| First Interstate BancSystem First Quarter 2008 Financial Highlights Three Months ended March 31, To our shareholders, First Interstate BancSystem is pleased to report first quarter (unaudited) 2008 2007 % Change 2008 net income to common shareholders of $17,307,000, or(in thousands except per share data) $2.14 per share, compared to $16,496,000, or $1.97 per share, OPERATING RESULTS in first quarter 2007. 2008 first quarter earnings are the high- Net income $ 18,076 $ 16,496 9.6% est first quarter earnings reported in our history. Return on Net income to common stockholders 17,307 16,496 4.9% average common equity was 15.82% in first quarter 2008, as Diluted earnings per share 2.14 1.97 8.6% compared to 16.14% in first quarter 2007 and return on average Dividends per share 0.65 1.02 -36.3% assets was 1.20% versus 1.37%. PERIOD END BALANCES Quarterly Results Assets 6,284,356 4,959,855 26.7% Our financial performance for first quarter 2008 includes the Loans 4,384,346 3,363,981 30.3% results of the First Western Banks acquired January 10, 2008. Investment securities 1,141,850 984,245 16.0% As of the date of acquisition, the First Western Banks had as- Deposits 4,901,949 3,863,224 26.9% sets of $918,000,000, loans of $725,000,000 and deposits of Stockholders’ equity 504,452 421,617 19.6% $812,000,000. Common shares outstanding 7,885 8,183 -3.6% Net interest income increased 18% to $56,803,000 for first quar- QUARTERLY AVERAGES ter 2008, as compared to the same period in 2007. Despite 27% Assets 6,065,208 4,884,328 24.2% growth in average earning assets, our net interest margin ratio Loans 4,246,302 3,322,149 27.8% decreased 17 basis points to 4.29% in first quarter 2008, as Investment securities 1,117,297 1,075,443 3.9% compared to first quarter 2007. This decrease is due, in part, to Deposits 4,700,927 3,680,205 33.2% the deployment of available funding into non-earning assets Stockholders’ equity 485,267 414,502 17.1% including premises, equipment, goodwill and core deposit intan- gible assets recorded as part of the First Western acquisition. In addition, interest free funding sources, including noninterest bearing deposits and equity, comprised a smaller percentage of our funding base during first quarter 2008, as compared to first benefits expenses and increases in occupancy costs. During quarter 2007, further compressing our net interest margin ratio. first quarter 2008, we recorded charges for impairment of mort- gage servicing rights of $3,552,000 as compared to $793,000 Our provisions for loan losses of $2,363,000 were 26% higher during first quarter 2007. Exclusive of expenses directly attribut-than first quarter 2007. This increase is primarily due higher able to the acquired entities, salary and benefits expense in-levels of internally classified loans combined with provisions creased $1,619,000, or 7%, as compared to first quarter 2007 related to the acquired banks. primarily due to inflationary wage increases and occupancy expense increased $418,000, or 12%, primarily due to higher Noninterest income of $26,369,000 for first quarter 2008 was repairs, maintenance and depreciation expenses. $4,530,000, or 21%, higher than first quarter 2007. Approxi- mately 33% of the increase in 2008 was directly attributable to On April 8, 2008, we paid a $.65 dividend per common share. the acquired banks. In addition, d uring first quarter 2008, we recorded a one-time gain on the mandatory redemption of Visa Our financial performance for the first quarter of 2008 is note-stock of $1,620,000 and a one-time gain of $1,083,000 from the worthy, especially in light of the challenges facing the banking release of escrowed funds related to the December 2006 sale of industry today. Our results confirm our confidence in the econo-our interest in iPay Technologies, LLC. The remaining improve- mies of Montana, Wyoming and South Dakota and in the abili-ment in noninterest income was primarily due to increases of ties of the talented and dedicated team of employees, officers $1,221,000 in income from the origination and sale of residential and directors who guide our company. real estate mortgage loans; $589,000 in debit and credit card transaction fees, $407,000 in insurance commissions and $327,000 in wealth management revenues. These improve- ments offset a first quarter 2007 non-recurring gain of $1,100,000 on the sale of mortgage servicing rights. Noninterest expense of $53,155,000 was $10,243,000, or 24%, Lyle R. Knight Terrill R. Moore higher than first quarter 2007. Approximately 55% of the in- President Executive Vice President crease in 2008 was directly attributable to the acquired banks. Chief Executive Officer Chief Financial Officer The remaining increase was primarily due to additional charges for impairment of mortgage servicing rights, higher salaries and |
