exv99

Exhibit 99

First Interstate BancSystem, Inc. Reports Results for
Fourth Quarter and Full Year 2009

For Immediate Release

Contact:

Terrill R. Moore
Chief Financial Officer
First Interstate BancSystem, Inc.
(406) 255-5304
terrill.moore@fib.com

HIGHLIGHTS:

	•		Net income available to common shareholders of $10.7 million for the quarter and $50.4 million for the year.

	•		Diluted earnings per common share of $1.35 for the quarter and $6.37 for the year.

	•		Provision for loan losses of $13.5 million for the quarter and $45.3 million for the year.

	•		Net charge-offs of $12.2 for the quarter and $29.6 for the year, compared to $9.8 million in fourth quarter 2008 and $12.9 for the year ended December 31, 2008.

	•		Allowance for loan losses of $103.0 million or 2.28% of total loans as of December 31, 2009, compared to $87.3 million or 1.83% of total loans as of December 31, 2008.

	•		Non-performing assets of $163.1 million, or 2.28% of total assets, as of December 31, 2009.

	•		Total deposits of $5.8 billion as of December 31, 2009, an increase of $649.8 million or 12.6%, from December 31, 2008.

	•		Net interest income of $63.6 million for the quarter, an increase of $4.1 million, or 6.8%, compared to fourth quarter 2008.

	•		Net interest income of $243.1 million for year, an increase of $7.8 million, or 3.3%, compared the same period in 2008.

	•		Costs of interest-bearing liabilities of 1.41% for the quarter and 1.63% for the year, a decrease of 75 basis points and 87 basis points from the same periods in 2008.

	•		Net interest margin, on a tax equivalent basis, of 4.05% for the quarter and the year, compared to 4.12% for fourth quarter 2008 and 4.25% for the year ended December 31, 2008.

	•		Book value per common share of $66.91 as of December 31, 2009, an increase of 7.9% from December 31, 2008.

	•		Tangible book value per common share of $42.13 as of December 31, 2009, an increase of 13.6% from December 31, 2008.

	•		Common stock dividends of $0.45 per share for the quarter and $2.00 per share for the year.

RESULTS SUMMARY


	Three Months ended
	December 31,						Change
(Unaudited; $ in thousands, except per share data)	2009			2008			Dollars			Percent
Net income	$	11,521		$	18,052		$	(6,531	)		-36.2	%
Net income available to common stockholders		10,658			17,189			(6,531	)		-38.0	%
Diluted earnings per common share		1.35			2.13			(0.78	)		-36.6	%
Dividends per common share		0.45			0.65			(0.20	)		-30.8	%
Return on average common equity		8.07	%		14.31	%
Return on average assets		0.65	%		1.09	%


	Twelve Months ended
	December 31,						Change
	2009			2008			Dollars			Percent
Net income	$	53,863		$	70,648		$	(16,785	)		-23.8	%
Net income available to common stockholders		50,441			67,301			(16,860	)		-25.1	%
Diluted earnings per common share		6.37			8.38			(2.01	)		-24.0	%
Dividends per common share		2.00			2.60			(0.60	)		-23.1	%
Return on average common equity		9.96	%		14.73	%
Return on average assets		0.79	%		1.12	%

First Interstate BancSystem, Inc., parent holding company of First Interstate Bank, reported fourth quarter 2009 net income available to common stockholders of $10.7 million, or $1.35 per diluted share, as compared to $17.2 million, or $2.13 per diluted share for the fourth quarter of 2008. For the twelve months ended December 31, 2009, the Company reported net income available to common stockholders of $50.4 million, or $6.37 per diluted share, as compared to $67.3 million, or $8.38 per diluted share for the twelve months ended December 31, 2008. Return on average common equity was 8.07% in the fourth quarter of 2009 and 9.96% for the full year 2009, compared to 14.31% in the fourth quarter of 2008 and 14.73% for the full year 2008. Return on average assets was 0.65% for the fourth quarter of 2009 and 0.79% for the full year 2009, compared to 1.09% for the fourth quarter of 2008 and 1.12% for the full year 2008.

The Company’s results for 2008 included a one-time, after tax gain of $17.0 million, or $2.11 per diluted common share, from the sale of the Company’s technology services subsidiary in December. Exclusive of this one-time gain, net income available to common stockholders for the three and twelve month periods ended December 31, 2009, increased $10.4 million and $102,000, respectively, from the same periods in 2008.

“First Interstate BancSystem is proud to report that 2009 marks its 22^nd consecutive profitable year,” said Lyle R. Knight, President and Chief Executive Officer. “2009 was a difficult year for depositories nationwide, but we at First Interstate have been successful in managing through this economic downturn by focusing on our core earnings and disciplined credit underwriting.”

Balance Sheet

Total assets at December 31, 2009 increased by $509 million or by 7.7% to $7.1 billion, compared to the total assets of $6.6 billion at December 31, 2008.

ASSETS


	At December 31,				Change
(Unaudited; $ in thousands)	2009		2008		Dollars			Percent
Cash and cash equivalents	$	623,482	$	314,030	$	309,452			98.5	%
Investment securities		1,446,280		1,072,276		374,004			34.9	%

Loans:
Real Estate		2,963,738		3,100,515		(136,777	)		-4.4	%
Consumer		677,548		669,731		7,817			1.2	%
Commercial		750,647		853,798		(103,151	)		-12.1	%
Agriculture		134,470		145,876		(11,406	)		-7.8	%
Other		1,601		2,893		(1,292	)		-44.7	%

Total loans		4,528,004		4,772,813		(244,809	)		-5.1	%
Less allowance for loan losses		103,030		87,316		15,714			18.0	%

Net loans		4,424,974		4,685,497		(260,523	)		-5.6	%
Other assets		642,917		556,544		86,373			15.5	%

Total assets	$	7,137,653	$	6,628,347	$	509,306			7.7	%

Loan Portfolio

At December 31, 2009, total loans were $4.5 billion, a decrease of $244.8 million, or 5.1%, from total loans of $4.8 billion at December 31, 2008. The most significant decreases occurred in real estate and commercial loans. Real estate loans decreased $136.8 million, or 4.4% from December 31, 2008, due to general decreases in demand for housing, particularly in markets dependent upon resort communities and second home sales and the movement of lower quality loans out of the loan portfolio through charge-off, pay-off or foreclosure. Commercial loans decreased $103.2 million, or 12.1% from December 31, 2008. Management attributes the decrease to low loan demand resulting from the impact of current difficult economic conditions on borrowers in the Company’s market areas.

Investment Securities

Investment securities as of December 31, 2009, increased $374.0 million, or 34.9%, from December 31, 2008. Investment securities represented 20.3% of total assets at December 31, 2009 versus 16.2% at December 31, 2008. Beginning in third quarter 2009, the Company invested its excess liquidity, as represented by higher levels of federal funds sold, into investment securities maturing within thirty-six months. Management expects investment securities to continue to increase in future quarters as excess liquidity continues to be reinvested.

LIABILITIES


	At December 31,				Change
(Unaudited; $ in thousands)	2009		2008		Dollars			Percent
Non-interest bearing deposits	$	1,026,584	$	985,155	$	41,429			4.2	%
Interest bearing deposits		4,797,472		4,189,104		608,368			14.5	%

Total deposits		5,824,056		5,174,259		649,797			12.6	%
Federal funds purchased		—		30,625		(30,625	)		-100.0	%
Securities sold under repurchase agreements		474,141		525,501		(51,360	)		-9.8	%
Other borrowed funds		5,423		79,216		(73,793	)		-93.2	%
Long-term debt		73,353		84,148		(10,795	)		-12.8	%
Subordinated debentures held by subsidiary trusts		123,715		123,715		—			0.0	%
Other liabilities		62,531		71,821		(9,290	)		-12.9	%

Total liabilities	$	6,563,219	$	6,089,285	$	473,934			7.8	%

Deposits

Total deposits increased $649.8 million, or 12.6%, to $5.8 billion as of December 31, 2009 from $5.2 billion as of December 31, 2008. All categories of deposits demonstrated growth during 2009 and there was a shift in the mix of deposits from interest-free deposits to higher costing savings and time deposits. Management attributes this organic deposit growth to ongoing business development in the Company’s market areas and increases in consumer savings. In addition, the Company participates in the Certificate of Deposit Account Registry Service, or CDARS, program, which allows it to provide competitive certificate of deposit products while maintaining FDIC insurance for customers with larger balances.

Securities Sold Under Repurchase Agreements, Other Borrowed Funds and Long-term Debt

Repurchase agreements decreased $51.4 million, or 9.8%, to $474.1 million as of December 31, 2009 from $525.5 million as of December 31, 2008, primarily due to fluctuations in the liquidity needs of customers and the introduction of full FDIC deposit insurance coverage for certain non-interest bearing transaction deposits under the Temporary Liquidity Guarantee, or TLG, Program.

Other borrowed funds decreased $73.8 million, or 93.2%, to $5.4 million as December 31, 2009 from $79.2 million as of December 31, 2008. The decrease was due to the scheduled repayments and maturities of short-term Federal Home Loan Bank borrowings.

Long-term debt decreased $10.8 million, or 12.8%, to $73.4 million as of December 31, 2009 from $84.1 million as of December 31, 2008, primarily as a result of scheduled debt repayments. The Company entered into two amendments to its syndicated credit agreement, each of which became effective in 2009. These amendments modified certain financial performance covenants and waived all covenant defaults existing under the original and amended terms of the agreement. As of December 31, 2009, the Company was in compliance with all existing and amended covenants.

STOCKHOLDERS’ EQUITY


	At December 31,				Change
(Unaudited, $ in thousands, except per share data)	2009		2008		Dollars			Percent
Preferred stockholders’ equity	$	50,000	$	50,000	$	—			0.0	%
Common stockholders’ equity		509,359		480,090		29,269			6.1	%
Accumulated other comprehensive income, net		15,075		8,972		6,103			68.0	%

Total stockholders’ equity		574,434		539,062		35,372			6.6	%
Less goodwill and other intangibles		194,273		196,667		(2,394	)		-1.2	%
Less preferred stock		50,000		50,000		—			0.0	%

Tangible common stockholders’ equity	$	330,161	$	292,395	$	37,766			12.9	%


Number of common shares outstanding		7,837,397		7,887,519		(50,122	)		-0.6	%

Book value per common share	$	66.91	$	62.00	$	4.91			7.9	%
Tangible book value per common share	$	42.13	$	37.07	$	5.06			13.6	%

Total stockholders’ equity and book value per common share as of December 31, 2009, increased $35.4 million and $4.91 per share, respectively, from December 31, 2008, due to the retention of earnings and increases in unrealized gains on available-for-sale investment securities. In addition the Company raised capital through its annual stock offering to employees and directors of the Company. The 2009 annual offering resulted in the issuance of 62,828 shares of common stock with an aggregate value of $3.8 million.

The Company paid aggregate cash dividends of $15.7 million to common shareholders and $3.4 million to preferred shareholders during 2009. In response to the current recession and uncertain market conditions, the Company implemented changes to its capital management practices to conserve capital. During each of the second, third and fourth quarters of 2009, the Company paid quarterly dividends of $0.45 per common share, a decrease of $0.20 per common share from quarterly dividends paid during 2008 and first quarter 2009. In addition, during 2009 the Company limited repurchases of common stock outside of its 401(k) retirement plan. During 2009, the Company repurchased 160,688 shares of common stock with an aggregate value of $11.1 million compared to repurchases of 333,393 shares of common stock with an aggregate value of $27.9 million during 2008. During second quarter 2009, the Company received notification that its application for participation in the TARP Capital Purchase Program was approved; however, the Company elected not to participate in this capital program.

Income Statement

REVENUE


	Three Months ended
	December 31,				Change
(Unaudited; $ in thousands)	2009		2008		Dollars			Percent
Interest income	$	82,678	$	86,814	$	(4,136	)		-4.8	%
Interest expense:		19,094		27,305		(8,211	)		-30.1	%

Net interest income		63,584		59,509		4,075			6.8	%
Provision for loan losses		13,500		20,036		(6,536	)		-32.6	%

Net interest income after provision for loan losses	$	50,084	$	39,473	$	10,611			26.9	%


Non-interest income:
Income from the origination and sale of loans	$	5,246	$	2,827	$	2,419			85.6	%
Other service charges, commissions and fees		7,124		6,874		250			3.6	%
Service charges on deposit accounts		5,038		5,403		(365	)		-6.8	%
Wealth managment revenues		2,894		2,784		110			4.0	%
Investment securities gains, net		11		15		(4	)		-26.7	%
Gain on sale of nonbank subsidiary		—		27,096		(27,096	)		-100.0	%
Technology services revenues		—		4,397		(4,397	)		-100.0	%
Other income		1,897		3,189		(1,292	)		-40.5	%

Total non-interest income	$	22,210	$	52,585	$	(30,375	)		-57.8	%


	Twelve Months ended
	December 31,				Change
	2009		2008		Dollars			Percent
Interest Income	$	328,034	$	355,919	$	(27,885	)		-7.8	%
Interest expense:		84,898		120,542		(35,644	)		-29.6	%

Net interest income		243,136		235,377		7,759			3.3	%
Provision for loan losses		45,300		33,356		11,944			35.8	%

Net interest income after provision for loan losses	$	197,836	$	202,021	$	(4,185	)		-2.1	%


Non-interest income:
Income from the origination and sale of loans	$	30,928	$	12,290	$	18,638			151.7	%
Other service charges, commissions and fees		28,747		28,193		554			2.0	%
Service charges on deposit accounts		20,323		20,712		(389	)		-1.9	%
Wealth managment revenues		10,821		12,352		(1,531	)		-12.4	%
Investment securities gains, net		137		101		36			35.6	%
Gain on sale of nonbank subsidiary		—		27,096		(27,096	)		-100.0	%
Technology services revenues		—		17,699		(17,699	)		-100.0	%
Other income		9,734		10,154		(420	)		-4.1	%

Total non-interest income	$	100,690	$	128,597	$	(27,907	)		-21.7	%

Net Interest Income

Net interest income, on a fully taxable equivalent, or FTE, basis, increased $3.9 million, or 6.4%, to $64.7 million for the three months ended December 31, 2009 compared to $60.8 million for the same period in 2008. Net interest income, on a FTE basis, increased $7.4 million, or 3.1%, to $248.0 million for the twelve months ended December 31, 2009 compared to $240.6 million for the same period in 2008.

Non-interest Income

Non-interest income decreased $30.4 million, or 57.8%, to $22.2 million for the three months ended December 31, 2009, as compared to $52.6 million for the same period in 2008. Non-interest income decreased $27.9 million, or 21.7%, to $100.7 million for the twelve months ended December 31, 2009, as compared to $128.6 million for the same period in 2008. These decreases are primarily due to a $27.1 million gain on the sale of i_Tech Corporation, a technology subsidiary sold on December 31, 2008, and the discontinuance of non-affiliate technology services revenues generated by i-Tech.

Decreases in non-interest income were offset by increases in income from the origination and sale of residential mortgage loans. Income from the origination and sale of residential mortgage loans increased $2.4 million, or 85.6%, to $5.2 million for the three months ended December 31, 2009, as compared to $2.8 million for the same period in 2008. Income from the origination and sale of loans increased $18.6 million, or 151.7%, to $30.9 million for the twelve months ended December 31, 2009, as compared to $12.3 million for the same period in 2008. Low market interest rates increased demand for residential mortgage loans, which the Company generally sells into the secondary market with servicing rights retained. In June 2009 long-term interest rates increased causing a slowdown in application activity associated with fixed rate secondary market loans. If long-term rates remain at their existing levels or increase, income from the origination and sale of loans is expected to decrease in future periods.

NON-INTEREST EXPENSE


	Three Months ended
	December 31,					Change
(Unaudited; $ in thousands)	2009			2008		Dollars			Percent
Non-interest expense:
Salaries, wages and employee benefits	$	27,980		$	28,288	$	(308	)		-1.1	%
Occupancy, net		4,242			4,118		124			3.0	%
Furniture and equipment		3,389			4,779		(1,390	)		-29.1	%
FDIC insurance premiums		2,389			1,099		1,290			117.4	%
Outsourced technology services		2,279			1,130		1,149			101.7	%
Mortgage servicing rights amortization		1,224			1,913		(689	)		-36.0	%
Other real estate owned expense, net of income		318			107		211			197.2	%
Core deposit intangible amortization		531			641		(110	)		-17.2	%
Mortgage servicing rights impairment (recovery)		(255	)		10,045		(10,300	)		-102.5	%
Other expenses		13,055			12,385		670			5.4	%

Total non-interest expense	$	55,152		$	64,505	$	(9,353	)		-14.5	%


	Twelve Months ended
	December 31,					Change
	2009			2008		Dollars			Percent
Non-interest expense:
Salaries, wages and employee benefits	$	113,569		$	114,024	$	(455	)		-0.4	%
Occupancy, net		15,898			16,361		(463	)		-2.8	%
Furniture and equipment		12,405			18,880		(6,475	)		-34.3	%
FDIC insurance premiums		12,130			2,912		9,218			316.6	%
Outsourced technology services		10,567			4,016		6,551			163.1	%
Mortgage servicing rights amortization		7,568			5,918		1,650			27.9	%
Mortgage servicing rights impairment (recovery)		(7,224	)		10,940		(18,164	)		-166.0	%
Other real estate owned expense, net of income		6,397			215		6,182			2875.3	%
Core deposit intangible amortization		2,131			2,503		(372	)		-14.9	%
Other expenses		44,269			46,772		(2,503	)		-5.4	%

Total non-interest expense	$	217,710		$	222,541	$	(4,831	)		-2.2	%

Non-interest expense decreased $9.4 million, or 14.5%, to $55.2 million for the three months ended December 31, 2009, as compared to $64.5 million for the same period in 2008. Non-interest expense decreased $4.8 million, or 2.2%, to $217.7 million for the twelve months ended December 31, 2009, as compared to $222.5 million for the same period in 2008.

FDIC insurance premiums increased $1.3 million for the three months ended December 31, 2009 and $9.2 million for the twelve months ended December 31, 2009 from the same periods in 2008. During 2009, the FDIC increased assessment rates and levied a special assessment applicable to all insured depository institutions. Increases in deposit insurance expense were due to increases in fee assessment rates and the special assessment of $3.1 million. The increases were also partly related to the additional 10 basis point per annum assessment paid on covered transaction accounts exceeding $250,000 under the deposit insurance coverage guarantee program and the full utilization of available credits to offset assessments during the first nine months of 2008. We expect FDIC insurance premiums to remain at these higher levels for the foreseeable future.

Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income. Changes in estimated servicing period and growth in the serviced loan portfolio cause amortization expense to vary between periods. Mortgage servicing rights amortization decreased $689,000, or 36.0%, to $1.2 million for the three months ended December 31, 2009, as compared to $1.9 million for the same period in 2008. Mortgage servicing rights amortization increased $1.7 million, or 27.9%, to $7.6 million for the twelve months ended December 31, 2009, as compared to $5.9 million for the same period in 2008.

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. During a period of declining interest rates, the fair value of mortgage servicing rights is expected to decline due to anticipated prepayments within the portfolio. Alternatively, during a period of rising interest rates, the fair value of mortgage servicing rights is expected to increase because prepayments of the underlying loans would be anticipated to decline. Impairment adjustments are recorded through a valuation allowance. The valuation allowance is adjusted for changes in impairment through a charge to current period earnings. During the three and twelve months ended December 31, 2009, we reversed previously recorded impairment of $255,000 and $7.2 million, respectively, compared to recording additional impairment of $10.0 million and $10.9 million for the same periods in 2008.

Asset Quality

ASSET QUALITY


	At December 31,
(Unaudited; $ in thousands)	2009			2008
Allowance for loan losses — beginning of year	$	87,316		$	52,355
Allowance of acquired banking offices		—			14,463
Charge-offs		(31,978	)		(14,695	)
Recoveries		2,392			1,837
Provision		45,300			33,356

Allowance for loan losses — end of year	$	103,030		$	87,316


Period end loans	$	4,528,004		$	4,772,813
Average loans		4,660,189			4,527,987
Non-performing loans:
Nonaccrual loans		115,030			85,632
Accruing loans past due 90 days or more		4,965			3,828
Restructured loans		4,683			1,462

Total non-performing loans		124,678			90,922
Other real estate owned		38,400			6,025

Total non-performing assets	$	163,078		$	96,947


Net charge-offs to average loans		0.63	%		0.28	%
Allowance for loan losses to period end loans		2.28	%		1.83	%
Allowance for loan losses to total non-performing loans		82.64	%		96.03	%
Non-performing loans to period end loans		2.75	%		1.90	%
Non-performing assets to period end loans and other real estate owned		3.57	%		2.03	%
Non-performing assets to total assets		2.28	%		1.46	%

The Company recorded provision for loan losses of $13.5 million for the fourth quarter of 2009, bringing the year-to-date amount to $45.3 million as compared to provisions of $33.4 million for 2008. The allowance for loan losses as a percent of total loans increased to 2.28% as of December 31, 2009 compared to 1.83% as of December 31, 2008. The increase in the allowance for loan losses as a percentage of total loans was primarily attributable to additional reserves recorded based on the estimated effects of current economic conditions on our loan portfolio and increases in past due, non-performing and internally risk classified loans.

Nonperforming assets were 3.57% of total loans and other real estate owned as of December 31, 2009 compared to 2.03% as of December 31, 2008. Total non-performing assets increased $66.1 million, or 68.2%, to $163.1 million as of December 31, 2009, from $96.9 million as of December 31, 2008. This increase in non-performing assets is attributable to general declines in markets dependent upon resort communities and second home sales and declines in real estate prices. In addition, increasing unemployment has negatively impacted the credit performance of commercial and real estate related loans. This market turmoil has led to increased levels of delinquency, a lack of consumer confidence, increased market volatility and a widespread reduction of general business activities in our market areas. The continuing impact of the current difficult economic conditions and rising unemployment levels in the Company’s market areas is expected to further increase non-performing loans in future quarters.

Net loan charge-offs increased to 0.63% of average loans during 2009 compared to 0.28% during 2008. Additionally, during 2009, losses of $6 million were recorded for other real estate owned, $4 million of which related to a decline in the market value of one residential real estate development property.

Following is a summary of the Company’s credit quality trends since the start of 2008.

CREDIT QUALITY TRENDS


					Allowance		Loans
	Provision for		Net		for		30 - 89 Days		Non-Performing		Non-Performing
(Unaudited; $ in thousands)	Loan Losses		Charge-offs		Loan Losses		Past Due		Loans		Assets
Q1 2008	$	2,363	$	766	$	68,415	$	55,532	$	58,047	$	58,921
Q2 2008		5,321		1,086		72,650		81,571		92,403		95,108
Q3 2008		5,636		1,192		77,094		58,085		89,800		92,971
Q4 2008		20,036		9,814		87,316		92,180		90,922		96,947
Q1 2009		9,600		4,693		92,223		98,980		103,653		122,300
Q2 2009		11,700		5,528		98,395		88,632		135,484		167,273
Q3 2009		10,500		7,147		101,748		91,956		125,083		156,958
Q4 2009		13,500		12,218		103,030		63,878		124,678		163,078

Capital

CAPITAL RATIOS


	At December 31,
(Unaudited)	2009			2008
Tangible common equity to tangible assets		4.79	%		4.58	%
Tier 1 common capital to total risk weighted assets		6.43	%		5.35	%
Leverage ratio		7.30	%		7.13	%
Tier 1 risk-based capital		9.74	%		8.57	%
Total risk-based capital		11.68	%		10.49	%

The Company exceeds “well capitalized” requirements under all regulatory capital guidelines.

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 earnings release contains the following non-GAAP financial measures that the Company believes are meaningful measures of capital adequacy: tangible stockholders’ equity, tangible book value per common share and tangible common equity to tangible assets. Tangible stockholders’ equity is calculated as total stockholders’ equity less preferred stock, goodwill and other intangible assets (excluding mortgage servicing rights). Tangible assets are total assets less goodwill and other intangible assets (excluding mortgage servicing assets). Tangible book value per common share is calculated as tangible stockholders’ equity divided by common shares outstanding. Tangible common equity to tangible assets is calculated as tangible stockholders’ equity divided by tangible assets.

A table showing the reconciliation from ending stockholders’ equity (GAAP) to ending tangible common stockholders’ equity (non-GAAP) is included under the caption “Stockholders’ Equity” herein. The following table reconciles ending assets (GAAP) to ending tangible assets (non-GAAP).


	At December 31,
(Unaudited; $ in thousands)	2009			2008
Total assets	$	7,137,653		$	6,628,347
Less goodwill and other intangibles		(194,273	)		(196,667	)
Less preferred stock		(50,000	)		(50,000	)

Tangible assets	$	6,893,380		$	6,381,680

Tangible common stockholders’ equity	$	330,161		$	292,395

Tangible common stockholders’ equity to tangible assets		4.79	%		4.58	%

Subsequent Events

On January 15, 2010, the Company filed a registration statement with the Securities and Exchange Commission for a proposed public offering of shares of Class A common stock.

Consolidated Balance Sheets


	At December 31,
(Unaudited, $ in thousands)	2009		2008
Assets
Cash and due from banks	$	213,029	$	205,070
Federal funds sold		11,474		107,502
Interest bearing deposits in banks		398,979		1,458

Total cash and cash equivalents		623,482		314,030

Investment securities:
Available-for-sale		1,316,429		961,914
Held-to-maturity (estimated fair values of $130,855 and $109,809 at December 31, 2009 and 2008, respectively)		129,851		110,362

Total investment securities		1,446,280		1,072,276

Loans		4,528,004		4,772,813
Less allowance for loan losses		103,030		87,316

Net loans		4,424,974		4,685,497

Premises and equipment, net		196,307		177,799
Goodwill		183,673		183,673
Company owned life insurance		71,374		69,515
Other real estate owned		38,400		6,025
Accrued interest receivable		37,123		38,694
Mortgage servicing rights, net of accumulated amortization and impairment reserve		17,325		11,002
Core deposit intangibles, net of accumulated amortization		10,551		12,682
Net deferred tax asset		—		7,401
Other assets		88,164		49,753

Total assets	$	7,137,653	$	6,628,347


Liabilities and Stockholders’ Equity
Deposits:
Non-interest bearing	$	1,026,584	$	985,155
Interest bearing		4,797,472		4,189,104

Total deposits		5,824,056		5,174,259

Federal funds purchased		—		30,625
Securities sold under repurchase agreements		474,141		525,501
Accounts payable and accrued expenses		44,946		51,290
Accrued interest payable		17,585		20,531
Other borrowed funds		5,423		79,216
Long-term debt		73,353		84,148
Subordinated debentures held by subsidiary trusts		123,715		123,715

Total liabilities		6,563,219		6,089,285

Stockholders’ equity:
Nonvoting noncumulative preferred stock without par value; authorized 100,000 shares; issued and outstanding 5,000 shares as of December 31, 2009 and December 31, 2008		50,000		50,000
Common stock without par value; authorized 20,000,000 shares; issued and outstanding 7,837,397 shares and 7,887,519 shares as of December 31, 2009 and 2008, respectively		112,135		117,613
Retained earnings		397,224		362,477
Accumulated other comprehensive income, net		15,075		8,972

Total stockholders’ equity		574,434		539,062

Total liabilities and stockholders’ equity	$	7,137,653	$	6,628,347

Consolidated Statements of Income


	Three Months ended					Twelve Months ended
	December 31,					December 31,
(Unaudited, $ in thousands, except per share data)	2009			2008		2009			2008
Interest income:
Interest and fees on loans	$	69,877		$	74,591	$	279,985		$	305,152
Interest and dividends on investment securities:
Taxable		11,327			10,650		41,978			43,583
Exempt from federal taxes		1,213			1,445		5,298			5,913
Interest on deposits in banks		228			12		520			191
Interest on federal funds sold		33			116		253			1,080

Total interest income		82,678			86,814		328,034			355,919

Interest expense:
Interest on deposits		16,587			22,518		73,226			96,863
Interest on federal funds purchased		—			63		20			1,389
Interest on securities sold under repurchase agreements		179			841		776			7,694
Interest on other borrowed funds		2			646		1,347			1,741
Interest on long-term debt		850			1,142		3,249			4,578
Interest on subordinated debentures held by subsidiary trusts		1,476			2,095		6,280			8,277

Total interest expense		19,094			27,305		84,898			120,542

Net interest income		63,584			59,509		243,136			235,377
Provision for loan losses		13,500			20,036		45,300			33,356

Net interest income after provision for loan losses		50,084			39,473		197,836			202,021

Non-interest income:
Income from the origination and sale of loans		5,246			2,827		30,928			12,290
Other service charges, commissions and fees		7,124			6,874		28,747			28,193
Service charges on deposit accounts		5,038			5,403		20,323			20,712
Wealth managment revenues		2,894			2,784		10,821			12,352
Investment securities gains, net		11			15		137			101
Gain on sale of nonbank subsidiary		—			27,096		—			27,096
Technology services revenues		—			4,397		—			17,699
Other income		1,897			3,189		9,734			10,154

Total non-interest income		22,210			52,585		100,690			128,597

Non-interest expense:
Salaries, wages and employee benefits		27,980			28,288		113,569			114,024
Occupancy, net		4,242			4,118		15,898			16,361
Furniture and equipment		3,389			4,779		12,405			18,880
FDIC insurance premiums		2,389			1,099		12,130			2,912
Outsourced technology services		2,279			1,130		10,567			4,016
Mortgage servicing rights amortization		1,224			1,913		7,568			5,918
Mortgage servicing rights impairment (recovery)		(255	)		10,045		(7,224	)		10,940
Other real estate owned expense, net of income		318			107		6,397			215
Core deposit intangibles amortization		531			641		2,131			2,503
Other expenses		13,055			12,385		44,269			46,772

Total non-interest expense		55,152			64,505		217,710			222,541

Income before income tax expense		17,142			27,553		80,816			108,077
Income tax expense		5,621			9,501		26,953			37,429

Net income		11,521			18,052		53,863			70,648
Preferred stock dividends		863			863		3,422			3,347

Net income available to common shareholders	$	10,658		$	17,189	$	50,441		$	67,301

Basic earnings per common share	$	1.36		$	2.17	$	6.44		$	8.55
Diluted earnings per common share	$	1.35		$	2.13	$	6.37		$	8.38

Average Balance Sheets
(Unaudited, $ in thousands)


	For the three months ended December 31,
	2009								2008
	Average					Average			Average					Average
	Balance		Interest			Rate			Balance		Interest			Rate

Interest earning assets:
Loans (1)(2)	$	4,561,237	$	70,325			6.12	%	$	4,734,767	$	75,060			6.29	%
Investment securities (2)		1,374,162		13,240			3.82			1,050,101		12,930			4.89
Interest bearing deposits in banks		357,974		229			0.25			1,447		12			3.29
Federal funds sold		42,866		33			0.31			75,850		116			0.61

Total interest earnings assets		6,336,239		83,827			5.25			5,862,165		88,118			5.96
Non-earning assets		698,022								688,155

Total assets	$	7,034,261							$	6,550,320

Interest bearing liabilities:
Demand deposits		1,103,095		755			0.27	%		1,046,587		2,101			0.80	%
Savings deposits		1,400,337		2,387			0.68			1,213,862		3,870			1.26
Time deposits		2,222,716		13,445			2.40			1,882,777		16,547			3.49
Repurchase agreements		459,029		179			0.15			545,983		841			0.61
Borrowings (3)		5,889		2			0.13			110,909		709			2.54
Long-term debt		76,139		850			4.43			83,715		1,142			5.41
Subordinated debentures held by by subsidiary trusts		123,715		1,476			4.74			123,327		2,095			6.72

Total interest bearing liabilities		5,390,920		19,094			1.41			5,007,160		27,305			2.16
Non-interest bearing deposits		1,004,191								957,623
Other non-interest bearing liabilities		65,172								58,850
Stockholders’ equity		573,978								526,687

Total liabilities and stockholders’ equity	$	7,034,261							$	6,550,320

Net FTE interest income			$	64,733							$	60,813
Less FTE adjustments (2)				(1,149	)							(1,304	)

Net interest income from consolidated statements of income			$	63,584							$	59,509

Interest rate spread							3.84	%							3.80	%

Net FTE interest margin (4)							4.05	%							4.12	%


(1)		Average loan balances include nonaccrual 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 the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by average interest earning assets for the period.

Average Balance Sheets (Continued)
(Unaudited, $ in thousands)


	For the twelve months ended December 31,
	2009								2008
	Average					Average			Average					Average
	Balance		Interest			Rate			Balance		Interest			Rate

Interest earning assets:
Loans (1)(2)	$	4,660,189	$	281,799			6.05	%	$	4,527,987	$	306,976			6.78	%
Investment securities		1,152,561		50,335			4.37			1,076,744		52,932			4.92
Interest bearing deposits in banks		199,316		520			0.26			5,946		191			3.21
Federal funds sold		105,423		253			0.24			55,205		1,080			1.96

Total interest earnings assets		6,117,489		332,907			5.44			5,665,882		361,179			6.37
Non-earning assets		687,110								667,206

Total assets	$	6,804,599							$	6,333,088

Interest bearing liabilities:
Demand deposits		1,083,054		4,068			0.38	%		1,120,807		12,966			1.16	%
Savings deposits		1,321,625		10,033			0.76			1,144,553		18,454			1.61
Time deposits		2,129,313		59,125			2.78			1,688,859		65,443			3.87
Repurcahse agreements		422,713		776			0.18			537,267		7,694			1.43
Borrowings (3)		56,817		1,367			2.41			126,690		3,129			2.47
Long-term debt		79,812		3,249			4.07			86,909		4,579			5.27
Subordinated debentures held by by subsidiary trusts		123,715		6,280			5.08			123,327		8,277			6.71

Total interest bearing liabilities		5,217,049		84,898			1.63			4,828,412		120,542			2.50
Non-interest bearing deposits		965,226								940,968
Other non-interest bearing liabilities		67,061								58,173
Stockholders’ equity		555,263								505,535

Total liabilities and stockholders’ equity	$	6,804,599							$	6,333,088

Net FTE interest income			$	248,009							$	240,637
Less FTE adjustments (2)				(4,873	)							(5,260	)

Net interest income from consolidated statements of income			$	243,136							$	235,377

Interest rate spread							3.81	%							3.87	%

Net FTE interest margin (4)							4.05	%							4.25	%


(1)		Average loan balances include nonaccrual 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 the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by average interest earning assets for the period.

About First Interstate BancSystem, Inc.

First Interstate Inc. is a financial and bank holding company incorporated in 1971 and headquartered in Billings, Montana. The Company operates 72 banking offices in 42 communities in Montana, Wyoming and western South Dakota. Through the First Interstate Bank, the Company delivers a comprehensive range of banking products and services to individuals, businesses, municipalities and other entities throughout our market areas.

Cautionary Statement

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are covered by the safe harbor provisions of such sections. These statements include statements about our plans, strategies and prospects and involve known and unknown risks that are difficult to predict. Therefore, our actual results, performance or achievements may differ materially from those expressed in or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. 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 news release:

	•		credit losses;

	•		concentrations of real estate loans;

	•		economic and market developments, including inflation;

	•		commercial loan risk;

	•		adequacy of our allowance for loan losses;

	•		impairment of goodwill;

	•		changes in interest rates;

	•		access to low-cost funding sources;

	•		increases in deposit insurance premiums;

	•		inability to grow our business;

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

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

	•		changes in or noncompliance with governmental regulations;

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

	•		dependence on our management team;

	•		ability to attract and retain qualified employees;

	•		failure of technology;

	•		disruption of vital infrastructure and other business interruptions;

	•		illiquidity in the credit markets;

	•		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;

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

	•		litigation pertaining to fiduciary responsibilities;

	•		capital required to support our bank subsidiary;

	•		soundness of other financial institutions;

	•		impact of Basel II capital standards;

	•		inability of our bank subsidiary to pay dividends;

	•		change in dividend policy;

	•		lack of public market for our common stock;

	•		voting control;

	•		dilution as a result of future equity issuances;

	•		anti-takeover provisions; and

	•		subordination of common stock to company debt.

A more detailed discussion of each of the foregoing risks is included in our periodic and current reports filed with the Securities and Exchange Commission and will be contained in our Annual Report on Form 10-K for the year ended December 31, 2009. These factors and the other risk factors described in our periodic and current reports filed with the Securities and Exchange Commission from time to time, however, are not necessarily all of the important 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. Investors and others are encouraged to read the more detailed discussion of our risks contained in our most recently filed Forms 10-K and 10-Q, which discussion in incorporated herein by reference.

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.

First Interstate BancSystem, Inc.
P.O. Box 30918 Billings, Montana 59116 (406) 255-5390
www.firstinterstatebank.com