Company Overview: First Interstate BancSystem, Inc. (NASDAQ: FIBK) is a community banking-focused financial and bank holding company that offers a variety of banking products and services, including online and mobile banking, through its banking subsidiary, First Interstate Bank, to individuals, businesses, municipalities, and others across its market areas. It provides trust, employee benefit, investment management, insurance, agency, and custodial services, including estate and personal trust administration, management of individual investment accounts, employee benefit plans and charity foundations, and insurance planning. FIBK banking offices, including detached drive-up facilities in Idaho, Montana, Oregon, South Dakota, and Washington.
Key Takeaways from FY21 (ended December 31, 2021)
Net Interest Income & Net Income Key Highlights; Analysis by Kalkine Group
Other Key Findings:
Key Metrics: In FY21, FIBK's net interest margin was 2.86% lower than the industry median of 3.20%. Efficiency ratio improved to 63.5% in FY21 vs. 68% in FY20. Tier 1 Risk-Adjusted Capital Ratio increased to 12.49% in FY21 from 12.33% in FY20.
Profitability Metrics; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together hold around 23.32% of the total shareholding shares, while the top 4 constitute the maximum holding. BlackRock Institutional Trust Company, N.A. and The Vanguard Group, Inc. hold the maximum stake in the company at 4.13% and 4.08%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Valuation Methodology: Price/Book Value Multiple Based Relative Valuation
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: FIBK's share price has corrected 17.71% over the past six months. The stock is currently leaning towards the lower band of its 52-week range of USD 36.01 to USD 51.24. We have valued the stock using the Price/Book Value multiple-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a discount compared to its peer's average, considering its industry below net interest margin and negative loan growth in FY21 and loan and geographical concentration risk. We have taken peers like First Financial Bancorp. (NASDAQ: FFBC) and Eastern Bankshares, Inc. (NASDAQ: EBC). Considering the solid bottom-line performance, recent merger with GWB, improvement in overdraft procedures, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the current price of USD 37.73, down 0.45% as of February 09, 2022, 10:08 AM ET.
FIBK Technical Chart, Data Source: REFINITIV
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
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