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TheStreet Open House

First Interstate BancSystem, Inc. Reports Third Quarter 2012 Results

During third quarter 2012, the Company recorded additions to OREO of $3 million, recorded write downs in the fair value of OREO properties of $2 million and sold OREO with a net book value of $15 million at a gain of $775 thousand.

Decreases in provisions for loan losses during third quarter 2012, as compared to second quarter 2012 and third quarter 2011, are reflective of continued improvement in credit quality as evidenced by declining levels of non-performing and criticized loans.

CREDIT QUALITY TRENDS

(Unaudited; $ in thousands)

         
  Provision for Loan Losses   Net Charge-offs   Allowance for Loan Losses   Accruing Loans 30-89 Days Past Due   Non-Performing Loans   Non-Performing Assets
Q1 2009 $ 9,600 $ 4,693 $ 92,223 $ 98,980 $ 103,653 $ 122,300
Q2 2009 11,700 5,528 98,395 88,632 135,484 167,273
Q3 2009 10,500 7,147 101,748 91,956 125,083 156,958
Q4 2009 13,500 12,218 103,030 63,878 124,678 163,078
Q1 2010 11,900 8,581 106,349 62,675 133,042 177,022
Q2 2010 19,500 11,521 114,328 99,334 158,113 200,451
Q3 2010 18,000 12,092 120,236 47,966 202,008 237,304
Q4 2010 17,500 17,256 120,480 57,011 210,684 244,312
Q1 2011 15,000 11,034 124,446 68,021 249,878 281,873
Q2 2011 15,400 15,267 124,579 70,145 263,467 291,790
Q3 2011 14,000 18,276 120,303 62,165 262,578 287,658
Q4 2011 13,751 21,473 112,581 75,603 241,470 278,922
Q1 2012 11,250 7,929 115,902 58,531 222,765 267,521
Q2 2012 12,000 25,108 102,794 55,074 172,333 226,150
Q3 2012 9,500     13,288     99,006     41,056     162,698     202,669

CRITICIZED LOANS

(Unaudited; $ in thousands)

     
  Other Assets Especially Mentioned   Substandard   Doubtful   Total
Q1 2009 $ 163,402 $ 231,861 $ 40,356 $ 435,619
Q2 2009 230,833 242,751 48,326 521,910
Q3 2009 239,320 271,487 60,725 571,532
Q4 2009 279,294 271,324 69,603 620,221
Q1 2010 312,441 311,866 64,113 688,420
Q2 2010 319,130 337,758 92,249 749,137
Q3 2010 340,075 340,973 116,003 797,051
Q4 2010 305,925 303,653 133,353 742,931
Q1 2011 293,899 299,072 135,862 728,833
Q2 2011 268,450 309,029 149,964 727,443
Q3 2011 261,501 305,145 134,367 701,013
Q4 2011 240,903 269,794 120,165 630,862
Q1 2012 242,071 276,165 93,596 611,832
Q2 2012 220,509 243,916 81,473 545,898
Q3 2012 223,306     229,826     66,179     519,311

LOANS

(Unaudited; $ in thousands)

       
  September 30,2012   June 30,2012   September 30,2011   Sequential Quarter

% Change

  Year Over Year

% Change

Real estate:
Commercial $ 1,513,784 $ 1,517,400 $ 1,561,788

-0.2

%

-3.1

%

Construction:
Land acquisition & development 233,082 240,550 296,407

-3.1

%

-21.4

%

Residential 50,895 51,193 67,261

-0.6

%

-24.3

%

Commercial 56,097     59,911     64,098    

-6.4

%

 

-12.5

%

Total construction loans 340,074     351,654     427,766    

-3.3

%

 

-20.5

%

Residential 639,235 572,018 586,425 11.8 % 9.0 %
Agricultural 175,395     171,087     177,121     2.5 %  

-1.0

%

Total real estate loans 2,668,488     2,612,159     2,753,100     2.2 %  

-3.1

%

Consumer:
Indirect consumer loans 431,449 418,604 415,245 3.1 % 3.9 %
Other consumer loans 139,984 144,442 151,611

-3.1

%

-7.7

%

Credit card loans 58,324     58,166     60,283     0.3 %  

-3.2

%

Total consumer loans 629,757     621,212     627,139     1.4 %   0.4 %
Commercial 672,100 720,010 703,010

-6.7

%

-4.4

%

Agricultural 135,467 138,115 136,728

-1.9

%

-0.9

%

Other loans, including overdrafts 1,359     2,319     3,252    

-41.4

%

 

-58.2

%

Loans held for investment 4,107,171 4,093,815 4,223,229 0.3 %

-2.7

%

Mortgage loans held for sale 72,880     76,148     52,488    

-4.3

%

  38.9 %
Total loans $ 4,180,051     $ 4,169,963     $ 4,275,717     0.2 %  

-2.2

%

Loan demand continues to be challenging with total loans showing only slight growth as of September 30, 2012, compared to June 30, 2012. Residential real estate loans continued to grow due to retention of selected loan production. Decreases in construction loans as of September 30, 2012, compared to June 30, 2012 and September 30, 2011, were primarily due to movement of lower quality loans out of the loan portfolio through charge-off or foreclosure.

DEPOSITS

(Unaudited; $ in thousands)

         
    September 30,2012   June 30,2012   September 30,2011   Sequential Quarter

% Change

  Year Over Year

% Change

Non-interest bearing demand $ 1,443,773 $ 1,337,777 $ 1,243,703 7.9 % 16.1 %
Interest bearing:
Demand 1,637,214 1,586,962 1,308,122 3.2 % 25.2 %
Savings 1,531,359 1,495,230 1,662,602 2.4 %

-7.9

%

Time, $100 and over 613,586 641,070 704,518

-4.3

%

-12.9

%

Time, other   809,800     840,340     932,374    

-3.6

%

 

-13.1

%

Total interest bearing   4,591,959     4,563,602     4,607,616     0.6 %  

-0.3

%

Total deposits   $ 6,035,732     $ 5,901,379     $ 5,851,319     2.3 %   3.2 %

Total deposits increased as of September 30, 2012, as compared to June 30, 2012 and September 30, 2011. The favorable shift in the composition of deposits away from higher costing time deposits into lower costing demand deposits continued during third quarter 2012. As a result, the Company's cost of funds, including non-interest bearing demand deposits, decreased to 0.43% during third quarter 2012, from 0.49% during second quarter 2012 and 0.61% during third quarter 2011.

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