10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-K

(Mark One)

þ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2012

or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number: 001-34653

FIRST INTERSTATE BANCSYSTEM, INC.

(Exact name of registrant as specified in its charter)

Montana (State or other jurisdiction of incorporation or organization) 81-0331430 (IRS Employer Identification No.)

401 North 31st Street Billings, Montana (Address of principal executive offices) 59116 (Zip Code)

(406) 255-5390

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Class A common stock (Title of each class) NASDAQ Stock Market (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

Class B common stock

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§223.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files). þ Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

o Large accelerated filer  þ Accelerated filer   o Non-accelerated filer  (Do not check if a smaller reporting company) o Smaller reporting company 

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act.) o Yes þ No

The aggregate market value of voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, was $265,747,635.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of January 31, 2013:

Class A common stock	17,691,998
Class B common sock	25,639,335

Documents Incorporated by Reference

The registrant intends to file a definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to be held May 22, 2013. The information required by Part III of this Form 10-K is incorporated by reference from such Proxy Statement.

EX-21.1

EX-23.1

EX-31.1

EX-31.2

EX-32

PART I

Item 1. Business

The disclosures set forth in this report are qualified by Item 1A. Risk Factors included herein and the section captioned “Cautionary Note Regarding Forward-Looking Statements and Factors that Could Affect Future Results” included in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. When we refer to “we,” “our,” “us” or the “Company” in this annual report, we mean First Interstate BancSystem, Inc. and our consolidated subsidiaries, including our wholly-owned subsidiary, First Interstate Bank, unless the context indicates that we refer only to the parent company, First Interstate BancSystem, Inc. When we refer to the “Bank” in this annual report, we mean First Interstate Bank.

Our Company

We are a financial and bank holding company incorporated as a Montana corporation in 1971. We are headquartered in Billings, Montana. As of December 31, 2012, we had consolidated assets of $7.7 billion, deposits of $6.2 billion, loans of $4.2 billion and total stockholders’ equity of $751 million. We currently operate 76 banking offices, including detached drive-up facilities, in 42 communities located in Montana, Wyoming and western South Dakota. We also offer internet and mobile banking services. Through our wholly-owned subsidiary, First Interstate Bank, we deliver a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout our market areas. Our customers participate in a wide variety of industries, including energy, healthcare and professional services, education and governmental services, construction, mining, agriculture, retail and wholesale trade and tourism. Our principal markets range in size from 23,000 to 150,000 people, have diversified economic characteristics and favorable population growth prospects and usually serve as trade centers for larger rural areas.

We are the licensee under a perpetual trademark license agreement granting us an exclusive, nontransferable license to use the “First Interstate” name and logo in Montana, Wyoming and the six neighboring states of Idaho, Utah, Colorado, Nebraska, South Dakota and North Dakota.

We have grown our business by adhering to a set of guiding principles and a long-term disciplined perspective that emphasizes our commitment to providing high-quality financial products and services, delivering quality customer service, effecting business leadership through professional and dedicated managers and employees, assisting our communities through socially responsible leadership and cultivating a strong and positive corporate culture. In the future, we intend to remain a leader in our markets by continuing to adhere to the core principles and values that have contributed to our growth and success and by continuing to follow our community banking model. In addition, we plan to continue to expand our business in a disciplined and prudent manner, including organic growth in our existing market areas and expansion into new and complementary markets when appropriate opportunities arise.

Community Banking

Community banking encompasses commercial and consumer banking services provided through our Bank, primarily the acceptance of deposits; extensions of credit; mortgage loan origination and servicing; and trust, employee benefit, investment and insurance services. Our community banking philosophy emphasizes providing customers with commercial and consumer banking products and services locally using a personalized service approach while strengthening the communities in our market areas through community service activities. We grant our banking offices significant authority in delivering and pricing products in response to local market considerations and customer needs. This authority enables our banking offices to remain competitive by responding quickly to local market conditions and enhances their relationships with the customers they serve by tailoring our products and price points to each individual customer’s needs. We also require accountability by having company-wide standards and established limits on the authority and discretion of each banking office. This combination of authority and accountability allows our banking offices to provide personalized customer service and be in close contact with our communities, while at the same time promoting strong performance at the branch level and remaining focused on our overall financial performance.

Lending Activities

We offer short and long-term real estate, consumer, commercial, agricultural and other loans to individuals and businesses in our market areas. We have comprehensive credit policies establishing company-wide underwriting and documentation standards to assist management in the lending process and to limit our risk. Each loan must meet minimum underwriting

1

standards specified in our credit policies. Minimum underwriting standards generally specify that loans (i) are made to borrowers located within a designated geographical lending area with the exception of participation loans and loans to national accounts; (ii) are made only for identified legal purposes; (iii) have specifically identified sources of repayment; (iv) mature within designated maximum maturity periods that coincide with repayment sources; (v) are appropriately collateralized whenever possible, (vi) are supported by current credit information; (vii) do not exceed the Bank's legal lending limit; (viii) with fixed interest rates are adjusted within designated time frames; and (ix) require a flood determination prior to closing. In addition, our minimum underwriting standards include lending limitations to prevent concentrations of credit in agricultural, commercial, real estate or consumer loans. Further, each minimum underwriting standard must be documented as part of the loan approval process.

While each loan must meet minimum underwriting standards established in our credit policies, lending officers are granted certain levels of authority in approving and pricing loans to assure that the banking offices are responsive to competitive issues and community needs in each market area. Lending authorities are established at individual, branch and market levels. Branch and market lending authorities are assigned annually by the Company's chief executive officer and chief credit officer based on the size of the branch or market's loan portfolio and the branch or market's historical credit performance. Individual lending limits are approved annually by branch or market management and are based on the credit ability and experience of each individual officer. Branch and market lending limits and aggregate lending relationships in excess of $10 million are approved by the Bank's board of directors after review by the Credit Committee of the Company's board of directors.

Deposit Products

We offer traditional depository products including checking, savings and time deposits. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation, or FDIC, up to statutory limits. We also offer repurchase agreements primarily to commercial and municipal depositors. Under repurchase agreements, we sell investment securities held by the Bank to our customers under an agreement to repurchase the investment securities at a specified time or on demand. All outstanding repurchase agreements are due in one business day.

Wealth Management

We provide a wide range of trust, employee benefit, investment management, insurance, agency and custodial services to individuals, businesses and nonprofit organizations. These services include the administration of estates and personal trusts; management of investment accounts for individuals, employee benefit plans and charitable foundations; and insurance planning. As of December 31, 2012, the estimated fair value of trust assets held in a fiduciary or agent capacity was in excess of $3 billion.

Centralized Services

We have centralized certain operational activities to provide consistent service levels to our customers company-wide, to gain efficiency in management of those activities and to ensure regulatory compliance. Centralized operational activities generally support our banking offices in the delivery of products and services to customers and include marketing; credit review; credit cards; mortgage loan sales and servicing; indirect consumer loan purchasing and processing; loan collections and, other operational activities. Additionally, specialized staff support services have been centralized to enable our branches to serve their markets more efficiently. These services include credit administration, finance, accounting, human resource management, internal audit, technology, risk management, compliance and other support services.

Competition

Banking is highly competitive. We compete with other financial institutions located in Montana, Wyoming, South Dakota and adjoining states for deposits, loans and trust, employee benefit, investment and insurance accounts. We also compete with savings and loan associations, savings banks and credit unions for deposits and loans. In addition, we compete with large banks in major financial centers and other financial intermediaries, such as consumer finance companies, brokerage firms, mortgage banking companies, insurance companies, securities firms, mutual funds and certain government agencies as well as major retailers, all actively engaged in providing various types of loans and other financial services. We generally compete on the basis of customer service and responsiveness to customer needs, available loan and deposit products, rates of interest charged on loans, rates of interest paid for deposits and the availability and pricing of trust, employee benefit, investment and insurance services.

2

Employees

At December 31, 2012, we employed 1,683 full-time equivalent employees, none of whom are represented by a collective bargaining agreement. We strive to be the employer of choice in the markets we serve and consider our employee relations to be good.

Regulation and Supervision

Regulatory Authorities

We are subject to extensive regulation under federal and state laws. A description of certain material laws and regulations applicable to us is summarized below. This description is not intended to include a summary of all laws and regulations applicable to us. In addition to laws and regulations, state and federal banking regulatory agencies may issue policy statements, interpretive letters and similar written guidance applicable to us. Those issuances may affect the conduct of our business or impose additional regulatory obligations.

As a financial and bank holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended, or the Bank Holding Company Act, and to supervision, regulation and regular examination by the Federal Reserve. Because we are a public company, we are also subject to the disclosure and regulatory requirements of the Securities Exchange Act of 1934, as amended, or Exchange Act, as administered by the Securities and Exchange Commission, or SEC.

The Bank is subject to supervision and regular examination by its primary banking regulators, the Federal Reserve and the State of Montana, Department of Administration, Division of Banking and Financial Institutions, with respect to its activities in Wyoming the State of Wyoming, Department of Audit, and with respect to its activities in South Dakota, the State of South Dakota Department of Revenue & Regulation, Division of Banking.

The Bank's deposits are insured by the deposit insurance fund of the FDIC in the manner and to the extent provided by law. The Bank is subject to the Federal Deposit Insurance Act, or FDIA, and FDIC regulations relating to deposit insurance and may also be subject to supervision and examination by the FDIC.

The extensive regulation of the Bank limits both the activities in which the Bank may engage and the conduct of its permitted activities. Further, the laws and regulations impose reporting and information collection obligations on the Bank. The Bank incurs significant costs relating to compliance with various laws and regulations and the collection and retention of information.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enacts significant changes in federal statutes governing banks and bank holding companies generally as well as other entities. Some of the significant changes are already in effect, additional significant changes will become effective in the near-term and other significant changes require action by federal banking agencies, including the Federal Reserve, the principal federal regulator of the Company. Except as otherwise noted, the following discussion assumes that provisions of the Dodd-Frank Act applicable to banks and bank holding companies to become effective in the near-term are currently in effect.

Financial and Bank Holding Company

The Company is a bank holding company and has registered as a financial holding company under regulations issued by the Federal Reserve. Under federal law, including the Dodd-Frank Act, the Company is required to serve as a source of financial strength to the Bank, which may include providing financial assistance to the Bank if the Bank experiences financial distress. The federal banking agencies are required under the Dodd-Frank Act to issue joint rules to carry out the source of strength requirements. Under existing Federal Reserve source of strength policies, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank. The Federal Reserve may also determine that the bank holding company is engaging in unsafe and unsound practices if it fails to commit resources to such a subsidiary bank.

3

We are required by the Bank Holding Company Act to obtain Federal Reserve approval prior to acquiring, directly or indirectly, ownership or control of voting shares of any bank, if, after such acquisition, we would own or control more than 5% of its voting stock. Under the Dodd-Frank Act, when acting on an application for approval the Federal Reserve is required to consider whether the transaction would result in greater or more concentrated risks to the United States banking or financial system. Under federal law and regulations, including the Dodd-Frank Act, a bank holding company may acquire banks in states other than its home state if the bank holding company is both 'well-capitalized' and 'well-managed' both before and after the acquisition. The interstate acquisitions are subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company's initial entry into the state, more than 30% of such deposits in the state, or such lesser or greater amount set by state law of such deposits in that state.

With additional changes made to federal statutes under the Dodd-Frank Act, banks are also permitted to establish new branches in a state if a bank located in that state could establish a new branch at the proposed location without regard to state laws limiting interstate de novo branching. Banks may also merge across state lines. A state can prohibit interstate mergers entirely or prohibit them if the continuing bank would control insured bank deposits in excess of a specified percentage of total insured bank deposits in the state, provided such prohibition does not discriminate against out-of-state banks. For example, under Montana law, banks, bank holding companies and their respective subsidiaries cannot acquire control of a bank located in Montana if, after the acquisition, the acquiring institution and its affiliates would directly or indirectly control, in the aggregate, more than 22% of the total deposits of insured depository institutions located in Montana.

We have voluntarily registered with the Federal Reserve as a financial holding company. As a financial holding company, we may engage in certain business activities that are determined by the Federal Reserve to be financial in nature or incidental to financial activities as well as all activities authorized to bank holding companies generally. In most circumstances, we must notify the Federal Reserve of our financial activities within a specified time period following our initial engagement in each business or activity. If the type of proposed business or activity has not been previously determined by the Federal Reserve to be financially related or incidental to financial activities, we must receive the prior approval of the Federal Reserve before engaging in the activity.

We may engage in authorized financial activities, such as providing investment services, provided that we remain a financial holding company and meet certain regulatory standards of being “well capitalized” and “well managed.” If we fail to meet the “well capitalized” or “well managed” regulatory standards, we may be required to cease our financial holding company activities or, in certain circumstances, to divest of the Bank. We do not currently engage in significant financial holding company businesses or activities not otherwise permitted for bank holding companies generally. Should we engage in certain financial activities currently authorized to financial holding companies, we may become subject to additional laws, regulations, supervision and examination by regulatory agencies.

In order to assess the financial strength of the bank holding company, the Federal Reserve and the State of Montana also conducts throughout the year periodic onsite and offsite inspections and credit reviews of us. The federal banking agencies, including the Federal Reserve, may also require additional information and reports from us. In addition, the Federal Reserve may examine, and require reports and information regarding, any entity that we control, including entities other than banks or entities engaged in financial activities. In certain circumstances, the Federal Reserve may require us to divest of non-bank entities or limit the activities of those entities even if the activities are otherwise permitted to bank holding companies under governing law.

With limited exceptions, as of July 21, 2011, banks and their affiliates are not permitted to engage in proprietary trading, or invest in, or serve as an advisor to, hedge funds or private equity funds. We have not historically engaged in any of those activities.

Restrictions on Transfers of Funds to Us and the Bank

Dividends from the Bank are the primary source of funds for the payment of our expenses of operating and for the payment of dividends. Under both state and federal law, the amount of dividends that may be paid by the Bank from time to time is limited. In general, the Bank is limited to paying dividends that do not exceed the current year net profits together with retained earnings from the two preceding calendar years unless the prior consents of the Montana and federal banking regulators are obtained.

4

A state or federal banking regulator may impose, by regulatory order or agreement of the Bank, specific dividend limitations or prohibitions in certain circumstances. The Bank is not currently subject to a specific regulatory dividend limitation other than generally applicable limitations.

In general, banks are also prohibited from making capital distributions, including dividends and are prohibited from paying management fees to control persons if it would be “undercapitalized” under the regulatory framework for corrective action after making such payments. See “Capital Standards and Prompt Corrective Action.”

Certain restrictive covenants that may exist in future debt instruments may also limit the Bank's ability to make dividend payments to us. Also, under Montana corporate law, a dividend may not be paid if, after giving effect to the dividend: (1) the company would not be able to pay its debts as they become due in the usual course of business; or (2) the company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the company were to be dissolved at the time of the dividend, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the dividend.

Furthermore, because we are a legal entity separate and distinct from the Bank, our right to participate in the distribution of assets of the Bank upon its liquidation or reorganization will be subject to the prior claims of the Bank's creditors. In the event of such a liquidation or other resolution, the claims of depositors and other general or subordinated creditors of the Bank are entitled to a priority of payment of the claims of holders of any obligation of the Bank to its shareholders, including us, or our shareholders or creditors.

Restrictions on Transactions with Affiliates, Directors and Officers

Under the Federal Reserve Act, the Bank may not lend funds to, or otherwise extend credit to or for our benefit or the benefit of our affiliates, except on specified types and amounts of collateral and other terms required by state and federal law. The limitation on lending may limit our ability to obtain funds from the Bank for our cash needs, including funds for payment of dividends, interest and operational expenses.

The Federal Reserve also has authority to define and limit the transactions between banks and their affiliates. The Federal Reserve's Regulation W and relevant federal statutes, among other things, impose significant additional limitations on transactions in which the Bank may engage with us, with each other, or with other affiliates.

Federal Reserve Regulation O restricts loans to the Bank and Company insiders, which includes directors, officers and principal stockholders and their respective related interests. All extensions of credit to the insiders and their related interests must be on the same terms as, and subject to the same loan underwriting requirements as, loans to persons who are not insiders. In addition, Regulation O imposes lending limits on loans to insiders and their related interests and imposes, in certain circumstances, requirements for prior approval of the loans by the Bank board of directors.

Capital Standards and Prompt Corrective Action

Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.

Under the Dodd-Frank Act, the federal banking agencies are required to establish, by regulation or order, minimum capital requirements for insured depository organizations and the Federal Reserve is permitted to establish capital requirements, by regulation or order, for bank holding companies. The minimum capital requirements to be established cannot be less than the minimum capital guidelines in effect when the Dodd-Frank Act was enacted. The Federal Reserve is required to seek to make capital requirements countercyclical by increasing the amount of required capital during times of economic expansion and decreasing the amount of required capital during times of economic contraction. The provisions of the Dodd-Frank Act, together with actions taken by the Basel Committee for the Basel III accords, may result in future regulatory minimum capital requirements that will exceed the regulatory minimum capital guidelines to which we are currently subject.

5

In 2012, the Federal Reserve issued several requests for comments on proposed rules that, if adopted, would implement, among other things, the capital guideline requirements under the Dodd-Frank Act. In most circumstances the proposed rules would apply only to bank holding companies or banks with consolidated assets in excess of $50 billion. Some proposed rules would apply to bank holding companies or banks with consolidated assets in excess of $10 billion. Because the Company has consolidated assets of less than $10 billion, none of the proposed rules, if adopted, would apply to the Company or the Bank. Most recently, the Federal Reserve has revoked its prior indications that the capital guideline requirements would be effective on January 1, 2013, and has not yet stated a date when such requirements may become effective. The current proposed guidelines do not apply to companies, such as us, with consolidated assets of less than $10 billion.

Currently, the Federal Reserve Board and the FDIC have substantially similar risk-based capital ratio and leverage ratio guidelines for banks similar in asset size to the Bank. The guidelines are intended to ensure that banks have adequate capital given the risk levels of assets and off-balance sheet financial instruments. Under the guidelines, banking organizations are required to maintain minimum ratios for tier 1 capital and total capital to risk-weighted assets (including certain off-balance sheet items, such as letters of credit). For purposes of calculating the ratios, a banking organization's assets and some of its specified off-balance sheet commitments and obligations are assigned to various risk categories. Generally, under the applicable guidelines, a financial institution's capital is divided into two tiers. These tiers are:

Core Capital (tier 1).  Tier 1 capital includes common equity, noncumulative perpetual preferred stock (excluding auction rate issues) and minority interests in equity accounts of consolidated subsidiaries, less both goodwill (adjusted for associated deferred tax liability) and, with certain limited exceptions, all other intangible assets. Bank holding companies, however, may include up to a limit of 25% of cumulative preferred stock in their tier 1 capital.

Supplementary Capital (tier 2).  Tier 2 capital includes, among other things, cumulative and limited-life preferred stock, hybrid capital instruments, mandatory convertible securities, qualifying subordinated debt and the allowance for loan and lease losses, subject to certain limitations.

Institutions that must incorporate market risk exposure into their risk-based capital requirements may also have a third tier of capital in the form of restricted short-term subordinated debt.

The Dodd-Frank Act provisions relating to required minimum capital also limit, in certain circumstances, the use of hybrid capital instruments in meeting regulatory capital requirements, including instruments similar to those which we currently have issued and outstanding. However, because our total consolidated assets are substantially less than $15 billion, the limitations on use of hybrid capital instruments are not expected to apply to us for the foreseeable future.

We, like other bank holding companies, are required under current guidelines to maintain tier 1 capital and total capital (the sum of tier 1 and tier 2 capital) equal to at least 4.0% and 8.0%, respectively, of our total risk-weighted assets. The Bank, like other depository institutions, is required to maintain similar capital levels under capital adequacy guidelines. For a depository institution to be considered “well capitalized” under the regulatory framework for prompt corrective action its tier 1 and total capital ratios must be at least 6.0% and 10.0% on a risk-adjusted basis, respectively.

Bank holding companies and banks are also required to comply with minimum leverage ratio requirements. The leverage ratio is the ratio of a banking organization's tier 1 capital to its total adjusted quarterly average assets (as defined for regulatory purposes). The current guidelines require a minimum leverage ratio of 3.0% for financial holding companies and banks that either have the highest supervisory rating or have implemented the appropriate federal regulatory authority's risk-adjusted capital measure for market risk. All other financial holding companies and banks are required to maintain a minimum leverage ratio of 4.0%, unless a different minimum is specified by an appropriate regulatory authority. For a depository institution to be considered “well capitalized” under the regulatory framework for prompt corrective action, its leverage ratio must be at least 5.0%.

The capital guidelines also provide that banking organizations experiencing significant internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. In addition, the regulations of the bank regulators provide that concentration of credit risks, as well as an institution's ability to manage these risks, are important factors to be taken into account by regulatory agencies in assessing an organization's overall capital adequacy. The Federal Reserve has not advised us of any specific minimum leverage ratio applicable to us or the Bank.

6

The FDIA requires, among other things, the federal banking agencies to take “prompt corrective action” in respect of depository institutions that do not meet minimum capital requirements. The FDIA sets forth the following five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” A depository institution's capital tier will depend upon how its capital levels compare with various relevant capital measures and certain other factors, as established by regulation. The relevant capital measures are the total capital ratio, the tier 1 capital ratio and the leverage ratio.

Under the regulations adopted by the federal regulatory authorities, a bank will be: (1) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 5.0% or greater and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (2) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a tier 1 risk-based capital ratio of 4.0% or greater and a leverage ratio of 4.0% or greater (3.0% in certain circumstances ) and is not “well capitalized”; (3) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 4.0% (3.0% in certain circumstances); (4) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a tier 1 risk-based capital ratio of less than 3.0% or a leverage ratio of less than 3.0%; and (5) “critically undercapitalized” if the institution's tangible equity is equal to or less than 2.0% of average quarterly tangible assets. An institution may be downgraded to, or deemed to be in, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. Our regulatory capital ratios and those of the Bank are in excess of the levels established for “well capitalized” institutions. A bank's capital category is determined solely for the purpose of applying prompt corrective action regulations and the capital category may not constitute an accurate representation of the bank's overall financial condition or prospects for other purposes.

The FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be undercapitalized. Undercapitalized institutions are subject to growth limitations and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of (1) an amount equal to 5.0% of the depository institution's total assets at the time it became undercapitalized and (2) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.”

“Significantly undercapitalized” depository institutions may be subject to a number of requirements and restrictions, including mandated capital raising activities such as orders to sell sufficient voting stock to become “adequately capitalized,” requirements to reduce total assets, restrictions for interest rates paid, removal of management and cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator.

A bank that is not “well-capitalized” as defined by applicable regulations may, among other regulatory requirements or limitations, be prohibited under federal law and regulation from accepting or renewing brokered deposits.

The capital stock of banks organized under Montana law, such as the Bank, may be subject to assessment upon the direction of the Montana Department of Administration under the Montana Bank Act. Under the Montana Bank Act, if the Department of Administration determines an impairment of a bank's capital exists, it may notify the bank's board of directors of the impairment and require the impairment be made good by an assessment on the bank stock. If the bank fails to make good the impairment, the Department of Administration may, among other things, take charge of the bank and proceed to liquidate the bank.

Under FDIA, the appropriate federal banking agency may take certain actions with respect to significantly or critically undercapitalized institutions. The actions may include requiring the sale of additional shares of the institution's stock or other actions deemed appropriate by the federal banking agency, which could include assessment on the institution's stock.

7

Safety and Soundness Standards and Other Enforcement Mechanisms

The federal banking agencies have adopted guidelines establishing standards for safety and soundness, asset quality and earnings, internal controls and audit systems, among others, as required by the Federal Deposit Insurance Corporation Improvement Act, or FDICIA. These standards are designed to identify potential concerns and ensure that action is taken to address those concerns before they pose a risk to the deposit insurance fund, or DIF. If a federal banking agency determines that an institution fails to meet any of these standards, the agency may require the institution to submit an acceptable plan to achieve compliance with the standard. If the institution fails to submit an acceptable plan within the time allowed by the agency or fails in any material respect to implement an accepted plan, the agency must, by order, require the institution to correct the deficiency.

Federal banking agencies possess broad enforcement powers to take corrective and other supervisory action on an insured bank and its holding company. Moreover, federal laws require each federal banking agency to take prompt corrective action to resolve the problems of insured banks. Bank holding companies and insured banks are subject to a wide range of potential enforcement actions by federal regulators for violation of any law, rule, regulation, standard, condition imposed in writing by the regulator, or term of a written agreement with the regulator.

Deposit Insurance

The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries. The FDIC insures our customer deposits through the DIF up to prescribed limits for each depositor. The maximum deposit insurance amount is $250,000 per depositor. In addition, certain non-interest bearing deposit accounts were accorded unlimited insurance until December 31, 2012. Effective January 1, 2013, those accounts are subject to the general $250,000 deposit insurance limitation. The amount of FDIC assessments paid by each DIF member institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors.

All FDIC-insured institutions are required to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation, or FICO, an agency of the Federal government established to recapitalize the predecessor to the DIF. The FICO assessment rates are set at 0.00165% of total assets and will continue until the FICO bonds mature in 2017.

On November 17, 2009, the FDIC imposed a prepayment requirement on most insured depository organizations, requiring that the organizations prepay estimated quarterly risk-based assessments for the fourth quarter of 2009 and for each calendar quarter for calendar years 2010, 2011 and 2012. The Bank's prepayment of FDIC insurance premiums will continue through March 31, 2013 and any excess prepayment will be refunded to the Bank on June 28, 2013. Beginning April 1, 2013, the Bank will again be subject to assessments for FDIC insurance premiums. The estimated annualized premium amount for 2013 is approximately $6 million.

As required by the Dodd-Frank Act the FDIC changed its method of assessment of insurance premiums effective as of April 1, 2011 to an assessment based on the average total consolidated assets of the insured depository institution less the institutions average tangible equity for the assessment period and made other adjustments to the assessment calculation methods. The changes reduced the deposit insurance premium paid by the Bank from the amounts paid under the prior assessment method based on total deposits.

The FDIC is also required to set its designated reserve ratio for each year at 1.35% of estimated insured deposits and take actions necessary to reach a reserve ratio of 1.35% of total estimated insured deposits by September 30, 2020. The FDIC may be required to increase deposit insurance premium assessments to meet the reserve ratio requirements. However, under the Dodd-Frank Act, the effects of any increases in deposit insurance premium assessments are to be offset for the benefit of depository institutions with total consolidated assets of less than $10 billion. The Bank currently has total consolidated assets of less than $10 billion.

8

Insolvency of an Insured Depository Institution

If the FDIC is appointed the conservator or receiver of an insured depository institution upon its insolvency or in certain other events, the FDIC has the power, among other things: (1) to transfer any of the depository institution's assets and liabilities to a new obligor without the approval of the depository institution's creditors; (2) to enforce the terms of the depository institution's contracts pursuant to their terms; or (3) to repudiate or disaffirm any contract or lease to which the depository institution is a party, the performance of which is determined by the FDIC to be burdensome and the disaffirmation or repudiation of which is determined by the FDIC to promote the orderly administration of the depository institution.

Depositor Preference

The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

Customer Privacy and Other Consumer Protections

Federal law imposes customer privacy requirements on any company engaged in financial activities, including the Bank and us. Under these requirements, a financial company is required to protect the security and confidentiality of customer nonpublic personal information. In addition, for customers who obtain a financial product such as a loan for personal, family or household purposes, a financial holding company is required to disclose its privacy policy to the customer at the time the relationship is established and annually thereafter. The financial company must also disclose its policies concerning the sharing of the customer's nonpublic personal information with affiliates and third parties. Finally, a financial company is prohibited from disclosing an account number or similar item to a third party for use in telemarketing, direct mail marketing or marketing through electronic mail.

The Bank is subject to a variety of federal and state laws, regulations and reporting obligations aimed at protecting consumers and Bank customers. Failure to comply with these laws and regulations may, among other things, impair the collection of loans made in violation of the laws and regulations, provide borrowers or other customers certain rights and remedies or result in the imposition of penalties on the Bank.

The Equal Credit Opportunity Act generally prohibits discrimination in credit transactions on, among other things, the basis of race, color, religion, national origin, sex, marital status or age and, in certain circumstances, limits the Bank's ability to require co-obligors or guarantors as a condition to the extension of credit to an individual.

The Real Estate Settlement Procedures Act, or RESPA, requires certain disclosures be provided to borrowers in real estate loan closings or other real estate settlements. In addition, RESPA limits or prohibits certain settlement practices, fee sharing, kickbacks and similar practices that are considered to be abusive.

The Truth in Lending Act, or TILA, and Regulation Z require disclosures to borrowers and other parties in consumer loans including, among other things, disclosures relating to interest rates and other finance charges, payments and payment schedules and annual percentage rates. TILA provides remedies to borrowers upon certain failures in compliance by a lender.

The Fair Housing Act regulates, among other things, lending practices in residential lending and prohibits discrimination in housing related lending activities on the basis of race, color, religion, national origin, sex, handicap, disability or familial status.

The Home Mortgage Disclosure Act requires certain lenders and other firms engaged in the home mortgage industry to collect and report information relating to applicants, borrowers and home mortgage lending activities in which they engage in their market areas or communities. The information is used for, among other purposes, evaluation of discrimination or other impermissible acts in home mortgage lending.

The Home Ownership and Equity Protection Act regulates terms and disclosures of certain closed end home mortgage loans that are not purchase money loans and includes loans classified as “high cost loans.”

9

The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, generally limits lenders and other financial firms in their collection, use or dissemination of customer credit information, gives customers some access to, and control over, their credit information and requires financial firms to establish policies and procedures intended to deter identity theft and related frauds.

The Fair Debt Collection Practices Act regulates actions that may be taken in the collection of consumer debts and provides consumers with certain rights of access to information related to collection actions.

 The Electronic Fund Transfer Act regulates fees and other terms on electronic funds transactions. On November 17, 2009, the Federal Reserve Board published a final rule amending Regulation E, which implements the Electronic Fund Transfer Act. Effective July 1, 2010 for new accounts and August 15, 2010 for existing accounts, this rule generally prohibits financial institutions from charging an overdraft fee for automated teller machine and one-time debit card transactions that overdraw a consumer deposit account, unless the customer opts in to having the overdrafts authorized and paid.

The Federal Reserve issued regulations relating to fees and charges in debit card transactions intended to implement provisions of the Dodd-Frank Act. Card issuers with consolidated assets of less than $10 billion are exempt from the interchange fee standards but are subject to other rules addressing exclusivity and other requirements. The Bank is not subject to the interchange fee standards as its consolidated assets, together with affiliates, are less than $10 billion.

Federal consumer protection laws have been expanded by the Dodd-Frank Act, pursuant to which a Bureau of Consumer Protection has been created with authority to regulate consumer financial products and services and to implement and enforce federal consumer financial laws. Although the Bureau is accorded examination and enforcement authority, the Bureau's authority does not generally extend to depository institutions with total assets of less than $10 billion. The Bank currently has total assets of less than $10 billion.

The Community Reinvestment Act, or CRA, generally requires the federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of its local communities, including low and moderate income neighborhoods. In addition to substantial penalties and corrective measures that may be required for a violation of fair lending laws, the federal banking agencies may take compliance with such laws and the CRA into account when regulating and supervising our other activities or in authorizing new activities.

In connection with its assessment of CRA performance, the appropriate bank regulatory agency assigns a rating of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.” The Bank received an “outstanding” rating on its most recent published examination. Although the Bank's policies and procedures are designed to achieve compliance with all fair lending and CRA requirements, instances of non-compliance are occasionally identified through normal operational activities. Management responds proactively to correct all instances of non-compliance and implement procedures to prevent further violations from occurring.

USA PATRIOT Act

The USA PATRIOT Act of 2001 amended the Bank Secrecy Act of 1970 and the Money Laundering Control Act of 1986 and adopted additional measures requiring insured depository institutions, broker-dealers and certain other financial institutions to have policies, procedures and controls to detect, prevent and report money laundering and terrorist financing. The USA PATRIOT Act includes the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 and also amends laws relating to currency control and regulation. The laws and related regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Federal banking regulators are required, when reviewing bank holding company acquisition or merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the institution. The USA PATRIOT Improvement and Reauthorization Act of 2005, among other things, made permanent or otherwise generally extended the effectiveness of provisions applicable to financial institutions.

10

Office of Foreign Asset Control

The United States Treasury Office of Foreign Asset Control enforces economic and trade sanctions imposed by the United States on foreign persons and governments. Among other authorities, the Office of Foreign Asset Control may require United States financial institutions to block or “freeze” assets of identified foreign persons or governments which come within the control of the financial institution. Financial institutions are required to adopt procedures for identification of new and existing deposit accounts and other relationships with persons or governments identified by the Office of Foreign Asset Control and to timely report the accounts or relationships to the Office of Foreign Asset Control.

Website Access to SEC Filings

All of our reports and statements filed or furnished electronically with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Proxy Statements, as well as amendments to these reports and statements filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are accessible at no cost through our website at www.FIBK.com as soon as reasonably practicable after they have been filed with the SEC. These reports are also accessible on the SEC’s website at www.sec.gov. The public may read and copy materials we file with the SEC at the public reference facilities maintained by the SEC at Room 1580, 100 F Street N.E., Washington, DC 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Our website and the information contained therein or connected thereto is not intended to be incorporated into this report and should not be considered a part of this report.

Item 1A. Risk Factors

Like other financial and bank holding companies, we are subject to a number of risks, many of which are outside of our control. If any of the events or circumstances described in the following risk factors actually occurs, our business, financial condition, results of operations and prospects could be harmed. These risks are not the only ones that we may face. Other risks of which we are not aware, including those which relate to the banking and financial services industry in general and us in particular, or those which we do not currently believe are material, may harm our future business, financial condition, results of operations and prospects. Readers should consider carefully the following important factors in evaluating us, our business and an investment in our securities.

Risks Relating to the Market and Our Business

Continued or worsening general business and economic conditions could materially and adversely affect us.

Our business and operations are sensitive to general business and economic conditions in the United States. If U.S. economic conditions worsen, our growth and profitability could be adversely affected. Weak economic conditions may be characterized by deflation, fluctuations in debt and equity capital markets, including a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines and lower home sales and commercial activity. All of these factors would be detrimental to our business.

In addition, significant concern regarding the creditworthiness of some of the governments in Europe has contributed to volatility in financial markets in Europe and globally, and to funding pressures on some globally active European banks, leading to greater investor and economic uncertainty worldwide. A failure to adequately address sovereign debt concerns in Europe could hamper economic recovery or contribute to a return to recessionary economic conditions and severe stress in the financial markets, including in the United States.

Our business is also significantly affected by monetary and related policies of the U.S. federal government, its agencies and government-sponsored entities. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control, are difficult to predict and could have a material adverse effect on our business, financial position, results of operations and cash flows.

11

Adverse economic conditions affecting Montana, Wyoming and western South Dakota could harm our business.

Our customers are located predominantly in Montana, Wyoming and western South Dakota. Because of the concentration of loans and deposits in these states, existing or future adverse economic conditions in Montana, Wyoming or western South Dakota could cause us to experience higher rates of loss and delinquency on our loans than if the loans were more geographically diversified. In the future, adverse economic conditions, including inflation, recession and unemployment and other factors, such as regulatory or business developments, natural disasters, wide-spread disease, terrorist activity, environmental contamination and other unfavorable conditions and events that affect these states, could reduce demand for credit or fee-based products and may delay or prevent borrowers from repaying their loans. Adverse conditions and other factors identified above could also negatively affect real estate and other collateral values, interest rate levels and the availability of credit to refinance loans at or prior to maturity. These results could adversely impact our business, financial condition, results of operations and cash flows.

We may incur significant credit losses, particularly in light of recent and existing market conditions.

We take on credit risk by virtue of making loans and extending loan commitments and letters of credit. Our credit standards, procedures and policies may not prevent us from incurring substantial credit losses, particularly in light of market developments in recent years. Weakening economic conditions, increasing unemployment rates and/or deterioration of housing markets could exert pressure on our loan customers resulting in higher delinquencies, repossession and losses, which would have an adverse impact on our business, financial condition, results of operations and prospects.

Our concentration of real estate loans subjects us to increased risks in the event real estate values continue to decline due to the economic recession, a further deterioration in the real estate markets or other causes.

 At December 31, 2012, we had approximately $2.7 billion of commercial, agricultural, construction, residential and other real estate loans, representing approximately 64% of our total loan portfolio. The recent economic recession, deterioration in the real estate markets and increasing delinquencies and foreclosures have had an adverse effect on the collateral value for many of our loans and on the repayment ability of many of our borrowers. The continuation or further deterioration of these factors, including increasing foreclosures and unemployment, will continue to have the same or similar adverse effects. In addition, these factors could reduce the amount of loans we make to businesses in the construction and real estate industry, which could negatively impact our interest income and results of operations. A continued decline in real estate values could also lead to higher charge-offs in the event of defaults in our real estate loan portfolio. Similarly, the occurrence of a natural or manmade disaster in our market areas could impair the value of the collateral we hold for real estate secured loans. Any one or a combination of the factors identified above could negatively impact our business, financial condition, results of operations and prospects.

Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans.

 Commercial loans, including commercial real estate loans, are often larger and involve greater risks than other types of lending. Because payments on such loans are often dependent on the successful operation or development of the property or business involved, repayment of such loans is more sensitive than other types of loans to adverse conditions in the real estate market or the general economy. Accordingly, the downturn in the real estate market and economy has heightened our risk related to commercial loans, particularly commercial real estate loans. Unlike residential mortgage loans, which generally are made on the basis of the borrowers' ability to make repayment from their employment and other income and which are secured by real property whose value tends to be more easily ascertainable, commercial loans typically are made on the basis of the borrowers' ability to make repayment from the cash flow of the commercial venture. If the cash flow from business operations is reduced, the borrower's ability to repay the loan may be impaired. Due to the larger average size of each commercial loan as compared with other loans such as residential loans, as well as the collateral which is generally less readily-marketable, losses incurred on a small number of commercial loans could have a material adverse impact on our financial condition and results of operations. At December 31, 2012, we had $2.2 billion of commercial loans, including $1.5 billion of commercial real estate loans, representing approximately 52% of our total loan portfolio.

12

If we experience loan losses in excess of estimated amounts, our earnings will be adversely affected.

The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the value and marketability of the collateral for the loan. We maintain an allowance for loan losses based upon, among other things, historical experience, an evaluation of economic conditions and regular reviews of loan portfolio quality. Based upon such factors, our management makes various assumptions and judgments about the ultimate collectability of our loan portfolio and provides an allowance for loan losses. These assumptions and judgments are complex and difficult to determine given the significant uncertainty surrounding future conditions in the general economy and banking industry. If management's assumptions and judgments prove to be incorrect and the allowance for loan losses is inadequate, or if the banking authorities or regulations require us to increase the allowance for loan losses, our earnings, financial condition, results of operations and prospects could be significantly and adversely affected.

Our goodwill may become impaired, which may adversely impact our results of operations and financial condition and may limit our Bank's ability to pay dividends to us, thereby causing liquidity issues.

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely impairment has occurred. In testing for impairment, the fair value of net assets is estimated based on analyses of our market value, discounted cash flows and peer values. Consequently, the determination of the fair value of goodwill is sensitive to market-based economics and other key assumptions. Variability in market conditions or in key assumptions could result in impairment of goodwill, which is recorded as a noncash adjustment to income. An impairment of goodwill could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2012, we had goodwill of approximately $184 million, or 24% of our total stockholders' equity. Furthermore, an impairment of goodwill could cause our Bank to be unable to pay dividends to us. If our Bank is unable to pay dividends to us, our cash flow and liquidity would be reduced. See below “Our Bank's ability to pay dividends to us is subject to regulatory limitations, which, to the extent we are not able to receive such dividends, may impair our ability to grow, pay dividends, cover operating expenses and meet debt service requirements.”

Changes in interest rates could negatively impact our net interest income, may weaken demand for our products and services or harm our results of operations and cash flows.

Our earnings and cash flows are largely dependent upon net interest income, which is the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve. Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also adversely affect (1) our ability to originate loans and obtain deposits, (2) the fair value of our financial assets and liabilities, including mortgage servicing rights, (3) our ability to realize gains on the sale of assets and (4) the average duration of our mortgage-backed investment securities portfolio. An increase in interest rates may reduce customers' desire to borrow money from us as it increases their borrowing costs and may adversely affect the ability of borrowers to pay the principal or interest on loans which may lead to an increase in non-performing assets and a reduction of income recognized, which could harm our results of operations and cash flows. Further, because many of our variable rate loans contain interest rate floors, as market interest rates begin to rise, the interest rates on these loans may not increase correspondingly. In contrast, decreasing interest rates have the effect of causing customers to refinance mortgage loans faster than anticipated. This causes the value of assets related to the servicing rights on mortgage loans sold to be lower than originally recognized. If this happens, we may need to write down our mortgage servicing rights assets faster, which would accelerate expense and lower our earnings. Any substantial, unexpected or prolonged change in market interest rates could have a material adverse effect on our cash flows, financial condition and results of operations. If the current low interest rate environment continues for a prolonged period, our interest income could decrease, adversely impacting our financial condition, results of operations and cash flows.

We may not continue to have access to low-cost funding sources.

We depend on checking and savings, negotiable order of withdrawal, or NOW, and money market deposit account balances and other forms of customer deposits as our primary source of funding. Such account and deposit balances can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, we could lose a relatively low cost source of funds, increasing our funding costs and reducing our net interest income and net income.

13

Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings.

The FDIC insures deposits at FDIC insured depository institutions, including the Bank. Under current FDIC regulations, each insured depository institution is subject to a risk-based assessment system and, depending on its assigned risk category, is assessed insurance premiums based on average total assets less average tangible equity, with adjustments for brokered deposits, unsecured debt and for custodial banks and banks that primarily provide services to other banks. The FDIC charges insured financial institutions premiums to maintain the Depositors Insurance Fund or DIF at a certain level. Bank failures have substantially reduced the DIF's reserves. The FDIC has published and amended a restoration plan designed to replenish the DIF and to increase the deposit insurance reserve ratio through 2015. To implement the restoration plan, the FDIC has adopted a series of initiatives that have changed its risk-based assessment system, increased its base assessment rates and imposed special assessments. A change in the risk category assigned to our Bank, further adjustments to base assessment rates and additional special assessments could have a material adverse effect on our earnings, financial condition and results of operation.

We may be required to repurchase mortgage loans or reimburse investors as a result of breaches in contractual representations and warranties.

We sell residential mortgage loans to various parties. The agreements under which we sell these loans contain various representations and warranties regarding the origination and characteristics of the loans, including ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan, absence of delinquent taxes or liens against the property securing the loan, and compliance with applicable origination laws. We may be required to repurchase mortgage loans, indemnify the investor or reimburse the investor for credit losses incurred on these loans in the event of a breach of contractual representations or warranties that is not remedied within a period, usually 90 days or less, after we receive notice of the breach Similarly, the agreements under which we sell mortgage loans require us to deliver various documents to the investor, and we may be obligated to repurchase loans for which the required documents are not delivered or are defective. The level of mortgage loan repurchase depends upon certain factors that may be out of our control, including economic factors, investor demand strategies and other external conditions that may change over the life of the underlying loan. If economic conditions deteriorate or housing markets decline, future investor repurchase demands may increase. Our failure to successfully appeal repurchase requests could materially and adversely affect our business, financial condition, results of operations and prospects. We had approximately $20 million of sold residential mortgage loans with recourse provisions in effect as of December 31, 2012

 We may not be able to continue growing our business.

Our total assets have grown from $6.6 billion as of December 31, 2008 to $7.7 billion as of December 31, 2012. Our ability to grow depends, in part, upon our ability to successfully attract deposits, identify favorable loan and investment opportunities, open new branch banking offices and expand into new and complementary markets when appropriate opportunities arise. In the event we do not continue to grow, our results of operations could be adversely impacted.

Our ability to successfully grow depends on our capital resources and whether we can continue to fund growth while maintaining cost controls and asset quality, as well as on other factors beyond our control, such as national and regional economic conditions and interest rate trends. If we are not able to make loans, attract deposits and maintain asset quality due to constrained capital resources or other reasons, we may not be able to continue growing our business, which could adversely impact our earnings, financial condition, results of operations, and prospects.

We are subject to significant governmental regulation and new or changes in existing regulatory, tax and accounting rules and interpretations could significantly harm our business.

The financial services industry is extensively regulated. Federal and state banking regulations are designed primarily to protect the deposit insurance funds and consumers, not to benefit a financial company's stockholders. These regulations may impose significant limitations on operations. The significant federal and state banking regulations that affect us are described in this report under the heading “Regulation and Supervision.” These regulations, along with the currently existing tax, accounting, securities, insurance, employment, monetary and other laws and regulations, rules, standards, policies and interpretations control the methods by which we conduct business, implement strategic initiatives and tax compliance and govern financial reporting and disclosures. These laws, regulations, rules, standards, policies and interpretations are undergoing

14

significant review and changes, particularly given the recent market developments in the banking and financial services industries and the enactment of the Dodd-Frank Act.

Recent events have resulted in legislators, regulators and authoritative bodies, such as the Financial Accounting Standards Board, the Securities and Exchange Commission, or SEC, the Public Company Accounting Oversight Board and various taxing authorities responding by adopting and/or proposing substantive revisions to laws, regulations, rules, standards, policies and interpretations. Further, federal monetary policy as implemented through the Federal Reserve can significantly affect credit conditions in our markets.

The nature, extent and timing of the adoption of significant new laws, regulations, rules, standards, policies and interpretations, or changes in or repeal of these items or specific actions of regulators, may increase our costs of compliance and harm our business. For example, potential increases in or other modifications affecting regulatory capital thresholds could impact our status as “well capitalized.” We may not be able to predict accurately the extent of any impact from changes in existing laws, regulations, rules, standards, policies and interpretations.

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 will result in sweeping changes in the regulation of financial institutions and could have a material adverse effect on our business.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was signed into law. The Dodd-Frank Act will result in sweeping changes in the regulation of financial institutions, and contains numerous provisions that will affect all banks and bank holding companies. Many of these and other provisions in the Dodd-Frank Act remain subject to regulatory rule-making and implementation, the effects of which are not yet known.

Although we cannot predict the specific impact and long-term effects that the Dodd-Frank Act will have on us and the financial industry in general, we believe the Dodd-Frank Act and the regulations promulgated thereunder will result in additional administrative burdens that will obligate us to incur additional costs and expenses. Provisions of the Act that affect the treatment of our existing trust preferred securities as Tier 1 capital will be grandfathered under the Act; however, provisions of the Act that revoke Tier 1 capital treatments of trust preferred securities and otherwise require revisions to capital requirements may cause us to seek other sources of capital in the future. Furthermore, the Dodd-Frank Act could limit the types of financial services and products we may offer, increase the ability of non-banks to offer competing financial services and products, reduce interchange fees, require us to renegotiate payment network agreements or enter into multiple payment network agreements, require a significant amount of management's time and attention, and otherwise adversely impact our business, financial condition, results of operations and prospects.

Non-compliance with laws and regulations could result in fines, sanctions and other enforcement actions and the loss of our financial holding company status.

 Federal and state regulators have broad enforcement powers. If we fail to comply with any laws, regulations, rules, standards, policies or interpretations applicable to us, we could face various sanctions and enforcement actions, which include:

• the appointment of a conservator or receiver for us;

• the issuance of a cease and desist order that can be judicially enforced;

• the termination of our deposit insurance;

• the imposition of civil monetary fines and penalties;

• the issuance of directives to increase capital;

• the issuance of formal and informal agreements;

• the issuance of removal and prohibition orders against officers, directors and other institution-affiliated parties; and

• the enforcement of such actions through injunctions or restraining orders

The imposition of any such sanctions or other enforcement actions could adversely impact our earnings, financial condition, results of operations and prospects. Furthermore, as a financial holding company, we may engage in authorized financial activities provided we are in compliance with applicable regulatory standards and guidelines. If we fail to meet such standards and guidelines, we may be required to cease certain financial holding company activities and, in certain circumstances, to divest the Bank.

15

The effects of recent legislative and regulatory efforts are uncertain.

In response to market disruptions, legislators and financial regulators implemented a number of initiatives designed to stabilize and improve the financial markets, some of which have been implemented and some of which have not, including:

• direct and indirect assistance to distressed financial institutions and the provision of assistance by the banking authorities in arranging acquisitions of weakened banks and broker-dealers;

• legislation that provided economic stimulus funding and liquidity to the financial markets, including the Troubled Asset Relief Program Capital Purchase Program;

• programs by the Federal Reserve to provide liquidity to the commercial paper markets, stimulus to increase commercial and consumer based lending, and successive rounds of quantitative easing;

• proposed guidance by the Federal Reserve on incentive compensation policies at banking organizations;

• proposals and recent judicial decisions limiting a lender's ability to foreclose on mortgages or make such foreclosures less economically viable, including by allowing Chapter 13 bankruptcy plans to “cram down” the value of certain mortgages on a consumer's principal residence to its market value and/or reset interest rates and monthly payments to permit defaulting debtors to remain in their home; and

• enactment of the Dodd-Frank Act.

These initiatives may increase our expenses or decrease our income by, among other things, making it harder for us to foreclose on mortgages and impacting the amount of overdraft fees we will be able to charge. Further, the overall effects of these and other legislative and regulatory efforts on the financial markets remain uncertain and they may not have the intended results. These efforts may even have unintended harmful consequences on the U.S. financial system and our business. Should these or other legislative or regulatory initiatives have unintended effects, our business, financial condition, results of operations and prospects could be materially and adversely affected.  In addition, we may need to further modify our strategies and business operations in response to these initiatives. We may also incur increased capital requirements and constraints or additional costs in order to satisfy new regulatory requirements. Given the volatile nature of the current market and the uncertainties underlying efforts to mitigate or reverse disruptions, we may not timely anticipate or manage existing, new or additional risks, contingencies or developments in the current or future environment. Our failure to do so could materially and adversely affect our business, financial condition, results of operations and prospects.

We are dependent upon the services of our management team and directors.

Our future success and profitability is substantially dependent upon the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. We do not currently have employment agreements or non-competition agreements with any of our key executives. The unanticipated loss or unavailability of key employees could harm our ability to operate our business or execute our business strategy. We cannot assure you that we will be successful in retaining these key employees or finding and integrating suitable successors in the event of their loss or unavailability.

We may not be able to attract and retain qualified employees to operate our business effectively.

There is substantial competition for qualified personnel in our markets. Although unemployment rates have been declining in Montana and Wyoming, and the surrounding region, it may still be difficult to attract and retain qualified employees at all management and staffing levels. Failure to attract and retain employees and maintain adequate staffing of qualified personnel could adversely impact our operations and our ability to execute our business strategy. Furthermore, relatively low unemployment rates in certain of our markets, compared with national unemployment rates, may lead to significant increases in salaries, wages and employee benefits expenses as we compete for qualified, skilled employees, which could negatively impact our results of operations and prospects.

We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures, interruptions or breaches of security could have a material adverse effect on us.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We outsource many of our major systems, such as certain data processing, loan servicing and deposit processing systems. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could

16

experience service disruptions if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service disruption could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us, our financial condition, results of operations and cash flows.

In addition, we provide our customers with the ability to bank remotely, including online and over the telephone. The secure transmission of confidential information over the internet and other remote channels is a critical element of remote banking. Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes and other internal and external security breaches. We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses. To the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in our systems and could materially and adversely affect us, our financial condition, results of operations and cash flows.

Our operations rely on certain external vendors.

We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations. In addition, we are subject to certain long-term vendor contracts that limit our flexibility and increase our dependence on third party vendors. Failure of certain external vendors to perform in accordance with contractual arrangements could be disruptive to our operations and limit our ability to provide certain products and services demanded by our customers, which could have material adverse impact on our financial condition or results of operations.

We are subject to liquidity risks.

Liquidity is the ability to meet current and future cash flow needs on a timely basis at a reasonable cost. Our liquidity is used to make loans and to repay deposit liabilities as they become due or are demanded by customers. Potential alternative sources of liquidity include federal funds purchased and securities sold under repurchase agreements. We maintain a portfolio of investment securities that may be used as a secondary source of liquidity to the extent the securities are not pledged for collateral. Other potential sources of liquidity include the sale of loans, the utilization of available government and regulatory assistance programs, the ability to acquire national market, non-core deposits, the issuance of additional collateralized borrowings such as Federal Home Loan Bank, or FHLB, advances, the issuance of debt securities, issuance of equity securities and borrowings through the Federal Reserve's discount window. Without sufficient liquidity from these potential sources, we may not be able to meet the cash flow requirements of our depositors and borrowers.

Additionally, our access to funding sources in amounts adequate to finance our activities or on terms that are acceptable to us could be impaired by factors specific to us, the financial services industry or the economy in general. Factors that could reduce our access to liquidity sources include a downturn in our local or national economies, difficult or illiquid credit markets or adverse regulatory actions against us. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition or results of operations.

We may not be able to find suitable acquisition candidates.

Although our growth strategy is to primarily focus and promote organic growth, we also have in the past and intend in the future to complement and expand our business by pursuing strategic acquisitions of banks and other financial institutions. We believe, however, there are a limited number of banks that will meet our acquisition criteria and, consequently, we cannot assure you that we will be able to identify suitable candidates for acquisitions. In addition, even if suitable candidates are identified, we expect to compete with other potential bidders for such businesses, many of which may have greater financial resources than we have. Our failure to find suitable acquisition candidates, or successfully bid against other competitors for acquisitions, could adversely affect our ability to successfully implement our business strategy.

17

We may be unable to manage our growth due to acquisitions, which could have an adverse effect on our financial condition or results of operations.

Acquisitions of other banks and financial institutions involve risks of changes in results of operations or cash flows, unforeseen liabilities relating to the acquired institution or arising out of the acquisition, asset quality problems of the acquired entity and other conditions not within our control, such as adverse personnel relations, loss of customers because of change of identity, deterioration in local economic conditions and other risks affecting the acquired institution. In addition, the process of integrating acquired entities will divert significant management time and resources. We may not be able to integrate successfully or operate profitably any financial institutions we may acquire. We may experience disruption and incur unexpected expenses in integrating acquisitions. There can be no assurance that any such acquisitions will enhance our cash flows, business, financial condition, results of operations or prospects and such acquisitions may have an adverse effect on our results of operations, particularly during periods in which the acquisitions are being integrated into our operations.

We face significant competition from other financial institutions and financial services providers.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources, higher lending limits and large branch networks. Such competitors primarily include national, regional and community banks within the various markets we serve. We also face competition from many other types of financial institutions, including, without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Increased competition among financial services companies due to the recent consolidation of certain competing financial institutions and the conversion of certain investment banks to bank holding companies may adversely affect our ability to market our products and services. Also, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic funds transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may offer a broader range of products and services as well as better pricing for those products and services than we can.

Our ability to compete successfully depends on a number of factors, including, among other things:

• the ability to develop, maintain and build upon long-term customer relationships based on quality service, high ethical standards and safe, sound assets;

• the ability to expand our market position;

• the scope, relevance and pricing of products and services offered to meet customer needs and demands;

• the rate at which we introduce new products and services relative to our competitors;

• customer satisfaction with our level of service; and

• industry and general economic trends.

Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our business, financial condition, results of operations and cash flows.

We may not be able to manage risks inherent in our business, particularly given the recent turbulent and dynamic market conditions.

A comprehensive and well-integrated risk management function is essential for our business. We have adopted various policies, procedures and systems to monitor and manage risk and are currently implementing a centralized risk oversight function. These policies, procedures and systems may be inadequate to identify and mitigate all risks inherent in our business. In addition, our business and the markets and industry in which we operate are continuously evolving. We may fail to understand fully the implications of changes in our business or the financial markets and fail to adequately or timely enhance our risk framework to address those changes, particularly given the recent turbulent and dynamic market conditions. If our risk framework is ineffective, either because it fails to keep pace with changes in the financial markets or in our business or for other reasons, we could incur losses and otherwise experience harm to our business.

18

Our systems of internal operating controls may not be effective.

We establish and maintain systems of internal operational controls that provide us with critical information used to manage our business. These systems are subject to various inherent limitations, including cost, judgments used in decision-making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error and the risk of fraud. Moreover, controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, any system of internal operating controls may not be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management. From time to time, control deficiencies and losses from operational malfunctions or fraud have occurred and may occur in the future. Any future deficiencies, weaknesses or losses related to internal operating control systems could have an adverse effect on our business and, in turn, on our financial condition, results of operations and prospects.

We may become liable for environmental remediation and other costs on repossessed properties, which could adversely impact our results of operations, cash flows and financial condition.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. If hazardous or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property's value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our cash flows, financial condition and results of operations.

We may be subject to claims and litigation pertaining to our fiduciary responsibilities.

Some of the services we provide, such as trust and investment services, require us to act as fiduciaries for our customers and others. From time to time, third parties make claims and take legal action against us pertaining to the performance of our fiduciary responsibilities. If these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability and/or our reputation could be damaged. Either of these results may adversely impact demand for our products and services or otherwise have a harmful effect on our business and, in turn, on our financial condition, results of operations and prospects.

We may not effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to use technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, on our financial condition, results of operations and prospects.

The Federal Reserve may require us to commit capital resources to support our bank subsidiary.

As a matter of policy, the Federal Reserve, which examines us and our subsidiaries, expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. In addition, the Dodd-Frank Act directs the federal bank regulators to require that all companies that directly or indirectly control an insured depository institution serve as a source of strength for the institution. Under this requirement, we could be required to provide financial assistance to our subsidiary bank should our subsidiary bank experience financial distress.

19

A capital injection may be required at times when we do not have the resources to provide it and therefore we may be required to borrow the funds or raise additional equity capital from third parties. Any loans by a holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In the event of a bank holding company's bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company's general unsecured creditors, including the holders of its indebtedness. Any financing that must be done by the holding company in order to make the required capital injection may be difficult and expensive and may not be available on attractive terms, or at all, which likely would have a material adverse effect on our cash flows, financial condition, results of operations and prospects.

We may be adversely affected by the soundness of other financial institutions.

The financial services industry as a whole, as well as the securities markets generally, have been materially and adversely affected by significant declines in the values of nearly all asset classes and a serious lack of liquidity. If other financial institutions in our markets dispose of real estate collateral at below-market prices to meet liquidity or regulatory requirements, such actions could negatively impact overall real estate values, including properties securing our loans. Our credit risk is exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit exposure due to us. Any such losses could harm our financial condition, results of operations and prospects.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties. For example, we execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services companies or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to increased credit risk in the event of default of a counterparty or client.

The short-term and long-term impact of the proposed Basel III capital standards and the forthcoming new capital rules proposed for U.S. banks is uncertain.

On December 16, 2010, the Basel Committee on Banking Supervision, or Basel Committee, released the final text of its reforms to strengthen global capital and liquidity rules designed to create a more resilient banking industry. These reforms, known as Basel III, are intended to strengthen the regulatory capital framework by, among other things, (1) raising the quality, consistency and transparency of an institution's capital base, (2) reducing procyclicality and promoting counter cyclical buffers, (3) enhancing risk coverage, (4) supplementing the risk-based capital requirement with a leverage ratio, and (5) introducing a global liquidity standard.

On January 13, 2011, the Basel Committee issued additional criteria to Basel III. This criteria provides that for instruments issued by a bank to be included in Tier 1 or Tier 2 capital, they must meet or exceed minimum requirements designed to require such instruments to fully absorb losses before taxpayers are exposed to loss.

Basel III, as supplemented, has been adopted by the Federal Reserve. On June 4, 2012, the Board of Governors of the Federal Reserve System, or the Board, issued three notices of proposed rulemaking, or NPRs, to restructure the Board's current regulatory capital rules and revise current regulatory capital requirements to make them consistent with the Basel III capital standards and certain provisions of the Dodd-Frank Act. On November 9, 2012, the Board announced that the suggested effective date of these NPRs of January 1, 2013 had been delayed indefinitely.

Because the NPRs are subject to final rulemaking by the Board and their provisions may change before implementation, the short-term and long-term impact of the Basel III capital standards and the forthcoming new capital rules is uncertain.

20

Our Bank's ability to pay dividends to us is subject to regulatory limitations, which, to the extent we are not able to receive such dividends, may impair our ability to grow, pay dividends, cover operating expenses and meet debt service requirements.

We are a legal entity separate and distinct from the Bank, our only bank subsidiary. Since we are a holding company with no significant assets other than the capital stock of our subsidiaries, we depend upon dividends from the Bank for a substantial part of our revenue. Accordingly, our ability to grow, pay dividends, cover operating expenses and meet debt service requirements depends primarily upon the receipt of dividends or other capital distributions from the Bank. The Bank's ability to pay dividends to us is subject to, among other things, its earnings, financial condition and need for funds, as well as federal and state governmental policies and regulations applicable to us and the Bank, which limit the amount that may be paid as dividends without prior approval. For example, in general, the Bank is limited to paying dividends that do not exceed the current year net profits together with retained earnings from the two preceding calendar years unless the prior consents of the Montana and federal banking regulators are obtained.

New lines of business or new products and services may subject us to additional risks.

From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to Our Common Stock

Our dividend policy may change.

Although we have historically paid dividends to our stockholders, we have no obligation to continue doing so and may change our dividend policy at any time without notice to our stockholders. Holders of our common stock are only entitled to receive such cash dividends as our Board may declare out of funds legally available for such payments. Furthermore, consistent with our strategic plans, growth initiatives, capital availability, projected liquidity needs and other factors, we have made and adopted and will continue to make and adopt, capital management decisions and policies that could adversely impact the amount of dividends paid to our stockholders.

The trading volume in our Class A Common Stock has been limited, and an active trading market may not develop.

Our Class A common stock is currently traded on The NASDAQ Global Select Market. Our Class A common stock is thinly-traded and has substantially less liquidity than the average trading market for many other publicly-traded financial institutions and other companies. Therefore, investors have limited opportunities to sell their shares of Class A common stock in the open market. Limited trading of our Class A common stock also contributes to more volatile price fluctuations. An active trading market for our Class A common stock may never develop or be sustained, which could affect your ability to sell your shares and could depress the market price of your shares. Approximately 45% of our outstanding Class A common stock is owned by members of the Scott family, our executive officers and our directors. The substantial amount of stock owned by these individuals may adversely affect the development of an active and liquid trading market.

Our Class A common stock share price could be volatile and could decline.

The market price of our Class A common stock is volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include:

• prevailing market conditions;

• our historical performance and capital structure;

• estimates of our business potential and earnings prospects;

21

• an overall assessment of our management; 

• our Class B shareholders may convert their shares into Class A common stock and liquidate their holdings; and

• the consideration of these factors in relation to market valuation of companies in related businesses.

At times the stock markets, including the NASDAQ Stock Market, on which our Class A common stock is listed, may experience significant price and volume fluctuations. As a result, the market price of our Class A common stock is likely to be similarly volatile and investors in our Class A common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. In addition, in the past, following periods of volatility in the overall market and the market price of a company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.

Holders of the Class B common stock have voting control of our company and are able to determine virtually all matters submitted to stockholders, including potential change in control transactions.

Members of the Scott family control in excess of 80% of the voting power of our outstanding common stock. Due to their holdings of common stock, members of the Scott family are able to determine the outcome of virtually all matters submitted to stockholders for approval, including the election of directors, amendment of our articles of incorporation (except when a class vote is required by law), any merger or consolidation requiring common stockholder approval and the sale of all or substantially all of our assets. Accordingly, such holders have the ability to prevent change in control transactions as long as they maintain voting control of the company.

In addition, because these holders will have the ability to elect all of our directors they will be able to control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payments of dividends on our common stock and entering into extraordinary transactions, and their interests may not in all cases be aligned with your interests. Further, because of our dual class structure, members of the Scott family will continue to be able to control all matters submitted to our stockholder for approval even if they come to own less than 50% of the total outstanding shares of our common stock. The Scott family members have entered into a stockholder agreement giving family members a right of first refusal to purchase shares of Class B common stock that are intended to be sold or transferred, subject to certain exceptions, by other family members. This agreement may have the effect of continuing ownership of the Class B common stock and control within the Scott family. This concentrated control will limit your ability to influence corporate matters. As a result, the market price of our Class A common stock could be adversely affected.

Future equity issuances could result in dilution, which could cause our Class A common stock price to decline.

We are not restricted from issuing additional Class A common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, Class A common stock. We may issue additional Class A common stock in the future pursuant to current or future employee stock option plans or in connection with future acquisitions or financings. Should we choose to raise capital by selling shares of Class A common stock for any reason, the issuance would have a dilutive effect on the holders of our Class A common stock and could have a material negative effect on the market price of our Class A common stock.

 An investment in our Class A common stock is not an insured deposit.

Our Class A common stock is not a bank savings account or deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or any other public or private entity. As a result, holders of our common stock could lose some or all of their investment.

“Anti-takeover” provisions and the regulations to which we are subject also may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders.

We are a financial and bank holding company incorporated in the State of Montana. Anti-takeover provisions in Montana law and our articles of incorporation and bylaws, as well as regulatory approvals that would be required under federal law, could make it more difficult for a third party to acquire control of us and may prevent stockholders from receiving a premium for their shares of our Class A common stock. These provisions could adversely affect the market price of our Class A common stock and could reduce the amount that stockholders might receive if we are sold.

22

Our articles of incorporation provide that our board of directors, or Board, may issue up to 100,000 shares of preferred stock, in one or more series, without stockholder approval and with such terms, conditions, rights, privileges and preferences as the Board may deem appropriate. In addition, our articles of incorporation provide for staggered terms for our Board and limitations on persons authorized to call a special meeting of stockholders. In addition, certain provisions of Montana law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our Class A common stock with the opportunity to realize a premium over the then-prevailing market price of such Class A common stock.

Further, the acquisition of specified amounts of our common stock (in some cases, the acquisition or control of more than 5% of our voting stock) may require certain regulatory approvals, including the approval of the Federal Reserve and one or more of our state banking regulatory agencies. The filing of applications with these agencies and the accompanying review process can take several months. Additionally, as discussed above, the holders of the Class B common stock will have voting control of our company. This and the other factors described above may hinder or even prevent a change in control of us, even if a change in control would be beneficial to our stockholders.

We qualify as a “controlled company” under the NASDAQ Marketplace Rules and may rely on exemptions from certain corporate governance requirements.

As a result of the combined voting power of the members of the Scott family described above, we qualify as a “controlled company” under the NASDAQ Marketplace Rules. As a controlled company, we may rely on exemptions from certain NASDAQ corporate governance standards that are available to controlled companies, including the requirements that:

• a majority of the board of directors consist of independent directors;

• the compensation of officers be determined, or recommended to the board of directors for determination, by a majority of the independent directors or a compensation committee comprised solely of independent directors; and

• director nominees be selected, or recommended for the board of directors' selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors with a written charter or board resolution addressing the nomination process.

As a result, in the future, our compensation and governance & nominating committees may not consist entirely of independent directors. As long as we choose to rely on these exemptions from NASDAQ Marketplace Rules in the future, you will not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.

The Class A common stock is equity and is subordinate to our existing and future indebtedness

Shares of our Class A common stock are equity interests and do not constitute indebtedness. As such, shares of our Class A common stock rank junior to all our indebtedness, including our subordinated term loans, the subordinated debentures held by trusts that have issued trust preferred securities and other non-equity claims on us with respect to assets available to satisfy claims on us. Additionally, holders of our Class A common stock are subject to the prior dividend and liquidation rights of any holders of Series A preferred stock then outstanding.

In the future, we may attempt to increase our capital resources or, if our Bank's capital ratios fall below the required minimums, we or the Bank could be forced to raise additional capital by making additional offerings of debt or equity securities, including medium-term notes, trust preferred securities, senior or subordinated notes and preferred stock. Or, we may issue additional debt or equity securities as consideration for future mergers and acquisitions. Such additional debt and equity offerings may place restrictions on our ability to pay dividends on or repurchase our common stock, dilute the holdings of our existing stockholders or reduce the market price of our Class A common stock. Furthermore, acquisitions typically involve the payment of a premium over book and market values and therefore, some dilution of our tangible book value and net income per common stock may occur in connection with any future transaction. Holders of our Class A common stock are not entitled to preemptive rights or other protections against dilution.

Item 1B. Unresolved Staff Comments

None.

23

Item 2. Properties

Our principal executive offices and one of our banking offices are anchor tenants in an eighteen story commercial building located in Billings, Montana. The building is owned by a joint venture partnership in which the Bank is one of two partners, owning a 50% interest in the partnership. We lease approximately 97,313 square feet of office space in the building. We also own a 65,226 square foot building that houses our operations center in Billings, Montana. We provide banking services at 75 additional locations in Montana, Wyoming and western South Dakota, of which 17 properties are leased from independent third parties and 58 properties are owned by us. We believe each of our facilities is suitable and adequate to meet our current operational needs.

Item 3. Legal Proceedings

In the normal course of business, we are named or threatened to be named as a defendant in various lawsuits. Management, following consultation with legal counsel, does not expect the ultimate disposition of one or a combination of these matters to have a material adverse effect on our business.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Description of Our Capital Stock

Our articles provide for two classes of common stock: Class A common stock, which has one vote per share, and Class B common stock, which has five votes per share. Class B common stock is convertible into Class A common stock as described below. Our common stock is uncertificated.

Our authorized capital stock consists of 200,100,000 shares, each with no par value per share, of which:

• 100,000,000 shares are designated as Class A common stock;

• 100,000,000 shares are designated as Class B common stock; and

• 100,000 shares are designated as preferred stock.

At December 31, 2012, we had issued and outstanding 17,635,369 shares of Class A common stock, 25,654,954 shares of Class B common stock and 5,000 shares of preferred stock that have been designated as Series A preferred stock. At December 31, 2012, we also had outstanding stock options to purchase an aggregate of 707,622 shares of our Class A common stock and 2,666,033 shares of our Class B common stock.

Members of the Scott family control in excess of 80% of the voting power of our outstanding common stock. The Scott family members have entered into a stockholder agreement giving family members a right of first refusal to purchase shares of Class B common stock that are intended to be sold or transferred, subject to certain exceptions, by other family members. This agreement may have the effect of continuing ownership of the Class B common stock and control of our Company within the Scott family.

Due to the ownership and control of our Company by members of the Scott family, we are a “controlled company” as that term is used under the NASDAQ Marketplace Rules. As a “controlled company,” we may rely on exemptions from certain NASDAQ corporate governance requirements, including those regarding independent director requirements for the Board and committees of the Board.

24

Preferred Stock

Our Board is authorized, without approval of the holders of Class A common stock or Class B common stock, to provide for the issuance of preferred stock from time to time in one or more series in such number and with such designations, preferences, powers and other special rights as may be stated in the resolution or resolutions providing for such preferred stock. Our Board may cause us to issue preferred stock with voting, conversion and other rights that could adversely affect the holders of Class A common stock or Class B common stock or make it more difficult to effect a change in control.

As of December 31, 2012, we had outstanding 5,000 shares of 6.75% Series A noncumulative redeemable preferred stock, which ranked senior to our Class A common stock and Class B common stock with respect to dividend and liquidation rights. Holders of the Series A preferred stock were entitled to receive, when and if declared by the Board, noncumulative cash dividends at an annual rate of $675 per share (based on a 360 day year). In the event full dividends were not paid for three consecutive quarters, the Series A preferred stock holders were entitled to elect two members to our Board. The Series A preferred stock was redeemed by the Company on January 18, 2013, at a price of $10,000 per share plus accrued but unpaid dividends at the redemption date. For additional information regarding the redemption of the Series A preferred stock, see "Notes to Consolidated Financial Statements — Capital Stock and Dividend Restrictions" included in Part IV, Item 15.

Common Stock

The holders of our Class A common stock are entitled to one vote per share and the holders of our Class B common stock are entitled to five votes per share on any matter to be voted upon by the stockholders. Holders of Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law.

The holders of common stock are not entitled to cumulative voting rights with respect to the election of directors, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election. Directors are elected by a majority of the voting power present in person or represented by proxy at a shareholder meeting rather than by a plurality vote.

The holders of our Class A common stock and Class B common stock are entitled to share equally in any dividends that our Board may declare from time to time from legally available funds and assets, subject to limitations under Montana law and the preferential rights of holders of any outstanding shares of preferred stock. If a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock will be entitled to receive Class A common stock, or rights to acquire Class A common stock, as the case may be and the holders of Class B common stock will be entitled to receive Class B common stock, or rights to acquire Class B common stock, as the case may be

Upon any voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of our company, the holders of our Class A common stock and Class B common stock are entitled to share equally, on a per share basis, in all our assets available for distribution, after payment to creditors and subject to any prior distribution rights granted to holders of any outstanding shares of preferred stock.

Our Class A common stock is not convertible into any other shares of our capital stock. Any holder of Class B common stock may at any time convert his or her shares into shares of Class A common stock on a share-for-share basis. The shares of Class B common stock will automatically convert into shares of Class A common stock on a share-for-share basis:

• when the aggregate number of shares of our Class B common stock is less than 20% of the aggregate number of shares of our Class A common stock and Class B common stock then outstanding; or

• upon any transfer, whether or not for value, except for transfers to the holder’s spouse, certain of the holder’s relatives, the trustees of certain trusts established for their benefit, corporations and partnerships wholly-owned by the holders and their relatives, the holder’s estate and other holders of Class B common stock.

Once converted into Class A common stock, the Class B common stock cannot be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.

25

Other than in connection with dividends and distributions, subdivisions or combinations, or certain other circumstances, we are not authorized to issue additional shares of Class B common stock.

Class A and Class B common stock do not have any preemptive rights.

The Class B common stock is not and will not be listed on the NASDAQ Stock Market or any other exchange. Therefore, no trading market is expected to develop in the Class B common stock. Class A common stock is listed on the NASDAQ Stock Market under the symbol “FIBK.”

The table below sets forth, for each quarter in the past two years, the quarterly high and low closing sales prices per share of the Class A common stock, as reported by the NASDAQ Stock Market.

Quarter Ended	High		Low
March 31, 2011		$15.90		$12.99
June 30, 2011	14.74		13.16
September 30, 2011	14.83		10.08
December 31, 2011	13.41		9.88
March 31, 2012	15.00		13.12
June 30, 2012	14.94		13.32
September 30, 2012	15.49		13.54
December 31, 2012	15.64		13.52

As of December 31, 2012, we had 670 record shareholders, including the Wealth Management division of First Interstate Bank as trustee for 1,503,448 shares of Class A common stock held on behalf of 987 individual participants in the Savings and Profit Sharing Plan for Employees of First Interstate BancSystem, Inc., or the Savings Plan. The Savings Plan Trustee votes the shares based on the instructions of each participant. In the event the participant does not provide the Savings Plan Trustee with instructions, the Savings Plan Trustee votes those shares in accordance with voting instructions received from a majority of the participants in the plan.

Dividends

It is our policy to pay a dividend to all common shareholders quarterly. We currently intend to continue paying quarterly dividends; however, the Board may change or eliminate the payment of future dividends.

Recent quarterly dividends follow:

Dividend Payment	Amount Per Share		Total Cash Dividends
First quarter 2011		$0.1125		$4,797,595
Second quarter 2011	0.1125		4,809,901
Third quarter 2011	0.1125		4,811,704
Fourth quarter 2011	0.1125		4,813,801
First quarter 2012	0.1200		5,136,079
Second quarter 2012	0.1200		5,154,213
Third quarter 2012	0.1200		5,158,975
Fourth quarter 2012	0.1200		5,162,138
Fourth quarter 2012 - Accelerated	0.1300		5,597,747

26

Dividend Restrictions

For a description of restrictions on the payment of dividends, see Part I, Item 1, “Business — Regulation and Supervision — Restrictions on Transfers of Funds to Us and the Bank,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Resources and Liquidity Management” included in Part II, Item 7 herein.

Sales of Unregistered Securities

There were no issuances of unregistered securities during the three months ended December 31, 2012.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases made by or on behalf of us or any “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three months ended December 31, 2012.

27

Performance Graph

The performance graph below compares the cumulative total shareholder return on our Class A common stock since our Class A common stock began trading on the Nasdaq Global Select Market on March 23, 2010, as compared with the cumulative total return on equity securities of companies included in the Nasdaq Composite Index and the Nasdaq Bank Index over the same period. The Nasdaq Bank Index is a comparative peer index comprised of financial companies, including banks, savings institutions and related holding companies that perform banking-related functions, listed on the Nasdaq Stock Market. The Nasdaq Composite Index is a comparative broad market index comprised of all domestic and international common stocks listed on the Nasdaq Stock Market. This graph assumes a $100 investment in our common stock on the first day of trading, and reinvestment of dividends on the date of payment without commissions. The plot points on the graph were provided by SNL Financial LC, Charlottesville, VA. The performance graph represents past performance, which may not be indicative of the future performance of our common stock.

	Period Ending
Index	3/23/10		6/30/10	12/31/10	12/31/11	6/30/12	12/31/12
First Interstate BancSystem, Inc.	$	100.00	110.02	108.27	95.89	106.56	117.38
NASDAQ Composite	100.00		87.56	110.78	109.92	124.56	129.43
NASDAQ Bank	100.00		89.04	98.86	88.48	98.67	105.02

28

Item 6. Selected Consolidated Financial Data

The following selected consolidated financial data with respect to our consolidated financial position as of December 31, 2012 and 2011, and the results of our operations for the fiscal years ended December 31, 2012, 2011 and 2010, has been derived from our audited consolidated financial statements included in Part IV, Item 15. This data should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and such consolidated financial statements, including the notes thereto. The selected consolidated financial data with respect to our consolidated financial position as of December 31, 2010, 2009 and 2008, and the results of our operations for the fiscal years ended December 31, 2009 and 2008, has been derived from our audited consolidated financial statements not included herein.

Five Year Summary (Dollars in thousands except share and per share data)
As of or for the year ended December 31,	2012		2011		2010		2009		2008
Selected Balance Sheet Data:
Net loans	$	4,123,401	$	4,073,968	$	4,247,429	$	4,424,974	$	4,685,497
Investment securities	2,203,481		2,169,645		1,933,403		1,446,280		1,072,276
Total assets	7,721,761		7,325,527		7,500,970		7,137,653		6,628,347
Deposits	6,240,411		5,826,971		5,925,713		5,824,056		5,174,259
Securities sold under repurchase agreements	505,785		516,243		620,154		474,141		525,501
Long-term debt	37,160		37,200		37,502		73,353		84,148
Preferred stock pending redemption (1)	50,000		—		—		—		—
Subordinated debentures held by subsidiary trusts	82,477		123,715		123,715		123,715		123,715
Preferred stockholders’ equity (1)	—		50,000		50,000		50,000		50,000
Common stockholders’ equity	751,186		721,020		686,802		524,434		489,062
Selected Income Statement Data:
Interest income	$	273,900	$	292,883	$	314,546	$	328,034	$	355,919
Interest expense	30,114		42,031		63,107		84,898		120,542
Net interest income	243,786		250,852		251,439		243,136		235,377
Provision for loan losses	40,750		58,151		66,900		45,300		33,356
Net interest income after provision for loan losses	203,036		192,701		184,539		197,836		202,021
Non-interest income	114,861		91,872		90,911		100,690		128,597
Non-interest expense	229,635		218,412		221,004		217,710		222,541
Income before income taxes	88,262		66,161		54,446		80,816		108,077
Income tax expense	30,038		21,615		17,090		26,953		37,429
Net income	58,224		44,546		37,356		53,863		70,648
Preferred stock dividends	3,300		3,422		3,422		3,422		3,347
Net income available to common shareholders	$	54,924	$	41,124	$	33,934	$	50,441	$	67,301
Common Share Data:
Earnings per share:
Basic	$	1.28	$	0.96	$	0.85	$	1.61	$	2.14
Diluted	1.27		0.96		0.85		1.59		2.10
Dividends per share	0.61		0.45		0.45		0.50		0.65
Book value per share (2)	17.35		16.77		16.05		16.73		15.50
Tangible book value per share (3)	12.97		12.33		11.55		10.53		9.27
Weighted average shares outstanding:
Basic	42,965,987		42,749,526		39,907,640		31,335,668		31,484,136
Diluted	43,092,978		42,847,196		40,127,365		31,678,500		32,112,672

29

Five Year Summary (continued) (Dollars in thousands except share and per share data)
As of or for the year ended December 31,	2012		2011		2010		2009		2008
Financial Ratios:
Return on average assets	0.79	%	0.61	%	0.52	%	0.79	%	1.12	%
Return on average common stockholders’ equity	7.46		5.86		5.22		9.98		14.73
Average stockholders’ equity to average assets	10.57		10.25		9.67		8.16		7.98
Yield on average earning assets	4.10		4.43		4.85		5.44		6.37
Cost of average interest bearing liabilities	0.58		0.78		1.15		1.63		2.50
Interest rate spread	3.52		3.65		3.70		3.81		3.87
Net interest margin (4)	3.66		3.80		3.89		4.05		4.25
Efficiency ratio (5)	64.03		63.73		64.55		63.32		61.14
Common stock dividend payout ratio (6)	47.66		46.88		52.94		31.06		30.37
Loan to deposit ratio	67.69		71.85		73.71		77.75		92.24
Asset Quality Ratios
Non-performing loans to total loans (7)	3.36	%	5.77	%	4.82	%	2.75	%	1.90	%
Non-performing assets to total loans and other real estate owned (OREO) (8)	4.10		6.60		5.55		3.57		2.03
Non-performing assets to total assets	2.26		3.81		3.26		2.28		1.46
Allowance for loan losses to total loans	2.38		2.69		2.76		2.28		1.83
Allowance for loan losses to non-performing loans	70.78		46.62		57.19		82.64		96.03
Net charge-offs to average loans	1.26		1.54		1.10		0.63		0.28
Capital Ratios:
Tangible common stockholders equity to tangible assets (9)	7.46	%	7.43	%	6.76	%	4.76	%	4.55	%
Net tangible common stockholders equity to tangible      assets (10)	8.26		8.28		7.59		5.63		5.49
Tier 1 common capital to total risk weighted assets (11)	11.94		11.04		10.12		6.43		5.35
Leverage ratio	8.81		9.84		9.27		7.30		7.13
Tier 1 risk-based capital	13.60		14.55		13.53		9.74		8.57
Total risk-based capital	15.59		16.54		15.50		11.68		10.49

(1) On December 18, 2012, we provided notice to preferred stockholders of our intention to redeem the preferred stock on January 18, 2013. Upon notice to holders of the redemption, all preferred stock outstanding was reclassified from stockholder's equity to a liability.

(2) For purposes of computing book value per share, book value equals common stockholders’ equity.

(3) Tangible book value per share is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing tangible book value per share, tangible book value equals common stockholders’ equity less goodwill, core deposit intangibles and other intangible assets (except mortgage servicing rights). Tangible book value per share is calculated as tangible common stockholders’ equity divided by common shares outstanding, and its most directly comparable GAAP financial measure is book value per share. See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.

(4) Net interest margin ratio is presented on a fully taxable equivalent, or FTE, basis.

(5) Efficiency ratio represents non-interest expense, excluding loan loss provision, divided by the aggregate of net interest income and non-interest income.

(6) Common stock dividend payout ratio represents dividends per common share divided by basic earnings per common share.

(7) Non-performing loans include non-accrual loans, loans past due 90 days or more and still accruing interest and troubled debt restructurings.

(8) Non-performing assets include non-accrual loans, loans past due 90 days or more and still accruing interest, troubled debt restructurings and OREO.

(9) Tangible common equity to tangible assets is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing tangible common equity to tangible assets, tangible common equity is calculated as common stockholders’ equity less goodwill and other intangible assets (except mortgage servicing assets), and tangible assets is calculated as total assets less goodwill and other intangible assets (except mortgage servicing rights). See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.

(10) Net tangible common equity to tangible assets is a non-GAAP financial measure that management uses to evaluate our capital adequacy. For purposes of computing net tangible common equity to tangible assets, net tangible common equity is calculated as common stockholders’ equity less goodwill (adjusted for associated deferred tax liability) and other intangible assets (except mortgage servicing assets), and tangible assets is calculated as total assets less goodwill and other intangible assets (except mortgage servicing rights). See below our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “—Non-GAAP Financial Measures” in this Part II, Item 6.

(11) For purposes of computing tier 1 common capital to total risk-weighted assets, tier 1 common capital excludes preferred stock and trust preferred securities.

30

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principals in the United States of America, or GAAP, this annual report contains the following non-GAAP financial measures that management uses to evaluate our capital adequacy: tangible book value per share, tangible common equity to tangible assets and net tangible common equity to tangible assets. Tangible book value per share is calculated as tangible common stockholders’ equity divided by common shares outstanding. Tangible assets is calculated as total assets less goodwill and other intangible assets (excluding mortgage servicing assets). Tangible common equity to tangible assets is calculated as tangible common stockholders’ equity divided by tangible assets. Net tangible common equity to tangible assets is calculated as net tangible common stockholders’ equity divided by tangible assets. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies because other companies may not calculate these non-GAAP measures in the same manner. They also should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.

The following table shows a reconciliation from ending stockholders’ equity (GAAP) to ending tangible common stockholders’ equity (non-GAAP) and ending net tangible common stockholders’ equity (non-GAAP) and ending assets (GAAP) to ending tangible assets (non-GAAP), their most directly comparable GAAP financial measures, in each instance as of the periods presented.

Non-GAAP Financial Measures - Five Year Summary (Dollars in thousands except share and per share data)
As of December 31,	2012			2011			2010			2009			2008
Preferred stockholders’ equity	$	—		$	50,000		$	50,000		$	50,000		$	50,000
Common stockholders’ equity	751,186			721,020			686,802			524,434			489,062
Total stockholders’ equity	751,186			771,020			736,802			574,434			539,062
Less goodwill and other intangible assets	189,637			191,065			192,518			194,273			196,667
Less preferred stock	—			50,000			50,000			50,000			50,000
Tangible common stockholders’ equity	561,549			529,955			494,284			330,161			292,395
Add deferred tax liability for deductible goodwill	60,499			60,499			60,499			60,499			60,499
Net tangible common stockholders’ equity	$	622,048		$	590,454		$	554,783		$	390,660		$	352,894
Total assets	$	7,721,761		$	7,325,527		$	7,500,970		$	7,137,653		$	6,628,347
Less goodwill and other intangible assets (excluding mortgage servicing rights)	189,637			191,065			192,518			194,273			196,667
Tangible assets	$	7,532,124		$	7,134,462		$	7,308,452		$	6,943,380		$	6,431,680
Number of common shares outstanding	43,290,323			42,981,174			42,800,694			31,349,588			31,550,076
Book value per common share	$	17.35		$	16.77		$	16.05		$	16.73		$	15.50
Tangible book value per common share	12.97			12.33			11.55			10.53			9.27
Net tangible book value per common share	14.37			13.74			12.96			12.46			11.19
Tangible common stockholders’ equity to tangible assets	7.46		%	7.43		%	6.76		%	4.76		%	4.55		%
Net tangible common stockholders’ equity to tangible assets	8.26		%	8.28		%	7.59		%	5.63		%	5.49		%

31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements and Factors that Could Affect Future Results

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risks and uncertainties. Any statements about our plans, objectives, expectations, strategies, beliefs, or future performance or events constitute forward-looking statements. Such statements are identified as those that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “may” or similar expressions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other important factors that could cause actual results to differ materially from any results, performance or events expressed or implied by such forward-looking statements. The following factors, among others, may cause actual results to differ materially from current expectations in the forward-looking statements, including those set forth in this report:

• continuing or worsening economic conditions;

• adverse economic conditions affecting Montana, Wyoming and western South Dakota;

• credit losses;

• concentrations of real estate loans;

• commercial loan risk;

• adequacy of the allowance for loan losses;

• impairment of goodwill;

• changes in interest rates;

• access to low-cost funding sources;

• increases in deposit insurance premiums;

• repurchases of mortgage loans from or reimbursements to investors due to contractual or warranty breach;

• inability to grow business;

• governmental regulation and changes in regulatory, tax and accounting rules and interpretations;

• sweeping changes in regulation of financial institutions due to passage of the Dodd-Frank Act;

• changes in or noncompliance with governmental regulations;

• effects of recent legislative and regulatory efforts to stabilize financial markets;

• dependence on the Company’s management team;

• ability to attract and retain qualified employees;

• failure of technology;

• reliance on external vendors;

• inability to meet liquidity requirements;

• lack of acquisition candidates;

• failure to manage growth;

• competition;

• inability to manage risks in turbulent and dynamic market conditions;

• ineffective internal operational controls;

• environmental remediation and other costs;

• litigation pertaining to fiduciary responsibilities;

• failure to effectively implement technology-driven products and services;

• capital required to support the Company’s bank subsidiary;

• soundness of other financial institutions;

• impact of proposed Basel III capital standards for U.S. banks;

• inability of our bank subsidiary to pay dividends;

• implementation of new lines of business or new product or service offerings;

32

• change in dividend policy;

• lack of public market for our Class A common stock;

• volatility of Class A common stock;

• voting control of Class B stockholders;

• decline in market price of Class A common stock;

• dilution as a result of future equity issuances;

• uninsured nature of any investment in Class A common stock;

• anti-takeover provisions;

• controlled company status; and,

• subordination of common stock to Company debt.

These factors are not necessarily all of the factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Executive Overview

We are a financial and bank holding company headquartered in Billings, Montana. As of December 31, 2012, we had consolidated assets of $7.7 billion, deposits of $6.2 billion, loans of $4.2 billion and total stockholders’ equity of $751 million. We currently operate 76 banking offices, including detached drive-up facilities, in 42 communities located in Montana, Wyoming and western South Dakota. Through the Bank, we deliver a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout our market areas. We also offer internet and mobile banking services. Our customers participate in a wide variety of industries, including energy, tourism, agriculture, healthcare, professional services, education, governmental services, construction, mining, retail and wholesale trade.

Our Business

Our principal business activity is lending to, accepting deposits from and conducting financial transaction for individuals, businesses, municipalities and other entities. We derive our income principally from interest charged on loans and, to a lesser extent, from interest and dividends earned on investments. We also derive income from non-interest sources such as fees received in connection with various lending and deposit services; trust, employee benefit, investment and insurance services; mortgage loan originations, sales and servicing; merchant and electronic banking services; and from time to time, gains on sales of assets. Our principal expenses include interest expense on deposits and borrowings, operating expenses, provisions for loan losses and income tax expense.

Our loan portfolio consists of a mix of real estate, consumer, commercial, agricultural and other loans, including fixed and variable rate loans. Our real estate loans comprise commercial real estate, construction (including residential, commercial and land development loans), residential, agricultural and other real estate loans. Fluctuations in the loan portfolio are directly related to the economies of the communities we serve. While each loan originated generally must meet minimum underwriting standards established in our credit policies, lending officers are granted discretion within pre-approved limits in approving and pricing loans to assure that the banking offices are responsive to competitive issues and community needs in each market area. We fund our loan portfolio primarily with the core deposits from our customers, generally without utilizing brokered deposits and with minimal reliance on wholesale funding sources. For additional information about our underwriting standards and loan approval process, see "Business—Lending Activities," included in Part I, Item 1 of this report.

33

Recent Trends and Developments

Asset Quality

Non-performing assets decreased to $175 million, or 2.26% of total assets, as of December 31, 2012, from $279 million, or 3.81% of total assets as of December 31, 2011, primarily due to the movement of lower quality loans out of the portfolio through charge-off or foreclosure and sales of OREO properties. Loan charge-offs, net of recoveries, totaled $53 million during 2012, as compared to $66 million during 2011. Net charge-offs peaked during the second quarter 2012 at $25 million for the three-month period. Net charge-offs are expected to decline, yet remain elevated in future quarters as problem loans continue to work through the credit cycle.

Our criticized loans decreased during 2012, ending the year at $468 million, a $163 million, or 25.8%, decrease from $631 million as of December 31, 2011. Based on our assessment of the adequacy of our allowance for loan losses, we recorded provision for loan losses of $40.8 million during 2012, compared to $58.2 million during 2011. Management expects provision for loan losses to continue to decline as credit quality improves.

Net Interest Margin

Our net interest margin ratio, on a fully taxable-equivalent, or FTE, basis, decreased 14 basis points to 3.66% in 2012, as compared to 3.80% in 2011. The decrease was attributable to lower outstanding loan balances and lower yields earned on our loan and investment portfolios, which were partially offset by reductions in the cost of interest bearing liabilities combined with a continued shift away from higher-costing savings and time deposits to lower-costing demand deposits. Management expects further compression in the net FTE interest margin ratio in future quarters resulting from the continuing low interest rate environment.

Origination and Sale of Residential Mortgages

With market interest rates dipping to record lows, we recorded income from the origination and sale of residential mortgages of $41.8 million in 2012, a $20.6 million, or 97.6%, increase from $21.2 million recorded in 2011. Refinancing activity accounted for 65% of our residential mortgage loan origination production in 2012, as compared to 56% in 2011. Management does not expect the current level of refinancing activity to continue in future quarters.

In January 2013, the Consumer Financial Protection Bureau, or CFPB, issued a series of final rules amending the mortgage servicing provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act. These rules, which become effective on January 10, 2014, are designed to protect borrowers from risky lending practices and includes, among other things, minimum requirements for creditors in making ability-to-repay determinations, special provisions to encourage creditors to refinance non-standard mortgages into standard mortgages with fixed rates, general underwriting criteria for qualifying mortgage loans and expansion of required disclosures and notices to the borrower. Management does not expect implementation of these new rules will have a material impact on our operations.

Proposed Regulatory Capital Rules

On June 4, 2012, the Board of Governors of the Federal Reserve System, or the Board, issued three notices of proposed rulemaking, or NPRs. Taken together, the NPRs would restructure the Board's current regulatory capital rules and revise current regulatory capital requirements to make them consistent with the Basel III capital standards established by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The first NPR is primarily focused on quantity and quality of banking organizations' capital. The second NPR increases the risk-sensitivity of the Board's general risk-based capital requirements for determining risk-weighted assets by expanding the number of risk-weight categories and increasing the capital required for certain high-risk residential mortgages, higher-risk construction and commercial real estate lending, and certain securitization exposures. These two NPRs apply to banks, saving associations and bank holding companies with consolidated assets of $500 million or more, like us, and to savings and loan holding companies. On November 19, 2012, the Board postponed the January 1, 2013 effective date of these NPRs indefinitely. Management believes, as of December 31, 2012, we would meet all capital adequacy requirements as currently proposed on a fully phased-in basis if such requirements were currently effective.

34

The third NPR enhances the risk-sensitivity of the advanced approaches risk-based capital rule, including, among other revisions, revisions to better address counterparty credit risk and interconnectedness among financial institutions and incorporation of the Board's market risk rule into the integrated capital framework that would be established by all three proposed rules. This NPR would generally apply only to large, internationally active banking organizations or banking organizations with significant trading activity and would not impact us as currently proposed.

Proposed Settlement of Visa Interchange Litigation

On July 13, 2012,Visa, MasterCard and U.S. financial institution defendants signed a memorandum of understanding to enter into a settlement agreement to resolve a class-action lawsuit alleging collusion between the defendant banks and the credit card companies to maintain higher credit card interchange fees. Under the terms of the proposed settlement, class merchants may receive a distribution equal to 10 basis points of default interchange for a period of eight months, which would effectively reduce interchange fees received by credit card issuers, like us, during that time. Based on current transaction volumes, a 10 basis point reduction in credit interchange fees would not have a material impact on our consolidated financial statements, results of operations or liquidity. The proposed settlement agreement was submitted for preliminary federal court approval on October 19, 2012. Assuming the proposed settlement agreement is approved, the eight-month reduction in interchange fees could begin in late 2013.

Primary Factors Used in Evaluating Our Business

As a banking institution, we manage and evaluate various aspects of both our financial condition and our results of operations. We monitor our financial condition and performance on a monthly basis, at our holding company, at the Bank and at each banking office. We evaluate the levels and trends of the line items included in our balance sheet and statements of income, as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against both our own historical levels and the financial condition and performance of comparable banking institutions in our region and nationally.

Results of Operations

Principal factors used in managing and evaluating our results of operations include return on average assets, net interest income, non-interest income, non-interest expense and net income. Net interest income is affected by the level of interest rates, changes in interest rates and changes in the volume and composition of interest earning assets and interest bearing liabilities. The most significant impact on our net interest income between periods is derived from the interaction of changes in the rates earned or paid on interest earning assets and interest bearing liabilities, which we refer to as interest rate spread. The volume of loans, investment securities and other interest earning assets, compared to the volume of interest bearing deposits and indebtedness, combined with the interest rate spread, produces changes in our net interest income between periods. Non-interest bearing sources of funds, such as demand deposits and stockholders’ equity, also support earning assets. The impact of free funding sources is captured in the net interest margin, which is calculated as net interest income divided by average earning assets. We evaluate our net interest income on factors that include the yields on our loans and other earning assets, the costs of our deposits and other funding sources, the levels of our net interest spread and net interest margin and the provisions for loan losses required to maintain our allowance for loan losses at an adequate level.

We seek to increase our non-interest income over time and we evaluate our non-interest income relative to the trends of the individual types of non-interest income in view of prevailing market conditions.

We manage our non-interest expenses in consideration of growth opportunities and our community banking model that emphasizes customer service and responsiveness. We evaluate our non-interest expense on factors that include our non-interest expense relative to our average assets, our efficiency ratio and the trends of the individual categories of non-interest expense.

Finally, we seek to increase our net income and provide favorable shareholder returns over time, and we evaluate our net income relative to the performance of other bank holding companies on factors that include return on average assets, return on average equity, total shareholder return and growth in earnings.

Financial Condition

Principal areas of focus in managing and evaluating our financial condition include liquidity, the diversification and quality of our loans, the adequacy of our allowance for loan losses, the diversification and terms of our deposits and other funding sources, the re-pricing characteristics and maturities of our assets and liabilities, including potential interest rate exposure and

35

the adequacy of our capital levels. We seek to maintain sufficient levels of cash and investment securities to meet potential payment and funding obligations, and we evaluate our liquidity on factors that include the levels of cash and highly liquid assets relative to our liabilities, the quality and maturities of our investment securities, the ratio of loans to deposits and any reliance on brokered certificates of deposit or other wholesale funding sources.

We seek to maintain a diverse and high quality loan portfolio and evaluate our asset quality on factors that include the allocation of our loans among loan types, credit exposure to any single borrower or industry type, non-performing assets as a percentage of total loans and OREO, and loan charge-offs as a percentage of average loans. We seek to maintain our allowance for loan losses at a level adequate to absorb probable losses inherent in our loan portfolio at each balance sheet date, and we evaluate the level of our allowance for loan losses relative to our overall loan portfolio and the level of non-performing loans and potential charge-offs.

We seek to fund our assets primarily using core customer deposits spread among various deposit categories, and we evaluate our deposit and funding mix on factors that include the allocation of our deposits among deposit types, the level of our non-interest bearing deposits, the ratio of our core deposits (i.e. excluding time deposits above $100,000) to our total deposits and our reliance on brokered deposits or other wholesale funding sources, such as borrowings from other banks or agencies. We seek to manage the mix, maturities and re-pricing characteristics of our assets and liabilities to maintain relative stability of our net interest rate margin in a changing interest rate environment, and we evaluate our asset-liability management using models to evaluate the changes to our net interest income under different interest rate scenarios.

Finally, we seek to maintain adequate capital levels to absorb unforeseen operating losses and to help support the growth of our balance sheet. We evaluate our capital adequacy using the regulatory and financial capital ratios including leverage capital ratio, tier 1 risk-based capital ratio, total risk-based capital ratio, tangible common equity to tangible assets and tier 1 common capital to total risk-weighted assets.

Critical Accounting Estimates and Significant Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow general practices within the industries in which we operate. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Our significant accounting policies are summarized in “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies” included in financial statements included Part IV, Item 15 of this report.

Our critical accounting estimates are summarized below. Management considers an accounting estimate to be critical if: (1) the accounting estimate requires management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and (2) changes in the estimate that are reasonably likely to occur from period to period, or the use of different estimates that management could have reasonably used in the current period, would have a material impact on our consolidated financial statements, results of operations or liquidity.

Allowance for Loan Losses

The provision for loan losses creates an allowance for loan losses known and inherent in the loan portfolio at each balance sheet date. The allowance for loan losses represents management’s estimate of probable credit losses inherent in the loan portfolio.

We perform a quarterly assessment of the risks inherent in our loan portfolio, as well as a detailed review of each significant loan with identified weaknesses. Based on this analysis, we record a provision for loan losses in order to maintain the allowance for loan losses at appropriate levels. In determining the allowance for loan losses, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of subjective measurements, including management’s assessment of the internal risk classifications of loans, historical loan loss rates, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends and the impact of current local, regional and national economic factors on the quality of the loan portfolio. Changes in these estimates and assumptions are possible and may have a material impact on our allowance, and therefore our consolidated financial statements or results of operations. The allowance for loan losses is maintained at an amount we believe is sufficient to provide for estimated losses inherent in our loan portfolio at each balance sheet date, and fluctuations in the provision for loan losses result from management’s assessment of the adequacy of the allowance for loan losses. Management monitors qualitative

36

and quantitative trends in the loan portfolio, including changes in the levels of past due, internally classified and non-performing loans. See “Notes to Consolidated Financial Statements — Summary of Significant Accounting Policies” for a description of the methodology used to determine the allowance for loan losses. A discussion of the factors driving changes in the amount of the allowance for loan losses is included herein under the heading “—Financial Condition—Allowance for Loan Losses.” See also Part I, Item 1A, “Risk Factors—Risks Relating to the Market and Our Business.”

Goodwill

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely impairment has occurred. In any given year, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a two-step quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on an analysis of our market value, discounted cash flows and peer values. Determining the fair value of goodwill is considered a critical accounting estimate because of its sensitivity to market-based economics. In addition, any allocation of the fair value of goodwill to assets and liabilities requires significant management judgment and the use of subjective measurements. Variability in market conditions and key assumptions or subjective measurements used to estimate and allocate fair value are reasonably possible and could have a material impact on our consolidated financial statements or results of operations.

Our annual goodwill impairment test is performed each year as of July 1^st. Upon completion of this year's test, the estimated fair value of net assets was greater than carrying value of the Company. We will continue to monitor our performance and evaluate our goodwill for impairment annually or more frequently as needed.

For additional information regarding goodwill, see “Notes to Consolidated Financial Statements-Summary of Significant Accounting Policies,” included in Part IV, Item 15 of this report and “Risk Factors-Risks Relating to the Market and Our Business,” included in Part I, Item 1A of this report.

Other Real Estate Owned

Real estate acquired in satisfaction of loans is initially carried at current fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate acquired is recorded as a charge to the allowance for loan losses. Subsequent declines in fair value less estimated selling costs are included in OREO expense. Subsequent increases in fair value less estimated selling costs are recorded as a reduction in OREO expense to the extent of recognized losses. Determining the fair value of OREO is considered a critical accounting estimate due to the assets’ sensitivity to changes in estimates and assumptions used. Changes in these estimates and assumptions are reasonably possible and may have a material impact on our consolidated financial statements, liquidity or results of operations. For additional information regarding OREO, see “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies” and “Notes to Consolidated Financial Statements—Other Real Estate Owned,” included in Part IV, Item 15 of this report.

Results of Operations

The following discussion of our results of operations compares the years ended December 31, 2012 to December 31, 2011 and the years ended December 31, 2011 to December 31, 2010.

Net Interest Income

Net interest income, the largest source of our operating income, is derived from interest, dividends and fees received on interest earning assets, less interest expense incurred on interest bearing liabilities. Interest earning assets primarily include loans and investment securities. Interest bearing liabilities include deposits and various forms of indebtedness. Net interest income is affected by the level of interest rates, changes in interest rates and changes in the composition of interest earning assets and interest bearing liabilities.

The most significant impact on our net interest income between periods is derived from the interaction of changes in the volume of and rates earned or paid on interest earning assets and interest bearing liabilities. The volume of loans, investment

securities and other interest earning assets, compared to the volume of interest bearing deposits and indebtedness, combined with the interest rate spread, produces changes in the net interest income between periods.

37

The following table presents, for the periods indicated, condensed average balance sheet information, together with interest income and yields earned on average interest earning assets and interest expense and rates paid on average interest bearing liabilities.

Average Balance Sheets, Yields and Rates

(Dollars in thousands)

	Year Ended December 31,
	2012							2011							2010
	Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate		Average Balance		Interest			Average Rate
Interest earning assets:
Loans (1) (2)	$	4,176,439	$	232,724		5.57	%	$	4,275,128	$	247,492		5.79	%	$	4,482,219	$	268,279		5.99	%
Investment securities (2)	2,123,231		44,613			2.10		2,026,192		48,795			2.41		1,663,211		49,626			2.98
Federal funds sold	2,341		13			0.56		2,231		13			0.58		6,238		22			0.35
Interest bearing deposits in banks	486,203		1,235			0.25		414,375		1,050			0.25		429,657		1,093			0.25
Total interest earnings assets	6,788,214		278,585			4.10		6,717,926		297,350			4.43		6,581,325		319,020			4.85
Non-earning assets	627,498							618,454							665,012
Total assets	$	7,415,712						$	7,336,380						$	7,246,337
Interest bearing liabilities:
Demand deposits	$	1,624,687	$	2,390		0.15	%	$	1,269,676	$	3,057		0.24	%	$	1,135,208	$	3,430		0.30	%
Savings deposits	1,496,254		3,562			0.24		1,714,294		6,448			0.38		1,530,844		8,934			0.58
Time deposits	1,473,501		16,354			1.11		1,737,401		24,028			1.38		2,143,899		41,585			1.94
Repurchase agreements	501,192		579			0.12		500,882		695			0.14		480,276		879			0.18
Other borrowed funds (3)	16		—			—		5,582		—			—		5,779		3			0.05
Long-term debt	37,185		1,981			5.33		37,442		1,975			5.27		46,024		2,433			5.29
Preferred stock pending redemption	1,913		131			6.85		—		—			—		—		—			—
Subordinated debentures held by by subsidiary trusts	102,307		5,117			5.00		123,715		5,828			4.71		123,715		5,843			4.72
Total interest bearing liabilities	5,237,055		30,114			0.58		5,388,992		42,031			0.78		5,465,745		63,107			1.15
Non-interest bearing deposits	1,346,787							1,146,535							1,021,409
Other non-interest bearing liabilities	47,799							48,532							58,778
Stockholders’ equity	784,071							752,321							700,405
Total liabilities and stockholders’ equity	$	7,415,712						$	7,336,380						$	7,246,337
Net FTE interest income			$	248,471						$	255,319						$	255,913
Less FTE adjustments (2)			(4,685		)					(4,467		)					(4,474		)
Net interest income from consolidated statements of income			$	243,786						$	250,852						$	251,439
Interest rate spread						3.52	%						3.65	%						3.70	%
Net FTE interest margin (4)						3.66	%						3.80	%						3.89	%
Cost of funds, including non-interest bearing demand deposits (5)						0.46	%						0.64	%						0.97	%

(1) Average loan balances include non-accrual loans. Interest income on loans includes amortization of deferred loan fees net of deferred loan costs, which is not material.

(2) Interest income and average rates for tax exempt loans and securities are presented on a FTE basis.

(3) Includes interest on federal funds purchased and other borrowed funds. Excludes long-term debt.

(4) Net FTE interest margin during the period equals (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

(5) Cost of funds including non-interest bearing demand deposits equals (i) interest expense on interest bearing liabilities, divided by (ii) the sum of average interest bearing liabilities and average non-interest bearing demand deposits.

38

Our FTE net interest income decreased $6.8 million, or 2.7%, to $248.5 million in 2012, compared to $255.3 million in 2011, and our net FTE interest margin ratio decreased 14 basis points to 3.66% in 2012, compared to 3.80% in 2011. The decrease in our net FTE interest income and compression in our net FTE interest margin ratio were attributable to lower outstanding loan balances and lower yields earned on our loan and investment portfolios, which were partially offset by reductions in the cost of interest bearing liabilities combined with a continued shift away from higher-costing savings and time deposits to lower-costing demand deposits. Management expects further compression in the net FTE interest margin ratio in future quarters resulting from the continuing low interest rate environment.

Net FTE interest income decreased $594 thousand, or less than 1.0%, to $255.3 million in 2011, compared to $255.9 million in 2010, and our net FTE interest margin ratio decreased 9 basis points to 3.80% in 2011, compared to 3.89% in 2010. Decrease in net FTE interest income and compression in our net FTE interest margin ratio were attributable to lower yields earned on our investment and loan portfolios and lower outstanding loan balances, the effects of which were substantially offset by a 37 basis point reduction in the cost of interest bearing liabilities.

The table below sets forth, for the periods indicated, a summary of the changes in interest income and interest expense resulting from estimated changes in average asset and liability balances (volume) and estimated changes in average interest rates (rate). Changes which are not due solely to volume or rate have been allocated to these categories based on the respective percent changes in average volume and average rate as they compare to each other.

Analysis of Interest Changes Due To Volume and Rates (Dollars in thousands)
	Year Ended December 31, 2012 compared with December 31, 2011									Year Ended December 31, 2011 compared with December 31, 2010									Year Ended December 31, 2010 compared with December 31, 2009
	Volume			Rate			Net			Volume			Rate			Net			Volume			Rate			Net
Interest earning assets:
Loans (1)	$	(5,713	)	$	(9,055	)	$	(14,768	)	$	(12,395	)	$	(8,392	)	$	(20,787	)	$	(10,762	)	$	(2,758	)	$	(13,520	)
U.S. government agency and mortgage-backed securities	1,531			(4,642		)	(3,111		)	9,537			(11,450		)	(1,913		)	21,136			(21,199		)	(63		)
Other securities	—			47			47			—			—			—			(38		)	(12		)	(50		)
Tax exempt securities (1)	1,315			(2,433		)	(1,118		)	841			241			1,082			(73		)	(523		)	(596		)
Federal funds sold	1			(1		)	—			(14		)	5			(9		)	(238		)	7			(231		)
Interest bearing deposits in banks	182			3			185			(39		)	(4		)	(43		)	601			(28		)	573
Total change	(2,684		)	(16,081		)	(18,765		)	(2,070		)	(19,600		)	(21,670		)	10,626			(24,513		)	(13,887		)
Interest bearing liabilities:
Demand deposits	855			(1,522		)	(667		)	406			(779		)	(373		)	196			(834		)	(638		)
Savings deposits	(820		)	(2,066		)	(2,886		)	1,071			(3,557		)	(2,486		)	1,588			(2,687		)	(1,099		)
Time deposits	(3,650		)	(4,024		)	(7,674		)	(7,885		)	(9,672		)	(17,557		)	405			(17,945		)	(17,540		)
Repurchase agreements	—			(116		)	(116		)	38			(222		)	(184		)	106			(3		)	103
Borrowings (2)	—			—			—			—			(3		)	(3		)	(1,228		)	(136		)	(1,364		)
Long-term debt	(14		)	20			6			(454		)	(4		)	(458		)	(1,375		)	559			(816		)
Preferred stock pending redemption	131			—			131			—			—			—			—			—			—
Subordinated debentures held by subsidiary trusts	(1,008		)	297			(711		)	—			(15		)	(15		)	—			(437		)	(437		)
Total change	(4,506		)	(7,411		)	(11,917		)	(6,824		)	(14,252		)	(21,076		)	(308		)	(21,483		)	(21,791		)
Increase (decrease) in FTE net interest income (1)	$	1,822		$	(8,670	)	$	(6,848	)	$	4,754		$	(5,348	)	$	(594	)	$	10,934		$	(3,030	)	$	7,904

(1) Interest income and average rates for tax exempt loans and securities are presented on a FTE basis.

(2) Includes interest on federal funds purchased and other borrowed funds.

39

Provision for Loan Losses

The provision for loan losses supports the allowance for loan losses known and inherent in the loan portfolio at each balance sheet date. We perform a quarterly assessment of the risks inherent in our loan portfolio, as well as a detailed review of each significant loan with identified weaknesses. Based on this analysis, we record a provision for loan losses in order to maintain the allowance for loan losses at appropriate levels. In determining the allowance for loan losses, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of the allowance for loan losses is based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates. Fluctuations in the provision for loan losses result from management’s assessment of the adequacy of the allowance for loan losses. Ultimate loan losses may vary from current estimates. For additional information concerning the provision for loan losses, see “—Critical Accounting Estimates and Significant Accounting Policies” included herein.

Our provision for loan losses decreased $17.4 million, or 29.9%, to $40.8 million in 2012, as compared to $58.2 million in 2011, and decreased $8.7 million, or 13.1%, to $58.2 million in 2011, as compared to $66.9 million in 2010. Fluctuations in the provision for loan losses reflect management's estimate of possible loan loss based upon evaluation of the borrowers' ability to repay, collateral underlying loans, loan loss trends and estimated effects of current economic conditions on our loan portfolio. The level of provision for loan losses in 2012 is reflective of improvement in and stabilization of credit quality as evidenced by declining levels of non-performing and criticized loans, as compared to 2011. The level of provision in 2011 reflects decreases in the level of criticized loans and overall loan volume in 2011, as compared to 2010. For additional information concerning non-performing assets, see “—Financial Condition—Non-Performing Assets” herein.

Non-interest Income

Our principal sources of non-interest income include income from the origination and sale of loans; other service charges, commissions and fees; service charges on deposit accounts; and wealth management revenues. Non-interest income increased $23.0 million, or 25.0%, to $114.9 million in 2012, as compared to $91.9 million in 2011, and increased $961 thousand, or 1.1%, to $91.9 million in 2011, from $90.9 million in 2010. Significant components of these fluctuations are discussed below.

Income from the origination and sale of loans includes origination and processing fees on residential real estate loans held for sale and gains on residential real estate loans sold to third parties. Fluctuations in market interest rates have a significant impact on revenues generated from the origination and sale of loans. Higher interest rates can reduce the demand for home loans and loans to refinance existing mortgages. Conversely, lower interest rates generally stimulate refinancing and home loan origination. Income from the origination and sale of loans increased $20.6 million, or 97.6%, to $41.8 million in 2012, as compared to $21.2 million in 2011. Record low mortgage interest rates continued to spur residential mortgage loan originations in our market areas in 2012, resulting in higher income from the origination and sale of loans. Refinancing activity accounted for 65% of our residential mortgage loan origination production in 2012, as compared to 56% in 2011. Management does not expect the current level of refinancing activity to continue in future quarters.

Income from the origination and sale of loans decreased $1.7 million, or 7.5%, to $21.2 million in 2011, from $22.9 million in 2010, primarily due to declines in refinancing activity. Although mortgage rates were generally stable in 2011, as compared to 2010, and decreased in the latter part of 2011, refinancing activity declined as many homeowners who qualified for refinancing did so in 2010. Refinancing activity accounted for approximately 56% of the Company’s residential real estate loan originations during 2011, as compared to 60% during 2010.

Other service charges, commissions and fees primarily include debit and credit card interchange income, mortgage servicing fees, insurance and other commissions and ATM service charge revenues. Other service charges, commissions and fees increased $2.5 million, or 8.0%, to $34.2 million in 2012, as compared to $31.7 million in 2011, and increased $2.2 million, or 7.4%, to $31.7 million in 2011, from $29.5 million in 2010. These increases were primarily due to higher debit and credit card interchange fee revenue resulting from higher transaction volumes.

Wealth management revenues are principally comprised of fees earned for management of trust assets and investment services revenues. Wealth management revenues increased $739 thousand, or 5.4%, to $14.3 million in 2012, as compared to $13.6 million in 2011, and increased $1.2 million, or 9.6% to $13.6 million in 2011, from $12.4 million in 2010. These increases are primarily due to the addition of new trust customers combined with increases in the market values of new and existing assets under trust management.

40

During 2012, we recorded net gains on the disposal of investment securities of $348 thousand, as compared to net gains of $1.5 million in 2011 and net gains of $170 thousand in 2010. Net gains on disposal of investment securities were primarily due to recognition of unamortized discounts on investment securities called by the issuing agencies.

Other income primarily includes company-owned life insurance revenues, net gains or losses on securities held under deferred compensation plans, check printing income, agency stock dividends and gains on sales of miscellaneous assets. Other income increased $507 thousand, or 8.1%, to $6.8 million in 2012, as compared to $6.3 million in 2011. This increase was primarily due to increases in the values of securities held under deferred compensation plans. During 2012, market value adjustments for securities held under deferred compensation plans resulted in increases in other income of $648 thousand, as compared to reductions in other income of $161 thousand in 2011. In addition, during second quarter 2012, we recorded a one-time gain of $581 thousand recorded on the sale of a bank building. These increases were partially offset by decreases in company-owned life insurance revenues during 2012, as compared to 2011.

Other income decreased $1.5 million, or 19.8%, to $6.3 million in 2011, from $7.8 million in 2010, primarily due to fluctuations of values of securities held under deferred compensation plans. During 2011, market value adjustments for securities held under deferred compensation plans resulted in reductions in other income of $161 thousand, as compared to increases in other income of $545 thousand in 2010. In addition, we recorded a $249 thousand one-time gain on the sale of our student loan portfolio in 2010.

Non-interest Expense

Non-interest expense increased $11.2 million, or 5.1%, to $229.6 million in 2012, as compared to $218.4 million in 2011. Non-interest expense decreased $2.6 million, or 1.2%, to $218.4 million in 2011, from $221.0 million in 2010. Significant components of these fluctuations are discussed below.

Salaries and wages increased $6.3 million, or 7.5%, to $89.8 million in 2012, as compared to $83.6 million in 2011, primarily due to inflationary wage increases, higher incentive bonus accruals reflective of our improved performance, and increases in commissions and overtime related to the substantial volume of residential real estate loan activity in 2012.

Salaries and wages increased $187 thousand, or less than 1.0%, to $83.6 million in 2011, as compared to $83.4 million in 2010. Increases resulting from normal inflationary wage increases and higher incentive bonus accruals reflective of improved performance in 2011 were primarily offset by reductions in full-time equivalent employees.

Employee benefits increased $1.6 million, or 5.6%, to $29.3 million in 2012, as compared to $27.8 million in 2011, primarily due to the combined effects of increases in the market value of securities held under deferred compensation plans, higher stock-based compensation expense and increases in profit sharing accruals reflective of our improved performance in 2012. These increases were partially offset by a $1.0 million reduction in group health insurance expense reflecting favorable claims experience in 2012.

Employee benefits decreased $1.5 million, or 5.1%, to $27.8 million in 2011, as compared to $29.3 million in 2010, primarily due to lower group health insurance costs, reductions in the market values of securities held under deferred compensation plans and reductions in full-time equivalent employees.

OREO expense is recorded net of OREO income. Variations in net OREO expense between periods are primarily due to fluctuations in write-downs of the estimated fair value of OREO properties, net gains and losses recorded on the sale of OREO properties and carrying costs and/or operating expenses of OREO properties. Net OREO expense increased $748 thousand, or 8.6%, to $9.4 million in 2012, as compared to $8.7 million in 2011, primarily due to additional carrying costs of OREO properties foreclosed in 2012. During 2012, OREO expense included net operating expenses of $3.7 million, write-downs in the estimated fair value of OREO properties of $6.7 million and net gains on the sale of OREO properties of $1.0 million. During 2011, OREO expense included net operating expenses of $1.8 million, write-downs in the estimated fair value of OREO properties of $7.5 million and net gains on the sale of OREO properties of $567 thousand.

Net OREO expense increased $982 thousand, or 12.8%, to $8.7 million in 2011, as compared to $7.7 million in 2010, primarily due to write-downs of the estimated fair value of OREO properties. During 2011, we recorded write-downs of the estimated fair value of OREO properties of $7.5 million, compared to $6.7 million of write-downs of the estimated fair value of OREO properties during 2010.

41

FDIC insurance premiums decreased $863 thousand, or 11.8%, to $6.5 million in 2012, as compared to $7.3 million in 2011, and decreased $2.7 million, or 27.0%, to $7.3 million in 2011, from $10.0 million in 2010. In February 2011, the FDIC issued a final rule that, among other things, modified the definition of an institution's deposit insurance assessment base and revised assessment rate schedules. These changes, which became effective April 1, 2011, reduced the Company's FDIC insurance premiums.

Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights amortization increased $276 thousand, or 8.6%, to $3.5 million in 2012, as compared to $3.2 million in 2011. Mortgage servicing rights amortization decreased $1.4 million, or 30.1%, to $3.2 million in 2011, from $4.6 million in 2010 , primarily due to lower prepayment rates and the December 2010 sale of mortgage servicing rights with a carrying value of $5 million.

Mortgage servicing rights are evaluated quarterly for impairment based on the fair value of the mortgage servicing rights. The fair value of mortgage servicing rights is estimated by discounting the expected future cash flows, taking into consideration the estimated level of prepayments based on current industry expectations and the predominant risk characteristics of the underlying loans. Impairment adjustments are recorded through a valuation allowance. The valuation allowance is adjusted for changes in impairment through a charge to current period earnings. Fluctuations in the fair value of mortgage servicing rights are primarily due to changes in assumptions regarding prepayments of the underlying mortgage loans, which typically correspond with changes in market interest rates. During 2012, we reversed previously recorded impairment of $771 thousand, as compared to recording additional impairment of $1.3 million in 2011, and the reversal of previously recorded impairment of $787 thousand during 2010.

Other expenses primarily include advertising and public relations costs; office supply, postage, freight, telephone and travel expenses; donations expense; debit and credit card expenses; board of director fees; and other losses. Other expense increased $5.2 million, or 11.9%, to $48.9 million in 2012, as compared to $43.7 million in 2011, primarily due to non-recurring expenses recorded during the first and second quarters of 2012. During first quarter 2012, we recorded as other expense $3.0 million of estimated loan collection and settlement costs related to one borrower and, during second quarter 2012, we recorded $1.5 million of donations expense in conjunction with the sale of a bank building to a charitable organization and wrote-off $428 thousand of unamortized issuance costs associated with the redemption of junior subordinated debentures. Also contributing to the increases in other expense in 2012, as compared to 2011, were increases of $1.4 million in debit card processing expenses, the result of changes in per transaction processing costs and increases in transaction volumes. Other expense increased $1.1 million, or 2.6%, to $43.7 million in 2011, from $42.6 million in 2010, primarily due to higher legal expenses associated with foreclosure and collection efforts.

Income Tax Expense

Our effective federal tax rate was 29.6% for the year ended December 31, 2012, 28.1% for the year ended December 31, 2011 and 26.8% for the year ended December 31, 2010. Increases in effective federal income tax rates are primarily due to higher levels of taxable income without a proportional increase in tax exempt interest income on loan and investment securities.

State income tax applies primarily to pretax earnings generated within Montana and South Dakota. Our effective state tax rate was 4.4% for the year ended December 31, 2012 and 4.6% for the years ended December 31, 2011 and 2010.

Net Income Available to Common Shareholders

Net income available to common shareholders was $54.9 million, or $1.27 per diluted share, in 2012, compared to $41.1 million, or $0.96 per diluted share, in 2011 and $33.9 million, or $0.85 per diluted share, in 2010.

42

Summary of Quarterly Results

The following table presents unaudited quarterly results of operations for the fiscal years ended December 31, 2012 and 2011.

Quarterly Results (Dollars in thousands except per share data)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
Year Ended December 31, 2012:
Interest income	$	69,057	$	69,067	$	68,175	$	67,601	$	273,900
Interest expense	8,423		7,893		7,170		6,628		30,114
Net interest income	60,634		61,174		61,005		60,973		243,786
Provision for loan losses	11,250		12,000		9,500		8,000		40,750
Net interest income after provision for loan losses	49,384		49,174		51,505		52,973		203,036
Non-interest income	26,382		27,662		30,182		30,635		114,861
Non-interest expense	57,440		57,299		57,064		57,832		229,635
Income before income taxes	18,326		19,537		24,623		25,776		88,262
Income tax expense	6,112		6,527		8,468		8,931		30,038
Net income	12,214		13,010		16,155		16,845		58,224
Preferred stock dividends	853		853		863		731		3,300
Net income available to common shareholders	$	11,361	$	12,157	$	15,292	$	16,114	$	54,924
Basic earnings per common share	$	0.26	$	0.28	$	0.36	$	0.37	$	1.28
Diluted earnings per common share	0.26		0.28		0.35		0.37		1.27
Dividends paid per common share	0.12		0.12		0.12		0.25		0.61
Year Ended December 31, 2011:
Interest income	$	73,843	$	73,551	$	73,483	$	72,006	$	292,883
Interest expense	12,045		11,024		9,991		8,971		42,031
Net interest income	61,798		62,527		63,492		63,035		250,852
Provision for loan losses	15,000		15,400		14,000		13,751		58,151
Net interest income after provision for loan losses	46,798		47,127		49,492		49,284		192,701
Non-interest income	20,159		21,591		23,125		26,997		91,872
Non-interest expense	52,958		54,192		55,041		56,221		218,412
Income before income taxes	13,999		14,526		17,576		20,060		66,161
Income tax expense	4,493		4,672		5,655		6,795		21,615
Net income	9,506		9,854		11,921		13,265		44,546
Preferred stock dividends	844		853		862		863		3,422
Net income available to common shareholders	$	8,662	$	9,001	$	11,059	$	12,402	$	41,124
Basic earnings per common share	$	0.20	$	0.21	$	0.26	$	0.29	$	0.96
Diluted earnings per common share	0.20		0.21		0.26		0.29		0.96
Dividends paid per common share	0.1125		0.1125		0.1125		0.1125		0.4500

43

Financial Condition

Total assets increased $396 million, or 5.4%, to $7,722 million as of December 31, 2012, from $7,326 million as of December  31, 2011, due to deposit growth. Total assets decreased $175 million, or 2.3%, to $7,326 million as of December 31, 2011, from $7,501 million as of December 31, 2010, due to lower outstanding funding sources, including deposits and repurchase agreements.

Loans

Our loan portfolio consists of a mix of real estate, consumer, commercial, agricultural and other loans, including fixed and variable rate loans. Fluctuations in the loan portfolio are directly related to the economies of the communities we serve. While each loan originated generally must meet minimum underwriting standards established in our credit policies, lending officers are granted certain levels of authority in approving and pricing loans to assure that the banking offices are responsive to competitive issues and community needs in each market area. For additional information regarding our underwriting standards and loan approval policies, see "Community Banking—Lending Activities", included in Part I, Item I of this report.

Total loans increased $37 million, or less than 1.0%, to $4,224 million as of December 31, 2012, from $4,187 million as of December 31, 2011. During 2012, modest growth in residential real estate, agricultural and indirect consumer loans was partially offset by decreases in commercial real estate and land acquisition and development loans.

Total loans decreased $181 million, or 4.2% to $4,187 million as of December 31, 2011, from $4,368 million as of December 31, 2010, primarily due to weak loan demand in our market areas, the result of economic uncertainty, and to the movement of lower quality loans out of the loan portfolio through charge-off, pay-off or foreclosure.

The following table presents the composition of our loan portfolio as of the dates indicated:

Loans Outstanding (Dollars in thousands)
	As of December 31,
	2012			Percent		2011			Percent		2010			Percent		2009			Percent		2008			Percent
Loans
Real estate:
Commercial	$	1,497,272		35.4	%	$	1,553,155		37.1	%	$	1,565,665		35.8	%	$	1,556,273		34.4	%	$	1,483,967		31.1	%
Construction	334,529			7.9		400,773			9.6		527,458			12.1		636,892			14.1		790,177			16.5
Residential	708,339			16.8		571,943			13.7		549,604			12.6		539,098			11.9		587,464			12.3
Agricultural	177,244			4.2		175,302			4.2		182,794			4.2		195,045			4.3		191,831			4.0
Consumer	636,794			15.1		616,071			14.7		646,580			14.8		677,548			14.9		669,731			14.0
Commercial	688,753			16.3		693,261			16.6		730,471			16.7		750,647			16.6		853,798			17.9
Agricultural	113,627			2.7		119,710			2.8		116,546			2.7		134,470			3.0		145,876			3.1
Other loans	912			—		2,813			—		2,383			0.1		1,601			—		2,893			0.1
Mortgage loans held for sale	66,442			1.6		53,521			1.3		46,408			1.0		36,430			0.8		47,076			1.0
Total loans	4,223,912			100.0	%	4,186,549			100.0	%	4,367,909			100.0	%	4,528,004			100.0	%	4,772,813			100.0	%
Less allowance for loan losses	100,511					112,581					120,480					103,030					87,316
Net loans	$	4,123,401				$	4,073,968				$	4,247,429				$	4,424,974				$	4,685,497
Ratio of allowance to total loans	2.38		%			2.69		%			2.76		%			2.28		%			1.83		%

Real Estate Loans. We provide interim construction and permanent financing for both single-family and multi-unit properties, medium-term loans for commercial, agricultural and industrial property and/or buildings and equity lines of credit secured by real estate.

Commercial real estate loans. Commercial real estate loans include loans for property and improvements used commercially by the borrower or for lease to others for the production of goods or services. Approximately 57% of our commercial real estate loans as of December 31, 2012 and 2011, were owner occupied. Commercial real estate loans decreased $56 million, or 3.6%, to $1,497 million as of December 31, 2012, from $1,553 million as of December 31, 2011, and decreased $13 million,

44

or less than 1.0%, to $1,553 million a of December 31, 2011, from $1,566 million as of December 31 2010. Management attributes these decreases to the movement of lower quality loans out of the loan portfolio through charge-off, pay-off or foreclosure and low loan demand.

Construction loans. Construction loans are primarily to commercial builders for residential lot development and the construction of single-family residences and commercial real estate properties. Construction loans are generally underwritten pursuant to pre-approved permanent financing. During the construction phase the borrower pays interest only. As of December 31, 2012, our construction loan portfolio was divided among the following categories: approximately $49 million, or 14.7%, residential construction; approximately $65 million, or 19.4%, commercial construction; and, approximately $220 million, or 65.9%, land acquisition and development. As of December 31, 2011, our construction loan portfolio was divided among the following categories: approximately $61 million, or 15.3%, residential construction; approximately $61 million, or 15.2%, commercial construction; and, approximately $279 million, or 69.5%, land acquisition and development.

Construction loans decreased $66 million, or 16.5%, to $335 million as of December 31, 2012, from $401 million as of December 31, 2011, primarily due to movement of lower quality loans out of the loan portfolio through charge-off and foreclosure. Construction loans decreased $127 million, or 24.0%, to $401 million as of December 31, 2011, from $527 million as of December 31, 2010. Management attributes the decrease in 2011 to the continuing impact of general declines in new home construction in our market areas, particularly in markets dependent upon resort and second home communities, and, to a lesser extent, the movement of lower quality loans out of our loan portfolio through charge-off, pay-off or foreclosure.

Residential real estate loans. Residential real estate loans increased $136 million, or 23.8%, to $708 million as of December 31, 2012, from $572 million as of December 31, 2011, and increased $22 million, or 4.1%, to $572 million as of December 31, 2011, from $550 million as of December 31, 2010. Record low mortgage interest rates resulted in increased residential real estate loan production during 2012 and 2011. Historically, we have sold a significant portion of our residential real estate loan production in the secondary market; however, during 2010 we began to retain more of our residential real estate loans. Retained residential real estate loans are typically secured by first liens on the financed property and generally mature in less than fifteen years. Included in residential real estate loans were home equity loans and lines of credit of $274 million as of December 31, 2012 and $312 million as of December 31, 2011.

Consumer Loans. Our consumer loans include direct personal loans, credit card loans and lines of credit; and indirect loans created when we purchase consumer loan contracts advanced for the purchase of automobiles, boats and other consumer goods from the consumer product dealer network within the market areas we serve. Personal loans and indirect dealer loans are generally secured by automobiles, recreational vehicles, boats and other types of personal property and are made on an installment basis. Credit cards are offered to customers in our market areas. Lines of credit are generally floating rate loans that are unsecured or secured by personal property. Approximately 68.8% and 66.2% of our consumer loans as of December 31, 2012 and 2011, respectively, were indirect consumer loans.

Consumer loans increased $21 million, or 3.4%, to $637 million as of December 31, 2012, from $616 million as of December 31, 2011, due to expansion of our indirect lending program within our existing market areas and competitive pricing. Consumer loans decreased $31 million, or 4.7%, to $616 million as of December 31, 2011, from $647 million as of December 31, 2010. Approximately 52% of this decrease occurred in indirect consumer loans and was the result of competitive rate pressure. Management attributes the remaining 2011 decrease to changes in consumer behavior resulting from continuing economic uncertainty.

Commercial Loans. We provide a mix of variable and fixed rate commercial loans. The loans are typically made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansions. Commercial loans generally include lines of credit, business credit cards and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but also include collateralization by inventory, accounts receivable, equipment and/or personal guarantees.

Commercial loans decreased $5 million, or less than 1.0%, to $689 million as of December 31, 2012, from $693 million as of December 31, 2011. Management attributes these decreases to the movement of lower quality loans out of the loan portfolio through charge-off, pay-off or foreclosure and low loan demand.

Commercial loans decreased $37 million, or 5.1%, to $693 million as of December 31, 2011, from $730 million as of December 31, 2010, primarily due to the continuing effects of economic uncertainty on borrowers in our market areas and the movement of lower quality loans out of our loan portfolio through charge-off, pay-off or foreclosure.

45

Agricultural Loans. Our agricultural loans generally consist of short and medium-term loans and lines of credit that are primarily used for crops, livestock, equipment and general operations. Agricultural loans are ordinarily secured by assets such as livestock or equipment and are repaid from the operations of the farm or ranch. Agricultural loans generally have maturities of five years or less, with operating lines for one production season. Agricultural loans decreased $6 million, or 5.1%, to $114 million as of December 31, 2012, from $120 million as of December 31, 2011 and increased $3 million, or 2.7%, to $120 million as of December 31, 2011, from $117 million as of December 31, 2010.

The following table presents the maturity distribution of our loan portfolio and the sensitivity of the loans to changes in interest rates as of December 31, 2012:

Maturities and Interest Rate Sensitivities (Dollars in thousands)
	Within One Year		One Year to Five Years		After Five Years		Total
Real estate	$	1,015,206	$	1,190,964	$	511,214	$	2,717,384
Consumer	220,017		372,038		44,739		636,794
Commercial	419,157		212,438		57,158		688,753
Agricultural	92,452		20,140		1,035		113,627
Other	912		—		—		912
Mortgage loans held for sale	66,442		—		—		66,442
Total loans	$	1,814,186	$	1,795,580	$	614,146	$	4,223,912
Loans at fixed interest rates	$	1,067,319	$	1,290,240	$	143,689	$	2,501,248
Loans at variable interest rates	746,867		505,340		362,658		1,614,865
Non-accrual loans	—		—		107,799		107,799
Total loans	$	1,814,186	$	1,795,580	$	614,146	$	4,223,912

Non-Performing Assets

Non-performing assets include non-performing loans and OREO. The following table sets forth information regarding non-performing assets as of the dates indicated:

Non-Performing Assets (Dollars in thousands)
As of December 31,	2012			2011			2010			2009			2008
Non-performing loans:
Nonaccrual loans	$	107,799		$	199,983		$	195,342		$	115,030		$	85,632
Accruing loans past due 90 days or more	2,277			4,111			1,852			4,965			3,828
Troubled debt restructurings	31,932			37,376			13,490			4,683			1,462
Total non-performing loans	142,008			241,470			210,684			124,678			90,922
OREO	32,571			37,452			33,632			38,400			6,025
Total non-performing assets	$	174,579		$	278,922		$	244,316		$	163,078		$	96,947
Non-performing loans to total loans	3.36		%	5.77		%	4.82		%	2.75		%	1.90		%
Non-performing assets to total loans and OREO	4.10			6.60			5.55			3.57			2.03
Non-performing assets to total assets	2.26			3.81			3.26			2.28			1.46

Non-performing loans. Non-performing loans include non-accrual loans, loans contractually past due 90 days or more and still accruing interest and loans renegotiated in troubled debt restructurings. Impaired loans are a subset of non-performing loans and include all loans risk rated doubtful, loans placed on non-accrual status and loans renegotiated in troubled debt restructurings with the exception of consumer loans. We monitor and evaluate collateral values on impaired loans quarterly. Appraisals are required on all impaired loans every 18-24 months, or sooner as conditions necessitate. We monitor real estate values by market for our larger market areas. Based on trends in real estate values, adjustments may be made to the appraised value based on time elapsed between the appraisal date and the impairment analysis or a new appraisal may be ordered. Appraised values in our smaller market areas may be adjusted based on trends identified through discussions with local realtors

46

and appraisers. Appraisals are also adjusted for selling costs. The adjusted appraised value is then compared to the loan balance and any resulting shortfall is recorded in the allowance for loan losses as a specific valuation allowance. Overall increases in specific valuation allowances will result in higher provisions for loan losses. Provisions for loan losses are also impacted by changes in the historical or general valuation elements of the allowance for loan losses as well.

The following table sets forth the allocation of our non-performing loans among our different types of loans as of the dates indicated.    

Non-Performing Loans by Loan Type (Dollars in thousands)
As of December 31,	2012		2011		2010		2009		2008
Real estate	$	125,456	$	216,289	$	169,961	$	101,751	$	79,167
Consumer	2,963		3,455		2,720		2,265		2,944
Commercial	12,825		20,857		36,910		19,774		8,594
Agricultural	764		869		1,093		888		217
Total non-performing loans	$	142,008	$	241,470	$	210,684	$	124,678	$	90,922

As of December 31, 2012, our non-performing real estate loans were divided among the following categories: $23 million, or 18.6%, land and land development; $74 million, or 59.2%, commercial; $3 million, or 2.1% residential construction; $12 million, or 9.4%, residential; $8 million, or 6.5% commercial construction; and, $5 million, or 4.2%, agricultural.

As of December 31, 2011, our non-performing real estate loans were divided among the following categories: $63 million, or 29.2%, land and land development; $87 million, or 40.2%, commercial; $14 million, or 6.5% residential construction; $20 million, or 9.3%, residential; $25 million, or 11.3% commercial construction; and, $7 million, or 3.5%, agricultural.

Total non-performing loans decreased $99 million, or 41.2%, to $142 million as of December 31, 2012, from $241 million as of December 31, 2011, and increased $31 million, or 14.6%, to $241 million as of December 31, 2011, from $211 million as of December 31, 2010. Significant components of these fluctuations are discussed below.

Non-accrual loans. We generally place loans on non-accrual when they become 90 days past due, unless they are well secured and in the process of collection. When a loan is placed on non-accrual status, any interest previously accrued but not collected is reversed from income. Approximately $8.5 million, $12.5 million and $8.9 million of gross interest income would have been accrued if all loans on non-accrual had been current in accordance with their original terms for the years ended December 31, 2012, 2011 and 2010, respectively.

Non-accrual loans decreased $92 million, or 46.1%, to $108 million as of December 31, 2012, from $200 million as of December 31, 2011, primarily due to movement of lower quality loans out of the loan portfolio through charge-off, pay-off or foreclosure. As of December 31, 2012, approximately 47% of our non-accrual loans were commercial real estate loans and approximately 18% were land acquisition and development loans. Non-accrual loans increased $5 million, or 2.4%, to $200 million at December 31, 2011, from $195 million at December 31, 2010.

Troubled Debt Restructuring. Modifications of performing loans are made in the ordinary course of business and are completed on a case-by-case basis as negotiated with the borrower. Loan modifications typically include interest rate concessions, interest-only periods, short-term payment deferrals and extension of amortization periods to provide payment relief. A loan modification is considered a troubled debt restructuring if the borrower is experiencing financial difficulties and we, for economic or legal reasons, grant a concession to the borrower that we would not otherwise consider. Those modifications deemed to be troubled debt restructurings are monitored centrally to ensure proper classification as a troubled debt restructuring and if or when the loan may be placed on accrual status.

As of December 31, 2012, we had loans renegotiated in troubled debt restructurings of $77 million, of which $45 million were reported as non-accrual loans and $32 million were on accrual status and reported as troubled debt restructurings in the non-performing asset and non-performing loan tables above. As of December 31, 2012, approximately 94% of our loans renegotiated in troubled debt restructurings were performing in accordance with their modified terms. Troubled debt restructurings in the preceding non-performing asset and non-performing loan tables includes $17 thousand of accruing loans past due 90 days or more as of December 31, 2012.

47

As of December 31, 2011, we had loans renegotiated in troubled debt restructurings of $95 million, of which $58 million were reported as non-accrual loans and $37 million were on accrual status and reported as troubled debt restructurings in the non-performing asset and non-performing loan tables above. As of December 31, 2011, approximately 72% of our loans renegotiated in troubled debt restructurings were performing in accordance with their modified terms. Troubled debt restructurings in the preceding non-performing asset and non-performing loan tables includes $389 thousand of accruing loans past due 90 days or more as of December 31, 2011.

OREO. OREO consists of real property acquired through foreclosure on the collateral underlying defaulted loans. We initially record OREO at fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate acquired is recorded as charge against the allowance for loan losses. Estimated losses that result from the ongoing periodic valuation of these properties are charged to earnings in the period in which they are identified. The fair values of OREO properties are estimated using appraisals and management estimates of current market conditions. OREO properties are appraised every 18-24 months unless deterioration in local market conditions indicates the need to obtain new appraisals sooner. OREO properties are evaluated by management quarterly to determine if additional write-downs are appropriate or necessary based on current market conditions. Quarterly evaluations include a review of the most recent appraisal of the property and reviews of recent appraisals and comparable sales data for similar properties in the same or adjacent market areas. Commercial and agricultural OREO properties are listed with unrelated third party professional real estate agents or brokers local to the areas where the marketed properties are located. Residential properties are typically listed with local realtors, after any redemption period has expired. We rely on these local real estate agents and/or brokers to list the properties on the local multiple listing system, to provide marketing materials and advertisements for the properties and to conduct open houses.

OREO decreased $5 million, or 13.0%, to $33 million as of December 31, 2012, from $37 million as of December 31, 2011. During 2012, the Company recorded additions to OREO of $44 million, wrote down the fair value of OREO properties by $7 million and sold OREO with a book value of $42 million. As of December 31, 2012, 45% of our OREO balance comprised land and land development properties, 32% comprised commercial properties, 22% comprised residential real estate properties and 1% comprised agricultural real estate properties.

OREO increased $4 million, or 11.4%, to $37 million as of December 31, 2011 from $34 million as of December 31, 2010. During 2011, the Company recorded additions to OREO of $27 million, wrote down the fair value of OREO properties by $7 million and sold OREO with a book value of $16 million.

Allowance for Loan Losses

The Company performs a quarterly assessment of the adequacy of its allowance for loan losses in accordance with generally accepted accounting principles. The methodology used to assess the adequacy is consistently applied to the Company's loan portfolio. The allowance for loan losses is established through a provision for loan losses based on our evaluation of known and inherent risk in our loan portfolio at each balance sheet date. In determining the allowance for loan losses, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of the allowance for loan losses is based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates. See the discussion under “Critical Accounting Estimates and Significant Accounting Policies — Allowance for Loan Losses” above.

The allowance for loan losses is increased by provisions charged against earnings and reduced by net loan charge-offs. Loans, or portions thereof, are charged-off when management believes that the collectibility of the principal is unlikely or, with respect to consumer installment and credit card loans, according to established delinquency schedules.

The allowance for loan losses consists of three elements:

(1) Specific valuation allowances associated with impaired loans. Specific valuation allowances are determined based on assessment of the fair value of the collateral underlying the loans as determined through independent appraisals, the present value of future cash flows, observable market prices and any relevant qualitative or environmental factors impacting the loan. No specific valuation allowances are recorded for impaired loans that are adequately secured.

48

(2) Historical valuation allowances based on loan loss experience for similar loans with similar characteristics and trends. Historical valuation allowances are determined by applying percentage loss factors to the credit exposures from outstanding loans. For commercial, agricultural and real estate loans, loss factors are applied based on the internal risk classifications of these loans. For consumer loans, loss factors are applied on a portfolio basis. For commercial, agriculture and real estate loans, loss factor percentages are based on a migration analysis of our historical loss experience, designed to account for credit deterioration. For consumer loans, loss factor percentages are based on a one-year loss history.

(3) General valuation allowances determined based on changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, general economic conditions and other qualitative risk factors both internal and external to us.

Based on the assessment of the adequacy of the allowance for loan losses, management records provisions for loan losses to maintain the allowance for loan losses at appropriate levels.

Loans, or portions thereof, are charged-off against the allowance for loan losses when management believes that the collectability of the principal is unlikely, or, with respect to consumer installment loans, according to an established delinquency schedule. Generally, loans are charged-off when (1) there has been no material principal reduction within the previous 90 days and there is no pending sale of collateral or other assets, (2) there is no significant or pending event which will result in principal reduction within the upcoming 90 days, (3) it is clear that we will not be able to collect all or a portion of the loan, (4) payments on the loan are sporadic, will result in an excessive amortization or are not consistent with the collateral held and (5) foreclosure or repossession actions are pending. Loan charge-offs do not directly correspond with the receipt of independent appraisals or the use of observable market data if the collateral value is determined to be sufficient to repay the principal balance of the loan.

If the impaired loan is adequately collateralized, a specific valuation allowance is not recorded. As such, significant changes in impaired and non-performing loans do not necessarily correspond proportionally with changes in the specific valuation component of the allowance for loan losses. Additionally, management expects the timing of charge-offs will vary between quarters and will not necessarily correspond proportionally to changes in the allowance for loan losses or changes in non-performing or impaired loans due to timing differences among the initial identification of an impaired loan, recording of a specific valuation allowance for the impaired loan and any resulting charge-off of uncollectible principal.

Based on declines in national, regional and local economies which began in 2008, we began to record additional general valuation allowances based on management's estimation of the probable impact that the declines would have on our loan portfolio. Accordingly, beginning in 2008, and continuing in 2009 and 2010, we recorded significantly higher provisions for loan losses to maintain the allowance for loan losses at appropriate levels. During 2008, 2009 and 2010, we experienced higher levels of impaired and non-performing loans as anticipated. Impaired and non-performing loans peaked in mid-2011 and our provision for loan losses, which began decreasing during the last half of 2011, continued to decrease through 2012. Management expects that non-performing and impaired loans will continue to decline as previously identified problem loans make their way through the credit cycle and the volume of newly identified non-performing and impaired loans decreases as economic conditions in our market areas improve.

49

The following table sets forth information concerning our allowance for loan losses as of the dates and for the periods indicated.

Allowance for Loan Losses (Dollars in thousands)
As of and for the year ended December 31,	2012			2011			2010			2009			2008
Balance at the beginning of period	$	112,581		$	120,480		$	103,030		$	87,316		$	52,355
Allowance of acquired banking offices	—			—			—			—			14,463
Charge-offs:
Real estate
Commercial	13,014			13,227			8,980			5,156			995
Construction	25,510			26,125			19,989			14,153			3,035
Residential	4,879			6,199			3,511			1,086			325
Agricultural	103			213			2,238			11			642
Consumer	5,320			6,043			7,577			8,134			5,527
Commercial	11,990			19,332			10,023			3,346			3,523
Agricultural	120			142			21			92			648
Total charge-offs	60,936			71,281			52,339			31,978			14,695
Recoveries:
Real estate
Commercial	907			293			34			108			88
Construction	2,022			1,641			213			7			1
Residential	310			201			132			38			67
Agricultural	2			—			—			—			—
Consumer	1,945			1,739			2,053			1,850			1,404
Commercial	2,905			1,344			436			328			211
Agricultural	25			13			21			61			66
Total recoveries	8,116			5,231			2,889			2,392			1,837
Net charge-offs	52,820			66,050			49,450			29,586			12,858
Provision for loan losses	40,750			58,151			66,900			45,300			33,356
Balance at end of period	$	100,511		$	112,581		$	120,480		$	103,030		$	87,316
Period end loans	$	4,223,912		$	4,186,549		$	4,367,909		$	4,528,004		$	4,772,813
Average loans	4,176,439			4,275,128			4,482,218			4,660,189			4,527,987
Net charge-offs to average loans	1.26		%	1.54		%	1.10		%	0.63		%	0.28		%
Allowance to period-end loans	2.38		%	2.69		%	2.76		%	2.28		%	1.83		%

The allowance for loan losses was $101 million, or 2.38% of period-end loans, at December 31, 2012, compared to $113 million, or 2.69% of period-end loans, at December 31, 2011, and $120 million, or 2.76% of period-end loans, at December 31, 2010. Decreases in the allowance for loan losses as a percentage of total loans as of December 31, 2012, compared to December 31, 2011, were primarily due to decreases in specific reserves on impaired loans and lower general reserves reflective of decreases in past due, non-performing and internally risk classified loans. Decreases in the allowance for loan loses as a percentage of total loans as of December 31, 2011, compared to December 31, 2010, were due to decreases in specific reserves on impaired loans.

Net charge-offs in 2012 decreased $13 million, or 20.0%, to $53 million, or 1.26% of average loans, from $66 million, or 1.54% of average loans in 2011. Approximately 53% of the loans charged-off in 2012 were related to sixteen borrowers. Net charge-offs in 2011 increased $17 million to $66 million, or 1.54% of average loans, from $49 million, or 1.10% of average loans in 2010. Approximately 46% of loans charged-off during 2011were related to one consumer real estate, two land development and three commercial borrowers.

50

Although we believe that we have established our allowance for loan losses in accordance with accounting principles generally accepted in the United States and that the allowance for loan losses was adequate to provide for known and inherent losses in the portfolio at all times during the five-year period ended December 31, 2012, future provisions will be subject to on-going evaluations of the risks in the loan portfolio. If the economy declines or asset quality deteriorates, material additional provisions could be required.

The allowance for loan losses is allocated to loan categories based on the relative risk characteristics, asset classifications and actual loss experience of the loan portfolio. The following table provides a summary of the allocation of the allowance for loan losses for specific loan categories as of the dates indicated. The allocations presented should not be interpreted as an indication that charges to the allowance for loan losses will be incurred in these amounts or proportions, or that the portion of the allowance allocated to each loan category represents the total amount available for future losses that may occur within these categories. The unallocated portion of the allowance for loan losses and the total allowance are applicable to the entire loan portfolio.

Allocation of the Allowance for Loan Losses (Dollars in thousands)
As of December 31,	2012				2011				2010				2009				2008
	Allocated Reserves		% of Loan Category to Total Loans		Allocated Reserves		% of Loan Category to Total Loans		Allocated Reserves		% of Loan Category to Total Loans		Allocated Reserves		% of Loan Category to Total Loans		Allocated Reserves		% of Loan Category to Total Loans
Real estate	$	75,782	64.3	%	$	87,396	64.6	%	$	84,181	64.7	%	$	76,357	64.7	%	$	69,280	63.9	%
Consumer	7,141		15.1		8,594		14.7		9,332		14.8		6,220		14.9		5,092		14.0
Commercial	17,085		16.3		15,325		16.6		25,354		16.7		18,608		16.6		11,021		17.9
Agricultural	503		2.7		1,266		2.8		1,613		2.7		1,845		3.0		1,923		3.1
Other loans	—		—		—		—		—		0.1		—		—		—		0.1
Mortgage loans held for sale	—		1.6		—		1.3		—		1.0		—		0.8		—		1.0
Unallocated	—		N/A		—		N/A		—		N/A		—		N/A		—		N/A
Totals	$	100,511	100.0	%	$	112,581	100.0	%	$	120,480	100.0	%	$	103,030	100.0	%	$	87,316	100.0	%

The allowance for loan losses allocated to real estate loans decreased 13.3% to $76 million as of December 31 2012, from $87 million as of December 31, 2011, primarily due to the charge-off of $40 million of non-performing real estate loans. The allowance for loan losses allocated to commercial loans decreased 39.6% to $15 million as of December 31, 2011, from $25 million as of December 31, 2010, primarily due to the charge-off of non-performing loans.

Investment Securities

We manage our investment portfolio to obtain the highest yield possible, while meeting our risk tolerance and liquidity guidelines and satisfying the pledging requirements for deposits of state and political subdivisions and securities sold under repurchase agreements. Our portfolio principally comprises U.S. government agency residential mortgage-backed securities and collateralized mortgage obligations, U.S. government agency securities and tax exempt securities. Federal funds sold and interest bearing deposits in bank are additional investments that are classified as cash equivalents rather than as investment securities. Investment securities classified as available-for-sale are recorded at fair value, while investment securities classified as held-to-maturity are recorded at amortized cost. Unrealized gains or losses, net of the deferred tax effect, on available-for-sale securities are reported as increases or decreases in accumulated other comprehensive income or loss, a component of stockholders’ equity.

Investment securities increased $34 million, or 1.6%, to $2,203 million as of December 31, 2012, from $2,170 million as of December 31, 2011, and increased $236 million, or 12.2%, to $2,170 million as of December 31, 2011, from $1,933 million as of December 31, 2010. During 2012 and 2011, excess liquidity was primarily invested into available-for-sale U.S. government agency residential mortgage-backed securities. The estimated duration of the Company’s investment securities portfolio was 2.5 years as of December 31, 2012. The weighted average yield on investment securities decreased 31 basis points to 2.10% in 2012, from 2.41% in 2011, and 57 basis points to 2.41% in 2011, from 2.98% in 2010.

51

As of December 31, 2012, investment securities with amortized costs and fair values of $1,319 million and $1,344 million, respectively, were pledged to secure public deposits and securities sold under repurchase agreements, as compared to $1,280 million and $1,311 million, respectively, as of December 31, 2011.

For additional information concerning securities sold under repurchase agreements, see “—Securities Sold Under Repurchase Agreements” included herein.

The following table sets forth the book value, percentage of total investment securities and weighted average yields on investment securities as of December 31, 2012. Weighted-average yields have been computed on a fully taxable-equivalent basis using a tax rate of 35%.

Securities Maturities and Yield (Dollars in thousands)
	Book Value		% of Total Investment Securities		Weighted Average FTE Yield
U.S. Government agency securities
Maturing within one year	$	147,190	6.69	%	0.84	%
Maturing in one to five years	508,133		23.06		0.94
Maturing in five to ten years	96,178		4.36		1.45
Mark-to-market adjustments on securities available-for-sale	3,355		0.15		NA
Total	754,856		34.26		0.92
Mortgage-backed securities
Maturing within one year	291,580		13.23		3.54
Maturing in one to five years	534,563		24.26		1.53
Maturing in five to ten years	255,132		11.58		2.40
Maturing after ten years	133,641		6.06		2.57
Mark-to-market adjustments on securities available-for-sale	25,486		1.16		NA
Total	1,240,402		56.29		2.32
Tax exempt securities
Maturing within one year	4,657		0.21		5.57
Maturing in one to five years	32,462		1.47		4.00
Maturing in five to ten years	86,416		3.92		5.10
Maturing after ten years	69,340		3.15		5.00
Mark-to-market adjustments on securities available-for-sale	NA		NA		NA
Total	192,875		8.75		4.89
Corporate securities
Maturing in one to five years	14,975		0.68		1.20
Mark-to-market adjustments on securities available-for-sale	NA		NA		NA
Total	14,975		0.68		1.20
Other securities (1)
No stated maturity	373		0.02		NA
Mark-to-market adjustments on securities available-for-sale	NA		NA		NA
Total	373		0.02		NA
Total	$	2,203,481	100.00	%	1.93	%

(1) Equity investments in community development entities. Investment income is in the form of credits that reduce income tax expense.

52

Maturities of U.S. government agency securities noted above reflect $371 million of investment securities at their final maturities although they have call provisions within the next year. Based on current market interest rates, management expects approximately $308 million of these securities will be called in 2013.

Mortgage-backed securities, and to a limited extent other securities, have uncertain cash flow characteristics that present additional interest rate risk in the form of prepayment or extension risk primarily caused by changes in market interest rates. This additional risk is generally rewarded in the form of higher yields. Maturities of mortgage-backed securities presented above have been adjusted to reflect shorter maturities based upon estimated prepayments of principal. As of December 31, 2012, the carrying value of our investments in non-agency mortgage-backed securities totaled $551 thousand. All other mortgage-backed securities included in the table above were issued by U.S. government agencies and corporations. As of December 31, 2012, there were no significant concentrations of investments (greater than 10% of stockholders’ equity) in any individual security issuer, except for U.S. government or agency-backed securities.

As of December 31, 2012, approximately 72% of our tax-exempt securities were general obligation securities, of which 48% were issued by political subdivisions or agencies within the states of Montana, Wyoming and South Dakota.

As of December 31, 2011, we had U.S. government agency securities with carrying values of $1,138 million and a weighted average yield of 0.92%; mortgage-backed securities with carrying values of $879 million and a weighted average yield of 2.99%; tax exempt securities with carrying values of $153 million and a weighted average yield of 5.65%; and other securities with carrying values of $162 thousand with no weighted average yield.

As of December 31, 2010, we had U.S. government agency securities with carrying values of $953 million and a weighted average yield of 0.77%; mortgage-backed securities with carrying values of $833 million and a weighted average yield of 3.52%; tax exempt securities with carrying values of $147 million and a weighted average yield of 5.78%; and other securities with carrying values of $218 thousand with no weighted average yield.

We evaluate our investment portfolio quarterly for other-than-temporary declines in the market value of individual investment securities. This evaluation includes monitoring credit ratings; market, industry and corporate news; volatility in market prices; and, determining whether the market value of a security has been below its cost for an extended period of time. As of December 31, 2012, we had investment securities with fair values of $694 thousand that had been in a continuous loss position more than twelve months. Gross unrealized losses on these securities totaled $9 thousand as of December 31, 2012, and were primarily attributable to changes in interest rates. No impairment losses were recorded during 2012, 2011 or 2010.

For additional information concerning investment securities, see “Notes to Consolidated Financial Statements — Investment Securities” included in Part IV, Item 15.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold for one day periods and interest bearing deposits in banks with original maturities of less than three months. Cash and cash equivalents increased $329 million, or 69.6%, to $801 million as of December 31, 2012, from $472 million as of December 31, 2011, and decreased $213 million, or 31.1%, to $472 million as of December 31, 2011, from $686 million as of December 31, 2010. Fluctuations in cash and cash equivalents occurred during the normal course of business and are not reflective of changes in business plan or strategy.

Deferred Tax Asset/Liability

Our net deferred tax asset decreased $7 million, or 73.0%, to $3 million as of December, 31, 2012, from $10 million as of December 31, 2011. This decrease was primarily due to tax amortization of goodwill and core deposits intangibles and loan charge-offs, which are deductible currently for income tax purposes.

Net deferred tax asset decreased $9 million, or 47.9%, to $10 million as of December 31, 2011, from $18 million as of December 31, 2010, primarily due to increases in net unrealized gains on available-for-sale investment securities and tax amortization of goodwill and core deposits intangibles.

53

Other Assets

Other assets decreased $5 million, or 7.7%, to $63 million as of December 31, 2012, from $68 million as of December 31, 2011, primarily due to reductions in prepaid FDIC insurance assessments. Other assets decreased $14 million, or 16.8%, to $68 million as of December 31, 2011, from $82 million as of December 31, 2010. Approximately 50% of the decrease was due to reductions in prepaid FDIC insurance assessments. In addition, during second quarter 2011 we sold a condominium unit located inside one of our branch bank buildings, which had a carrying value of $3 million.

Deposits

We emphasize developing relationships with our customers in order to increase our core deposit base, which is our primary funding source. Our deposits consist of non-interest bearing and interest bearing demand, savings, individual retirement and time deposit accounts.

The following table summarizes our deposits as of the dates indicated:

Deposits (Dollars in thousands)
As of December 31,	2012		Percent		2011		Percent	2010		Percent		2009		Percent	2008		Percent
Non-interest bearing demand	$	1,495,309	24.0	%	$	1,271,709	21.8%	$	1,063,869	18.0	%	$	1,026,584	17.6%	$	985,155	19.0	%
Interest bearing:
Demand	1,811,905		29.0		1,306,509		22.4	1,218,078		20.5		1,197,254		20.6	1,059,818		20.5
Savings	1,547,713		24.8		1,691,413		29.0	1,718,521		29.0		1,362,410		23.4	1,198,783		23.2
Time, $100 or more	594,712		9.5		681,047		11.7	908,044		15.3		996,839		17.1	821,437		15.9
Time, other	790,772		12.7		876,293		15.1	1,017,201		17.2		1,240,969		21.3	1,109,066		21.4
Total interest bearing	4,745,102		76.0		4,555,262		78.2	4,861,844		82.0		4,797,472		82.4	4,189,104		81.0
Total deposits	$	6,240,411	100.0%		$	5,826,971	100.0%	$	5,925,713	100.0%		$	5,824,056	100.0%	$	5,174,259	100.0	%

Total deposits increased $413 million, or 7.1%, to $6,240 million as of December 31, 2012, from $5,827 million as of December 31, 2011, with a shift in the mix of deposits away from higher-costing time deposits into lower-costing savings, interest bearing demand and non-interest bearing demand deposits. Total deposits decreased $99 million, or 1.7%, to $5,827 million as of December 31, 2011, from $5,926 million as of December 31, 2010. During 2011, the mix of deposits continued to shift from higher-costing time deposits to lower-costing interest bearing and non-interest bearing demand deposits.

Non-Interest Bearing Demand. Non-interest bearing demand deposits increased $224 million, or 17.6%, to $1,495 million as of December 31, 2012, from $1,272 million as of December 31, 2011, and increased $208 million, or 19.5%, to $1,272 million as of December 31, 2011 from $1,064 million as of December 31, 2010. Management attributes these increases to customer liquidity combined with the current low interest rates offered on alternative interest earning deposit products.

Interest Bearing Demand. Interest bearing demand deposits increased $505 million, or 38.7%, to $1,812 million as of December 31, 2012, from $1,307 million as of December 31, 2011. As a result of a regulatory change allowing businesses to receive interest on checking accounts, during first quarter 2012 we discontinued our savings sweep product, which resulted in a shift of approximately $300 million from savings deposits into interest bearing demand deposits during first quarter 2012. Non-interest bearing demand deposits increased $88 million, or 7.3%, to $1,307 million as of December 31, 2011, from $1,218 million as of December 31, 2010.

Savings Deposits. Savings deposits decreased $144 million, or 8.5%, to $1,548 million as of December 31, 2012, from $1,691 million as of December 31, 2011, primarily due to the discontinuation of our savings sweep product during first quarter 2012, as described above. Savings deposits decreased $27 million, or 1.6%, to $1,691 million as of December 31, 2011, from $1,719 million as of December 31, 2010.

Time deposits of $100,000 or more. Time deposits of $100,000 or more decreased $86 million, or 12.7%, to $595 million as of December 31, 2012, from $681 million as of December 31, 2011, and decreased $227 million, or 25.0%, to $681 million as of December 31, 2011, from $908 million as of December 31, 2010. These decreases occurred primarily in time deposits with maturities of less than 12 months. As of December 31, 2012 and 2011, we had no certificates of deposit issued in brokered transactions.

54

The following table presents the maturities of time deposits of $100,000 or more as of December 31, 2012.

Maturities of Time Deposits of $100,000 or More (Dollars in thousands)
Maturing in 3 months or less	$	143,666
Maturing in 3-6 months	103,135
Maturing in 6-12 months	190,796
Maturing in over 12 months	157,115
Total time deposits of $100,000 or more	$	594,712

Other time deposits. Other time deposits decreased $86 million, or 9.8%, to $791 million as of December 31, 2012, from $876 million as of December 31, 2011, and decreased $141 million, or 13.9%, to $876 million as of December 31, 2011, from $1,017 million as of December 31, 2010. We had Certificate of Deposit Account Registry Service, or CDARS, deposits of $72 million as of December 31, 2012, and $98 million as of December 31, 2011.

For additional information concerning customer deposits, including the use of repurchase agreements, see “Business—Community Banking—Deposit Products,” included in Part I, Item 1 and “Notes to Consolidated Financial Statements—Deposits,” included in Part IV, Item 15 of this report.

Securities Sold Under Repurchase Agreements

Under repurchase agreements with commercial and municipal depositors, customer deposit balances are invested in short-term U.S. government agency securities overnight and are then repurchased the following day. All outstanding repurchase agreements are due in one day. Repurchase agreement balances decreased $10 million, or 2.0%, to $506 million as of December 31, 2012, from $516 million as of December 31, 2011, and decreased $104 million, or 16.8%, to $516 million as of December 31, 2011, from $620 million as of December 31, 2010. Fluctuations in repurchase agreement balances correspond with fluctuations in the liquidity of our customers.

The following table sets forth certain information regarding securities sold under repurchase agreements as of the dates indicated:

Securities Sold Under Repurchase Agreements (Dollars in thousands)
As of and for the year ended December 31,	2012			2011			2010
Securities sold under repurchase agreements:
Balance at period end	$	505,785		$	516,243		$	620,154
Average balance	501,192			500,882			480,276
Maximum amount outstanding at any month-end	541,032			560,515			620,154
Average interest rate:
During the year	0.12		%	0.14		%	0.18		%
At period end	0.09			0.12			0.14

55

Other Borrowed Funds

Other borrowed funds increased $25 thousand, or 357.1%, to $32 thousand as of December 31 2012, from $7 thousand as of December 31, 2011, primarily due to fluctuation in the timing of tax deposit by customers and their subsequent withdrawal by the federal government. Other borrowed funds decreased $5 million or 99.9% to $7 thousand as of December 31, 2011, from $5 million as of December 31, 2010, primarily due to scheduled repayments and maturities of short-term borrowings from the FHLB. For additional information on other borrowed funds, see “Notes to Consolidated Financial Statements—Long-Term Debt and Other Borrowed Funds,” included in Part IV, Item 15 of this report.

Preferred Stock Pending Redemption

On December 18, 2012, we provided notice to preferred stockholders of our intent to redeem our perpetual preferred stock on January 18, 2013. Upon notice to holders of the redemption, the preferred stock was reclassified from stockholder's equity to a liability in accordance with generally accepted accounting principles. The preferred stock was redeemed on January 18, 2013 at an aggregate redemption price of $50 million, which represented par value of the preferred stock plus unpaid and accrued dividends to the redemption date.

Subordinated Debentures Held by Subsidiary Trusts

Subordinated debentures held by subsidiary trusts decreased $41 million, or 33.3%, to $82 million as of December 31, 2012, from $124 million as of December 31, 2011. During second quarter 2012, we redeemed $41 million of junior subordinated deferrable interest debentures, or subordinated debentures, maturing March 26, 2033, and bearing a cumulative floating interest rate equal to LIBOR plus 3.15% per annum. Redemption of the subordinated debentures caused a mandatory redemption of $40 million of floating rate mandatorily redeemable capital trust preferred securities, or trust preferred securities, and all common securities issued by First Interstate Statutory Trust I, a wholly-owned unconsolidated business trust sponsored by us. A loss of $428 thousand on the early extinguishment of the junior subordinated debentures,comprised solely of unamortized debt issuance costs, was included in other expense in the accompanying consolidated statement of income. Subordinated debentures held by subsidiary trusts were $124 million as of December 31, 2011 and 2010. For additional information regarding the Subordinated Debentures, see “Notes to Consolidated Financial Statements—Subordinated Debentures Held by Subsidiary Trusts,” included in Part IV, Item 15 of this report.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses increased $6 million, or 14.1%, to $48 million as of December 31, 2012, from $42 million as of December 31 2011, and increased $3 million, or 8.6% to $42 million as of December 31, 2011, from $39 million as of December 31, 2010. These increases are primarily due to the timing and amounts of corporate tax payments.

56

Contractual Obligations

Contractual obligations as of December 31, 2012 are summarized in the following table.

Contractual Obligations (Dollars in thousands)
	Payments Due
	Within One Year		One Year to Three Years		Three Years to Five Years		After Five Years		Total
Deposits without a stated maturity	$	4,854,927	$	—	$	—	$	—	$	4,854,927
Time deposits	999,439		255,273		130,769		3		1,385,484
Securities sold under repurchase agreements	505,785		—		—		—		505,785
Other borrowed funds (1)	32		—		—		—		32
Long-term debt obligations (2)	200		225		—		35,000		35,425
Preferred stock pending redemption	50,000		—		—		—		50,000
Capital lease obligations	44		109		136		1,446		1,735
Operating lease obligations	3,221		5,525		1,800		4,170		14,716
Purchase obligations (3)	197		—		—		—		197
Subordinated debentures held by subsidiary trusts (4)	—		—		—		82,477		82,477
Total contractual obligations	$	6,413,845	$	261,132	$	132,705	$	123,096	$	6,930,778

(1) Included in other borrowed funds are tax deposits made by customers pending subsequent withdrawal by the federal government. For additional information concerning other borrowed funds, see “Notes to Consolidated Financial Statements — Long Term Debt and Other Borrowed Funds” included in Part IV, Item 15.

(2) Long-term debt obligations consists of various notes payable to FHLB at various rates with maturities through October 31, 2015; a fixed rate subordinated term loan bearing interest of 6.81% and maturing January 9, 2018; and a variable rate subordinated term loan maturing February 28, 2018. For additional information concerning long-term debt, see “Notes to Consolidated Financial Statements — Long Term Debt and Other Borrowed Funds” included in Part IV, Item 15.

(3) Purchase obligations relate to obligations under construction contracts to build or renovate banking offices.

(4) The subordinated debentures are unsecured, with various interest rates and maturities from December 15, 2037 through April 1, 2038. Interest distributions are payable quarterly; however, we may defer interest payments at any time for a period not exceeding 20 consecutive quarters. For additional information concerning the subordinated debentures, see “Notes to Consolidated Financial Statements — Subordinated Debentures Held by Subsidiary Trusts” included in Part IV, Item 15.

We also have obligations under a postretirement healthcare benefit plan. These obligations represent actuarially determined future benefit payments to eligible plan participants. See “Notes to Consolidated Financial Statements — Employee Benefit Plans” included in Part IV, Item 15.

Off-Balance Sheet Arrangements

We have entered into various arrangements not reflected on the consolidated balance sheet that have or are reasonably likely to have a current or future effect on our financial condition, results of operations or liquidity. These include guarantees, commitments to extend credit and standby letters of credit.

We guarantee the distributions and payments for redemption or liquidation of capital trust preferred securities issued by our wholly-owned subsidiary business trusts to the extent of funds held by the trusts. Although the guarantees are not separately recorded, the obligations underlying the guarantees are fully reflected on our consolidated balance sheets as subordinated debentures held by subsidiary trusts. The subordinated debentures currently qualify as tier 1 capital under the Federal Reserve capital adequacy guidelines. For additional information regarding the subordinated debentures, see “Notes to Consolidated Financial Statements — Subordinated Debentures Held by Subsidiary Trusts” included in Part IV, Item 15.

57

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. For additional information regarding our off-balance sheet arrangements, see “Notes to Consolidated Financial Statements — Financial Instruments with Off-Balance Sheet Risk” included in Part IV, Item 15.

Capital Resources and Liquidity Management

Capital Resources

Stockholders’ equity is influenced primarily by earnings, dividends, sales and redemptions of common or preferred stock and changes in the unrealized holding gains or losses, net of taxes, on available-for-sale investment securities. Stockholders’ equity decreased $20 million, or 2.6%, to $751 million as of December 31, 2012, from $771 million as of December 31, 2011. On December 18, 2012, we provided notice to preferred stockholders of our intent to redeem $50 million of perpetual preferred stock. Upon notice to holders of the planned redemption, we reclassified the preferred stock from stockholder's equity to a liability. Exclusive of this reclassification, stockholders’ equity would have increased $30 million, or 3.9%, to $801 million as of December 31, 2012 from $771 million as of December 31, 2011, due primarily to the retention of earnings. We paid aggregate cash dividends of $26.2 million to common shareholders and $3.4 million to preferred shareholders during 2012.

Stockholders’ equity increased $34 million, or 4.6%, to $771 million as of December 31, 2011 from $737 million as of December 31, 2010, due primarily to the retention of earnings and increases in net unrealized gains on available-for-sale investment securities. We paid aggregate cash dividends of $19.2 million to common shareholders and $3.4 million to preferred shareholders during 2011.

On March 5, 2010, our shareholders approved proposals to recapitalize our existing common stock. The recapitalization included a redesignation of existing common stock as Class B common stock with five votes per share, convertible into Class A common stock on a share for share basis; a four-for-one stock split of the Class B common stock; an increase in the authorized number of Class B common shares from 20,000,000 to 100,000,000; and, the creation of a new class of common stock designated as Class A common stock, with one vote per share, with 100,000,000 shares authorized.

On March 29, 2010, we concluded an IPO of 10,000,000 shares of Class A common stock, and an additional 1,500,000 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase Class A common shares in the offering. We received net proceeds of $153 million from the sale of the shares, after deducting underwriting discounts, commissions and other offering expenses of $14 million

Pursuant to the FDICIA, the Federal Reserve and FDIC have adopted regulations setting forth a five-tier system for measuring the capital adequacy of the financial institutions they supervise. At December 31, 2012 and 2011, our Bank had capital levels that, in all cases, exceeded the well capitalized guidelines. For additional information concerning our capital levels, see “Notes to Consolidated Financial Statements—Regulatory Capital” contained in Part IV, Item 15 of this report.

Liquidity

Liquidity measures our ability to meet current and future cash flow needs on a timely basis and at a reasonable cost. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders. Our liquidity position is supported by management of liquid assets and liabilities and access to alternative sources of funds. Liquid assets include cash, interest bearing deposits in banks, federal funds sold, available-for-sale investment securities and maturing or prepaying balances in our held-to-maturity investment and loan portfolios. Liquid liabilities include core deposits, federal funds purchased, securities sold under repurchase agreements and borrowings. Other sources of liquidity include the sale of loans, the ability to acquire additional national market, non-core deposits, the issuance of additional collateralized borrowings such as FHLB advances, the issuance of debt securities, additional borrowings through the Federal Reserve’s discount window and the issuance of preferred or common securities. We do not engage in derivatives or hedging activities to support our liquidity position.

58

Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers, capital expenditures and shareholder dividends. These liquidity requirements are met primarily through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, debt financing and increases in customer deposits. For additional information regarding our operating, investing and financing cash flows, see “Consolidated Financial Statements—Consolidated Statements of Cash Flows,” included in Part IV, Item 15 of this report.

As a holding company, we are a corporation separate and apart from our subsidiary Bank and, therefore, we provide for our own liquidity. Our main sources of funding include management fees and dividends declared and paid by our subsidiaries and access to capital markets. There are statutory, regulatory and debt covenant limitations that affect the ability of our Bank to pay dividends to us. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations. For additional information regarding dividend restrictions, see “—Financial Condition—Capital Resources and Liquidity Management” above and “Business—Regulation and Supervision—Restrictions on Transfers of Funds to Us and the Bank” and “Risk Factors—Our Bank’s ability to pay dividends to us is subject to regulatory limitations, which, to the extent we are not able to receive such dividends, may impair our ability to grow, pay dividends, cover operating expenses and meet debt service requirements.”

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposure is interest rate risk. Our business and the composition of our balance sheet consists of investments in interest earning assets (principally loans and investment securities) which are primarily funded by interest bearing liabilities (deposits and indebtedness). Such financial instruments have varying levels of sensitivity to changes in market interest rates. Interest rate risk results when, due to different maturity dates and repricing intervals, interest rate indices for interest earning assets decrease relative to interest bearing liabilities, thereby creating a risk of decreased net earnings and cash flow.

Although we characterize some of our interest-sensitive assets as securities available-for-sale, such securities are not purchased with a view to sell in the near term. Rather, such securities may be sold in response to or in anticipation of changes in interest rates and resulting prepayment risk. See “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies” included in Part IV, Item 15 of this report.

Asset Liability Management

The goal of asset liability management is the prudent control of market risk, liquidity and capital. Asset liability management is governed by policies, goals and objectives adopted and reviewed by the Bank’s board of directors. Development of asset liability management strategies to is the responsibility of the Asset Liability Committee, or ALCO, which is composed of members of senior management.

Interest Rate Risk

Interest rate risk is the risk of loss of future earnings or long-term value due to changes in interest rates. Our primary source of earnings is the net interest margin, which is affected by changes in interest rates, the relationship between rates on interest bearing assets and liabilities, the impact of interest rate fluctuations on asset prepayments and the mix of interest bearing assets and liabilities.

The ability to optimize the net interest margin is largely dependent upon the achievement of an interest rate spread that can be managed during periods of fluctuating interest rates. Interest sensitivity is a measure of the extent to which net interest income will be affected by market interest rates over a period of time. Interest rate sensitivity is related to the difference between amounts of interest earning assets and interest bearing liabilities which either reprice or mature within a given period of time. The difference is known as interest rate sensitivity gap.

59

The following table shows interest rate sensitivity gaps and the earnings sensitivity ratio for different intervals as of December 31, 2012. The information presented in the table is based on our mix of interest earning assets and interest bearing liabilities and historical experience regarding their interest rate sensitivity.

Interest Rate Sensitivity Gaps (Dollars in thousands)
	Projected Maturity or Repricing
	Three Months or Less			Three Months to One Year			One Year to Five Years			After Five Years			Total
Interest earning assets:
Loans (1)	$	1,498,496		$	836,174		$	1,646,031		$	135,412		$	4,116,113
Investment securities (2)	225,531			607,151			888,563			482,236			2,203,481
Interest bearing deposits in banks	622,624			—			—			—			622,624
Federal funds sold	730			—			—			—			730
Total interest earning assets	$	2,347,381		$	1,443,325		$	2,534,594		$	617,648		$	6,942,948
Interest bearing liabilities:
Interest bearing demand accounts (3)	$	135,893		$	407,679		$	1,268,333		$	—		$	1,811,905
Savings deposits (3)	1,212,634			81,506			253,573			—			1,547,713
Time deposits, $100 or more	143,666			293,931			157,115			—			594,712
Other time deposits	222,444			339,400			228,926			2			790,772
Securities sold under repurchase agreements	505,785			—			—			—			505,785
Other borrowed funds	32			—			—			—			32
Preferred stock pending redemption	50,000			—			—			—			50,000
Long-term debt	15,011			233			470			21,446			37,160
Subordinated debentures held by subsidiary trusts	72,167			10,310			—			—			82,477
Total interest bearing liabilities	$	2,357,632		$	1,133,059		$	1,908,417		$	21,448		$	5,420,556
Rate gap	$	(10,251	)	$	310,266		$	626,177		$	596,200		$	1,522,392
Cumulative rate gap	(10,251		)	300,015			926,192			1,522,392
Cumulative rate gap as a percentage of total interest earning assets	-0.15		%	4.32		%	13.34		%	21.93		%	21.93		%

(1) Does not include non-accrual loans of $108 million. Variable rate loans are included in the three months or less category in the above table although certain of these loans have reached interest rate floors and may not immediately reprice.

(2) Adjusted to reflect: (a) expected shorter maturities based upon our historical experience of early prepayments of principal, and (b) the redemption of callable securities on their next call date.

(3) Includes savings deposits paying interest at market rates in the three month or less category. All other deposit categories, while technically subject to immediate withdrawal, actually display sensitivity characteristics that generally fall within one to five years. Their allocation is presented based on that historical analysis. If these deposits were included in the three month or less category, the above table would reflect a negative three month gap of $2.0 million, a negative cumulative one year gap of $1.2 million and a positive cumulative one to five year gap of $926 million.

Net Interest Income Sensitivity

We believe net interest income sensitivity provides the best perspective of how day-to-day decisions affect our interest rate risk profile. We monitor net interest margin sensitivity by utilizing an income simulation model to subject twelve month net interest income to various rate movements. Simulations modeled quarterly include scenarios where market rates change suddenly up or down in a parallel manner and scenarios where market rates gradually change up or down at nonparallel rates resulting in a change in the slope of the yield curve. Estimates produced by our income simulation model are based on numerous assumptions including, but not limited to, the nature and timing of changes in interest rates, prepayments of loans and investment securities, volume of loans originated, level and composition of deposits, ability of borrowers to repay adjustable or variable

60

rate loans and reinvestment opportunities for cash flows. Given these various assumptions, the actual effect of interest rate changes on our net interest margin may be materially different than estimated.

We target a mix of interest earning assets and interest bearing liabilities such that no more than 5% of the net interest margin will be at risk over a one-year period should short-term interest rates shift up or down 2%. As of December 31, 2012, our income simulation model predicted net interest income would increase $2.6 million, or 1.1%, assuming a 0.5% increase in short-term and long-term interest rates during each of the next four consecutive quarters. This scenario predicts that our interest earning assets reprice slightly faster than our funding costs. We have not engaged in derivatives or hedging activities to manage our interest rate risk.

We did not simulate a decrease in interest rates due to the extremely low rate environment as of December 31, 2012. Prime rate has historically been set at a rate of 300 basis points over the targeted federal funds rate, which is currently set between 0 and 25 basis points. Our income simulation model has an assumption that prime will continue to be set at a rate of 300 basis points over the targeted federal funds rate. Additionally, rates that are currently below 2% are modeled not to fall below 0% with an overall decrease of 2% in interest rates. Although we did not simulate a decrease in interest rates due to the extremely low rate environment as of December 31, 2012, a further decline in interest rates would result in an acceleration of the compression of our net interest margin.

The preceding interest rate sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results. In addition, if the actual prime rate falls below a 300 basis point spread to targeted federal funds rates, we could experience a continued decrease in net interest income as a result of falling yields on earning assets tied to prime rate.

Recent Accounting Pronouncements

The expected impact of accounting standards recently issued but not yet adopted are discussed in “Notes to Consolidated Financial Statements—Authoritative Accounting Guidance” included in Part IV, Item 15 of this report.

Item 8. Financial Statements and Supplementary Data

The following consolidated financial statements of First Interstate BancSystem, Inc. and subsidiaries are contained in Part IV, Item 15 of this report and are incorporated herein by reference.

Report of McGladrey LLP, Independent Registered Public Accounting Firm

Consolidated Balance Sheets — December 31, 2012 and 2011

Consolidated Statements of Income — Years Ended December 31, 2012, 2011 and 2010

Consolidated Statements of Comprehensive Income — Years Ended December 31, 2012, 2011 and 2010

Consolidated Statements of Stockholders’ Equity — Years Ended December 31, 2012, 2011 and 2010

Consolidated Statements of Cash Flows — Years Ended December 31, 2012, 2011 and 2010

Notes to Consolidated Financial Statements

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There have been no disagreements with accountants on accounting and financial disclosure.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As of December 31, 2012, our management evaluated, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of December 31, 2012, were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods required by the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

61

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our system of internal control over financial reporting within the meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of our published financial statements in accordance with U.S. generally accepted accounting principles. Our management, including the Chief Executive Officer and the Chief Financial Officer, assessed the effectiveness of our system of internal control over financial reporting as of December 31, 2012. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on our assessment, we believe that, as of December 31, 2012, our system of internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

McGladrey LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2012. The report, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2012, is included below.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

First Interstate BancSystem, Inc.

We have audited First Interstate BancSystem Inc. and subsidiaries' internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. First Interstate BancSystem, Inc. and subsidiaries' management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, First Interstate BancSystem, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

62

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of First Interstate BancSystem, Inc. and subsidiaries as of December 31, 2012 and 2011 and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2012 and our report dated February 28, 2013 expressed an unqualified opinion.

/s/ MCGLADREY LLP

Des Moines, Iowa

February 28, 2013

Item 9B. Other Information

There were no items required to be disclosed in a report on Form 8-K during the fourth quarter of 2012 that were not reported.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information concerning “Directors, Executive Officers and Corporate Governance” is set forth under the heading “Directors and Executive Officers” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference.

Information concerning “Compliance With Section 16(a) of the Securities Exchange Act of 1934” is set forth under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference.

Item 11. Executive Compensation

Information concerning “Executive Compensation” is set forth under the headings “Compensation of Executive Officers Compensation Discussion and Analysis” and “Compensation of Executive Officers and Directors” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information concerning “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” is set forth under the heading “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information concerning “Certain Relationships and Related Transactions and Director Independence” is set forth under the headings “Directors and Executive Officers” and “Certain Relationships and Related Transactions” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference. In addition, see “Notes to Consolidated Financial Statements — Related Party Transactions” included in Part IV, Item 15.

Item 14. Principal Accountant Fees and Services

Information concerning “Principal Accountant Fees and Services” is set forth under the heading “Directors and Executive Officers — Principal Accounting Fees and Services” in our Proxy Statement relating to our 2013 annual meeting of shareholders and is herein incorporated by reference.

63

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) 1. Our audited consolidated financial statements follow.

64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

First Interstate BancSystem, Inc.

We have audited the accompanying consolidated balance sheets of First Interstate BancSystem, Inc. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Interstate BancSystem, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),First Interstate BancSystem, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2013 expressed an unqualified opinion on the effectiveness of First Interstate BancSystem Inc. and subsidiaries' internal control over financial reporting.

/s/ MCGLADREY LLP

Des Moines, Iowa

February 28, 2013

65

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 31,	2012		2011
Assets
Cash and due from banks	$	177,978	$	142,502
Federal funds sold	730		309
Interest bearing deposits in banks	622,624		329,636
Total cash and cash equivalents	801,332		472,447
Investment securities:
Available-for-sale	1,995,258		2,016,864
Held-to-maturity (estimated fair values of $218,933 and $161,877 at December 31, 2012 and 2011, respectively)	208,223		152,781
Total investment securities	2,203,481		2,169,645
Loans held for investment	4,157,470		4,133,028
Mortgage loans held for sale	66,442		53,521
Total loans	4,223,912		4,186,549
Less allowance for loan losses	100,511		112,581
Net loans	4,123,401		4,073,968
Premises and equipment, net of accumulated depreciation	187,565		184,771
Goodwill	183,673		183,673
Company-owned life insurance	76,729		74,880
Other real estate owned (“OREO”)	32,571		37,452
Accrued interest receivable	28,869		31,974
Mortgage servicing rights, net of accumulated amortization and impairment reserve	12,653		11,555
Deferred tax asset, net	2,597		9,628
Core deposit intangibles, net of accumulated amortization	5,937		7,357
Other assets	62,953		68,177
Total assets	$	7,721,761	$	7,325,527
Liabilities and Stockholders’ Equity
Deposits:
Non-interest bearing	$	1,495,309	$	1,271,709
Interest bearing	4,745,102		4,555,262
Total deposits	6,240,411		5,826,971
Securities sold under repurchase agreements	505,785		516,243
Accounts payable and accrued expenses	48,208		42,248
Accrued interest payable	6,502		8,123
Long-term debt	37,160		37,200
Other borrowed funds	32		7
Preferred stock pending redemption	50,000		—
Subordinated debentures held by subsidiary trusts	82,477		123,715
Total liabilities	6,970,575		6,554,507
Stockholders’ equity:
Nonvoting noncumulative preferred stock without par value; authorized 100,000 shares; issued and outstanding 5,000 shares as of December 31, 2012 and 2011	—		50,000
Common stock	271,335		266,842
Retained earnings	463,860		435,144
Accumulated other comprehensive income, net	15,991		19,034
Total stockholders’ equity	751,186		771,020
Total liabilities and stockholders’ equity	$	7,721,761	$	7,325,527

See accompanying notes to consolidated financial statements.

66

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
Year Ended December 31,	2012			2011		2010
Interest income:
Interest and fees on loans	$	230,882		$	245,767	$	266,472
Interest and dividends on investment securities:
Taxable	36,847			41,304		42,338
Exempt from federal taxes	4,923			4,749		4,621
Interest on deposits in banks	1,235			1,050		1,093
Interest on federal funds sold	13			13		22
Total interest income	273,900			292,883		314,546
Interest expense:
Interest on deposits	22,306			33,533		53,949
Interest on securities sold under repurchase agreements	579			695		879
Interest on other borrowed funds	—			—		3
Interest on long-term debt	1,981			1,975		2,433
Interest in preferred stock pending redemption	131			—		—
Interest on subordinated debentures held by subsidiary trusts	5,117			5,828		5,843
Total interest expense	30,114			42,031		63,107
Net interest income	243,786			250,852		251,439
Provision for loan losses	40,750			58,151		66,900
Net interest income after provision for loan losses	203,036			192,701		184,539
Non-interest income:
Income from the origination and sale of loans	41,790			21,153		22,868
Other service charges, commissions and fees	34,226			31,689		29,494
Service charges on deposit accounts	17,412			17,647		18,181
Wealth management revenues	14,314			13,575		12,387
Investment securities gains, net	348			1,544		170
Other income	6,771			6,264		7,811
Total non-interest income	114,861			91,872		90,911
Non-interest expense:
Salaries and wages	89,833			83,560		83,373
Employee benefits	29,345			27,792		29,294
Occupancy, net	15,786			16,223		16,251
Furniture and equipment	12,859			12,562		13,434
OREO expense, net of income	9,400			8,652		7,670
Outsourced technology services	8,826			8,933		9,477
FDIC insurance premiums	6,470			7,333		10,044
Professional fees	4,044			3,676		3,245
Mortgage servicing rights amortization	3,501			3,225		4,615
Mortgage servicing rights impairment (recovery)	(771		)	1,275		(787		)
Core deposit intangibles amortization	1,420			1,446		1,748
Other expenses	48,922			43,735		42,640
Total non-interest expense	229,635			218,412		221,004
Income before income tax expense	88,262			66,161		54,446
Income tax expense	30,038			21,615		17,090
Net income	58,224			44,546		37,356
Preferred stock dividends	3,300			3,422		3,422
Net income available to common shareholders	$	54,924		$	41,124	$	33,934
Basic earnings per common share	$	1.28		$	0.96	$	0.85
Diluted earnings per common share	1.27			0.96		0.85

See accompanying notes to consolidated financial statements.

67

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
Year ended December 31,	2012			2011			2010
Net income	$	58,224		$	44,546		$	37,356
Other comprehensive income (loss) before tax:
Investment securities available-for-sale:
Change in net unrealized gains (losses) during the period	(4,648		)	17,168			(8,438		)
Reclassification adjustment for net gains included in income	(348		)	(1,544		)	(170		)
Unamortized premium on available-for-sale securities transferred into held-to-maturity	56			389			722
Defined benefit post-retirement benefit plans:
Change in the net actuarial loss	(77		)	135			(940		)
Other comprehensive income (loss), before tax	(5,017		)	16,148			(8,826		)
Deferred tax benefit (expense) related to other comprehensive income	1,974			(6,489		)	3,126
Other comprehensive income (loss), net of tax	(3,043		)	9,659			(5,700		)
Comprehensive income	$	55,181		$	54,205		$	31,656

See accompanying notes to consolidated financial statements.

68

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share and per share data)
	Preferred Stock		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2009	$	50,000	$	112,135		$	397,224		$	15,075		$	574,434
Comprehensive income:
Net income	—		—			37,356			—			37,356
Other comprehensive loss, net of tax	—		—			—			(5,700		)	(5,700		)
Common stock transactions:
246,596 common shares purchased and retired	—		(3,699		)	—			—			(3,699		)
11,506,503 common shares issued	—		153,257			—			—			153,257
117,140 non-vested common shares issued	—		—			—			—			—
18,821 non-vested common shares forfeited or canceled	—		—			—			—			—
Non-vested liability awards vesting during period	—		59			—			—			59
92,880 stock options exercised, net of 111,792 shares tendered in payment of option price and income tax withholding amounts	—		649			—			—			649
Tax benefit of stock-based compensation	—		239			—			—			239
Stock-based compensation expense	—		1,534			—			—			1,534
Cash dividends declared:
Common ($0.45 per share)	—		—			(17,905		)	—			(17,905		)
Preferred (6.75% per share)	—		—			(3,422		)	—			(3,422		)
Balance at December 31, 2010	50,000		264,174			413,253			9,375			736,802
Comprehensive income:
Net income	—		—			44,546			—			44,546
Other comprehensive income, net of tax	—		—			—			9,659			9,659
Common stock transactions:
17,926 common shares purchased and retired	—		(248		)	—			—			(248		)
15,440 common shares issued	—		205			—			—			205
130,904 non-vested common shares issued	—		—			—			—			—
27,963 non-vested common shares forfeited or canceled	—		—			—			—			—
83,025 stock options exercised, net of 174,583 shares tendered in payment of option price and income tax withholding amounts	—		216			—			—			216
Tax benefit of stock-based compensation	—		385			—			—			385
Non-vested liability awards vesting during period	—		204			—			—			204
Stock-based compensation expense	—		1,906			—			—			1,906
Cash dividends declared:
Common ($0.45 per share)	—		—			(19,233		)	—			(19,233		)
Preferred (6.75% per share)	—		—			(3,422		)	—			(3,422		)
Balance at December 31, 2011	$	50,000	$	266,842		$	435,144		$	19,034		$	771,020

69

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED) (In thousands, except share and per share data)
	Preferred Stock			Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2011	$	50,000		$	266,842		$	435,144		$	19,034		$	771,020
Comprehensive income:
Net income	—			—			58,224			—			58,224
Other comprehensive loss, net of tax	—			—			—			(3,043		)	(3,043		)
Common stock transactions:
18,351 common shares purchased and retired	—			(263		)	—			—			(263		)
23,991 common shares issued	—			299			—			—			299
122,912 non-vested common shares issued	—			—			—			—			—
15,232 non-vested common shares forfeited or canceled	—			—			—			—			—
192,829 stock options exercised, net of 183,805 shares tendered in payment of option price and income tax withholding amounts	—			1,612			—			—			1,612
Tax benefit of stock-based compensation	—			360			—			—			360
Stock-based compensation expense	—			2,485			—			—			2,485
Preferred stock transactions:
5,000 preferred shares called for redemption	(50,000		)	—						—			(50,000		)
Cash dividends declared:
Common ($0.61 per share)	—			—			(26,208		)	—			(26,208		)
Preferred (6.75% per share)	—			—			(3,300		)	—			(3,300		)
Balance at December 31, 2012	$	—		$	271,335		$	463,860		$	15,991		$	751,186

See accompanying notes to consolidated financial statements.

70

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Year Ended December 31,	2012			2011			2010
Cash flows from operating activities:
Net income	$	58,224		$	44,546		$	37,356
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Provision for loan losses	40,750			58,151			66,900
Net loss (gain) on disposal of property and equipment	(424		)	28			672
Depreciation and amortization	17,112			17,368			20,136
Net premium amortization on investment securities	11,700			10,353			6,762
Net gain on investment securities transactions	(348		)	(1,544		)	(170		)
Net gain on sales of mortgage loans held for sale	(29,606		)	(14,443		)	(15,321		)
Net gain on sales of student loan portfolio	—			—			(374		)
Net (gain) loss on sale of mortgage servicing rights	(19		)	—			1,525
Net gain on sale of OREO	(1,041		)	(552		)	(708		)
Write-down of OREO	6,724			7,464			6,724
Loss on early extinguishment of debt	428			—			306
Mortgage servicing rights impairment (recovery)	(771		)	1,275			(787		)
Deferred income tax expense (benefit)	8,762			2,405			(17,257		)
Net increase in cash surrender value of company-owned life insurance policies	(1,849		)	(1,824		)	(1,682		)
Stock-based compensation expense	2,485			2,111			1,764
Tax benefits from stock-based compensation	360			204			239
Excess tax benefits from stock-based compensation	(273		)	(124		)	(225		)
Originations of loans held for sale, net	12,122			4,466			1,121
Changes in operating assets and liabilities:
Decrease in accrued interest receivable	3,105			1,654			3,495
Decrease in other assets	4,089			13,039			8,158
Decrease in accrued interest payable	(1,621		)	(5,055		)	(4,407		)
Increase (decrease) in accounts payable and accrued expenses	5,913			3,579			(4,969		)
Net cash provided by operating activities	135,822			143,101			109,258
Cash flows from investing activities:
Purchases of investment securities:
Held-to-maturity	(68,305		)	(18,846		)	(33,118		)
Available-for-sale	(1,246,068		)	(1,166,364		)	(1,317,938		)
Proceeds from maturities, paydowns and calls of investment securities:
Held-to-maturity	12,192			12,682			15,134
Available-for-sale	1,252,266			943,490			833,910
Proceeds from sales of mortgage servicing rights	907			596			2,480
Extensions of credit to customers, net of repayments	(128,919		)	90,548			71,762
Proceeds from sale of student loan portfolio	—			—			25,032
Recoveries of loans charged-off	8,116			5,231			2,889
Proceeds from sales of OREO	42,814			15,896			20,336
Capital contribution to equity method investment	(900		)	—			—
Capital distribution from unconsolidated subsidiary	1,238			—			—
Capital expenditures, net of proceeds from sales	(14,420		)	(9,172		)	(7,998		)
Net cash used in investing activities	$	(141,079	)	$	(125,939	)	$	(387,511	)

71

INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands)
Year Ended December 31,	2012			2011			2010
Cash flows from financing activities:
Net increase (decrease) in deposits	$	413,440		$	(98,742	)	$	101,657
Net increase (decrease) in repurchase agreements	(10,458		)	(103,911		)	146,013
Net increase (decrease) in short-term borrowings	25			(4,984		)	(432		)
Repayments of long-term debt	(40		)	(302		)	(35,851		)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238		)	—			—
Proceeds from issuance of common stock	1,911			385			167,400
Common stock issuance costs	—			—			(13,597		)
Excess tax benefits from stock-based compensation	273			124			225
Purchase and retirement of common stock	(263		)	(248		)	(3,699		)
Dividends paid to common stockholders	(26,208		)	(19,233		)	(17,905		)
Dividends paid to preferred stockholders	(3,300		)	(3,422		)	(3,422		)
Net cash provided by (used in) financing activities	334,142			(230,333		)	340,389
Net increase (decrease) in cash and cash equivalents	328,885			(213,171		)	62,136
Cash and cash equivalents at beginning of year	472,447			685,618			623,482
Cash and cash equivalents at end of year	$	801,332		$	472,447		$	685,618
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes	$	17,540		$	16,640		$	37,325
Cash paid during the year for interest expense	31,735			47,086			67,514

See accompanying notes to consolidated financial statements.

72

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business. First Interstate BancSystem, Inc. (the “Parent Company” and collectively with its subsidiaries, the “Company”) is a financial and bank holding company that, through the branch offices of its bank subsidiary, provides a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout Montana, Wyoming and western South Dakota. In addition to its primary emphasis on commercial and consumer banking services, the Company also offers trust, employee benefit and investment and insurance services through its bank subsidiary. The Company is subject to competition from other financial institutions and nonbank financial companies, and is also subject to the regulations of various government agencies and undergoes periodic examinations by those regulatory authorities.

Basis of Presentation. The Company’s consolidated financial statements include the accounts of the Parent Company and its operating subsidiaries. As of December 31, 2012, the Company had one significant subsidiary, First Interstate Bank (“FIB”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, none of which were material, have been made in the consolidated financial statements for 2011 and 2010 to conform to the 2012 presentation. These reclassifications did not change previously reported net income or stockholders’ equity.

On March 5, 2010, the Company’s shareholders approved proposals to recapitalize the Company’s existing common stock. The recapitalization included, among other things, a redesignation of existing common stock as Class B common stock; a four-for-one stock split of the Class B common stock; and, the creation of a new class of common stock designated as Class A common stock. All share and per share information included in the accompanying consolidated financial statements, including the notes thereto, has been adjusted to give effect to the recapitalization of the common stock, including the four-for-one stock split of Class B common stock, as if the recapitalization had occurred on January 1, 2010, the earliest date presented. For additional information regarding the recapitalization, see Note 12—Capital Stock and Dividend Restrictions.

Equity Method Investments. The Company has an investment in a real estate joint venture that is not consolidated because the Company does not own a majority voting interest, control the operations or receive a majority of the losses or earnings of the joint venture. This joint venture is accounted for using the equity method of accounting whereby the Company initially records its investment at cost and then subsequently adjusts the cost for the Company’s proportionate share of distributions and earnings or losses of the joint venture.

Variable Interest Entities. The Company’s wholly-owned business trusts, First Interstate Statutory Trust (“FIST”), FI Statutory Trust I (“Trust I”), FI Capital Trust II (“Trust II”), FI Statutory Trust III (“Trust III”), FI Capital Trust IV (“Trust IV”), FI Statutory Trust V (“Trust V”) and FI Statutory Trust VI (“Trust VI”) are variable interest entities for which the Company is not a primary beneficiary. Accordingly, the accounts of FIST, Trust I, Trust II, Trust III, Trust IV, Trust V and Trust VI are not included in the accompanying consolidated financial statements, and are instead accounted for using the equity method of accounting.

Assets Held in Fiduciary or Agency Capacity. The Company holds certain trust assets in a fiduciary or agency capacity. The Company also purchases and sells federal funds as an agent. These and other assets held in an agency or fiduciary capacity are not assets of the Company and, accordingly, are not included in the accompanying consolidated financial statements.

Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses and the valuation of goodwill and other real estate owned.

73

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold for one day periods and interest bearing deposits in banks with original maturities of less than three months. As of December 31, 2012 and 2011, the Company had cash of $622,152 and $329,390, respectively, on deposit with the Federal Reserve Bank. In addition, the Company maintained compensating balances with the Federal Reserve Bank of approximately $1,057 and $5,000 as of December 31, 2012 and 2011 to reduce service charges for check clearing services.

Investment Securities. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt securities that may be sold in response to or in anticipation of changes in interest rates and resulting prepayment risk, or other factors, and marketable equity securities are classified as available-for-sale and carried at fair value. The unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of stockholders’ equity and comprehensive income. Management determines the appropriate classification of securities at the time of purchase and at each reporting date management reassesses the appropriateness of the classification.

The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for accretion of discounts to maturity and amortization of premiums over the estimated average life of the security, or in the case of callable securities, through the first call date, using the effective yield method. Such amortization and accretion is included in interest income. Realized gains and losses are included in investment securities gains (losses). Declines in the fair value of securities below their cost that are judged to be other-than-temporary are included in other expenses if the decline is related to credit losses. Other-than-temporary impairment losses related to other factors are recognized in other comprehensive income, net of income taxes. In estimating other-than-temporary impairment losses, the Company considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific identification method.

The Company invests in securities on behalf of certain officers and directors of the Company who have elected to participate in the Company’s deferred compensation plans. These securities are included in other assets and are carried at their fair value based on quoted market prices. Net realized and unrealized holding gains and losses are included in other non-interest income and employee benefits expense.

Loans. Loans are reported at the principal amount outstanding. Interest income on loans is calculated using the simple interest method on the daily balance of the principal amount outstanding. Loan origination fees and certain direct origination costs are deferred, and the net amount is amortized as an adjustment of the related loan’s yield using a level yield method over the expected lives of the related loans.

The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due or when a loan becomes contractually past due ninety days or more with respect to interest or principal, unless such past due loan is well secured and in the process of collection. When interest accrual is discontinued, all unpaid accrued interest is reversed against current period interest income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and when, in the opinion of management, the loans are estimated to be fully collectible as to both principal and interest.

A loan is considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect, on a timely basis, all amounts due according to the contractual terms of the loan’s original agreement. The amount of the impairment is measured using cash flows discounted at the loan’s effective interest rate, except when it is determined that the primary source of repayment for the loan is the operation or liquidation of the underlying collateral. In such cases, the current fair value of the collateral, reduced by anticipated selling costs, is used to measure impairment. The Company considers impaired loans to include all loans risk rated doubtful and non-consumer loans on which interest accrual has been discontinued or have been renegotiated in a troubled debt restructuring. Interest payments received on impaired loans are applied based on whether they are on accrual or non-accrual status. Interest income recognized by the Company on impaired loans primarily relate to loans modified in a troubled debt restructuring that remain on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due.

74

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

A loan is considered a troubled debt restructuring when a borrower is experiencing financial difficulties that leads to a restructuring of the loan and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions to minimize potential losses. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status only after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a reasonable period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will no longer be disclosed as a troubled debt restructuring.

Included in loans are certain residential mortgage loans originated for sale. These loans are carried at the lower of aggregate cost or estimated market value. Market value is estimated based on binding contracts or quotes or bids from third party investors. Residential mortgages held for sale were $66,442 and $53,521 as of December 31, 2012 and 2011, respectively. Gains and losses on sales of mortgage loans are determined using the specific identification method and are included in income from the origination and sale of loans.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses which is charged to expense. Loans, or portions thereof, are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely or, with respect to consumer installment and credit card loans, according to established delinquency schedules. The allowance balance is an amount that management believes will be adequate to absorb known and inherent losses in the loan portfolio based upon quarterly analyses of the current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, industry concentrations and current economic factors and the estimated impact of current economic and environmental conditions on historical loss rates.

Goodwill. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a two-step quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company's market value, discounted cash flows and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.

Core Deposit Intangibles. Core deposit intangibles represent the intangible value of depositor relationships resulting from deposit liabilities assumed and are amortized using an accelerated method based on the estimated weighted average useful lives of the related deposits of 9.5 years. Accumulated core deposit intangibles amortization was $20,983 as of December 31, 2012 and $19,563 as of December 31, 2011. Amortization expense related to core deposit intangibles recorded as of December 31, 2012 is expected to total $1,417, $1,417, $1,417, $1,380 and $306 in 2013, 2014, 2015, 2016 and 2017, respectively.

Mortgage Servicing Rights. The Company recognizes the rights to service mortgage loans for others, whether acquired or internally originated. Mortgage servicing rights are initially recorded at fair value based on comparable market data and are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights are evaluated quarterly for impairment by discounting the expected future cash flows, taking into consideration the estimated level of prepayments based on current industry expectations and the predominant risk characteristics of the underlying loans including loan type, note rate and loan term. Impairment adjustments, if any, are recorded through a valuation allowance.

75

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Premises and Equipment. Buildings, furniture and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using straight-line methods over estimated useful lives of 5 to 45 years for buildings and improvements and 4 to 15 years for furniture and equipment. Leasehold improvements and assets acquired under capital lease are amortized over the shorter of their estimated useful lives or the terms of the related leases. Land is recorded at cost.

Company-Owned Life Insurance. Key executive life insurance policies are recorded at their cash surrender value. Group life insurance policies are subject to a stable value contract that offsets the impact of interest rate fluctuations on the market value of the policies. Group life insurance policies are recorded at the stabilized investment value. Increases in the cash surrender or stabilized investment value of insurance policies, as well as insurance proceeds received, are recorded as other non-interest income, and are not subject to income taxes.

Impairment of Long-Lived Assets. Long-lived assets, including premises and equipment and certain identifiable intangibles, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The amount of the impairment loss, if any, is based on the asset’s fair value. Impairment losses of $70 were recognized in other non-interest expense in 2012. No impairment losses were recognized during 2011 or 2010.

Other Real Estate Owned. Real estate acquired in satisfaction of loans is initially carried at current fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate acquired is recorded as a charge to the allowance for loan losses. Subsequent declines in fair value less estimated selling costs are included in OREO expense. Subsequent increases in fair value less estimated selling costs are recorded as a reduction in OREO expense to the extent of recognized losses. Operating expenses, net of related income, and gains or losses on sales are included in OREO expense. Write-downs of $6,724, $7,464 and $6,724 were recorded in 2012, 2011 and 2010 respectively.

Restricted Equity Securities. The Company, as a member of the Federal Reserve Bank and the Federal Home Loan Bank (“FHLB”), is required to maintain investments in each of the organization’s capital stock. As of December 31, 2012, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank of $13,357 and $6,687, respectively, were included in other assets at cost. As of December 31, 2011, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank were $13,357 and $6,807, respectively. No ready market exists for these restricted equity securities, and they have no quoted market values. Restricted equity securities are periodically reviewed for impairment based on ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery of par value is influenced by the significance of the decline compared to the cost basis of the restricted equity securities, the length of time a decline has persisted, the impact of legislative and regulatory changes on the issuing organizations and the liquidity positions of the issuing organizations. Based on management’s assessment, no impairment losses were recorded on restricted equity securities during 2012, 2011 or 2010.

Income from Fiduciary Activities. Consistent with industry practice, income for trust services is recognized on the basis of cash received. However, use of this method in lieu of accrual basis accounting does not materially affect reported earnings.

Income Taxes. The Parent Company and its subsidiaries have elected to be included in a consolidated federal income tax return. For state income tax purposes, the combined taxable income of the Parent Company and its subsidiaries is apportioned among the states in which operations take place. Federal and state income taxes attributable to the subsidiaries, computed on a separate return basis, are paid to or received from the Parent Company.

The Company accounts for income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are determined based on enacted income tax rates which will be in effect when the differences between the financial statement carrying values and tax bases of existing assets and liabilities are expected to be reported in taxable income.

76

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination. Uncertain tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing. Penalties are recognized in the period that the Company claims the position in the tax return. Interest and penalties on income tax uncertainties are classified within income tax expense in the income statement. With few exceptions, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009. The Company had no accrued interest or penalties as of December 31, 2012 or 2011.

Earnings Per Common Share. Basic and diluted earnings per common share are calculated using a two-class method. Under the two-class method, basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Diluted earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding determined for the basic earnings per share calculation plus the dilutive effect of stock compensation using the treasury stock method.

Comprehensive Income. Comprehensive income includes net income, as well as other changes in stockholders’ equity that result from transactions and economic events other than those with shareholders. In addition to net income, the Company’s comprehensive income includes the after tax effect of changes in unrealized gains and losses on available-for-sale investment securities and changes in net actuarial gains and losses on defined benefit post-retirement benefits plans.

Segment Reporting. An operating segment is defined as a component of a business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and evaluate performance. The Company has one operating segment, community banking, which encompasses commercial and consumer banking services offered to individuals, businesses, municipalities and other entities.

Advertising Costs. Advertising costs are expensed as incurred. Advertising expense was $3,555, $3,048, and $3,200 in 2012, 2011 and 2010, respectively.

Transfers of Financial Assets. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company; the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets; and, the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Stock-Based Compensation. Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the requisite service period for awards expected to vest. Stock-based compensation expense of $2,485, $1,906 and $1,660 for the years ended December 31, 2012, 2011 and 2010, respectively, is included in benefits expense in the Company’s consolidated statements of income. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $950, $728 and $635, respectively. All compensation cost for stock-based awards is expensed at the Parent Company.

Fair Value Measurements. In general, fair value measurements are based upon quoted market prices, where available. If quoted market prices are not available, fair value measurements are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and require some degree of judgment regarding interest rates, credit risk, prepayments and other factors. The use of different assumptions or estimation techniques may have a significant effect on the fair value amounts reported.

77

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(2) INVESTMENT SECURITIES

The amortized cost and approximate fair values of investment securities are summarized as follows:

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	751,501	$	3,518	$	(163	)	$	754,856
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	1,214,377		27,000		(1,526		)	1,239,851
Private mortgage-backed securities	539		13		(1		)	551
Total	$	1,966,417	$	30,531	$	(1,690	)	$	1,995,258

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	192,875	$	10,835	$	(176	)	$	203,534
Corporate securities	14,975		64		(13		)	15,026
Other securities	373		—		—			373
Total	$	208,223	$	10,899	$	(189	)	$	218,933

Gross gains of $351 and gross losses of $3 were realized on the disposition of available-for-sale securities in 2012.

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	1,134,427	$	4,353	$	(662	)	$	1,138,118
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	848,444		29,567		(14		)	877,997
Private mortgage-backed securities	758		7		(16		)	749
Total	$	1,983,629	$	33,927	$	(692	)	$	2,016,864

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	152,619	$	9,113	$	(17	)	$	161,715
Other securities	162		—		—			162
Total	$	152,781	$	9,113	$	(17	)	$	161,877

Gross gains of $1,544 were realized on the disposition of available-for-sale securities in 2011. No gross losses were realized on the disposition of available-for-sale securities in 2011. Gross gains of $173 and gross losses of $3 were realized on the disposition of available-for-sale securities in 2010.

As of December 31, 2012, the Company had general obligation securities with amortized costs of $139,434 included in state, county and municipal securities, of which $67,171 were issued by political subdivisions or agencies within the states of Montana, Wyoming and South Dakota.

78

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The following table shows the gross unrealized losses and fair values of investment securities, aggregated by investment category, and the length of time individual investment securities have been in a continuous unrealized loss position, as of December 31, 2012 and 2011.

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	93,982	$	(163	)	$	—	$	—		$	93,982	$	(163	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	250,198		(1,526		)	—		—			250,198		(1,526		)
Private mortgage-backed securities	—		—			137		(1		)	137		(1		)
Total	$	344,180	$	(1,689	)	$	137	$	(1	)	$	344,317	$	(1,690	)

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	19,389	$	(168	)	$	557	$	(8	)	$	19,946	$	(176	)
Corporate securities	9,312		(13		)	—		—			9,312		(13		)
Total	$	28,701	(181		)	557		(8		)	29,258		(189		)

	Less than 12 Months					12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	287,404	$	(662	)	$	—	$	—		$	287,404	$	(662	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	45,694		(14		)	—		—			45,694		(14		)
Private mortgage-backed securities	246		(10		)	177		(6		)	423		(16		)
Total	$	333,344	$	(686	)	$	177	$	(6	)	$	333,521	$	(692	)

	Less than 12 Months				12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	—	$	—	$	773	$	(17	)	$	773	$	(17	)

The investment portfolio is evaluated quarterly for other-than-temporary declines in the market value of each individual investment security. Consideration is given to the length of time and the extent to which the fair value has been less than cost; the financial condition and near term prospects of the issuer; and, the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of December 31, 2012, the Company had 69 individual investment securities that were in an unrealized loss position. As of December 31, 2011, the Company had 24 individual investment securities that were in an unrealized loss position. Unrealized losses as of December 31, 2012 and 2011 related primarily to fluctuations in the current interest rates. The fair value of these investment securities is expected to recover as the securities approach their maturity or repricing date or if market yields for such investments decline. As of December 31, 2012, the Company had the intent and ability to hold these investment securities for a period of time sufficient to allow for an anticipated recovery. Furthermore,

79

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

the Company does not have the intent to sell any of the available-for-sale securities in the above table and it is more likely than not that the Company will not have to sell any such securities before a recovery in cost. No impairment losses were recorded during 2012, 2011 or 2010.

Maturities of investment securities at December 31, 2012 are shown below. Maturities of mortgage-backed securities have been adjusted to reflect shorter maturities based upon estimated prepayments of principal. All other investment securities maturities are shown at contractual maturity dates.

	Available-for-Sale				Held-to-Maturity
December 31, 2012	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	438,770	$	445,319	$	4,657	$	4,657
After one year but within five years	1,042,696		1,056,854		47,437		48,293
After five years but within ten years	351,310		356,641		86,416		90,954
After ten years	133,641		136,444		69,340		74,656
Total	1,966,417		1,995,258		207,850		218,560
Investments with no stated maturity	—		—		373		373
Total	$	1,966,417	$	1,995,258	$	208,223	$	218,933

At December 31, 2012, the Company had investment securities callable within one year with amortized costs and estimated fair values of $370,546 and $371,280, respectively. These investment securities are primarily classified as available-for-sale and included in the after one year but within five years category in the table above.

At December 31, 2012, the Company had callable structured notes with amortized costs and estimated fair values of $148,428 and $148,778, respectively. These callable structured notes, which are classified as available-for-sale and included in the after one year but within five years category in the table above, have fixed interest rates that increase at various intervals as market rates increase.

Maturities of securities do not reflect rate repricing opportunities present in adjustable rate mortgage-backed securities. At December 31, 2012 and 2011, the Company had variable rate mortgage-backed securities with amortized costs of $29,105 and $21,333, respectively, classified as available-for-sale in the table above.

There are no significant concentrations of investments at December 31, 2012, (greater than 10 percent of stockholders’ equity) in any individual security issuer, except for U.S. government or agency-backed securities. As of December 31, 2012 and 2011, all mortgage-backed securities were residential in nature.

Investment securities with amortized cost of $1,318,807 and $1,280,317 at December 31, 2012 and 2011, respectively, were pledged to secure public deposits and securities sold under repurchase agreements. The approximate fair value of securities pledged at December 31, 2012 and 2011 was $1,344,220 and $1,310,895, respectively. All securities sold under repurchase agreements are with customers and mature on the next banking day. The Company retains possession of the underlying securities sold under repurchase agreements.

80

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(3) LOANS

The following table presents loans by class as of the dates indicated:

December 31,	2012		2011
Real estate loans:
Commercial	$	1,497,272	$	1,553,155
Construction:
Land acquisition & development	220,196		278,613
Residential	49,274		61,106
Commercial	65,059		61,054
Total construction loans	334,529		400,773
Residential	708,339		571,943
Agricultural	177,244		175,302
Total real estate loans	2,717,384		2,701,173
Consumer:
Indirect consumer	438,245		407,651
Other consumer	137,743		147,487
Credit card	60,806		60,933
Total consumer loans	636,794		616,071
Commercial	688,753		693,261
Agricultural	113,627		119,710
Other, including overdrafts	912		2,813
Loans held for investment	4,157,470		4,133,028
Mortgage loans held for sale	66,442		53,521
Total loans	$	4,223,912	$	4,186,549

The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and internally risk-classified loans.

Real estate loans include construction and permanent financing for both single-family and multi-unit properties, term loans for commercial, agricultural and industrial property and/or buildings and home equity loans and lines of credit secured by real estate. Longer-term residential real estate loans are generally sold in the secondary market. Those residential real estate loans not sold are typically secured by first liens on the financed property and generally mature in less than fifteen years. Home equity loans and lines of credit are typically secured by first or second liens on residential real estate and generally do not exceed a loan to value ratio of 80%. The Company had home equity loans and lines of credit of $273,739 and $312,295 as of December 31, 2012 and 2011, respectively. Commercial and agricultural real estate loans are generally secured by first liens on income-producing real estate and generally mature in less than 5 years.

Construction loans are primarily to commercial builders for residential lot development and the construction of single-family residences and commercial real estate properties. Construction loans are generally underwritten pursuant to pre-approved permanent financing. During the construction phase the borrower pays interest only.

Consumer loans include direct personal loans, credit card loans and lines of credit; and indirect dealer loans for the purchase of automobiles, recreational vehicles, boats and other consumer goods. Personal loans and indirect dealer loans are generally secured by automobiles, boats and other types of personal property and are made on an installment basis. Credit cards are offered to individuals in our market areas. Lines of credit are generally floating rate loans that are unsecured or secured by personal property.

81

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Commercial loans include a mix of variable and fixed rate loans made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansions. Commercial loans generally include lines of credit, business credit cards and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but also include collateralization by inventory, accounts receivable, equipment and/or personal guarantees.

Agricultural loans generally consist of short and medium-term loans and lines of credit that are primarily used for crops, livestock, equipment and general operations. Agricultural loans are ordinarily secured by assets such as livestock or equipment and are repaid from the operations of the farm or ranch. Agricultural loans generally have maturities of five years or less, with operating lines for one production season.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables present the contractual aging of the Company’s recorded investment in past due loans by class as of the period indicated:

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2012	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,449	$	3,163	$	2	$	8,614	$	1,438,142	$	50,516	$	1,497,272
Construction:
Land acquisition & development	3,371		2,121		318		5,810		195,077		19,309		220,196
Residential	283		—		—		283		46,816		2,175		49,274
Commercial	—		—		—		—		56,933		8,126		65,059
Total construction loans	3,654		2,121		318		6,093		298,826		29,610		334,529
Residential	3,896		969		1,085		5,950		691,963		10,426		708,339
Agricultural	1,187		—		218		1,405		171,009		4,830		177,244
Total real estate loans	14,186		6,253		1,623		22,062		2,599,940		95,382		2,717,384
Consumer:
Indirect consumer	3,218		512		32		3,762		434,200		283		438,245
Other consumer	1,044		104		31		1,179		135,574		990		137,743
Credit card	409		278		392		1,079		59,704		23		60,806
Total consumer loans	4,671		894		455		6,020		629,478		1,296		636,794
Commercial	5,463		1,064		216		6,743		671,414		10,596		688,753
Agricultural	1,710		361		—		2,071		111,031		525		113,627
Other, including overdrafts	—		—		—		—		912		—		912
Loans held for investment	26,030		8,572		2,294		36,896		4,012,775		107,799		4,157,470
Mortgage loans originated for sale	—		—		—		—		66,442		—		66,442
Total loans	$	26,030	$	8,572	$	2,294	$	36,896	$	4,079,217	$	107,799	$	4,223,912

82

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2011	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	22,124	$	7,871	$	630	$	30,625	$	1,455,139	$	67,391	$	1,553,155
Construction:
Land acquisition & development	5,251		2,448		867		8,566		208,134		61,913		278,613
Residential	415		—		—		415		56,219		4,472		61,106
Commercial	1,698		—		—		1,698		34,820		24,536		61,054
Total construction loans	7,364		2,448		867		10,679		299,173		90,921		400,773
Residential	4,669		973		1,798		7,440		546,278		18,225		571,943
Agricultural	4,103		1,831		—		5,934		166,119		3,249		175,302
Total real estate loans	38,260		13,123		3,295		54,678		2,466,709		179,786		2,701,173
Consumer:
Indirect consumer	3,078		370		45		3,493		403,695		463		407,651
Other consumer	1,479		436		60		1,975		144,625		887		147,487
Credit card	604		375		585		1,564		59,343		26		60,933
Total consumer loans	5,161		1,181		690		7,032		607,663		1,376		616,071
Commercial	13,721		3,464		405		17,590		657,609		18,062		693,261
Agricultural	476		215		110		801		118,150		759		119,710
Other, including overdrafts	—		2		—		2		2,811		—		2,813
Loans held for investment	57,618		17,985		4,500		80,103		3,852,942		199,983		4,133,028
Mortgage loans originated for sale	—		—		—		—		53,521		—		53,521
Total loans	$	57,618	$	17,985	$	4,500	$	80,103	$	3,906,463	$	199,983	$	4,186,549

If interest on non-accrual loans had been accrued, such income would have approximated $8,537, $12,508 and $8,942 during the years ended December 31, 2012, 2011 and 2010, respectively.

83

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The Company considers impaired loans to include all loans risk rated doubtful, loans placed on non-accrual status and loans renegotiated in troubled debt restructurings with the exception of consumer loans. The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated:

	December 31, 2012
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	84,300	$	39,049	$	34,774	$	73,823	$	4,112
Construction:
Land acquisition & development	28,558		15,891		7,173		23,064		1,457
Residential	3,018		1,976		710		2,686		251
Commercial	10,447		7,785		340		8,125		69
Total construction loans	42,023		25,652		8,223		33,875		1,777
Residential	13,271		6,152		4,495		10,647		1,677
Agricultural	5,559		1,834		3,227		5,061		784
Total real estate loans	145,153		72,687		50,719		123,406		8,350
Commercial	12,770		9,036		3,206		12,242		1,919
Agricultural	589		509		28		537		28
Total	$	158,512	$	82,232	$	53,953	$	136,185	$	10,297

	December 31, 2011
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	97,745	$	62,769	$	23,218	$	85,987	$	6,741
Construction:
Land acquisition & development	73,258		22,300		39,131		61,431		12,084
Residential	13,721		10,427		2,044		12,471		312
Commercial	26,647		3,510		21,026		24,536		5,042
Total construction loans	113,626		36,237		62,201		98,438		17,438
Residential	18,305		2,678		15,626		18,304		3,844
Agricultural	8,018		7,470		—		7,470		—
Total real estate loans	237,694		109,154		101,045		210,199		28,023
Commercial	26,348		7,354		12,284		19,638		4,664
Agricultural	759		496		263		759		151
Total	$	264,801	$	117,004	$	113,592	$	230,596	$	32,838

84

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

	December 31, 2010
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	79,193	$	31,925	$	41,703	$	73,628	$	10,315
Construction:
Land acquisition & development	48,371		24,120		20,440		44,560		8,064
Residential	18,632		2,993		13,721		16,714		3,431
Commercial	17,458		2,976		13,578		16,554		3,877
Total construction loans	84,461		30,089		47,739		77,828		15,372
Residential	8,951		1,741		7,110		8,851		1,266
Agricultural	3,045		1,065		1,432		2,497		128
Total real estate loans	175,650		64,820		97,984		162,804		27,081
Commercial	36,251		11,354		24,168		35,522		14,892
Agricultural	976		498		478		976		253
Total	$	212,877	$	76,672	$	122,630	$	199,302	$	42,226

The following tables present the average recorded investment in and income recognized on impaired loans for the periods indicated:

	Year Ended December 31,
	2012				2011				2010
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized		Average Recorded Investment
Real estate:
Commercial	$	78,670	$	1,339	$	85,702	$	633	$	49,713
Construction:
Land acquisition & development	44,457		110		57,675		96		34,871
Residential	8,431		4		19,769		384		15,097
Commercial	16,401		—		20,676		—		21,086
Total construction loans	69,289		114		98,120		480		71,054
Residential	13,703		26		15,768		258		10,889
Agricultural	6,936		41		6,188		167		1,737
Total real estate loans	168,598		1,520		205,778		1,538		133,393
Commercial	15,741		84		31,490		121		22,017
Agricultural	942		27		907		—		974
Total	$	185,281	$	1,631	$	238,175	$	1,659	$	156,384

The amount of interest income recognized by the Company within the period that the loans were impaired was primarily related to loans modified in a troubled debt restructuring that remained on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. If interest on impaired loans had been accrued, interest income on impaired loans during 2012, 2011 and 2010 would have been approximately $8,463, $12,358 and $8,824, respectively.

85

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Collateralized impaired loans are generally recorded at the fair value of the underlying collateral using discounted cash flows, independent appraisals and management estimates based upon current market conditions. For loans measured under the present value of cash flows method, the change in present value attributable to the passage of time, if applicable, is recognized in the provision for loan losses and thus no interest income is recognized.

Modifications of performing loans are made in the ordinary course of business and are completed on a case-by-case basis as negotiated with the borrower. Loan modifications typically include interest rate concessions, interest only periods of less than twelve months, short-term payment deferrals and extension of amortization periods to provide payment relief. A loan modification is considered a troubled debt restructuring if the borrower is experiencing financial difficulties and the Company, for economic or legal reasons, grants a concession to the borrower that it would not otherwise consider. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will return to performing status and the accrual of interest will resume.

The Company had loans renegotiated in troubled debt restructurings of $76,597 as of December 31, 2012, of which $44,665 were included in non-accrual loans and $31,932 were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $94,827 as of December 31, 2011, of which $57,451 were included in non-accrual loans and $37,376 were on accrual status.

The following table presents information on the Company's troubled debt restructurings that occurred during the periods indicated:

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year Ended December 31, 2012		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	16	$	—	$	959	$	4,504	$	8,611	$	14,074
Construction:
Commercial	1	—		—		—		3,155		3,155
Land acquisition & development	5	—		1,000		1,757		623		3,380
Residential	2	—		280		233		—		513
Total construction loans	8	—		1,280		1,990		3,778		7,048
Residential	2	568		25		—		—		593
Agriculture	1	—		154		—		—		154
Total real estate loans	27	568		2,418		6,494		12,389		21,869
Consumer:
Other consumer	1	—		69		—		—		69
Total consumer loans	1	—		69		—		—		69
Commercial	10	387		217		—		218		822
Agriculture	—			—				—		—
Total	38	$	955	$	2,704	$	6,494	$	12,607	$	22,760

86

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year ended December 31, 2011		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	60	$	23,982	$	4,444	$	3,131	$	7,364	$	38,921
Construction:
Land acquisition & development	9	995		4,124		680		408		6,207
Residential	5	7,749		878		234		—		8,861
Total construction loans	14	8,744		5,002		914		408		15,068
Residential	6	9,771		364		223		590		10,948
Agriculture	7	3,594		517		189		240		4,540
Total real estate loans	87	46,091		10,327		4,457		8,602		69,477
Consumer:
Indirect	2	—		—		—		29		29
Other consumer	3	17		11		—		50		78
Total consumer loans	5	17		11		—		79		107
Commercial	40	11,727		428		662		2,555		15,372
Agriculture	5	—		24		—		163		187
Total	137	$	57,835	$	10,790	$	5,119	$	11,399	$	85,143

Other concessions include payment reductions or deferrals for a specified period of time or the extention of amortization schedules. A specific reserve may have been previously recorded for loans modified in troubled debt restructurings that were on non-accrual status or otherwise deemed impaired before the modification. In periods subsequent to modification, the Company continues to evaluate all loans modified in troubled debt restructurings for possible impairment, which is recognized through the allowance for loan losses. Financial effects of modifications may include principal loan forgiveness or other charge-offs directly related to the restructuring. The Company had no charge-offs directly related to loans modified in troubled debt restructurings during 2012 or 2011.

87

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The Company considers a payment default to occur on loans modified in troubled debt restructurings when the loan is 90 days or more past due or was placed on non-accrual status after the modification. The following table presents information on the Company's troubled debt restructurings within the previous 12 months for which there was a payment default during the period.

	2012			2011
As of December 31,	Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	—	$	—	9	$	2,747
Construction:
Land acquisition & development	1	468		1	1,135
Residential	—	—		1	170
Total construction loans	1	468		2	1,305
Residential	2	635		—	—
Agriculture	—	—		1	33
Total real estate loans	3	1,103		12	4,085
Commercial	—	—		6	213
Agricultural	—	—		2	24
Total	3	$	1,103	20	$	4,322

As of December 31, 2012, all of the loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status. As of December 31, 2011, eighteen of the twenty loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status.

At December 31, 2012, there were no material commitments to lend additional funds to borrowers whose existing loans have been renegotiated or are classified as non-accrual.

As part of the on-going and continuous monitoring of the credit quality of the Company’s loan portfolio, management tracks internally assigned risk classifications of loans. The Company adheres to a Uniform Classification System developed jointly by the various bank regulatory agencies to internally risk rate loans. The Uniform Classification System defines three broad categories of criticized assets, which the Company uses as credit quality indicators:

Other Assets Especially Mentioned — includes loans that exhibit weaknesses in financial condition, loan structure or documentation, which if not promptly corrected, may lead to the development of abnormal risk elements.

Substandard — includes loans that are inadequately protected by the current sound worth and paying capacity of the borrower. Although the primary source of repayment for a Substandard is not currently sufficient; collateral or other sources of repayment are sufficient to satisfy the debt. Continuance of a Substandard loan is not warranted unless positive steps are taken to improve the worthiness of the credit.

Doubtful — includes loans that exhibit pronounced weaknesses to a point where collection or liquidation in full, on the basis of currently existing facts, conditions and values, is highly questionable and improbable. Doubtful loans are required to be placed on non-accrual status and are assigned specific loss exposure.

88

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The following tables present the Company’s recorded investment in criticized loans by class and credit quality indicator based on the most recent analysis performed as of the dates indicated:

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2012
Real estate:
Commercial	$	101,936	$	135,282	$	15,173	$	252,391
Construction:
Land acquisition & development	28,137		25,884		4,739		58,760
Residential	2,531		2,427		1,143		6,101
Commercial	3,000		795		7,383		11,178
Total construction loans	33,668		29,106		13,265		76,039
Residential	9,542		11,680		4,511		25,733
Agricultural	18,490		6,737		3,228		28,455
Total real estate loans	163,636		182,805		36,177		382,618
Consumer:
Indirect consumer	793		1,764		114		2,671
Other consumer	684		1,395		628		2,707
Credit card	—		415		2,085		2,500
Total consumer loans	1,477		3,574		2,827		7,878
Commercial	42,223		27,184		3,428		72,835
Agricultural	2,596		1,625		28		4,249
Total	$	209,932	$	215,188	$	42,460	$	467,580

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2011
Real estate:
Commercial	$	129,046	$	153,320	$	25,087	$	307,453
Construction:
Land acquisition & development	37,294		31,873		38,761		107,928
Residential	9,448		5,528		2,044		17,020
Commercial	—		2,620		21,916		24,536
Total construction loans	46,742		40,021		62,721		149,484
Residential	8,149		15,706		15,140		38,995
Agricultural	16,037		18,498		395		34,930
Total real estate loans	199,974		227,545		103,343		530,862
Consumer:
Indirect consumer	1,141		1,729		247		3,117
Other consumer	745		1,361		674		2,780
Credit card	—		486		2,789		3,275
Total consumer loans	1,886		3,576		3,710		9,172
Commercial	34,698		33,478		12,849		81,025
Agricultural	4,345		5,195		263		9,803
Total	$	240,903	$	269,794	$	120,165	$	630,862

89

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The Company maintains a credit review function, which is independent of the credit approval process, to assess assigned internal risk classifications and monitor compliance with internal lending policies and procedures. Written action plans with firm target dates for resolution of identified problems are maintained and reviewed on a quarterly basis for all categories of criticized loans.

(4) ALLOWANCE FOR LOAN LOSSES

The following table presents a summary of changes in the allowance for loan losses by portfolio segment:

Year ended December 31, 2012	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Provision charged to operating expense	28,651			1,922			10,845			(668		)	—		40,750
Less loans charged-off	(43,506		)	(5,320		)	(11,990		)	(120		)	—		(60,936		)
Add back recoveries of loans previously charged-off	3,241			1,945			2,905			25			—		8,116
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Individually evaluated for impairment	$	8,350		$	—		$	1,919		$	28		$	—	$	10,297
Collectively evaluated for impairment	67,432			7,141			15,166			475			—		90,214
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Total loans:
Individually evaluated for impairment	$	123,406		$	—		$	12,242		$	537		$	—	$	136,185
Collectively evaluated for impairment	2,660,420			636,794			676,511			113,090			912		4,087,727
Total loans	$	2,783,826		$	636,794		$	688,753		$	113,627		$	912	$	4,223,912

Year ended December 31, 2011	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Provision charged to operating expense	46,844			3,566			7,959			(218		)	—		58,151
Less loans charged-off	(45,764		)	(6,043		)	(19,332		)	(142		)	—		(71,281		)
Add back recoveries of loans previously charged-off	2,135			1,739			1,344			13			—		5,231
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Individually evaluated for impairment	$	28,023		$	—		$	4,664		$	151		$	—	$	32,838
Collectively evaluated for impairment	59,373			8,594			10,661			1,115			—		79,743
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Total loans:
Individually evaluated for impairment	$	210,199		$	—		$	19,638		$	759		$	—	$	230,596
Collectively evaluated for impairment	2,544,495			616,071			673,623			118,951			2,813		3,955,953
Total loans	$	2,754,694		$	616,071		$	693,261		$	119,710		$	2,813	$	4,186,549

90

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Year ended December 31, 2010	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	76,357		$	6,220		$	18,608		$	1,845		$	—	$	103,030
Provision charged to operating expense	42,163			8,636			16,333			(232		)	—		66,900
Less loans charged-off	(34,718		)	(7,577		)	(10,023		)	(21		)	—		(52,339		)
Add back recoveries of loans previously charged-off	379			2,053			436			21			—		2,889
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Individually evaluated for impairment	$	27,081		$	—		$	14,892		$	253		$	—	$	42,226
Collectively evaluated for impairment	57,100			9,332			10,462			1,360			—		78,254
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Total loans:
Individually evaluated for impairment	$	162,804		$	—		$	35,522		$	976		$	—	$	199,302
Collectively evaluated for impairment	2,709,125			646,580			694,949			115,570			2,383		4,168,607
Total loans	$	2,871,929		$	646,580		$	730,471		$	116,546		$	2,383	$	4,367,909

The Company performs a quarterly assessment of the adequacy of its allowance for loan losses in accordance with generally accepted accounting principles. The methodology used to assess the adequacy is consistently applied to the Company's loan portfolio and consists of three elements: (1) specific valuation allowances based on probable losses on impaired loans; (2) historical valuation allowances based on loan loss experience for similar loans with similar characteristics and trends; and (3) general valuation allowances determined based on changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, general economic conditions and other qualitative risk factors both internal and external to the Company.

Specific allowances are established for loans where management has determined that probability of a loss exists by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies and any relevant qualitative or environmental factors impacting the loan. Historical valuation allowances are determined by applying percentage loss factors to the credit exposures from outstanding loans. For commercial, agricultural and real estate loans, loss factors are applied based on the internal risk classifications of these loans. For consumer loans, loss factors are applied on a portfolio basis. For commercial, agriculture and real estate loans, loss factor percentages are based on a migration analysis of our historical loss experience, designed to account for credit deterioration. For consumer loans, loss factor percentages are based on a one-year loss history. General valuation allowances are determined by evaluating, on a quarterly basis, changes in the nature and volume of the loan portfolio, overall portfolio quality, industry concentrations, current economic and regulatory factors and the estimated impact of current economic, environmental and regulatory conditions on historical loss rates.

(5) PREMISES AND EQUIPMENT

Premises and equipment and related accumulated depreciation are as follows:

December 31,	2012			2011
Land	$	38,917		$	38,743
Buildings and improvements	195,549			188,509
Furniture and equipment	68,688			63,939
	303,154			291,191
Less accumulated depreciation	(115,589		)	(106,420		)
Premises and equipment, net	$	187,565		$	184,771

91

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The Parent Company and a FIB branch office lease premises from an affiliated partnership. See Note 15—Commitments and Contingencies.

(6) COMPANY-OWNED LIFE INSURANCE

Company-owned life insurance consists of the following:

December 31,	2012		2011
Key executive, principal shareholder	$	4,858	$	4,800
Key executive split dollar	4,538		4,441
Group life	67,333		65,639
Total	$	76,729	$	74,880

The Company maintains key executive life insurance policies on certain principal shareholders. Under these policies, the Company receives benefits payable upon the death of the insured. The net cash surrender value of key executive, principal shareholder insurance policies was $4,858 and $4,800 at December 31, 2012 and 2011, respectively.

The Company also has life insurance policies covering selected other key officers. The net cash surrender value of these policies was $4,538 and $4,441 at December 31, 2012 and 2011, respectively. Under these policies, the Company receives benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with the selected key officers whereby a portion of the policy death benefit is payable to their designated beneficiaries. The endorsement split dollar agreement will provide post-retirement coverage for those selected key officers meeting specified retirement qualifications. The Company expenses the earned portion of the post-employment benefit through the vesting period.

The Company has a group life insurance policy covering selected officers of FIB. The net cash surrender value of the policy was $67,333 and $65,639 at December 31, 2012 and 2011, respectively. Under the policy, the Company receives benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with the insured officers whereby a portion of the policy death benefit is payable to their designated beneficiaries if they are employed by the Company at the time of death.

(7) OTHER REAL ESTATE OWNED

Information with respect to the Company’s other real estate owned follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	37,452		$	33,632		$	38,400
Additions	43,541			26,644			21,314
Capitalized improvements	75			14			240
Valuation adjustments	(6,724		)	(7,464		)	(6,724		)
Dispositions	(41,773		)	(15,374		)	(19,598		)
Balance at end of year	$	32,571		$	37,452		$	33,632

Write-downs of $6,724 during 2012 included adjustments of $702 directly related to receipt of updated appraisals and adjustments of $6,022 based on other sources, including management estimates of the current fair value of properties. Write-downs of $7,464 during 2011 included adjustments of $4,197 directly related to receipt of updated appraisals and adjustments of $3,267 based on other sources, including management estimates of the current fair value of properties. Write-downs of $6,724 during 2010 included adjustments of $2,491 directly related to receipt of updated appraisals and adjustments of $4,233 based on other sources, including management estimates of the current fair value of properties.

92

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(8) MORTGAGE SERVICING RIGHTS

Information with respect to the Company’s mortgage servicing rights follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	13,450		$	13,811		$	18,732
Sales of mortgage servicing rights	(735		)	—			(4,528		)
Purchases of mortgage servicing rights	—			—			—
Originations of mortgage servicing rights	4,563			2,864			4,222
Amortization expense	(3,501		)	(3,225		)	(4,615		)
Write-off of permanent impairment	(553		)	—			—
Balance at end of year	13,224			13,450			13,811
Less valuation reserve	(571		)	(1,895		)	(620		)
Balance at end of year	$	12,653		$	11,555		$	13,191
Principal balance of serviced loans underlying mortgage servicing rights	$	2,146,351		$	1,803,303		$	1,594,697
Mortgage servicing rights as a percentage of serviced loans	0.59		%	0.64		%	0.83		%

At December 31, 2012, the estimated fair value and weighted average remaining life of the Company’s mortgage servicing rights were $16,373 and 4.4 years, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 8.5% to 21.0% and monthly prepayment speeds ranging from 0.7% to 6.1% depending upon the risk characteristics of the underlying loans. The Company reversed impairment of $771 in 2012 and $787 in 2010 and recorded additional impairment of $1,275 in 2011. Permanent impairment of $553 and was charged against the carrying value of mortgage servicing rights in 2012. No permanent impairment was recorded in 2011 or 2010.

The Company sold mortgage servicing rights with carrying values of $735 and $4,528 in 2012 and 2010, respectively. A gain on sale of $19 was recorded as other income in 2012. A loss on sale of $1,525 was recorded as other expense in 2010. In conjunction with the sales, the Company entered into agreements with the purchasers whereby the Company continues to sub-service the loans underlying the sold mortgage servicing rights.

(9) DEPOSITS

Deposits are summarized as follows:

December 31,	2012		2011
Non-interest bearing demand	$	1,495,309	$	1,271,709
Interest bearing:
Demand	1,811,905		1,306,509
Savings	1,547,713		1,691,413
Time, $100 and over	594,712		681,047
Time, other	790,772		876,293
Total interest bearing	4,745,102		4,555,262
Total deposits	$	6,240,411	$	5,826,971

The Company had no brokered time deposits as of December 31, 2012 and 2011.

Other time deposits include deposits obtained through the Company’s participation in the Certificate of Deposit Account Registry Service (“CDARS”). CDARS deposits totaled $72,062 and $98,331 as of December 31, 2012 and 2011, respectively.

93

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Maturities of time deposits at December 31, 2012 are as follows:

	Time, $100 and Over		Total Time
2013	$	437,597	$	999,439
2014	72,483		176,243
2015	33,646		79,030
2016	27,272		63,412
2017	23,714		67,357
Thereafter	—		3
Total	$	594,712	$	1,385,484

Interest expense on time deposits of $100 or more was $6,951, $10,377 and $18,595 for the years ended December 31, 2012, 2011 and 2010, respectively.

(10) LONG-TERM DEBT AND OTHER BORROWED FUNDS

A summary of long-term debt follows:

December 31,	2012		2011
Parent Company:
6.81% subordinated term loan maturing January 9, 2018, principal due at maturity, interest payable quarterly	$	20,000	$	20,000
Subsidiaries:
Variable rate subordinated term loan maturing February 28, 2018, principal due at maturity, interest payable quarterly (rate of 2.52% at December 31, 2012)	15,000		15,000
Various notes payable to FHLB, interest due monthly at various rates and maturities through October 31, 2015 (weighted average rate of 4.83% at December 31, 2012)	425		425
8.00% capital lease obligation with term ending October 25, 2029	1,735		1,775
Total long-term debt	$	37,160	$	37,200

Maturities of long-term debt at December 31, 2012 are as follows:
2013	$	244
2014	49
2015	285
2016	65
2017	71
Thereafter	36,446
Total	$	37,160

On January 10, 2008, the Company borrowed $20,000 on a 6.81% unsecured subordinated term loan maturing January 9, 2018, with interest payable quarterly and principal due at maturity. The unsecured subordinated term loan qualifies as tier 2 capital under regulatory capital adequacy guidelines.

During February 2008, the Company borrowed $15,000 on a variable rate unsecured subordinated term loan maturing February 28, 2018, with interest payable quarterly and principal due at maturity. The Company may elect at various dates either prime or LIBOR plus 2.00%. The interest rate on the subordinated term loan was 2.52% as of December 31, 2012. The unsecured subordinated term loan qualifies as tier 2 capital under regulatory capital adequacy guidelines.

94

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The notes payable to FHLB are secured by a blanket assignment of the Company’s qualifying residential and commercial real estate loans. The Company has available lines of credit with the FHLB of approximately $624,959, subject to collateral availability. As of December 31, 2012 and 2011, FHLB advances of $425, were included in long-term debt. As of December 31, 2012 and 2011 there were no short-term advances outstanding with the FHLB.

The Company has a capital lease obligation on a banking office. The balance of the obligation was $1,735 and $1,775 as of December 31, 2012 and 2011, respectively. Assets acquired under capital lease, consisting solely of a building and leasehold improvements, are included in premises and equipment and are subject to depreciation.

The Company had other borrowed funds of $32 and $7 as of December 31, 2012 and 2011, respectively, consisting of demand notes issued to the United States Treasury, secured by investment securities and bearing no interest.

The Company has federal funds lines of credit with third parties amounting to $115,000, subject to funds availability. These lines are subject to cancellation without notice. The Company also has a line of credit with the Federal Reserve Bank for borrowings up to $323,153 secured by a blanket pledge of indirect consumer loans.

(11) SUBORDINATED DEBENTURES HELD BY SUBSIDIARY TRUSTS

During 2012, the Company sponsored seven wholly-owned business trusts, FIST, Trust I, Trust II, Trust III, Trust IV, Trust V and Trust VI (collectively, the “Trusts”). The Trusts were formed for the exclusive purpose of issuing an aggregate of $120,000 of 30-year floating rate mandatorily redeemable capital trust preferred securities (“Trust Preferred Securities”) to third-party investors. The Trusts also issued, in aggregate, $3,715 of common equity securities to the Parent Company. Proceeds from the issuance of the Trust Preferred Securities and common equity securities were invested in 30-year junior subordinated deferrable interest debentures (“Subordinated Debentures”) issued by the Parent Company.

A summary of Subordinated Debenture issuances follows:

		Principal Amount Outstanding as of December 31,
Issuance	Maturity Date	2012		2011
March 2003	March 26, 2033	$	—	$	41,238
October 2007	January 1, 2038	10,310		10,310
November 2007	December 15, 2037	15,464		15,464
December 2007	December 15, 2037	20,619		20,619
December 2007	April 1, 2038	15,464		15,464
January 2008	April 1, 2038	10,310		10,310
January 2008	April 1, 2038	10,310		10,310
Total subordinated debentures held by subsidiary trusts		$	82,477	$	123,715

On June 26, 2012, the Company redeemed $41,238 of Subordinated Debentures issued by FIST bearing a cumulative floating interest rate equal to LIBOR plus 3.15% per annum. The redemption price of $41,238 was equal to the $1 liquidation amount of each debenture plus all accrued and unpaid distributions to the date of redemption. Unamortized issuance costs of $428 were charged to other expense on the date of redemption. The redemption of the Subordinated Debentures caused a mandatory redemption of $40,000 of Trust Preferred Securities issued by FIST to third party investors and $1,238 of common equity securities issued by FIST to the Company.

In October 2007, the Company issued $10,310 of Subordinated Debentures to Trust II. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.25% per annum. As of December 31, 2012 the interest rate on the Subordinated Debentures was 2.61%.

95

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

In November 2007, the Company issued $15,464 of Subordinated Debentures to Trust I. The Subordinated Debentures bear interest at a fixed rate of 7.50% for five years after issuance until December 16, 2012, and thereafter at a variable rate equal to LIBOR plus 2.75% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 3.06%.

In December 2007, the Company issued $20,619 of Subordinated Debentures to Trust III. The Subordinated Debentures bear interest at a fixed rate of 6.88% for five years after issuance until December 15, 2012, and thereafter at a variable rate equal to LIBOR plus 2.40% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 2.71%.

In December 2007, the Company issued $15,464 of Subordinated Debentures to Trust IV. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.70% per annum. As of December 31, 2012 the interest rate on the Subordinated Debentures was 3.06%.

In January 2008, the Company issued $10,310 of Subordinated Debentures to Trust V. The Subordinated Debentures bear interest at a fixed rate of 6.78% for five years after issuance, and thereafter at a variable rate equal to LIBOR plus 2.75% per annum.

In January 2008, the Company issued $10,310 of Subordinated Debentures to Trust VI. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.75% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 3.11%.

The Subordinated Debentures are unsecured with interest distributions payable quarterly. The Company may defer the payment of interest at any time provided that the deferral period does not extend past the stated maturity. During any such deferral period, distributions on the Trust Preferred Securities will also be deferred and the Company’s ability to pay dividends on its common and preferred shares is restricted. The Subordinated Debentures may be redeemed, subject to approval by the Federal Reserve Bank, at the Company’s option on or after five years from the date of issue, or at any time in the event of unfavorable changes in laws or regulations. Debt issuance costs consisting primarily of underwriting discounts and professional fees were capitalized and are being amortized through maturity to interest expense using the straight-line method, which approximates level yield.

The terms of the Trust Preferred Securities are identical to those of the Subordinated Debentures. The Trust Preferred Securities are subject to mandatory redemption upon repayment of the Subordinated Debentures at their stated maturity dates or earlier redemption in an amount equal to their liquidation amount plus accumulated and unpaid distributions to the date of redemption. The Company guarantees the payment of distributions and payments for redemption or liquidation of the Trust Preferred Securities to the extent of funds held by the Trusts.

Subject to certain limitations, the Trust Preferred Securities qualify as tier 1 capital of the Parent Company under the Federal Reserve Board’s capital adequacy guidelines. Proceeds from the issuance of the Trust Preferred Securities were used to fund acquisitions.

(12) CAPITAL STOCK AND DIVIDEND RESTRICTIONS

The Company has 5,000 shares of 6.75% Series A noncumulative redeemable preferred stock (“Series A Preferred Stock”) issued with an aggregate value of $50,000. The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend and liquidation rights and has no voting rights. Holders of the Series A Preferred Stock are entitled to receive, if and when declared, noncumulative dividends at an annual rate of $675 per share, based on a 360 day year. The Company may redeem all or part of the Series A Preferred Stock at any time after January 10, 2013 at a redemption price of $10,000 per share plus all accrued and unpaid dividends. On December 18, 2012, the Company provided notice to holders of the Series A Preferred Stock of its intention to redeem the Series A Preferred Stock on January 18, 2013. Upon notice to holders of the redemption, the Series A Preferred Stock was reclassified from stockholders' equity to a liability. The aggregate redemption price for the Series A Preferred Stock was $50,150.

96

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

On March 5, 2010, the Company’s shareholders approved proposals to recapitalize the Company’s existing common stock. The recapitalization included a redesignation of existing common stock as Class B common stock with five votes per share, convertible into Class A common stock on a share for share basis; a four-for-one stock split of the Class B common stock; an increase in the authorized number of Class B common shares from 20,000,000 to 100,000,000; and, the creation of a new class of common stock designated as Class A common stock, with one vote per share, with 100,000,000 shares authorized.

On March 29, 2010, the Company concluded its initial public offering (“IPO”) of 10,000,000 shares of Class A common stock, and an additional 1,500,000 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase Class A common shares in the offering. The Company received net proceeds of $153,153 from the sale of the shares, after deducting the underwriting discount, commissions and other offering expenses.

The Company had 17,635,369 and 16,443,429 shares of Class A common stock outstanding as of December 31, 2012 and 2011, respectively.

The Company had 25,654,954 and 26,540,745 shares of Class B common stock outstanding as of December 31, 2012 and 2011, respectively.

The payment of dividends by subsidiary banks is subject to various federal and state regulatory limitations. In general, a bank is limited, without the prior consent of its regulators, to paying dividends that do not exceed current year net profits together with retained earnings from the two preceding calendar years. The Company’s debt instruments also include limitations on the payment of dividends.

(13) EARNINGS PER COMMON SHARE

Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period presented, excluding unvested restricted stock. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares determined for the basic earnings per share computation plus the dilutive effects of stock-based compensation using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per common share:

Year Ended December 31,	2012		2011		2010
Net income	$	58,224	$	44,546	$	37,356
Less preferred stock dividends	3,300		3,422		3,422
Net income available to common shareholders, basic and diluted	$	54,924	$	41,124	$	33,934
Weighted average common shares outstanding for basic earnings per share computation	42,965,987		42,749,526		39,907,640
Dilutive effects of stock-based compensation	126,991		97,670		219,725
Weighted average common shares outstanding for diluted earnings per common share computation	43,092,978		42,847,196		40,127,365
Basic earnings per common share	$	1.28	$	0.96	$	0.85
Diluted earnings per common share	$	1.27	$	0.96	$	0.85

The Company had 2,427,823, 2,865,832 and 2,301,413 stock options outstanding as of December 31, 2012, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive. The Company had 41,240, 9,427 and 17,644 shares of unvested restricted stock as of December 31, 2012, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per common share because performance conditions for vesting had not been met.

97

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(14) REGULATORY CAPITAL

The Company is subject to the regulatory capital requirements administered by federal banking regulators and the Federal Reserve. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Parent Company, like all bank holding companies, is not subject to the prompt corrective action provisions. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, as defined in the regulations. As of December 31, 2012, the Company exceeded all capital adequacy requirements to which it is subject.

The Company’s actual capital amounts and ratios and selected minimum regulatory thresholds and prompt corrective action provisions as of December 31, 2012 and 2011 are presented in the following table:

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2012
Total risk-based capital:
Consolidated	$	748,431	15.6	%	$	384,014	8.0	%	NA		NA
FIB	697,695		14.6		382,245		8.0		$	477,806	10.0	%
Tier 1 risk-based capital:
Consolidated	652,929		13.6		192,007		4.0		NA		NA
FIB	622,466		13.0		191,122		4.0		$	286,683	6.0
Leverage capital ratio:
Consolidated	652,929		8.8		296,559		4.0		NA		NA
FIB	622,466		8.4		296,061		4.0		$	370,077	5.0

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2011
Total risk-based capital:
Consolidated	$	800,354	16.5	%	$	387,082	8.0	%	NA		NA
FIB	663,860		13.8		384,987		8.0		$	481,234	10.0	%
Tier 1 risk-based capital:
Consolidated	704,229		14.6		193,541		4.0		NA		NA
FIB	588,059		12.2		192,494		4.0		$	288,740	6.0
Leverage capital ratio:
Consolidated	704,229		9.8		286,303		4.0		NA		NA
FIB	588,059		8.2		285,358		4.0		$	356,698	5.0

98

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(15) COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is involved in various claims and litigation. In the opinion of management, following consultation with legal counsel, the ultimate liability or disposition thereof is not expected to have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

The Company had commitments under construction contracts of $197 as of December 31, 2012.

The Company leases certain premises and equipment from third parties under operating leases. Total rental expense to third parties was $1,423 in 2012, $2,030 in 2011 and $1,960 in 2010.

The total future minimum rental commitments, exclusive of maintenance and operating costs, required under operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 2012, are as follows:

	Third Parties		Related Partnership		Total
For the year ending December 31:
2013	$	1,110	$	2,111	$	3,221
2014	1,062		2,020		3,082
2015	1,005		1,438		2,443
2016	919		165		1,084
2017	633		83		716
Thereafter	4,170		—		4,170
Total	$	8,899	$	5,817	$	14,716

The Parent Company and the Billings office of FIB are the anchor tenants in a building owned by a partnership in which FIB is one of two partners, and has a 50% partnership interest.

In conjunction with the sale of all of its Class B shares of Visa, Inc. common stock ("Visa common shares") in 2009, the Company entered into a derivative contract with the purchaser whereby the Company will make or receive payments based on subsequent changes in the conversion rate of Class B Visa common shares in Class A Visa common shares. The conversion rate is dependent upon the resolution of certain specifically defined litigation against Visa, U.S.A.. The value of the derivative contract is estimated based on the Company's expectations regarding the ultimate resolution of the Visa, U.S.A. litigation, which involves a high degree of judgment and subjectivity. On November 9, 2012, the court granted preliminary approval of a settlement agreement resolving all claims associated with the specifically defined litigation; however, objections to the preliminary approval have been filed. Final court approval of the settlement agreement is expected in late 2013. As of December 31, 2012, all estimated amounts due under the derivative liability contract were paid. As of December 31, 2011, a liability of $383 related to the derivative contract was included in accounts payable and accrued expenses. The derivative contract is collateralized by $1,000 of U.S. government agency investment securities.

Residential mortgage loans sold to investors in the secondary market are sold with varying recourse provisions. Essentially all of the loan sales agreements require the repurchase of a mortgage loan by the seller in situations such as breach of representation, warranty or covenant; untimely document delivery; false or misleading statements; failure to obtain certain certificates or insurance; unmarketability; etc. Certain loan sales agreements contain repurchase requirements based on payment-related defects that are defined in terms of the number of days or months since the purchase, the sequence number of the payment, and/or the number of days of payment delinquency. Based on the specific terms stated in the agreements, the Company had $19,877 and $13,839 of sold residential mortgage loans with recourse provisions still in effect as of December 31, 2012 and 2011, respectively. The Company did not repurchase any significant amount of loans from secondary market investors under the terms of loan sales agreements during the years ended December 31, 2012, 2011 and 2010. In the opinion of management, the risk of recourse and the subsequent

99

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

requirement of loan repurchase to the Company is not significant, and accordingly no liabilities have been established related to such. In addition, the Company issues various representations and warranties associated with the sale of loans. The Company has not incurred significant losses resulting from these provisions.

(16) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the consolidated balance sheet. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, premises and equipment, and income-producing commercial properties.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Generally, commitments to extend credit are subject to annual renewal. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments to extend credit to borrowers approximated $1,144,695 at December 31, 2012, which included $337,532 on unused credit card lines and $253,130 with commitment maturities beyond one year. Commitments to extend credit to borrowers approximated $1,049,796 at December 31, 2011, which included $285,761 on unused credit card lines and $283,861 with commitment maturities beyond one year.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Most commitments extend for no more than two years and are generally subject to annual renewal. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At December 31, 2012 and 2011, the Company had outstanding stand-by letters of credit of $66,702 and $69,934, respectively. The estimated fair value of the obligation undertaken by the Company in issuing standby letters of credit is included in accounts payable and accrued expenses in the Company’s consolidated balance sheets.

(17) INCOME TAXES

Income tax expense consists of the following:

Year ended December 31,	2012		2011		2010
Current:
Federal	$	18,458	$	16,451	$	29,866
State	2,818		2,759		4,481
Total current	21,276		19,210		34,347
Deferred:
Federal	7,697		2,131		(15,268		)
State	1,065		274		(1,989		)
Total deferred	8,762		2,405		(17,257		)
Total income tax expense	$	30,038	$	21,615	$	17,090

100

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate of 35 percent in 2012, 2011 and 2010 to income before income taxes as a result of the following:

Year ended December 31,	2012			2011			2010
Tax expense at the statutory tax rate	$	30,892		$	23,156		$	19,056
Increase (decrease) in tax resulting from:
Tax-exempt income	(3,498		)	(3,578		)	(3,661		)
State income tax, net of federal income tax benefit	2,524			1,972			1,619
Other, net	120			65			76
Tax expense at effective tax rate	$	30,038		$	21,615		$	17,090

The tax effects of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax asset (liability) relate to the following:

December 31,	2012			2011
Deferred tax assets:
Loans, principally due to allowance for loan losses	$	38,688		$	42,602
Employee benefits	7,041			7,659
Other real estate owned write-downs and carrying costs	6,850			7,444
Deferred gain on sale of subsidiary	750			1,010
Other	385			428
Deferred tax assets	53,714			59,143
Deferred tax liabilities:
Fixed assets, principally differences in bases and depreciation	(4,711		)	(4,284		)
Investment securities, unrealized gains	(11,360		)	(13,091		)
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets	(782		)	(855		)
Prepaid amounts	(1,052		)	(921		)
Government agency stock dividends	(2,060		)	(2,079		)
Goodwill and core deposit intangibles	(25,815		)	(22,736		)
Mortgage servicing rights	(4,418		)	(4,150		)
Other	(919		)	(1,399		)
Deferred tax liabilities	(51,117		)	(49,515		)
Net deferred tax assets	$	2,597		$	9,628

The Company had a current net income tax payables of $3,691 and $489 at December 31, 2012 and 2011, respectively, which are included in accounts payable and accrued expenses.

(18) STOCK-BASED COMPENSATION

The Company has equity awards outstanding under two stock-based compensation plans; the 2006 Equity Compensation Plan (the “2006 Plan”) and the 2001 Stock Option Plan. These plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors or, upon delegation, the Compensation Committee of the Board of Directors (“Compensation Committee”) has exclusive authority to select employees, advisors and others, including directors, to receive awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans.

101

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The 2006 Plan, approved by the Company’s shareholders in May 2006, was established to consolidate into one plan the benefits available under the 2001 Stock Option Plan and all other then existing share-based award plans (collectively, the “Previous Plans”). The Previous Plans continue with respect to awards made prior to May 2006. All shares of common stock available for future grant under the Previous Plans were transferred into the 2006 Plan. At December 31, 2012, there were 659,863 common shares available for future grant under the 2006 Plan. All awards granted subsequent to completion of the Company’s IPO on March 29, 2010 will be for shares of Class A common stock. All awards granted prior to the Company’s IPO are for shares of Class B common stock.

Stock Options. All options granted have an exercise price equal to fair market value, which is currently defined as the closing sales price for the stock as quoted on the NASDAQ Stock Market for the last market trading day preceding the date that the Company’s Board of Directors awards the benefit. Options may be subject to vesting as determined by the Company's Board of Directors or Compensation Committee, and can be exercised for periods of up to ten years from the date of grant.

Compensation expense related to stock option awards of $1,276, $915 and $813 was included in benefits on the Company’s consolidated income statements for the years ended December 31, 2012, 2011 and 2010, respectively. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $488, $349 and $311, respectively.

The weighted average grant date fair value of options granted was $4.06, $4.30 and $4.58 during the years ended December 31, 2012, 2011 and 2010, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The following table presents the weighted-average assumptions used in the option pricing model for the periods indicated:

Years ended December 31,	2012		2011		2010
Expected volatility	37.46	%	36.36	%	35.66	%
Expected dividend yield	3.35	%	3.17	%	2.98	%
Risk-free interest rate	1.99	%	3.05	%	3.08	%
Expected life of options (in years)	7.85		7.97		7.70

Expected dividend yield is based on the Company’s annualized expected dividends per share divided by the average common stock price. Risk-free interest rate is based on the U.S. treasury constant maturity yield for treasury securities with maturities approximating the expected life of the options granted on the date of grant. The expected life of options is based on the Company’s historical exercise and post-vesting termination behaviors. The Company expected the historical volatility of its common stock would not be indicative of future volatility subsequent to the Company’s IPO, which was concluded on March 29, 2010. As such, in 2012, 2011 and 2010, the Company estimated expected volatility based on the share price volatility of a peer group of publicly-traded regional banks of similar size and performance as the Company over the expected life of options.

102

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The following table summarizes stock option activity under the Company’s active stock option plans for the year ended December 31, 2012:

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life
Outstanding options, beginning of year	3,484,928		$	16.26
Granted	369,766		14.33
Exercised	(376,634	)	11.38
Forfeited	(27,442	)	14.42
Expired	(76,963	)	16.75
Outstanding options, end of year	3,373,655		$	16.60	5.02 years
Outstanding options exercisable, end of year	2,756,441		$	17.10	4.23 years

The total intrinsic value of fully-vested stock options outstanding as of December 31, 2012 was $1,653. The total intrinsic value of options exercised was $1,158, $764 and $757 during the years ended December 31, 2012, 2011 and 2010, respectively. The actual tax benefit realized for the tax deduction from option exercises totaled $397, $285 and $250 for the years ended December 31, 2012, 2011 and 2010, respectively. The Company received cash of $1,612, $385 and $649 from stock option exercises during the years ended December 31, 2012, 2011 and 2010, respectively. The Company redeemed common stock with aggregate values of $2,675, $2,381 and $1,643 tendered in payment for stock option exercises during the years ended December 31, 2012, 2011 and 2010, respectively.

Information with respect to the Company’s nonvested stock options as of and for the year ended December 31, 2012 follows:

	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested stock options, beginning of year	588,236		$	3.71
Granted	369,766		4.06
Vested	(313,346	)	3.13
Forfeited	(27,442	)	4.12
Nonvested stock options, end of year	617,214		$	4.20

As of December 31, 2012, there was $1,523 of unrecognized compensation cost related to nonvested stock options granted under the Company’s active stock option plans. That cost is expected to be recognized over a weighted-average period of 1.56 years. The total fair value of shares vested during 2012 was $980.

Restricted Stock Awards. Common stock issued under the Company’s restricted stock plan may not be sold or otherwise transferred until restrictions have lapsed or performance objectives have been obtained. During the vesting periods, participants have voting rights and receive dividends on the restricted shares. Upon termination of employment, common shares upon which restrictions have not lapsed must be returned to the Company.

Based on the substantive terms of each award, restricted shares are classified as equity or liability awards. The fair value of equity-classified restricted stock awards is being amortized as compensation expense on a straight-line basis over the period restrictions lapse or performance goals are met. Compensation cost for liability-classified awards is expensed each period from the date of grant to the measurement date based on the fair value of the Company’s common stock at the end of each period. Compensation expense related to restricted stock awards of $1,209, $991 and $847 was included in benefits on the Company’s consolidated statements of income for the years ended December 31, 2012, 2011 and 2010, respectively. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $462, $379 and $324, respectively.

103

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The following table presents information regarding the Company’s restricted stock as of December 31, 2012:

	Number of Shares		Weighted-Average Measurement Date Fair Value
Restricted stock, beginning of year	190,770		$	14.57
Granted	122,912		14.37
Vested	(67,720	)	14.82
Forfeited	(8,276	)	14.69
Canceled	(6,956	)	15.00
Restricted stock, end of year	230,730		$	14.38

During 2012, the Company issued 122,912 restricted common shares. The 2012 restricted share awards included 20,564 performance restricted shares of which 10,282 vest in varying percentages upon achievement of defined return on asset performance goals and 10,282 vest in varying percentages upon achievement of defined return on equity performance goals. Vesting of the performance restricted shares is also contingent on employment as of December 31, 2014. Additionally, 102,348 time-restricted shares were issued during 2012 that vest one-third on each annual anniversary of the grant date through February 17, 2015, contingent on continued employment through the vesting date.

As of December 31, 2012, there was $2,081 of unrecognized compensation cost related to nonvested restricted stock awards expected to be recognized over a period of 2.1 years.

(19) EMPLOYEE BENEFIT PLANS

Profit Sharing Plan. The Company has a noncontributory profit sharing plan. All employees, other than temporary employees, working 20 hours or more per week are eligible to participate in the profit sharing plan. The Company’s Board of Directors authorize contributions to the profit sharing plan that are not to exceed, on an individual basis, the lesser of 100% of compensation or $40 annually. Participants become 100% vested upon the completion of three years of vesting service. The Company accrued contribution expense for this plan of $2,063, $1,480 and $1,197 in 2012, 2011 and 2010, respectively.

Savings Plan. In addition, the Company has a contributory employee savings plan. Eligibility requirements for this plan are the same as those for the profit sharing plan discussed in the preceding paragraph. Employee participation in the plan is at the option of the employee. The Company contributes $1.25 for each $1.00 of employee contributions up to 4% of the participating employee’s compensation. The Company accrued contribution expense for this plan of $4,034, $3,905 and $3,896 in 2012, 2011 and 2010, respectively.

Postretirement Healthcare Plan. The Company sponsors a contributory defined benefit healthcare plan (the “Plan”) for active employees and employees and directors retiring from the Company at the age of at least 55 years and with at least 15 years of continuous service. Retired Plan participants contribute the full cost of benefits based on the average per capita cost of benefit coverage for both active employees and retired Plan participants.

The Plan’s unfunded benefit obligation of $4,432 and $3,948 as of December 31, 2012 and 2011, respectively, is included in accounts payable and accrued expenses in the Company’s consolidated balance sheets. Net periodic benefit costs of $561, $507 and $502 for the years ended December 31, 2012, 2011 and 2010, respectively, are included in employee benefits expense in the Company’s consolidated statements of income.

104

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Weighted average actuarial assumptions used to determine the postretirement benefit obligation at December 31, 2012 and 2011, and the net periodic benefit costs for the year then ended, included a discount rate of 4.3% and a 5.0% annual increase in the per capita cost of covered healthcare benefits. The estimated effect of a one percent increase or a one percent decrease in the assumed healthcare cost trend rate would not significantly impact the service and interest cost components of the net periodic benefit cost or the accumulated postretirement benefit obligation. Future benefit payments are expected to be $165, $175, $163, $149, $181 and $1,221 for 2013, 2014, 2015, 2016, 2017, and 2018 through 2022, respectively.

At December 31, 2012, the Company had accumulated other comprehensive loss related to the Plan of $2,549, or $1,546 net of related income tax benefit, comprised of net actuarial losses of $2,137 and unamortized transition asset of $412. The Company estimates $147 will be amortized from accumulated other comprehensive loss into net period benefit costs in 2013.

(20) OTHER COMPREHENSIVE INCOME

The gross amounts of each component of other comprehensive income and the related tax effects are as periods indicated are as follows:

Year ended December 31, 2012	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(4,648	)	$	(1,829	)	$	(2,819	)
Reclassification adjustment for net gains included in net income	(348		)	(137		)	(211		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	56			22			34
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(77		)	(30		)	(47		)
Total other comprehensive loss	$	(5,017	)	$	(1,974	)	$	(3,043	)

Year ended December 31, 2011	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	17,168		$	6,899		$	10,269
Reclassification adjustment for net gains included in net income	(1,544		)	(620		)	(924		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	389			156			233
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	135			54			81
Total other comprehensive income	$	16,148		$	6,489		$	9,659

105

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Year ended December 31, 2010	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(8,438	)	$	(2,989	)	$	(5,449	)
Reclassification adjustment for net gains included in net income	(170		)	(60		)	(110		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	722			256			466
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(940		)	(333		)	(607		)
Total other comprehensive loss	$	(8,826	)	$	(3,126	)	$	(5,700	)

The components of accumulated other comprehensive income, net of income taxes, are as follows:

Year ended December 31,	2012			2011
Net unrealized gain on investment securities available-for-sale	$	17,537		$	20,533
Net actuarial loss on defined benefit post-retirement benefit plans	(1,546		)	(1,499		)
Net accumulated other comprehensive income	$	15,991		$	19,034

(21) NON-CASH INVESTING AND FINANCING ACTIVITIES

The Company transferred loans of $43,541, $26,644 and $21,314 to other real estate owned in 2012, 2011 and 2010, respectively.

The Company transferred internally originated mortgage servicing assets of $4,563, $2,864 and $4,222 from loans to mortgage servicing assets in 2012, 2011 and 2010, respectively.

The Company transferred real property pending disposal of $566 to other assets in 2012. The Company transferred equipment pending disposal of $1,513 to other assets in 2010.

During 2012, the Company reclassified $50,000 of perpetual preferred stock pending redemption from equity to a liability.

The Company transferred accrued liabilities of $216 and $59 to common stock in conjunction with the vesting of liability-classified non-vested stock awards during 2011 and 2010 respectively.

The Company recorded receivables of $1,204 in conjunction with the sale of mortgage servicing rights during 2010.

106

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(22) CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

Following is condensed financial information of First Interstate BancSystem, Inc.

December 31,	2012		2011
Condensed balance sheets:
Cash and cash equivalents	$	95,407	$	131,860
Investment in subsidiaries, at equity:
Bank subsidiary	802,270		776,349
Nonbank subsidiaries	1,969		1,973
Total investment in subsidiaries	804,239		778,322
Advances from subsidiaries, net	697		—
Other assets	25,815		26,246
Total assets	$	926,158	$	936,428
Other liabilities	$	22,495	$	19,552
Advances to subsidiaries, net	—		2,141
Long-term debt	20,000		20,000
Preferred stock pending redemption	50,000		—
Subordinated debentures held by subsidiary trusts	82,477		123,715
Total liabilities	174,972		165,408
Stockholders’ equity	751,186		771,020
Total liabilities and stockholders’ equity	$	926,158	$	936,428

Years Ended December 31,	2012			2011			2010
Condensed statements of income:
Dividends from subsidiaries	$	40,000		$	30,000		$	15,400
Other interest income	92			118			105
Other income, primarily management fees from subsidiaries	10,042			10,617			11,336
Total income	50,134			40,735			26,841
Salaries and benefits	13,205			13,975			13,435
Interest expense	6,691			7,273			7,703
Other operating expenses, net	7,150			6,903			6,827
Total expenses	27,046			28,151			27,965
Earnings before income tax benefit	23,088			12,584			(1,124		)
Income tax benefit	(6,222		)	(6,518		)	(6,254		)
Income before undistributed earnings of subsidiaries	29,310			19,102			5,130
Undistributed earnings of subsidiaries	28,914			25,444			32,226
Net income	$	58,224		$	44,546		$	37,356

107

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Years Ended December 31,	2012			2011			2010
Condensed statements of cash flows:
Cash flows from operating activities:
Net income	$	58,224		$	44,546		$	37,356
Adjustments to reconcile net income to cash provided by operating activities:
Undistributed earnings of subsidiaries	(28,914		)	(25,444		)	(32,226		)
Stock-based compensation expense	2,485			2,111			1,764
Tax benefits from stock-based compensation	360			204			239
Excess tax benefits from stock-based compensation	(273		)	(124		)	(225		)
Other, net	3,327			2,600			(4,325		)
Net cash provided by operating activities	35,209			23,893			2,583
Cash flows from investing activities:
Capitalization of subsidiaries	—			—			(130		)
Capital expenditures, net of sales	1			(3		)	—
Net cash provided by (used in) investing activities	1			(3		)	(130		)
Cash flows from financing activities:
Net (decrease) increase in advances from nonbank subsidiaries	(2,838		)	(2,913		)	5,002
Repayments of long-term debt	—			—			(33,929		)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238		)	—			—
Proceeds from issuance of common stock	1,911			385			167,400
Common stock issuance costs	—			—			(13,597		)
Excess tax benefits from stock-based compensation	273			124			225
Purchase and retirement of common stock	(263		)	(248		)	(3,699		)
Dividends paid to common stockholders	(26,208		)	(19,233		)	(17,905		)
Dividends paid to preferred stockholders	(3,300		)	(3,422		)	(3,422		)
Net cash provided by (used in) financing activities	(71,663		)	(25,307		)	100,075
Net change in cash and cash equivalents	(36,453		)	(1,417		)	102,528
Cash and cash equivalents, beginning of year	131,860			133,277			30,749
Cash and cash equivalents, end of year	$	95,407		$	131,860		$	133,277

Noncash Investing and Financing Activities — During 2012, the Company reclassified $50,000 of perpetual preferred stock pending redemption from equity to a liability. The Company transferred accrued liabilities of $216 and $59 to common stock in conjunction with the vesting of liability-classified non-vested stock awards during 2011 and 2010, respectively.

108

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

(23) FAIR VALUE MEASUREMENTS

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:

	Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	754,856	$	—	$	754,856	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	1,239,851		—		1,239,851		—
Private mortgage-backed securities	551		—		551		—
Mortgage servicing rights	16,373		—		16,373		—

	Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	1,138,118	$	—	$	1,138,118	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	877,997		—		877,997		—
Private mortgage-backed securities	749		—		749		—
Mortgage servicing rights	11,910		—		11,910		—
Derivative liability contract	383		—		—		383

The following table reconciles the beginning and ending balances of the derivative liability contract measured at fair value on a recurring basis using significant unobservable (Level 3) inputs during the twelve months ended December 31, 2012 and 2011:

For the Twelve Months Ended December 31,	2012			2011
Balance, beginning of period	$	383		$	86
Accruals during the period	—			425
Cash payments during the period	(383		)	(128		)
Balance, end of period	$	—		$	383

The methodologies used by the Company in determining the fair values of each class of financial instruments are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected in an orderly transaction between market participants at the measurement date. The Company obtains fair value measurements for investment securities from an independent pricing service and evaluates mortgage servicing rights for impairment using an independent valuation service. The vendors chosen by the Company are widely recognized vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. The Company has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations. These internal processes include obtaining and reviewing

109

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

available reports on internal controls, evaluating the prices for reasonableness given market changes, obtaining and evaluating the inputs used in the model for a sample of securities, investigating anomalies and confirming determinations through discussions with the vendor. For investment securities, if needed, a broker may be utilized to determine the reported fair value. Further details on the methods used to estimate the fair value of each class of financial instruments above are discussed below:

Investment Securities Available-for-Sale. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the investment's terms and conditions, among other things.

Mortgage Servicing Rights. Mortgage servicing rights are initially recorded at fair value based on comparable market quotes and are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights are evaluated quarterly for impairment using an independent valuation service. The valuation service utilizes discounted cash flow modeling techniques, which consider observable data that includes market consensus prepayment speeds and the predominant risk characteristics of the underlying loans including loan type, note rate and loan term. Management believes the significant inputs utilized in the valuation model are observable in the market.

Derivative Liability Contract. In conjunction with the sale of all of its Class B shares of Visa, Inc. (“Visa”) common stock in 2009, the Company entered into a derivative liability contract with the purchaser whereby the Company will make or receive cash payments based on subsequent changes in the conversion rate of the Class B shares into Class A shares of Visa. The conversion rate is dependent upon the resolution of certain litigation involving Visa U.S.A. Inc. card association or its affiliates. The value of the derivative liability contract is estimated using an internal valuation model with significant unobservable inputs including the Company's expectations regarding the ultimate resolution of the visa litigations and loss severity in the event of unfavorable litigaiton outcomes. The probability of unfavorable outcomes and the estimation of loss severity is determined through review of visa's press releases and public filings made with the Securities and Exchange Commission and managements estimation of the effect of changes in litigation status on the value of the derivative liability contract. On November 9, 2012, the court granted preliminary approval of a settlement agreement resolving the litigation. If finalized, the proposed settlement will not result in additional material liability to the Company.

Additionally, from time to time, certain assets are measured at fair value on a non-recurring basis. Adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment.

The following table presents information about the Company’s assets and liabilities measured at fair value on a non-recurring basis.

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	Total		(Level 1)		(Level 2)		(Level 3)
As of December 31, 2012
Impaired loans	$	74,623	$	—	$	—	$	74,623	$	(32,624	)
Other real estate owned	15,745		—		—		15,745		(20,797		)
As of December 31, 2011
Impaired loans	$	100,035	$	—	$	—	$	100,035	$	(67,043	)
Other real estate owned	17,000		—		—		17,000		(21,282		)

110

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Impaired Loans. Collateralized impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from collateral. The impaired loans are reported at fair value through specific valuation allowance allocations. In addition, when it is determined that the fair value of an impaired loan is less than the recorded investment in the loan, the carrying value of the loan is adjusted to fair value through a charge to the allowance for loan losses. Collateral values are estimated using independent appraisals and management estimates of current market conditions. As of December 31, 2012, certain impaired loans with a carrying value of $107,247 were reduced by specific valuation allowance allocations of $10,297 and partial loan charge-offs of $22,327 resulting in a reported fair value of $74,623. As of December 31, 2011, certain impaired loans with a carrying value of $167,078 were reduced by specific valuation allowance allocations of $32,838 and partial loan charge-offs of $34,205 resulting in a reported fair value of $100,035.

OREO.The fair values of OREO are estimated using independent appraisals and management estimates of current market conditions. Upon initial recognition, write-downs based on the foreclosed asset's fair value at foreclosure are reported through charges to the allowance for loan losses. Periodically, the fair value of foreclosed assets is remeasured with any subsequent write-downs charged to OREO expense in the period in which they are identified.

Long-lived Assets to be Disposed of by Sale. Long-lived assets to be disposed of by sale are carried at the lower of carrying value or fair value less estimated costs to sell. The fair values of long-lived assets to be disposed of by sale are based upon observable market data and management estimates of current market conditions. As of December 31, 2012, a long-lived asset to be disposed of by sale with a carrying value of $566 was reduced by write-downs of $70 charged to other expense resulting in a reported fair value of $496. As of December 31, 2011, the company had a long-lived assets to be disposed of by sale of $1,513 that was carried at cost.

In addition, mortgage loans held for sale are required to be measured at the lower of cost or fair value. The fair value of mortgage loans held for sale is based upon binding contracts or quotes or bids from third party investors. As of December 31, 2012 and 2011, all mortgage loans held for sale were recorded at cost.

The Company is required to disclose the fair value of financial instruments for which it is practical to estimate fair value. The methodologies for estimating the fair value of financial instruments that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for estimating the fair value of other financial instruments are discussed below. For financial instruments bearing a variable interest rate where no credit risk exists, it is presumed that recorded book values are reasonable estimates of fair value.

Financial Assets. Carrying values of cash, cash equivalents and accrued interest receivable approximate fair values due to the liquid and/or short-term nature of these instruments. Fair values for investment securities held-to-maturity are obtained from an independent pricing service, which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the investment’s terms and conditions, among other things. Fair values of fixed rate loans and variable rate loans that reprice on an infrequent basis are estimated by discounting future cash flows using current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality. Carrying values of variable rate loans that reprice frequently, and with no change in credit risk, approximate the fair values of these instruments.

Financial Liabilities. The fair values of demand deposits, savings accounts, securities sold under repurchase agreements and accrued interest payable are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using external market rates currently offered for deposits with similar remaining maturities. The carrying values of the interest bearing demand notes to the United States Treasury are deemed an approximation of fair values due to the frequent repayment and repricing at market rates. The fair value of the derivative liability contract was estimated by discounting cash flows using assumptions regarding the expected outcome of related litigation. The floating rate subordinated debenture, floating rate subordinated term loan, notes payable to the FHLB, fixed rate subordinated term debt, fixed rate subordinated debentures and capital lease obligation are estimated by discounting future cash flows using current rates for advances with similar characteristics. The carrying value of the preferred stock pending redemption approximates fair value due to the short-term nature of this instrument.

111

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

Commitments to Extend Credit and Standby Letters of Credit. The fair value of commitments to extend credit and standby letters of credit, based on fees currently charged to enter into similar agreements, is not significant.

A summary of the estimated fair values of financial instruments follows:

	`				Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	801,332	$	801,332	$	—	$	801,332	$	—
Investment securities available-for-sale	1,995,258		1,995,258		—		1,995,258		—
Investment securities held-to-maturity	208,223		218,933		—		218,933		—
Accrued interest receivable	28,869		28,869		—		28,869		—
Mortgage servicing rights, net	12,653		16,373		—		16,373
Net loans	4,123,401		4,142,426		—		4,067,803		74,623
Total financial assets	$	7,169,736	$	7,203,191	$	—	$	7,128,568	$	74,623
Financial liabilities:
Total deposits, excluding time deposits	$	4,854,927	$	4,854,927	$	—	$	4,854,927	$	—
Time deposits	1,385,484		1,394,403		—		1,394,403		—
Securities sold under repurchase agreements	505,785		505,785		—		505,785		—
Other borrowed funds	32		32		—		32		—
Accrued interest payable	6,502		6,502		—		6,502		—
Long-term debt	37,160		35,104		—		35,104		—
Preferred stock pending redemption	50,000		50,000		—		50,000		—
Subordinated debentures held by subsidiary trusts	82,477		62,409		—		62,409
Total financial liabilities	$	6,922,367	$	6,909,162	$	—	$	6,909,162	$	—

112

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

					Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	472,447	$	472,447	$	—	$	472,447	$	—
Investment securities available-for-sale	2,016,864		2,016,864		—		2,016,864		—
Investment securities held-to-maturity	152,781		161,877		—		161,877		—
Accrued interest receivable	31,974		31,974		—		31,974		—
Mortgage servicing rights, net	11,555		11,910		—		11,910		—
Net loans	4,073,968		4,064,718		—		3,964,683		100,035
Total financial assets	$	6,759,589	$	6,759,790	$	—	$	6,659,755	$	100,035
Financial liabilities:
Total deposits, excluding time deposits	$	4,269,631	$	4,269,631	$	—	$	4,269,631	$	—
Time deposits	1,557,340		1,565,558		—		1,565,558		—
Securities sold under repurchase agreements	516,243		516,243		—		516,243		—
Other borrowed funds	7		7		—		7		—
Accrued interest payable	8,123		8,123		—		8,123		—
Long-term debt	37,200		34,341		—		34,341		—
Subordinated debentures held by subsidiary trusts	123,715		102,525		—		102,525		—
Derivative contract liability	383		383				—		383
Total financial liabilities	$	6,512,642	$	6,496,811	$	—	$	6,496,428	$	383

(24) RELATED PARTY TRANSACTIONS

The Company conducts banking transactions in the ordinary course of business with related parties, including directors, executive officers, shareholders and their associates, on the same terms as those prevailing at the same time for comparable transactions with unrelated persons and that do not involve more than a normal risk of collectibility or present other unfavorable features.

Certain executive officers, directors and greater than 5% shareholders of the Company and certain entities and individuals related to such persons, incurred indebtedness in the form of loans, as customers, of $36,067 and $44,430 at December 31, 2012 and 2011, respectively. During 2012, new loans and advances on existing loans of $15,751 were funded and loan repayments totaled $24,556. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company and are allowable under the Sarbanes Oxley Act of 2002. Additionally, during 2012, net loans of $442 were added due to changes in related parties from the prior year.

The Company purchases property, casualty and other insurance through an agency in which a director of the Company has a controlling ownership interest. The Company paid insurance premiums to the agency of $839, $1,328, and $879 in 2012, 2011 and 2010, respectively.

113

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

The Company leases an aircraft from an entity wholly-owned by the chairman of the Company’s Board of Directors. Under the terms of the lease, the Company pays a fee for each flight hour plus certain third party operating expenses related to the aircraft. During 2012, 2011 and 2010, the Company paid total fees and operating expenses of $262, $311 and $305, respectively, for its use of the aircraft. In addition, the Company leases a portion of its hanger and provides pilot services to the related entity. During 2012, 2011 and 2010, the Company received payments from the related entity of $47, $70 and $63, respectively, for hanger use, pilot fees and reimbursement of certain third party operating expenses related to the chairman’s personal use of the aircraft.

The Company purchases services from an entity in which four greater than 5% shareholders and six directors of the Company, including the chairman and vice chairman of the Board of Directors, have an aggregate ownership interest of 25%, and in which the vice chairman is the chairman of such entity. Services provided for the Company’s benefit include shareholder education and communication, strategic enterprise planning and corporate governance consultation.

During 2012, 2011 and 2010, the Company paid $243, $250 and $337, respectively, for these services. The Company also reimbursed the related entity for certain costs incurred in the Company’s behalf, primarily office costs for the vice chairman of the Company’s Board of Directors and the Company’s charitable foundation. These reimbursements totaled $88 in 2010. During 2012 and 2011, the Company paid these costs directly and thus no reimbursements were made. The related entity reimburses the Company for all salaries, wages and employee benefits expenses incurred by the Company in behalf of the related entity for its personnel.

During 2012, the Company entered into a contract with an entity wholly-owned by a director of the Company to provide construction management and advisory services related to the construction of a bank office building. Under the terms of the agreement, the entity will receive payments equal to the lesser of a fixed price of $180 or 4% of the actual construction contract price, with an initial payment of $60 due upon execution of the agreement and the remainder due in two equal installments over a two year period. Under the terms of the contract, the Company paid the entity $60 during 2012.

In conjunction with an acquisition, the Company assumed certain existing deferred compensatory agreements. Under the terms of one such agreement, the Company is required to make cash payments to a director of the Company for the promotion of growth and development of new business through December 31, 2011. The total amount due under the agreement was fixed prior to the acquisition date at $577, with a portion to be paid over 4 years and the remaining balance of $424 due in January 2012. As additional consideration under the agreement, the director provided, among other things, a covenant not to compete. Under the terms of the agreement, the Company made cash payments of $424 during 2012 and $38 during 2011 and 2010, respectively.

A director of the Company is party to an agreement to guarantee the payment of interest on loans between FIB and an unrelated third party borrower through December 31, 2012. Under the terms of the interest guaranty agreement, the director made interest payments to FIB on behalf of the borrower of $815 in 2012, $954 in 2011 and $487 in 2010. In addition, the director pledged to FIB collateral for the loans of the unrelated third party borrower. During 2011, the collateral was liquidated and proceeds of $7,998 were applied to the outstanding principal balances of the loans.

During 2010, the Company entered into an agreement to sell real property to a director of the Company. The sale closed in 2011 at a sales price of $2,695.

(25) AUTHORITATIVE ACCOUNTING GUIDANCE

ASU No. 2011-03, "Transfers and Servicing (Topic 860) - Reconsideration of Effective Control for Repurchase Agreements." Accounting Standards Update (“ASU”) No. 2011-03 is intended to improve financial reporting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU No. 2011-03 removes from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The provisions of ASU No. 2011-03 became effective for the Company on January 1, 2012 and did not impact the Company's consolidated financial statements, results of operations or liquidity.

114

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

ASU No. 2011-04, "Fair Value Measurements (Topic 820) - Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs." ASU No. 2011-04 amends Topic 820, "Fair Value Measurements and disclosures," to converge the fair value measurements guidance in U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value disclosures. ASU No. 2011-04 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income.” ASU 2011-05 amends Topic 220, “Comprehensive Income,” to require that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 became effective for the Company on January 1, 2012; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” as further discussed below. Adoption of the provisions of ASU 2011-05 did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350) - Testing Goodwill for Impairment.” ASU 2011-08 amends Topic 350, “Intangibles - Goodwill and Other,” to give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011. The adoption of ASU2011-08 did not have a significant impact on the Company's annual impairment test conducted as of July 1, 2012, or on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-11, “Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities.” ASU 2011-11 amends Topic 210, “Balance Sheet,” to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject to a master netting arrangement or similar agreement. In response to this update, FASB has since issued ASU 2013-01 to clarify the scope of ASU 2011-11, stating that only entities that have derivatives accounted for with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions subject to an enforceable master netting arrangement or similar agreement will require disclosure. Other types of financial instruments subject to a master netting arrangement or similar agreement are no longer subject of this disclosure requirement. The effective date of ASU 2013-01 is the same as Update 2011-11; ASU 2011-11 is effective for annual and interim periods beginning on January 1, 2013, and is not expected to have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income. ASU 2011-12 allows entities

115

FIRST INTERSTATE BANCSYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share data)

to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05. ASU 2011-12 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2012-02 "Intangibles - Goodwill and Other Topics (Topic 350)." ASU 2012-02 amends Topic 350, “Intangibles - Goodwill and Other,” to reduce the cost and complexity of performing an impairment test for indefinite-lived assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments in ASU 2012-02 permit an entity to first assess the qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. In addition, ASU 2012-02 provides an entity with an option not to calculate annually the fair value of in indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted including for annual and interim impairment test performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued. Adoption of the amendments in ASU 2012-02 on July 1, 2012 did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2013-02 “Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” ASU 2013-02 requires entities to provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendments in ASU 2013-02 require entities to present, either on the face of the income statement or in the notes significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required by U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for public entities for reporting periods beginning after December 15, 2012. Management does expect the amendments in ASU 2013-02 to have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

(26) SUBSEQUENT EVENTS

Subsequent events have been evaluated for potential recognition and disclosure through the date financial statements were filed with the Securities and Exchange Commission. No events requiring recognition or disclosure were identified.

116

(a) 2. Financial statement schedules

All other schedules to the consolidated financial statements of the Registrant are omitted since the required information is either not applicable, deemed immaterial, or is shown in the respective financial statements or in notes thereto.

(a) 3. Exhibits

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation dated March 5, 2010 (incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K/A filed on March 10, 2010)
3.2	Second Amended and Restated Bylaws dated January 27, 2011 (incorporated herein by reference to Exhibit 3.8 of the Company’s Current Report on Form 8-K filed on February 3, 2011)
4.1	Specimen of Series A preferred stock certificate of First Interstate BancSystem, Inc. (incorporated herein by reference to Exhibit 4.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007)
10.1	Credit Agreement Re: Subordinated Term Note dated as of January 10, 2008, between First Interstate BancSystem, Inc. and First Midwest Bank (incorporated herein by reference to Exhibit 10.24 of the Company’s Current Report on Form 8-K filed on January 16, 2008)
10.2	Lease Agreement between Billings 401 Joint Venture and First Interstate Bank Montana dated September 20, 1985 and addendum thereto (incorporated herein by reference to Exhibit 10.4 of the Company’s Post-Effective Amendment No. 3 to Registration Statement on Form S-1, No. 033-84540, filed on September 29, 1994)
10.3†	First Interstate BancSystem’s Deferred Compensation Plan dated December 1, 2006 (incorporated herein by reference to Exhibit 10.9 of the Company’s Pre-Effective Amendment No. 3 to Registration Statement on Form S-1, No. 333-164380, filed on March 23, 2010)
10.4†	First Amendment to the First Interstate BancSystem’s Deferred Compensation Plan dated October 24, 2008 (incorporated herein by reference to Exhibit 10.10 of the Company’s Pre-Effective Amendment No. 3 to Registration Statement on Form S-1, No. 333-164380, filed on March 23, 2010)
10.5†	2001 Stock Option Plan, as amended (incorporated herein by reference to Exhibit 4.12 of the Company’s Registration Statement on Form S-8, No. 333-106495, filed on June 25, 2003)
10.6†	Second Amendment to 2001 Stock Option Plan (incorporated herein by reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010)
10.7†	First Interstate BancSystem, Inc. 2006 Equity Compensation Plan (incorporated herein by reference to Appendix A of the Company’s 2006 Definitive Proxy Statement on Schedule 14A)
10.8†	Amendment to the First Interstate BancSystem, Inc. 2006 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 22, 2010)
10.9†	Second Amendment to the First Interstate BancSystem, Inc. 2006 Equity Compensation Plan (incorporated herein by reference to Exhibit 10.9 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010)
10.10†	Form of First Interstate BancSystem, Inc. 2006 Equity Compensation Plan Restricted Stock Agreement (Time) for Certain Executive Officers (incorporated herein by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008)

117

Exhibit Number	Description
10.11†	Form of First Interstate BancSystem, Inc. 2006 Equity Compensation Plan Restricted Stock Agreement (Performance) for Certain Executive Officers (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 13, 2013)
10.12†	First Interstate BancSystem, Inc. 2006 Equity Compensation Plan Restricted Stock Agreement (Performance) for Lyle R. Knight (incorporated herein by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008)
10.13†	First Interstate BancSystem, Inc. 2006 Equity Compensation Plan Restricted Stock Agreement (Performance) for Lyle R. Knight (incorporated herein by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008)
10.14	Trademark License Agreements between Wells Fargo & Company and First Interstate BancSystem, Inc. (incorporated herein by reference to Exhibit 10.11 of the Registration Statement on Form S-1, filed on April 22, 1997)
14.1	Code of Ethics for Chief Executive Officer and Senior Financial Officers (incorporated herein by reference to Exhibit 14.1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010)
21.1*	Subsidiaries of First Interstate BancSystem, Inc.
23.1*	Consent of McGladrey LLP Independent Registered Public Accounting Firm
31.1*	Certification of Annual Report on Form 10-K pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer
31.2*	Certification of Annual Report on Form 10-K pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer
32*	Certification of Annual Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	Interactive data file

† Management contract or compensatory plan or arrangement.

* Filed herewith.

** As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

(b) Exhibits

See Item 15(a)3 above.

(c) Financial Statements Schedules

See Item 15(a)2 above.

118

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

First Interstate BancSystem, Inc.
By:	/s/ ED GARDING	February 28, 2013
	Ed Garding	Date
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ THOMAS W. SCOTT	February 28, 2013
	Thomas W. Scott, Chairman of the Board	Date
By:	/s/ JAMES R. SCOTT	February 28, 2013
	James R. Scott, Vice Chairman of the Board	Date
By:	/s/ STEVEN J. CORNING	February 28, 2013
	Steven J. Corning, Director	Date
By:	/s/ DAVID H. CRUM	February 28, 2013
	David H. Crum, Director	Date
By:	/s/ WILLIAM B. EBZERY	February 28, 2013
	William B. Ebzery, Director	Date
By:	/s/ CHARLES E. HART, M.D., M.S.	February 28, 2013
	Charles E. Hart, M.D., M.S., Director	Date
By:	/s/ JAMES W. HAUGH	February 28, 2013
	James W. Haugh, Director	Date
By:	/s/ CHARLES M. HEYENMAN	February 28, 2013
	Charles M. Heyneman, Director	Date
By:	/s/ JOHN M. HEYNEMAN, JR.	February 28, 2013
	John M. Heyneman, Jr., Director	Date
By:	/s/ DAVID L. JAHNKE	February 28, 2013
	David L. Jahnke, Director	Date
By:	/s/ ROSS E. LECKIE	February 28, 2013
	Ross E. Leckie, Director	Date
By:	/s/ TERRY W. PAYNE	February 28, 2013
	Terry W. Payne, Director	Date
By:	/s/ RANDALL I. SCOTT	February 28, 2013
	Randall I. Scott, Director	Date
By:	/s/ SANDRA A. SCOTT SUZOR	February 28, 2013
	Sandra A. Scott Suzor, Director	Date
By:	/s/ MICHAEL J. SULLIVAN	February 28, 2013
	Michael J. Sullivan, Director	Date
By:	/s/ TERESA A. TAYLOR	February 28, 2013
	Teresa A. Taylor, Director	Date

119

By:	/s/ ED GARDING	February 28, 2013
	Ed Garding President, Chief Executive Officer and Director (Principal executive officer)	Date
By:	/s/ TERRILL R. MOORE	February 28, 2013
	Terrill R. Moore Executive Vice President and Chief Financial Officer (Principal financial and accounting officer)	Date

120

EX-21.1

Exhibit 21.1

Subsidiaries of First Interstate BancSystem, Inc.

Subsidiary	State of Incorporation or Jurisdiction of Organization	Business Name
First Interstate Bank	Montana	First Interstate Bank
First Western Data, Inc.	South Dakota	First Western Data, Inc.
First Interstate Statutory Trust	Delaware	First Interstate Statutory Trust
FI Statutory Trust I	Connecticut	FI Statutory Trust I
FI Capital Trust II	Delaware	FI Capital Trust II
FI Statutory Trust III	Delaware	FI Statutory Trust III
FI Capital Trust IV	Delaware	FI Capital Trust IV
FI Statutory Trust V	Delaware	FI Statutory Trust V
FI Statutory Trust VI	Delaware	FI Statutory Trust VI
Commerce Financial, Inc.	Montana	Commerce Financial, Inc.
First Interstate Insurance Agency, Inc.	Montana	First Interstate Insurance Agency, Inc.
FIBCT, LLC	Montana	Crytech
FIB, LLC	Montana	FIB, LLC

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-106495 and Form S-8 No. 333-69490) pertaining to the First Interstate BancSystem, Inc. 2001 Stock Option Plan, as amended; and Registration Statement (Form S-8 No. 333-133837) pertaining to the First Interstate BancSystem, Inc. 2006 Equity Compensation Plan, as amended, of our reports dated February 28, 2013, relating to our audits of the consolidated financial statements and internal control over financial reporting which appear in the Annual Report on Form 10-K of First Interstate BancSystem, Inc. for the year ended December 31, 2012.

/s/ MCGLADREY LLP

Des Moines, Iowa

February 28, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION OF ANNUAL REPORT ON FORM 10-K

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ed Garding, certify that:

1. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2012 of First Interstate BancSystem, Inc.,

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

DATE: February 28, 2013

/s/ ED GARDING

Ed Garding

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF ANNUAL REPORT ON FORM 10-K

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Terrill R. Moore, certify that:

1. I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2012 of First Interstate BancSystem, Inc.,

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

DATE: February 28, 2013

/s/ TERRILL R. MOORE

Terrill R. Moore

Executive Vice President and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned are the Chief Executive Officer and the Chief Financial Officer of First Interstate BancSystem, Inc. (the “Registrant”). This Certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Certification accompanies the Annual Report on Form 10-K of the Registrant for the year ended December 31, 2012.

We certify to the best of our knowledge that such Annual Report on Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant for the periods presented therein.

This Certification is executed as of February 28, 2013.

/s/ ED GARDING

Ed Garding

President and Chief Executive Officer 

/s/ TERRILL R. MOORE  

Terrill R. Moore 

Executive Vice President and

Chief Financial Officer 

The forgoing certification is being furnished solely pursuant to Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

XML

Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Premises and Equipment and Related Accumulated Depreciation

Premises and equipment and related accumulated depreciation are as follows:

December 31,	2012			2011
Land	$	38,917		$	38,743
Buildings and improvements	195,549			188,509
Furniture and equipment	68,688			63,939
	303,154			291,191
Less accumulated depreciation	(115,589		)	(106,420		)
Premises and equipment, net	$	187,565		$	184,771

XML

Summary of Significant Accounting Policies (Details) (USD $)	2 Months Ended	12 Months Ended
	Mar. 05, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Accounting Policies [Abstract]
Stock issued during period, shares, stock split	4
Cash and Cash Equivalents [Abstract]
Cash on deposit with Federal Reserve Bank		$ 622,152,000	$ 329,390,000
Compensating balances with Federal Reserve Bank		1,057,000	5,000,000
Loans and Leases Receivable Disclosure [Abstract]
Mortgage loans held for sale		66,442,000	53,521,000
Impairment losses		70	0	0
Write-downs of OREO		6,724,000	7,464,000	6,724,000
Federal Home Loan Bank Stock and Federal Reserve Bank Stock [Abstract]
Federal Reserve Bank stock		13,357,000	13,357,000
Federal Home Loan Bank stock		6,687,000	6,807,000
Advertising expense		3,555,000	3,048,000	3,200,000
Share-based Compensation [Abstract]
Stock compensation expense		2,485,000	1,906,000	1,660,000
Tax benefits from stock-based compensation		$ 950,000	$ 728,000	$ 635,000

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

The total future minimum rental commitments, exclusive of maintenance and operating costs, required under operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 2012, are as follows:

	Third Parties		Related Partnership		Total
For the year ending December 31:
2013	$	1,110	$	2,111	$	3,221
2014	1,062		2,020		3,082
2015	1,005		1,438		2,443
2016	919		165		1,084
2017	633		83		716
Thereafter	4,170		—		4,170
Total	$	8,899	$	5,817	$	14,716

XML

Company - Owned Life Insurance (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Company - Owned Life Insurance, By Type
Company owned life insurance	$ 76,729	$ 74,880
Key executive, principal shareholder
Schedule of Company - Owned Life Insurance, By Type
Cash surrender value of life insurance	4,858	4,800
Key executive split dollar
Schedule of Company - Owned Life Insurance, By Type
Cash surrender value of life insurance	4,538	4,441
Group life
Schedule of Company - Owned Life Insurance, By Type
Cash surrender value of life insurance	$ 67,333	$ 65,639

XML

Summary of Significant Accounting Policies - Premises and Equipment (Details)	12 Months Ended
	Dec. 31, 2012
Buildings and improvements | Minimum
Property, Plant and Equipment
Estimated useful lives	5 years
Buildings and improvements | Maximum
Property, Plant and Equipment
Estimated useful lives	45 years
Furniture and equipment | Minimum
Property, Plant and Equipment
Estimated useful lives	4 years
Furniture and equipment | Maximum
Property, Plant and Equipment
Estimated useful lives	15 years

XML

Subordinated Debentures Held by Subsidiary Trusts - Subordinated Debentures (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended		0 Months Ended
	Dec. 31, 2012 trusts	Dec. 31, 2011	Jun. 26, 2012 First Interstate Statutory Trust (FIST) Junior Subordinated Deferrable Interest Debentures Issued by FIST	Dec. 31, 2012 First Interstate Statutory Trust (FIST) Junior Subordinated Deferrable Interest Debentures Issued by FIST	Dec. 31, 2011 First Interstate Statutory Trust (FIST) Junior Subordinated Deferrable Interest Debentures Issued by FIST	Jun. 26, 2012 First Interstate Statutory Trust (FIST) Junior Subordinated Deferrable Interest Debentures Issued by FIST LIBOR	Dec. 31, 2012 First Interstate Statutory Trust II Junior Subordinated Deferrable Interest Debentures Issued by FIST II	Dec. 31, 2011 First Interstate Statutory Trust II Junior Subordinated Deferrable Interest Debentures Issued by FIST II	Oct. 31, 2007 First Interstate Statutory Trust II Junior Subordinated Deferrable Interest Debentures Issued by FIST II	Oct. 31, 2007 First Interstate Statutory Trust II Junior Subordinated Deferrable Interest Debentures Issued by FIST II LIBOR	Dec. 31, 2012 First Interstate Statutory Trust I Junior Subordinated Deferrable Interest Debentures Issued by FIST I	Dec. 31, 2011 First Interstate Statutory Trust I Junior Subordinated Deferrable Interest Debentures Issued by FIST I	Nov. 30, 2007 First Interstate Statutory Trust I Junior Subordinated Deferrable Interest Debentures Issued by FIST I	Nov. 30, 2007 First Interstate Statutory Trust I Junior Subordinated Deferrable Interest Debentures Issued by FIST I Debt Instrument, Redemption, At Issuance through Year Five	Nov. 30, 2007 First Interstate Statutory Trust I Junior Subordinated Deferrable Interest Debentures Issued by FIST I LIBOR Debt Instrument, Redemption, After Period Five	Dec. 31, 2012 First Interstate Statutory Trust III Junior Subordinated Deferrable Interest Debentures Issued by FIST III	Dec. 31, 2011 First Interstate Statutory Trust III Junior Subordinated Deferrable Interest Debentures Issued by FIST III	Dec. 31, 2007 First Interstate Statutory Trust III Junior Subordinated Deferrable Interest Debentures Issued by FIST III	Dec. 31, 2007 First Interstate Statutory Trust III Junior Subordinated Deferrable Interest Debentures Issued by FIST III Debt Instrument, Redemption, At Issuance through Year Five	Dec. 31, 2007 First Interstate Statutory Trust III Junior Subordinated Deferrable Interest Debentures Issued by FIST III LIBOR Debt Instrument, Redemption, After Period Five	Dec. 31, 2012 First Interstate Statutory Trust IV Junior Subordinated Deferrable Interest Debentures Issued by FIST IV	Dec. 31, 2011 First Interstate Statutory Trust IV Junior Subordinated Deferrable Interest Debentures Issued by FIST IV	Dec. 31, 2012 First Interstate Statutory Trust IV Junior Subordinated Deferrable Interest Debentures Issued by FIST IV LIBOR	Dec. 31, 2012 First Interstate Statutory Trust V Junior Subordinated Deferrable Interest Debentures Issued by FIST V	Dec. 31, 2011 First Interstate Statutory Trust V Junior Subordinated Deferrable Interest Debentures Issued by FIST V	Jan. 31, 2008 First Interstate Statutory Trust V Junior Subordinated Deferrable Interest Debentures Issued by FIST V	Jan. 31, 2008 First Interstate Statutory Trust V Junior Subordinated Deferrable Interest Debentures Issued by FIST V Debt Instrument, Redemption, At Issuance through Year Five	Jan. 31, 2008 First Interstate Statutory Trust V Junior Subordinated Deferrable Interest Debentures Issued by FIST V LIBOR Debt Instrument, Redemption, After Period Five	Dec. 31, 2012 First Interstate Statutory Trust VI Junior Subordinated Deferrable Interest Debentures Issued by FIST VI	Dec. 31, 2011 First Interstate Statutory Trust VI Junior Subordinated Deferrable Interest Debentures Issued by FIST VI	Jan. 31, 2008 First Interstate Statutory Trust VI Junior Subordinated Deferrable Interest Debentures Issued by FIST VI	Jan. 31, 2008 First Interstate Statutory Trust VI Junior Subordinated Deferrable Interest Debentures Issued by FIST VI LIBOR
Subordinated Borrowing
Number of company sponsored wholly-owned business trusts	7
Subordinated debentures held by subsidiary trusts	$ 82,477	$ 123,715		$ 0	$ 41,238		$ 10,310	$ 10,310	$ 10,310		$ 15,464	$ 15,464	$ 15,464			$ 20,619	$ 20,619	$ 20,619			$ 15,464	$ 15,464		$ 10,310	$ 10,310	$ 10,310			$ 10,310	$ 10,310	$ 10,310
Redemption price			41,238
Debt instrument, basis spread on variable rate						3.15%				2.25%					2.75%					2.40%			2.70%					2.75%				2.75%
Liquidation amount per security			1
Unamortized issuance costs charged to other expense			428
Mandatory redemption of trust preferred securities			40,000
Capitalization of subsidiaries			$ 1,238
Debt instrument, interest rate, stated percentage														7.50%					6.88%								6.78%
Debt instrument, interest rate at period end							2.61%				3.06%					2.71%					3.06%								3.11%

XML

Fair Value Measurements - Derivative Liability Contract Measured at Fair Value on a Recurring Basis (Details) (Fair Value Measured on a Recurring Basis, Derivative Liability Contract, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Fair Value Measured on a Recurring Basis | Derivative Liability Contract
Derivative Liability Contract Measured at Fair Value on a Recurring Basis Unobservable Input Reconciliation
Balance, beginning of period	$ 383	$ 86
Accruals during the period	0	425
Cash payments during the period	(383)	(128)
Balance, end of period	$ 0	$ 383

XML

Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per common share:

Year Ended December 31,	2012		2011		2010
Net income	$	58,224	$	44,546	$	37,356
Less preferred stock dividends	3,300		3,422		3,422
Net income available to common shareholders, basic and diluted	$	54,924	$	41,124	$	33,934
Weighted average common shares outstanding for basic earnings per share computation	42,965,987		42,749,526		39,907,640
Dilutive effects of stock-based compensation	126,991		97,670		219,725
Weighted average common shares outstanding for diluted earnings per common share computation	43,092,978		42,847,196		40,127,365
Basic earnings per common share	$	1.28	$	0.96	$	0.85
Diluted earnings per common share	$	1.27	$	0.96	$	0.85

XML

Authoritative Accounting Guidance

12 Months Ended

Dec. 31, 2012

Accounting Changes and Error Corrections [Abstract]

Authoritative Accounting Guidance

AUTHORITATIVE ACCOUNTING GUIDANCE

ASU No. 2011-03, "Transfers and Servicing (Topic 860) - Reconsideration of Effective Control for Repurchase Agreements." Accounting Standards Update (“ASU”) No. 2011-03 is intended to improve financial reporting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU No. 2011-03 removes from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The provisions of ASU No. 2011-03 became effective for the Company on January 1, 2012 and did not impact the Company's consolidated financial statements, results of operations or liquidity.

ASU No. 2011-04, "Fair Value Measurements (Topic 820) - Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs." ASU No. 2011-04 amends Topic 820, "Fair Value Measurements and disclosures," to converge the fair value measurements guidance in U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value disclosures. ASU No. 2011-04 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income.” ASU 2011-05 amends Topic 220, “Comprehensive Income,” to require that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 became effective for the Company on January 1, 2012; however, certain provisions related to the presentation of reclassification adjustments have been deferred by ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” as further discussed below. Adoption of the provisions of ASU 2011-05 did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-08, “Intangibles - Goodwill and Other (Topic 350) - Testing Goodwill for Impairment.” ASU 2011-08 amends Topic 350, “Intangibles - Goodwill and Other,” to give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011. The adoption of ASU2011-08 did not have a significant impact on the Company's annual impairment test conducted as of July 1, 2012, or on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-11, “Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities.” ASU 2011-11 amends Topic 210, “Balance Sheet,” to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject to a master netting arrangement or similar agreement. In response to this update, FASB has since issued ASU 2013-01 to clarify the scope of ASU 2011-11, stating that only entities that have derivatives accounted for with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions subject to an enforceable master netting arrangement or similar agreement will require disclosure. Other types of financial instruments subject to a master netting arrangement or similar agreement are no longer subject of this disclosure requirement. The effective date of ASU 2013-01 is the same as Update 2011-11; ASU 2011-11 is effective for annual and interim periods beginning on January 1, 2013, and is not expected to have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2011-12 “Comprehensive Income (Topic 220) - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income. ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05. ASU 2011-12 became effective for the Company on January 1, 2012 and did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2012-02 "Intangibles - Goodwill and Other Topics (Topic 350)." ASU 2012-02 amends Topic 350, “Intangibles - Goodwill and Other,” to reduce the cost and complexity of performing an impairment test for indefinite-lived assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments in ASU 2012-02 permit an entity to first assess the qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. In addition, ASU 2012-02 provides an entity with an option not to calculate annually the fair value of in indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted including for annual and interim impairment test performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued. Adoption of the amendments in ASU 2012-02 on July 1, 2012 did not have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

ASU 2013-02 “Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” ASU 2013-02 requires entities to provide information about amounts reclassified out of accumulated other comprehensive income by component. The amendments in ASU 2013-02 require entities to present, either on the face of the income statement or in the notes significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required by U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. ASU 2013-02 is effective for public entities for reporting periods beginning after December 15, 2012. Management does expect the amendments in ASU 2013-02 to have a significant impact on the Company's consolidated financial statements, results of operations or liquidity.

XML

Capital Stock and Dividend Restrictions (Details) (USD $)	2 Months Ended	12 Months Ended							1 Months Ended	12 Months Ended
	Mar. 05, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Series A Preferred Stock	Dec. 31, 2010 Class B Common Stock votes_per_shares	Dec. 31, 2012 Class B Common Stock	Dec. 31, 2011 Class B Common Stock	Mar. 31, 2010 Class A Common Stock	Dec. 31, 2010 Class A Common Stock vote	Dec. 31, 2012 Class A Common Stock	Dec. 31, 2011 Class A Common Stock	Mar. 30, 2010 Class A Common Stock	Mar. 29, 2010 Class A Common Stock	Mar. 05, 2010 Class A Common Stock	Mar. 04, 2010 Class A Common Stock
Preferred Stock
Nonvoting, noncumulative preferred stock, shares outstanding		5,000	5,000		5,000,000
Preferred stock, dividend rate, percentage					6.75%
Preferred stock, value, issued					$ 50,000,000
Preferred stock, dividend rate, per-dollar-amount					$ 675
Preferred stock, redemption price per share					$ 10,000
Preferred stock, aggregate redemption price					50,150
Common Stock, Recapitalization
Recapitalization, common stock votes per share						5
Stock issued during period, shares, stock split	4					4
Common stock, shares authorized															100,000,000	20,000,000
Common stock, vote per share										1
Common Stock
Common stock, shares issued, IPO														10,000,000
Common stock, additional shares issued from IPO													1,500,000
Proceeds from issuance of common stock		$ 1,911,000	$ 385,000	$ 167,400,000					$ 153,153,000
Common stock, shares, outstanding							25,654,954	26,540,745			17,635,369	16,443,429

XML

Mortgage Servicing Rights - At Fair Value (Details) (Mortgage loans, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Mortagage servicing rights, fair value	$ 16,373
Servicing asset at fair value, assumptions used to estimate fair value, weighted average life	4 years 4 months 21 days
Minimum
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Servicing assets at fair value, assumptions used to estimate fair value, discount rate	8.50%
Servicing assets at fair value, assumptions used to estimate fair value, prepayment speed	0.70%
Maximum
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Servicing assets at fair value, assumptions used to estimate fair value, discount rate	21.00%
Servicing assets at fair value, assumptions used to estimate fair value, prepayment speed	6.10%

XML

Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Loans, principally due to allowance for loan losses	$ 38,688	$ 42,602
Employee benefits	7,041	7,659
Other real estate owned write-downs and carrying costs	6,850	7,444
Deferred gain on sale of subsidiary	750	1,010
Other	385	428
Deferred tax assets	53,714	59,143
Deferred tax liabilities:
Fixed assets, principally differences in bases and depreciation	(4,711)	(4,284)
Investment securities, unrealized gains	(11,360)	(13,091)
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets	(782)	(855)
Prepaid amounts	(1,052)	(921)
Government agency stock dividends	(2,060)	(2,079)
Goodwill and core deposit intangibles	(25,815)	(22,736)
Mortgage servicing rights	(4,418)	(4,150)
Other	(919)	(1,399)
Deferred tax liabilities	51,117	49,515
Net deferred tax assets	2,597	9,628
Current income tax payable	$ 3,691	$ 489

XML

Investment Securities - Amortized Cost and Approximate Fair Values of Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Available-for-Sale:
Available-for-Sale, Amortized Cost	$ 1,966,417	$ 1,983,629
Available-for-Sale, Gross Unrealized Gains	30,531	33,927
Available-for-Sale, Gross Unrealized Losses	(1,690)	(692)
Available-for-Sale, Estimated Fair Value	1,995,258	2,016,864
Held-to-Maturity:
Held-to-Maturity, Amortized Cost	208,223	152,781
Held-to-Maturity, Gross Unrealized Gains	10,899	9,113
Held-to-Maturity, Gross Unrealized Losses	(189)	(17)
Held-to-Maturity, Estimated Fair Value	218,933	161,877
Gross realized gains	351	1,544	173
Gross realized losses	3	0	3
Obligations of U.S. government agencies
Available-for-Sale:
Available-for-Sale, Amortized Cost	751,501	1,134,427
Available-for-Sale, Gross Unrealized Gains	3,518	4,353
Available-for-Sale, Gross Unrealized Losses	(163)	(662)
Available-for-Sale, Estimated Fair Value	754,856	1,138,118
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations
Available-for-Sale:
Available-for-Sale, Amortized Cost	1,214,377	848,444
Available-for-Sale, Gross Unrealized Gains	27,000	29,567
Available-for-Sale, Gross Unrealized Losses	(1,526)	(14)
Available-for-Sale, Estimated Fair Value	1,239,851	877,997
Private mortgage-backed securities
Available-for-Sale:
Available-for-Sale, Amortized Cost	539	758
Available-for-Sale, Gross Unrealized Gains	13	7
Available-for-Sale, Gross Unrealized Losses	(1)	(16)
Available-for-Sale, Estimated Fair Value	551	749
State, county and municipal securities
Held-to-Maturity:
Held-to-Maturity, Amortized Cost	192,875	152,619
Held-to-Maturity, Gross Unrealized Gains	10,835	9,113
Held-to-Maturity, Gross Unrealized Losses	(176)	(17)
Held-to-Maturity, Estimated Fair Value	203,534	161,715
Corporate securities
Held-to-Maturity:
Held-to-Maturity, Amortized Cost	14,975
Held-to-Maturity, Gross Unrealized Gains	64
Held-to-Maturity, Gross Unrealized Losses	(13)
Held-to-Maturity, Estimated Fair Value	15,026
Other securities
Held-to-Maturity:
Held-to-Maturity, Amortized Cost	373	162
Held-to-Maturity, Gross Unrealized Gains	0	0
Held-to-Maturity, Gross Unrealized Losses	0	0
Held-to-Maturity, Estimated Fair Value	$ 373	$ 162

XML

Long-Term Debt and Other Borrowed Funds (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Parent Company	Dec. 31, 2011 Parent Company	Dec. 31, 2012 Subordinated Debt Subordinated Term Loan, 6.81% Parent Company	Dec. 31, 2011 Subordinated Debt Subordinated Term Loan, 6.81% Parent Company	Jan. 10, 2008 Subordinated Debt Subordinated Term Loan, 6.81% Parent Company	Dec. 31, 2012 Subordinated Debt Subordinated Term Loan, Variable Rate Subsidiaries	Dec. 31, 2011 Subordinated Debt Subordinated Term Loan, Variable Rate Subsidiaries	Feb. 28, 2008 Subordinated Debt Subordinated Term Loan, Variable Rate Subsidiaries	Dec. 31, 2012 Subordinated Debt Subordinated Term Loan, Variable Rate Subsidiaries LIBOR	Dec. 31, 2012 Notes Payable to Banks Notes Payable to FHLB Subsidiaries	Dec. 31, 2011 Notes Payable to Banks Notes Payable to FHLB Subsidiaries	Dec. 31, 2012 Capital Lease Obligations Capital Lease Obligation, 8.00% Subsidiaries	Dec. 31, 2011 Capital Lease Obligations Capital Lease Obligation, 8.00% Subsidiaries	Dec. 31, 2011 Federal Home Loan Bank Notes Payable to FHLB	Dec. 31, 2012 Federal Home Loan Bank Notes Payable to FHLB Subsidiaries	Dec. 31, 2012 Federal Funds Purchased	Dec. 31, 2012 Federal Reserve Bank Advances
Debt Instrument
Long-term debt			$ 20,000	$ 20,000	$ 20,000	$ 20,000		$ 15,000	$ 15,000			$ 425	$ 425
Capital Lease Obligations														1,735	1,775
Long-term debt and capital lease obligations	37,160	37,200
Fiscal Year Maturities of Long-term Debt [Abstract]
2013	244
2014	49
2015	285
2016	65
2017	71
Thereafter	36,446
Long-term debt and capital lease obligations	37,160	37,200
Debt instrument, face amount							20,000			15,000
Debt instrument, basis spread on variable rate											2.00%
Debt instrument, interest rate, stated percentage					6.81%		6.81%							8.00%
Debt instrument, interest rate at period end								2.52%
FHLB, advances, maximum amount available																	624,959
FHLB, advances, weighted average interest rate												4.83%
Long-term FHLB advances																425	425
Other borrowings	32	7
Line of credit facility, maximum borrowing capacity																		$ 115,000	$ 323,153

XML

Financial Instruments with Off-Balance Sheet Risk (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Entity Information
Credit Extension Commitments	$ 1,144,695	$ 1,049,796
Credit Extension Commitments, Beyond One Year	253,130,000	283,861,000
Standby Letters of Credit
Entity Information
Credit Extension Commitments	66,702,000	69,934,000
Unused Credit Card Lines
Entity Information
Credit Extension Commitments	$ 337,532,000	$ 285,761,000

XML

Regulatory Capital Schedule of Actual Capital Amounts and Ratios and Selected Minimum Regulatory Thresholds (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Total risk-based capital:
Actual Amount	$ 748,431	$ 800,354
Actual Ratio	15.60%	16.50%
Adequately Capitalized Amount	384,014	387,082
Adequately Capitalized Ratio	8.00%	8.00%
Tier 1 risk-based capital:
Actual Amount	652,929	704,229
Actual Ratio	13.60%	14.60%
Adequately Capitalized Amount	192,007	193,541
Adequately Capitalized Ratio	4.00%	4.00%
Leverage capital ratio:
Tier One Leverage Capital	652,929	704,229
Actual Ratio	8.80%	9.80%
Adequately Capitalized Amount	296,559	286,303
Adequately Capitalized Ratio	4.00%	4.00%
FIB
Total risk-based capital:
Actual Amount	697,695	663,860
Actual Ratio	14.60%	13.80%
Adequately Capitalized Amount	382,245	384,987
Adequately Capitalized Ratio	8.00%	8.00%
Well Capitalized Amount	477,806	481,234
Well Capitalized Ratio	10.00%	10.00%
Tier 1 risk-based capital:
Actual Amount	622,466	588,059
Actual Ratio	13.00%	12.20%
Adequately Capitalized Amount	191,122	192,494
Adequately Capitalized Ratio	4.00%	4.00%
Well Capitalized Amount	286,683	288,740
Well Capitalized Ratio	6.00%	6.00%
Leverage capital ratio:
Tier One Leverage Capital	622,466	588,059
Actual Ratio	8.40%	8.20%
Adequately Capitalized Amount	296,061	285,358
Adequately Capitalized Ratio	4.00%	4.00%
Well Capitalized Amount	$ 370,077	$ 356,698
Well Capitalized Ratio	5.00%	5.00%

XML

Income Taxes - Schedule of Income Tax Exepnse (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current:
Federal	$ 18,458	$ 16,451	$ 29,866
State	2,818	2,759	4,481
Total current	21,276	19,210	34,347
Deferred:
Federal	7,697	2,131	(15,268)
State	1,065	274	(1,989)
Total deferred	8,762	2,405	(17,257)
Total income tax expense	$ 30,038	$ 21,615	$ 17,090

XML

Subordinated Debentures Held by Subsidiary Trusts - Financial Insruments Subject to Mandatory Redemption (Details) (Trusts, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Trust Preferred Securities Subject to Mandatory Redemption
Financial Instruments Subject to Mandatory Redemption by Settlement Terms
Financial Instruments Subject to Mandatory Redemption, Settlement Terms, Share Value, Amount	$ 120,000
Common Stock Subject to Mandatory Redemption
Financial Instruments Subject to Mandatory Redemption by Settlement Terms
Financial Instruments Subject to Mandatory Redemption, Settlement Terms, Share Value, Amount	$ 3,715

XML

Other Real Estate Owned (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Real Estate Acquired Through Foreclosure [Roll Forward]
Balance at beginning of year	$ 37,452	$ 33,632	$ 38,400
Additions	43,541	26,644	21,314
Capitalized improvements	75	14	240
Valuation adjustments	(6,724)	(7,464)	(6,724)
Dispositions	(41,773)	(15,374)	(19,598)
Balance at end of year	32,571	37,452	33,632
Valuation adjustments	(6,724)	(7,464)	(6,724)
Write-down due to change in appraised value	702	4,197	2,491
Write-down due to change in management estimates	$ 6,022	$ 3,267	$ 4,233

XML

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense consists of the following:

Year ended December 31,	2012		2011		2010
Current:
Federal	$	18,458	$	16,451	$	29,866
State	2,818		2,759		4,481
Total current	21,276		19,210		34,347
Deferred:
Federal	7,697		2,131		(15,268		)
State	1,065		274		(1,989		)
Total deferred	8,762		2,405		(17,257		)
Total income tax expense	$	30,038	$	21,615	$	17,090

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate of 35 percent in 2012, 2011 and 2010 to income before income taxes as a result of the following:

Year ended December 31,	2012			2011			2010
Tax expense at the statutory tax rate	$	30,892		$	23,156		$	19,056
Increase (decrease) in tax resulting from:
Tax-exempt income	(3,498		)	(3,578		)	(3,661		)
State income tax, net of federal income tax benefit	2,524			1,972			1,619
Other, net	120			65			76
Tax expense at effective tax rate	$	30,038		$	21,615		$	17,090

The tax effects of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax asset (liability) relate to the following:

December 31,	2012			2011
Deferred tax assets:
Loans, principally due to allowance for loan losses	$	38,688		$	42,602
Employee benefits	7,041			7,659
Other real estate owned write-downs and carrying costs	6,850			7,444
Deferred gain on sale of subsidiary	750			1,010
Other	385			428
Deferred tax assets	53,714			59,143
Deferred tax liabilities:
Fixed assets, principally differences in bases and depreciation	(4,711		)	(4,284		)
Investment securities, unrealized gains	(11,360		)	(13,091		)
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets	(782		)	(855		)
Prepaid amounts	(1,052		)	(921		)
Government agency stock dividends	(2,060		)	(2,079		)
Goodwill and core deposit intangibles	(25,815		)	(22,736		)
Mortgage servicing rights	(4,418		)	(4,150		)
Other	(919		)	(1,399		)
Deferred tax liabilities	(51,117		)	(49,515		)
Net deferred tax assets	$	2,597		$	9,628

The Company had a current net income tax payables of $3,691 and $489 at December 31, 2012 and 2011, respectively, which are included in accounts payable and accrued expenses.

XML

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Weighted-Average Assumptions used in Option Pricing Model

The following table presents the weighted-average assumptions used in the option pricing model for the periods indicated:

Years ended December 31,	2012		2011		2010
Expected volatility	37.46	%	36.36	%	35.66	%
Expected dividend yield	3.35	%	3.17	%	2.98	%
Risk-free interest rate	1.99	%	3.05	%	3.08	%
Expected life of options (in years)	7.85		7.97		7.70

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes stock option activity under the Company’s active stock option plans for the year ended December 31, 2012:

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life
Outstanding options, beginning of year	3,484,928		$	16.26
Granted	369,766		14.33
Exercised	(376,634	)	11.38
Forfeited	(27,442	)	14.42
Expired	(76,963	)	16.75
Outstanding options, end of year	3,373,655		$	16.60	5.02 years
Outstanding options exercisable, end of year	2,756,441		$	17.10	4.23 years

Schedule of Nonvested Share Activity

Information with respect to the Company’s nonvested stock options as of and for the year ended December 31, 2012 follows:

	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested stock options, beginning of year	588,236		$	3.71
Granted	369,766		4.06
Vested	(313,346	)	3.13
Forfeited	(27,442	)	4.12
Nonvested stock options, end of year	617,214		$	4.20

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table presents information regarding the Company’s restricted stock as of December 31, 2012:

	Number of Shares		Weighted-Average Measurement Date Fair Value
Restricted stock, beginning of year	190,770		$	14.57
Granted	122,912		14.37
Vested	(67,720	)	14.82
Forfeited	(8,276	)	14.69
Canceled	(6,956	)	15.00
Restricted stock, end of year	230,730		$	14.38

XML

Mortgage Servicing Rights (Tables)

12 Months Ended

Dec. 31, 2012

Transfers and Servicing [Abstract]

Schedule of Servicing Assets at Amortized Value

Information with respect to the Company’s mortgage servicing rights follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	13,450		$	13,811		$	18,732
Sales of mortgage servicing rights	(735		)	—			(4,528		)
Purchases of mortgage servicing rights	—			—			—
Originations of mortgage servicing rights	4,563			2,864			4,222
Amortization expense	(3,501		)	(3,225		)	(4,615		)
Write-off of permanent impairment	(553		)	—			—
Balance at end of year	13,224			13,450			13,811
Less valuation reserve	(571		)	(1,895		)	(620		)
Balance at end of year	$	12,653		$	11,555		$	13,191
Principal balance of serviced loans underlying mortgage servicing rights	$	2,146,351		$	1,803,303		$	1,594,697
Mortgage servicing rights as a percentage of serviced loans	0.59		%	0.64		%	0.83		%

XML

Deposits (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deposits, by Type [Abstract]
Non-interest bearing demand	$ 1,495,309	$ 1,271,709
Interest bearing:
Demand	1,811,905	1,306,509
Savings	1,547,713	1,691,413
Time, $100 and over	594,712	681,047
Time, other	790,772	876,293
Total interest bearing	4,745,102	4,555,262
Total deposits	6,240,411	5,826,971
Time deposits obtained through Certificate of Deposit Account Registry Service (CDARS)	72,062	98,331
Contractual Maturities, Time Deposits, $100,000 or More [Abstract]
2013, Time, $100 and Over	437,597
2014, Time, $100 and Over	72,483
2015, Time, $100 and Over	33,646
2016, Time, $100 and Over	27,272
2017, Time, $100 and Over	23,714
Thereafter, Time, $100 and Over	0
Time Deposits, $100,000 or More	594,712	681,047
Time Deposits, Fiscal Year Maturity [Abstract]
2013, Time	999,439
2014, Time	176,243
2015, Time	79,030
2016, Time	63,412
2017, Time	67,357
Thereafter, Time	3
Time Deposits	1,385,484
Interest expense, time deposits, $100,000 or more	$ 6,951	$ 10,377	$ 18,595

XML

Other Comprehensive Income - Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Change in net unrealized Gain during period:
Change in net unrealized gain during period, before tax amount	$ (4,648)	$ 17,168	$ (8,438)
Change in net unrealized gain during period, tax expense (benefit)	(1,829)	6,899	(2,989)
Change in net unrealized gain during period, net of tax amount	(2,819)	10,269	(5,449)
Investment securities available-for-sale:
Reclassification adjustment for net gains included in net income, before tax amount	(348)	(1,544)	(170)
Reclassification adjustment for net, gains included in net income, tax expense (benefit)	(137)	(620)	(60)
Reclassification adjustment for net gains included in net income, net of tax amount	(211)	(924)	(110)
Unamortized Premium on Available-For-Sale Securities Transferred to Held-To-Maturity
Unamortized premium on available-to-sale securities transferred into held-for-maturity, before tax amount	56	389	722
Unamortized premium on available-to-sale securities transferred into held-for-maturity, tax expense (benefit)	22	156	256
Unamortized premium on available-to-sale securities transferred into held-for-maturity, net of tax amount	34	233	466
Change in net actuarial loss:
Change in net actuarial loss, before tax amount	(77)	135	(940)
Change in net actuarial loss, tax expense (benefit)	(30)	54	(333)
Change in net actuarial loss, net of tax amount	(47)	81	(607)
Other comprehensive income (Loss)
Other comprehensive income (loss), before tax	(5,017)	16,148	(8,826)
Total other comprehensive income, tax expense (benefit)	(1,974)	6,489	(3,126)
Other comprehensive income, net of tax	$ (3,043)	$ 9,659	$ (5,700)

XML

Loans (Tables)

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Schedule of Loans by Class

The following table presents loans by class as of the dates indicated:

December 31,	2012		2011
Real estate loans:
Commercial	$	1,497,272	$	1,553,155
Construction:
Land acquisition & development	220,196		278,613
Residential	49,274		61,106
Commercial	65,059		61,054
Total construction loans	334,529		400,773
Residential	708,339		571,943
Agricultural	177,244		175,302
Total real estate loans	2,717,384		2,701,173
Consumer:
Indirect consumer	438,245		407,651
Other consumer	137,743		147,487
Credit card	60,806		60,933
Total consumer loans	636,794		616,071
Commercial	688,753		693,261
Agricultural	113,627		119,710
Other, including overdrafts	912		2,813
Loans held for investment	4,157,470		4,133,028
Mortgage loans held for sale	66,442		53,521
Total loans	$	4,223,912	$	4,186,549

Schedule of Recorded Investment in Past Due Loans by Class

The following tables present the contractual aging of the Company’s recorded investment in past due loans by class as of the period indicated:

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2012	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,449	$	3,163	$	2	$	8,614	$	1,438,142	$	50,516	$	1,497,272
Construction:
Land acquisition & development	3,371		2,121		318		5,810		195,077		19,309		220,196
Residential	283		—		—		283		46,816		2,175		49,274
Commercial	—		—		—		—		56,933		8,126		65,059
Total construction loans	3,654		2,121		318		6,093		298,826		29,610		334,529
Residential	3,896		969		1,085		5,950		691,963		10,426		708,339
Agricultural	1,187		—		218		1,405		171,009		4,830		177,244
Total real estate loans	14,186		6,253		1,623		22,062		2,599,940		95,382		2,717,384
Consumer:
Indirect consumer	3,218		512		32		3,762		434,200		283		438,245
Other consumer	1,044		104		31		1,179		135,574		990		137,743
Credit card	409		278		392		1,079		59,704		23		60,806
Total consumer loans	4,671		894		455		6,020		629,478		1,296		636,794
Commercial	5,463		1,064		216		6,743		671,414		10,596		688,753
Agricultural	1,710		361		—		2,071		111,031		525		113,627
Other, including overdrafts	—		—		—		—		912		—		912
Loans held for investment	26,030		8,572		2,294		36,896		4,012,775		107,799		4,157,470
Mortgage loans originated for sale	—		—		—		—		66,442		—		66,442
Total loans	$	26,030	$	8,572	$	2,294	$	36,896	$	4,079,217	$	107,799	$	4,223,912

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2011	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	22,124	$	7,871	$	630	$	30,625	$	1,455,139	$	67,391	$	1,553,155
Construction:
Land acquisition & development	5,251		2,448		867		8,566		208,134		61,913		278,613
Residential	415		—		—		415		56,219		4,472		61,106
Commercial	1,698		—		—		1,698		34,820		24,536		61,054
Total construction loans	7,364		2,448		867		10,679		299,173		90,921		400,773
Residential	4,669		973		1,798		7,440		546,278		18,225		571,943
Agricultural	4,103		1,831		—		5,934		166,119		3,249		175,302
Total real estate loans	38,260		13,123		3,295		54,678		2,466,709		179,786		2,701,173
Consumer:
Indirect consumer	3,078		370		45		3,493		403,695		463		407,651
Other consumer	1,479		436		60		1,975		144,625		887		147,487
Credit card	604		375		585		1,564		59,343		26		60,933
Total consumer loans	5,161		1,181		690		7,032		607,663		1,376		616,071
Commercial	13,721		3,464		405		17,590		657,609		18,062		693,261
Agricultural	476		215		110		801		118,150		759		119,710
Other, including overdrafts	—		2		—		2		2,811		—		2,813
Loans held for investment	57,618		17,985		4,500		80,103		3,852,942		199,983		4,133,028
Mortgage loans originated for sale	—		—		—		—		53,521		—		53,521
Total loans	$	57,618	$	17,985	$	4,500	$	80,103	$	3,906,463	$	199,983	$	4,186,549

Schedule of Recorded Investment in Impaired Loans

The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated:

	December 31, 2012
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	84,300	$	39,049	$	34,774	$	73,823	$	4,112
Construction:
Land acquisition & development	28,558		15,891		7,173		23,064		1,457
Residential	3,018		1,976		710		2,686		251
Commercial	10,447		7,785		340		8,125		69
Total construction loans	42,023		25,652		8,223		33,875		1,777
Residential	13,271		6,152		4,495		10,647		1,677
Agricultural	5,559		1,834		3,227		5,061		784
Total real estate loans	145,153		72,687		50,719		123,406		8,350
Commercial	12,770		9,036		3,206		12,242		1,919
Agricultural	589		509		28		537		28
Total	$	158,512	$	82,232	$	53,953	$	136,185	$	10,297

	December 31, 2011
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	97,745	$	62,769	$	23,218	$	85,987	$	6,741
Construction:
Land acquisition & development	73,258		22,300		39,131		61,431		12,084
Residential	13,721		10,427		2,044		12,471		312
Commercial	26,647		3,510		21,026		24,536		5,042
Total construction loans	113,626		36,237		62,201		98,438		17,438
Residential	18,305		2,678		15,626		18,304		3,844
Agricultural	8,018		7,470		—		7,470		—
Total real estate loans	237,694		109,154		101,045		210,199		28,023
Commercial	26,348		7,354		12,284		19,638		4,664
Agricultural	759		496		263		759		151
Total	$	264,801	$	117,004	$	113,592	$	230,596	$	32,838

	December 31, 2010
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	79,193	$	31,925	$	41,703	$	73,628	$	10,315
Construction:
Land acquisition & development	48,371		24,120		20,440		44,560		8,064
Residential	18,632		2,993		13,721		16,714		3,431
Commercial	17,458		2,976		13,578		16,554		3,877
Total construction loans	84,461		30,089		47,739		77,828		15,372
Residential	8,951		1,741		7,110		8,851		1,266
Agricultural	3,045		1,065		1,432		2,497		128
Total real estate loans	175,650		64,820		97,984		162,804		27,081
Commercial	36,251		11,354		24,168		35,522		14,892
Agricultural	976		498		478		976		253
Total	$	212,877	$	76,672	$	122,630	$	199,302	$	42,226

Schedule of Average Recorded Investment In and Income Recognized on Impaired Loans

The following tables present the average recorded investment in and income recognized on impaired loans for the periods indicated:

	Year Ended December 31,
	2012				2011				2010
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized		Average Recorded Investment
Real estate:
Commercial	$	78,670	$	1,339	$	85,702	$	633	$	49,713
Construction:
Land acquisition & development	44,457		110		57,675		96		34,871
Residential	8,431		4		19,769		384		15,097
Commercial	16,401		—		20,676		—		21,086
Total construction loans	69,289		114		98,120		480		71,054
Residential	13,703		26		15,768		258		10,889
Agricultural	6,936		41		6,188		167		1,737
Total real estate loans	168,598		1,520		205,778		1,538		133,393
Commercial	15,741		84		31,490		121		22,017
Agricultural	942		27		907		—		974
Total	$	185,281	$	1,631	$	238,175	$	1,659	$	156,384

Schedule of Loans Renegotiated in Troubled Debt Restructurings

The following table presents information on the Company's troubled debt restructurings that occurred during the periods indicated:

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year Ended December 31, 2012		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	16	$	—	$	959	$	4,504	$	8,611	$	14,074
Construction:
Commercial	1	—		—		—		3,155		3,155
Land acquisition & development	5	—		1,000		1,757		623		3,380
Residential	2	—		280		233		—		513
Total construction loans	8	—		1,280		1,990		3,778		7,048
Residential	2	568		25		—		—		593
Agriculture	1	—		154		—		—		154
Total real estate loans	27	568		2,418		6,494		12,389		21,869
Consumer:
Other consumer	1	—		69		—		—		69
Total consumer loans	1	—		69		—		—		69
Commercial	10	387		217		—		218		822
Agriculture	—			—				—		—
Total	38	$	955	$	2,704	$	6,494	$	12,607	$	22,760

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year ended December 31, 2011		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	60	$	23,982	$	4,444	$	3,131	$	7,364	$	38,921
Construction:
Land acquisition & development	9	995		4,124		680		408		6,207
Residential	5	7,749		878		234		—		8,861
Total construction loans	14	8,744		5,002		914		408		15,068
Residential	6	9,771		364		223		590		10,948
Agriculture	7	3,594		517		189		240		4,540
Total real estate loans	87	46,091		10,327		4,457		8,602		69,477
Consumer:
Indirect	2	—		—		—		29		29
Other consumer	3	17		11		—		50		78
Total consumer loans	5	17		11		—		79		107
Commercial	40	11,727		428		662		2,555		15,372
Agriculture	5	—		24		—		163		187
Total	137	$	57,835	$	10,790	$	5,119	$	11,399	$	85,143

Troubled Debt Restructurings Within Previous 12 Months

The following table presents information on the Company's troubled debt restructurings within the previous 12 months for which there was a payment default during the period.

	2012			2011
As of December 31,	Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	—	$	—	9	$	2,747
Construction:
Land acquisition & development	1	468		1	1,135
Residential	—	—		1	170
Total construction loans	1	468		2	1,305
Residential	2	635		—	—
Agriculture	—	—		1	33
Total real estate loans	3	1,103		12	4,085
Commercial	—	—		6	213
Agricultural	—	—		2	24
Total	3	$	1,103	20	$	4,322

Schedule of Recorded Investment in Criticized Loans by Class and Credit Quality Indicator

The following tables present the Company’s recorded investment in criticized loans by class and credit quality indicator based on the most recent analysis performed as of the dates indicated:

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2012
Real estate:
Commercial	$	101,936	$	135,282	$	15,173	$	252,391
Construction:
Land acquisition & development	28,137		25,884		4,739		58,760
Residential	2,531		2,427		1,143		6,101
Commercial	3,000		795		7,383		11,178
Total construction loans	33,668		29,106		13,265		76,039
Residential	9,542		11,680		4,511		25,733
Agricultural	18,490		6,737		3,228		28,455
Total real estate loans	163,636		182,805		36,177		382,618
Consumer:
Indirect consumer	793		1,764		114		2,671
Other consumer	684		1,395		628		2,707
Credit card	—		415		2,085		2,500
Total consumer loans	1,477		3,574		2,827		7,878
Commercial	42,223		27,184		3,428		72,835
Agricultural	2,596		1,625		28		4,249
Total	$	209,932	$	215,188	$	42,460	$	467,580

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2011
Real estate:
Commercial	$	129,046	$	153,320	$	25,087	$	307,453
Construction:
Land acquisition & development	37,294		31,873		38,761		107,928
Residential	9,448		5,528		2,044		17,020
Commercial	—		2,620		21,916		24,536
Total construction loans	46,742		40,021		62,721		149,484
Residential	8,149		15,706		15,140		38,995
Agricultural	16,037		18,498		395		34,930
Total real estate loans	199,974		227,545		103,343		530,862
Consumer:
Indirect consumer	1,141		1,729		247		3,117
Other consumer	745		1,361		674		2,780
Credit card	—		486		2,789		3,275
Total consumer loans	1,886		3,576		3,710		9,172
Commercial	34,698		33,478		12,849		81,025
Agricultural	4,345		5,195		263		9,803
Total	$	240,903	$	269,794	$	120,165	$	630,862

XML

Condensed Financial Information (Parent Company Only) (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Financial Statements

Following is condensed financial information of First Interstate BancSystem, Inc.

December 31,	2012		2011
Condensed balance sheets:
Cash and cash equivalents	$	95,407	$	131,860
Investment in subsidiaries, at equity:
Bank subsidiary	802,270		776,349
Nonbank subsidiaries	1,969		1,973
Total investment in subsidiaries	804,239		778,322
Advances from subsidiaries, net	697		—
Other assets	25,815		26,246
Total assets	$	926,158	$	936,428
Other liabilities	$	22,495	$	19,552
Advances to subsidiaries, net	—		2,141
Long-term debt	20,000		20,000
Preferred stock pending redemption	50,000		—
Subordinated debentures held by subsidiary trusts	82,477		123,715
Total liabilities	174,972		165,408
Stockholders’ equity	751,186		771,020
Total liabilities and stockholders’ equity	$	926,158	$	936,428

Years Ended December 31,	2012			2011			2010
Condensed statements of income:
Dividends from subsidiaries	$	40,000		$	30,000		$	15,400
Other interest income	92			118			105
Other income, primarily management fees from subsidiaries	10,042			10,617			11,336
Total income	50,134			40,735			26,841
Salaries and benefits	13,205			13,975			13,435
Interest expense	6,691			7,273			7,703
Other operating expenses, net	7,150			6,903			6,827
Total expenses	27,046			28,151			27,965
Earnings before income tax benefit	23,088			12,584			(1,124		)
Income tax benefit	(6,222		)	(6,518		)	(6,254		)
Income before undistributed earnings of subsidiaries	29,310			19,102			5,130
Undistributed earnings of subsidiaries	28,914			25,444			32,226
Net income	$	58,224		$	44,546		$	37,356

Years Ended December 31,	2012			2011			2010
Condensed statements of cash flows:
Cash flows from operating activities:
Net income	$	58,224		$	44,546		$	37,356
Adjustments to reconcile net income to cash provided by operating activities:
Undistributed earnings of subsidiaries	(28,914		)	(25,444		)	(32,226		)
Stock-based compensation expense	2,485			2,111			1,764
Tax benefits from stock-based compensation	360			204			239
Excess tax benefits from stock-based compensation	(273		)	(124		)	(225		)
Other, net	3,327			2,600			(4,325		)
Net cash provided by operating activities	35,209			23,893			2,583
Cash flows from investing activities:
Capitalization of subsidiaries	—			—			(130		)
Capital expenditures, net of sales	1			(3		)	—
Net cash provided by (used in) investing activities	1			(3		)	(130		)
Cash flows from financing activities:
Net (decrease) increase in advances from nonbank subsidiaries	(2,838		)	(2,913		)	5,002
Repayments of long-term debt	—			—			(33,929		)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238		)	—			—
Proceeds from issuance of common stock	1,911			385			167,400
Common stock issuance costs	—			—			(13,597		)
Excess tax benefits from stock-based compensation	273			124			225
Purchase and retirement of common stock	(263		)	(248		)	(3,699		)
Dividends paid to common stockholders	(26,208		)	(19,233		)	(17,905		)
Dividends paid to preferred stockholders	(3,300		)	(3,422		)	(3,422		)
Net cash provided by (used in) financing activities	(71,663		)	(25,307		)	100,075
Net change in cash and cash equivalents	(36,453		)	(1,417		)	102,528
Cash and cash equivalents, beginning of year	131,860			133,277			30,749
Cash and cash equivalents, end of year	$	95,407		$	131,860		$	133,277

XML

Loans - Schedule of Recorded Investment in Criticized Loans by Class and Credit Quality Indicator (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	$ 4,157,470	$ 4,133,028
Commercial real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,497,272	1,553,155
Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	220,196	278,613
Residential construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	49,274	61,106
Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	65,059	61,054
Total construction loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	334,529	400,773
Residential real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	708,339	571,943
Agricultural real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	177,244	175,302
Total real estate loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,717,384	2,701,173
Indirect consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	438,245	407,651
Other consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	137,743	147,487
Credit card consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	60,806	60,933
Total consumer loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	636,794	616,071
Commercial
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	688,753	693,261
Agricultural
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	113,627	119,710
Other Assets Especially Mentioned
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	209,932	240,903
Other Assets Especially Mentioned | Commercial real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	101,936	129,046
Other Assets Especially Mentioned | Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	28,137	37,294
Other Assets Especially Mentioned | Residential construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,531	9,448
Other Assets Especially Mentioned | Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	3,000	0
Other Assets Especially Mentioned | Total construction loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	33,668	46,742
Other Assets Especially Mentioned | Residential real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	9,542	8,149
Other Assets Especially Mentioned | Agricultural real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	18,490	16,037
Other Assets Especially Mentioned | Total real estate loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	163,636	199,974
Other Assets Especially Mentioned | Indirect consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	793	1,141
Other Assets Especially Mentioned | Other consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	684	745
Other Assets Especially Mentioned | Credit card consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	0	0
Other Assets Especially Mentioned | Total consumer loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,477	1,886
Other Assets Especially Mentioned | Commercial
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	42,223	34,698
Other Assets Especially Mentioned | Agricultural
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,596	4,345
Substandard
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	215,188	269,794
Substandard | Commercial real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	135,282	153,320
Substandard | Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	25,884	31,873
Substandard | Residential construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,427	5,528
Substandard | Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	795	2,620
Substandard | Total construction loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	29,106	40,021
Substandard | Residential real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	11,680	15,706
Substandard | Agricultural real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	6,737	18,498
Substandard | Total real estate loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	182,805	227,545
Substandard | Indirect consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,764	1,729
Substandard | Other consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,395	1,361
Substandard | Credit card consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	415	486
Substandard | Total consumer loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	3,574	3,576
Substandard | Commercial
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	27,184	33,478
Substandard | Agricultural
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,625	5,195
Doubtful
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	42,460	120,165
Doubtful | Commercial real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	15,173	25,087
Doubtful | Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	4,739	38,761
Doubtful | Residential construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	1,143	2,044
Doubtful | Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	7,383	21,916
Doubtful | Total construction loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	13,265	62,721
Doubtful | Residential real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	4,511	15,140
Doubtful | Agricultural real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	3,228	395
Doubtful | Total real estate loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	36,177	103,343
Doubtful | Indirect consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	114	247
Doubtful | Other consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	628	674
Doubtful | Credit card consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,085	2,789
Doubtful | Total consumer loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,827	3,710
Doubtful | Commercial
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	3,428	12,849
Doubtful | Agricultural
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	28	263
Total Criticized Loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	467,580	630,862
Total Criticized Loans | Commercial real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	252,391	307,453
Total Criticized Loans | Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	58,760	107,928
Total Criticized Loans | Residential construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	6,101	17,020
Total Criticized Loans | Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	11,178	24,536
Total Criticized Loans | Total construction loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	76,039	149,484
Total Criticized Loans | Residential real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	25,733	38,995
Total Criticized Loans | Agricultural real estate
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	28,455	34,930
Total Criticized Loans | Total real estate loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	382,618	530,862
Total Criticized Loans | Indirect consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,671	3,117
Total Criticized Loans | Other consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,707	2,780
Total Criticized Loans | Credit card consumer
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	2,500	3,275
Total Criticized Loans | Total consumer loans
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	7,878	9,172
Total Criticized Loans | Commercial
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	72,835	81,025
Total Criticized Loans | Agricultural
Loans and Leases Receivable Recorded Investment, Criticized Loans
Loans held for investment	$ 4,249	$ 9,803

XML

Loans - Schedule of Loans by Class (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Loans and Leases Receivable
Loans held for investment	$ 4,157,470	$ 4,133,028
Mortgage loans held for sale	66,442	53,521
Total loans	4,223,912	4,186,549
Commercial real estate
Loans and Leases Receivable
Loans held for investment	1,497,272	1,553,155
Land acquisition & development construction real estate
Loans and Leases Receivable
Loans held for investment	220,196	278,613
Residential construction real estate
Loans and Leases Receivable
Loans held for investment	49,274	61,106
Commercial construction real estate
Loans and Leases Receivable
Loans held for investment	65,059	61,054
Total construction loans
Loans and Leases Receivable
Loans held for investment	334,529	400,773
Residential real estate
Loans and Leases Receivable
Loans held for investment	708,339	571,943
Loans receivable, maturity	15 years
Agricultural real estate
Loans and Leases Receivable
Loans held for investment	177,244	175,302
Total real estate loans
Loans and Leases Receivable
Loans held for investment	2,717,384	2,701,173
Indirect consumer
Loans and Leases Receivable
Loans held for investment	438,245	407,651
Other consumer
Loans and Leases Receivable
Loans held for investment	137,743	147,487
Credit card consumer
Loans and Leases Receivable
Loans held for investment	60,806	60,933
Total consumer loans
Loans and Leases Receivable
Loans held for investment	636,794	616,071
Commercial
Loans and Leases Receivable
Loans held for investment	688,753	693,261
Agricultural
Loans and Leases Receivable
Loans held for investment	113,627	119,710
Other, including overdrafts
Loans and Leases Receivable
Loans held for investment	912	2,813
Home equity line of credit
Loans and Leases Receivable
Loans held for investment	$ 273,739	$ 312,295
Loans receivable, loan to value limit	80.00%
Commercial and agricultural real estate
Loans and Leases Receivable
Loans receivable, maturity	5 years

XML

Regulatory Capital (Tables)

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

The Company’s actual capital amounts and ratios and selected minimum regulatory thresholds and prompt corrective action provisions as of December 31, 2012 and 2011 are presented in the following table:

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2012
Total risk-based capital:
Consolidated	$	748,431	15.6	%	$	384,014	8.0	%	NA		NA
FIB	697,695		14.6		382,245		8.0		$	477,806	10.0	%
Tier 1 risk-based capital:
Consolidated	652,929		13.6		192,007		4.0		NA		NA
FIB	622,466		13.0		191,122		4.0		$	286,683	6.0
Leverage capital ratio:
Consolidated	652,929		8.8		296,559		4.0		NA		NA
FIB	622,466		8.4		296,061		4.0		$	370,077	5.0

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2011
Total risk-based capital:
Consolidated	$	800,354	16.5	%	$	387,082	8.0	%	NA		NA
FIB	663,860		13.8		384,987		8.0		$	481,234	10.0	%
Tier 1 risk-based capital:
Consolidated	704,229		14.6		193,541		4.0		NA		NA
FIB	588,059		12.2		192,494		4.0		$	288,740	6.0
Leverage capital ratio:
Consolidated	704,229		9.8		286,303		4.0		NA		NA
FIB	588,059		8.2		285,358		4.0		$	356,698	5.0

XML

Summary of Significant Accounting Policies (Notes)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business. First Interstate BancSystem, Inc. (the “Parent Company” and collectively with its subsidiaries, the “Company”) is a financial and bank holding company that, through the branch offices of its bank subsidiary, provides a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout Montana, Wyoming and western South Dakota. In addition to its primary emphasis on commercial and consumer banking services, the Company also offers trust, employee benefit and investment and insurance services through its bank subsidiary. The Company is subject to competition from other financial institutions and nonbank financial companies, and is also subject to the regulations of various government agencies and undergoes periodic examinations by those regulatory authorities.

Basis of Presentation. The Company’s consolidated financial statements include the accounts of the Parent Company and its operating subsidiaries. As of December 31, 2012, the Company had one significant subsidiary, First Interstate Bank (“FIB”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, none of which were material, have been made in the consolidated financial statements for 2011 and 2010 to conform to the 2012 presentation. These reclassifications did not change previously reported net income or stockholders’ equity.

On March 5, 2010, the Company’s shareholders approved proposals to recapitalize the Company’s existing common stock. The recapitalization included, among other things, a redesignation of existing common stock as Class B common stock; a four-for-one stock split of the Class B common stock; and, the creation of a new class of common stock designated as Class A common stock. All share and per share information included in the accompanying consolidated financial statements, including the notes thereto, has been adjusted to give effect to the recapitalization of the common stock, including the four-for-one stock split of Class B common stock, as if the recapitalization had occurred on January 1, 2010, the earliest date presented. For additional information regarding the recapitalization, see Note 12—Capital Stock and Dividend Restrictions.

Equity Method Investments. The Company has an investment in a real estate joint venture that is not consolidated because the Company does not own a majority voting interest, control the operations or receive a majority of the losses or earnings of the joint venture. This joint venture is accounted for using the equity method of accounting whereby the Company initially records its investment at cost and then subsequently adjusts the cost for the Company’s proportionate share of distributions and earnings or losses of the joint venture.

Variable Interest Entities. The Company’s wholly-owned business trusts, First Interstate Statutory Trust (“FIST”), FI Statutory Trust I (“Trust I”), FI Capital Trust II (“Trust II”), FI Statutory Trust III (“Trust III”), FI Capital Trust IV (“Trust IV”), FI Statutory Trust V (“Trust V”) and FI Statutory Trust VI (“Trust VI”) are variable interest entities for which the Company is not a primary beneficiary. Accordingly, the accounts of FIST, Trust I, Trust II, Trust III, Trust IV, Trust V and Trust VI are not included in the accompanying consolidated financial statements, and are instead accounted for using the equity method of accounting.

Assets Held in Fiduciary or Agency Capacity. The Company holds certain trust assets in a fiduciary or agency capacity. The Company also purchases and sells federal funds as an agent. These and other assets held in an agency or fiduciary capacity are not assets of the Company and, accordingly, are not included in the accompanying consolidated financial statements.

Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses and the valuation of goodwill and other real estate owned.

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold for one day periods and interest bearing deposits in banks with original maturities of less than three months. As of December 31, 2012 and 2011, the Company had cash of $622,152 and $329,390, respectively, on deposit with the Federal Reserve Bank. In addition, the Company maintained compensating balances with the Federal Reserve Bank of approximately $1,057 and $5,000 as of December 31, 2012 and 2011 to reduce service charges for check clearing services.

Investment Securities. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt securities that may be sold in response to or in anticipation of changes in interest rates and resulting prepayment risk, or other factors, and marketable equity securities are classified as available-for-sale and carried at fair value. The unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of stockholders’ equity and comprehensive income. Management determines the appropriate classification of securities at the time of purchase and at each reporting date management reassesses the appropriateness of the classification.

The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for accretion of discounts to maturity and amortization of premiums over the estimated average life of the security, or in the case of callable securities, through the first call date, using the effective yield method. Such amortization and accretion is included in interest income. Realized gains and losses are included in investment securities gains (losses). Declines in the fair value of securities below their cost that are judged to be other-than-temporary are included in other expenses if the decline is related to credit losses. Other-than-temporary impairment losses related to other factors are recognized in other comprehensive income, net of income taxes. In estimating other-than-temporary impairment losses, the Company considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific identification method.

The Company invests in securities on behalf of certain officers and directors of the Company who have elected to participate in the Company’s deferred compensation plans. These securities are included in other assets and are carried at their fair value based on quoted market prices. Net realized and unrealized holding gains and losses are included in other non-interest income and employee benefits expense.

Loans. Loans are reported at the principal amount outstanding. Interest income on loans is calculated using the simple interest method on the daily balance of the principal amount outstanding. Loan origination fees and certain direct origination costs are deferred, and the net amount is amortized as an adjustment of the related loan’s yield using a level yield method over the expected lives of the related loans.

The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due or when a loan becomes contractually past due ninety days or more with respect to interest or principal, unless such past due loan is well secured and in the process of collection. When interest accrual is discontinued, all unpaid accrued interest is reversed against current period interest income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and when, in the opinion of management, the loans are estimated to be fully collectible as to both principal and interest.

A loan is considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect, on a timely basis, all amounts due according to the contractual terms of the loan’s original agreement. The amount of the impairment is measured using cash flows discounted at the loan’s effective interest rate, except when it is determined that the primary source of repayment for the loan is the operation or liquidation of the underlying collateral. In such cases, the current fair value of the collateral, reduced by anticipated selling costs, is used to measure impairment. The Company considers impaired loans to include all loans risk rated doubtful and non-consumer loans on which interest accrual has been discontinued or have been renegotiated in a troubled debt restructuring. Interest payments received on impaired loans are applied based on whether they are on accrual or non-accrual status. Interest income recognized by the Company on impaired loans primarily relate to loans modified in a troubled debt restructuring that remain on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due.

A loan is considered a troubled debt restructuring when a borrower is experiencing financial difficulties that leads to a restructuring of the loan and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions to minimize potential losses. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status only after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a reasonable period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will no longer be disclosed as a troubled debt restructuring.

Included in loans are certain residential mortgage loans originated for sale. These loans are carried at the lower of aggregate cost or estimated market value. Market value is estimated based on binding contracts or quotes or bids from third party investors. Residential mortgages held for sale were $66,442 and $53,521 as of December 31, 2012 and 2011, respectively. Gains and losses on sales of mortgage loans are determined using the specific identification method and are included in income from the origination and sale of loans.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses which is charged to expense. Loans, or portions thereof, are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely or, with respect to consumer installment and credit card loans, according to established delinquency schedules. The allowance balance is an amount that management believes will be adequate to absorb known and inherent losses in the loan portfolio based upon quarterly analyses of the current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, industry concentrations and current economic factors and the estimated impact of current economic and environmental conditions on historical loss rates.

Goodwill. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a two-step quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company's market value, discounted cash flows and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.

Core Deposit Intangibles. Core deposit intangibles represent the intangible value of depositor relationships resulting from deposit liabilities assumed and are amortized using an accelerated method based on the estimated weighted average useful lives of the related deposits of 9.5 years. Accumulated core deposit intangibles amortization was $20,983 as of December 31, 2012 and $19,563 as of December 31, 2011. Amortization expense related to core deposit intangibles recorded as of December 31, 2012 is expected to total $1,417, $1,417, $1,417, $1,380 and $306 in 2013, 2014, 2015, 2016 and 2017, respectively.

Mortgage Servicing Rights. The Company recognizes the rights to service mortgage loans for others, whether acquired or internally originated. Mortgage servicing rights are initially recorded at fair value based on comparable market data and are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights are evaluated quarterly for impairment by discounting the expected future cash flows, taking into consideration the estimated level of prepayments based on current industry expectations and the predominant risk characteristics of the underlying loans including loan type, note rate and loan term. Impairment adjustments, if any, are recorded through a valuation allowance.

Premises and Equipment. Buildings, furniture and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using straight-line methods over estimated useful lives of 5 to 45 years for buildings and improvements and 4 to 15 years for furniture and equipment. Leasehold improvements and assets acquired under capital lease are amortized over the shorter of their estimated useful lives or the terms of the related leases. Land is recorded at cost.

Company-Owned Life Insurance. Key executive life insurance policies are recorded at their cash surrender value. Group life insurance policies are subject to a stable value contract that offsets the impact of interest rate fluctuations on the market value of the policies. Group life insurance policies are recorded at the stabilized investment value. Increases in the cash surrender or stabilized investment value of insurance policies, as well as insurance proceeds received, are recorded as other non-interest income, and are not subject to income taxes.

Impairment of Long-Lived Assets. Long-lived assets, including premises and equipment and certain identifiable intangibles, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The amount of the impairment loss, if any, is based on the asset’s fair value. Impairment losses of $70 were recognized in other non-interest expense in 2012. No impairment losses were recognized during 2011 or 2010.

Other Real Estate Owned. Real estate acquired in satisfaction of loans is initially carried at current fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate acquired is recorded as a charge to the allowance for loan losses. Subsequent declines in fair value less estimated selling costs are included in OREO expense. Subsequent increases in fair value less estimated selling costs are recorded as a reduction in OREO expense to the extent of recognized losses. Operating expenses, net of related income, and gains or losses on sales are included in OREO expense. Write-downs of $6,724, $7,464 and $6,724 were recorded in 2012, 2011 and 2010 respectively.

Restricted Equity Securities. The Company, as a member of the Federal Reserve Bank and the Federal Home Loan Bank (“FHLB”), is required to maintain investments in each of the organization’s capital stock. As of December 31, 2012, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank of $13,357 and $6,687, respectively, were included in other assets at cost. As of December 31, 2011, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank were $13,357 and $6,807, respectively. No ready market exists for these restricted equity securities, and they have no quoted market values. Restricted equity securities are periodically reviewed for impairment based on ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery of par value is influenced by the significance of the decline compared to the cost basis of the restricted equity securities, the length of time a decline has persisted, the impact of legislative and regulatory changes on the issuing organizations and the liquidity positions of the issuing organizations. Based on management’s assessment, no impairment losses were recorded on restricted equity securities during 2012, 2011 or 2010.

Income from Fiduciary Activities. Consistent with industry practice, income for trust services is recognized on the basis of cash received. However, use of this method in lieu of accrual basis accounting does not materially affect reported earnings.

Income Taxes. The Parent Company and its subsidiaries have elected to be included in a consolidated federal income tax return. For state income tax purposes, the combined taxable income of the Parent Company and its subsidiaries is apportioned among the states in which operations take place. Federal and state income taxes attributable to the subsidiaries, computed on a separate return basis, are paid to or received from the Parent Company.

The Company accounts for income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are determined based on enacted income tax rates which will be in effect when the differences between the financial statement carrying values and tax bases of existing assets and liabilities are expected to be reported in taxable income.

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination. Uncertain tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing. Penalties are recognized in the period that the Company claims the position in the tax return. Interest and penalties on income tax uncertainties are classified within income tax expense in the income statement. With few exceptions, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009. The Company had no accrued interest or penalties as of December 31, 2012 or 2011.

Earnings Per Common Share. Basic and diluted earnings per common share are calculated using a two-class method. Under the two-class method, basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Diluted earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding determined for the basic earnings per share calculation plus the dilutive effect of stock compensation using the treasury stock method.

Comprehensive Income. Comprehensive income includes net income, as well as other changes in stockholders’ equity that result from transactions and economic events other than those with shareholders. In addition to net income, the Company’s comprehensive income includes the after tax effect of changes in unrealized gains and losses on available-for-sale investment securities and changes in net actuarial gains and losses on defined benefit post-retirement benefits plans.

Segment Reporting. An operating segment is defined as a component of a business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and evaluate performance. The Company has one operating segment, community banking, which encompasses commercial and consumer banking services offered to individuals, businesses, municipalities and other entities.

Advertising Costs. Advertising costs are expensed as incurred. Advertising expense was $3,555, $3,048, and $3,200 in 2012, 2011 and 2010, respectively.

Transfers of Financial Assets. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company; the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets; and, the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Stock-Based Compensation. Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the requisite service period for awards expected to vest. Stock-based compensation expense of $2,485, $1,906 and $1,660 for the years ended December 31, 2012, 2011 and 2010, respectively, is included in benefits expense in the Company’s consolidated statements of income. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $950, $728 and $635, respectively. All compensation cost for stock-based awards is expensed at the Parent Company.

Fair Value Measurements. In general, fair value measurements are based upon quoted market prices, where available. If quoted market prices are not available, fair value measurements are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and require some degree of judgment regarding interest rates, credit risk, prepayments and other factors. The use of different assumptions or estimation techniques may have a significant effect on the fair value amounts reported.

XML

Loans - Schedule of Recorded Investment in Past Due Loans by Class (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Loans and Leases Receivable Recorded Investment, Past Due
Loans held for investment	$ 4,157,470	$ 4,133,028
Mortgage loans held for sale	66,442	53,521
Total loans	4,223,912	4,186,549
Interest Income on Non-Accrual Loans if Accrued	8,537	12,508	8,942
Commercial real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	5,449	22,124
60 to 89 Days Past Due	3,163	7,871
Greater than 90 Days Past Due	2	630
Total Loans 30 or More Days Past Due	8,614	30,625
Current Loans	1,438,142	1,455,139
Non-accrual Loans	50,516	67,391
Loans held for investment	1,497,272	1,553,155
Land acquisition & development construction real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	3,371	5,251
60 to 89 Days Past Due	2,121	2,448
Greater than 90 Days Past Due	318	867
Total Loans 30 or More Days Past Due	5,810	8,566
Current Loans	195,077	208,134
Non-accrual Loans	19,309	61,913
Loans held for investment	220,196	278,613
Residential construction real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	283	415
60 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Loans 30 or More Days Past Due	283	415
Current Loans	46,816	56,219
Non-accrual Loans	2,175	4,472
Loans held for investment	49,274	61,106
Commercial construction real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	0	1,698
60 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Loans 30 or More Days Past Due	0	1,698
Current Loans	56,933	34,820
Non-accrual Loans	8,126	24,536
Loans held for investment	65,059	61,054
Total construction loans
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	3,654	7,364
60 to 89 Days Past Due	2,121	2,448
Greater than 90 Days Past Due	318	867
Total Loans 30 or More Days Past Due	6,093	10,679
Current Loans	298,826	299,173
Non-accrual Loans	29,610	90,921
Loans held for investment	334,529	400,773
Residential real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	3,896	4,669
60 to 89 Days Past Due	969	973
Greater than 90 Days Past Due	1,085	1,798
Total Loans 30 or More Days Past Due	5,950	7,440
Current Loans	691,963	546,278
Non-accrual Loans	10,426	18,225
Loans held for investment	708,339	571,943
Agricultural real estate
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	1,187	4,103
60 to 89 Days Past Due	0	1,831
Greater than 90 Days Past Due	218	0
Total Loans 30 or More Days Past Due	1,405	5,934
Current Loans	171,009	166,119
Non-accrual Loans	4,830	3,249
Loans held for investment	177,244	175,302
Total real estate loans
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	14,186	38,260
60 to 89 Days Past Due	6,253	13,123
Greater than 90 Days Past Due	1,623	3,295
Total Loans 30 or More Days Past Due	22,062	54,678
Current Loans	2,599,940	2,466,709
Non-accrual Loans	95,382	179,786
Loans held for investment	2,717,384	2,701,173
Indirect consumer
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	3,218	3,078
60 to 89 Days Past Due	512	370
Greater than 90 Days Past Due	32	45
Total Loans 30 or More Days Past Due	3,762	3,493
Current Loans	434,200	403,695
Non-accrual Loans	283	463
Loans held for investment	438,245	407,651
Other consumer
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	1,044	1,479
60 to 89 Days Past Due	104	436
Greater than 90 Days Past Due	31	60
Total Loans 30 or More Days Past Due	1,179	1,975
Current Loans	135,574	144,625
Non-accrual Loans	990	887
Loans held for investment	137,743	147,487
Credit card consumer
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	409	604
60 to 89 Days Past Due	278	375
Greater than 90 Days Past Due	392	585
Total Loans 30 or More Days Past Due	1,079	1,564
Current Loans	59,704	59,343
Non-accrual Loans	23	26
Loans held for investment	60,806	60,933
Total consumer loans
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	4,671	5,161
60 to 89 Days Past Due	894	1,181
Greater than 90 Days Past Due	455	690
Total Loans 30 or More Days Past Due	6,020	7,032
Current Loans	629,478	607,663
Non-accrual Loans	1,296	1,376
Loans held for investment	636,794	616,071
Commercial
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	5,463	13,721
60 to 89 Days Past Due	1,064	3,464
Greater than 90 Days Past Due	216	405
Total Loans 30 or More Days Past Due	6,743	17,590
Current Loans	671,414	657,609
Non-accrual Loans	10,596	18,062
Loans held for investment	688,753	693,261
Agricultural
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	1,710	476
60 to 89 Days Past Due	361	215
Greater than 90 Days Past Due	0	110
Total Loans 30 or More Days Past Due	2,071	801
Current Loans	111,031	118,150
Non-accrual Loans	525	759
Loans held for investment	113,627	119,710
Other, including overdrafts
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	0	0
60 to 89 Days Past Due	0	2
Greater than 90 Days Past Due	0	0
Total Loans 30 or More Days Past Due	0	2
Current Loans	912	2,811
Non-accrual Loans	0	0
Loans held for investment	912	2,813
Loans held for investment
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	26,030	57,618
60 to 89 Days Past Due	8,572	17,985
Greater than 90 Days Past Due	2,294	4,500
Total Loans 30 or More Days Past Due	36,896	80,103
Current Loans	4,012,775	3,852,942
Non-accrual Loans	107,799	199,983
Loans held for investment	4,157,470	4,133,028
Mortgage loans originated for sale
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	0	0
60 to 89 Days Past Due	0	0
Greater than 90 Days Past Due	0	0
Total Loans 30 or More Days Past Due	0	0
Current Loans	66,442	53,521
Non-accrual Loans	0	0
Total loans
Loans and Leases Receivable Recorded Investment, Past Due
30 to 59 Days Past Due	26,030	57,618
60 to 89 Days Past Due	8,572	17,985
Greater than 90 Days Past Due	2,294	4,500
Total Loans 30 or More Days Past Due	36,896	80,103
Current Loans	4,079,217	3,906,463
Non-accrual Loans	107,799	199,983
Total loans	$ 4,223,912	$ 4,186,549

XML

Deposits (Tables)

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

Schedule of Deposits, By Type

Deposits are summarized as follows:

December 31,	2012		2011
Non-interest bearing demand	$	1,495,309	$	1,271,709
Interest bearing:
Demand	1,811,905		1,306,509
Savings	1,547,713		1,691,413
Time, $100 and over	594,712		681,047
Time, other	790,772		876,293
Total interest bearing	4,745,102		4,555,262
Total deposits	$	6,240,411	$	5,826,971

Schedule of Maturities of Time Deposits

Maturities of time deposits at December 31, 2012 are as follows:

	Time, $100 and Over		Total Time
2013	$	437,597	$	999,439
2014	72,483		176,243
2015	33,646		79,030
2016	27,272		63,412
2017	23,714		67,357
Thereafter	—		3
Total	$	594,712	$	1,385,484

XML

Non-Cash Investing and Financing Activities

12 Months Ended

Dec. 31, 2012

Supplemental Cash Flow Information [Abstract]

Non-Cash Investing and Financing Activities

NON-CASH INVESTING AND FINANCING ACTIVITIES

The Company transferred loans of $43,541, $26,644 and $21,314 to other real estate owned in 2012, 2011 and 2010, respectively.

The Company transferred internally originated mortgage servicing assets of $4,563, $2,864 and $4,222 from loans to mortgage servicing assets in 2012, 2011 and 2010, respectively.

The Company transferred real property pending disposal of $566 to other assets in 2012. The Company transferred equipment pending disposal of $1,513 to other assets in 2010.

During 2012, the Company reclassified $50,000 of perpetual preferred stock pending redemption from equity to a liability.

The Company transferred accrued liabilities of $216 and $59 to common stock in conjunction with the vesting of liability-classified non-vested stock awards during 2011 and 2010 respectively.

The Company recorded receivables of $1,204 in conjunction with the sale of mortgage servicing rights during 2010.

XML

Other Comprehensive Income

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Other Comprehensive Income

OTHER COMPREHENSIVE INCOME

The gross amounts of each component of other comprehensive income and the related tax effects are as periods indicated are as follows:

Year ended December 31, 2012	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(4,648	)	$	(1,829	)	$	(2,819	)
Reclassification adjustment for net gains included in net income	(348		)	(137		)	(211		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	56			22			34
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(77		)	(30		)	(47		)
Total other comprehensive loss	$	(5,017	)	$	(1,974	)	$	(3,043	)

Year ended December 31, 2011	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	17,168		$	6,899		$	10,269
Reclassification adjustment for net gains included in net income	(1,544		)	(620		)	(924		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	389			156			233
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	135			54			81
Total other comprehensive income	$	16,148		$	6,489		$	9,659

Year ended December 31, 2010	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(8,438	)	$	(2,989	)	$	(5,449	)
Reclassification adjustment for net gains included in net income	(170		)	(60		)	(110		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	722			256			466
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(940		)	(333		)	(607		)
Total other comprehensive loss	$	(8,826	)	$	(3,126	)	$	(5,700	)

The components of accumulated other comprehensive income, net of income taxes, are as follows:

Year ended December 31,	2012			2011
Net unrealized gain on investment securities available-for-sale	$	17,537		$	20,533
Net actuarial loss on defined benefit post-retirement benefit plans	(1,546		)	(1,499		)
Net accumulated other comprehensive income	$	15,991		$	19,034

XML

Condensed Financial Information (Parent Company Only) - Condensed Balance Sheets (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Condensed balance sheets:
Cash and cash equivalents	$ 801,332,000	$ 472,447,000
Investment in subsidiaries, at equity:
Other assets	62,953,000	68,177,000
Total assets	7,721,761,000	7,325,527,000
Preferred stock pending redemption	50,000,000	0
Subordinated debentures held by subsidiary trusts	82,477,000	123,715,000
Total liabilities	6,970,575,000	6,554,507,000
Stockholders’ equity	751,186,000	771,020,000	736,802,000	574,434,000
Total liabilities and stockholders’ equity	7,721,761,000	7,325,527,000
Parent Company
Condensed balance sheets:
Cash and cash equivalents	95,407,000	131,860,000
Investment in subsidiaries, at equity:
Equity method investments	804,239,000	778,322,000
Advances from subsidiaries, net	697,000	0
Other assets	25,815,000	26,246,000
Total assets	926,158,000	936,428,000
Other liabilities	22,495,000	19,552,000
Advances to subsidiaries, net	0	2,141,000
Long-term debt	20,000,000	20,000,000
Preferred stock pending redemption	50,000,000	0
Subordinated debentures held by subsidiary trusts	82,477,000	123,715,000
Total liabilities	174,972,000	165,408,000
Stockholders’ equity	751,186,000	771,020,000
Total liabilities and stockholders’ equity	926,158,000	936,428,000
Bank subsidiary
Investment in subsidiaries, at equity:
Equity method investments	802,270,000	776,349,000
Nonbank subsidiaries
Investment in subsidiaries, at equity:
Equity method investments	$ 1,969,000	$ 1,973,000

XML

Summary of Significant Accounting Policies - Core Deposit Intangibles (Details) (Core Deposits Intangibles, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Core Deposits Intangibles
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Weighted average useful life of related deposits	9 years 6 months
Accumulated core deposit intangibles amortization	$ 20,983	$ 19,563
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2013	1,417
2014	1,417
2015	1,417
2016	1,380
2017	$ 306

XML

Long-Term Debt and Other Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Summary of Long-Term Debt

A summary of long-term debt follows:

December 31,	2012		2011
Parent Company:
6.81% subordinated term loan maturing January 9, 2018, principal due at maturity, interest payable quarterly	$	20,000	$	20,000
Subsidiaries:
Variable rate subordinated term loan maturing February 28, 2018, principal due at maturity, interest payable quarterly (rate of 2.52% at December 31, 2012)	15,000		15,000
Various notes payable to FHLB, interest due monthly at various rates and maturities through October 31, 2015 (weighted average rate of 4.83% at December 31, 2012)	425		425
8.00% capital lease obligation with term ending October 25, 2029	1,735		1,775
Total long-term debt	$	37,160	$	37,200

Schedule of Maturities of Long-term Debt

Maturities of long-term debt at December 31, 2012 are as follows:
2013	$	244
2014	49
2015	285
2016	65
2017	71
Thereafter	36,446
Total	$	37,160

XML

Condensed Financial Information (Parent Company Only)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information (Parent Company Only)

CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

Following is condensed financial information of First Interstate BancSystem, Inc.

December 31,	2012		2011
Condensed balance sheets:
Cash and cash equivalents	$	95,407	$	131,860
Investment in subsidiaries, at equity:
Bank subsidiary	802,270		776,349
Nonbank subsidiaries	1,969		1,973
Total investment in subsidiaries	804,239		778,322
Advances from subsidiaries, net	697		—
Other assets	25,815		26,246
Total assets	$	926,158	$	936,428
Other liabilities	$	22,495	$	19,552
Advances to subsidiaries, net	—		2,141
Long-term debt	20,000		20,000
Preferred stock pending redemption	50,000		—
Subordinated debentures held by subsidiary trusts	82,477		123,715
Total liabilities	174,972		165,408
Stockholders’ equity	751,186		771,020
Total liabilities and stockholders’ equity	$	926,158	$	936,428

Years Ended December 31,	2012			2011			2010
Condensed statements of income:
Dividends from subsidiaries	$	40,000		$	30,000		$	15,400
Other interest income	92			118			105
Other income, primarily management fees from subsidiaries	10,042			10,617			11,336
Total income	50,134			40,735			26,841
Salaries and benefits	13,205			13,975			13,435
Interest expense	6,691			7,273			7,703
Other operating expenses, net	7,150			6,903			6,827
Total expenses	27,046			28,151			27,965
Earnings before income tax benefit	23,088			12,584			(1,124		)
Income tax benefit	(6,222		)	(6,518		)	(6,254		)
Income before undistributed earnings of subsidiaries	29,310			19,102			5,130
Undistributed earnings of subsidiaries	28,914			25,444			32,226
Net income	$	58,224		$	44,546		$	37,356

Years Ended December 31,	2012			2011			2010
Condensed statements of cash flows:
Cash flows from operating activities:
Net income	$	58,224		$	44,546		$	37,356
Adjustments to reconcile net income to cash provided by operating activities:
Undistributed earnings of subsidiaries	(28,914		)	(25,444		)	(32,226		)
Stock-based compensation expense	2,485			2,111			1,764
Tax benefits from stock-based compensation	360			204			239
Excess tax benefits from stock-based compensation	(273		)	(124		)	(225		)
Other, net	3,327			2,600			(4,325		)
Net cash provided by operating activities	35,209			23,893			2,583
Cash flows from investing activities:
Capitalization of subsidiaries	—			—			(130		)
Capital expenditures, net of sales	1			(3		)	—
Net cash provided by (used in) investing activities	1			(3		)	(130		)
Cash flows from financing activities:
Net (decrease) increase in advances from nonbank subsidiaries	(2,838		)	(2,913		)	5,002
Repayments of long-term debt	—			—			(33,929		)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238		)	—			—
Proceeds from issuance of common stock	1,911			385			167,400
Common stock issuance costs	—			—			(13,597		)
Excess tax benefits from stock-based compensation	273			124			225
Purchase and retirement of common stock	(263		)	(248		)	(3,699		)
Dividends paid to common stockholders	(26,208		)	(19,233		)	(17,905		)
Dividends paid to preferred stockholders	(3,300		)	(3,422		)	(3,422		)
Net cash provided by (used in) financing activities	(71,663		)	(25,307		)	100,075
Net change in cash and cash equivalents	(36,453		)	(1,417		)	102,528
Cash and cash equivalents, beginning of year	131,860			133,277			30,749
Cash and cash equivalents, end of year	$	95,407		$	131,860		$	133,277

Noncash Investing and Financing Activities — During 2012, the Company reclassified $50,000 of perpetual preferred stock pending redemption from equity to a liability. The Company transferred accrued liabilities of $216 and $59 to common stock in conjunction with the vesting of liability-classified non-vested stock awards during 2011 and 2010, respectively.

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:

	Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	754,856	$	—	$	754,856	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	1,239,851		—		1,239,851		—
Private mortgage-backed securities	551		—		551		—
Mortgage servicing rights	16,373		—		16,373		—

	Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	1,138,118	$	—	$	1,138,118	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	877,997		—		877,997		—
Private mortgage-backed securities	749		—		749		—
Mortgage servicing rights	11,910		—		11,910		—
Derivative liability contract	383		—		—		383

The following table reconciles the beginning and ending balances of the derivative liability contract measured at fair value on a recurring basis using significant unobservable (Level 3) inputs during the twelve months ended December 31, 2012 and 2011:

For the Twelve Months Ended December 31,	2012			2011
Balance, beginning of period	$	383		$	86
Accruals during the period	—			425
Cash payments during the period	(383		)	(128		)
Balance, end of period	$	—		$	383

The methodologies used by the Company in determining the fair values of each class of financial instruments are based primarily on the use of independent, market-based data to reflect a value that would be reasonably expected in an orderly transaction between market participants at the measurement date. The Company obtains fair value measurements for investment securities from an independent pricing service and evaluates mortgage servicing rights for impairment using an independent valuation service. The vendors chosen by the Company are widely recognized vendors whose evaluations support the pricing functions of financial institutions, investment and mutual funds, and portfolio managers. The Company has documented and evaluated the pricing methodologies used by the vendors and maintains internal processes that regularly test valuations. These internal processes include obtaining and reviewing available reports on internal controls, evaluating the prices for reasonableness given market changes, obtaining and evaluating the inputs used in the model for a sample of securities, investigating anomalies and confirming determinations through discussions with the vendor. For investment securities, if needed, a broker may be utilized to determine the reported fair value. Further details on the methods used to estimate the fair value of each class of financial instruments above are discussed below:

Investment Securities Available-for-Sale. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the investment's terms and conditions, among other things.

Mortgage Servicing Rights. Mortgage servicing rights are initially recorded at fair value based on comparable market quotes and are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights are evaluated quarterly for impairment using an independent valuation service. The valuation service utilizes discounted cash flow modeling techniques, which consider observable data that includes market consensus prepayment speeds and the predominant risk characteristics of the underlying loans including loan type, note rate and loan term. Management believes the significant inputs utilized in the valuation model are observable in the market.

Derivative Liability Contract. In conjunction with the sale of all of its Class B shares of Visa, Inc. (“Visa”) common stock in 2009, the Company entered into a derivative liability contract with the purchaser whereby the Company will make or receive cash payments based on subsequent changes in the conversion rate of the Class B shares into Class A shares of Visa. The conversion rate is dependent upon the resolution of certain litigation involving Visa U.S.A. Inc. card association or its affiliates. The value of the derivative liability contract is estimated using an internal valuation model with significant unobservable inputs including the Company's expectations regarding the ultimate resolution of the visa litigations and loss severity in the event of unfavorable litigaiton outcomes. The probability of unfavorable outcomes and the estimation of loss severity is determined through review of visa's press releases and public filings made with the Securities and Exchange Commission and managements estimation of the effect of changes in litigation status on the value of the derivative liability contract. On November 9, 2012, the court granted preliminary approval of a settlement agreement resolving the litigation. If finalized, the proposed settlement will not result in additional material liability to the Company.

Additionally, from time to time, certain assets are measured at fair value on a non-recurring basis. Adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment.

The following table presents information about the Company’s assets and liabilities measured at fair value on a non-recurring basis.

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	Total		(Level 1)		(Level 2)		(Level 3)
As of December 31, 2012
Impaired loans	$	74,623	$	—	$	—	$	74,623	$	(32,624	)
Other real estate owned	15,745		—		—		15,745		(20,797		)
As of December 31, 2011
Impaired loans	$	100,035	$	—	$	—	$	100,035	$	(67,043	)
Other real estate owned	17,000		—		—		17,000		(21,282		)

Impaired Loans. Collateralized impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from collateral. The impaired loans are reported at fair value through specific valuation allowance allocations. In addition, when it is determined that the fair value of an impaired loan is less than the recorded investment in the loan, the carrying value of the loan is adjusted to fair value through a charge to the allowance for loan losses. Collateral values are estimated using independent appraisals and management estimates of current market conditions. As of December 31, 2012, certain impaired loans with a carrying value of $107,247 were reduced by specific valuation allowance allocations of $10,297 and partial loan charge-offs of $22,327 resulting in a reported fair value of $74,623. As of December 31, 2011, certain impaired loans with a carrying value of $167,078 were reduced by specific valuation allowance allocations of $32,838 and partial loan charge-offs of $34,205 resulting in a reported fair value of $100,035.

OREO.The fair values of OREO are estimated using independent appraisals and management estimates of current market conditions. Upon initial recognition, write-downs based on the foreclosed asset's fair value at foreclosure are reported through charges to the allowance for loan losses. Periodically, the fair value of foreclosed assets is remeasured with any subsequent write-downs charged to OREO expense in the period in which they are identified.

Long-lived Assets to be Disposed of by Sale. Long-lived assets to be disposed of by sale are carried at the lower of carrying value or fair value less estimated costs to sell. The fair values of long-lived assets to be disposed of by sale are based upon observable market data and management estimates of current market conditions. As of December 31, 2012, a long-lived asset to be disposed of by sale with a carrying value of $566 was reduced by write-downs of $70 charged to other expense resulting in a reported fair value of $496. As of December 31, 2011, the company had a long-lived assets to be disposed of by sale of $1,513 that was carried at cost.

In addition, mortgage loans held for sale are required to be measured at the lower of cost or fair value. The fair value of mortgage loans held for sale is based upon binding contracts or quotes or bids from third party investors. As of December 31, 2012 and 2011, all mortgage loans held for sale were recorded at cost.

The Company is required to disclose the fair value of financial instruments for which it is practical to estimate fair value. The methodologies for estimating the fair value of financial instruments that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for estimating the fair value of other financial instruments are discussed below. For financial instruments bearing a variable interest rate where no credit risk exists, it is presumed that recorded book values are reasonable estimates of fair value.

Financial Assets. Carrying values of cash, cash equivalents and accrued interest receivable approximate fair values due to the liquid and/or short-term nature of these instruments. Fair values for investment securities held-to-maturity are obtained from an independent pricing service, which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the investment’s terms and conditions, among other things. Fair values of fixed rate loans and variable rate loans that reprice on an infrequent basis are estimated by discounting future cash flows using current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality. Carrying values of variable rate loans that reprice frequently, and with no change in credit risk, approximate the fair values of these instruments.

Financial Liabilities. The fair values of demand deposits, savings accounts, securities sold under repurchase agreements and accrued interest payable are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using external market rates currently offered for deposits with similar remaining maturities. The carrying values of the interest bearing demand notes to the United States Treasury are deemed an approximation of fair values due to the frequent repayment and repricing at market rates. The fair value of the derivative liability contract was estimated by discounting cash flows using assumptions regarding the expected outcome of related litigation. The floating rate subordinated debenture, floating rate subordinated term loan, notes payable to the FHLB, fixed rate subordinated term debt, fixed rate subordinated debentures and capital lease obligation are estimated by discounting future cash flows using current rates for advances with similar characteristics. The carrying value of the preferred stock pending redemption approximates fair value due to the short-term nature of this instrument.

Commitments to Extend Credit and Standby Letters of Credit. The fair value of commitments to extend credit and standby letters of credit, based on fees currently charged to enter into similar agreements, is not significant.

A summary of the estimated fair values of financial instruments follows:

	`				Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	801,332	$	801,332	$	—	$	801,332	$	—
Investment securities available-for-sale	1,995,258		1,995,258		—		1,995,258		—
Investment securities held-to-maturity	208,223		218,933		—		218,933		—
Accrued interest receivable	28,869		28,869		—		28,869		—
Mortgage servicing rights, net	12,653		16,373		—		16,373
Net loans	4,123,401		4,142,426		—		4,067,803		74,623
Total financial assets	$	7,169,736	$	7,203,191	$	—	$	7,128,568	$	74,623
Financial liabilities:
Total deposits, excluding time deposits	$	4,854,927	$	4,854,927	$	—	$	4,854,927	$	—
Time deposits	1,385,484		1,394,403		—		1,394,403		—
Securities sold under repurchase agreements	505,785		505,785		—		505,785		—
Other borrowed funds	32		32		—		32		—
Accrued interest payable	6,502		6,502		—		6,502		—
Long-term debt	37,160		35,104		—		35,104		—
Preferred stock pending redemption	50,000		50,000		—		50,000		—
Subordinated debentures held by subsidiary trusts	82,477		62,409		—		62,409
Total financial liabilities	$	6,922,367	$	6,909,162	$	—	$	6,909,162	$	—

					Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	472,447	$	472,447	$	—	$	472,447	$	—
Investment securities available-for-sale	2,016,864		2,016,864		—		2,016,864		—
Investment securities held-to-maturity	152,781		161,877		—		161,877		—
Accrued interest receivable	31,974		31,974		—		31,974		—
Mortgage servicing rights, net	11,555		11,910		—		11,910		—
Net loans	4,073,968		4,064,718		—		3,964,683		100,035
Total financial assets	$	6,759,589	$	6,759,790	$	—	$	6,659,755	$	100,035
Financial liabilities:
Total deposits, excluding time deposits	$	4,269,631	$	4,269,631	$	—	$	4,269,631	$	—
Time deposits	1,557,340		1,565,558		—		1,565,558		—
Securities sold under repurchase agreements	516,243		516,243		—		516,243		—
Other borrowed funds	7		7		—		7		—
Accrued interest payable	8,123		8,123		—		8,123		—
Long-term debt	37,200		34,341		—		34,341		—
Subordinated debentures held by subsidiary trusts	123,715		102,525		—		102,525		—
Derivative contract liability	383		383				—		383
Total financial liabilities	$	6,512,642	$	6,496,811	$	—	$	6,496,428	$	383

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities:
Net income	$ 58,224	$ 44,546	$ 37,356
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Provision for loan losses	40,750	58,151	66,900
Net loss (gain) on disposal of property and equipment	(424)	28	672
Depreciation and amortization	17,112	17,368	20,136
Net premium amortization on investment securities	11,700	10,353	6,762
Net gain on investment securities transactions	(348)	(1,544)	(170)
Net gain on sales of mortgage loans held for sale	(29,606)	(14,443)	(15,321)
Net gain on sales of student loan portfolio	0	0	(374)
Net (gain) loss on sale of mortgage servicing rights	(19)	0	1,525
Net gain on sale of OREO	(1,041)	(552)	(708)
Write-down of OREO	6,724	7,464	6,724
Loss on early extinguishment of debt	428	0	306
Mortgage servicing rights impairment (recovery)	(771)	1,275	(787)
Deferred income tax expense (benefit)	8,762	2,405	(17,257)
Net increase in cash surrender value of company-owned life insurance policies	(1,849)	(1,824)	(1,682)
Stock-based compensation expense	2,485	2,111	1,764
Tax benefits from stock-based compensation	360	204	239
Excess tax benefits from stock-based compensation	(273)	(124)	(225)
Originations of loans held for sale, net	12,122	4,466	1,121
Changes in operating assets and liabilities:
Decrease in accrued interest receivable	3,105	1,654	3,495
Decrease in other assets	4,089	13,039	8,158
Decrease in accrued interest payable	(1,621)	(5,055)	(4,407)
Increase (decrease) in accounts payable and accrued expenses	5,913	3,579	(4,969)
Net cash provided by operating activities	135,822	143,101	109,258
Purchases of investment securities:
Held-to-maturity	(68,305)	(18,846)	(33,118)
Available-for-sale	(1,246,068)	(1,166,364)	(1,317,938)
Proceeds from maturities, paydowns and calls of investment securities:
Held-to-maturity	12,192	12,682	15,134
Available-for-sale	1,252,266	943,490	833,910
Proceeds from sales of mortgage servicing rights	907	596	2,480
Extensions of credit to customers, net of repayments	(128,919)	90,548	71,762
Proceeds from sale of student loan portfolio	0	0	25,032
Recoveries of loans charged-off	8,116	5,231	2,889
Proceeds from sales of OREO	42,814	15,896	20,336
Capital contribution to equity method investment	(900)	0	0
Capital distribution from unconsolidated subsidiary	1,238	0	0
Capital expenditures, net of proceeds from sales	(14,420)	(9,172)	(7,998)
Net cash used in investing activities	(141,079)	(125,939)	(387,511)
Cash flows from financing activities:
Net increase (decrease) in deposits	413,440	(98,742)	101,657
Net increase (decrease) in repurchase agreements	(10,458)	(103,911)	146,013
Net increase (decrease) in short-term borrowings	25	(4,984)	(432)
Repayments of long-term debt	(40)	(302)	(35,851)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238)	0	0
Proceeds from issuance of common stock	1,911	385	167,400
Common stock issuance costs	0	0	(13,597)
Excess tax benefits from stock-based compensation	273	124	225
Purchase and retirement of common stock	(263)	(248)	(3,699)
Dividends paid to common stockholders	(26,208)	(19,233)	(17,905)
Dividends paid to preferred stockholders	(3,300)	(3,422)	(3,422)
Net cash provided by (used in) financing activities	334,142	(230,333)	340,389
Net increase (decrease) in cash and cash equivalents	328,885	(213,171)	62,136
Cash and cash equivalents at beginning of year	472,447	685,618	623,482
Cash and cash equivalents at end of year	801,332	472,447	685,618
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes	17,540	16,640	37,325
Cash paid during the year for interest expense	$ 31,735	$ 47,086	$ 67,514

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

The Company conducts banking transactions in the ordinary course of business with related parties, including directors, executive officers, shareholders and their associates, on the same terms as those prevailing at the same time for comparable transactions with unrelated persons and that do not involve more than a normal risk of collectibility or present other unfavorable features.

Certain executive officers, directors and greater than 5% shareholders of the Company and certain entities and individuals related to such persons, incurred indebtedness in the form of loans, as customers, of $36,067 and $44,430 at December 31, 2012 and 2011, respectively. During 2012, new loans and advances on existing loans of $15,751 were funded and loan repayments totaled $24,556. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company and are allowable under the Sarbanes Oxley Act of 2002. Additionally, during 2012, net loans of $442 were added due to changes in related parties from the prior year.

The Company purchases property, casualty and other insurance through an agency in which a director of the Company has a controlling ownership interest. The Company paid insurance premiums to the agency of $839, $1,328, and $879 in 2012, 2011 and 2010, respectively.

The Company leases an aircraft from an entity wholly-owned by the chairman of the Company’s Board of Directors. Under the terms of the lease, the Company pays a fee for each flight hour plus certain third party operating expenses related to the aircraft. During 2012, 2011 and 2010, the Company paid total fees and operating expenses of $262, $311 and $305, respectively, for its use of the aircraft. In addition, the Company leases a portion of its hanger and provides pilot services to the related entity. During 2012, 2011 and 2010, the Company received payments from the related entity of $47, $70 and $63, respectively, for hanger use, pilot fees and reimbursement of certain third party operating expenses related to the chairman’s personal use of the aircraft.

The Company purchases services from an entity in which four greater than 5% shareholders and six directors of the Company, including the chairman and vice chairman of the Board of Directors, have an aggregate ownership interest of 25%, and in which the vice chairman is the chairman of such entity. Services provided for the Company’s benefit include shareholder education and communication, strategic enterprise planning and corporate governance consultation.

During 2012, 2011 and 2010, the Company paid $243, $250 and $337, respectively, for these services. The Company also reimbursed the related entity for certain costs incurred in the Company’s behalf, primarily office costs for the vice chairman of the Company’s Board of Directors and the Company’s charitable foundation. These reimbursements totaled $88 in 2010. During 2012 and 2011, the Company paid these costs directly and thus no reimbursements were made. The related entity reimburses the Company for all salaries, wages and employee benefits expenses incurred by the Company in behalf of the related entity for its personnel.

During 2012, the Company entered into a contract with an entity wholly-owned by a director of the Company to provide construction management and advisory services related to the construction of a bank office building. Under the terms of the agreement, the entity will receive payments equal to the lesser of a fixed price of $180 or 4% of the actual construction contract price, with an initial payment of $60 due upon execution of the agreement and the remainder due in two equal installments over a two year period. Under the terms of the contract, the Company paid the entity $60 during 2012.

In conjunction with an acquisition, the Company assumed certain existing deferred compensatory agreements. Under the terms of one such agreement, the Company is required to make cash payments to a director of the Company for the promotion of growth and development of new business through December 31, 2011. The total amount due under the agreement was fixed prior to the acquisition date at $577, with a portion to be paid over 4 years and the remaining balance of $424 due in January 2012. As additional consideration under the agreement, the director provided, among other things, a covenant not to compete. Under the terms of the agreement, the Company made cash payments of $424 during 2012 and $38 during 2011 and 2010, respectively.

A director of the Company is party to an agreement to guarantee the payment of interest on loans between FIB and an unrelated third party borrower through December 31, 2012. Under the terms of the interest guaranty agreement, the director made interest payments to FIB on behalf of the borrower of $815 in 2012, $954 in 2011 and $487 in 2010. In addition, the director pledged to FIB collateral for the loans of the unrelated third party borrower. During 2011, the collateral was liquidated and proceeds of $7,998 were applied to the outstanding principal balances of the loans.

During 2010, the Company entered into an agreement to sell real property to a director of the Company. The sale closed in 2011 at a sales price of $2,695.

XML

Commitments and Contingencies - Operating Lease Commitments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Future Minimum Rental Commitments
Operating leases, rent expense	$ 1,423	$ 2,030	$ 1,960
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	3,221
2014	3,082
2015	2,443
2016	1,084
2017	716
Thereafter	4,170
Operating leases, future minimum payments due	14,716
Third Parties
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	1,110
2014	1,062
2015	1,005
2016	919
2017	633
Thereafter	4,170
Operating leases, future minimum payments due	8,899
Related Partnership
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	2,111
2014	2,020
2015	1,438
2016	165
2017	83
Thereafter	0
Operating leases, future minimum payments due	$ 5,817
Ownership percentage in partnership	50.00%

XML

Company - Owned Life Insurance (Tables)

12 Months Ended

Dec. 31, 2012

Investments, All Other Investments [Abstract]

Schedule of Life Settlement Contracts

Company-owned life insurance consists of the following:

December 31,	2012		2011
Key executive, principal shareholder	$	4,858	$	4,800
Key executive split dollar	4,538		4,441
Group life	67,333		65,639
Total	$	76,729	$	74,880

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:

	Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	754,856	$	—	$	754,856	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	1,239,851		—		1,239,851		—
Private mortgage-backed securities	551		—		551		—
Mortgage servicing rights	16,373		—		16,373		—

	Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities available-for-sale:
Obligations of U.S. government agencies	$	1,138,118	$	—	$	1,138,118	$	—
U.S. agencies mortgage-backed securities & collateralized mortgage obligations	877,997		—		877,997		—
Private mortgage-backed securities	749		—		749		—
Mortgage servicing rights	11,910		—		11,910		—
Derivative liability contract	383		—		—		383

Schedule of Derivative Liability Contract Measured at Fair Value on a Recurring Basis Unobservable Input Reconciliation

The following table reconciles the beginning and ending balances of the derivative liability contract measured at fair value on a recurring basis using significant unobservable (Level 3) inputs during the twelve months ended December 31, 2012 and 2011:

For the Twelve Months Ended December 31,	2012			2011
Balance, beginning of period	$	383		$	86
Accruals during the period	—			425
Cash payments during the period	(383		)	(128		)
Balance, end of period	$	—		$	383

Schedule of Financial Assets and Financial Liabilities Measured at Fair Value on a Non-Recurring Basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a non-recurring basis.

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	Total		(Level 1)		(Level 2)		(Level 3)
As of December 31, 2012
Impaired loans	$	74,623	$	—	$	—	$	74,623	$	(32,624	)
Other real estate owned	15,745		—		—		15,745		(20,797		)
As of December 31, 2011
Impaired loans	$	100,035	$	—	$	—	$	100,035	$	(67,043	)
Other real estate owned	17,000		—		—		17,000		(21,282		)

Schedule of Estimated Fair Values of Financial Instruments by Level of Valuation Inputs

A summary of the estimated fair values of financial instruments follows:

	`				Fair Value Measurements at Reporting Date Using
As of December 31, 2012	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	801,332	$	801,332	$	—	$	801,332	$	—
Investment securities available-for-sale	1,995,258		1,995,258		—		1,995,258		—
Investment securities held-to-maturity	208,223		218,933		—		218,933		—
Accrued interest receivable	28,869		28,869		—		28,869		—
Mortgage servicing rights, net	12,653		16,373		—		16,373
Net loans	4,123,401		4,142,426		—		4,067,803		74,623
Total financial assets	$	7,169,736	$	7,203,191	$	—	$	7,128,568	$	74,623
Financial liabilities:
Total deposits, excluding time deposits	$	4,854,927	$	4,854,927	$	—	$	4,854,927	$	—
Time deposits	1,385,484		1,394,403		—		1,394,403		—
Securities sold under repurchase agreements	505,785		505,785		—		505,785		—
Other borrowed funds	32		32		—		32		—
Accrued interest payable	6,502		6,502		—		6,502		—
Long-term debt	37,160		35,104		—		35,104		—
Preferred stock pending redemption	50,000		50,000		—		50,000		—
Subordinated debentures held by subsidiary trusts	82,477		62,409		—		62,409
Total financial liabilities	$	6,922,367	$	6,909,162	$	—	$	6,909,162	$	—

					Fair Value Measurements at Reporting Date Using
As of December 31, 2011	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	472,447	$	472,447	$	—	$	472,447	$	—
Investment securities available-for-sale	2,016,864		2,016,864		—		2,016,864		—
Investment securities held-to-maturity	152,781		161,877		—		161,877		—
Accrued interest receivable	31,974		31,974		—		31,974		—
Mortgage servicing rights, net	11,555		11,910		—		11,910		—
Net loans	4,073,968		4,064,718		—		3,964,683		100,035
Total financial assets	$	6,759,589	$	6,759,790	$	—	$	6,659,755	$	100,035
Financial liabilities:
Total deposits, excluding time deposits	$	4,269,631	$	4,269,631	$	—	$	4,269,631	$	—
Time deposits	1,557,340		1,565,558		—		1,565,558		—
Securities sold under repurchase agreements	516,243		516,243		—		516,243		—
Other borrowed funds	7		7		—		7		—
Accrued interest payable	8,123		8,123		—		8,123		—
Long-term debt	37,200		34,341		—		34,341		—
Subordinated debentures held by subsidiary trusts	123,715		102,525		—		102,525		—
Derivative contract liability	383		383				—		383
Total financial liabilities	$	6,512,642	$	6,496,811	$	—	$	6,496,428	$	383

XML

Mortgage Servicing Rights - At Amortized Cost (Details) (Mortgage loans, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Mortgage loans
Servicing Asset at Amortized Value, Balance [Roll Forward]
Servicing asset at amortized cost, before valuation reserve, beginning	$ 13,450	$ 13,811	$ 18,732
Sales of mortgage servicing rights	(735)	0	(4,528)
Purchases of mortgage servicing rights	0	0	0
Originations of mortgage servicing rights	4,563	2,864	4,222
Amorization expense	3,501	3,225	4,615
Write-off of permanent impairment	(553)	0	0
Servicing asset at amortized cost, before valuation reserve, ending	13,224	13,450	13,811
Less valuation reserve	(571)	(1,895)	(620)
Servicing asset at fair value, ending	12,653	11,555	13,191
Principal balance of serviced loans underlying mortgage servicing rights	2,146,351	1,803,303	1,594,697
Mortgage servicing rights as a percentage of serviced loans	0.0059	0.0064	0.0083
Disclosure of Transfer of Securitizations or Asset-backed Financing Financial Assets Accounted for as Sale [Abstract]
Carrying value of sold mortgage servicing rights	735		4,528
Losses on sale of mortgage servicing rights recorded as other expense	$ (19)		$ 1,525

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 177,978	$ 142,502
Federal funds sold	730	309
Interest bearing deposits in banks	622,624	329,636
Total cash and cash equivalents	801,332	472,447
Investment securities:
Available-for-sale	1,995,258	2,016,864
Held-to-maturity (estimated fair values of $218,933 and $161,877 at December 31, 2012 and 2011, respectively)	208,223	152,781
Total investment securities	2,203,481	2,169,645
Loans held for investment	4,157,470	4,133,028
Mortgage loans held for sale	66,442	53,521
Total loans	4,223,912	4,186,549
Less allowance for loan losses	100,511	112,581
Net loans	4,123,401	4,073,968
Premises and equipment, net of accumulated depreciation	187,565	184,771
Goodwill	183,673	183,673
Company-owned life insurance	76,729	74,880
Other real estate owned (“OREO”)	32,571	37,452
Accrued interest receivable	28,869	31,974
Mortgage servicing rights, net of accumulated amortization and impairment reserve	12,653	11,555
Deferred tax asset, net	2,597	9,628
Core deposit intangibles, net of accumulated amortization	5,937	7,357
Other assets	62,953	68,177
Total assets	7,721,761	7,325,527
Deposits:
Non-interest bearing	1,495,309	1,271,709
Interest bearing	4,745,102	4,555,262
Total deposits	6,240,411	5,826,971
Securities sold under repurchase agreements	505,785	516,243
Accounts payable and accrued expenses	48,208	42,248
Accrued interest payable	6,502	8,123
Long-term debt	37,160	37,200
Other borrowed funds	32	7
Preferred stock pending redemption	50,000	0
Subordinated debentures held by subsidiary trusts	82,477	123,715
Total liabilities	6,970,575	6,554,507
Stockholders’ equity:
Nonvoting noncumulative preferred stock without par value; authorized 100,000 shares; issued and outstanding 5,000 shares as of December 31, 2012 and 2011	0	50,000
Common stock	271,335	266,842
Retained earnings	463,860	435,144
Accumulated other comprehensive income, net	15,991	19,034
Total stockholders’ equity	751,186	771,020
Total liabilities and stockholders’ equity	$ 7,721,761	$ 7,325,527

XML

Subordinated Debentures Held by Subsidiary Trusts (Tables)

12 Months Ended

Dec. 31, 2012

Subordinated Borrowings [Abstract]

Schedule of Subordinated Borrowings

A summary of Subordinated Debenture issuances follows:

		Principal Amount Outstanding as of December 31,
Issuance	Maturity Date	2012		2011
March 2003	March 26, 2033	$	—	$	41,238
October 2007	January 1, 2038	10,310		10,310
November 2007	December 15, 2037	15,464		15,464
December 2007	December 15, 2037	20,619		20,619
December 2007	April 1, 2038	15,464		15,464
January 2008	April 1, 2038	10,310		10,310
January 2008	April 1, 2038	10,310		10,310
Total subordinated debentures held by subsidiary trusts		$	82,477	$	123,715

XML

Employee Benefit Plans - Postretirement Healthcare Plan (Details) (Postretirement Healthcare Plan, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Postretirement Healthcare Plan
Defined Benefit Plan Disclosure
Minimum age requirement	55 years
Requisite service period	15 years
Unfunded benefit obligation	$ 4,432	$ 3,948
Net periodic benefit cost	561	507	502
Assumptions used calculating net periodic benefit cost, discount rate	4.30%	4.30%
Assumptions used calculating net periodic benefit cost, rate of compensation increase	5.00%	5.00%
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	165
2014	175
2015	163
2016	149
2017	181
2018 through 2022	1,221
Accumulated other comprehensive income (loss), before tax, related to the Plan	2,549
Accumulated other comprehensive income (loss), net of tax	1,546
Net acturarial loss, net of tax	2,137
Unamortized transition asset, net of tax	412
Estimated amount amortized from accumulated other comprehensive loss into net periodic benefit costs	$ 147

XML

Consolidated Statements of Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Preferred Stock	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2009	$ 574,434	$ 50,000	$ 112,135	$ 397,224	$ 15,075
Comprehensive income:
Net income	37,356	0	0	37,356
Other comprehensive loss, net of tax	(5,700)	0	0	0	(5,700)
Common stock transactions:
Common shares purchased and retired	3,699	0	(3,699)	0
Common shares issued	153,257	0	153,257	0
Non-vested common shares issued	0	0	0	0
Non-vested common shares forfeited or canceled	0	0	0	0	0
Non-vested liability awards vesting during period	59	0	59	0	0
Stock options exercised, net of shares tendered in payment of option price and income tax withholding amounts	649	0	649	0
Tax benefit of stock-based compensation	239	0	239	0
Stock-based compensation expense	1,534	0	1,534	0
Cash dividends declared:
Common (per share)	(17,905)	0	0	(17,905)
Preferred (per share)	(3,422)	0	0	(3,422)
Ending Balance at Dec. 31, 2010	736,802	50,000	264,174	413,253	9,375
Comprehensive income:
Net income	44,546	0	0	44,546	0
Other comprehensive loss, net of tax	9,659	0	0	0	9,659
Common stock transactions:
Common shares purchased and retired	(248)	0	(248)	0	0
Common shares issued	205	0	205	0	0
Non-vested common shares issued	0	0	0	0	0
Non-vested common shares forfeited or canceled	0	0	0	0	0
Non-vested liability awards vesting during period	204	0	204	0	0
Stock options exercised, net of shares tendered in payment of option price and income tax withholding amounts	216	0	216	0	0
Tax benefit of stock-based compensation	385	0	385	0	0
Stock-based compensation expense	1,906	0	1,906	0	0
Cash dividends declared:
Common (per share)	(19,233)	0	0	(19,233)	0
Preferred (per share)	(3,422)	0	0	(3,422)	0
Ending Balance at Dec. 31, 2011	771,020	50,000	266,842	435,144	19,034
Comprehensive income:
Net income	58,224	0	0	58,224	0
Other comprehensive loss, net of tax	(3,043)	0	0	0	(3,043)
Common stock transactions:
Common shares purchased and retired	(263)	0	(263)	0	0
Common shares issued	299	0	299	0	0
Non-vested common shares issued	0	0	0	0	0
Non-vested common shares forfeited or canceled	0	0	0	0	0
Stock options exercised, net of shares tendered in payment of option price and income tax withholding amounts	1,612	0	1,612	0	0
Tax benefit of stock-based compensation	360	0	360	0	0
Stock-based compensation expense	2,485	0	2,485	0	0
Preferred shars called for redemption, shares		(50,000)
Preferred shares called for redemption, value	(50,000)
Cash dividends declared:
Common (per share)	(26,208)	0	0	(26,208)	0
Preferred (per share)	(3,300)	0	0	(3,300)	0
Ending Balance at Dec. 31, 2012	$ 751,186	$ 0	$ 271,335	$ 463,860	$ 15,991

XML

Stock-Based Compensation - Narrative (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award
Stock compensation expense	$ 2,485	$ 1,906	$ 1,660
Tax benefits from stock-based compensation	950	728	635
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award
Stock compensation expense	1,276	915	813
Tax benefits from stock-based compensation	488	349	311
Intrinsic value of fully-vested stock options outstanding	1,653
Total intrinsic value of options exercised	1,158	764	757
Tax benefit realized from stock option exercises	397	285	250
Proceeds from stock options exercised	1,612	385	649
Common stock redeemed for payment of stock option exercises, aggregate value	2,675	2,381	1,643
Unrecognized compensation cost related to nonvested restricted stock to be recognized over weighted average period (in years)	1 year 6 months 22 days
Share-Based CompensationaArrangement By Share Based Payment Award, Options, Vested In Period, Fair Value	980
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	1,523
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Stock compensation expense	1,209	991	847
Tax benefits from stock-based compensation	462	379	324
Unrecognized compensation cost related to nonvested restricted stock to be recognized over weighted average period (in years)	2 years 1 month 24 days
Stock issued during period, shares, restricted stock award	122,912
Unrecognized compensation cost related to nonvested restricted stock awards	$ 2,081
Restricted Stock | Upon Achievement of Performance Goals
Share-based Compensation Arrangement by Share-based Payment Award
Stock issued during period, shares, restricted stock award	20,564
Restricted Stock | Upon Achievement of Defined Return on Asset Performance Goals
Share-based Compensation Arrangement by Share-based Payment Award
Stock issued during period, shares, restricted stock award	10,282
Restricted Stock | Upon Achievement of Defined Return on Equity Performance Goals
Share-based Compensation Arrangement by Share-based Payment Award
Stock issued during period, shares, restricted stock award	10,282
Restricted Stock | Upon One-Third Annual Anniversary
Share-based Compensation Arrangement by Share-based Payment Award
Stock issued during period, shares, restricted stock award	102,348
2006 Plan | Stock Option
Share-based Compensation Arrangement by Share-based Payment Award
Shares available for grant	659,863
2012 Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Restricted stock award, vesting period	3 years

XML

Investment Securities - Gross Unrealized Losses and Fair Values of Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 securities	Dec. 31, 2011 securities
Available-for-Sale:
Available-for-Sale, less than 12 months fair value	$ 344,180	$ 333,344
Available-for-Sale, less than 12 months gross unrealized losses	(1,689)	(686)
Available-for-Sale, 12 months or more fair value	137	177
Available-for-sale, 12 months or more gross unrealized losses	(1)	(6)
Available-for-Sale, total fair value	344,317	333,521
Available-for-sale, total gross unrealized losses	(1,690)	(692)
Held-to-Maturity:
Held-to-maturity, less than 12 months fair value	28,701
Held-to-maturity, less than 12 months gross unrealized losses	(181)
Held-to-maturity, 12 months or more fair value	557
Held-to-maturity, 12 months or more gross unrealized losses	(8)
Held-to-maturity, total fair value	29,258
Held-to-maturity, total gross unrealized losses	(189)
Available-for-Sale and Held-to-Maturity:
Investment securities in an unrealized loss position (number of securities)	69,000	24,000
Obligations of U.S. government agencies
Available-for-Sale:
Available-for-Sale, less than 12 months fair value	93,982	287,404
Available-for-Sale, less than 12 months gross unrealized losses	(163)	(662)
Available-for-Sale, 12 months or more fair value	0	0
Available-for-sale, 12 months or more gross unrealized losses	0	0
Available-for-Sale, total fair value	93,982	287,404
Available-for-sale, total gross unrealized losses	(163)	(662)
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations
Available-for-Sale:
Available-for-Sale, less than 12 months fair value	250,198	45,694
Available-for-Sale, less than 12 months gross unrealized losses	(1,526)	(14)
Available-for-Sale, 12 months or more fair value	0	0
Available-for-sale, 12 months or more gross unrealized losses	0	0
Available-for-Sale, total fair value	250,198	45,694
Available-for-sale, total gross unrealized losses	(1,526)	(14)
Private mortgage-backed securities
Available-for-Sale:
Available-for-Sale, less than 12 months fair value	0	246
Available-for-Sale, less than 12 months gross unrealized losses	0	(10)
Available-for-Sale, 12 months or more fair value	137	177
Available-for-sale, 12 months or more gross unrealized losses	(1)	(6)
Available-for-Sale, total fair value	137	423
Available-for-sale, total gross unrealized losses	(1)	(16)
State, county and municipal securities
Held-to-Maturity:
Held-to-maturity, less than 12 months fair value	19,389	0
Held-to-maturity, less than 12 months gross unrealized losses	(168)	0
Held-to-maturity, 12 months or more fair value	557	773
Held-to-maturity, 12 months or more gross unrealized losses	(8)	(17)
Held-to-maturity, total fair value	19,946	773
Held-to-maturity, total gross unrealized losses	(176)	(17)
Corporate securities
Held-to-Maturity:
Held-to-maturity, less than 12 months fair value	9,312
Held-to-maturity, less than 12 months gross unrealized losses	(13)
Held-to-maturity, 12 months or more fair value	0
Held-to-maturity, 12 months or more gross unrealized losses	0
Held-to-maturity, total fair value	9,312
Held-to-maturity, total gross unrealized losses	$ (13)

XML

Non-Cash Investing and Financing Activities (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Supplemental Cash Flow Information [Abstract]
Transferred loans to OREO	$ 43,541	$ 26,644	$ 21,314
Transferred loans to mortgage servicing assets	4,563	2,864	4,222
Transfer of premises and equipment pending disposal to other assets, book value	1		1,513
Transfer of preferred stock pending redemption from equity to liability	50,000
Transfered accrued liabilities to common stock in conjunction with the vesting of liability-classified non-vested stock awards		216	59
Recorded receivable from sale of mortgage servicing rights			$ 1,204

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Consolidation Policy

Basis of Presentation. The Company’s consolidated financial statements include the accounts of the Parent Company and its operating subsidiaries. As of December 31, 2012, the Company had one significant subsidiary, First Interstate Bank (“FIB”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, none of which were material, have been made in the consolidated financial statements for 2011 and 2010 to conform to the 2012 presentation. These reclassifications did not change previously reported net income or stockholders’ equity.

On March 5, 2010, the Company’s shareholders approved proposals to recapitalize the Company’s existing common stock. The recapitalization included, among other things, a redesignation of existing common stock as Class B common stock; a four-for-one stock split of the Class B common stock; and, the creation of a new class of common stock designated as Class A common stock. All share and per share information included in the accompanying consolidated financial statements, including the notes thereto, has been adjusted to give effect to the recapitalization of the common stock, including the four-for-one stock split of Class B common stock, as if the recapitalization had occurred on January 1, 2010, the earliest date presented. For additional information regarding the recapitalization, see Note 12—Capital Stock and Dividend Restrictions.

Equity Method Investments. The Company has an investment in a real estate joint venture that is not consolidated because the Company does not own a majority voting interest, control the operations or receive a majority of the losses or earnings of the joint venture. This joint venture is accounted for using the equity method of accounting whereby the Company initially records its investment at cost and then subsequently adjusts the cost for the Company’s proportionate share of distributions and earnings or losses of the joint venture.

Variable Interest Entities. The Company’s wholly-owned business trusts, First Interstate Statutory Trust (“FIST”), FI Statutory Trust I (“Trust I”), FI Capital Trust II (“Trust II”), FI Statutory Trust III (“Trust III”), FI Capital Trust IV (“Trust IV”), FI Statutory Trust V (“Trust V”) and FI Statutory Trust VI (“Trust VI”) are variable interest entities for which the Company is not a primary beneficiary. Accordingly, the accounts of FIST, Trust I, Trust II, Trust III, Trust IV, Trust V and Trust VI are not included in the accompanying consolidated financial statements, and are instead accounted for using the equity method of accounting.

Assets Held in Fiduciary or Agency Capacity. The Company holds certain trust assets in a fiduciary or agency capacity. The Company also purchases and sells federal funds as an agent. These and other assets held in an agency or fiduciary capacity are not assets of the Company and, accordingly, are not included in the accompanying consolidated financial statements.

Use of Estimates

Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses and the valuation of goodwill and other real estate owned.

Cash and Cash Equivalents

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold for one day periods and interest bearing deposits in banks with original maturities of less than three months. As of December 31, 2012 and 2011, the Company had cash of $622,152 and $329,390, respectively, on deposit with the Federal Reserve Bank. In addition, the Company maintained compensating balances with the Federal Reserve Bank of approximately $1,057 and $5,000 as of December 31, 2012 and 2011 to reduce service charges for check clearing services.

Investment Securities

Investment Securities. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt securities that may be sold in response to or in anticipation of changes in interest rates and resulting prepayment risk, or other factors, and marketable equity securities are classified as available-for-sale and carried at fair value. The unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of stockholders’ equity and comprehensive income. Management determines the appropriate classification of securities at the time of purchase and at each reporting date management reassesses the appropriateness of the classification.

The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for accretion of discounts to maturity and amortization of premiums over the estimated average life of the security, or in the case of callable securities, through the first call date, using the effective yield method. Such amortization and accretion is included in interest income. Realized gains and losses are included in investment securities gains (losses). Declines in the fair value of securities below their cost that are judged to be other-than-temporary are included in other expenses if the decline is related to credit losses. Other-than-temporary impairment losses related to other factors are recognized in other comprehensive income, net of income taxes. In estimating other-than-temporary impairment losses, the Company considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The cost of securities sold is based on the specific identification method.

The Company invests in securities on behalf of certain officers and directors of the Company who have elected to participate in the Company’s deferred compensation plans. These securities are included in other assets and are carried at their fair value based on quoted market prices. Net realized and unrealized holding gains and losses are included in other non-interest income and employee benefits expense.

Loans and Allowance for Loan Losses

Loans. Loans are reported at the principal amount outstanding. Interest income on loans is calculated using the simple interest method on the daily balance of the principal amount outstanding. Loan origination fees and certain direct origination costs are deferred, and the net amount is amortized as an adjustment of the related loan’s yield using a level yield method over the expected lives of the related loans.

The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due or when a loan becomes contractually past due ninety days or more with respect to interest or principal, unless such past due loan is well secured and in the process of collection. When interest accrual is discontinued, all unpaid accrued interest is reversed against current period interest income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and when, in the opinion of management, the loans are estimated to be fully collectible as to both principal and interest.

A loan is considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect, on a timely basis, all amounts due according to the contractual terms of the loan’s original agreement. The amount of the impairment is measured using cash flows discounted at the loan’s effective interest rate, except when it is determined that the primary source of repayment for the loan is the operation or liquidation of the underlying collateral. In such cases, the current fair value of the collateral, reduced by anticipated selling costs, is used to measure impairment. The Company considers impaired loans to include all loans risk rated doubtful and non-consumer loans on which interest accrual has been discontinued or have been renegotiated in a troubled debt restructuring. Interest payments received on impaired loans are applied based on whether they are on accrual or non-accrual status. Interest income recognized by the Company on impaired loans primarily relate to loans modified in a troubled debt restructuring that remain on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due.

A loan is considered a troubled debt restructuring when a borrower is experiencing financial difficulties that leads to a restructuring of the loan and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions to minimize potential losses. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status only after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a reasonable period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will no longer be disclosed as a troubled debt restructuring.

Included in loans are certain residential mortgage loans originated for sale. These loans are carried at the lower of aggregate cost or estimated market value. Market value is estimated based on binding contracts or quotes or bids from third party investors. Residential mortgages held for sale were $66,442 and $53,521 as of December 31, 2012 and 2011, respectively. Gains and losses on sales of mortgage loans are determined using the specific identification method and are included in income from the origination and sale of loans.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses which is charged to expense. Loans, or portions thereof, are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely or, with respect to consumer installment and credit card loans, according to established delinquency schedules. The allowance balance is an amount that management believes will be adequate to absorb known and inherent losses in the loan portfolio based upon quarterly analyses of the current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, industry concentrations and current economic factors and the estimated impact of current economic and environmental conditions on historical loss rates.

Goodwill and Core Deposit Intangibles

Goodwill. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a two-step quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company's market value, discounted cash flows and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations.

Core Deposit Intangibles. Core deposit intangibles represent the intangible value of depositor relationships resulting from deposit liabilities assumed and are amortized using an accelerated method based on the estimated weighted average useful lives of the related deposits of 9.5 years. Accumulated core deposit intangibles amortization was $20,983 as of December 31, 2012 and $19,563 as of December 31, 2011. Amortization expense related to core deposit intangibles recorded as of December 31, 2012 is expected to total $1,417, $1,417, $1,417, $1,380 and $306 in 2013, 2014, 2015, 2016 and 2017, respectively.

Mortgage Servicing Rights

Mortgage Servicing Rights. The Company recognizes the rights to service mortgage loans for others, whether acquired or internally originated. Mortgage servicing rights are initially recorded at fair value based on comparable market data and are amortized in proportion to and over the period of estimated net servicing income. Mortgage servicing rights are evaluated quarterly for impairment by discounting the expected future cash flows, taking into consideration the estimated level of prepayments based on current industry expectations and the predominant risk characteristics of the underlying loans including loan type, note rate and loan term. Impairment adjustments, if any, are recorded through a valuation allowance.

Premises and Equipment

Premises and Equipment. Buildings, furniture and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using straight-line methods over estimated useful lives of 5 to 45 years for buildings and improvements and 4 to 15 years for furniture and equipment. Leasehold improvements and assets acquired under capital lease are amortized over the shorter of their estimated useful lives or the terms of the related leases. Land is recorded at cost.

Company-Owned Life Insurance

Company-Owned Life Insurance. Key executive life insurance policies are recorded at their cash surrender value. Group life insurance policies are subject to a stable value contract that offsets the impact of interest rate fluctuations on the market value of the policies. Group life insurance policies are recorded at the stabilized investment value. Increases in the cash surrender or stabilized investment value of insurance policies, as well as insurance proceeds received, are recorded as other non-interest income, and are not subject to income taxes.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets. Long-lived assets, including premises and equipment and certain identifiable intangibles, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The amount of the impairment loss, if any, is based on the asset’s fair value. Impairment losses of $70 were recognized in other non-interest expense in 2012. No impairment losses were recognized during 2011 or 2010.

Other Real Estate Owned

Other Real Estate Owned. Real estate acquired in satisfaction of loans is initially carried at current fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate acquired is recorded as a charge to the allowance for loan losses. Subsequent declines in fair value less estimated selling costs are included in OREO expense. Subsequent increases in fair value less estimated selling costs are recorded as a reduction in OREO expense to the extent of recognized losses. Operating expenses, net of related income, and gains or losses on sales are included in OREO expense. Write-downs of $6,724, $7,464 and $6,724 were recorded in 2012, 2011 and 2010 respectively.

Restricted Equity Securities

Restricted Equity Securities. The Company, as a member of the Federal Reserve Bank and the Federal Home Loan Bank (“FHLB”), is required to maintain investments in each of the organization’s capital stock. As of December 31, 2012, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank of $13,357 and $6,687, respectively, were included in other assets at cost. As of December 31, 2011, restricted equity securities of the Federal Reserve Bank and the Federal Home Loan Bank were $13,357 and $6,807, respectively. No ready market exists for these restricted equity securities, and they have no quoted market values. Restricted equity securities are periodically reviewed for impairment based on ultimate recovery of par value. The determination of whether a decline affects the ultimate recovery of par value is influenced by the significance of the decline compared to the cost basis of the restricted equity securities, the length of time a decline has persisted, the impact of legislative and regulatory changes on the issuing organizations and the liquidity positions of the issuing organizations. Based on management’s assessment, no impairment losses were recorded on restricted equity securities during 2012, 2011 or 2010.

Income From Fiduciary Activities

Income from Fiduciary Activities. Consistent with industry practice, income for trust services is recognized on the basis of cash received. However, use of this method in lieu of accrual basis accounting does not materially affect reported earnings.

Income Taxes

Income Taxes. The Parent Company and its subsidiaries have elected to be included in a consolidated federal income tax return. For state income tax purposes, the combined taxable income of the Parent Company and its subsidiaries is apportioned among the states in which operations take place. Federal and state income taxes attributable to the subsidiaries, computed on a separate return basis, are paid to or received from the Parent Company.

The Company accounts for income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are determined based on enacted income tax rates which will be in effect when the differences between the financial statement carrying values and tax bases of existing assets and liabilities are expected to be reported in taxable income.

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination. Uncertain tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing. Penalties are recognized in the period that the Company claims the position in the tax return. Interest and penalties on income tax uncertainties are classified within income tax expense in the income statement. With few exceptions, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009. The Company had no accrued interest or penalties as of December 31, 2012 or 2011.

Earnings Per Common Share

Earnings Per Common Share. Basic and diluted earnings per common share are calculated using a two-class method. Under the two-class method, basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards. Diluted earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding determined for the basic earnings per share calculation plus the dilutive effect of stock compensation using the treasury stock method.

Comprehensive Income

Comprehensive Income. Comprehensive income includes net income, as well as other changes in stockholders’ equity that result from transactions and economic events other than those with shareholders. In addition to net income, the Company’s comprehensive income includes the after tax effect of changes in unrealized gains and losses on available-for-sale investment securities and changes in net actuarial gains and losses on defined benefit post-retirement benefits plans.

Segment Reporting

Segment Reporting. An operating segment is defined as a component of a business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and evaluate performance. The Company has one operating segment, community banking, which encompasses commercial and consumer banking services offered to individuals, businesses, municipalities and other entities.

Advertising Costs

Advertising Costs. Advertising costs are expensed as incurred. Advertising expense was $3,555, $3,048, and $3,200 in 2012, 2011 and 2010, respectively.

Transfers of Financial Assets

Transfers of Financial Assets. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company; the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets; and, the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Stock-Based Compensation

Stock-Based Compensation. Compensation cost for all stock-based awards is measured at fair value on the date of grant and is recognized over the requisite service period for awards expected to vest. Stock-based compensation expense of $2,485, $1,906 and $1,660 for the years ended December 31, 2012, 2011 and 2010, respectively, is included in benefits expense in the Company’s consolidated statements of income. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $950, $728 and $635, respectively. All compensation cost for stock-based awards is expensed at the Parent Company.

Fair Value Measurements

Fair Value Measurements. In general, fair value measurements are based upon quoted market prices, where available. If quoted market prices are not available, fair value measurements are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and require some degree of judgment regarding interest rates, credit risk, prepayments and other factors. The use of different assumptions or estimation techniques may have a significant effect on the fair value amounts reported.

XML

Loans - Schedule of Loans Renegotiated in Troubled Debt Restructurings (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 notes	Dec. 31, 2011 notes
Loans and Leases Receivable, Troubled Debt Restructuring
Loans renegotiated in troubled debt restructurings	$ 76,597	$ 94,827
Loans renegotiated in troubled debt restructurings, non-accrual loans	44,665	57,451
Loans tenegotiated in troubled debt restructurings, accrual loans	31,932	37,376
Financing receivable, modifications, subsequent default, number of contracts, during period	38	137
Principle balance at restructure date	22,760	85,143
Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	955	57,835
Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	2,704	10,790
Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	6,494	5,119
Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	12,607	11,399
Commercial real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	16	60
Principle balance at restructure date	14,074	38,921
Commercial real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	23,982
Commercial real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	959	4,444
Commercial real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	4,504	3,131
Commercial real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	8,611	7,364
Commercial construction real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	1
Principle balance at restructure date	3,155
Commercial construction real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0
Commercial construction real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0
Commercial construction real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0
Commercial construction real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	3,155
Land acquisition & development construction real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	5	9
Principle balance at restructure date	3,380	6,207
Land acquisition & development construction real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	995
Land acquisition & development construction real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	1,000	4,124
Land acquisition & development construction real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	1,757	680
Land acquisition & development construction real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	623	408
Residential construction real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	2	5
Principle balance at restructure date	513	8,861
Residential construction real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	7,749
Residential construction real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	280	878
Residential construction real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	233	234
Residential construction real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	0
Total construction loans
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	8	14
Principle balance at restructure date	7,048	15,068
Total construction loans | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	8,744
Total construction loans | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	1,280	5,002
Total construction loans | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	1,990	914
Total construction loans | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	3,778	408
Residential real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	2	6
Principle balance at restructure date	593	10,948
Residential real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	568	9,771
Residential real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	25	364
Residential real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	223
Residential real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	590
Agricultural real estate
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	1	7
Principle balance at restructure date	154	4,540
Agricultural real estate | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	3,594
Agricultural real estate | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	154	517
Agricultural real estate | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	189
Agricultural real estate | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	240
Total real estate loans
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	27	87
Principle balance at restructure date	21,869	69,477
Total real estate loans | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	568	46,091
Total real estate loans | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	2,418	10,327
Total real estate loans | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	6,494	4,457
Total real estate loans | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	12,389	8,602
Indirect consumer
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period		2
Principle balance at restructure date		29
Indirect consumer | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		0
Indirect consumer | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		0
Indirect consumer | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		0
Indirect consumer | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		29
Other consumer
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	1	3
Principle balance at restructure date	69	78
Other consumer | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	17
Other consumer | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	69	11
Other consumer | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	0
Other consumer | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	50
Total consumer loans
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	1	5
Principle balance at restructure date	69	107
Total consumer loans | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	17
Total consumer loans | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	69	11
Total consumer loans | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	0
Total consumer loans | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	79
Commercial
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	10	40
Principle balance at restructure date	822	15,372
Commercial | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	387	11,727
Commercial | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	217	428
Commercial | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	662
Commercial | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	218	2,555
Agricultural
Loans and Leases Receivable, Troubled Debt Restructuring
Financing receivable, modifications, subsequent default, number of contracts, during period	0	5
Principle balance at restructure date	0	187
Agricultural | Interest only period
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		0
Agricultural | Extension of terms or maturity
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	0	24
Agricultural | Interest rate adjustment
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date		0
Agricultural | Other
Loans and Leases Receivable, Troubled Debt Restructuring
Principle balance at restructure date	$ 0	$ 163

XML

Regulatory Capital

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

Regulatory Capital

REGULATORY CAPITAL

The Company is subject to the regulatory capital requirements administered by federal banking regulators and the Federal Reserve. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Parent Company, like all bank holding companies, is not subject to the prompt corrective action provisions. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and tier 1 capital to risk-weighted assets, and of tier 1 capital to average assets, as defined in the regulations. As of December 31, 2012, the Company exceeded all capital adequacy requirements to which it is subject.

The Company’s actual capital amounts and ratios and selected minimum regulatory thresholds and prompt corrective action provisions as of December 31, 2012 and 2011 are presented in the following table:

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2012
Total risk-based capital:
Consolidated	$	748,431	15.6	%	$	384,014	8.0	%	NA		NA
FIB	697,695		14.6		382,245		8.0		$	477,806	10.0	%
Tier 1 risk-based capital:
Consolidated	652,929		13.6		192,007		4.0		NA		NA
FIB	622,466		13.0		191,122		4.0		$	286,683	6.0
Leverage capital ratio:
Consolidated	652,929		8.8		296,559		4.0		NA		NA
FIB	622,466		8.4		296,061		4.0		$	370,077	5.0

	Actual				Adequately Capitalized				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2011
Total risk-based capital:
Consolidated	$	800,354	16.5	%	$	387,082	8.0	%	NA		NA
FIB	663,860		13.8		384,987		8.0		$	481,234	10.0	%
Tier 1 risk-based capital:
Consolidated	704,229		14.6		193,541		4.0		NA		NA
FIB	588,059		12.2		192,494		4.0		$	288,740	6.0
Leverage capital ratio:
Consolidated	704,229		9.8		286,303		4.0		NA		NA
FIB	588,059		8.2		285,358		4.0		$	356,698	5.0

XML

Investment Securities (Tables)

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Amortized Cost and Approximate Fair Values of Investment Securities

Gross gains of $351 and gross losses of $3 were realized on the disposition of available-for-sale securities in 2012.

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	1,134,427	$	4,353	$	(662	)	$	1,138,118
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	848,444		29,567		(14		)	877,997
Private mortgage-backed securities	758		7		(16		)	749
Total	$	1,983,629	$	33,927	$	(692	)	$	2,016,864

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	152,619	$	9,113	$	(17	)	$	161,715
Other securities	162		—		—			162
Total	$	152,781	$	9,113	$	(17	)	$	161,877

The amortized cost and approximate fair values of investment securities are summarized as follows:

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	751,501	$	3,518	$	(163	)	$	754,856
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	1,214,377		27,000		(1,526		)	1,239,851
Private mortgage-backed securities	539		13		(1		)	551
Total	$	1,966,417	$	30,531	$	(1,690	)	$	1,995,258

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	192,875	$	10,835	$	(176	)	$	203,534
Corporate securities	14,975		64		(13		)	15,026
Other securities	373		—		—			373
Total	$	208,223	$	10,899	$	(189	)	$	218,933

Gross Unrealized Losses and Fair Values of Investment Securities

The following table shows the gross unrealized losses and fair values of investment securities, aggregated by investment category, and the length of time individual investment securities have been in a continuous unrealized loss position, as of December 31, 2012 and 2011.

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	93,982	$	(163	)	$	—	$	—		$	93,982	$	(163	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	250,198		(1,526		)	—		—			250,198		(1,526		)
Private mortgage-backed securities	—		—			137		(1		)	137		(1		)
Total	$	344,180	$	(1,689	)	$	137	$	(1	)	$	344,317	$	(1,690	)

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	19,389	$	(168	)	$	557	$	(8	)	$	19,946	$	(176	)
Corporate securities	9,312		(13		)	—		—			9,312		(13		)
Total	$	28,701	(181		)	557		(8		)	29,258		(189		)

	Less than 12 Months					12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	287,404	$	(662	)	$	—	$	—		$	287,404	$	(662	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	45,694		(14		)	—		—			45,694		(14		)
Private mortgage-backed securities	246		(10		)	177		(6		)	423		(16		)
Total	$	333,344	$	(686	)	$	177	$	(6	)	$	333,521	$	(692	)

	Less than 12 Months				12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	—	$	—	$	773	$	(17	)	$	773	$	(17	)

Maturities of Investment Securities

All other investment securities maturities are shown at contractual maturity dates.

	Available-for-Sale				Held-to-Maturity
December 31, 2012	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	438,770	$	445,319	$	4,657	$	4,657
After one year but within five years	1,042,696		1,056,854		47,437		48,293
After five years but within ten years	351,310		356,641		86,416		90,954
After ten years	133,641		136,444		69,340		74,656
Total	1,966,417		1,995,258		207,850		218,560
Investments with no stated maturity	—		—		373		373
Total	$	1,966,417	$	1,995,258	$	208,223	$	218,933

XML

Other Comprehensive Income - Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Net accumulated other comprehensive income:
Net unrealized gain on investment securities available-for-sale	$ 17,537	$ 20,533
Net actuarial loss on defined benefit post-retirement benefit plans	(1,546)	(1,499)
Net accumulated other comprehensive income	$ 15,991	$ 19,034

XML

Financial Instruments with Off-Balance Sheet Risk

12 Months Ended

Dec. 31, 2012

Financial Instruments with Off-Balance Sheet Risk [Abstract]

Financial Instruments with Off-Balance Sheet Risk

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the consolidated balance sheet. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable, inventory, premises and equipment, and income-producing commercial properties.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Generally, commitments to extend credit are subject to annual renewal. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments to extend credit to borrowers approximated $1,144,695 at December 31, 2012, which included $337,532 on unused credit card lines and $253,130 with commitment maturities beyond one year. Commitments to extend credit to borrowers approximated $1,049,796 at December 31, 2011, which included $285,761 on unused credit card lines and $283,861 with commitment maturities beyond one year.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Most commitments extend for no more than two years and are generally subject to annual renewal. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At December 31, 2012 and 2011, the Company had outstanding stand-by letters of credit of $66,702 and $69,934, respectively. The estimated fair value of the obligation undertaken by the Company in issuing standby letters of credit is included in accounts payable and accrued expenses in the Company’s consolidated balance sheets.

XML

Schedule of Allowance for Loan Losses by Portfolio Segment (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 112,581	$ 120,480	$ 103,030
Provision charged to operating expense	40,750	58,151	66,900
Less loans charged-off	(60,936)	(71,281)	(52,339)
Add back recoveries of loans previously charged-off	8,116	5,231	2,889
Ending balance	100,511	112,581	120,480
Allowance for loan losses:
Loans individually evaluated for impairment	10,297	32,838	42,226
Loans collectively evaluated for impairment	90,214	79,743	78,254
Ending balance	100,511	112,581	120,480
Total loans:
Individually evaluated for impairment	136,185	230,596	199,302
Individually evaluated for impairment	4,087,727	3,955,953	4,168,607
Loans held for investment	4,223,912	4,186,549	4,367,909
Real Estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	87,396	84,181	76,357
Provision charged to operating expense	28,651	46,844	42,163
Less loans charged-off	(43,506)	(45,764)	(34,718)
Add back recoveries of loans previously charged-off	3,241	2,135	379
Ending balance	75,782	87,396	84,181
Allowance for loan losses:
Loans individually evaluated for impairment	8,350	28,023	27,081
Loans collectively evaluated for impairment	67,432	59,373	57,100
Ending balance	75,782	87,396	84,181
Total loans:
Individually evaluated for impairment	123,406	210,199	162,804
Individually evaluated for impairment	2,660,420	2,544,495	2,709,125
Loans held for investment	2,783,826	2,754,694	2,871,929
Consumer
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	8,594	9,332	6,220
Provision charged to operating expense	1,922	3,566	8,636
Less loans charged-off	(5,320)	(6,043)	(7,577)
Add back recoveries of loans previously charged-off	1,945	1,739	2,053
Ending balance	7,141	8,594	9,332
Allowance for loan losses:
Loans individually evaluated for impairment	0	0	0
Loans collectively evaluated for impairment	7,141	8,594	9,332
Ending balance	7,141	8,594	9,332
Total loans:
Individually evaluated for impairment	0	0	0
Individually evaluated for impairment	636,794	616,071	646,580
Loans held for investment	636,794	616,071	646,580
Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	15,325	25,354	18,608
Provision charged to operating expense	10,845	7,959	16,333
Less loans charged-off	(11,990)	(19,332)	(10,023)
Add back recoveries of loans previously charged-off	2,905	1,344	436
Ending balance	17,085	15,325	25,354
Allowance for loan losses:
Loans individually evaluated for impairment	1,919	4,664	14,892
Loans collectively evaluated for impairment	15,166	10,661	10,462
Ending balance	17,085	15,325	25,354
Total loans:
Individually evaluated for impairment	12,242	19,638	35,522
Individually evaluated for impairment	676,511	673,623	694,949
Loans held for investment	688,753	693,261	730,471
Agriculture
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,266	1,613	1,845
Provision charged to operating expense	(668)	(218)	(232)
Less loans charged-off	(120)	(142)	(21)
Add back recoveries of loans previously charged-off	25	13	21
Ending balance	503	1,266	1,613
Allowance for loan losses:
Loans individually evaluated for impairment	28	151	253
Loans collectively evaluated for impairment	475	1,115	1,360
Ending balance	503	1,266	1,613
Total loans:
Individually evaluated for impairment	537	759	976
Individually evaluated for impairment	113,090	118,951	115,570
Loans held for investment	113,627	119,710	116,546
Other
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	0	0	0
Provision charged to operating expense	0	0	0
Less loans charged-off	0	0	0
Add back recoveries of loans previously charged-off	0	0	0
Ending balance	0	0	0
Allowance for loan losses:
Loans individually evaluated for impairment	0	0	0
Loans collectively evaluated for impairment	0	0	0
Ending balance	0	0	0
Total loans:
Individually evaluated for impairment	0	0	0
Individually evaluated for impairment	912	2,813	2,383
Loans held for investment	$ 912	$ 2,813	$ 2,383

XML

Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Shareholder
Related Party Transaction
Ownership percentage threshhold for related party	5.00%
Executive Officers, Directors, Shareholders Greater than Five Percent, and Related Entities and Individuals to Such Persons [Member]
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Loans and leases receivable, related parties	$ 36,067	$ 44,430
Loans and leases receivable, related parties, additions	15,751
Loans and leases receivable, related parties, collections	24,556
Loans and leases receivable, related parties, increase due to change in related parties	442
Director, Controlling Ownership Interest in Entity | Insurance Premiums
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, selling, general and administrative expenses from transactions with related party	839	1,328	879
Board of Directors Chairman, Wholly-Owned Entity | Aircraft Usage and Related Activities
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, expenses from transactions with related party	262	311	305
Related party transactions, other revenues	47	70	63
4 Shareholders Greater than 5% and 6 Directors
Related Party Transaction
Ownership percentage threshhold for related party	5.00%
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Ownership Percentage, Related Party	25.00%
Entity Majority Owned by Shareholders and Directors
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party relationship, number of significant shareholders	4
Related party relationship, number of directors	6
Entity Majority Owned by Shareholders and Directors | Education, Communication, Strategic Enterprise Planning and Corporate Governance Consultation
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, expenses from transactions with related party	243	250	337
Entity Majority Owned by Shareholders and Directors | Reimbursable Costs, Office Costs
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, expenses from transactions with related party	0		88
Director, Wholly-Owned Entity | Construction Management and Adivsory Services
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, expenses from transactions with related party	60
Related party transaction, contractual agreement, amount	180
Related party transaction, contractual agreement, percentage of contract price	4.00%
Related party transaction, contractual agreement, initial payment	60
Director | Deferred Compensation Agreement
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transaction, expenses from transactions with related party	424	38	38,000
Related party transaction, liability from acquisition	424	577
Related party transaction, liability from acquisition, payout period	4 years
Director | Interest Guaranty Agreement, Interest Payments on Loans
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Revenue from related parties	815	954	487
Director | Interest Guaranty Agreement, Proceeds From Liquidated Collateral
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Related party transactions, other revenues	7,998
Director | Sale of Real Property, Proceeds
Loans and Leases Receivable, Related Parties Disclosure [Abstract]
Revenue from related parties	$ 2,695

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Common stock transactions:
Stock options exercised	376,634
Common stock
Common stock transactions:
Common shares purchased and retired	18,351	17,926	246,596
Common shares issued	23,991	15,440	11,506,503
Non-vested common shares issued	122,912	130,904	117,140
Non-vested common shares forfeited	15,232	27,963	18,821
Stock options exercised	192,829	83,025	92,880
Shares tendered in payment of option price and income tax withholding amounts	183,805	174,583	111,792
Retained Earnings
Cash dividends declared:
Common (in dollars per share)	0.61	0.45	0.45
Preferred (in dollars per share)	6.75%	6.75%	6.75%

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Assets:
Held-to-maturity investment securities, estimated fair value	$ 218,933	$ 161,877
Stockholders' Equity:
Nonvoting, noncumulative preferred stock, par value
Nonvoting, noncumulative preferred stock, shares authorized	100,000	100,000
Nonvoting, noncumulative preferred stock, shares issued	5,000	5,000
Nonvoting, noncumulative preferred stock, shares outstanding	5,000	5,000

XML

Deposits

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

Deposits

DEPOSITS

Deposits are summarized as follows:

December 31,	2012		2011
Non-interest bearing demand	$	1,495,309	$	1,271,709
Interest bearing:
Demand	1,811,905		1,306,509
Savings	1,547,713		1,691,413
Time, $100 and over	594,712		681,047
Time, other	790,772		876,293
Total interest bearing	4,745,102		4,555,262
Total deposits	$	6,240,411	$	5,826,971

The Company had no brokered time deposits as of December 31, 2012 and 2011.

Other time deposits include deposits obtained through the Company’s participation in the Certificate of Deposit Account Registry Service (“CDARS”). CDARS deposits totaled $72,062 and $98,331 as of December 31, 2012 and 2011, respectively.

Maturities of time deposits at December 31, 2012 are as follows:

	Time, $100 and Over		Total Time
2013	$	437,597	$	999,439
2014	72,483		176,243
2015	33,646		79,030
2016	27,272		63,412
2017	23,714		67,357
Thereafter	—		3
Total	$	594,712	$	1,385,484

Interest expense on time deposits of $100 or more was $6,951, $10,377 and $18,595 for the years ended December 31, 2012, 2011 and 2010, respectively.

XML

Fair Value Measurements - Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	$ 50,000	$ 0
Estimated Fair Value | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Mortgage servicing rights	16,373	11,910
Derivative liability contract		383
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Mortgage servicing rights	0	0
Derivative liability contract		0
Significant Other Observable Inputs (Level 2) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Mortgage servicing rights	16,373	11,910
Derivative liability contract		0
Significant Unobservable Inputs (Level 3) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Mortgage servicing rights	0	0
Derivative liability contract		383
Obligations of U.S. government agencies | Estimated Fair Value | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	754,856	1,138,118
Obligations of U.S. government agencies | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
Obligations of U.S. government agencies | Significant Other Observable Inputs (Level 2) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	754,856	1,138,118
Obligations of U.S. government agencies | Significant Unobservable Inputs (Level 3) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations | Estimated Fair Value | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	1,239,851	877,997
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations | Significant Other Observable Inputs (Level 2) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	1,239,851	877,997
U.S. agency residential mortgage-backed securities & collateralized mortgage obligations | Significant Unobservable Inputs (Level 3) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
Private mortgage-backed securities | Estimated Fair Value | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	551	749
Private mortgage-backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
Private mortgage-backed securities | Significant Other Observable Inputs (Level 2) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	551	749
Private mortgage-backed securities | Significant Unobservable Inputs (Level 3) | Fair Value Measured on a Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Investment securities available-for-sale	0	0
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	50,000
Investment securities available-for-sale	1,995,258	2,016,864
Mortgage servicing rights	12,653	11,555
Derivative liability contract		383
Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	50,000
Investment securities available-for-sale	1,995,258	2,016,864
Mortgage servicing rights	16,373	11,910
Derivative liability contract		383
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	0
Investment securities available-for-sale	0	0
Mortgage servicing rights	0	0
Derivative liability contract
Estimated Fair Value | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	50,000
Investment securities available-for-sale	1,995,258	2,016,864
Mortgage servicing rights	16,373	11,910
Derivative liability contract		0
Estimated Fair Value | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Preferred stock pending redemption	0
Investment securities available-for-sale	0	0
Mortgage servicing rights		$ 0

XML

Stock-Based Compensation - Restricted Stock Activity Rollforward (Details) (Restricted Stock, USD $)	12 Months Ended
	Dec. 31, 2012
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Restricted stock, beginning of year, number of shares	190,770
Granted, number of shares	122,912
Vested, number of shares	(67,720)
Forfeited, number of shares	(8,276)
Canceled, number of shares	(6,956)
Restricted stock, end of year, number of shares	230,730
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Restricted stock, beginning of year, weighted-average measurement date fair value	$ 14.57
Granted, weighted average grant date fair value	$ 14.37
Vested, weighted average grant date fair value	$ 14.82
Forfeited, weighted average grant date fair value	$ 14.69
Cancelled, weighted average grant date fair value	$ 15.00
Restricted stock, end of year, weighted-average measurement date fair value	$ 14.38

XML

Stock-Based Compensation - Stock Options Activity Rollforward (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding options, beginning of year, number of shares	3,484,928
Granted, number of shares	369,766
Exercised, number of shares	(376,634)
Forfeited, number of shares	(27,442)
Expired, number of shares	(76,963)
Outstanding options, end of year, number of shares	3,373,655
Outstanding options exercisable, end of year, number of shares	2,756,441
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding options, beginning of year, weighted average exercise price	$ 16.26
Granted, weighted average exercise price	$ 14.33
Exercised, weighted average exercise price	$ 11.38
Forfeited, weighted average exercise price	$ 14.42
Expired, weighted average exercise price	$ 16.75
Outstanding options, end of year, weighted average exercise price	$ 16.60
Outstanding options exercisable, end of year, weighted average exercise price	$ 17.10
Outstanding options, end of year weighted average remaining contractual term	5 years 0 months 7 days
Outstanding options exercisable, end of year, weighted average remaining contractual term	4 years 2 months 23 days

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Jun. 30, 2012	Jan. 31, 2013 Class A Common Stock	Jan. 31, 2013 Class B Common Stock
Entity Registrant Name	FIRST INTERSTATE BANCSYSTEM INC
Entity Central Index Key	0000860413
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding			17,691,998	25,639,335
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float		$ 265,747,635

XML

Long-Term Debt and Other Borrowed Funds

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Long-Term Debt and Other Borrowed Funds

LONG-TERM DEBT AND OTHER BORROWED FUNDS

A summary of long-term debt follows:

December 31,	2012		2011
Parent Company:
6.81% subordinated term loan maturing January 9, 2018, principal due at maturity, interest payable quarterly	$	20,000	$	20,000
Subsidiaries:
Variable rate subordinated term loan maturing February 28, 2018, principal due at maturity, interest payable quarterly (rate of 2.52% at December 31, 2012)	15,000		15,000
Various notes payable to FHLB, interest due monthly at various rates and maturities through October 31, 2015 (weighted average rate of 4.83% at December 31, 2012)	425		425
8.00% capital lease obligation with term ending October 25, 2029	1,735		1,775
Total long-term debt	$	37,160	$	37,200

Maturities of long-term debt at December 31, 2012 are as follows:
2013	$	244
2014	49
2015	285
2016	65
2017	71
Thereafter	36,446
Total	$	37,160

On January 10, 2008, the Company borrowed $20,000 on a 6.81% unsecured subordinated term loan maturing January 9, 2018, with interest payable quarterly and principal due at maturity. The unsecured subordinated term loan qualifies as tier 2 capital under regulatory capital adequacy guidelines.

During February 2008, the Company borrowed $15,000 on a variable rate unsecured subordinated term loan maturing February 28, 2018, with interest payable quarterly and principal due at maturity. The Company may elect at various dates either prime or LIBOR plus 2.00%. The interest rate on the subordinated term loan was 2.52% as of December 31, 2012. The unsecured subordinated term loan qualifies as tier 2 capital under regulatory capital adequacy guidelines.

The notes payable to FHLB are secured by a blanket assignment of the Company’s qualifying residential and commercial real estate loans. The Company has available lines of credit with the FHLB of approximately $624,959, subject to collateral availability. As of December 31, 2012 and 2011, FHLB advances of $425, were included in long-term debt. As of December 31, 2012 and 2011 there were no short-term advances outstanding with the FHLB.

The Company has a capital lease obligation on a banking office. The balance of the obligation was $1,735 and $1,775 as of December 31, 2012 and 2011, respectively. Assets acquired under capital lease, consisting solely of a building and leasehold improvements, are included in premises and equipment and are subject to depreciation.

The Company had other borrowed funds of $32 and $7 as of December 31, 2012 and 2011, respectively, consisting of demand notes issued to the United States Treasury, secured by investment securities and bearing no interest.

The Company has federal funds lines of credit with third parties amounting to $115,000, subject to funds availability. These lines are subject to cancellation without notice. The Company also has a line of credit with the Federal Reserve Bank for borrowings up to $323,153 secured by a blanket pledge of indirect consumer loans.

XML

Earnings per Common Share Computation of Basic and Diluted Earnings per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net Income (Loss) Available to Common Stockholders, Basic [Abstract]
Net income	$ 58,224	$ 44,546	$ 37,356
Preferred stock dividends	3,300	3,422	3,422
Net income available to common shareholders	$ 54,924	$ 41,124	$ 33,934
Weighted Average Number of Shares Outstanding, Basic and Diluted [Abstract]
Weighted average common shares outstanding for basic earnings per share computation	42,965,987	42,749,526	39,907,640
Dilutive effect of stock-based compensation	126,991	97,670	219,725
Weighted average common shares outstanding for diluted earnings per common share computation	43,092,978	42,847,196	40,127,365
Earnings Per Share, Basic and Diluted [Abstract]
Basic earnings per common share (in dollars per share)	$ 1.28	$ 0.96	$ 0.85
Diluted earnings per common share (in dollars per share)	$ 1.27	$ 0.96	$ 0.85
Stock Options
Earnings Per Share, Basic and Diluted [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	2,427,823	2,865,832	2,301,413
Unvested Restricted Stock
Earnings Per Share, Basic and Diluted [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	41,240	9,427	17,644

XML

Stock-Based Compensation - Weighted-Average Assumptions Used in Option Pricing Model (Details) (Stock Option, USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Stock Option
Schedule of Share-Based Compensation Award, Options, Fair Value Assumption Inputs
Weighted average grant date fair value of options granted (in dollars per share)	$ 4.06	$ 4.30	$ 4.58
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected volatility	37.46%	36.36%	35.66%
Expected dividend yield	3.35%	3.17%	2.98%
Risk-free interest rate	1.99%	3.05%	3.08%
Expected life of options (in years)	7 years 10 months 6 days	7 years 11 months 19 days	7 years 8 months 12 days

XML

Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income:
Interest and fees on loans	$ 230,882	$ 245,767	$ 266,472
Interest and dividends on investment securities:
Taxable	36,847	41,304	42,338
Exempt from federal taxes	4,923	4,749	4,621
Interest on deposits in banks	1,235	1,050	1,093
Interest on federal funds sold	13	13	22
Total interest income	273,900	292,883	314,546
Interest expense:
Interest on deposits	22,306	33,533	53,949
Interest on securities sold under repurchase agreements	579	695	879
Interest on other borrowed funds	0	0	3
Interest on long-term debt	1,981	1,975	2,433
Interest in preferred stock pending redemption	131	0	0
Interest on subordinated debentures held by subsidiary trusts	5,117	5,828	5,843
Total interest expense	30,114	42,031	63,107
Net interest income	243,786	250,852	251,439
Provision for Loan Losses Expensed	40,750	58,151	66,900
Net interest income after provision for loan losses	203,036	192,701	184,539
Non-interest income:
Income from the origination and sale of loans	41,790	21,153	22,868
Other service charges, commissions and fees	34,226	31,689	29,494
Service charges on deposit accounts	17,412	17,647	18,181
Wealth management revenues	14,314	13,575	12,387
Investment securities gains, net	348	1,544	170
Other income	6,771	6,264	7,811
Total non-interest income	114,861	91,872	90,911
Non-interest expense:
Salaries and wages	89,833	83,560	83,373
Employee benefits	29,345	27,792	29,294
Occupancy, net	15,786	16,223	16,251
Furniture and equipment	12,859	12,562	13,434
OREO expense, net of income	9,400	8,652	7,670
Outsourced technology services	8,826	8,933	9,477
FDIC insurance premiums	6,470	7,333	10,044
Professional fees	4,044	3,676	3,245
Mortgage servicing rights amortization	3,501	3,225	4,615
Mortgage servicing rights impairment (recovery)	(771)	1,275	(787)
Core deposit intangibles amortization	1,420	1,446	1,748
Other expenses	48,922	43,735	42,640
Total non-interest expense	229,635	218,412	221,004
Income before income tax expense	88,262	66,161	54,446
Income tax expense	30,038	21,615	17,090
Net income	58,224	44,546	37,356
Preferred stock dividends	3,300	3,422	3,422
Net income available to common shareholders	$ 54,924	$ 41,124	$ 33,934
Basic earnings per common share	$ 1.28	$ 0.96	$ 0.85
Diluted earnings per common share	$ 1.27	$ 0.96	$ 0.85

XML

Allowance For Loan Losses

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Allowance For Loan Losses

ALLOWANCE FOR LOAN LOSSES

The following table presents a summary of changes in the allowance for loan losses by portfolio segment:

Year ended December 31, 2012	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Provision charged to operating expense	28,651			1,922			10,845			(668		)	—		40,750
Less loans charged-off	(43,506		)	(5,320		)	(11,990		)	(120		)	—		(60,936		)
Add back recoveries of loans previously charged-off	3,241			1,945			2,905			25			—		8,116
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Individually evaluated for impairment	$	8,350		$	—		$	1,919		$	28		$	—	$	10,297
Collectively evaluated for impairment	67,432			7,141			15,166			475			—		90,214
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Total loans:
Individually evaluated for impairment	$	123,406		$	—		$	12,242		$	537		$	—	$	136,185
Collectively evaluated for impairment	2,660,420			636,794			676,511			113,090			912		4,087,727
Total loans	$	2,783,826		$	636,794		$	688,753		$	113,627		$	912	$	4,223,912

Year ended December 31, 2011	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Provision charged to operating expense	46,844			3,566			7,959			(218		)	—		58,151
Less loans charged-off	(45,764		)	(6,043		)	(19,332		)	(142		)	—		(71,281		)
Add back recoveries of loans previously charged-off	2,135			1,739			1,344			13			—		5,231
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Individually evaluated for impairment	$	28,023		$	—		$	4,664		$	151		$	—	$	32,838
Collectively evaluated for impairment	59,373			8,594			10,661			1,115			—		79,743
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Total loans:
Individually evaluated for impairment	$	210,199		$	—		$	19,638		$	759		$	—	$	230,596
Collectively evaluated for impairment	2,544,495			616,071			673,623			118,951			2,813		3,955,953
Total loans	$	2,754,694		$	616,071		$	693,261		$	119,710		$	2,813	$	4,186,549

Year ended December 31, 2010	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	76,357		$	6,220		$	18,608		$	1,845		$	—	$	103,030
Provision charged to operating expense	42,163			8,636			16,333			(232		)	—		66,900
Less loans charged-off	(34,718		)	(7,577		)	(10,023		)	(21		)	—		(52,339		)
Add back recoveries of loans previously charged-off	379			2,053			436			21			—		2,889
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Individually evaluated for impairment	$	27,081		$	—		$	14,892		$	253		$	—	$	42,226
Collectively evaluated for impairment	57,100			9,332			10,462			1,360			—		78,254
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Total loans:
Individually evaluated for impairment	$	162,804		$	—		$	35,522		$	976		$	—	$	199,302
Collectively evaluated for impairment	2,709,125			646,580			694,949			115,570			2,383		4,168,607
Total loans	$	2,871,929		$	646,580		$	730,471		$	116,546		$	2,383	$	4,367,909

The Company performs a quarterly assessment of the adequacy of its allowance for loan losses in accordance with generally accepted accounting principles. The methodology used to assess the adequacy is consistently applied to the Company's loan portfolio and consists of three elements: (1) specific valuation allowances based on probable losses on impaired loans; (2) historical valuation allowances based on loan loss experience for similar loans with similar characteristics and trends; and (3) general valuation allowances determined based on changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, general economic conditions and other qualitative risk factors both internal and external to the Company.

Specific allowances are established for loans where management has determined that probability of a loss exists by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies and any relevant qualitative or environmental factors impacting the loan. Historical valuation allowances are determined by applying percentage loss factors to the credit exposures from outstanding loans. For commercial, agricultural and real estate loans, loss factors are applied based on the internal risk classifications of these loans. For consumer loans, loss factors are applied on a portfolio basis. For commercial, agriculture and real estate loans, loss factor percentages are based on a migration analysis of our historical loss experience, designed to account for credit deterioration. For consumer loans, loss factor percentages are based on a one-year loss history. General valuation allowances are determined by evaluating, on a quarterly basis, changes in the nature and volume of the loan portfolio, overall portfolio quality, industry concentrations, current economic and regulatory factors and the estimated impact of current economic, environmental and regulatory conditions on historical loss rates.

XML

Loans

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Loans

LOANS

The following table presents loans by class as of the dates indicated:

December 31,	2012		2011
Real estate loans:
Commercial	$	1,497,272	$	1,553,155
Construction:
Land acquisition & development	220,196		278,613
Residential	49,274		61,106
Commercial	65,059		61,054
Total construction loans	334,529		400,773
Residential	708,339		571,943
Agricultural	177,244		175,302
Total real estate loans	2,717,384		2,701,173
Consumer:
Indirect consumer	438,245		407,651
Other consumer	137,743		147,487
Credit card	60,806		60,933
Total consumer loans	636,794		616,071
Commercial	688,753		693,261
Agricultural	113,627		119,710
Other, including overdrafts	912		2,813
Loans held for investment	4,157,470		4,133,028
Mortgage loans held for sale	66,442		53,521
Total loans	$	4,223,912	$	4,186,549

The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and internally risk-classified loans.

Real estate loans include construction and permanent financing for both single-family and multi-unit properties, term loans for commercial, agricultural and industrial property and/or buildings and home equity loans and lines of credit secured by real estate. Longer-term residential real estate loans are generally sold in the secondary market. Those residential real estate loans not sold are typically secured by first liens on the financed property and generally mature in less than fifteen years. Home equity loans and lines of credit are typically secured by first or second liens on residential real estate and generally do not exceed a loan to value ratio of 80%. The Company had home equity loans and lines of credit of $273,739 and $312,295 as of December 31, 2012 and 2011, respectively. Commercial and agricultural real estate loans are generally secured by first liens on income-producing real estate and generally mature in less than 5 years.

Construction loans are primarily to commercial builders for residential lot development and the construction of single-family residences and commercial real estate properties. Construction loans are generally underwritten pursuant to pre-approved permanent financing. During the construction phase the borrower pays interest only.

Consumer loans include direct personal loans, credit card loans and lines of credit; and indirect dealer loans for the purchase of automobiles, recreational vehicles, boats and other consumer goods. Personal loans and indirect dealer loans are generally secured by automobiles, boats and other types of personal property and are made on an installment basis. Credit cards are offered to individuals in our market areas. Lines of credit are generally floating rate loans that are unsecured or secured by personal property.

Commercial loans include a mix of variable and fixed rate loans made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansions. Commercial loans generally include lines of credit, business credit cards and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but also include collateralization by inventory, accounts receivable, equipment and/or personal guarantees.

Agricultural loans generally consist of short and medium-term loans and lines of credit that are primarily used for crops, livestock, equipment and general operations. Agricultural loans are ordinarily secured by assets such as livestock or equipment and are repaid from the operations of the farm or ranch. Agricultural loans generally have maturities of five years or less, with operating lines for one production season.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables present the contractual aging of the Company’s recorded investment in past due loans by class as of the period indicated:

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2012	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,449	$	3,163	$	2	$	8,614	$	1,438,142	$	50,516	$	1,497,272
Construction:
Land acquisition & development	3,371		2,121		318		5,810		195,077		19,309		220,196
Residential	283		—		—		283		46,816		2,175		49,274
Commercial	—		—		—		—		56,933		8,126		65,059
Total construction loans	3,654		2,121		318		6,093		298,826		29,610		334,529
Residential	3,896		969		1,085		5,950		691,963		10,426		708,339
Agricultural	1,187		—		218		1,405		171,009		4,830		177,244
Total real estate loans	14,186		6,253		1,623		22,062		2,599,940		95,382		2,717,384
Consumer:
Indirect consumer	3,218		512		32		3,762		434,200		283		438,245
Other consumer	1,044		104		31		1,179		135,574		990		137,743
Credit card	409		278		392		1,079		59,704		23		60,806
Total consumer loans	4,671		894		455		6,020		629,478		1,296		636,794
Commercial	5,463		1,064		216		6,743		671,414		10,596		688,753
Agricultural	1,710		361		—		2,071		111,031		525		113,627
Other, including overdrafts	—		—		—		—		912		—		912
Loans held for investment	26,030		8,572		2,294		36,896		4,012,775		107,799		4,157,470
Mortgage loans originated for sale	—		—		—		—		66,442		—		66,442
Total loans	$	26,030	$	8,572	$	2,294	$	36,896	$	4,079,217	$	107,799	$	4,223,912

							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2011	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	22,124	$	7,871	$	630	$	30,625	$	1,455,139	$	67,391	$	1,553,155
Construction:
Land acquisition & development	5,251		2,448		867		8,566		208,134		61,913		278,613
Residential	415		—		—		415		56,219		4,472		61,106
Commercial	1,698		—		—		1,698		34,820		24,536		61,054
Total construction loans	7,364		2,448		867		10,679		299,173		90,921		400,773
Residential	4,669		973		1,798		7,440		546,278		18,225		571,943
Agricultural	4,103		1,831		—		5,934		166,119		3,249		175,302
Total real estate loans	38,260		13,123		3,295		54,678		2,466,709		179,786		2,701,173
Consumer:
Indirect consumer	3,078		370		45		3,493		403,695		463		407,651
Other consumer	1,479		436		60		1,975		144,625		887		147,487
Credit card	604		375		585		1,564		59,343		26		60,933
Total consumer loans	5,161		1,181		690		7,032		607,663		1,376		616,071
Commercial	13,721		3,464		405		17,590		657,609		18,062		693,261
Agricultural	476		215		110		801		118,150		759		119,710
Other, including overdrafts	—		2		—		2		2,811		—		2,813
Loans held for investment	57,618		17,985		4,500		80,103		3,852,942		199,983		4,133,028
Mortgage loans originated for sale	—		—		—		—		53,521		—		53,521
Total loans	$	57,618	$	17,985	$	4,500	$	80,103	$	3,906,463	$	199,983	$	4,186,549

If interest on non-accrual loans had been accrued, such income would have approximated $8,537, $12,508 and $8,942 during the years ended December 31, 2012, 2011 and 2010, respectively.

The Company considers impaired loans to include all loans risk rated doubtful, loans placed on non-accrual status and loans renegotiated in troubled debt restructurings with the exception of consumer loans. The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated:

	December 31, 2012
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	84,300	$	39,049	$	34,774	$	73,823	$	4,112
Construction:
Land acquisition & development	28,558		15,891		7,173		23,064		1,457
Residential	3,018		1,976		710		2,686		251
Commercial	10,447		7,785		340		8,125		69
Total construction loans	42,023		25,652		8,223		33,875		1,777
Residential	13,271		6,152		4,495		10,647		1,677
Agricultural	5,559		1,834		3,227		5,061		784
Total real estate loans	145,153		72,687		50,719		123,406		8,350
Commercial	12,770		9,036		3,206		12,242		1,919
Agricultural	589		509		28		537		28
Total	$	158,512	$	82,232	$	53,953	$	136,185	$	10,297

	December 31, 2011
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	97,745	$	62,769	$	23,218	$	85,987	$	6,741
Construction:
Land acquisition & development	73,258		22,300		39,131		61,431		12,084
Residential	13,721		10,427		2,044		12,471		312
Commercial	26,647		3,510		21,026		24,536		5,042
Total construction loans	113,626		36,237		62,201		98,438		17,438
Residential	18,305		2,678		15,626		18,304		3,844
Agricultural	8,018		7,470		—		7,470		—
Total real estate loans	237,694		109,154		101,045		210,199		28,023
Commercial	26,348		7,354		12,284		19,638		4,664
Agricultural	759		496		263		759		151
Total	$	264,801	$	117,004	$	113,592	$	230,596	$	32,838

	December 31, 2010
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	79,193	$	31,925	$	41,703	$	73,628	$	10,315
Construction:
Land acquisition & development	48,371		24,120		20,440		44,560		8,064
Residential	18,632		2,993		13,721		16,714		3,431
Commercial	17,458		2,976		13,578		16,554		3,877
Total construction loans	84,461		30,089		47,739		77,828		15,372
Residential	8,951		1,741		7,110		8,851		1,266
Agricultural	3,045		1,065		1,432		2,497		128
Total real estate loans	175,650		64,820		97,984		162,804		27,081
Commercial	36,251		11,354		24,168		35,522		14,892
Agricultural	976		498		478		976		253
Total	$	212,877	$	76,672	$	122,630	$	199,302	$	42,226

The following tables present the average recorded investment in and income recognized on impaired loans for the periods indicated:

	Year Ended December 31,
	2012				2011				2010
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized		Average Recorded Investment
Real estate:
Commercial	$	78,670	$	1,339	$	85,702	$	633	$	49,713
Construction:
Land acquisition & development	44,457		110		57,675		96		34,871
Residential	8,431		4		19,769		384		15,097
Commercial	16,401		—		20,676		—		21,086
Total construction loans	69,289		114		98,120		480		71,054
Residential	13,703		26		15,768		258		10,889
Agricultural	6,936		41		6,188		167		1,737
Total real estate loans	168,598		1,520		205,778		1,538		133,393
Commercial	15,741		84		31,490		121		22,017
Agricultural	942		27		907		—		974
Total	$	185,281	$	1,631	$	238,175	$	1,659	$	156,384

The amount of interest income recognized by the Company within the period that the loans were impaired was primarily related to loans modified in a troubled debt restructuring that remained on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. If interest on impaired loans had been accrued, interest income on impaired loans during 2012, 2011 and 2010 would have been approximately $8,463, $12,358 and $8,824, respectively.

Collateralized impaired loans are generally recorded at the fair value of the underlying collateral using discounted cash flows, independent appraisals and management estimates based upon current market conditions. For loans measured under the present value of cash flows method, the change in present value attributable to the passage of time, if applicable, is recognized in the provision for loan losses and thus no interest income is recognized.

Modifications of performing loans are made in the ordinary course of business and are completed on a case-by-case basis as negotiated with the borrower. Loan modifications typically include interest rate concessions, interest only periods of less than twelve months, short-term payment deferrals and extension of amortization periods to provide payment relief. A loan modification is considered a troubled debt restructuring if the borrower is experiencing financial difficulties and the Company, for economic or legal reasons, grants a concession to the borrower that it would not otherwise consider. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will return to performing status and the accrual of interest will resume.

The Company had loans renegotiated in troubled debt restructurings of $76,597 as of December 31, 2012, of which $44,665 were included in non-accrual loans and $31,932 were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $94,827 as of December 31, 2011, of which $57,451 were included in non-accrual loans and $37,376 were on accrual status.

The following table presents information on the Company's troubled debt restructurings that occurred during the periods indicated:

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year Ended December 31, 2012		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	16	$	—	$	959	$	4,504	$	8,611	$	14,074
Construction:
Commercial	1	—		—		—		3,155		3,155
Land acquisition & development	5	—		1,000		1,757		623		3,380
Residential	2	—		280		233		—		513
Total construction loans	8	—		1,280		1,990		3,778		7,048
Residential	2	568		25		—		—		593
Agriculture	1	—		154		—		—		154
Total real estate loans	27	568		2,418		6,494		12,389		21,869
Consumer:
Other consumer	1	—		69		—		—		69
Total consumer loans	1	—		69		—		—		69
Commercial	10	387		217		—		218		822
Agriculture	—			—				—		—
Total	38	$	955	$	2,704	$	6,494	$	12,607	$	22,760

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year ended December 31, 2011		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	60	$	23,982	$	4,444	$	3,131	$	7,364	$	38,921
Construction:
Land acquisition & development	9	995		4,124		680		408		6,207
Residential	5	7,749		878		234		—		8,861
Total construction loans	14	8,744		5,002		914		408		15,068
Residential	6	9,771		364		223		590		10,948
Agriculture	7	3,594		517		189		240		4,540
Total real estate loans	87	46,091		10,327		4,457		8,602		69,477
Consumer:
Indirect	2	—		—		—		29		29
Other consumer	3	17		11		—		50		78
Total consumer loans	5	17		11		—		79		107
Commercial	40	11,727		428		662		2,555		15,372
Agriculture	5	—		24		—		163		187
Total	137	$	57,835	$	10,790	$	5,119	$	11,399	$	85,143

Other concessions include payment reductions or deferrals for a specified period of time or the extention of amortization schedules. A specific reserve may have been previously recorded for loans modified in troubled debt restructurings that were on non-accrual status or otherwise deemed impaired before the modification. In periods subsequent to modification, the Company continues to evaluate all loans modified in troubled debt restructurings for possible impairment, which is recognized through the allowance for loan losses. Financial effects of modifications may include principal loan forgiveness or other charge-offs directly related to the restructuring. The Company had no charge-offs directly related to loans modified in troubled debt restructurings during 2012 or 2011.

The Company considers a payment default to occur on loans modified in troubled debt restructurings when the loan is 90 days or more past due or was placed on non-accrual status after the modification. The following table presents information on the Company's troubled debt restructurings within the previous 12 months for which there was a payment default during the period.

	2012			2011
As of December 31,	Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	—	$	—	9	$	2,747
Construction:
Land acquisition & development	1	468		1	1,135
Residential	—	—		1	170
Total construction loans	1	468		2	1,305
Residential	2	635		—	—
Agriculture	—	—		1	33
Total real estate loans	3	1,103		12	4,085
Commercial	—	—		6	213
Agricultural	—	—		2	24
Total	3	$	1,103	20	$	4,322

As of December 31, 2012, all of the loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status. As of December 31, 2011, eighteen of the twenty loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status.

At December 31, 2012, there were no material commitments to lend additional funds to borrowers whose existing loans have been renegotiated or are classified as non-accrual.

As part of the on-going and continuous monitoring of the credit quality of the Company’s loan portfolio, management tracks internally assigned risk classifications of loans. The Company adheres to a Uniform Classification System developed jointly by the various bank regulatory agencies to internally risk rate loans. The Uniform Classification System defines three broad categories of criticized assets, which the Company uses as credit quality indicators:

Other Assets Especially Mentioned — includes loans that exhibit weaknesses in financial condition, loan structure or documentation, which if not promptly corrected, may lead to the development of abnormal risk elements.

Substandard — includes loans that are inadequately protected by the current sound worth and paying capacity of the borrower. Although the primary source of repayment for a Substandard is not currently sufficient; collateral or other sources of repayment are sufficient to satisfy the debt. Continuance of a Substandard loan is not warranted unless positive steps are taken to improve the worthiness of the credit.

Doubtful — includes loans that exhibit pronounced weaknesses to a point where collection or liquidation in full, on the basis of currently existing facts, conditions and values, is highly questionable and improbable. Doubtful loans are required to be placed on non-accrual status and are assigned specific loss exposure.

The following tables present the Company’s recorded investment in criticized loans by class and credit quality indicator based on the most recent analysis performed as of the dates indicated:

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2012
Real estate:
Commercial	$	101,936	$	135,282	$	15,173	$	252,391
Construction:
Land acquisition & development	28,137		25,884		4,739		58,760
Residential	2,531		2,427		1,143		6,101
Commercial	3,000		795		7,383		11,178
Total construction loans	33,668		29,106		13,265		76,039
Residential	9,542		11,680		4,511		25,733
Agricultural	18,490		6,737		3,228		28,455
Total real estate loans	163,636		182,805		36,177		382,618
Consumer:
Indirect consumer	793		1,764		114		2,671
Other consumer	684		1,395		628		2,707
Credit card	—		415		2,085		2,500
Total consumer loans	1,477		3,574		2,827		7,878
Commercial	42,223		27,184		3,428		72,835
Agricultural	2,596		1,625		28		4,249
Total	$	209,932	$	215,188	$	42,460	$	467,580

	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
As of December 31, 2011
Real estate:
Commercial	$	129,046	$	153,320	$	25,087	$	307,453
Construction:
Land acquisition & development	37,294		31,873		38,761		107,928
Residential	9,448		5,528		2,044		17,020
Commercial	—		2,620		21,916		24,536
Total construction loans	46,742		40,021		62,721		149,484
Residential	8,149		15,706		15,140		38,995
Agricultural	16,037		18,498		395		34,930
Total real estate loans	199,974		227,545		103,343		530,862
Consumer:
Indirect consumer	1,141		1,729		247		3,117
Other consumer	745		1,361		674		2,780
Credit card	—		486		2,789		3,275
Total consumer loans	1,886		3,576		3,710		9,172
Commercial	34,698		33,478		12,849		81,025
Agricultural	4,345		5,195		263		9,803
Total	$	240,903	$	269,794	$	120,165	$	630,862

The Company maintains a credit review function, which is independent of the credit approval process, to assess assigned internal risk classifications and monitor compliance with internal lending policies and procedures. Written action plans with firm target dates for resolution of identified problems are maintained and reviewed on a quarterly basis for all categories of criticized loans.

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is involved in various claims and litigation. In the opinion of management, following consultation with legal counsel, the ultimate liability or disposition thereof is not expected to have a material adverse effect on the consolidated financial condition, results of operations or liquidity of the Company.

The Company had commitments under construction contracts of $197 as of December 31, 2012.

The Company leases certain premises and equipment from third parties under operating leases. Total rental expense to third parties was $1,423 in 2012, $2,030 in 2011 and $1,960 in 2010.

The total future minimum rental commitments, exclusive of maintenance and operating costs, required under operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 2012, are as follows:

	Third Parties		Related Partnership		Total
For the year ending December 31:
2013	$	1,110	$	2,111	$	3,221
2014	1,062		2,020		3,082
2015	1,005		1,438		2,443
2016	919		165		1,084
2017	633		83		716
Thereafter	4,170		—		4,170
Total	$	8,899	$	5,817	$	14,716

The Parent Company and the Billings office of FIB are the anchor tenants in a building owned by a partnership in which FIB is one of two partners, and has a 50% partnership interest.

In conjunction with the sale of all of its Class B shares of Visa, Inc. common stock ("Visa common shares") in 2009, the Company entered into a derivative contract with the purchaser whereby the Company will make or receive payments based on subsequent changes in the conversion rate of Class B Visa common shares in Class A Visa common shares. The conversion rate is dependent upon the resolution of certain specifically defined litigation against Visa, U.S.A.. The value of the derivative contract is estimated based on the Company's expectations regarding the ultimate resolution of the Visa, U.S.A. litigation, which involves a high degree of judgment and subjectivity. On November 9, 2012, the court granted preliminary approval of a settlement agreement resolving all claims associated with the specifically defined litigation; however, objections to the preliminary approval have been filed. Final court approval of the settlement agreement is expected in late 2013. As of December 31, 2012, all estimated amounts due under the derivative liability contract were paid. As of December 31, 2011, a liability of $383 related to the derivative contract was included in accounts payable and accrued expenses. The derivative contract is collateralized by $1,000 of U.S. government agency investment securities.

Residential mortgage loans sold to investors in the secondary market are sold with varying recourse provisions. Essentially all of the loan sales agreements require the repurchase of a mortgage loan by the seller in situations such as breach of representation, warranty or covenant; untimely document delivery; false or misleading statements; failure to obtain certain certificates or insurance; unmarketability; etc. Certain loan sales agreements contain repurchase requirements based on payment-related defects that are defined in terms of the number of days or months since the purchase, the sequence number of the payment, and/or the number of days of payment delinquency. Based on the specific terms stated in the agreements, the Company had $19,877 and $13,839 of sold residential mortgage loans with recourse provisions still in effect as of December 31, 2012 and 2011, respectively. The Company did not repurchase any significant amount of loans from secondary market investors under the terms of loan sales agreements during the years ended December 31, 2012, 2011 and 2010. In the opinion of management, the risk of recourse and the subsequent requirement of loan repurchase to the Company is not significant, and accordingly no liabilities have been established related to such. In addition, the Company issues various representations and warranties associated with the sale of loans. The Company has not incurred significant losses resulting from these provisions.

XML

Subordinated Debentures Held by Subsidiary Trusts

12 Months Ended

Dec. 31, 2012

Subordinated Borrowings [Abstract]

Subordinated Debentures Held by Subsidiary Trusts

SUBORDINATED DEBENTURES HELD BY SUBSIDIARY TRUSTS

During 2012, the Company sponsored seven wholly-owned business trusts, FIST, Trust I, Trust II, Trust III, Trust IV, Trust V and Trust VI (collectively, the “Trusts”). The Trusts were formed for the exclusive purpose of issuing an aggregate of $120,000 of 30-year floating rate mandatorily redeemable capital trust preferred securities (“Trust Preferred Securities”) to third-party investors. The Trusts also issued, in aggregate, $3,715 of common equity securities to the Parent Company. Proceeds from the issuance of the Trust Preferred Securities and common equity securities were invested in 30-year junior subordinated deferrable interest debentures (“Subordinated Debentures”) issued by the Parent Company.

A summary of Subordinated Debenture issuances follows:

		Principal Amount Outstanding as of December 31,
Issuance	Maturity Date	2012		2011
March 2003	March 26, 2033	$	—	$	41,238
October 2007	January 1, 2038	10,310		10,310
November 2007	December 15, 2037	15,464		15,464
December 2007	December 15, 2037	20,619		20,619
December 2007	April 1, 2038	15,464		15,464
January 2008	April 1, 2038	10,310		10,310
January 2008	April 1, 2038	10,310		10,310
Total subordinated debentures held by subsidiary trusts		$	82,477	$	123,715

On June 26, 2012, the Company redeemed $41,238 of Subordinated Debentures issued by FIST bearing a cumulative floating interest rate equal to LIBOR plus 3.15% per annum. The redemption price of $41,238 was equal to the $1 liquidation amount of each debenture plus all accrued and unpaid distributions to the date of redemption. Unamortized issuance costs of $428 were charged to other expense on the date of redemption. The redemption of the Subordinated Debentures caused a mandatory redemption of $40,000 of Trust Preferred Securities issued by FIST to third party investors and $1,238 of common equity securities issued by FIST to the Company.

In October 2007, the Company issued $10,310 of Subordinated Debentures to Trust II. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.25% per annum. As of December 31, 2012 the interest rate on the Subordinated Debentures was 2.61%.

In November 2007, the Company issued $15,464 of Subordinated Debentures to Trust I. The Subordinated Debentures bear interest at a fixed rate of 7.50% for five years after issuance until December 16, 2012, and thereafter at a variable rate equal to LIBOR plus 2.75% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 3.06%.

In December 2007, the Company issued $20,619 of Subordinated Debentures to Trust III. The Subordinated Debentures bear interest at a fixed rate of 6.88% for five years after issuance until December 15, 2012, and thereafter at a variable rate equal to LIBOR plus 2.40% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 2.71%.

In December 2007, the Company issued $15,464 of Subordinated Debentures to Trust IV. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.70% per annum. As of December 31, 2012 the interest rate on the Subordinated Debentures was 3.06%.

In January 2008, the Company issued $10,310 of Subordinated Debentures to Trust V. The Subordinated Debentures bear interest at a fixed rate of 6.78% for five years after issuance, and thereafter at a variable rate equal to LIBOR plus 2.75% per annum.

In January 2008, the Company issued $10,310 of Subordinated Debentures to Trust VI. The Subordinated Debentures bear a cumulative floating interest rate equal to LIBOR plus 2.75% per annum. As of December 31, 2012, the interest rate on the Subordinated Debentures was 3.11%.

The Subordinated Debentures are unsecured with interest distributions payable quarterly. The Company may defer the payment of interest at any time provided that the deferral period does not extend past the stated maturity. During any such deferral period, distributions on the Trust Preferred Securities will also be deferred and the Company’s ability to pay dividends on its common and preferred shares is restricted. The Subordinated Debentures may be redeemed, subject to approval by the Federal Reserve Bank, at the Company’s option on or after five years from the date of issue, or at any time in the event of unfavorable changes in laws or regulations. Debt issuance costs consisting primarily of underwriting discounts and professional fees were capitalized and are being amortized through maturity to interest expense using the straight-line method, which approximates level yield.

The terms of the Trust Preferred Securities are identical to those of the Subordinated Debentures. The Trust Preferred Securities are subject to mandatory redemption upon repayment of the Subordinated Debentures at their stated maturity dates or earlier redemption in an amount equal to their liquidation amount plus accumulated and unpaid distributions to the date of redemption. The Company guarantees the payment of distributions and payments for redemption or liquidation of the Trust Preferred Securities to the extent of funds held by the Trusts.

Subject to certain limitations, the Trust Preferred Securities qualify as tier 1 capital of the Parent Company under the Federal Reserve Board’s capital adequacy guidelines. Proceeds from the issuance of the Trust Preferred Securities were used to fund acquisitions.

XML

Commitments and Contingencies - Residential Mortgage Loans Sold with Recourse Obligations (Details) (Obligation to repurchase loans sold, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Obligation to repurchase loans sold
Loss Contingencies
Loss contingency, estimate of possible loss	$ 19,877	$ 13,839

XML

Other Real Estate Owned

12 Months Ended

Dec. 31, 2012

Repossessed Assets [Abstract]

Other Real Estate Owned

OTHER REAL ESTATE OWNED

Information with respect to the Company’s other real estate owned follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	37,452		$	33,632		$	38,400
Additions	43,541			26,644			21,314
Capitalized improvements	75			14			240
Valuation adjustments	(6,724		)	(7,464		)	(6,724		)
Dispositions	(41,773		)	(15,374		)	(19,598		)
Balance at end of year	$	32,571		$	37,452		$	33,632

Write-downs of $6,724 during 2012 included adjustments of $702 directly related to receipt of updated appraisals and adjustments of $6,022 based on other sources, including management estimates of the current fair value of properties. Write-downs of $7,464 during 2011 included adjustments of $4,197 directly related to receipt of updated appraisals and adjustments of $3,267 based on other sources, including management estimates of the current fair value of properties. Write-downs of $6,724 during 2010 included adjustments of $2,491 directly related to receipt of updated appraisals and adjustments of $4,233 based on other sources, including management estimates of the current fair value of properties.

XML

Investment Securities - Maturities of Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Rolling Maturity
Available-for-sale amortized cost, within one year	$ 438,770
Available-for-sale amortized cost, after one year but within five years	1,042,696
Available-for-sale amortized cost, after five years but within ten years	351,310
Available-for-sale amortized cost, after ten years	133,641
Available-for-sale amortized cost, investments with stated maturity, total	1,966,417
Available-for-sale amortized cost, investments with no stated maturity	0
Available-for-sale amortized cost, total	1,966,417
Available-for-sale Securities, Debt Maturities, Fair Value, Rolling Maturity
Available-for-sale estimated fair value, within one year	445,319
Available-for-sale estimated fair value, after one year but within five years	1,056,854
Available-for-sale estimated fair value, after ten years	356,641
Available-for-ale estimated fair value, after five years but within ten years	136,444
Available-for-sale estimated fair value, investments with stated maturity, total	1,995,258
Available-for-sale estimated fair value, investments with no stated maturity	0
Available-for-Sale, Estimated Fair Value	1,995,258	2,016,864
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount
Held-to-maturity amortized cost, within one year	4,657
Held-to-maturity amoritzed cost, after one year but within five years	47,437
Held-to-maturity amortized cost, after five years but within ten years	86,416
Held-to-maturity amortized cost, after ten years	69,340
Held-to-maturity amortized cost, investments with stated maturity, total	207,850
Held-to-maturity amortized cost, investments with no stated maturity	373
Held-to-maturity amortized cost, total	208,223
Held-to-maturity Securities, Debt Maturities, Fair Value, Rolling Maturity
Held-to-maturity estimated fair value, within one year	4,657
Held-to-maturity estimated fair value, after one year but within five years	48,293
Held-to-maturity estimated fair value, after five years but within ten years	90,954
Held-to-maturity estimated fair value, after ten years	74,656
Held-to-maturity estimated fair value, investments with stated maturity, total	218,560
Held-to-maturity estimated fair value, investments with no stated maturity	373
Held-to-maturity estimated fair value, total	218,933
Available-for-sale Securities and Held-to-maturity Securities
Securities sold under agreements to repurchase	1,318,807	1,280,317
Pledged assets separately reported, securities pledged for repurchase agreements, at fair value	1,344,220	1,310,895
Callable within one year
Available-for-sale Securities and Held-to-maturity Securities
Investment securities primarily classified as available-for-sale, amortized costs, after one year but within five years	370,546
Investment securities primarily classified as available-for-sale, fair value, after one year but within five years	371,280
Callable structured notes
Available-for-sale Securities and Held-to-maturity Securities
Investment securities primarily classified as available-for-sale, amortized costs, after one year but within five years	148,428
Investment securities primarily classified as available-for-sale, fair value, after one year but within five years	148,778
Mortgage Backed Securities, Variable Rate
Available-for-sale Securities and Held-to-maturity Securities
Available-for-sale securities, amortized cost basis	$ 29,105	$ 21,333

XML

Premises and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Premises and Equipment

PREMISES AND EQUIPMENT

Premises and equipment and related accumulated depreciation are as follows:

December 31,	2012			2011
Land	$	38,917		$	38,743
Buildings and improvements	195,549			188,509
Furniture and equipment	68,688			63,939
	303,154			291,191
Less accumulated depreciation	(115,589		)	(106,420		)
Premises and equipment, net	$	187,565		$	184,771

The Parent Company and a FIB branch office lease premises from an affiliated partnership. See Note 15—Commitments and Contingencies.

XML

Company - Owned Life Insurance

12 Months Ended

Dec. 31, 2012

Investments, All Other Investments [Abstract]

Company-Owned Life Insurance

COMPANY-OWNED LIFE INSURANCE

Company-owned life insurance consists of the following:

December 31,	2012		2011
Key executive, principal shareholder	$	4,858	$	4,800
Key executive split dollar	4,538		4,441
Group life	67,333		65,639
Total	$	76,729	$	74,880

The Company maintains key executive life insurance policies on certain principal shareholders. Under these policies, the Company receives benefits payable upon the death of the insured. The net cash surrender value of key executive, principal shareholder insurance policies was $4,858 and $4,800 at December 31, 2012 and 2011, respectively.

The Company also has life insurance policies covering selected other key officers. The net cash surrender value of these policies was $4,538 and $4,441 at December 31, 2012 and 2011, respectively. Under these policies, the Company receives benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with the selected key officers whereby a portion of the policy death benefit is payable to their designated beneficiaries. The endorsement split dollar agreement will provide post-retirement coverage for those selected key officers meeting specified retirement qualifications. The Company expenses the earned portion of the post-employment benefit through the vesting period.

The Company has a group life insurance policy covering selected officers of FIB. The net cash surrender value of the policy was $67,333 and $65,639 at December 31, 2012 and 2011, respectively. Under the policy, the Company receives benefits payable upon death of the insured. An endorsement split dollar agreement has been executed with the insured officers whereby a portion of the policy death benefit is payable to their designated beneficiaries if they are employed by the Company at the time of death.

XML

Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2012

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

MORTGAGE SERVICING RIGHTS

Information with respect to the Company’s mortgage servicing rights follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	13,450		$	13,811		$	18,732
Sales of mortgage servicing rights	(735		)	—			(4,528		)
Purchases of mortgage servicing rights	—			—			—
Originations of mortgage servicing rights	4,563			2,864			4,222
Amortization expense	(3,501		)	(3,225		)	(4,615		)
Write-off of permanent impairment	(553		)	—			—
Balance at end of year	13,224			13,450			13,811
Less valuation reserve	(571		)	(1,895		)	(620		)
Balance at end of year	$	12,653		$	11,555		$	13,191
Principal balance of serviced loans underlying mortgage servicing rights	$	2,146,351		$	1,803,303		$	1,594,697
Mortgage servicing rights as a percentage of serviced loans	0.59		%	0.64		%	0.83		%

At December 31, 2012, the estimated fair value and weighted average remaining life of the Company’s mortgage servicing rights were $16,373 and 4.4 years, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 8.5% to 21.0% and monthly prepayment speeds ranging from 0.7% to 6.1% depending upon the risk characteristics of the underlying loans. The Company reversed impairment of $771 in 2012 and $787 in 2010 and recorded additional impairment of $1,275 in 2011. Permanent impairment of $553 and was charged against the carrying value of mortgage servicing rights in 2012. No permanent impairment was recorded in 2011 or 2010.

The Company sold mortgage servicing rights with carrying values of $735 and $4,528 in 2012 and 2010, respectively. A gain on sale of $19 was recorded as other income in 2012. A loss on sale of $1,525 was recorded as other expense in 2010. In conjunction with the sales, the Company entered into agreements with the purchasers whereby the Company continues to sub-service the loans underlying the sold mortgage servicing rights.

XML

Loans - Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	$ 185,281	$ 238,175	$ 156,384
Income Recognized	1,631	1,659
Impaired Financing Receivable, Average Recorded Investment and Cash Basis Method Interest Income
Interest income on impaired loans if interest had been accrued	8,463	12,358	8,824
Commercial real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	78,670	85,702	49,713
Income Recognized	1,339	633
Land acquisition & development construction real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	44,457	57,675	34,871
Income Recognized	110	96
Residential construction real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	8,431	19,769	15,097
Income Recognized	4	384
Commercial construction real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	16,401	20,676	21,086
Income Recognized	0	0
Total construction loans
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	69,289	98,120	71,054
Income Recognized	114	480
Residential real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	13,703	15,768	10,889
Income Recognized	26	258
Agricultural real estate
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	6,936	6,188	1,737
Income Recognized	41	167
Total real estate loans
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	168,598	205,778	133,393
Income Recognized	1,520	1,538
Commercial
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	15,741	31,490	22,017
Income Recognized	84	121
Agricultural
Schedule of Average Recorded Investment in and Income Recognized on Impaired Loans
Average Recorded Investment	942	907	974
Income Recognized	$ 27	$ 0

XML

Commitments and Contingencies - Narrative (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 Liability Contract	Dec. 31, 2011 Estimated Fair Value	Dec. 31, 2011 Fair Value, Inputs, Level 3 Estimated Fair Value Liability Contract Visa, Inc.
Investment Holdings
Derivative liability contract		$ 383	$ 383
Derivative collateralized by U.S. government agency investment securities	$ 1,000

XML

Loans - Schedule of Troubled Debt Restructurings, Payment Default in Past 12 Months (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 notes	Dec. 31, 2011 notes
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Financing Receivable, Modifications, Subsequent Default, Recorded Investment, During Period, on Non-Accrual Status		18
Number of Notes	3	20
Balance	$ 1,103	$ 4,322
Commercial real estate
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	0	9
Balance	0	2,747
Land acquisition & development construction real estate
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	1	1
Balance	468	1,135
Residential construction real estate
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	0	1
Balance	0	170
Total construction loans
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	1	2
Balance	468	1,305
Residential real estate
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	2	0
Balance	635	0
Agricultural real estate
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	0	1
Balance	0	33
Total real estate loans
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	3	12
Balance	1,103	4,085
Commercial
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	0	6
Balance	0	213
Agricultural
Schedule of Financing Receivable, Troubled Debt Restructurings Payment Default
Number of Notes	0	2
Balance	$ 0	$ 24

XML

Condensed Financial Information (Parent Company Only) - Condensed Statements of Cash Flows (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities:
Net income	$ 58,224,000	$ 44,546,000	$ 37,356,000
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	17,112,000	17,368,000	20,136,000
Write-down of equipment pending disposal	70	0	0
Deferred income tax expense (benefit)	8,762,000	2,405,000	(17,257,000)
Stock-based compensation expense	2,485,000	2,111,000	1,764,000
Tax benefits from stock-based compensation	360,000	204,000	239,000
Excess tax benefits from stock-based compensation	(273,000)	(124,000)	(225,000)
Net cash provided by operating activities	135,822,000	143,101,000	109,258,000
Cash flows from investing activities:
Net cash used in investing activities	(141,079,000)	(125,939,000)	(387,511,000)
Cash flows from financing activities:
Repayments of long-term debt	(40,000)	(302,000)	(35,851,000)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238,000)	0	0
Proceeds from issuance of common stock	1,911,000	385,000	167,400,000
Common stock issuance costs	0	0	(13,597,000)
Excess tax benefits from stock-based compensation	273,000	124,000	225,000
Purchase and retirement of common stock	(263,000)	(248,000)	(3,699,000)
Dividends paid to common stockholders	(26,208,000)	(19,233,000)	(17,905,000)
Dividends paid to preferred stockholders	(3,300,000)	(3,422,000)	(3,422,000)
Net cash provided by (used in) financing activities	334,142,000	(230,333,000)	340,389,000
Net change in cash and cash equivalents	328,885,000	(213,171,000)	62,136,000
Cash and cash equivalents at beginning of year	472,447,000	685,618,000	623,482,000
Cash and cash equivalents at end of year	801,332,000	472,447,000	685,618,000
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Transfer of preferred stock pending redemption from equity to liability	50,000,000
Transfered accrued liabilities to common stock in conjunction with the vesting of liability-classified non-vested stock awards		216,000	59,000
Parent Company
Cash flows from operating activities:
Net income	58,224,000	44,546,000	37,356,000
Adjustments to reconcile net income to cash provided by operating activities:
Undistributed earnings of subsidiaries	(28,914,000)	(25,444,000)	(32,226,000)
Stock-based compensation expense	2,485,000	2,111,000	1,764,000
Tax benefits from stock-based compensation	360,000	204,000	239,000
Excess tax benefits from stock-based compensation	(273,000)	(124,000)	(225,000)
Other, net	3,327,000	2,600,000	(4,325,000)
Net cash provided by operating activities	35,209,000	23,893,000	2,583,000
Cash flows from investing activities:
Capitalization of subsidiaries	0	0	(130,000)
Capital expenditures, net of sales	1,000	(3,000)	0
Net cash used in investing activities	1,000	(3,000)	(130,000)
Cash flows from financing activities:
Net (decrease) increase in advances from nonbank subsidiaries	(2,838,000)	(2,913,000)	5,002,000
Repayments of long-term debt	0	0	(33,929,000)
Repayment of junior subordinated debentures held by subsidiary trusts	(41,238,000)	0	0
Proceeds from issuance of common stock	1,911,000	385,000	167,400,000
Common stock issuance costs	0	0	(13,597,000)
Excess tax benefits from stock-based compensation	273,000	124,000	225,000
Purchase and retirement of common stock	(263,000)	(248,000)	(3,699,000)
Dividends paid to common stockholders	(26,208,000)	(19,233,000)	(17,905,000)
Dividends paid to preferred stockholders	(3,300,000)	(3,422,000)	(3,422,000)
Net cash provided by (used in) financing activities	(71,663,000)	(25,307,000)	100,075,000
Net change in cash and cash equivalents	(36,453,000)	(1,417,000)	102,528,000
Cash and cash equivalents at beginning of year	131,860,000	133,277,000	30,749,000
Cash and cash equivalents at end of year	95,407,000	131,860,000	133,277,000
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Transfer of preferred stock pending redemption from equity to liability	$ 50,000,000

XML

Loans - Schedule of Recorded Investment in Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	$ 158,512	$ 264,801	$ 212,877
Recorded Investment With No Allowance	82,232	117,004	76,672
Recorded Investment With Allowance	53,953	113,592	122,630
Total Recorded Investment	136,185	230,596	199,302
Related allowance	10,297	32,838	42,226
Commercial real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	84,300	97,745	79,193
Recorded Investment With No Allowance	39,049	62,769	31,925
Recorded Investment With Allowance	34,774	23,218	41,703
Total Recorded Investment	73,823	85,987	73,628
Related allowance	4,112	6,741	10,315
Land acquisition & development construction real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	28,558	73,258	48,371
Recorded Investment With No Allowance	15,891	22,300	24,120
Recorded Investment With Allowance	7,173	39,131	20,440
Total Recorded Investment	23,064	61,431	44,560
Related allowance	1,457	12,084	8,064
Residential construction real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	3,018	13,721	18,632
Recorded Investment With No Allowance	1,976	10,427	2,993
Recorded Investment With Allowance	710	2,044	13,721
Total Recorded Investment	2,686	12,471	16,714
Related allowance	251	312	3,431
Commercial construction real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	10,447	26,647	17,458
Recorded Investment With No Allowance	7,785	3,510	2,976
Recorded Investment With Allowance	340	21,026	13,578
Total Recorded Investment	8,125	24,536	16,554
Related allowance	69	5,042	3,877
Total construction loans
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	42,023	113,626	84,461
Recorded Investment With No Allowance	25,652	36,237	30,089
Recorded Investment With Allowance	8,223	62,201	47,739
Total Recorded Investment	33,875	98,438	77,828
Related allowance	1,777	17,438	15,372
Residential real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	13,271	18,305	8,951
Recorded Investment With No Allowance	6,152	2,678	1,741
Recorded Investment With Allowance	4,495	15,626	7,110
Total Recorded Investment	10,647	18,304	8,851
Related allowance	1,677	3,844	1,266
Agricultural real estate
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	5,559	8,018	3,045
Recorded Investment With No Allowance	1,834	7,470	1,065
Recorded Investment With Allowance	3,227	0	1,432
Total Recorded Investment	5,061	7,470	2,497
Related allowance	784	0	128
Total real estate loans
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	145,153	237,694	175,650
Recorded Investment With No Allowance	72,687	109,154	64,820
Recorded Investment With Allowance	50,719	101,045	97,984
Total Recorded Investment	123,406	210,199	162,804
Related allowance	8,350	28,023	27,081
Commercial
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	12,770	26,348	36,251
Recorded Investment With No Allowance	9,036	7,354	11,354
Recorded Investment With Allowance	3,206	12,284	24,168
Total Recorded Investment	12,242	19,638	35,522
Related allowance	1,919	4,664	14,892
Agricultural
Impaired Financing Receivable, Unpaid Principal Balance
Unpaid Total Principal Balance	589	759	976
Recorded Investment With No Allowance	509	496	498
Recorded Investment With Allowance	28	263	478
Total Recorded Investment	537	759	976
Related allowance	$ 28	$ 151	$ 253

XML

Stock-Based Compensation - Non-Vested Stock Options Rollforward (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Share-Based Compensation Arrangement by Share Based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested stock options, beginning of year, number of shares	588,236
Nonvested stock options, granted, number of shares	369,766
Nonvested stock options, vested, number of shares	(313,346)
Nonvested stock options, forfeited, number of shares	(27,442)
Nonvested stock options, end of year, number of shares	617,214
Share-Based Compensation Arrangement by Share Based Payment Award, Options, Nonvested, Weighted-Average Grant Date Fair Value [Roll Forward]
Nonvested stock options, beginning of period, weighted-average grant date fair value	$ 3.71
Nonvested stock options, granted, weighted-average grant date fair value	$ 4.06
Nonvested stock options, vested, weighted-average grant date fair value	$ 3.13
Nonvested stock options, forfeited, weighted-average grant date fair value	$ 4.12
Nonvested stock options, end of period, weighted-average grant date fair value	$ 4.20

XML

Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

Subsequent events have been evaluated for potential recognition and disclosure through the date financial statements were filed with the Securities and Exchange Commission. No events requiring recognition or disclosure were identified.

XML

Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Schedule of Comprehensive Income (Loss)

The gross amounts of each component of other comprehensive income and the related tax effects are as periods indicated are as follows:

Year ended December 31, 2012	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(4,648	)	$	(1,829	)	$	(2,819	)
Reclassification adjustment for net gains included in net income	(348		)	(137		)	(211		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	56			22			34
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(77		)	(30		)	(47		)
Total other comprehensive loss	$	(5,017	)	$	(1,974	)	$	(3,043	)

Year ended December 31, 2011	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	17,168		$	6,899		$	10,269
Reclassification adjustment for net gains included in net income	(1,544		)	(620		)	(924		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	389			156			233
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	135			54			81
Total other comprehensive income	$	16,148		$	6,489		$	9,659

Year ended December 31, 2010	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Investment securities available-for sale:
Change in net unrealized gain during period	$	(8,438	)	$	(2,989	)	$	(5,449	)
Reclassification adjustment for net gains included in net income	(170		)	(60		)	(110		)
Unamortized premium on available-to-sale securities transferred into held-for-maturity	722			256			466
Defined benefits post-retirement benefit plan:
Change in net actuarial loss	(940		)	(333		)	(607		)
Total other comprehensive loss	$	(8,826	)	$	(3,126	)	$	(5,700	)

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income, net of income taxes, are as follows:

Year ended December 31,	2012			2011
Net unrealized gain on investment securities available-for-sale	$	17,537		$	20,533
Net actuarial loss on defined benefit post-retirement benefit plans	(1,546		)	(1,499		)
Net accumulated other comprehensive income	$	15,991		$	19,034

XML

Earnings per Common Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings per Common Share

EARNINGS PER COMMON SHARE

Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period presented, excluding unvested restricted stock. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares determined for the basic earnings per share computation plus the dilutive effects of stock-based compensation using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per common share:

Year Ended December 31,	2012		2011		2010
Net income	$	58,224	$	44,546	$	37,356
Less preferred stock dividends	3,300		3,422		3,422
Net income available to common shareholders, basic and diluted	$	54,924	$	41,124	$	33,934
Weighted average common shares outstanding for basic earnings per share computation	42,965,987		42,749,526		39,907,640
Dilutive effects of stock-based compensation	126,991		97,670		219,725
Weighted average common shares outstanding for diluted earnings per common share computation	43,092,978		42,847,196		40,127,365
Basic earnings per common share	$	1.28	$	0.96	$	0.85
Diluted earnings per common share	$	1.27	$	0.96	$	0.85

The Company had 2,427,823, 2,865,832 and 2,301,413 stock options outstanding as of December 31, 2012, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive. The Company had 41,240, 9,427 and 17,644 shares of unvested restricted stock as of December 31, 2012, 2011 and 2010, respectively, that were not included in the computation of diluted earnings per common share because performance conditions for vesting had not been met.

XML

Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

The Company has equity awards outstanding under two stock-based compensation plans; the 2006 Equity Compensation Plan (the “2006 Plan”) and the 2001 Stock Option Plan. These plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors or, upon delegation, the Compensation Committee of the Board of Directors (“Compensation Committee”) has exclusive authority to select employees, advisors and others, including directors, to receive awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans.

The 2006 Plan, approved by the Company’s shareholders in May 2006, was established to consolidate into one plan the benefits available under the 2001 Stock Option Plan and all other then existing share-based award plans (collectively, the “Previous Plans”). The Previous Plans continue with respect to awards made prior to May 2006. All shares of common stock available for future grant under the Previous Plans were transferred into the 2006 Plan. At December 31, 2012, there were 659,863 common shares available for future grant under the 2006 Plan. All awards granted subsequent to completion of the Company’s IPO on March 29, 2010 will be for shares of Class A common stock. All awards granted prior to the Company’s IPO are for shares of Class B common stock.

Stock Options. All options granted have an exercise price equal to fair market value, which is currently defined as the closing sales price for the stock as quoted on the NASDAQ Stock Market for the last market trading day preceding the date that the Company’s Board of Directors awards the benefit. Options may be subject to vesting as determined by the Company's Board of Directors or Compensation Committee, and can be exercised for periods of up to ten years from the date of grant.

Compensation expense related to stock option awards of $1,276, $915 and $813 was included in benefits on the Company’s consolidated income statements for the years ended December 31, 2012, 2011 and 2010, respectively. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $488, $349 and $311, respectively.

The weighted average grant date fair value of options granted was $4.06, $4.30 and $4.58 during the years ended December 31, 2012, 2011 and 2010, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The following table presents the weighted-average assumptions used in the option pricing model for the periods indicated:

Years ended December 31,	2012		2011		2010
Expected volatility	37.46	%	36.36	%	35.66	%
Expected dividend yield	3.35	%	3.17	%	2.98	%
Risk-free interest rate	1.99	%	3.05	%	3.08	%
Expected life of options (in years)	7.85		7.97		7.70

Expected dividend yield is based on the Company’s annualized expected dividends per share divided by the average common stock price. Risk-free interest rate is based on the U.S. treasury constant maturity yield for treasury securities with maturities approximating the expected life of the options granted on the date of grant. The expected life of options is based on the Company’s historical exercise and post-vesting termination behaviors. The Company expected the historical volatility of its common stock would not be indicative of future volatility subsequent to the Company’s IPO, which was concluded on March 29, 2010. As such, in 2012, 2011 and 2010, the Company estimated expected volatility based on the share price volatility of a peer group of publicly-traded regional banks of similar size and performance as the Company over the expected life of options.

The following table summarizes stock option activity under the Company’s active stock option plans for the year ended December 31, 2012:

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life
Outstanding options, beginning of year	3,484,928		$	16.26
Granted	369,766		14.33
Exercised	(376,634	)	11.38
Forfeited	(27,442	)	14.42
Expired	(76,963	)	16.75
Outstanding options, end of year	3,373,655		$	16.60	5.02 years
Outstanding options exercisable, end of year	2,756,441		$	17.10	4.23 years

The total intrinsic value of fully-vested stock options outstanding as of December 31, 2012 was $1,653. The total intrinsic value of options exercised was $1,158, $764 and $757 during the years ended December 31, 2012, 2011 and 2010, respectively. The actual tax benefit realized for the tax deduction from option exercises totaled $397, $285 and $250 for the years ended December 31, 2012, 2011 and 2010, respectively. The Company received cash of $1,612, $385 and $649 from stock option exercises during the years ended December 31, 2012, 2011 and 2010, respectively. The Company redeemed common stock with aggregate values of $2,675, $2,381 and $1,643 tendered in payment for stock option exercises during the years ended December 31, 2012, 2011 and 2010, respectively.

Information with respect to the Company’s nonvested stock options as of and for the year ended December 31, 2012 follows:

	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested stock options, beginning of year	588,236		$	3.71
Granted	369,766		4.06
Vested	(313,346	)	3.13
Forfeited	(27,442	)	4.12
Nonvested stock options, end of year	617,214		$	4.20

As of December 31, 2012, there was $1,523 of unrecognized compensation cost related to nonvested stock options granted under the Company’s active stock option plans. That cost is expected to be recognized over a weighted-average period of 1.56 years. The total fair value of shares vested during 2012 was $980.

Restricted Stock Awards. Common stock issued under the Company’s restricted stock plan may not be sold or otherwise transferred until restrictions have lapsed or performance objectives have been obtained. During the vesting periods, participants have voting rights and receive dividends on the restricted shares. Upon termination of employment, common shares upon which restrictions have not lapsed must be returned to the Company.

Based on the substantive terms of each award, restricted shares are classified as equity or liability awards. The fair value of equity-classified restricted stock awards is being amortized as compensation expense on a straight-line basis over the period restrictions lapse or performance goals are met. Compensation cost for liability-classified awards is expensed each period from the date of grant to the measurement date based on the fair value of the Company’s common stock at the end of each period. Compensation expense related to restricted stock awards of $1,209, $991 and $847 was included in benefits on the Company’s consolidated statements of income for the years ended December 31, 2012, 2011 and 2010, respectively. Related income tax benefits recognized for the years ended December 31, 2012, 2011 and 2010 were $462, $379 and $324, respectively.

The following table presents information regarding the Company’s restricted stock as of December 31, 2012:

	Number of Shares		Weighted-Average Measurement Date Fair Value
Restricted stock, beginning of year	190,770		$	14.57
Granted	122,912		14.37
Vested	(67,720	)	14.82
Forfeited	(8,276	)	14.69
Canceled	(6,956	)	15.00
Restricted stock, end of year	230,730		$	14.38

During 2012, the Company issued 122,912 restricted common shares. The 2012 restricted share awards included 20,564 performance restricted shares of which 10,282 vest in varying percentages upon achievement of defined return on asset performance goals and 10,282 vest in varying percentages upon achievement of defined return on equity performance goals. Vesting of the performance restricted shares is also contingent on employment as of December 31, 2014. Additionally, 102,348 time-restricted shares were issued during 2012 that vest one-third on each annual anniversary of the grant date through February 17, 2015, contingent on continued employment through the vesting date.

As of December 31, 2012, there was $2,081 of unrecognized compensation cost related to nonvested restricted stock awards expected to be recognized over a period of 2.1 years.

XML

Employee Benefit Plans - Profit Sharing and Savings Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits
Eligibility requirement, service hours to be completed	20 hours
Deferred Profit Sharing
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits
Eligibility requirement, lesser of percent of compensation	100.00%
Eligibility requirement, lesser of annual contribution amount	$ 40,000
Eligibility requirement, requisite service period	P3Y
Compensation expense	2,063,000	1,480,000	1,197,000
Savings Plan, Employee Elected
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits
Compensation expense	4,034,000	3,905,000	3,896,000
Maximum annual contribution per employee, amount per dollar of employee contribution	$ 1.25
Maximum annual contribution per employee, percent	4.00%

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense consists of the following:

Year ended December 31,	2012		2011		2010
Current:
Federal	$	18,458	$	16,451	$	29,866
State	2,818		2,759		4,481
Total current	21,276		19,210		34,347
Deferred:
Federal	7,697		2,131		(15,268		)
State	1,065		274		(1,989		)
Total deferred	8,762		2,405		(17,257		)
Total income tax expense	$	30,038	$	21,615	$	17,090

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate of 35 percent in 2012, 2011 and 2010 to income before income taxes as a result of the following:

Year ended December 31,	2012			2011			2010
Tax expense at the statutory tax rate	$	30,892		$	23,156		$	19,056
Increase (decrease) in tax resulting from:
Tax-exempt income	(3,498		)	(3,578		)	(3,661		)
State income tax, net of federal income tax benefit	2,524			1,972			1,619
Other, net	120			65			76
Tax expense at effective tax rate	$	30,038		$	21,615		$	17,090

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax asset (liability) relate to the following:

December 31,	2012			2011
Deferred tax assets:
Loans, principally due to allowance for loan losses	$	38,688		$	42,602
Employee benefits	7,041			7,659
Other real estate owned write-downs and carrying costs	6,850			7,444
Deferred gain on sale of subsidiary	750			1,010
Other	385			428
Deferred tax assets	53,714			59,143
Deferred tax liabilities:
Fixed assets, principally differences in bases and depreciation	(4,711		)	(4,284		)
Investment securities, unrealized gains	(11,360		)	(13,091		)
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets	(782		)	(855		)
Prepaid amounts	(1,052		)	(921		)
Government agency stock dividends	(2,060		)	(2,079		)
Goodwill and core deposit intangibles	(25,815		)	(22,736		)
Mortgage servicing rights	(4,418		)	(4,150		)
Other	(919		)	(1,399		)
Deferred tax liabilities	(51,117		)	(49,515		)
Net deferred tax assets	$	2,597		$	9,628

XML

Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Details) (Fair Value, Measurements, Nonrecurring, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	$ 74,623	$ 100,035
Real estate acquired through foreclosure, fair value disclosure	15,745	17,000
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	0	0
Real estate acquired through foreclosure, fair value disclosure	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	0	0
Real estate acquired through foreclosure, fair value disclosure	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	74,623	100,035
Real estate acquired through foreclosure, fair value disclosure	15,745	17,000
Estimate of Fair Value, Fair Value Disclosure, Gain (Loss)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	(32,624)	(67,043)
Real estate acquired through foreclosure, fair value disclosure	$ (20,797)	$ (21,282)

XML

Other Real Estate Owned (Tables)

12 Months Ended

Dec. 31, 2012

Repossessed Assets [Abstract]

Other Real Estate Owned Roll Forward

Information with respect to the Company’s other real estate owned follows:

Year Ended December 31,	2012			2011			2010
Balance at beginning of year	$	37,452		$	33,632		$	38,400
Additions	43,541			26,644			21,314
Capitalized improvements	75			14			240
Valuation adjustments	(6,724		)	(7,464		)	(6,724		)
Dispositions	(41,773		)	(15,374		)	(19,598		)
Balance at end of year	$	32,571		$	37,452		$	33,632

XML

Fair Value Measurements - Narrative (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Related allowance	$ 10,297,000	$ 32,838,000	$ 42,226,000
Impairment losses	70	0	0
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Long-lived assets to be disposed of, carrying value	566,000
Impairment losses	70,000
Long-lived assets to be disposed of, fair value	496,000
Long-lived assets to be disposed of, carried at cost	1,513,000
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	74,623,000	100,035,000
Related allowance	10,297,000	32,838,000
Impaired financing receivable, related allowance, partial loan charge-offs	22,327,000	34,205,000
Carrying Amount | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	107,247,000	167,078,000
Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Loans receivable, impaired, fair value disclosure	$ 74,623,000	$ 100,035,000

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 58,224	$ 44,546	$ 37,356
Investment securities available-for-sale:
Change in net unrealized gains (losses) during the period	(4,648)	17,168	(8,438)
Reclassification adjustment for net gains included in income	(348)	(1,544)	(170)
Unamortized premium on available-for-sale securities transferred into held-to-maturity	56	389	722
Defined benefit post-retirement benefits plans:
Change in the net actuarial loss	(77)	135	(940)
Other comprehensive income (loss), before tax	(5,017)	16,148	(8,826)
Deferred tax benefit (expense) related to other comprehensive income	1,974	(6,489)	3,126
Other comprehensive income (loss), net of tax	(3,043)	9,659	(5,700)
Total comprehensive income	$ 55,181	$ 54,205	$ 31,656

XML

Income Taxes - Reconciliation of Tax Expense at Effective Tax Rate (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, at federal statutory income tax rate	35.00%	35.00%	35.00%
Income Tax Expense, Continuing Operations Income Tax Reconciliation [Abstract]
Tax expense at the statutory tax rate	$ 30,892	$ 23,156	$ 19,056
Increase (decrease) in tax resulting from:
Tax-exempt income	(3,498)	(3,578)	(3,661)
State income tax, net of federal income tax benefit	2,524	1,972	1,619
Other, net	120	65	76
Total income tax expense	$ 30,038	$ 21,615	$ 17,090

XML

Investment Securities

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Investment Securities

INVESTMENT SECURITIES

The amortized cost and approximate fair values of investment securities are summarized as follows:

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	751,501	$	3,518	$	(163	)	$	754,856
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	1,214,377		27,000		(1,526		)	1,239,851
Private mortgage-backed securities	539		13		(1		)	551
Total	$	1,966,417	$	30,531	$	(1,690	)	$	1,995,258

December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	192,875	$	10,835	$	(176	)	$	203,534
Corporate securities	14,975		64		(13		)	15,026
Other securities	373		—		—			373
Total	$	208,223	$	10,899	$	(189	)	$	218,933

Gross gains of $351 and gross losses of $3 were realized on the disposition of available-for-sale securities in 2012.

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-Sale
Obligations of U.S. government agencies	$	1,134,427	$	4,353	$	(662	)	$	1,138,118
U.S. agency residential mortgage-backed securities &    collateralized mortgage obligations	848,444		29,567		(14		)	877,997
Private mortgage-backed securities	758		7		(16		)	749
Total	$	1,983,629	$	33,927	$	(692	)	$	2,016,864

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Held-to Maturity
State, county and municipal securities	$	152,619	$	9,113	$	(17	)	$	161,715
Other securities	162		—		—			162
Total	$	152,781	$	9,113	$	(17	)	$	161,877

Gross gains of $1,544 were realized on the disposition of available-for-sale securities in 2011. No gross losses were realized on the disposition of available-for-sale securities in 2011. Gross gains of $173 and gross losses of $3 were realized on the disposition of available-for-sale securities in 2010.

As of December 31, 2012, the Company had general obligation securities with amortized costs of $139,434 included in state, county and municipal securities, of which $67,171 were issued by political subdivisions or agencies within the states of Montana, Wyoming and South Dakota.

The following table shows the gross unrealized losses and fair values of investment securities, aggregated by investment category, and the length of time individual investment securities have been in a continuous unrealized loss position, as of December 31, 2012 and 2011.

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	93,982	$	(163	)	$	—	$	—		$	93,982	$	(163	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	250,198		(1,526		)	—		—			250,198		(1,526		)
Private mortgage-backed securities	—		—			137		(1		)	137		(1		)
Total	$	344,180	$	(1,689	)	$	137	$	(1	)	$	344,317	$	(1,690	)

	Less than 12 Months					12 Months or More					Total
December 31, 2012	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	19,389	$	(168	)	$	557	$	(8	)	$	19,946	$	(176	)
Corporate securities	9,312		(13		)	—		—			9,312		(13		)
Total	$	28,701	(181		)	557		(8		)	29,258		(189		)

	Less than 12 Months					12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available-for-Sale
Obligations of U.S. government agencies	$	287,404	$	(662	)	$	—	$	—		$	287,404	$	(662	)
U.S. agency residential mortgage-backed    securities & collateralized mortgage    obligations	45,694		(14		)	—		—			45,694		(14		)
Private mortgage-backed securities	246		(10		)	177		(6		)	423		(16		)
Total	$	333,344	$	(686	)	$	177	$	(6	)	$	333,521	$	(692	)

	Less than 12 Months				12 Months or More					Total
December 31, 2011	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
State, county and municipal securities	$	—	$	—	$	773	$	(17	)	$	773	$	(17	)

The investment portfolio is evaluated quarterly for other-than-temporary declines in the market value of each individual investment security. Consideration is given to the length of time and the extent to which the fair value has been less than cost; the financial condition and near term prospects of the issuer; and, the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of December 31, 2012, the Company had 69 individual investment securities that were in an unrealized loss position. As of December 31, 2011, the Company had 24 individual investment securities that were in an unrealized loss position. Unrealized losses as of December 31, 2012 and 2011 related primarily to fluctuations in the current interest rates. The fair value of these investment securities is expected to recover as the securities approach their maturity or repricing date or if market yields for such investments decline. As of December 31, 2012, the Company had the intent and ability to hold these investment securities for a period of time sufficient to allow for an anticipated recovery. Furthermore, the Company does not have the intent to sell any of the available-for-sale securities in the above table and it is more likely than not that the Company will not have to sell any such securities before a recovery in cost. No impairment losses were recorded during 2012, 2011 or 2010.

Maturities of investment securities at December 31, 2012 are shown below. Maturities of mortgage-backed securities have been adjusted to reflect shorter maturities based upon estimated prepayments of principal. All other investment securities maturities are shown at contractual maturity dates.

	Available-for-Sale				Held-to-Maturity
December 31, 2012	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	438,770	$	445,319	$	4,657	$	4,657
After one year but within five years	1,042,696		1,056,854		47,437		48,293
After five years but within ten years	351,310		356,641		86,416		90,954
After ten years	133,641		136,444		69,340		74,656
Total	1,966,417		1,995,258		207,850		218,560
Investments with no stated maturity	—		—		373		373
Total	$	1,966,417	$	1,995,258	$	208,223	$	218,933

At December 31, 2012, the Company had investment securities callable within one year with amortized costs and estimated fair values of $370,546 and $371,280, respectively. These investment securities are primarily classified as available-for-sale and included in the after one year but within five years category in the table above.

At December 31, 2012, the Company had callable structured notes with amortized costs and estimated fair values of $148,428 and $148,778, respectively. These callable structured notes, which are classified as available-for-sale and included in the after one year but within five years category in the table above, have fixed interest rates that increase at various intervals as market rates increase.

Maturities of securities do not reflect rate repricing opportunities present in adjustable rate mortgage-backed securities. At December 31, 2012 and 2011, the Company had variable rate mortgage-backed securities with amortized costs of $29,105 and $21,333, respectively, classified as available-for-sale in the table above.

There are no significant concentrations of investments at December 31, 2012, (greater than 10 percent of stockholders’ equity) in any individual security issuer, except for U.S. government or agency-backed securities. As of December 31, 2012 and 2011, all mortgage-backed securities were residential in nature.

Investment securities with amortized cost of $1,318,807 and $1,280,317 at December 31, 2012 and 2011, respectively, were pledged to secure public deposits and securities sold under repurchase agreements. The approximate fair value of securities pledged at December 31, 2012 and 2011 was $1,344,220 and $1,310,895, respectively. All securities sold under repurchase agreements are with customers and mature on the next banking day. The Company retains possession of the underlying securities sold under repurchase agreements.

XML

Investment Securities - Realized Gains (Losses) on Investments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 351	$ 1,544	$ 173
Gross realized losses	3	0	3
Political Subdivisions
Schedule of Available-for-sale Securities
Available-for-sale Securities, Amortized Cost Basis	139,434
Montana, Wyoming, and South Dakota | Political Subdivisions
Schedule of Available-for-sale Securities
Available-for-sale Securities, Amortized Cost Basis	$ 67,171

XML

Commitments and Contingencies - Unrecorded Purchase Commitments (Details) (Construction Contracts, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Construction Contracts
Unrecorded Unconditional Purchase Obligation
Commitments to Purchase	$ 197

XML

Fair Value Measurements - Estimated Fair Values of Financial Instruments by Level of Valuation Inputs (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financial liabilities:
Preferred stock pending redemption	$ 50,000	$ 0
Carrying Amount
Financial assets:
Cash and cash equivalents	801,332	472,447
Investment securities available-for-sale	1,995,258	2,016,864
Investment securities held-to-maturity	208,223	152,781
Accrued interest receivable	28,869	31,974
Mortgage servicing rights	12,653	11,555
Net loans	4,123,401	4,073,968
Total financial assets	7,169,736	6,759,589
Financial liabilities:
Total deposits, excluding time deposits	4,854,927	4,269,631
Time deposits	1,385,484	1,557,340
Securities sold under repurchase agreements	505,785	516,243
Other borrowed funds	32	7
Accrued interest payable	6,502	8,123
Long-term debt	37,160	37,200
Preferred stock pending redemption	50,000
Subordinated debentures held by subsidiary trusts	82,477	123,715
Total financial liabilities	6,922,367	6,512,642
Estimated Fair Value
Financial assets:
Cash and cash equivalents	801,332	472,447
Investment securities available-for-sale	1,995,258	2,016,864
Investment securities held-to-maturity	218,933	161,877
Accrued interest receivable	28,869	31,974
Mortgage servicing rights	16,373	11,910
Net loans	4,142,426	4,064,718
Total financial assets	7,203,191	6,759,790
Financial liabilities:
Total deposits, excluding time deposits	4,854,927	4,269,631
Time deposits	1,394,403	1,565,558
Securities sold under repurchase agreements	505,785	516,243
Other borrowed funds	32	7
Accrued interest payable	6,502	8,123
Long-term debt	35,104	34,341
Preferred stock pending redemption	50,000
Subordinated debentures held by subsidiary trusts	62,409	102,525
Total financial liabilities	6,909,162	6,496,811
Quoted Prices in Active Markets for Identical Assets (Level 1) | Estimated Fair Value
Financial assets:
Cash and cash equivalents	0	0
Investment securities available-for-sale	0	0
Investment securities held-to-maturity	0	0
Accrued interest receivable	0	0
Mortgage servicing rights	0	0
Net loans	0	0
Total financial assets	0	0
Financial liabilities:
Total deposits, excluding time deposits	0	0
Time deposits	0	0
Securities sold under repurchase agreements	0	0
Other borrowed funds	0	0
Accrued interest payable	0	0
Long-term debt	0	0
Preferred stock pending redemption	0
Subordinated debentures held by subsidiary trusts	0	0
Total financial liabilities	0	0
Significant Other Observable Inputs (Level 2) | Estimated Fair Value
Financial assets:
Cash and cash equivalents	801,332	472,447
Investment securities available-for-sale	1,995,258	2,016,864
Investment securities held-to-maturity	218,933	161,877
Accrued interest receivable	28,869	31,974
Mortgage servicing rights	16,373	11,910
Net loans	4,067,803	3,964,683
Total financial assets	7,128,568	6,659,755
Financial liabilities:
Total deposits, excluding time deposits	4,854,927	4,269,631
Time deposits	1,394,403	1,565,558
Securities sold under repurchase agreements	505,785	516,243
Other borrowed funds	32	7
Accrued interest payable	6,502	8,123
Long-term debt	35,104	34,341
Preferred stock pending redemption	50,000
Subordinated debentures held by subsidiary trusts	62,409	102,525
Total financial liabilities	6,909,162	6,496,428
Significant Unobservable Inputs (Level 3) | Estimated Fair Value
Financial assets:
Cash and cash equivalents	0	0
Investment securities available-for-sale	0	0
Investment securities held-to-maturity	0	0
Accrued interest receivable	0	0
Mortgage servicing rights		0
Net loans		100,035
Total financial assets	74,623	100,035
Financial liabilities:
Total deposits, excluding time deposits	0	0
Time deposits	0	0
Securities sold under repurchase agreements	0	0
Other borrowed funds	0	0
Accrued interest payable	0	0
Long-term debt	0	0
Preferred stock pending redemption	0
Subordinated debentures held by subsidiary trusts		0
Total financial liabilities	$ 0	$ 383

XML

Premises and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment
Premises and equipment, gross	$ 303,154	$ 291,191
Less accumulated depreciation	(115,589)	(106,420)
Premises and equipment, net	187,565	184,771
Land
Property, Plant and Equipment
Premises and equipment, gross	38,917	38,743
Buildings and improvements
Property, Plant and Equipment
Premises and equipment, gross	195,549	188,509
Furniture and equipment
Property, Plant and Equipment
Premises and equipment, gross	$ 68,688	$ 63,939

XML

Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation Related Costs [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Profit Sharing Plan. The Company has a noncontributory profit sharing plan. All employees, other than temporary employees, working 20 hours or more per week are eligible to participate in the profit sharing plan. The Company’s Board of Directors authorize contributions to the profit sharing plan that are not to exceed, on an individual basis, the lesser of 100% of compensation or $40 annually. Participants become 100% vested upon the completion of three years of vesting service. The Company accrued contribution expense for this plan of $2,063, $1,480 and $1,197 in 2012, 2011 and 2010, respectively.

Savings Plan. In addition, the Company has a contributory employee savings plan. Eligibility requirements for this plan are the same as those for the profit sharing plan discussed in the preceding paragraph. Employee participation in the plan is at the option of the employee. The Company contributes $1.25 for each $1.00 of employee contributions up to 4% of the participating employee’s compensation. The Company accrued contribution expense for this plan of $4,034, $3,905 and $3,896 in 2012, 2011 and 2010, respectively.

Postretirement Healthcare Plan. The Company sponsors a contributory defined benefit healthcare plan (the “Plan”) for active employees and employees and directors retiring from the Company at the age of at least 55 years and with at least 15 years of continuous service. Retired Plan participants contribute the full cost of benefits based on the average per capita cost of benefit coverage for both active employees and retired Plan participants.

The Plan’s unfunded benefit obligation of $4,432 and $3,948 as of December 31, 2012 and 2011, respectively, is included in accounts payable and accrued expenses in the Company’s consolidated balance sheets. Net periodic benefit costs of $561, $507 and $502 for the years ended December 31, 2012, 2011 and 2010, respectively, are included in employee benefits expense in the Company’s consolidated statements of income.

Weighted average actuarial assumptions used to determine the postretirement benefit obligation at December 31, 2012 and 2011, and the net periodic benefit costs for the year then ended, included a discount rate of 4.3% and a 5.0% annual increase in the per capita cost of covered healthcare benefits. The estimated effect of a one percent increase or a one percent decrease in the assumed healthcare cost trend rate would not significantly impact the service and interest cost components of the net periodic benefit cost or the accumulated postretirement benefit obligation. Future benefit payments are expected to be $165, $175, $163, $149, $181 and $1,221 for 2013, 2014, 2015, 2016, 2017, and 2018 through 2022, respectively.

At December 31, 2012, the Company had accumulated other comprehensive loss related to the Plan of $2,549, or $1,546 net of related income tax benefit, comprised of net actuarial losses of $2,137 and unamortized transition asset of $412. The Company estimates $147 will be amortized from accumulated other comprehensive loss into net period benefit costs in 2013.

XML

Mortgage Servicing Rights - Valuation of Impairment (Details) (Mortgage loans, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Mortgage loans
Valuation Allowance for Impairment of Recognized Servicing Assets
Additional impairment recorded		$ 1,275
Impairment reversals	771		787
Permanent impairment charged against carrying value	$ 553	$ 0	$ 0

XML

Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Schedule of Allowance for Loan Losses by Portfolio Segment

The following table presents a summary of changes in the allowance for loan losses by portfolio segment:

Year ended December 31, 2012	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Provision charged to operating expense	28,651			1,922			10,845			(668		)	—		40,750
Less loans charged-off	(43,506		)	(5,320		)	(11,990		)	(120		)	—		(60,936		)
Add back recoveries of loans previously charged-off	3,241			1,945			2,905			25			—		8,116
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Individually evaluated for impairment	$	8,350		$	—		$	1,919		$	28		$	—	$	10,297
Collectively evaluated for impairment	67,432			7,141			15,166			475			—		90,214
Ending balance	$	75,782		$	7,141		$	17,085		$	503		$	—	$	100,511
Total loans:
Individually evaluated for impairment	$	123,406		$	—		$	12,242		$	537		$	—	$	136,185
Collectively evaluated for impairment	2,660,420			636,794			676,511			113,090			912		4,087,727
Total loans	$	2,783,826		$	636,794		$	688,753		$	113,627		$	912	$	4,223,912

Year ended December 31, 2011	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Provision charged to operating expense	46,844			3,566			7,959			(218		)	—		58,151
Less loans charged-off	(45,764		)	(6,043		)	(19,332		)	(142		)	—		(71,281		)
Add back recoveries of loans previously charged-off	2,135			1,739			1,344			13			—		5,231
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Individually evaluated for impairment	$	28,023		$	—		$	4,664		$	151		$	—	$	32,838
Collectively evaluated for impairment	59,373			8,594			10,661			1,115			—		79,743
Ending balance	$	87,396		$	8,594		$	15,325		$	1,266		$	—	$	112,581
Total loans:
Individually evaluated for impairment	$	210,199		$	—		$	19,638		$	759		$	—	$	230,596
Collectively evaluated for impairment	2,544,495			616,071			673,623			118,951			2,813		3,955,953
Total loans	$	2,754,694		$	616,071		$	693,261		$	119,710		$	2,813	$	4,186,549

Year ended December 31, 2010	Real Estate			Consumer			Commercial			Agriculture			Other		Total
Allowance for loan losses:
Beginning balance	$	76,357		$	6,220		$	18,608		$	1,845		$	—	$	103,030
Provision charged to operating expense	42,163			8,636			16,333			(232		)	—		66,900
Less loans charged-off	(34,718		)	(7,577		)	(10,023		)	(21		)	—		(52,339		)
Add back recoveries of loans previously charged-off	379			2,053			436			21			—		2,889
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Individually evaluated for impairment	$	27,081		$	—		$	14,892		$	253		$	—	$	42,226
Collectively evaluated for impairment	57,100			9,332			10,462			1,360			—		78,254
Ending balance	$	84,181		$	9,332		$	25,354		$	1,613		$	—	$	120,480
Total loans:
Individually evaluated for impairment	$	162,804		$	—		$	35,522		$	976		$	—	$	199,302
Collectively evaluated for impairment	2,709,125			646,580			694,949			115,570			2,383		4,168,607
Total loans	$	2,871,929		$	646,580		$	730,471		$	116,546		$	2,383	$	4,367,909

XML

Capital Stock and Dividend Restrictions

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Capital Stock and Dividend Restrictions

CAPITAL STOCK AND DIVIDEND RESTRICTIONS

The Company has 5,000 shares of 6.75% Series A noncumulative redeemable preferred stock (“Series A Preferred Stock”) issued with an aggregate value of $50,000. The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend and liquidation rights and has no voting rights. Holders of the Series A Preferred Stock are entitled to receive, if and when declared, noncumulative dividends at an annual rate of $675 per share, based on a 360 day year. The Company may redeem all or part of the Series A Preferred Stock at any time after January 10, 2013 at a redemption price of $10,000 per share plus all accrued and unpaid dividends. On December 18, 2012, the Company provided notice to holders of the Series A Preferred Stock of its intention to redeem the Series A Preferred Stock on January 18, 2013. Upon notice to holders of the redemption, the Series A Preferred Stock was reclassified from stockholders' equity to a liability. The aggregate redemption price for the Series A Preferred Stock was $50,150.

On March 5, 2010, the Company’s shareholders approved proposals to recapitalize the Company’s existing common stock. The recapitalization included a redesignation of existing common stock as Class B common stock with five votes per share, convertible into Class A common stock on a share for share basis; a four-for-one stock split of the Class B common stock; an increase in the authorized number of Class B common shares from 20,000,000 to 100,000,000; and, the creation of a new class of common stock designated as Class A common stock, with one vote per share, with 100,000,000 shares authorized.

On March 29, 2010, the Company concluded its initial public offering (“IPO”) of 10,000,000 shares of Class A common stock, and an additional 1,500,000 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase Class A common shares in the offering. The Company received net proceeds of $153,153 from the sale of the shares, after deducting the underwriting discount, commissions and other offering expenses.

The Company had 17,635,369 and 16,443,429 shares of Class A common stock outstanding as of December 31, 2012 and 2011, respectively.

The Company had 25,654,954 and 26,540,745 shares of Class B common stock outstanding as of December 31, 2012 and 2011, respectively.

The payment of dividends by subsidiary banks is subject to various federal and state regulatory limitations. In general, a bank is limited, without the prior consent of its regulators, to paying dividends that do not exceed current year net profits together with retained earnings from the two preceding calendar years. The Company’s debt instruments also include limitations on the payment of dividends.

XML

Condensed Financial Information (Parent Company Only) - Condensed Statements of Income (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions
Salaries and benefits	$ 89,833	$ 83,560	$ 83,373
Interest expense	30,114	42,031	63,107
Earnings before income tax benefit	88,262	66,161	54,446
Income tax benefit	30,038	21,615	17,090
Net income	58,224	44,546	37,356
Parent Company
Condensed Financial Statements, Captions
Dividends from subsidiaries	40,000	30,000	15,400
Other interest income	92	118	105
Other income, primarily management fees from subsidiaries	10,042	10,617	11,336
Total income	50,134	40,735	26,841
Salaries and benefits	13,205	13,975	13,435
Interest expense	6,691	7,273	7,703
Other operating expenses, net	7,150	6,903	6,827
Total expenses	27,046	28,151	27,965
Earnings before income tax benefit	23,088	12,584	(1,124)
Income tax benefit	(6,222)	(6,518)	(6,254)
Income before undistributed earnings of subsidiaries	29,310	19,102	5,130
Undistributed earnings of subsidiaries	28,914	25,444	32,226
Net income	$ 58,224	$ 44,546	$ 37,356