First Interstate BancSystem Inc. in Billings, Mont., said this week that second-quarter net income rose 48%, to $9.9 million, from a year earlier, despite an increase in its nonperforming loans.
First Interstate's loan portfolio was negatively impacted by economic conditions in its markets of Flathead and Gallatin Valley in Montana, and Jackson, Wyo. Those resort communities accounted for about 46% of the company's nonperforming assets at the end of the second quarter.
In all, nonperforming assets totaled $292 million, or 4.05% of total assets, compared $200 million and 2.77% of assets a year earlier.
Still, the $7.2 billion First Interstate was able to increase profits in part because its provision for loan losses declined by 21%, to $15.4 million. Also, noninterest income rose 2.6% to $21.6 million, primarily on higher fees from credit and debit card transactions, while noninterest expenses fell 2.2%, to $54.2 million
President and Chief Executive Officer Lyle Knight said positive growth in commercial and agricultural loans has somewhat offset declines in construction loans.
Nonetheless, he said in a news release that he expects loan growth to be flat the rest of the year. The company's net interest income fell 1%, to $62.5 million, from a year earlier, as loan balances decline by 6.2%, to $4.2 billion.
