First Interstate BancSystem, Inc.

Good day and welcome to the first Interstate BancSystem, Inc., second quarter 2020 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Lisa Slater-Bray. Please go ahead, ma'am.

Thanks, Rocco. Good morning. Thank you for joining us for our second quarter earnings conference call. As we begin, please note that the information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those expressed by those statements. I'd like to direct all listeners to read the cautionary note regarding forward-looking statements and factors that could affect future results contained in our most recent annual report on Form 10-K filed with the SEC and in our earnings release, as well as the risk factors identified in the annual report in our more recent periodic reports filed with the SEC. Relevant factors that could cause actual results to differ materially from any forward-looking statements are included in the earnings release and in our SEC filings. The company does not undertake to update any of the forward-looking statements made today. A copy of our earnings release, which contains non-GAAP financial measures, is available on our website at fibk.com. Information regarding our use of non-GAAP financial measures may be found in the body of the earnings release, and a reconciliation to their most directly comparable GAAP financial measures is included at the end of the earnings release for your reference. Joining us for management this morning are Kevin Riley, our Chief Executive Officer, and Marcy Mutch, our Chief Financial Officer, along with other members of our management team. At this time, I'll turn the call over to Kevin Riley. Kevin?

Thanks, Lisa. Good morning, and thanks again to all of you for joining us on our call today. Along with earnings release, we have published an updated investor presentation that has some additional disclosures that we believe will be helpful to you. We have updated a few slides, and that update will be published this morning. The presentation can be accessed on our investor relation website. If you haven't downloaded the copy yet, I would encourage you to do so. I'm going to start today by providing an overview of the major highlights of the quarter, and then I'll turn the call over to Marci so she can provide more detail on our financials. I want to begin to say about how proud I am of the whole organization. COVID-19 pandemic has presented an unprecedented set of challenges. At each turn, our team has figured out a way to keep our operations running smoothly, maintain a superior level of client service, and capitalize on our new business development opportunities that are available to us. I would like to thank all of our colleagues for the hard work and the commitment that resulted in a strong financial performance in a very challenging environment. For the quarter, we generated net income of $36.7 million. or 58 cents per share and a pre-tax pre-vision income of 66.6 million. In my mind, the real highlights of the quarter has to be the resiliency of our markets. We continue to be fortunate that many of our markets that we operate in have been among the areas of the country least impacted by COVID-19. Unemployment rates in our footprints, with the exception of Oregon, are slightly outperforming the national level. Montana, Wyoming, and South Dakota remain in the top 14 states in terms of the lowest unemployment, while Idaho ranks third in the nation with an unemployment rate of 5.6%. Additionally, consumer spending trends, while mostly negative since the start of the year, have seen marked improvement and are well above levels witnessed in early April. This matches up with the anecdotal information that we hear from our bankers and clients across our footprint. Simply put, people have money in their pockets and they are spending. With our diverse business mix, we have been able to capitalize on pockets of strength that we are seeing in the economy. While our commercial borrowers remain cautious about making new investments, we are seeing strong demand in our residential mortgage and indirect consumer lending businesses. Our mortgage banking revenues were up 58% for the second quarter of last year, While in our home portfolio, residential real estate loans were up 18.5% and indirect consumer loans were up 14.1% on an annualized basis. In the mortgage business, we are not only benefiting from the increased demand for refinancing, but also from the steady inflow of people relocating to Montana and Idaho, which is driving up more purchase volume. The resilience of our markets is also reflected in the strength of our asset quality. We saw declines in non-performing assets and criticized loans during the quarter. And as of July 22nd, 64% of the loans that received a modification or deferral had either continued or resumed making their scheduled payments. These positive trends also reflect in the strong underwriting in our portfolio and the limited exposure we have to industries most impacted by the pandemic. We've had limited requests for second deferrals or modifications, and the majority of those are coming from clients in our hospitality industry. Another highlight of the quarter was the productivity and efficiencies of our efforts around the Paycheck Protection Program. The investments we have made to adapt our lending to be scalable and the processes standardized over the past several years served us well in getting our PPP application process up and running very quickly. We were getting loan applications completed and submitted in a matter of hours. As a result, we were able to process more than 11,000 applications that were approved for $1.2 billion in funding. Through our efforts, we earned $43.2 million in fees and gained $90 million in deposits from over 2,200 new customers. Time after time, we heard stories of companies being frustrated with the lack of response from their current banks. both large and small institutions and being impressed by the level of service and the speed with which we could get their PPP loans processed and approved. The PPP program turned into an amazing business development opportunity that enabled us to really demonstrate the value proposition that we offer. A bank that leverages technology and efficiencies combined with unmatched level of personal service. Since bringing on these new clients, we have made significant progress on expanding our relationships. We are getting lots of messages from our bankers about clients moving over their deposit accounts, both business and personal, to First Interstate and expanding their lending relationship to include other types of loans, including commercial lines of credit and equipment and residential real estate loans. We expect further progress with these new clients will positively impact our loan and deposit pipeline in the coming quarters. The experience of the pandemic has also underscored the strength of our deposit franchise. Our total deposits increased by $1.8 billion from the end of the first quarter, with almost all that coming in our lowest cost deposit categories. In general, The increasing balances are coming from operating accounts of our commercial clients as their businesses continue to perform relatively well. And before I pass the call on to Marcie, I wanted to mention that we are excited that Michael Ludley joined our team as our new Chief Credit Officer. Michael comes to us from T-Bank, where he served in various roles for nearly 30 years. His extensive credit background, including asset recovery, healthcare real estate, commercial banking, Private Banking, and Mergers and Acquisitions, combined with his leadership experience, makes Michael the perfect person to oversee our credit team, and we are fortunate to have him with us. And with that, I'd like to turn the call over to Marcie so she can provide some additional details around our second quarter results. Go ahead, Marcie.