First Interstate BancSystem Stock: Earnings Jump Despite Revenue Miss

First Interstate BancSystem recently released its second quarter 2025 results, revealing a complex financial picture. The bank reported earnings per share of $0.69, significantly outperforming analyst estimates of $0.58 by 19%. However, revenues came in at $248.3 million, falling short of the $253.14 million expected by analysts. This mixed performance triggered a modest stock decline of 0.26%, with shares closing at $29.38 despite the impressive profit growth. The bank continues its strategic restructuring, having classified $338 million in loans from planned branch sales in Arizona and Kansas as "held for sale" – considerably more than the originally communicated $200 million. Additional pressure came from loan write-offs totaling $7.3 million related to these transactions.

Concerning Credit Quality Amid Strategic Shifts

The bank’s credit quality shows warning signs, with classified loans increasing by $177 million (17.2%), primarily driven by multi-family housing projects experiencing slower-than-anticipated leasing rates. Despite these challenges, the net interest margin improved by 12 basis points to 3.26%, benefiting from the repricing of maturing loans at higher interest rates. Management forecasts further loan portfolio contractions of 6-8% for the remainder of 2025, with net interest income growth not expected until 2026. For income-focused investors, the stock maintains appeal with its 6.4% dividend yield and 16-year streak of consistent distributions, though the restructuring process is likely to continue for several more quarters.