First Interstate BancSystem, Inc.

Good day and welcome to the First Interstate Bank System First Quarter 2021 Earnings Conference Call. All participants will be in 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 a 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 first 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 and 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 filing. The company does not undertake to update any 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 the 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 Reilly. Kevin?

Thanks, Lisa. Good morning, and thanks again to all of you for joining us on the call today. Again, this quarter, along with our earnings release, we have published an updated investor presentation that has some additional disclosures that we believe will be helpful. The presentation can be accessed on our investor website, and if you haven't downloaded a copy yet, I would encourage you to do so. I'm going to start off today by providing an overview of the major highlights of the quarter, and then I'll turn the call over to Marcie to provide more detail on our financials. The first quarter came in largely consistent with our expectations. We continue to see healthy economic activity throughout our markets, which resulted in strong deposit inflows, a positive impact on our fee-generating businesses, and further reduction in all of our problem loan categories. We executed well on our near-term strategy to support our net interest income by utilizing summer excess liquidity to retain more of our residential mortgage production and increase purchases of securities in our investment portfolio. The additional revenue generated through this strategy, combined with the stable expense level, helped us to deliver another strong quarter of earnings for our shareholders. For the quarter, we generated a net income of $51.4 million, or $0.83 per share. Loan balances were essentially flat to year end, whereas most years, we've seen declines in balances during the first quarter. We believe this reflects the health of our markets and the increasing confidence that our clients have in the strength and sustainability of the broader economic recovery. Across our footprint, Our clients are looking to invest in projects and put money to work that will help them capitalize on the improving economic environment. We will continue to see this most notably impacting our commercial construction loan balances, along with modest growth in commercial loans, excluding PPP loans, and growth in our residential real estate portfolio. Heading into the second quarter, we are already seeing promising growth, and we are focused on ensuring our speed to the final credit decision allows us to get deals done. We have adjusted to become more efficient in our underwriting and approval process and are winning deals without compromising on price or quality. We are also pleased with the execution of another successful round of PPP loan originations in the first quarter. The automatic process we utilized in the first round continues to provide a very efficient access to this funding for existing and new clients. and we funded an additional $437 million in loans throughout the end of March. We continue to be surprised at the pace of our deposit growth, which was over 25% on an annualized basis in the period where we typically see balances decline. While some of this growth can be attributable to PPP loans and stimulus payments, We believe this continuous historical high-level growth reflects the health of our clients. While we're able to put a substantial amount of liquidity to work in the first quarter, strong deposit inflows continues to leave us with high cash balances. Consistent with our approach in the first quarter, we expect to retain more of our residential mortgage production in the second quarter and will continue to add to the investment portfolio, although at a much more modest pace. The health of our markets is also reflected in our asset quality. Across the board, we saw improvements in all of our problem loan categories. Non-performing assets, non-performing loans, criticized loans, and delinquent loans were all down from the end of the prior quarter. Improved economic forecasts along with positive trends in asset quality resulted in a negative provision for credit losses in the quarter and a small reserve release. Although with an allowance of 1.38% of total loans or 1.51% when PPP loans are excluded, we still have a very high level of reserves that should enable us to keep our provision expense relatively low as we add to our loan balances in the future. I'd like to add a little color about our footprint. Over the last few weeks, I've had the opportunity to once again get out and visit some of our communities and our employees. What I've seen is that there's an overall optimism about the local economies and that the outlook for continued recovery throughout the summer. Notably, the expectation of record tourism across our footprint continues to point toward increased revenues for sectors that were hit hard by the pandemic. Unemployment in the Northwest continues to be below national averages and average wages show signs of growth. Our states continue to benefit from positive in-migration with some of our mid-sized markets like Rapid City showing hot residential housing trends with noticeable increases in building permits to address growing inventory shortages. Billings, Coeur d'Alene, and Spokane all made the national news as they were in the top five metro market areas for home buyers. Montana saw its population grow by 9.6% and picked up a House seat based on the recent census data. Oregon picked up a seat as well. In fact, based on the results of the last census, all of our states saw positive growth, with Idaho reporting the strongest increase of over 18%. They are also showing 60% annualized growth so far in 2021. The near-term future for the agriculture industry also looks positive. Federal programs provide substantial relief from the effects of the pandemic and have allowed farmers and ranchers to weather the effects of commodity prices and export tariffs. Higher income levels have resulted in increased liquidity and capacity to pay down existing lines. Lastly, our state and local governments have not experienced the severe shortfall in revenue that were predicted at the height of the pandemic. In some cases, seeing benefits from increasing gross sales and additional tax revenues. In summary, the strength of our markets and the momentum of our core business trends set us up well for accelerating core pre-provision net revenue growth for the rest of the year. Now, I'm going to go off script for a second because I just wanted to say that I am more bullish about the future of the bank than I ever have been since I joined the company. And with that, I'm going to turn the call over to Marcie to provide some additional detail on our financial results. Marcie?