First Interstate BancSystem (FIBK)

Regional banking company First Interstate BancSystem (NASDAQ:FIBK) missed Wall Street’s revenue expectations in Q3 CY2025, with sales flat year on year at $250.5 million. Its GAAP profit of $0.69 per share was 11.7% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1971 and still guided by founding family principles, First Interstate BancSystem (NASDAQ:FIBK) operates a network of community banks across 14 western and midwestern states, offering comprehensive banking services to individuals, businesses, and government entities.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

First Interstate BancSystem competes with other regional banks operating in the western and midwestern United States, including U.S. Bancorp (NYSE:USB), Zions Bancorporation (NASDAQ:ZION), PacWest Bancorp (NASDAQ:PACW), and Western Alliance Bancorporation (NYSE:WAL).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Luckily, First Interstate BancSystem’s revenue grew at a solid 9% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. First Interstate BancSystem’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 3.1% over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, First Interstate BancSystem missed Wall Street’s estimates and reported a rather uninspiring 0.6% year-on-year revenue decline, generating $250.5 million of revenue.

Net interest income made up 82.3% of the company’s total revenue during the last five years, meaning First Interstate BancSystem barely relies on non-interest income to drive its overall growth.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for First Interstate BancSystem, its EPS declined by 1.7% annually over the last five years while its revenue grew by 9%. This tells us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For First Interstate BancSystem, its two-year annual EPS declines of 6.5% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, First Interstate BancSystem reported EPS of $0.69, up from $0.54 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects First Interstate BancSystem’s full-year EPS of $2.37 to grow 4.3%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

First Interstate BancSystem’s TBVPS grew at a sluggish 1.1% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 9.7% annually over the last two years from $18.09 to $21.77 per share.

Over the next 12 months, Consensus estimates call for First Interstate BancSystem’s TBVPS to grow by 4% to $22.65, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, First Interstate BancSystem has averaged a Tier 1 capital ratio of 12.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, First Interstate BancSystem has averaged an ROE of 7.8%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

It was good to see First Interstate BancSystem beat analysts’ EPS expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. On the other hand, its net interest income missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock traded up 1.2% to $32.47 immediately after reporting.

Updated: December 4, 2025 at 11:32 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own First Interstate BancSystem, you should also grasp the company’s longer-term business quality and valuation.

We see the value of companies driving economic growth, but in the case of First Interstate BancSystem, we’re out. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, First Interstate BancSystem’s declining EPS over the last five years makes it a less attractive asset to the public markets, and its estimated net interest income for the next 12 months are weak.

First Interstate BancSystem’s P/B ratio based on the next 12 months is 1x. This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $35.50 on the company (compared to the current share price of $33.69).