First Interstate earnings fell to $62.2 million, or $0.65 per diluted share, in the third quarter of 2026, despite a tenth consecutive quarter of net interest margin expansion. Results announced October 22 showed stronger net interest income, but the absence of a prior-quarter branch-sale gain and higher credit-loss provisions weighed on profit.
Key Takeaways
- Net interest income rose 2% from the second quarter, while the fully taxable-equivalent margin reached 3.55%.
- A $19.5 million branch-sale gain boosted the prior quarter, complicating the sequential profit comparison.
- Loans declined $296 million, and management expects further loan contraction in the fourth quarter.
Table of Contents
- First Interstate earnings reflect a tougher comparison
- Wider margins lift interest income despite fewer loans
- Credit indicators improve unevenly
- Buybacks continue as management prioritizes growth
- Conclusion
First Interstate earnings reflect a tougher comparison
The company’s third-quarter earnings announcement showed net income declining from $83.9 million, or $0.87 per diluted share, in the second quarter. Profit also fell from $71.4 million, or $0.69 per share, a year earlier.
The sequential comparison includes a $19.5 million gain from selling eleven Nebraska branches in the second quarter. With that gain no longer contributing, third-quarter noninterest income fell $18.4 million to $43.3 million.
Credit provisions also changed sharply. First Interstate recorded a $10.5 million provision for credit losses, compared with a $3.2 million provision reduction in the preceding quarter. Lower operating costs provided a partial offset: noninterest expense declined $1.8 million to $157.1 million.
| Item | Details |
|---|---|
| Average loan yield | 5.67% in Q3 2026, up 5 basis points sequentially. |
| Loan-to-deposit ratio | 65.4% at September 30, versus 66.6% at June 30. |
| Common equity tier 1 ratio | 14.36%, down 18 basis points during the quarter. |
| Remaining buyback authorization | $103.4 million available at September 30, 2026. |
| Dividend timetable | Record date November 3, 2026; payment date November 13, 2026. |
Wider margins lift interest income despite fewer loans
Net interest income increased $4 million to $206.2 million, as higher yields on interest-earning assets and lower interest expense on time deposits outweighed pressure from a smaller loan portfolio. It remained slightly below the $206.8 million earned a year earlier.
The fully taxable-equivalent net interest margin, a non-GAAP measure, rose to 3.55% from 3.48% in the second quarter and 3.36% a year earlier. The separately reported, non-FTE margin was 3.53%, up from 3.45% sequentially. Keeping those measures separate matters when comparing the bank’s margin figures.
Loans held for investment declined $296 million to $13.99 billion. Payoffs, paydowns and continued runoff of indirect consumer loans contributed to the contraction. Deposits slipped $52.8 million to $21.39 billion, although noninterest-bearing balances increased for a second consecutive quarter.
CFO David Della Camera said fourth-quarter guidance implies declining loans and flat-to-higher deposits, meaning continued near-term pressure on the mix of earning assets. Management had not provided 2027 guidance.
Credit indicators improve unevenly
Nonperforming assets decreased 6.1% during the quarter to $155 million. Criticized loans were broadly stable at $939.5 million, up $2.1 million sequentially but down about 19% from a year earlier.
Net charge-offs nevertheless increased to $9.9 million, equivalent to an annualized 0.28% of average loans, from $9.7 million in the second quarter and $2.3 million a year earlier. The allowance for credit losses rose to 1.30% of period-end loans from 1.28%.
Those figures show why falling nonperforming assets do not necessarily translate immediately into lower credit costs: realized loan losses remained elevated relative to the year-earlier quarter.
Buybacks continue as management prioritizes growth
First Interstate repurchased approximately 2.04 million shares for $76.3 million during the quarter. Cumulative purchases reached $346.6 million under the program authorized in August 2025.
Della Camera said the company remained comfortable deploying excess capital, but described balance-sheet growth as its first capital-allocation priority. He did not give a specific quarterly repurchase target.
The board also declared a dividend of $0.47 per common share. Operationally, the bank plans to consolidate three locations in the fourth quarter of 2026 and open two Colorado branches in the first half of 2027.
Conclusion
First Interstate’s stronger interest spread supported revenue, but shrinking loans and higher credit provisions limited the earnings benefit. The next confirmed shareholder milestone is the November 3 dividend record date, followed by payment on November 13.
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