Good day, welcome to the First Interstate BancSystem and Great Western Bancorp joint forces event. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to Lisa Slyter-Br ay. Please go ahead, ma'am. Thanks, Rocco. Good morning. Thank you for joining us to discuss the proposed merger of First Interstate BancSystem and Great Western Bancorp announced today. Before we begin, I would like to direct all listeners to the cautionary note regarding forward-looking statements included on the second page of the investor presentation, as well as the similarly cautioned notes in our most recent Form 10-K and subsequent Form 10-Q filed with the SEC. These notes describe relevant factors that could cause actual results to differ materially from those expressed by any forward-looking statements that are included in this presentation and in our SEC filings, which speak only as of the date they were made. We do not intend to update any of the forward-looking statements. Investors are urged to read these cautionary statements in their entirety before making any decisions about an investment in our company. As discussed on page three of the investor presentation and in the press release, we will file with the SEC a registration statement that will include a joint proxy statement/prospectus of First Interstate BancSystem and Great Western Bancorp concerning the proposed merger that will be mailed to the shareholders of both companies. Before making any voting or investment decisions, investors and shareholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the proposed merger as well as any other relevant documents filed with the SEC and any amendments or supplements to those documents in their entirety when they become available, because they will contain important information. At this time, I'll turn the call over to Kevin Riley, Chief Executive Officer of First Interstate BancSystem. Kevin? Thanks, Lisa. Good morning, and thanks again to all of you for joining us on our call today. With me here today are Marcy Mutch, our Chief Financial Officer, and Mark Borrecco, President and Chief Executive Officer of Great Western Bancorp. Along with this morning's press release, we have published an investor presentation that has some additional disclosures that we believe will be helpful. The presentation can be accessed on our investor web page, and if you have not downloaded a copy yet, I would encourage you to do so. The presentation provides a great deal of information on the strategic merits of the merger and the meaningful value created with the combination of these two like-minded companies. We would like to use most of today to take your questions on the deal. Before we open it up, I'm just going to spend a few minutes providing an overview of the transaction. Mark is going to provide a few of his thoughts from the Great Western's perspective, and Marcy will walk us through the financial details. Over the last several years, we have effectively utilized M&A to expand the First Interstate franchise into new, faster-growing markets, increased our diversification, and realized the benefits of increased scale, all of which have strengthened our franchise and increased our earnings power. We've executed well on the integration of these transactions, meeting or exceeding the expected synergies we projected for each respective deal. Importantly, we've prudently managed our growth. As the size of our franchise has increased, we've maintained the core values that have served us as a foundation. It starts with a firm commitment to development of our employees, a strong credit culture, a commitment to superior client service and relationship banking, and a deep involvement and support for our local communities. This foundation has enabled us to generate consistently strong financial results while maintaining excellent asset quality at an attractive and low cost deposit base. We pride ourselves on being a forward-thinking institution, particularly in terms of how we invest to support our future growth. The investments we have made in personnel, technology, and improving our process over the past few years have been designed to build an infrastructure that can support a much larger financial institution. With the announcement of our merger with Great Western Bancorp, which will make First Interstate one of the largest regional banks headquartered in the Northwest United States with approximately $32 billion in total assets, we'll be able to effectively leverage the infrastructure we have built, improve the growth profile of the company, and increase the level of returns that we can generate for our shareholders. With the addition of Great Western, we will significantly increase the geography diversification of our franchise and enter states to the east and south of our current footprint, most notably Colorado, Arizona, Nebraska, and Iowa, while considerably increasing our presence in South Dakota. These are attractive markets that will present good growth opportunities long into the future. Cities like Omaha, Des Moines, and Sioux Falls are growing nicely and are very similar to our existing Boise, Idaho, Spokane, Washington markets, where we've had great deal of success over the past few years. In addition, Colorado, Arizona are experienced strong and considerable room for market share gains in the years to come. Overall, the Great Western footprint represents larger, faster-growing markets with higher medium household income, which we believe will create good opportunity for expansion of our retail offerings, in addition to the growth of our wealth management business. Great Western manages a little more than $2.8 billion in assets in its own wealth management business. With our strong trust platform and a broader offering of products and services, including our robo wealth management feature, we believe that we can effectively attract clients in these markets. As an institution, Great Western provides a talented group of bankers, a well-diversified loan portfolio, a low-cost deposit base, and a history of strong financial performance. They made good progress recently to de-risk their loan portfolio, which has more recently impacted their growth. I will let Mark speak to that in a few moments. Great Western has a relationship-based model focused on servicing small and mid-size businesses, retail depositors, and wealth management clients. We believe the alignment in our business models will lead to a smooth integration. On the credit side, I have known the Chief Credit Officer, Steve Yost, for over 30 years. He has worked for us prior to joining Great Western last year. As you may recall, Steve took First Interstate through its own de-risking process several years ago. Knowing Steve has helped us with our due diligence on the loan portfolio. As the current credit administration policies and underwriting criteria are very similar to ours, we hope that Steve will remain with the company and continue the great work he has done to improve the credit quality of the Great Western portfolio. In terms of the financial impact on the company, even using what we believe are conservative assumptions around pre-provision net revenue and credit, we expect the transaction to be 20% accretive to earnings per share and accretive to both tangible book value per share and our tangible common equity to tangible asset ratio. As you can see on slide 23 of the investor deck, the assumptions we have used for our modeling include the following. Pre-provision net revenue on a standalone basis for Great Western that is 15% lower than the current consensus estimate for 2023. 21% cost savings from Great Western's consensus expense base in no net growth in the loan portfolio for the next couple of years, as we effectively manage rated credits out of the bank. Over the long term, we fully expect these markets to support the same mid-to-high single-digit loan growth we are targeting each year for our current First Interstate footprint. Even with the near-term de-risking efforts, we are still anticipating annual loan growth for the combined company in the range of 3%-4%. One particular opportunity for growth is indirect lending, which has been a high-performing portfolio for us. Great Western currently does not offer indirect lending in any of its markets. With the expanded footprint, there are approximately 1,800 additional dealers across Great Western's nine states that we could target for our network. I should mention, for those of you less familiar with First Interstate, you should know that we do not focus on subprime indirect lending. While we didn't model additional revenue synergies, as you can see on slide 14, we believe there are plenty of opportunities to generate additional loan and fee income growth in the areas such as consumer wealth management, mortgage banking, and commercial and consumer credit cards, where Great Western has a relatively low penetration rate with its existing clients. As you can see on slide 18, even without modeling revenue synergies, we expect the pro forma earnings power of the combined institution will move First Interstate into the upper tier of profitability in its peer group, with projected ROA of approximately 1.2% and ROTCE of approximately 16% in 2023. This merger also helps us achieve an efficiency ratio below our previous stated 55% target. With this higher level of profitability, our capacity to continue increasing our quarterly dividend and positively impacting the total returns that we generate for our shareholders. Following the closing of the merger, Mark Borrecco will join First Interstate as our Chief Banking Officer and will work closely with Russ Lee over the next year to allow for a smooth transition. Now I'd like to turn the call over to Mark and welcome him. Mark, it's all yours. Appreciate it, Kevin, and good morning, everyone. Let me start by saying how excited we are to be joining a best-in-class organization like First Interstate, which I believe will result in tremendous benefits for our employees, our customers, our communities, and ultimately, our shareholders. After I became CEO of Great Western last year, we began an initiative to de-risk the company's balance sheet and improve our infrastructure and competitive positioning. This was going to be a multi-year process in which growth would be potentially challenged as we exited certain higher-risk loans and expense levels would be elevated as we made the investments required to modernize our technology platform. A few months ago, Kevin and I began a conversation about the possibilities for our two organizations. Quickly coming to the realization that the cultural and community banking alignment was significant. Through our continued conversations and the due diligence process, it became clear that combining with First Interstate would accelerate our internal efforts by two to four years and would immediately put the Great Western franchise in an offensive position, allowing us to focus on our core banking strengths and our clients. After much consideration, we concluded that it made strategic sense to partner with First Interstate. While we will continue our work to de-risk the loan portfolio, we are in a much stronger position to do so in the combined organization. You've heard me describe the bountiful growth opportunities Great Western currently has across our footprint. This merger will allow us to accelerate those efforts. The markets that we operate in provide some attractive growth opportunities, as Kevin mentioned. During the second quarter, our overall loan production was 50% higher than the prior quarter, with markets like Colorado Springs and Tucson being very strong contributors. While more mature markets like South Dakota and Central Iowa also saw nice growth. We've added some good banking talent recently, and combined with positive economic activity and demographic trends, there are many markets where we see robust growth opportunities in the future. In addition to the markets that Kevin mentioned earlier, I would also add Denver, Fort Collins, Fargo, Lincoln, Eastern Iowa, and Kansas City as markets where we believe there'll be pockets of strength in our footprint going forward. Certainly, with the additional infrastructure, products, and resources that First Interstate provides, we believe our business development capabilities will be positively impacted. I'd be remiss not to mention our people. Like First Interstate, our employees are our first priority. As a combined company, we have almost no overlap, allowing us to have minimal impact to our valued employee base. First Interstate is an ideal merger partner, and we couldn't be more excited to begin working together to leverage our collective strengths and capitalize on the opportunities we will have to continue growing this franchise into the future. With that, Kevin, I'll turn it back to you. Thanks, Mark. We're excited about welcoming Great Western's team to First Interstate. Now I'll turn the call over to Marcy for a little bit more of the financial detail. Marcy? Thanks, Kevin. I'll touch on just a few of the key details, and then we'll be happy to provide any additional information during the Q&A session at the end of the call. As Kevin indicated, we're projecting cost savings of 21% of Great Western's consensus expense base, which, as you can see on slide 23, compares favorably to recently announced transactions. Since, as Mark mentioned, there isn't much overlap of our branch footprint, the cost savings is coming through centralizing processes, back office functions, in addition to leveraging our overall risk and technology infrastructure. We expect the transaction to close in the first quarter of 2022, and we anticipate conversion taking place in mid-May. As a result, we've assumed 50% of the cost savings will be realized in 2022 with the full run rate captured in 2023. Upon fully realizing the cost savings, we believe the combined organization will be able to maintain an efficiency ratio sustainably below our stated 55% target. Following the closing, there will be some minimal consolidation of branches, which will drive a small portion of the cost savings. Similar to our current practice and our existing footprint, we will continue to evaluate opportunities to optimize our physical branch network. As you see on slide 23, we've taken a conservative view on the pre-provision net revenue run rate for purposes of evaluating this transaction. Even though we expect the Great Western markets to generate the same mid to high single digit organic loan growth as our existing footprint, we've modeled PPNR 15% lower than Street expectations for Great Western. This is driven primarily by our modeled assumption for zero net loan growth of the acquired portfolio related to de-risking the balance sheet. We believe this growth assumption may prove conservative, and I think Mark agrees that we expect to do better than this. I do. It allows ample room to effectively manage the purchased credit deteriorated loan pool. Importantly, as Kevin mentioned earlier, we still expect the combined company's loan portfolio to grow around 3%-4% annually through this near-term de-risking period. In addition, we've also modeled a conservative investment security strategy that closely aligns with our own. Finally, the pro forma expense base assumptions fully capture the revenue generating investment spend that was already underway at Great Western, which we will continue to support going forward. Moving on to the credit assumptions. As you can see in the detail on slides 21 and 22, our internal credit review team conducted extensive due diligence on the Great Western portfolio. We reviewed 54% of total loan commitments, including 87% of commitments exceeding $5 million, 100% of all criticized loans, and $1.7 billion of pass-rated credits. As a result, we've assumed a gross credit loan mark of $318 million, or 3.75% on the Great Western loan portfolio. Approximately 75% of the credit mark, or $238 million, has been allocated to the roughly $1.2 billion in purchased credit deteriorated loans, which represents a 20% mark on these loans. The remaining 25% of the mark, or approximately $80 million, is attributable to the non-PCD loans, and we've assumed the same $80 million will be booked on day two for CECL reserves. Importantly, these assumptions are fully considered into the accretion to tangible book value per share and the pro forma capital ratios we've communicated for the deal, as you'll see on slide 27. One nuance worth pointing out is that Great Western currently carries a roughly $23 million credit related fair value adjustment on the $525 million in loan balances for which they've elected fair value treatment. This $23 million mark is incremental to the $318 million we just discussed. Getting into the specifics, as you can see on slide 22, the ag/ dairy, and hospitality books make up nearly 40% of the PCD balances. We feel confident that we've appropriately identified and put a fence around the risks in each of these books. For ag/dairy, after reviewing over 90% of the outstanding commitments, 51% of the total exposure in that sector was identified as PCD, and those balances have been assigned a 23% reserve allocation. For hospitality, after reviewing over 80% of the outstanding commitments, 26% of those balances have been identified as PCD and have been assigned a 17% reserve allocation. Lastly, we estimate the total merger related cost will be around $140 million pre-tax, which includes a charitable contribution of over $20 million to the First Interstate Foundation. As you've heard us discuss many times, giving back to our communities is a part of the legacy ingrained in our company since it was founded by Homer and Mildred Scott 53 years ago. This contribution honors the philanthropic values first set forth by the Scott family and will enable the foundation to have a significant impact to the local communities across the larger footprints. With that, I'll turn the call back to Kevin. Thank you, Marcy. Nice job. I just wanted to provide a few final thoughts. We view this opportunity as a continuation of the transformation of our franchise from a community bank operating in three states into a regional community bank that now will serve a dynamic and diversified 14-state footprint. In 2016, we successfully moved west into Oregon, Washington, Idaho with the acquisition of the Bank of the Cascades. Over the next two years, we successfully completed three more acquisitions to deepen our penetration into that region, including two at the same time in 2019. The move into these markets increased the growth profile of the company while providing increased diversification and scale. This partnership with Great Western accomplishes the same. With the addition of Great Western, we are further increasing our diversification and leveraging the infrastructure we have built while adding opportunity in high growth markets. This has been possible because of the strength of our franchise, which has been proven throughout the duration of the pandemic. Our asset quality has been exceptional, our capital and liquidity extremely strong. The company is performing very well, leaving us in a position of strength to move forward with the vision we had for the company when we made the infrastructure investments to support a much larger institution. Those investments are part of what is allowing us to execute on this significant transaction. This transaction also represents the natural evolution and growth of our company that will sunset the A/B share class structure. While the super voting structure will no longer exist, the Scott family will continue to serve on the board of the company, supporting the legacy that was initially put in place 53 years ago. In addition, we would welcome five new directors from Great Western's Board, all three resulting in a 16-person Board. M&A activity has picked up significantly this year as banks look for opportunities to grow earnings in a challenging environment. As promised, we remain patient and stuck to the same discipline criteria we have always had for transactions and are thrilled to have found a like-minded partner in Great Western. We are highly experienced in M&A, and we have delivered for our shareholders in past deals. This one will be no different. This is a highly accretive transaction with no dilution to tangible book value, low execution risk, and one that improves the overall growth profile of the company. We expect the combination with Great Western will position First Interstate to deliver consistently strong results for our shareholders long into the future. With those comments, I will open the call up for questions. Thank you. Operator? Yes, sir. If you'd like to ask a question, please press star then one on your touch tone phone. If you're using a speaker phone, we ask you, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Jeff Rulis with D.A. Davidson. Please go ahead. Thanks. Good morning. Good morning, Jeff. Good morning, Jeff. Kevin, I wanted to circle back on your earlier comments at the beginning regarding Steve Yost. How critical is his involvement or given his credit understanding at each franchise, in this transaction? Just kind of wanted to further follow up on that. Seems like a critical figure. Well, first of all, we have a great credit officer that we had hired after Steve left us in the lurch. Steve's a good friend of mine. Okay. He came over from Key to help us with First Interstate for a period of time, redoing our credit structure. He moved over to Great Western, which he had an opportunity to help them, which was good for Steve. Mike Lugli, our current Chief Credit Officer, will stay on, and Steve will join that team. I think with the two of them, we'll have a strong credit team to ensure that we do the right things going forward. Okay. What is the pro forma hospitality exposure? Not just the purchased credit deteriorated or kind of the trouble, but just the total portfolio on a combined basis. The second part of that question would be any further sort of planned hotel loan sales that you foresee at this point. I'm going to have Mike answer that question. You have to turn the speaker on. Yeah. Go ahead, Mike. Yeah. Picking up on the hospitality exposure. Our exposure is around $525, and Great Western's exposure was. Over $800. $800. About $1.3 billion in hospitality exposure. I would say that I have not had an opportunity to talk to Steve about loan sales. If they're appropriate, we would certainly look at that. I would hope that we could avoid doing that and just work through the portfolio. One of the bigger problems with Great Western's asset quality is really just larger loans. 28 loans make up over 40% of their criticized book. It's these larger loans that have really hurt them quite a bit because they have made significant progress in improving their asset quality. That's masked somewhat because they've reduced their portfolio by about $1.6 billion. You have those larger loans in the portfolio. The hospitality portfolio will be a significant concentration, but I think it's a concentration we can work through. Look forward to working with Steve and the rest of the team at Great Western to do so. Yeah. I'd remind you that there's a 17% mark against those loans in their book. It gives us plenty of room to work through and economically solve any issues that might come up. As you call, we were heavy in hospitality when Steve arrived at First Interstate, Steve did a really good job in structuring our hospitality portfolio to weather the storm. As you look at our hospitality, 80% are more than flagged hotels, less than a 50% loan of value. Steve helped us transition our hospitality portfolio to what I believe is a very strong portfolio. I believe the team will continue doing that going forward. Got it. Last one just on a related front. Great Western clearly was targeting further credit pruning and given your assumption of zero growth from that platform, I guess through 2023. I guess the question is the reserve at sort of the combined company. Do you envision First Interstate had moved to sort of a neutral provisioning expense? I think we had assumed that Great Western continued rundown of that reserve. Any kind of commentary about how you see the treatment of the reserve going forward in terms of the consolidated balance and potentially what you may see on the provisioning front given your 3%-4% loan growth expectation? Well, I think you had to break the reserve down into two pieces, PCD and non-PCD. I will tell you that I think in the non-PCD, the reserve is kind of where we want to be. When you look at the PCD, we're going to be looking at that reserve and utilizing it when we need to make sure we keep that portfolio safe. Our goal is to resolve the credit issues with regards to that $1.2 billion better than what we have reserved against it. Time will tell as we work through that portfolio how much of that $200 and some million that we can recapture. The other ones look like we're in a pretty good shape as non-PCD balances. Okay. Thank you. Our next question today comes from Matthew Clark at Piper Sandler. Please go ahead. Hi. Good morning. Morning, Matt. Good morning, Matt. First question, just around the PCD loans, the $1.2 billion, and the runoff expectations there. I guess, what is your sense for the timing of that runoff? Does that $40 million haircut to NII, does that assume that kind of $1.2 billion goes to zero, or is there some portion of that portfolio do you expect to be cured? I'll answer the first part about $1.2 billion. We don't plan on getting rid of all that $1.2 billion. Some of those loans just need to be reworked a little bit. We'll exit some loans out of the bank. We'll restructure some loans to make them better. I don't want anybody to assume that we're going to run out $1.2 billion of those loans. We will take the most economic way to resolve those credit issues with regards to that group of loans. John, you want to talk about the other piece or Marcy on what the impact to- Yeah. about three-fourths of that $40 million is related to the de-risking of that balance sheet. Okay. What's your sense for timing in terms of working through the $1.2 billion? I would say, hopefully, we can resolve most of this thing in a couple of years. Okay. Yeah. This is Mike Lugli. I would point out, Great Western continues to de-risk that book. Yeah. The $1.2 billion is a result of very conservative due diligence approach that we took. As you'll note, on June 30th, Great Western had about $965 million in criticized. We increased that by $214 million, moving from watched up into criticized. Then within their criticized book, another $524 million was moved within grade. That's just us being very conservative. To Kevin's and Marcy's point, a lot of that portfolio, once we have time to spend with the credit officers in the lines of business, is probably fine and very similar to our criticized book and would return back to a performing status and loans that we would like to have. There is a portion, and that's what we've allocated to resolve some of the larger loans to clean that portfolio up. Great. Just switching gears to the ag portfolio that GWB has. I think it's going to equate to about 8% of your loans on a pro forma basis. How do you plan to manage that exposure and the related underwriting over time? I assume it will come down to some degree with some portion of that portfolio being in the PCD book. It may come down a little bit, but in general, outside of the ag dairy book, we feel like the ag exposure gives us good geographic and commodity diversification. We feel pretty good about the rest of that book. Frankly, ag lending is one of our core competencies. We also feel good about the ability of our combined teams to manage through the rest of that portfolio. Yeah, this is Mark. I think just reflecting back on Kevin's earlier comments as it relates to the underwriting criteria and the credit policies, we have implemented those as early as June of last year. When I think about the diversification, as we all know how ag works, ag in and of itself has diversification in the different commodities. As we think about our footprint and the combined footprint, we think about the core competency that First Interstate has and that Great Western has in that space. I'm actually excited about the opportunities that we have as it relates to ag, knowing that we do want to make sure we keep a little bit of a better eye on the concentration of that portfolio. Recognizing that we still have a lot of opportunity in other segments of ag to be successful moving forward. I really want to understand. We have to support our footprint. In some of our markets, you know our footprint is that you take Miles City, the old thing. It's an ag market. If you're not doing ag lending, then you just shut the branch and go home because that's an ag market. Wall, South Dakota, the same way. There's other markets that will have to do hospitality. If you're in Deadwood and you're operating a bank in Deadwood, you're doing hospitality. If you're not doing hospitality, you should shut the branch and go home because that's all you have in Deadwood, South Dakota. I think the thing is that we, in our lending practices, will do great underwriting and lend money, but we have to lend to the markets and the communities in which we serve. We don't, as you heard in the past, we don't say we're just going to grow one type of portfolio. What we do is we need to meet the needs of our communities by doing good lending. Understood. Kevin, just maybe on the M&A front, should we assume that you'll be on the sidelines for a while until you get this deal fully integrated? Is that the expectation? I think that would be the expectation. I don't think I'm doing two deals within the next couple of months. No, your expectation probably will be because we got to make this one really come to fruition with the estimates that we've given you and probably actually exceed those estimates. That'll allow us then the right to move into something better. Okay. Just last one from me. You both have a lot of excess liquidity. I guess, what are your plans on a combined basis to redeploy that? Is there any kind of sea change there, or is it just over time, ideally move into new loans? We'll probably use the same conservative investment strategy with the excess liquidity that we have that we've done at First Interstate. We have a lot of excess liquidity, but it's not a bad thing, and we'll be prudent how we put it out there. We're just not going to do something foolish to put this company at risk. Great. Thanks. Our next question today comes from Jared Shaw at Wells Fargo. Please go ahead. Hey, good morning. This is actually Timur Braziler filling in for Jared. Hi, Timur. Hey, guys. Maybe just circling back on the de-risking strategy. Is that primarily going to be on the existing loan book, or is that going to pertain to future origination and kind of lending strategy of the combined franchise as well? I'll let Mark talk about it in a second, but the way I see it, we went in there. There was a period of time that they did some lending they probably shouldn't have been doing, run by the chief banking officer and the senior credit person there, both of which Great Western removed. I would tell you, the majority of the way they do lending at Great Western is very similar to what we do in the risk profile that they do. As Mike said, they got into a couple large loans, and they tried to You guys push hard for organic loan growth. Some banks do things they shouldn't be doing, and this is an example of a bank who forced organic loan growth that they probably shouldn't have, and they got themselves in trouble. I will let Mark take it from here. Thanks, Kevin. In terms of the de-risking activities, in my mind, the key components of any de-risking start with your credit policies and your underwriting criteria. Those changes have been made now, as I mentioned, for over 15 months. From an ongoing or from a continuing origination standpoint, I feel very good about where we are. I feel very good about the types of loans that we're originating and the fact that those loans are commensurate or aligned with a similar credit philosophy here at First Interstate. At the same time, I'm also excited about this combination allowing Great Western to unlock or free up its franchise to go back to its core banking activities. When you have some of the asset quality challenges that we faced over the last 18 months, clearly that has an impact. It has an impact on what you spend your time on each day. It has an impact on banker mentality. For me, the exciting part is that while we still have to de-risk some of the existing loans, the fact is for originations and for our bankers being freed up to go back to business, to go back to originating loans in the really attractive growth markets that we have, I get very excited about that. Yeah. Part of that is in getting these people back out there is we have a special asset group, which right now is probably being underutilized with our current franchise because our asset quality is so good. We have a lot of bandwidth that really help with some of that work that needs to be done at Great Western. They have a special asset group. We have a special asset group. I think the combined team will be able to take this stuff off the plates of the lenders in the field, allow them, as Mark said, get back to work and taking care of our clients. Okay. Lastly, on the loan book, what percentage of the C&I and the CRE portfolio are ag related as well? Well, they're looking for, what's your next question as they look for that information? Just, Kevin, at the end of your prepared remarks, you mentioned that the combined franchise is going to be a faster-growing one than legacy First Interstate. I guess, how are you thinking about loan growth once some of the kind of net zero rolls off? What's the type of growth rate that this new franchise is going to be able to generate? I think we'll be comfortable with mid to upper single digit loan growth on a continuous basis as we do that for the whole combined company. Timur, let us get back with you with those percentages. Okay. That combined book. Okay. Just last question. Okay. I say we're hoping for higher than that because quite frankly, if you look at some of the market statistics of the markets we're going in, they actually perform better than some of the current markets we're in. We're hoping that we can light a fire in those markets and really exceed those expectations also. Okay, great. Just lastly for me, looking at the expense save expectations, that 21%, is that inclusive of the savings that'll come out of the 40% NII reduction, or is there incremental variable costs associated with some of the planned runoff? No, that's exclusive. Okay. Thank you. You bet. Thank you. Our next question today comes from Andrew Terrell with Stephens. Please go ahead. Hey, good morning. Good morning, Andrew. Hey, maybe just sticking on the cost saves. If I think back to the past few deals and even some of those that moved you into newer markets, cost saves were a lot higher than the 21% in this transaction. Can you maybe just talk to what's different in this deal that might keep that cost save number in the low 20s, and then maybe just any kind of further color you can provide on what's driving the cost savings? Yeah. Well, first ly, you got to look at Great Western's efficiency ratio. They have a pretty low cost base already established. What we do is, as you know, that percentage, what you see, this is how it's always created, as we always have done in past acquisitions. We do a zero-based budgeting. We staff with what we believe is going to be the necessary staff adds that we have to add to our franchise. We look at what our technology spend is going to be, what our facilities spend is going to be, with some additional expense that we have to put in technology in order to improve some of their hardware out in the locations to bring them up. We do the zero-based budget, and then we just compare that expense budget that we believe we need to run this institution and compare that to the consensus. The percentage just falls out. What we wanted to do is make sure we're budgeting appropriately for the expenses needed to run the company. We believe it's conservative, and we put everything in there we possibly can. The percentage that falls out. We believe the run rate of their expenses are going to be about $205 million. That's what we're going to need. We have to bolster some of our departments and everything in order to take care of a larger institution. We have to do all that stuff. The fact of the matter is, that's how we come to that 21%. It's not like we just picked that number. I hold people accountable because the only way you're going to make these integrations successful is that each department puts their own budget together. When we put these banks together, I can refer back to what they said they needed or what they were going to do to see if they actually did a good job or a bad job in their specific area with regards to the integration of this acquisition. Andrew, we even get down as far as understanding what our 2% pre-tax contribution is going to be on the combined basis. All of that, like Kevin said, is from the bottom up, what we expect to have with all the infrastructure spend and everything that we might need to do on the technology side. Yeah. The benefit changes from what benefits they offer their employees to our benefits. We restructured a whole expense run rate. Okay. Got it. That's very helpful. Maybe just on the due diligence of the Great Western portfolio, how long did you guys spend performing due diligence? I see on slide 21 how many people were involved and what was reviewed, just curious the timeline of the due diligence phase. We'll have Michael run through that. On the credit portfolio, approximately a little over 4.5 weeks was spent going through the book, which gave us ample time. It allowed us to increase the scope. That's how we got dairy up to 91%. As we were looking and we saw things that we questioned, we dived deeper into certain portfolios to get a better understanding of those portfolios. About 4.5 weeks, we did have more people than we typically would have. The good news is their policies and procedures are very similar to ours. They identified risk well. We were very comfortable with that. They actually have exceptional data on their criticized and classified books, and in fact, on their whole portfolio, which was very helpful. The person they had us connect with was exceptionally helpful. Barry was really instrumental to putting that together and allowing us to move through very efficiently, as well as their files were kept in very good order. Kudos to them. Okay, thanks. Maybe just last one from me. Are you going to be rebranding the Great Western franchise to the First Interstate brand in all the states or will it be split across the footprint? I'm thinking back to the Wells Fargo transaction back in, I think it was 1996. I think you got the license to use the First Interstate brand in quite a few states, but I don't think Arizona or Iowa was ever brought up in there. No. Subsequent to that, we actually purchased the First Interstate brand from Wells Fargo. We own outright the First Interstate brand now. We can go anywhere in the United States or the world because we own that franchise name. For the near term, we'll just start in the 14 states. Yeah, we'll start in the 14 states. They will all become First Interstate branches. Okay, perfect. Thank you for taking my questions. Our next question today comes from Janet Lee at JP Morgan. Please go ahead. Hello. Just had some clarifying questions on loan growth. Going back to your earlier comment about the combined company achieving 3%-4% growth in the near term during the de-risking period. Can you remind me again the duration of the de-risking period that you define? I understand that de-risking was still an ongoing process at Great Western, but on the July earnings call, it sounded like you guys were being ready to shift more often. I'm wondering whether the de-risking period should extend to something like 2023. Hi, Janet. This is Mark Borrecco. I'll just comment first and then we can turn it over to Mike or Kevin or others. In our July earnings call, yes, we did in terms of saying that we had identified the loans that we knew still had some challenges associated with them, and that we would be working as a team over a period of time to then work through those credits, whether that's a combination of exiting the credits or restructuring or enhancing the credits to allow them to get back to performing. The offensive comment that was made or that I made was in relationship to trying to get our bankers back to business, but at the same time recognizing we still had some challenging loans, specifically when it came to our dairy loans, and some of the other large credits that Mike mentioned. In terms of this combination, I would say that two years is really the time period that we're looking at. That's a reasonable timeframe. As Kevin mentioned, we do not want to be hasty. We do not want to make rash decisions as it relates to these credits. We want to be thoughtful about how we most economically exit and/or rehab these credits to be more valuable to the franchise. That time period will be two years. I don't know, Kevin. Yeah. That's probably the end of the timeline because they're going to start right now. We're just being conservative in the way we're modeling this thing. We feel that we'll get our arm probably around a fast track, but if you follow me in the past, we don't like to overpromise and underperform. We like to underpromise and overperform. We're taking a very conservative approach to this. Our job is to exceed that and make it look a lot better. Again, we don't think that that $238 million or something that we stacked against at one point, we're just going to foolishly use that. Our job is to use as little of that $238 million as possible and return that money back to our shareholders. Right. Makes sense. Just following up on that, I think you guys said you're assuming zero loan growth for the acquired Great Western portfolio in getting to that 3%-4%. What would you have expected for loan growth for standalone First Interstate without the deal in 2022? Yeah, we normally look at somewhere between mid to upper single digits of loan growth. Okay. My last question. Can you provide any details around what you may have identified as potential investments that you would make to the combined franchise or the Great Western franchise? Would this be included in any of the $140 merger expenses? I know that Great Western was making some small banking initiatives. Just wondering what kind of potential investments you would be considering. Yeah, that's a great question. Our technology stack is pretty strong, and they have a couple things I think we'll adopt from their technology stack. I think the biggest thing that we have in our expense run rate is we need to, I think, upgrade some of their hardware in their branches and everything and bring them up to speed to where we're at. That's baked into the expense run rate. That's a capitalized expense. That's depreciated. That would not be in a merger-related expense. A merger-related expense, we have the contribution to the foundation. The rest of that in the merger-related expense is pretty much the standard stuff. You got legal costs, investment bankers costs. You have buying out of IT contracts, early cancellation of contracts. Mainly what's in that is the standard stuff, except for the $20 million or so that we're putting into the First Interstate Foundation. Great. Thank you. The last question today comes from Tim Coffey at Janney. Please go ahead. Great. Thanks. Morning, Kevin. Morning, Tim. Hey, can you talk a little about the quality and depth of Great Western's technology relative to your own? Well, one of the things, the reason why it's a great partnership is that, Mark kind of spoke about it in his notes, is that as we have spoken about First Interstate for a long period of time, the company suffered a little bit of deferred maintenance with regards to their technology stack. They had, like we did over the last four years or so, improved our technology stack. They had that pretty much staring them in the face where they had to make some investments. They do have some good systems. If you look at slide 14, it kind of talks about it. It's interesting. They just went out with a small business digital application. We just went out with a small business digital application. They went out with one, we went out with one. We'll have to decide where we go with regards to that. They have a loan pricing tool called PrecisionLender that we have looked at in the past, and we hadn't gone there. That will help us a little bit. We'll probably take that and utilize PrecisionLender going forward. They also have a mortgage loan origination system that we were thinking about that we had to swap out ours to get up, and we'll probably take theirs. The rest of the technology stack will be that of First Interstate because one of the reasons why this deal makes sense is because we have invested in the infrastructure over time. We can just take that infrastructure and just leverage it into Great Western to move their kind of deferred maintenance work from up to two to four years to now. They'll get it done immediately. They won't have to worry about upgrading their technology because they'll get our technology stack. This is Mark. Just to add to that. One of the biggest elements of technology is the implementation, the time and attention, and the execution risk that goes with it. One of the big benefits that I see from this is not only just having that technology, but policies and procedures, reporting, all of those pieces are in place. It's much easier to plug into something like that than it is to build something from scratch. The nice part of this discussion has been, as Kevin mentioned, it's not just all First Interstate. There's elements of the Great Western platform that we're going to leverage. That combination becomes exponentially more powerful, not just in terms of how we use the technology, but also the fact that we can plug in and we save that time, the attention, the resources, and the execution risk that helps us accelerate that two to four-year timeframe. Yeah. Great. Thanks for that, Mark. My last question is, Kevin, First Interstate's always been a strong dividend payer. Are you planning to make any changes to your targeted payout ratio with this deal? No, not at all. We're just hoping this deal will allow us in that payout percentage to continue to increase our quarterly dividend as we move forward. Okay. All right. Thank you very much. Ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to the management team for any final remarks. Thank you everybody for joining us on our call today. Again, as always, we look forward to answering your questions. If you have any in the future, just give us a call, and we'll take care of that. Thank you for joining us on the call today, and look forward to seeing you in the future. Thanks. Thank you. Ladies and gentlemen, this concludes today's call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.