
Demand deposits $ 2,553,062 $ 5,481 0.21 % $ 2,162,571 $ 2,182 0.10 %
Savings deposits 2,739,250 7,722 0.28 2,037,351 2,677 0.13
Time deposits 1,112,735 8,164 0.73 1,094,190 7,803 0.71
Repurchase agreements 587,062 1,253 0.21 481,014 429 0.09
Other borrowed funds 23,950 1,537 6.42 8
Long-term debt 8,008 599 7.48 28,219 1,815 6.43
Subordinated debentures held by subsidiary trusts 82,477   3,178   3.85   82,477   2,755   3.34  
Total interest bearing liabilities 7,106,544 27,934 0.39 % 5,885,830 17,661 0.30 %
Non-interest bearing deposits 2,430,867 1,812,589
Other non-interest bearing liabilities 80,473 62,446
Stockholders' equity 1,243,673       963,530      
Total liabilities and stockholders' equity $ 10,861,557       $ 8,724,395      
Net FTE interest income $ 354,198 $ 284,217
Less FTE adjustments (2)   (4,355 )     (4,452 )  
Net interest income from consolidated statements of income   $ 349,843       $ 279,765    
Interest rate spread 3.54 % 3.50 %
Net FTE interest margin (3) 3.64 % 3.57 %
Cost of funds, including non-interest bearing demand deposits (4) 0.29 % 0.23 %
 

(1) Average loan balances include non-accrual loans.
Interest income on loans includes amortization of deferred loan
fees net of deferred loan costs, which is not material.

(2) Interest income and average rates for tax exempt
loans and securities are presented on an FTE basis.

(3) Net FTE interest margin during the period equals
the difference between annualized interest income on interest
earning assets and the annualized interest expense on interest
bearing liabilities, divided by average interest earning assets
for the period.

(4) Calculated by dividing total annualized interest on
interest bearing liabilities by the sum of total interest bearing
liabilities plus non-interest bearing deposits.

 
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
(Unaudited)
 
As Of or For the Quarter Ended
(In thousands, except % and per share data)     Dec 31,
2017
Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Annualized net income (A) $ 135,955 $ 108,147 $ 87,712 $ 93,789 $ 98,522
Total quarterly average assets (B) 12,233,740 12,251,205 9,975,824 8,933,927 9,016,101
 
Return on average assets (GAAP) (A)/(B) 1.11 % 0.88 % 0.88 % 1.05 % 1.09 %
 
Total quarterly average stockholders' equity (GAAP) (C) $ 1,427,763 $ 1,409,811 $ 1,141,427 $ 989,044 $ 990,056
Less: average goodwill and other intangible assets (excluding
mortgage servicing rights)
(523,542 ) (525,343 ) (341,603 ) (240,902 ) (223,013 )
Average tangible common stockholders' equity (Non-GAAP) (D) $ 904,221   $ 884,468   $ 799,824   $ 748,142   $ 767,043  
 
Total stockholders' equity, period-end (GAAP) (E) $ 1,427,616 $ 1,419,410 $ 1,405,378 $ 1,001,596 $ 982,593
Less: goodwill and other intangible assets (excluding mortgage
servicing rights)
(521,833 ) (524,015 ) (526,289 ) (249,851 ) (222,468 )
Total tangible common stockholders' equity (Non-GAAP) (F) $ 905,783   $ 895,395   $ 879,089   $ 751,745   $ 760,125  
 
Return on average common equity (GAAP) (A)/(C) 9.52 % 7.67 % 7.68 % 9.48 % 9.95 %
Return on average tangible common equity (Non-GAAP) (A)/(D) 15.04 12.23 10.97 12.54 12.84
 
Total assets (GAAP) (G) $ 12,213,255 $ 12,206,473 $ 12,236,342 $ 9,061,234 $ 9,063,895
Less: goodwill and other intangible assets (excluding mortgage
servicing rights)
(521,833 ) (524,015 ) (526,289 ) (249,851 ) (222,468 )
Tangible assets (Non-GAAP) (H) $ 11,691,422   $ 11,682,458   $ 11,710,053   $ 8,811,383   $ 8,841,427  
 
Total common shares outstanding, period end (I) 56,466 56,456 56,445 45,144 44,926
 
Book value per share, period end (GAAP) (E)/(I) $ 25.28 $ 25.14 $ 24.90 $ 22.19 $ 21.87
Tangible book value per share, period-end (Non-GAAP) (F)/(I) 16.04 15.86 15.57 16.65 16.92
Average common stockholders' equity to average assets (GAAP) (C)/(B) 11.67 % 11.51 % 11.44 % 11.07 % 10.98 %
Tangible common stockholders' equity to tangible assets (Non-GAAP) (F)/(H) 7.75 7.66 7.51 8.53 8.59
 
 
FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES
Non-GAAP Financial Measures
(Unaudited)
 
For the Year Ended
(In thousands, except % and per share data)     Dec 31,
2017
Dec 31,
2016
Net income (A) $ 106,521 $ 95,636
Average assets (B) 10,861,557 8,724,395
 
Return on average assets (GAAP) (A)/(B) 0.98 % 1.10 %
 
Average stockholders' equity (GAAP) (C) $ 1,243,673 $ 963,530
Less: average goodwill and other intangible assets (excluding
mortgage servicing rights)
(408,939 ) (216,726 )
Average tangible common stockholders' equity (Non-GAAP) (D) $ 834,734   $ 746,804  
 
Return on average common equity (GAAP) (A)/(C) 8.57 % 9.93 %
Return on average tangible common equity (Non-GAAP) (A)/(D) 12.76 12.81

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