First Interstate BancSystem, Inc.

. . . Good morning, ladies and gentlemen, and welcome to the first Interstate Bank System, Inc. first quarter earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, April 30th, 2025. I would now like to turn the conference over to Nancy Vermeulen. Please go ahead.

Nancy Vermeulen Thanks very much. 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 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 and 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 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, and 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. Again this quarter, along with our earnings release, we've published an updated investor presentation that has additional disclosures that we believe will be helpful. The presentation can be accessed on our investor relations website, and if you have not downloaded a copy yet, we encourage you to do so. Please also note that as we discuss our financials today, unless otherwise noted, all of the prior period comparisons will be with the fourth quarter of 2024. Joining us from management this morning are Jim Reuter, our Chief Executive Officer, Marcy Mutch, our Chief Financial Officer, and David Della Camera, our Deputy Chief Financial Officer, along with other members of our management team. At this time, I'll turn the call over to Jim Reuter.

Jim? Thank you, Nancy, and good morning all, and thank you for joining us on our earnings call. Before we begin, let me point out the bittersweet fact that this is the last earnings call we will have with Marcy. As we announced at the end of February, Marcy is retiring after more than 18 years here at the bank and an accomplished career in finance of more than 30 years. It has been a pleasure and a privilege to work with you, Marcy. Even for the short period of time that I've had the opportunity, it is obvious that your influence on this company has been profound. You are leaving your post in great hands with David, but our future success will always be due in large part to the impact you have had in your time here. Thank you for all you have done for First Interstate and congratulations on a brilliant career. On to the business at hand. I'd like to begin by discussing our longer-term strategy. As I discussed in the earnings call in the previous quarter, First Interstate is de-emphasizing large-scale M&A and refocusing on full relationship banking. Both our near and long-term actions will be centered around reorienting the bank towards organic growth. This affects how we operate and how we evaluate every other aspect of our business. While we won't be providing 2026 guidance in light of the ongoing economic uncertainty, we will provide additional color later in the call on our medium term net interest income expectations and our longer term branch strategy. Our overarching strategy will be to deploy capital to areas of strength. We have a valuable, low cost, granular deposit base and strong market share in areas that are growing faster than national trends in which we intend to invest. Our capital levels and balance sheet are strong and flexible, and our underlying earnings are supported by asset repricing, which we anticipate will support meaningful earnings improvement. We also acknowledge that there are opportunities in our footprint to optimize our branch network. Today, our average branch size is approximately $76 million, which is smaller than our peer average. As a result, we are evaluating our branch network and we anticipate beginning to take sequenced action to reposition, open, or consolidate branches later in 2025. With that said, due to our more rural branch network, we will always have a bit of a smaller branch size on average, but our goal is to narrow this delta. As announced on Monday, we are exiting our 12 locations in the states of Arizona and Kansas. Our decision to divest is aligned with our noted strategy to shift our capital investment and drive growth in markets where we have strong market share, and we believe this transaction allows us to do so. Deposit balances associated with these markets totaled $740 million as of March 31, and about $200 million of loans will be included in the transaction, which we expect to close by the fourth quarter. Moving to credit, We are taking a proactive approach to managing credit, which we believe sets the bank up to perform well in all economic cycles. We reported an increase in criticized loans in the first quarter of $252.8 million, generally concentrated within commercial real estate. Our focus on the primary source of repayment drove most of these downgrades. Downgrades in the multifamily book, which represented approximately 75 million this quarter, were mainly reflective of slower lease up activity. Guarantors in this portfolio are generally strong and they have shown willingness to solve property specific challenges when asked. Outside the multifamily asset class, our commercial real estate downgrades were primarily in the industrial warehouse property type. They were customer specific, and we did not see any specific trends driving this activity. Overall, while our downgrades in the first quarter were not as concentrated among a few borrowers as they were in the prior quarter, we did see pressure mainly from larger credits. The top 10 downgrades in terms of size comprised about three quarters of the increase in criticized assets. On a side note, the four larger properties that migrated to criticized in the prior quarter, which we discussed in the previous earnings call, remained in the criticized bucket at the end of this quarter. Non-performing assets increased $52.8 million during the quarter. Five credits comprised the majority of the increase, and they include agriculture, agriculture real estate, and commercial real estate properties. Again, there was no specific trend among these credits. Broadly, the bank believes it is well secured in these instances. This quarter, we completed the external credit review we discussed on the prior quarter's call. To date, we performed a detailed review comprised of both external and internal credit reviews of a good portion of the commercial book with a focus on larger credits. We do not have additional external reviews planned at this time. As we stated on our previous earnings call, credit is one of our primary areas of focus, and we have been proactive in recognizing credit concerns. Our current assessment indicates we have good collateral and strong guarantor support in most cases. We're hopeful for positive migration over time. You may also recall from the previous earnings caller decision to exit certain transactional credits, including large agricultural lending. Here's where we have had some success this quarter. We received approximately $40 million in an agricultural line pay down from one of the four customers we noted in the prior quarter, to whom we had exposure over $50 million. Three customers now remain with outstanding balances over that level. We also exited certain transactional real estate loans, including a $40 million low yielding multifamily property. These payoffs contributed to loan balances declining more than we previously anticipated in the first quarter. We also note that the current economic uncertainty has resulted in limited customer demand and loan production this quarter was below expectations, especially in commercial real estate. With the combination of lower customer demand and some expected larger payoffs in the multifamily space, we expect further shrinking of the balance sheet in the second quarter, which is reflected in our loan and net interest income guidance. Again, we intentionally exited loans that exhibited credit or transactional characteristics that do not fit with our longer-term strategy, and we believe some additional activity will occur in the second quarter. This intentional activity, which is a near-term reset, aligns our balance sheet with our business strategy and will position us for meaningful organic growth as we move into 2026 and drive our franchise value going forward. We are also increasing our efforts to reinvigorate our brand and have hired a new director of marketing and client experience. We will be highlighting our strong brand presence, community engagement, and the fact we have the services offered by a large bank with the personal touch of a community bank. This, combined with increased investment in digital delivery channels, which is included in our non-interest expense guidance, is all part of our organic growth strategy. We have also recently hired a new chief risk officer, Nathan Jones. Nathan brings with him extensive experience in credit and enterprise risk management in both large and medium-sized institutions. Before I turn the call over to Marcie, I want to touch on capital. Our capital ratios continued to improve this quarter due mostly to the reduction in our balance sheet. Our level of capital, our expectation of improving earnings, and near-term declines in loan balances create optionality in our capital. This will be strengthened further when we close on the announced branch transaction. Our dividend remains a key priority for us to provide shareholders with a strong yield. We actively consider our capital deployment strategy on an ongoing basis and will continue to do so. As we finalize our strategic planning, we'll continue to provide more guidance over time. I will now hand the call over to Marcie to discuss our results.