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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from _______ to _______
COMMISSION FILE NUMBER 333-3250
FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC.
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(Exact name of registrant as specified in its charter)
MONTANA 81-033143
- ------------------------------------ ---------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
PO BOX 30918, 401 NORTH 31ST STREET, BILLINGS, MT 59116-0918
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 406/255-5300
------------------------
N/A
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(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes X No
The Registrant had 1,973,460 share of common stock and 20,000 shares of
preferred stock outstanding on April 30, 1997.
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC.
Quarterly Report on Form 10-Q
Index Page
- ----- ----
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets
March 31, 1997, and December 31, 1996 3
Consolidated Statements of Income
Three months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996 5
Notes to Unaudited Consolidated Financial
Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 14
Item 2 - Changes in Securities 14
Item 3 - Defaults upon Senior Securities 14
Item 4 - Submission of Matters to a Vote of
Security Holders 14
Item 5 - Other Information 14
Item 6 - Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)
MARCH 31,
ASSETS 1997 DECEMBER 31,
------ (UNAUDITED) 1996
----------- -----------
Cash and due from banks $ 131,878 160,962
Interest bearing deposits in banks 2,033 6,545
Federal funds sold 27,695 4,945
Investment securities:
Available-for-sale 98,709 124,502
Held-to-maturity 286,097 279,069
----------- -----------
384,806 403,571
Loans, net 1,405,570 1,379,871
Less allowance for loan losses 28,393 27,797
----------- -----------
Net loans 1,377,177 1,352,074
Premises and equipment, net 58,722 58,183
Accrued interest receivable 19,250 19,573
Excess of purchase price over equity in net assets of
subsidiaries less accumulated amortization of $6,712
at March 31, 1997 (unaudited) and $5,971
at December 31, 1996 38,269 39,010
Other real estate owned, net 878 1,546
Deferred tax asset 5,230 4,921
Other assets 15,064 16,899
----------- -----------
$ 2,061,002 2,068,229
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 341,421 385,371
Interest bearing 1,308,035 1,294,053
----------- -----------
Total deposits 1,649,456 1,679,424
Federal funds purchased 24,730 13,450
Securities sold under repurchase agreements 119,731 129,137
Accounts payable and accrued expenses 29,339 22,419
Other borrowed funds 23,898 13,071
Long-term debt 64,259 64,667
----------- -----------
Total liabilities 1,911,413 1,922,168
Commitments and contingencies
Stockholders' equity:
Non-voting noncumulative 8.53% preferred stock
without par value; authorized 100,000 shares;
issued and outstanding 20,000 shares
at March 31, 1997 and December 31, 1996 20,000 20,000
Common stock without par value; authorized 5,000,000
shares; issued 1,973,640 shares at March 31, 1997
(unaudited) and 1,978,268 shares at
December 31, 1996 8,476 8,941
Retained earnings 120,932 116,613
Unrealized holding gain on investment securities
available-for-sale, net 181 507
----------- -----------
Total stockholders' equity 149,589 146,061
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$ 2,061,002 2,068,229
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----------- -----------
Book value per common share $ 65.66 63.72
----------- -----------
----------- -----------
See accompanying notes to unaudited consolidated financial statements.
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except share data)
(Unaudited)
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
------- --------
Interest income:
Interest and fees on loans $ 33,330 21,897
Interest and dividends on investment securities:
Taxable 5,343 3,451
Exempt from Federal taxes 251 236
Interest on deposits with banks 85 204
Interest on Federal funds sold 152 483
------- --------
Total interest income 39,161 26,271
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Interest expense:
Interest on deposits 13,387 9,808
Interest on Federal funds purchased 318 31
Interest on securities sold under repurchase
agreements 1,325 1,129
Interest on other borrowed funds 73 84
Interest on long-term debt 1,289 322
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Total interest expense 16,392 11,374
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Net interest income 22,769 14,897
Provision for loan losses 1,223 491
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Net interest income after provision for
loan losses 21,546 14,406
Other operating income:
Income from fiduciary activities 1,033 862
Service charges on deposit accounts 2,379 1,715
Data processing 1,841 2,041
Other service charges, commissions, and fees 892 624
Net investment securities gains 58 2
Other income 422 301
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Total other operating income 6,625 5,545
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Other operating expenses:
Salaries and wages 6,987 4,897
Employee benefits 1,996 1,370
Occupancy expense, net 1,600 1,039
Furniture and equipment expenses 1,819 1,290
Other real estate expense (income), net (134) (89)
Other expenses 5,435 2,925
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Total other operating expenses 17,703 11,432
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Income before income taxes 10,468 8,519
Income tax expense 4,006 3,283
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Net income $ 6,462 5,236
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Income per common share $ 3.04 2.68
Dividends per common share $ .87 .71
------ ------
------ ------
Weighted average common shares outstanding 1,985,404 1,953,802
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See accompanying notes to unaudited consolidated financial statements.
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
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Cash flows from operating activities:
Interest received $38,079 25,194
Service charges, commissions and fees received,
and other income 6,763 5,682
Interest paid (17,140) (11,885)
Cash paid to suppliers and employees (10,047) (11,325)
Federal and state income taxes paid (300) (60)
Other operating cash receipts 1,455 1,163
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Net cash provided by operating activities 18,810 8,769
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Cash flows from investing activities:
Purchases of investment securities:
Held-to-maturity (170,215) (40,310)
Available-for-sale (442) (10,119)
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(170,657) (50,429)
Proceeds from maturities and paydowns of
investment securities:
Held-to-maturity 162,989 25,176
Available-for-sale 5,696 3,105
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168,685 28,281
Sales of investment securities:
Available-for-sale 20,000 -
------- --------
20,000 -
Decrease in interest bearing deposits in banks 4,512 4
Extensions of credit to customers, net of repayments (27,010) (27,303)
Recoveries on loans charged-off 734 243
Proceeds from sale of other real estate owned 853 284
Distribution from real estate joint venture - 150
Capital expenditures, net (1,978) (1,787)
------- --------
Net cash used in investing activities (4,861) (50,557)
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Cash flows from financing activities:
Net decrease in deposits (29,968) (2,793)
Net increase (decrease) in federal funds and
repurchase agreements 1,874 (15,027)
Net increase in other borrowed funds 10,827 2,149
Proceeds from long-term borrowings 250 424
Repayment of long-term debt (658) (1,000)
Proceeds from issuance of common stock 139 277
Payments to retire common stock (604) (864)
Dividends paid on common stock (1,722) (1,385)
Dividends paid on preferred stock (421) -
------- --------
Net cash used in financing activities (20,283) (18,219)
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Net decrease in cash and cash equivalents (6,334) (60,007)
Cash and cash equivalents at beginning of period 165,907 165,067
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Cash and cash equivalents at end of period $ 159,573 105,060
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(Continued)
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Dollars in thousands)
(Unaudited)
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
------- --------
Reconciliation of net income to net cash provided by
operating activities:
Net income $ 6,462 5,236
Adjustments to reconcile net income to net cash
provided by operating activities:
Provisions for loan and other
real estate losses 1,223 491
Depreciation and amortization 2,177 1,037
Net premium amortization on
investment securities 246 300
Gains on sale of investments (58) (2)
Gains on sales of other real estate
owned (185) (112)
Losses on sales of property
and equipment 3 2
Provision for deferred income taxes (136) (257)
Decrease (increase) in interest
receivable 323 (75)
Decrease (increase) in other assets 1,835 (155)
Increase in accounts payable and
accrued expenses 6,920 2,304
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Net cash provided by operating
activities $18,810 8,769
------- --------
------- --------
Noncash Investing and Financing Activities:
No loans were transferred to other real estate owned during the three months
ended March 31, 1997. Loans of $197 were transferred to other real estate owned
during the three months ended March 31, 1996 (unaudited).
See accompanying notes to unaudited consolidated financial statements.
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(Dollars in thousands, except per share data)
(1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (all of which are of a normal
recurring nature) necessary to present fairly the consolidated financial
position at March 31, 1997 and the results of consolidated operations and
cash flows for each of the three month periods ended March 31, 1997 and
1996 in conformity with generally accepted accounting principles. The
balance sheet information at December 31, 1996 is derived from audited
consolidated financial statements, however, certain reclassifications have
been made to conform to the March 31, 1997 presentation.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." SFAS No. 125 requires the Company to recognize as separate
assets the rights to service mortgage loans for others, whether the
servicing rights are acquired through purchases or loan originations.
Servicing rights are initially recorded at fair value based upon the
present value of estimated future cash flows. Subsequently, the servicing
rights are assessed for impairment, with impairment losses recognized in
the statement of income in the period the impairment occurs. For purposes
of performing the impairment evaluation, the related portfolio must be
stratified on the basis of certain risk characteristics including loan type
and note rate. SFAS No. 125 also specifies that financial assets subject
to prepayment, including loans that can be contractually prepaid or
otherwise settled in such a way that the holder would not recover
substantially all of its recorded investment, be measured like debt
securities available-for-sale or trading securities under SFAS No. 115.
The Company adopted the provisions of SFAS No. 125 as of January 1, 1997.
The adoption did not have a material effect on the financial position or
results of operations of the Company.
(2) CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks and federal funds sold for one-day
periods.
(3) COMPUTATION OF EARNINGS PER SHARE
Earnings per common share are computed by dividing net income less
preferred stock dividends by the weighted average number of shares of
common stock outstanding during the period presented. Stock options
outstanding are considered common stock equivalents and are included in
computations of weighted average shares outstanding.
(4) CASH DIVIDENDS
On April 14, 1997, the Company paid a cash dividend on first quarter
earnings of $.98 per share to stockholders of record on that date. It has
been the Company's practice to pay quarterly dividends based upon earnings.
The April 1997 dividend represents 30% of the Company's net income for the
quarter ended March 31, 1997.
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(Dollars in thousands, except per share data)
(5) ALLOWANCE FOR POSSIBLE LOAN LOSSES
Transactions in the allowance for possible loan losses are summarized
below:
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
------- --------
Balance at beginning of period $27,797 15,171
Provision during the period 1,223 491
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29,020 15,662
Deduct:
Loans charged off 1,361 663
Recoveries of loans previously charged off (734) (243)
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Net chargeoffs 627 420
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Balance at end of period $ 28,393 15,242
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(6) OTHER REAL ESTATE OWNED (OREO)
Other real estate consists of the following:
March 31, December 31,
1997 1996
--------- ------------
Other real estate $ 1,344 2,057
Less allowance for OREO losses 466 511
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$ 878 1,546
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Transactions in the allowance for OREO losses were as follows:
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
------- --------
Balance at beginning of period $ 511 554
Provision (reversal) during the period - -
Losses on disposition (45) (6)
------ ------
Balance at end of period $ 466 548
------ ------
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FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(Dollars in thousands, except per share data)
The changes in the balance of other real estate for the three months ended March
31, 1997 and 1996 can be summarized as follows:
Three months ended March 31,
-----------------------------------
1997 1996
Balance at beginning of period $2,057 1,903
Add transfers from loans - 197
Less writedowns charged to reserves (45) -
Cash proceeds from sales 853 284
Less gains on sales 185 112
----- -----
Net basis of OREO sold (668) (172)
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Balances, end of period $ 1,344 1,928
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(7) ACQUISITIONS
On February 5, 1997, First Interstate Bank of Montana, NA purchased the
assets of Mountain Financial, a small loan production office located in
Eureka, Montana. The total cash purchase price of the assets acquired
aggregated $1,726, of which $166 was for premises and equipment and the
remaining $1,560 was for loans acquired.
(8) COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is named or threatened to be
named as defendant in various lawsuits, some of which involve claims for
substantial amounts of actual and/or punitive damages. With respect to
each of these suits it is the opinion of management, following consultation
with legal counsel, the suits are without merit or in the event the
plaintiff prevails, the ultimate liability or disposition thereof will not
have a material adverse effect on the consolidated financial condition or
the results of operations.
During 1985, the Company entered into a partnership agreement with two
outside parties for the purpose of acquiring certain land and constructing
a building with an aggregate cost of approximately $20,000. The Company is
a tenant in the building and owns a 50% undivided interest in the property.
The term debt of the partnership of $10,827 at December 31, 1996 is
guaranteed by each of the partners.
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend
credit and standby letters of credit. These instruments involve, in
varying degrees, elements of credit and interest rate risk in excess of
amounts recorded in the consolidated balance sheet.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Company to guarantee the performance of a
customer to a third party. Most commitments extend for no more than two
years. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Company holds various collateral supporting those
commitments for which collateral is deemed necessary.
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Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the commitment
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
The Company evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the
Company upon extension of credit, is based on management's credit
evaluation of the customer. Collateral held varies but may include
accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
(9) ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share", which
simplifies the standards for computing earnings per share ("EPS") by
replacing the presentation of primary EPS with a presentation of basic EPS.
SFAS No. 128 requires dual presentation of basic and diluted EPS by
entities with complex capital structures. Basic EPS includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number if common shares outstanding for the period.
Diluted EPS reflects the potential dilution of all securities that could
share in the earnings of an entity. SFAS No. 128 replaces APB Opinion 15
and is effective for financial statements issued for periods ending after
December 15, 1997. The Company does not expect adoption of SFAS No. 128 to
have an impact on its EPS disclosures.
In 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure", which lists required disclosures about capital
structure that had been included in a number of previously existing
separate statements and opinions. SFAS No. 129 is effective for financial
statements for periods ending after December 15, 1997. The Company does
not expect adoption of SFAS No. 129 to have a material impact on its
capital structure disclosures.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
(1) MATERIAL CHANGES IN FINANCIAL CONDITION. COMPARISON OF BALANCE SHEET ITEMS
AT MARCH 31, 1997 AND DECEMBER 31, 1996.
GENERAL. During the three month period ending March 31, 1997, total assets
decreased slightly from $2,068,229 at December 31, 1996 to $2,061,002 at
March 31, 1997. While total assets reflect only a nominal change, there
were some notable shifts in the mix of assets and liabilities between
periods. Seasonal declines in deposits and increases in loans and federal
funds sold were funded with available cash, proceeds from maturities and
paydowns of investments transactions, and other borrowings.
LOANS. Net loans increased $25,103 or 1.9% during the first three months
of 1997 from $1,352,074 at December 31, 1996 to $1,377,177 at March 31,
1997. The Company experienced increased loan volumes attributed to
continued strong economic conditions in the communities served by the
Company's banking subsidiaries, as well as some seasonal increases,
particularly in agricultural lending, following traditional paydowns in the
fourth quarter.
DEPOSITS. Total deposits decreased from $1,679,424 at December 31, 1996 to
$1,649,456 at March 31, 1997. The decrease in deposits is principally
related to an expected seasonal cycle in overall deposit growth that has
historically occurred during the first half of the year. While
non-interest bearing deposits declined $43,950 or 11.4% from December 31,
1996 to March 31, 1997, modest growth in interest bearing deposits offset a
portion of the decrease. Interest bearing deposits increased $13,982 or
1.1% from $1,294,053 at December 31, 1996 to $1,308,035 at March 31, 1997.
FEDERAL FUNDS SOLD. Federal funds sold balances increased $22,750 to
$27,695 at March 31, 1997 from $4,945 at December 31, 1996 as the Company's
banking subsidiaries funded the cash requirements of correspondent banks
facing similar seasonal fluctuations in customer deposits.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES. Accounts payable and accrued
expenses increased $6,920 from $22,419 at December 31, 1996 to $29,339 at
March 31, 1997. The increase is due primarily to the timing of federal and
state income tax payments.
OTHER BALANCE SHEET ACCOUNTS. Cash, amounts due from banks, interest
bearing deposits and investment securities decreased $52,361 (in aggregate)
and federal funds purchased, securities sold under repurchase agreements
and other borrowed funds increased $11,280 (in aggregate) during the first
quarter. These changes provided additional liquidity to fund increases in
other earning assets, primarily loans and federal funds sold for one day
periods.
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(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS. COMPARISON OF THREE MONTHS
ENDED MARCH 31, 1997 AND MARCH 31, 1996.
GENERAL. On October 1, 1996, the Company acquired all of the outstanding
capital stock of First Interstate Bank of Montana, N.A. and First
Interstate Bank of Wyoming, N.A. and, on December 18, 1996, acquired all of
the outstanding capital stock of Mountain Bank of Whitefish. The
acquisitions were accounted for using the purchase method of accounting.
Accordingly, the large increases in revenue and expenses for the three
month period ended March 31,1997 compared to the three month period ended
March 31, 1996 are due, in a large part, to the acquisitions. The
increases in consolidated earnings resulting from the acquisitions are
partially offset by higher interest expense resulting from funding of the
acquisition.
As a percentage of consolidated averages for the quarter ended March 31,
1997, average interest earning assets and average interest bearing
liabilities of the banks acquired were approximately 31% and 32%,
respectively. Accordingly, there are material increases in most categories
of income and expense for the three month period ended March 31,1997 when
compared to the three months ended March 31, 1996. Significant variances
not directly attributable to the acquired banks are explained in the
discussions that follow.
NET INCOME. Net income increased from $5,236 to $6,462 for the three month
periods ended March 31, 1996 and 1997, respectively, an increase of
$1,226. While net earnings of the acquired banks aggregated approximately
$1,935 for the quarter ended March 31, 1997, the increases were partially
offset by additional interest expense and other indirect costs at the
parent company.
INTEREST INCOME. Interest income increased from $26,271 for the three
month period ended March 31, 1996 to $39,161 for the three month period
ended March 31, 1997. Adjusted for interest income of the acquired banks,
interest income increased approximately $892 or 3.4% primarily due to
internal growth in loan volume. One of the Company's primary objectives is
to maintain steady growth in interest income by utilizing systems,
procedures, and products designed to manage and promote balance sheet
growth, maintain strong interest margins and provide competitive pricing.
INTEREST EXPENSE. Interest expense increased from $11,374 to $16,392 for
the three month periods ended March 31,1996 and 1997, respectively, an
increase of $5,018. Interest expense of the acquired banks and additional
interest costs to fund the acquisitions aggregated approximately $4,600 in
1997. The remaining increase was principally the result of internal growth
in deposits.
Adjusted for acquisitions, average interest-bearing deposits for the first
quarter of 1997 were up $50,512 or 5.8% compared to averages for the first
three months of 1996.
PROVISION FOR LOAN LOSSES. The provision for loan losses increased to
$1,223 from $491 for the first quarter of 1997 and 1996, respectively.
Increases in the provision of $566 are directly attributable to the
acquisitions. The remaining increases are associated with growth in loan
volumes and a slight deterioration in agricultural and consumer loans.
Management actively monitors the local economies for strengths and
diversity and unemployment levels, and evaluates its banking markets for
their effects on its loan portfolio. Although nonperforming and problem
assets have shown some increase, the fundamental economies within the
Company's markets have remained strong. Overall, the increases in the
provision for loan loss are reflective of management's evaluation of the
risks inherent in the loan portfolio and current economic
12
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conditions. Should a significant shift in economic trends and/or increased
volumes of problem credits or charge-offs occur, such events would likely
require increased loan loss provisions in the future.
NON-INTEREST INCOME. Overall, non-interest income increased $1,080 from
$5,545 to $6,625 for the three month periods ended March 31, 1996 and 1997,
respectively. Exclusive of non-interest income of $1,369 attributable to
the acquisitions, non-interest income declined $289 or 5.2% in 1997.
Decreases in income from fiduciary activities ($139) and data processing
revenues ($300) as a result of non-recurring accrual adjustments made in
January 1996 were partially offset by increases in data processing income
resulting from increases in the number of customers and in the volume of
transactions processed.
NON-INTEREST EXPENSES. Non-interest expenses were $17,703 and $11,432 for
the three month periods ended March 31, 1997 and 1996, respectively, an
increase of $6,271. Non-interest expenses incurred directly by the
acquired banks aggregated approximately $4,570, however, there were also
other indirect increases in non-interest expenses related to the
acquisitions recorded by the parent company and other bank subsidiaries
particularly in the data division of the parent company and operations
divisions of other banking subsidiaries.
Salaries and benefits expense increased $2,716 from $6,267 to $8,983 for
the three month periods ended March 31, 1996 and 1997, respectively. Of
the increases, $2,090 is the direct result of personnel costs related to
employees of the acquired banks. The remaining increases of approximately
$535 or 8.5% are primarily due to increases in staffing levels,
particularly in the Company's operations center and data division,
necessary to support the Company's growth, and secondarily, normal
inflationary increases.
Occupancy, furniture and equipment expenses were $2,329 and $3,419 for the
three months ended March 31, 1996 and 1997, respectively. Increases of
approximately $399 or 17.1% not directly related to acquisitions are
primarily due to increased depreciation on data processing equipment
upgrades, and the continuing upgrades and expansion of the Company's micro
computer and ATM networks.
Other operating expenses were $5,435 and $2,925 for the three months ended
March 31, 1997 and 1996, respectively. Exclusive of increases directly
related to the acquired banks, other operating expenses increased
approximately $779 or 26.7%. Major components of the increase include
additional professional fees primarily due to revision and upgrade of the
Company's job evaluation system aggregating approximately $167, increases
in employee retirement accruals of approximately $70, increases in employee
education costs of approximately $75, and increases in charitable
contributions of approximately $127. Postage, supplies, and telephone
expenses also increased approximately $313 primarily due to additional
costs associated with growth in customer base.
A decrease in royalty fee expense of $89 resulting from termination of the
Company's franchise agreement with First Interstate Bancorp in May 1996
partially offset increases in other operating expenses.
Other variances in non-interest expenses for the first quarter of 1997 as
compared to the first quarter of 1996 are not individually significant.
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PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
Not applicable or not required
ITEM 6 EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits.
27. Financial Data Schedule
(b) No reports of Form 8-K were filed for the quarter
ended March 31, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
FIRST INTERSTATE BANCSYSTEM OF MONTANA, INC.
Date May 8, 1997 /s/ William H. Ruegamer
------------------ ---------------------------------
William H. Ruegamer
Director, Executive Vice President
and Chief Operating Officer
Date May 8, 1997 /s/ Terrill R. Moore
------------------ ---------------------------------
Terrill R. Moore
Senior Vice President
and Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME
FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 131,878
<INT-BEARING-DEPOSITS> 2,033
<FED-FUNDS-SOLD> 27,695
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 98,709
<INVESTMENTS-CARRYING> 286,097
<INVESTMENTS-MARKET> 284,421
<LOANS> 1,405,570
<ALLOWANCE> 28,393
<TOTAL-ASSETS> 2,061,002
<DEPOSITS> 1,649,456
<SHORT-TERM> 168,359
<LIABILITIES-OTHER> 29,339
<LONG-TERM> 64,259
0
20,000
<COMMON> 8,476
<OTHER-SE> 121,113
<TOTAL-LIABILITIES-AND-EQUITY> 2,061,002
<INTEREST-LOAN> 33,330
<INTEREST-INVEST> 5,594
<INTEREST-OTHER> 237
<INTEREST-TOTAL> 39,161
<INTEREST-DEPOSIT> 13,387
<INTEREST-EXPENSE> 16,392
<INTEREST-INCOME-NET> 22,769
<LOAN-LOSSES> 1,223
<SECURITIES-GAINS> 58
<EXPENSE-OTHER> 17,703
<INCOME-PRETAX> 10,468
<INCOME-PRE-EXTRAORDINARY> 6,462
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,462
<EPS-PRIMARY> 3.04
<EPS-DILUTED> 3.04
<YIELD-ACTUAL> 4.62
<LOANS-NON> 6,555
<LOANS-PAST> 7,756
<LOANS-TROUBLED> 380
<LOANS-PROBLEM> 61,378
<ALLOWANCE-OPEN> 27,797
<CHARGE-OFFS> 1,361
<RECOVERIES> 734
<ALLOWANCE-CLOSE> 28,393
<ALLOWANCE-DOMESTIC> 4,087
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 24,306
</TABLE>
