Good morning and welcome to the First Interstate’s First Quarter 2015 Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Marcy Mutch. Please go ahead.

Thank you, Zilda [ph]. Good morning. Thank you for joining us for our first quarter earnings conference call. As we began, I'd like to direct all listeners to the cautionary note regarding forward-looking statements and factors that could affect future results in our most recently filed Form 10-K. Relevant factors that would cause actual results to differ materially from any forward-looking statements are listed in the earnings release and in our SEC filings. The Company does not intend to correct or update any of the forward-looking statements made today. Joining us from management this morning are Ed Garding, our Chief Executive Officer; and Kevin Riley, our Chief Financial Officer. At this time, I will turn the call over to Ed Garding. Ed?

Thanks, Marcy. Good morning and thanks again to all of you for joining us on the call. Yesterday, we reported earnings of $21 million or $0.46 per share. We were encouraged by our year-over-year increase in pre-tax, pre-provision income, which was up 17% from the first quarter of 2014. Net interest income combined with non-interest income or total revenue growth was up 12% compared to the first quarter of 2014. Year-over-year our revenues grew faster than our expenses a lot of which can attributed to the Mountain West acquisition and the realization of those cost savings. Overall we had a good first quarter, so I will start by giving the highlights. Organic loan growth was approximately 5% year-over-year and 1% quarter-over-quarter. Most of this growth was in the commercial real estate portfolio. Mortgage revenue, which is typically slower during the winter months was up 27% over the first quarter of last year. During the first quarter, we opened an office in Sioux Falls South Dakota, focused primarily on mortgage lending. While this didn’t have an impact on first quarter results, we expect it will provide a boost to revenue in the latter part of the second quarter. I will provide a little more detail on the Sioux Falls location in a minute. We also entered in a definitive agreement to purchase, Absarokee Bancorporation, parent company of United Bank. This deal will provide us with branches in communities complimentary to our headquarters in Billings and about $74 million in asset. We can offer a broader base of financial services to the new United Bank customers we are also better serving our existing customers that reside in those communities. Kevin will talk more about United Bank in his comments. We did see non-performing assets creep up this quarter to 1.1% of total…

Thanks, Ed and good morning, everyone. GAAP earnings for the quarter were $0.46 per share. On a pre-tax, pre-provision basis income increased $4.6 million or 17% over the same quarter a year ago the organic growth seeing across all of our key business lines. Let us start with the balance sheet. For the quarter, we had organic loan growth of about $30 million. Commercial real estate increased about $32 million or 2% this quarter. This was partially viewed by construction real estate loans moving into permanent financing. In addition, other commercial loans grew about 2%, while the consumer loans grew around 1%, but all the consumer loan growth attributed to the indirect loan portfolio. As it is typical for the first quarter, agricultural loans continue to pay down and we would expect borrowing to pick-up as we head into the second quarter. This quarter our investor portfolio will increase slightly to $2.3 billion and remains at 27% of total assets. Our strategy remains study and we continue to keep the duration of the portfolio short, decline in this quarter to 2.61 years from 2.98 years last quarter. The steep drop in duration during the last quarter was the result of declining interest rates which resulted in faster of prepayment’s fees on our securitized investments. I will keep saying this, if and when we tried, we really well positioned. As we expect it our total deposits declined slightly this quarter. The guy was dispersed across all deposit types, the saving account being the only category showing an increase. The declining time deposit exceeded the decline and demand in non-interest bearing accounts resulting in a 2 basis point decrease in our cost of funds. Now let’s look at the income statement. The decrease in net interest income were $1.2 million compared to…

Thanks Kevin. I want to ramp up by briefly mentioning the 8-K we put out last week related to the litigation involving our former customer. Now we’ve received the final order issued last week by the district court judge it will allow us to move forward and feel our case before the Montana Supreme Court. As you know we accrued $4 million in the third quarter of 2014 related to this litigation and more detailed information about this was included in our SEC filings. I will try to respond any general questions you might have, but won’t speak in great detail about this ongoing litigation. So with that we’ll open it up to questions.

Thanks you. [Operator Instructions] The first question comes from Jared Shaw with Wells Fargo. Please go ahead.

Hi, good morning.

Good morning.

When we look at the move in asset quality and the growth in non-performer and the result and change the allowance, should we expect to see as the asset quality improves going, should we expect to see the allowance from down the percentage of loans to potential additional reserve releases or as the asset quality improves the results for the few more as loan growth comes into the loans ratio come down?

Kevin, go ahead.

Well, I think as asset quality improves, I don’t know, if we’ll have many share releases, but we have the ability allowance as loan growth continues, but as asset quality improves the allowance will be not needed as much. So it’s kind of hard question to answer, but I would still project that our [Indiscernible] pretty much cover our net charge offs.

Okay and then, of course most of the, could you say most of the provision in this quarter was due to that specific increase in the [Indiscernible]?

Correct.

Okay, and then when you look at – looking at the M&A landscape, do you think that you could do multiple deals at the same time of the opportunity arise and this was this recent deals relatively small in terms of an asset side, how many do you think you could be working on it at any given time, if there are similar size?

Well, we have never done more than one at a time and in fact, we have usually allowed some space between acquisitions because, we’re very deliberate about the implementation. So more directly to your question, if there were two in the size range of the United Bank one in that 100 million undersize range, I would say, yes. We could challenge our people and they would raise to the challenge, whether that will happen or not that is probably unlikely just because it takes a while to find and negotiate those kinds of deals.

Okay, great. And this [Indiscernible] outer calling provision question. Was there loan recovery benefit included in interest income this quarter?

Kevin.

Yes, there is little bit of our interest recovery and your question was non-accrual loans or…?

No, no I mean, I’m sorry. Was there an interest income? Was there any benefit from loan recovery this quarter?

Yes, $591,000 it’s in our press release.

Okay, great. Thank you.

Next question comes from Jeff Rulis with D.A. Davidson. Please go ahead.

Thanks, good morning.

Good morning, Jeff.

Question on the non-interest expense run rate, may be first clarify the Mountain West, is that fully converted at this point?

Yes, we’re actually converted them to our core operating system and that the name change last fall.

Got it, and so from expected cost savings or kind of what’s trickling through the non-interest expense laid out on this Q1’s level, albeit a little higher on the comp side. That’s a pretty good base for representative of going forward?

Yes, that is correct.

Okay. And then Ed, I guess I’ll [recur] lightly on the litigation, but may be specifically if you could answer on, would you expect more accruals or likely to play out the appeal process before possibly add into the leave you’ve accrued $4 million so far. Would you possibly accrue more ahead of any appeal decision?

From an accounting standpoint it is so uncertain that I wouldn’t expect more accruals prior to having better knowledge about the final number and we’ve got our insurance company in the mix and of course, we were working and have been working on the appeal process and that kind have been put on hold as we waited for the District Judge to finalize the ruling, but now that’s finalized so we can move forward with that piece of it too, but there is an of lot of uncertainty, so I don’t expect accruals in the near future, once we know a number then perhaps there would be an expense.

Got it, that’s okay. And then I guess the last question just on – I guess may be to Kevin, on the core margin, there is some puts and takes in there, but I guess the outlook for assuming a pick-up in loan growth, what’s your view of kind of margin direction going forward?

Well, I mean, as loan picks up then we believe large and we’ll be here, we could see a basis point erosion if we stay in this lower environment, but we still have some excess balances where we could put the work which could offset any kind of erosion on the yield of loan, so it’s going to be right around here or it could be like a basis point down.

Fair enough, thanks.

Then next question comes from Jackie Chimera with KBW. Please go ahead.

Hi, good morning everyone.

Good morning, Jackie.

1 wondered, if you could provide a little bit more color on the – you mentioned in your prepared remarks that you have aggressive mortgage growth calls, if you could just give us more information on that some of those?

I’m sorry, I didn’t understand the question, Jackie.

You had mentioned that this year you have pretty aggressive mortgage growth calls, I was just wondering what if this were?

Kevin?

Yeah, well, we believe that mortgage gain on sale, mortgage will increase substantially over last year, especially with what we are seeing with regard to read that financing and also are in continued emphasis on trying to pick up more market share in our current markets as well as our expansion in the Sioux Falls area, so we’re expecting a nice growth pattern with regards to that business this year.

Is it possible you might add additional offices throughout the year or as Sioux Falls kind of it?

I’ll answer that, Jackie the Sioux Falls is the only additional office, but we have added people. And so, when confined top originators within our existing communities we hire and I’ve been adding, because we firmly believe that they paid for themselves with the volume that they bring us. We challenge our originators they all have minimum volume goals that we watch closely and then in order to help them reach their goals we’re working on all new software which will be installed probably late summer and with the long-term goal to a significantly lower the number of days between application and closing in which typically makes the realtors and the home owners very happy and we’re actually already seeing movement in lowering the number of days from applications to closing and we think that helps us get referrals which in term will help with the volume goals.

Okay, great. That’s wonderful color thank you.

The next question comes from Matthew Ferguson with Sandler ONeill and Partners, please go ahead.

Hi, good morning.

Good morning Matthew.

Can you give us a – what was the balance of the loan pipeline at quarter end and can you give us some inside into the complexion and weighted average rate?

I’m looking at Marcy, because she has got that and it look like maybe Kevin is going to answer that.

Weighted average rate of loans ever booked this quarter were about 4.81%. What we’re hearing from the field is that the pipelines are pretty robust right now, but sometimes they could be optimistic and that bring it to collusion, but they seem pretty excited about what they are seeing right now in loan growth. So, we hope the second quarter could look something like the second quarter of last year, we saw most of our loan growth in the second quarter, what we seen so far in April is that we had seen some pick up in loan growth, so we’re hoping that the second quarter is a strong quarter.

Okay. And then looked in terms of your M&A outlook, can you give us your most recent thoughts on crossing the $10 billion [02:54.2] [indiscernible] and how M&A and the $10 billion mark kind of come into play in our eyes and when we might expect that?

We indent to be ready for the $10 billion mark well before we hit the $10 billion mark. And so, we have an internal task force that’s working on that that’s made up of three of our Board Members and three of our Executive Team. And one of the big things about being over $10 billion is the DFAST Stress Testing, we’ve already bought the software to do that and want to be ahead of the curve there. And we don’t have any strategies to stay under or go way over. We don’t want the numbers to manage us so much as we want to manage the numbers.

Okay, all right, and then lastly, I sensed a bit of a change in tone, you guys sound even more optimistic than you were last quarter about your indirect exposure to the Bakken. Am I hearing that right and kind of what takes you in that direction?

Well, we have seen an uptick in the past new rate specific to indirect loans in the Bakken, but it’s been very minor and that’s a very minor part of that $5.5 or $550 million portfolio. And it’s less – our exposure to the Bakken in regards to indirect is about 5% of that portfolio. So that’s part of why we’re saying and always, it is not going to be an issue. And we are continuing to see that indirect portfolio grow and interestingly that the sale of automobiles has fallen off and we think that’s probably related to the drop in oil prices, but the sale of motorhomes and travel trailers had significantly trumped up, which is related to the lower gas prices.

Thank you very much.

This concludes our question-and-answer session. I would now like to turn the conference, we have Jackie back again, I apologize for that.

Welcome back, Jackie.

Thanks, sorry I got cut-off a little early...

I am sorry, Jackie that was my fault.

No, no problem, I was able to get back in queue. I just wanted to get a quick clarification on something in the press release. There was mentioned about $1 million in accruals related to Mountain West. Was that a non-interest income or non-interest expense?

That was a non-interest income.

Okay, and just on the other category I’m guessing?

Yes, correct.

Okay. And then sorry if I miss this in your prepared remarks, but the 2 larger credits that cause the uptick in NPA this quarter, those were not related to the bucket, correct?

No one of them is directly related, it’s an oil production loan and there is just no question that the borrower was highly leveraged in the drop in the price oil has affected their cash flow.

Okay. Was that already in one of the credit size loan bucket when excluding the NPA?

Yes, it was.

Okay. And then just lastly, you think very positive on tourism and more so perhaps than in last year. Do you expect it to be a larger factor than it was in 2014?

Yeah, we can do a little bit of gauging based on the reservations, and there is no official report on that, you just have to visit with your Hotel Owners Association in each state and so forth, but reservations in all three states are up more than they were last year especially over in South Dakota that 75th anniversary of that Sturgis Rally is a very big deal to the Sturgis Rally people, and we keep hearing over there, but don’t even try to come the Sturgis because you won’t get in. And so for those reasons we think it will be good, but also last year, we hit record numbers in both Yellowstone and Glacier, and this year gas prices are significantly lower than they were last year.

Okay, and then is it fair to say that the increase in tourism might provide some job for others who may have lost them in the Bakken?

Yes, it will certainly provide jobs and I can tell you like Bakken to the builder’s especially in Eastern Montana the home builders, they’re all if you ask them about the drop in oil prices, they are saying the good thing is that I can now hire skilled labor again, because a year ago that was their biggest challenge as they were taken inordinately long time to finish projects, because they couldn’t find skilled labor, and now they’re saying the skilled labors come back to the market, so that’s the good part of that. Now those people are probably not making the same level of wages as they were in the oil field, but nevertheless they are working. So we really think that the economy centered around that oil field has gone from a gold rush camp crazy to just a really good economy, because there is still 90 oil drilling rigs working in North Dakota. Now, year and a half ago there was a 180, so it’s a half of a drop but 90 rigs working meaning they are still doing some drilling is still a lot of economic activity for a spatially populated area.

Okay, so that makes great sense. Okay, thank you very much. Regard the call, I appreciate it.

You’re welcome Jackie.

Thank you and this now concludes our question-and-answer session. I would like to turn the conference back over to Ed Garding for any closing remarks.

No closing remarks, just as always we welcome calls from investors and analysts, so reach out to us at anytime. Thank you for tuning in and have a good day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.