Fourth Quarter Performance Overview
Net income for Q4 2025 of 108.8 million marked a significant increase from 71.4 million, or 0.69 diluted EPS, in the third quarter of 2025, and 52.1 million, or 0.50 diluted EPS, in the fourth quarter of 2024. Net interest income was 206.4 million, a slight decrease from 206.8 million in Q3 2025. The net interest margin (NIM) improved to 3.36% in Q4 2025, up from 3.34% in the prior quarter and 3.18% in Q4 2024. Noninterest income surged to 106.6 million, driven primarily by a 62.7 million gain from the sale of Arizona and Kansas branches. The efficiency ratio for the quarter was 52.2%.
Loans held for investment (LHFI) decreased by 632.8 million to 15.2 billion, while total deposits saw a decrease of 516.7 million to 22.088 billion, though this decrease was largely impacted by the 641.6 million of deposits sold in the branch transaction. Excluding this, deposits increased 124.9 million. Other borrowed funds were reduced to zero as of December 31, 2025, down from 1.567 billion a year prior.
Full-Year and Year-over-Year Context
For the full year 2025, net income was 302.1 million, or 2.94 diluted EPS, compared to 226.0 million, or 2.19 diluted EPS, for the full year 2024. This represents a 33.7% increase in net income year-over-year. Net interest income for the full year 2025 stood at 825.4 million, a modest increase from 821.6 million in 2024. Total assets at year-end 2025 were 26.6 billion.
Credit Quality and Capital Position
The provision for credit losses was 7.1 million in Q4 2025, compared to zero in Q3 2025 and 33.7 million in Q4 2024. Net charge-offs were 22.1 million, or an annualized 0.56% of average loans. Non-performing assets decreased by 25.5% from the prior quarter to 138.3 million. Criticized loans decreased by 9.6% quarter-over-quarter to 1.051 billion. The Common Equity Tier 1 (CET1) capital ratio improved by 48 basis points to 14.38%. The company declared a quarterly cash dividend of 0.47 per share.
Analyst Activity
DA Davidson reiterated a “Buy” rating on First Interstate BancSystem today, maintaining its price target of 42. Barclays recently raised its price target from 36.00 to 38.00 with an “equal weight” rating. No other immediate upgrades or downgrades were reported today. The company also announced an additional 150 million to its share repurchase program, bringing the total authorization to 300 million since August 2025.