FIBK shares target boosted by Stephens after positive 2Q results By Investing.com

On Monday, Stephens raised the price target for shares of First Interstate Bancsystems (NASDAQ:FIBK) from $32.00 to $36.00, while retaining an Overweight rating on the stock. The adjustment follows the company’s second-quarter earnings, which revealed operational earnings per share (EPS) of $0.58, surpassing both Stephens’ and the Street’s expectations of $0.51 and $0.55, respectively.

The bank’s pre-provision net revenue (PPNR) grew by 6.1%, exceeding the analyst’s projections. This growth was attributed to a positive shift in the core net interest margin (NIM), which increased by 9 basis points. The company’s guidance also indicates potential similar quarterly increases in the second half of the year.

Despite a moderate expected decrease in non-interest bearing (NIB) deposits from the period’s end, they are projected to maintain around 26% of the total deposits. Moreover, both loans and deposits are anticipated to remain flat through the end of the year.

First Interstate Bancsystems has shown progress in its fee income efforts and a slight moderation in expenses for the second half of the year. However, the company expects mergers and acquisitions activities to be on hold during the CEO transition period. On the credit front, the second quarter had some negative aspects, with net charge-offs (NCOs) at 0.30% and a forecast for potentially uneven NCOs in the latter half of the year.

Nonetheless, commercial and industrial non-performing loans (NPLs) have already been accounted for in reserves.

Reflecting these developments, the analyst revised the operational EPS estimate for the year to $2.58, up from the previous estimate of $2.53. The positive financial performance and outlook for First Interstate Bancsystems have contributed to the decision to maintain an Overweight rating on the stock.

In other recent news, First Interstate BancSystem announced the planned retirement of its President and CEO, Kevin P. Riley. The company has initiated the search for a successor, led by a globally recognized executive recruiting firm. Riley, who joined in 2013, has overseen substantial growth, transforming First Interstate from a $7 billion institution to a regional entity with over $30 billion in assets.

In its financial updates, First Interstate BancSystem reported a Q1 net income of $58.4 million, or $0.57 per share. Despite a decrease in net interest income and noninterest income, the company remains optimistic about future performance. They anticipate margin expansion in the second quarter and a stable cost of funds, even as loan demand remains muted, particularly in real estate.

First Interstate BancSystem has also made strategic adjustments to its balance sheet, including the departure of $185 million in high-cost municipal deposits. This move is expected to benefit its interest-bearing deposit costs..

InvestingPro Insights

Following Stephens’ recent price target update for First Interstate Bancsystems (NASDAQ:FIBK), InvestingPro data provides additional context for investors considering the stock. FIBK’s market capitalization stands at $3.38 billion, with a P/E ratio of 13.26, reflecting a market valuation that’s in line with its earnings. The company’s revenue for the last twelve months as of Q2 2024 was $974.9 million, despite a revenue decline of 7.81% during the same period. Importantly, FIBK has maintained a strong dividend yield of 5.81%, rewarding investors with consistent payouts, as evidenced by 15 consecutive years of dividend payments—an InvestingPro Tip that highlights the company’s commitment to shareholder returns.

Investors may also note that FIBK is trading near its 52-week high, with the price at 98.03% of this peak. The robust price performance is supported by a 21.46% total return over the last three months, reinforcing the positive sentiment surrounding the stock. Moreover, analysts predict the company will remain profitable this year, a sentiment backed by FIBK’s profitability over the last twelve months. For those seeking more in-depth analysis, there are additional InvestingPro Tips available, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

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