First Interstate BancSystem, Inc. Reports Fourth Quarter 2012 Results

“Moving into 2013, we expect to deliver another year of strong profitability. Although modest loan demand and continued compression in our net interest margin will present challenges for growing our net interest income, we believe we can offset these pressures through further increases in our non-interest income, continued improvement in operating efficiencies, and a reduction in credit costs resulting from continued improvement in asset quality,” said Mr. Garding.

REVENUE SUMMARY
(Unaudited; $ in thousands)
				For the Three Months Ended																		Sequential Quarter% Change				Year Over Year% Change
				December 31,2012						September 30,2012						December 31,2011
Interest income				$	67,601					$	68,175					$	72,006					-0.8%				-6.1%
Interest expense				6,628						7,170						8,971						-7.6%				-26.1%
Net interest income				60,973						61,005						63,035						-0.1%				-3.3%
Non-interest income:
Income from the origination and sale of loans				12,321						11,665						8,087						5.6%				52.4%
Other service charges, commissions and fees				8,774						8,774						8,062						—%				8.8%
Service charges on deposit accounts				4,401						4,395						4,543						0.1%				-3.1%
Wealth management revenues				3,659						3,557						3,280						2.9%				11.6%
Investment securities gains, net				53						66						1,488						-19.7%				-96.4%
Other income				1,427						1,725						1,537						-17.3%				-7.2%
Total non-interest income				30,635						30,182						26,997						1.5%				13.5%
Total revenues				$	91,608					$	91,187					$	90,032					0.5%				1.8%
Tax equivalent net interest margin ratio				3.55		%				3.63		%				3.79		%

				For the Year Ended												Year Over Year% Change
				December 31,2012						December 31,2011
Interest income				$	273,900					$	292,883					-6.5%
Interest expense				30,114						42,031						-28.4%
Net interest income				243,786						250,852						-2.8%
Non-interest income:
Income from the origination and sale of loans				41,790						21,153						97.6%
Other service charges, commissions and fees				34,226						31,689						8.0%
Service charges on deposit accounts				17,412						17,647						-1.3%
Wealth management revenues				14,314						13,575						5.4%
Investment securities gains, net				348						1,544						-77.5%
Other income				6,771						6,264						8.1%
Total non-interest income				114,861						91,872						25.0%
Total revenues				$	358,647					$	342,724					4.6%
Tax equivalent net interest margin ratio				3.66		%				3.80		%

Net Interest Income

The Company's net interest margin ratio decreased to 3.55% during fourth quarter 2012, as compared to 3.63% during third quarter 2012. The fourth quarter 2012 net interest margin ratio included $425 thousand of recoveries of charged-off interest. Exclusive of these interest recoveries, the Company's net interest margin ratio was 3.53% during fourth quarter 2012. The decline in the net interest margin ratio, as compared to third quarter 2012, was primarily due to lower yields earned on the Company's loan and investment portfolios. The impact of lower asset yields was partially offset by increases in average outstanding loans and investment securities and a 5 basis point reduction in the cost of interest-bearing liabilities due to a continuing favorable shift in the mix of deposits from higher costing time deposits into non-interest bearing demand deposits.

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