Good morning and welcome to the First Interstate BancSystem Fourth Quarter 2012 Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Ms. Marcy Mutch, IRO. Please go ahead.

Thanks, Sue. Good morning. Thank you for joining us for our fourth quarter earnings conference call. As we begin, I’d like to direct all listeners to the cautionary note regarding forward-looking statements and factors that could affect future results in our most recently filed Forms 10-Q and 10-K. Relevant factors that would cause actual results to differ materially from any forward-looking statements are listed in the earnings release and in our SEC filings. Joining us from management this morning are Ed Garding, our Chief Executive Officer; and Terry Moore, our Chief Financial Officer. Ed will begin by giving you an overview of the company’s results and review credit quality information. Terry will follow up with specific information behind the quarterly results. Ed and Terry are calling in this morning from separate sites, so please contact the operator if you experience any difficulties hearing them during the call. At this time, I’d like to turn the call over to Ed Garding. Ed?

Thanks, Marcy. Good morning and thanks again to all of you for joining us on the call. Yesterday, we were pleased to report earnings of $16.1 million for the fourth quarter and $54.9 million for the year, which is an increase of 5% quarter over quarter and 34% year-over-year. Earnings per share were $0.37 this quarter, an increase of 6% over third quarter. For the year, earnings per share was $1.27, a 32% increase over 2011. Let’s start out by reviewing a few of the details. Residential loan revenues this quarter were $12.3 million, our highest level ever. Year-over-year, these revenues almost doubled with 98% growth. Our residential loan team has worked hard over the last two years and have developed a proficiency and expertise that will allow us to capitalize on continued opportunities in refinance and purchase activity across the region. Credit quality is another area where we saw a significant improvement. As we had said at the beginning of the year, credit quality was our main focus for 2012, and we’re pleased with the results. Total non-performing loans declined 13% this quarter, and more significantly 41% for the year, that’s great progress. The most substantial category of improvement was in the construction real estate portfolio, which declined from 25% of non-performing at the beginning of the year to 10% of nonperforming at the end of 2012. Breaking down our nonperforming loans a little further, nonaccrual loans of $108 million at the end of the quarter included $51 million of commercial real estate and $30 million of construction real estate loans. We continue to see the inflow into non-performing loans slowing, and the outflow through pay downs, charge-offs, or foreclosures remaining steady. I’m going to say that again because I like the way it sounds, we’re seeing the inflow…

Thanks, Ed. As usual I’m going to start with net interest income. As you saw in our release last night and continue to hear across the banking industry, the pressure on net interest margin has not subsided. Net interest income revenues were flat quarter-over-quarter, and additionally, we recovered $425,000 of net charged off interest this past quarter, which helped to offset margin compression. Even with this interest recovery, the net interest margin declined 8 basis points quarter-over-quarter. Average loan yield was also flat compared to last year, but again four basis – the prior quarter, but again four basis points of this quarter’s yield can be attributed to the recovery of previously charged off interest. Competitive pressure on loan rates continues. However, part of the decline in loan yield is attributable to the growth in the lower yielding residential mortgage loans that Ed just visited about. The yield on the investment portfolio declined by a significant 18 basis points from the third quarter. At $450 million, investment purchases during the quarter were substantial, as liquidity from mortgage-backed securities and callable agencies were reinvested. As you all know, it’s a real challenge to find investment products with an acceptable duration that generate a reasonable yield. The duration on our investment portfolio has extended slightly to only around two-and-half years and the yield on securities repurchased during the fourth quarter was about 1.1%. Liquidity remains high, but we remain disciplined in our investment approach. Deposit balances continue to increase and shift into demand and non-interest-bearing deposits further driving down our cost of funds to 39 basis points, a 4 basis point decline from the prior quarter. As we get closer to zero, the opportunity to reduce cost of funds is limited to just a few basis points in any given quarter. We…

Thanks, Terry. Across Montana, Wyoming, and Western South Dakota, we have established great locations along transportation routes and in the major retail trade areas. However, we recognize the banking industry, along with the needs of our customers is changing. Our customers are more technologically savvy than ever before and demand is growing for online and mobile banking services. In October, we rolled out a new mobile banking platform, along with that, we continue to be diligent to look at opportunities, make our branches more efficient, use technology more effectively and take advantage of business improvements available through the centralization of processes. First, I’ll tell you about our mobile banking platform, which is comparable to any platform offered by the national banks in our region and surpasses anything our community bank competitors have available. Referred to as the triple play, it allows the customer to access their financial information, make inquiries and initiate transactions through web, text or mobile applications. This platform also includes a mobile check deposit feature where a deposit can be made simply by taking a picture of a check. Since introducing our mobile banking platform in October, we’ve signed up 6,400 mobile banking customers, that on average, are accessing their account through the mobile platform over once a day. Second, I want to talk about efficiency opportunities. We’ve invested in new technology this year that will allow us to more effectively roll out software products along with providing better support for products we currently use. All of our people are connected through servers versus individual personal computers. So, we’ll also see about 75% energy savings through the new server technology, which isn’t big dollar savings, but shows good energy stewardship. We successfully centralized our compliance function during 2012. This process allows us to remain a strong compliance program and save money in the long run, as more of the Dodd-Frank regulations come into place. Lastly, while we have larger average asset size per branch than most of our peers, we are clearly defining the services provided at each location, which will allow us to maintain an even higher level of customer service and at the same time, drive efficiencies that will be effective in allowing us to manage our expenses. Lastly, you’re always curious about acquisitions. So, I’ll give you our thoughts. Current conditions in banking would indicate that there are some acquisition opportunities out there. Our criteria for acquisition is that the price has to be reasonable, it has to have the potential for growth and the ability to add to earnings. So, with that, let’s open it up for questions.

We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Brett Rabatin from Sterne Agee. Please go ahead. Brett Rabatin – Sterne Agee: Hi, guys. Good morning.

Good morning. Brett Rabatin – Sterne Agee: Wanted to ask some questions around fee income and what you discussed in the press release. I guess, first, can you give us the dollar amount that you originated on the mortgage-backing platform and then how much you sold during the quarter?

I can tell you that we originated $1.4 billion throughout the year and in regards to – was your next question is how much did we originate in the quarter or what was the fee income for the quarter? Brett Rabatin – Sterne Agee: No, I know the fee income, it’s in – what I’m trying to figure out is, what was the gain on the sale margin in the fourth quarter and then how much you originated versus how much you sold during 4Q?

Okay. I don’t have that in front of me. Terry, do you have that?

Ed, I do not have that specific information. Brett Rabatin – Sterne Agee: Okay. Maybe we could follow-up with that. The other thing I was just trying to figure out was, in the press release, you talked about growing fee income in 2013 and I guess, you also mentioned during the call that the mortgage was probably going to be somewhat unsustainable given the higher percentage of refi business in 2012. Can you talk about maybe the growth you’re expecting in fee income and kind of how you guys get their if mortgage does soften a little bit this year?

I can talk to that a little bit, Brett, we – first off, we mentioned wealth management and we continue to see gross revenue increase in wealth management as the level of assets under management goes (inaudible). Secondly, we continue to see increased income in our credit card department and we’re continuing to roll out what we call cash management products to business customers. So, we plan to see at least a modest increase there. In regards to residential loans, you would think that that simply has to slow down from where it’s been on the refi side, but at the same time, we think that we’ve positioned ourselves to take more market share than we have previously had. Brett Rabatin – Sterne Agee: Okay. And then the other question I had was just, if you had a number for – or a guesstimate of where you’re originating loans today, where you see average pricing lies, kind of aside from the single family portfolio?

You’re talking about commercial loans? Brett Rabatin – Sterne Agee: Yeah, commercial – right, commercial, commercial real estate, mainly those two segments.

Well, we’re – and so I guess, the question is, what price are we originating at? Brett Rabatin – Sterne Agee: Right. What are the yields that you’re getting today?

Bob Cerkovnik is our Chief Credit Officer and I’m going to ask him to speak to that. Bob, go ahead.

Brett, it varies by market, but generally speaking, and then also it varies by amortization schedules that we – that people are wanting, but generally speaking, we’re seeing anywhere from 3.75% to 4.25% fixed for five years. We’re seeing a little lower than that on real good quality stuff, and it also depends on the size dollar amount, because once it gets over certain size, $5 million over, you get a lot more competitors in that market and if it’s good quality the price is being driven down by simple competition. And since we are very focused on pricing for risk and some of that we will go down on and if it’s an existing customer, we will lower rates, but again we’re picking and choosing how we’re going to strategically go into some of those deals on pricing. Brett Rabatin – Sterne Agee: Okay. Thanks for the color. I’ll step back.

The next question comes from Brad Milsaps of Sandler O’Neill. Please go ahead. Brad Milsaps – Sandler O’Neill: Hey, good morning.

Good morning, Brad. Brad Milsaps – Sandler O’Neill: Just to follow up on Brett’s question about loan yields, looks like sort of excluding the interest recovery, they’re only down about five basis points, did you guys anticipate the pace of shrinkage in loan yields to pick up in 2013? In other words, do you have a higher level of loan refis coming up in terms of your commercial book? I’m just kind of curious how you guys have been able to hold those in maybe a little bit better, at least on a linked quarter basis, kind of relative to where your loan growth is coming from which has been mostly out of the mortgage book?

Well, once again, I’m again going to ask Bob Cerkovnik to address that.

Yeah, we really – I’ll give a kind of a broad answer to that is that we price for risk, so what we’ve said basically is we want potential new customers. We’re going to look at the deals. If they’re shopping the deal around, we’re going to take a look at it, but we’re not going to, in some cases, we may go low on it, but in others we may not, it’s on a case-by-case basis. We have been matching rates if our customers are being approached by other competitors. On the high-quality customers, we are matching lowering rates. It’s a real – it depends again by market by market, if we’re seeing more refis out there, to get to your basic question is, more refis that we’re seeing as a percentage, I don’t – that doesn’t stand out in my mind, that gets to your question. As far as we have what’s coming due over the next three to five – three years or in 2013, I really don’t have that information in front of me. I can get it for you, though. Brad Milsaps – Sandler O’Neill: Okay. And then maybe just a question for Terry, I know the deposit growth has been really strong. It looks like during the quarter though your average fed funds was around $600 million or so. Can you talk about anything you might do with that money, I mean, obviously, you’d like to put into loan growth, but just sitting at 25 basis points, obviously that represents a big drag, just kind of curious what your thoughts are there from a sort of overall balance sheet management perspective.

Yeah, Brett, that level of fed funds is higher than we would target and we would expect and plan for a lower level, and so most of that would get invested in the investment portfolio to the extent it’s sustainable. So it could help us a little bit on that front, but we would move from a 0.25% to roughly 1%, perhaps on a couple of million, $100 million. We’re still hopeful that we’ll see some loan growth this year and some deployment of that liquidity in that front as well. I might circle back around, I think you were also enquiring in the last question, Brad, about do we have any unusual liquidity occurring in our loan portfolio, where there would be a significant amount of repricing occurring, and I would say no. It has been very consistent. We do have a lot of turn on that portfolio because some is variable rate than just the normal activity in the portfolio. But there would be an expected decline in the yield of the loan portfolio based on competitive pressures as well as the change in mix that has been occurring over the last year, associated with the mortgage residential loans that we’ve been including in our portfolio. Brad Milsaps – Sandler O’Neill: Okay. Great. Thanks Terry.

Thanks, Brad.

The next question comes from Jackie Chimera of KBW. Please go ahead. Jackie Chimera – KBW: Hi, good morning, everyone.

Good morning, Jackie. Jackie Chimera – KBW: I have a question about the text you had in the press release about the credit card loyalty program. From your prepared remarks, it sounds like credits are doing really well, so I was curious what drove that reversal.

Yeah, I will respond to that. The credit card program we have a reward program like most credit programs have. And as we’ve begun to analyze this and look at some of the reward points that were earned 20 years ago that have still not been redeemed, we were still holding that fairly high liability associated with those and as we reevaluated those and assessed in a more statistical way, what the likely redemption would be of those old points earned a decade ago that we didn’t need to retain as much liabilities we had. So there continues to be an accruing, an amount accrued for our reward program, and so it’s just kind of a one-time thing that we’ve assessed in there, Jackie. Jackie Chimera – KBW: Okay. So, just a true-up, not anything that’s an ongoing trend or any change?

Yes, exactly. Correct Jackie Chimera – KBW: Okay. And do you – the mobile platform that you spoke to, will there be any fees associated with that?

There will. The sign-up for the mobile product is free, but there are many different things that you can use it for and there will be fees assigned to the various different users. For example to photograph a check and deposit that check, I think the fee for that is $1. Jackie Chimera – KBW: So, is it something where this new fee generation takes away from old fee generation or will it be net new fee income?

It should be net new fee income. Jackie Chimera – KBW: And then, just one last one, on the commercial construction and the improvement in the economy, where in your footprint are you primarily seeing that and where do you think we might see more growth in 2013?

Eastern Montana has been highly impacted by that Bakken oil field. So, we’re seeing that in Billings, our biggest market and some of the other Eastern Montana towns. And then also, Casper, Wyoming seems to have a very robust economy, where a lot of which is driven by oil exploration. And those would be the two primary areas, along with Cheyenne, Wyoming, which again has a very robust economy going on, partly because they’re somewhat near some oil exploration activity and also an awful lot of wholesale and distribution type activity. Jackie Chimera – KBW: Okay. So, is it safe to say that to the extent that the oil exploration continues to do well and the net migration continues that we could continue to see growth in the construction portfolio?

Yes. Jackie Chimera – KBW: That was all I had. Thank you very much.

Thank you.

The next question comes from Jeff Rulis of DA Davidson. Please go ahead. Simonas Matulionis – DA Davidson: Hi. Good morning. This is Simonas filling in for Jeff.

Good morning. Simonas Matulionis – DA Davidson: Good morning. I just had a question on the health insurance reversal. Could you just explain what went on there and if we can expect anything similar in the future?

And I’ll hand that one off to Terry.

Yes, essentially, we’re self-insured with a reinsurance on large claims and having went through several years of increased medical claim cost, 2012 brought us actually lower claims cost, which was not what we had estimated or predicted and so we found ourselves at a position where we had more funds set aside for that than needed or appropriate, and so we reflect that that change has occurred. So, the future, frankly, is an unknown and generally speaking, we would see healthcare costs increasing from year-to-year and whether this was a one-time aberration in 2012, and whether it will recur that way in 2013 or 2014 is unknown. For the most part, it was – it had been influenced in prior years, largely by large claims that move up toward the reinsurance amount. And in 2012, we only had about one or two that were approaching that as opposed to half dozen. Simonas Matulionis – DA Davidson: Okay, that’s helpful. And then my second question is on the loan pipeline, what trends have you seen so far in the first quarter and what can we expect?

Okay. Bob Cerkovnik, would you answer that please.

The loan pipeline, we’re seeing activity again, as Ed mentioned, in Billings and Casper. It’s really early to tell, but we are encouraged, we expect moderate growth this year and in those portfolios primarily in our commercial and commercial real estate portfolios is where we expect a lot of that growth to come from. Simonas Matulionis – DA Davidson: Okay. Thank you. And that was it from me. Thanks, guys.

Thanks.

You’re welcome.

The next question comes from Matthew Keating of Barclays. Please go ahead. Matthew Keating – Barclays: Good morning. Thank you. I appreciate the color on the net margin of several basis points – or a few basis points of compression in each quarter of 2013. We heard a similar guidance last quarter, but you noted that, at least for the next quarter ahead, it would probably be less in magnitude than the third quarter. So, as we look out to 1Q 2013, are you expecting again less NIM compression than we saw this quarter with 10 basis points of core NIM compression? Thanks.

Go ahead, Terry.

Yeah, Matthew. Good morning. And in summary, yes, we would agree with you that we would see smaller compression being expected from the 8 basis points that we reflected in the last quarter. Certainly, one of those factors that cause it to be higher or even flat in any given quarter could be the level (inaudible). Matthew Keating – Barclays: Okay, thank you. And then my second question would just be on the mortgage loans, obviously we were up to over $700 million. Could you just refresh our memory on sort of the feeling there, how you want mortgages to go as a percentage of the overall portfolio? Thank you.

I’ll answer to that one, Matthew. First off, again, part of that portfolio is home equity loans and consumer loans secured by homes. And that for us, has performed very well. We don’t do 100% and 100-plus percent home equity loans, we stay pretty close to 80% and on occasion we’ll go to 90%, so that piece of the portfolio has performed very well. And so in regards to, first mortgages on single family residences, we watch that level and make sure that it’s not going to become a concentration and we’ve got some room to go before that would happen, and so we’ll watch how that grows or if it grows, and continue to recognize that we just wouldn’t allow our concentration there. Matthew Keating – Barclays: Fair enough. Thank you. I guess my final question would be, I know it’s quite difficult shoes to fill obviously, but now that we’re in 2013, can you give us an update on the timing of Terry’s announced retirement, have you had any more information there? Thank you.

Yeah, and I will respond to that one, Matthew. Terry’s given us quite a window there. His retirement will take place sometime between June of 2013 and June of 2014. So, you can say we’ve got a 12-month time span there. But in the meantime, we want to make sure that we find the right person and give them ample time to transition. So, we have contracted with a search firm and we’re going to search both internally and externally and we’ll probably start that search in earnest within the next couple of weeks. Matthew Keating – Barclays: Great. Thanks so much.

You’re welcome.

(Operator Instructions). Our next question is from James Rose of UBS. Please go ahead. James Rose – UBS: Hi, guys. What opportunities do you see for the greatest upside surprises going forward?

I’m not sure I understood the question, James. Could you ask it again? James Rose – UBS: Oh, sure, sorry. What opportunities do you see out there for the greatest potential for upside surprises over the near to medium-term future?

Okay, upside surprises.... James Rose – UBS: Surprises.

Would be a continuation of the mortgage volume, because we fully expect that to drop off by 20% or so. Another upside surprise and actually, it wouldn’t be a surprise, we still see an awful lot of activity around that Bakken oil field that spills over into Montana and specifically into the Billings area, because we’re the largest regional trade center – well, not the largest, but the closest regional trade center to that. And so we continue to see economic activity because of that. And finally, I’d say if – an upside would be, if that resort housing market would start to come back, we think it has finally stabilized and now we’d like to see it make a comeback. James Rose – UBS: Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Ed Garding for any closing remarks.

Thanks very much for your interest in First Interstate today. As always, you can contact us through Investor Relations on our website and we’d be glad to respond to any follow-up questions. And Brett, we will send you an e-mail and follow up to your question that we didn’t get answered. So again, thanks for your time and goodbye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.