Part I [Business](index=5&type=section&id=Item%201.%20Business) First Interstate BancSystem, Inc. is a community-focused financial and bank holding company that significantly expanded its operations and asset base through the Great Western Bancorp acquisition [Our Company](index=5&type=section&id=Our%20Company) First Interstate, a financial holding company, expanded its community banking operations through organic growth and the strategic acquisition of Great Western Bancorp, Inc - On **February 1, 2022**, the company acquired Great Western Bancorp, Inc. ("Great Western"), adding **174 banking offices** in **eight new states** and expanding its presence in South Dakota[21](index=21&type=chunk) Financial Snapshot as of December 31, 2021 | Metric | Value (Billions) | | :--- | :--- | | Consolidated Assets | $19.7 | | Deposits | $16.3 | | Loans Held for Investment | $9.3 | | Total Stockholders' Equity | $2.0 | - The company's business model is focused on **four key pillars**: Our People, Our Priority; Relentless Client Focus; Future Ready, Today; and Financial Vitality[23](index=23&type=chunk)[25](index=25&type=chunk) [Community Banking](index=6&type=section&id=Community%20Banking) The company operates a single community banking segment, offering comprehensive commercial, consumer, mortgage, and wealth management services with centralized operational oversight - The company has **one operating segment**: community banking, encompassing commercial and consumer banking, mortgage services, and wealth management[26](index=26&type=chunk) - Lending is guided by company-wide credit policies establishing minimum underwriting standards, including limitations on credit concentrations and requirements for collateral and repayment sources[27](index=27&type=chunk)[28](index=28&type=chunk) - Key operational activities like marketing, credit review, loan servicing, and compliance are **centralized** to ensure consistent service and regulatory adherence[33](index=33&type=chunk) [Market Area and Competition](index=8&type=section&id=Market%20Area%20and%20Competition) The company holds significant deposit market share in key states and faces intense competition from diverse financial service providers Deposit Market Share and Branch Locations by State (as of June 30, 2021) | State | % of Market Deposits | Deposit Market Share Rank | Number of Branches (as of Dec 31, 2021) | | :--- | :--- | :--- | :--- | | Idaho | 4.3% | 8 | 23 | | Montana | 17.5% | 2 | 44 | | Oregon | 2.3% | 11 | 33 | | South Dakota | 0.2% | 12 | 14 | | Washington | 0.4% | 31 | 18 | | Wyoming | 14.5% | 1 | 15 | | **Total** | | | **147** | - The company competes with a **diverse group of financial service providers**, including commercial banks, savings and loan associations, credit unions, fintech companies, and internet banks[36](index=36&type=chunk) [Government Regulation and Supervision](index=8&type=section&id=Government%20Regulation%20and%20Supervision) The company is extensively regulated by federal and state authorities, covering capital, dividends, consumer protection, and anti-money laundering, with specific rules for its asset size - The company is a financial holding company subject to regulation and examination by the **Federal Reserve**, with its subsidiary bank also regulated by the Montana Division of Banking and Financial Institutions and the **CFPB**[42](index=42&type=chunk)[43](index=43&type=chunk) - The company is subject to **Basel III capital requirements**, including a minimum common equity Tier 1 ratio of **4.5%**, Tier 1 capital ratio of **6.0%**, total capital ratio of **8.0%**, and a Tier 1 leverage ratio of **4.0%**[57](index=57&type=chunk) - Dividend payments from the subsidiary bank, a primary source of funds for the holding company, are restricted by federal and state regulations, generally limited to net profits of the current and preceding two years without prior regulatory consent[52](index=52&type=chunk) - Due to its asset size exceeding **$10 billion**, the company is subject to the **Durbin Amendment**, which caps debit card interchange fees[79](index=79&type=chunk) [Human Capital](index=15&type=section&id=Human%20Capital) The company prioritizes its 2,358 employees, focusing on DEI, competitive compensation, community involvement, and professional development Employee Demographics (as of Dec 31, 2021) | Metric | Value | | :--- | :--- | | Full-Time Equivalent Employees | 2,358 | | Female Workforce | 70.7% | | Male Workforce | 29.3% | | Average Tenure | 8.0 years | - The company donates **2% of its net income before tax** for charitable purposes and encourages employee volunteerism, including a company-wide Volunteer Day[103](index=103&type=chunk)[104](index=104&type=chunk) - A **Diversity, Equity, and Inclusion (DEI) Committee** was formed to integrate DEI principles into all business practices[113](index=113&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including regulatory, credit, liquidity, market, operational (cybersecurity, third-party reliance), and strategic challenges, alongside stock volatility and pandemic impacts - The company's loan portfolio is concentrated in commercial real estate and commercial business loans, constituting **59.1% of the total loan portfolio** as of December 31, 2021, making them sensitive to adverse market conditions[128](index=128&type=chunk) - The company faces significant operational risk from **cybersecurity threats**, including hacking and identity theft, and relies on **third-party vendors** for key business infrastructure components like data processing[157](index=157&type=chunk)[165](index=165&type=chunk) - Strategic risks include potential difficulties in integrating the recently acquired Great Western, which could be more costly or time-consuming than expected, delaying anticipated benefits and cost savings[179](index=179&type=chunk) - The transition away from **LIBOR** presents a market risk, with the company ceasing new USD LIBOR origination as of **December 31, 2021**, and preparing legacy contracts for transition before the **June 30, 2023** cessation date[152](index=152&type=chunk)[153](index=153&type=chunk) - The ongoing **COVID-19 pandemic** continues to pose a general risk, with potential impacts on client demand, credit quality, and operational expenses due to economic disruptions and health measures[197](index=197&type=chunk)[199](index=199&type=chunk) [Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - None[208](index=208&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) The company's main offices are in Billings, Montana, and it operates 147 banking locations, mostly owned, which are deemed adequate - The company's main offices are in Billings, Montana, where it leases approximately **100,060 square feet** and owns a **50% interest** in the building's ownership LLC[211](index=211&type=chunk) - As of year-end 2021, the company operated from **147 locations** across six states, with **111 properties owned** and **36 leased** from third parties[211](index=211&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management expecting no material adverse impact on financial condition or operations - Management does not anticipate that ongoing or anticipated legal matters will have a **material adverse effect** on the company's business, financial condition, or operating results[213](index=213&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[214](index=214&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) FIBK Class A common stock trades on NASDAQ, pays a quarterly dividend, and its five-year performance lagged key market indices - The Board approved a quarterly cash dividend of **$0.41 per share** of common stock[219](index=219&type=chunk) - During Q4 2021, the company repurchased **133 shares** at an average price of **$42.71**, with **1,889,158 shares** remaining available for repurchase as of December 31, 2021[223](index=223&type=chunk) Cumulative Total Shareholder Return (2016-2021) | Index | 12/31/16 | 12/31/21 | % Change | | :--- | :--- | :--- | :--- | | First Interstate BancSystem, Inc. | $100.00 | $114.31 | +14.3% | | NASDAQ Composite | $100.00 | $304.85 | +204.9% | | KBW NASDAQ Bank Index | $100.00 | $164.80 | +64.8% | [Reserved](index=36&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income increased in 2021 due to a credit loss provision reversal, while net interest income and non-interest income declined, and expenses rose due to acquisition costs [Executive Overview and Recent Trends](index=36&type=section&id=Executive%20Overview%20and%20Recent%20Trends) The company concluded its Great Western merger in early 2022, significantly expanding its asset base and branch network, while monitoring ongoing economic uncertainties - The merger with Great Western was completed on **February 1, 2022**, with stockholders receiving **0.8425 shares** of FIBK Class A common stock per share, totaling approximately **46.9 million shares** valued at about **$1.7 billion**[237](index=237&type=chunk) - Management continues to monitor the impact of **COVID-19**, noting economic recovery alongside challenges from inflation and supply chain disruptions, with branches functioning at normal hours[239](index=239&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) Key accounting estimates include the Allowance for Credit Losses, Goodwill, and Fair Value of Acquired Loans, all requiring significant judgment and economic forecasting - The **Allowance for Credit Losses** is a critical estimate based on historical experience, current conditions, and a one-year economic forecast, where changes in assumptions could materially impact the allowance[254](index=254&type=chunk)[255](index=255&type=chunk) - **Goodwill** totaled **$621.6 million** as of December 31, 2021, representing **31.3% of total stockholders' equity**, with no impairment indicated by the annual test on July 1, 2021[163](index=163&type=chunk)[259](index=259&type=chunk) - Loans acquired in business combinations are recorded at **fair value**, with an allowance for credit losses established at the acquisition date based on expected credit losses[262](index=262&type=chunk)[263](index=263&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Net income increased in 2021 due to a credit loss provision reversal, despite declines in net interest income and non-interest income, and a rise in expenses Key Performance Ratios | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Return on average assets | 1.02% | 1.00% | | Return on average common stockholders' equity | 9.73% | 8.12% | | Efficiency ratio | 61.94% | 57.61% | Net Interest Income and Margin Analysis | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Interest Income (FTE) | $490.4M | $499.0M | | Net Interest Margin (FTE) | 2.86% | 3.47% | | Interest Rate Spread | 2.81% | 3.38% | - The company recorded a **reversal of provision for credit losses of $14.6 million** in 2021, contrasting with a **$56.9 million provision** in 2020, attributed to an improved economic outlook post-CECL adoption and COVID-19 impact[278](index=278&type=chunk) - Non-interest income decreased by **$6.2 million (4.0%)**, primarily due to a **$6.5 million (13.7%) decline** in mortgage banking revenues from lower origination volumes compared to 2020[280](index=280&type=chunk)[282](index=282&type=chunk) - Non-interest expense increased by **$18.0 million (4.6%)**, driven by **$11.6 million** in acquisition-related expenses for the GWB merger and a **$1.0 million** legal settlement[288](index=288&type=chunk) [Financial Condition](index=45&type=section&id=Financial%20Condition) Total assets and deposits grew significantly in 2021, funding investment securities expansion, while the loan portfolio decreased due to PPP forgiveness and asset quality improved Loan Portfolio Composition (in millions) | Loan Category | Dec 31, 2021 | Dec 31, 2020 | % Change | | :--- | :--- | :--- | :--- | | Real estate | $6,731.4 | $6,399.5 | +5.2% | | Consumer | $931.7 | $1,025.9 | -9.2% | | Commercial | $1,475.5 | $2,153.9 | -31.5% | | Agricultural | $203.9 | $247.6 | -17.6% | | **Total Loans Held for Investment** | **$9,344.0** | **$9,828.5** | **-4.9%** | - The decrease in commercial loans was primarily due to the forgiveness of **Paycheck Protection Program (PPP) loans**, with outstanding PPP loans at **$100.0 million** at year-end 2021, down from **$739.8 million** at year-end 2020[309](index=309&type=chunk) Non-Performing Assets (in millions) | Metric | Dec 31, 2021 | Dec 31, 2020 | % Change | | :--- | :--- | :--- | :--- | | Non-performing loans | $27.7 | $48.0 | -42.3% | | OREO | $2.0 | $2.5 | -20.0% | | **Total non-performing assets** | **$29.7** | **$50.5** | **-41.2%** | | NPA to loans and OREO | 0.32% | 0.51% | -37.3% | - Total deposits increased by **$2.05 billion (14.4%)**, driven by growth in non-interest-bearing demand deposits (**+$934.8 million**) and interest-bearing demand/savings deposits, while time deposits decreased[356](index=356&type=chunk) - Investment securities increased by **$2.45 billion (60.3%) to $6.51 billion**, funded by strong deposit growth, with **$646.7 million** of securities transferred from available-for-sale to held-to-maturity during Q2 2021[340](index=340&type=chunk)[343](index=343&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with models indicating an asset-sensitive position where net interest income benefits from rising rates - The company's primary market risk exposure is **interest rate risk**, which affects net interest income[388](index=388&type=chunk)[393](index=393&type=chunk) Net Interest Income Sensitivity Analysis (as of Dec 31, 2021) | Interest Rate Scenario | Estimated % Change in NII (12 months) | | :--- | :--- | | Immediate +100 bps Shock | +7.68% | | Gradual +200 bps Ramp (over 4 quarters) | +7.07% | - The company's interest rate sensitivity gap analysis shows a cumulative one-year **positive gap of $3,464.1 million**, representing **19.25% of total interest-earning assets**, indicating an **asset-sensitive position**[396](index=396&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2019-2021, including balance sheets, income statements, and cash flows, along with the independent auditor's report [Report of Independent Registered Public Accounting Firm](index=66&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) RSM US LLP issued unqualified opinions on the financial statements and internal controls, identifying the Allowance for Credit Losses as a Critical Audit Matter - The auditor, **RSM US LLP**, issued an **unqualified opinion** on both the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[435](index=435&type=chunk)[436](index=436&type=chunk) - The **Critical Audit Matter** identified was the 'Allowance for Credit Losses - Loans Held for Investment,' specifically adjustments to historical loss information for current and forecasted economic scenarios, involving highly subjective and sensitive management estimates[441](index=441&type=chunk)[442](index=442&type=chunk) [Consolidated Financial Statements](index=68&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show asset and deposit growth, increased net income, and cash flow dynamics driven by operating, investing, and financing activities Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $2,344.8 | $2,276.8 | | Total investment securities | $6,508.1 | $4,060.3 | | Net loans held for investment | $9,209.4 | $9,663.2 | | Goodwill | $621.6 | $621.6 | | **Total Assets** | **$19,671.9** | **$17,648.7** | | **Liabilities & Equity** | | | | Total deposits | $16,269.6 | $14,217.0 | | Total liabilities | $17,685.3 | $15,688.9 | | Total stockholders' equity | $1,986.6 | $1,959.8 | | **Total Liabilities & Equity** | **$19,671.9** | **$17,648.7** | Consolidated Statement of Income Highlights (in millions) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net interest income | $488.2 | $497.0 | $495.0 | | (Reversal of) provision for credit losses | $(14.6) | $56.9 | $13.9 | | Total non-interest income | $150.5 | $156.7 | $142.6 | | Total non-interest expense | $405.5 | $387.5 | $388.6 | | **Net income** | **$192.1** | **$161.2** | **$181.0** | | Diluted earnings per common share | $3.11 | $2.53 | $2.83 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=61&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no disagreements with its accountants regarding accounting principles, practices, or financial disclosure - There have been **no disagreements** with accountants on accounting and financial disclosure[405](index=405&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of December 31, 2021[408](index=408&type=chunk) - Management's assessment concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021[411](index=411&type=chunk) - The independent registered public accounting firm, **RSM US LLP**, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[412](index=412&type=chunk) [Other Information](index=64&type=section&id=Item%209B.%20Other%20Information) The company reported no unreported Form 8-K items during the fourth quarter of 2021 - No items that should have been reported on a Form 8-K during Q4 2021 were unreported[420](index=420&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=64&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[420](index=420&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - This information is incorporated by reference from the **2022 Proxy Statement**[423](index=423&type=chunk) [Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2022 Proxy Statement - This information is incorporated by reference from the **2022 Proxy Statement**[426](index=426&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan details are incorporated by reference from the 2022 Proxy Statement - This information is incorporated by reference from the **2022 Proxy Statement**[427](index=427&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Equity compensation plans approved by shareholders | 23,252 | 880,798 | [Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2022 Proxy Statement - This information is incorporated by reference from the **2022 Proxy Statement**[429](index=429&type=chunk) [Principal Accountant Fees and Services](index=64&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2022 Proxy Statement - This information is incorporated by reference from the **2022 Proxy Statement**[431](index=431&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section includes audited consolidated financial statements, the independent auditor's report, and a comprehensive list of all exhibits filed with the Form 10-K - This section contains the **audited consolidated financial statements** and the list of exhibits filed with the report[433](index=433&type=chunk) [Form 10-K Summary](index=134&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[810](index=810&type=chunk)

Investor Presentation Filed by First Interstate BancSystem, Inc. pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Great Western Bancorp, Inc. Commission File No. 001-36688 Date: January 27, 2022 January 2022 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation 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 ...

Financial Data and Key Metrics Changes - The company reported net income of $51.2 million or $0.83 per diluted share, which is $0.03 higher than the operating earnings per share in the prior quarter [8] - Net interest income decreased by $5.1 million primarily due to a $4.5 million decrease in PPP loan income, with net interest margin declining 22 basis points to 2.69% [20] - Non-interest income decreased by $2.3 million quarter-over-quarter to $37.4 million, primarily due to lower mortgage banking revenues [21] - Total non-interest expense declined by $900,000, excluding acquisition-related expenses [22] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $291 million from the end of the prior quarter, including a net decline in PPP loans of approximately $190 million [23] - Deposits increased by $262 million from the end of the prior quarter, with most growth in interest-bearing demand deposits [24] - Non-performing assets declined by 16% in the quarter, and criticized loans declined by 14% [24] Market Data and Key Metrics Changes - The company experienced strong deposit inflows and new loan production, particularly in the Mountain Division, with Montana leading all markets [9] - The company noted that supply chain disruptions and labor shortages are causing delays in projects and investments [9] Company Strategy and Development Direction - The company is focused on executing a smooth integration with Great Western Bancorp, with the merger expected to be completed on or about February 1 [13] - The company aims to maintain a strong culture while expanding its footprint to over $32 billion in assets across 14 states [32] - The company announced significant changes in consumer overdraft practices, including the elimination of NSF fees, to better serve the underbanked [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth but remains cautious, projecting mid-single digit loan growth excluding PPP [27] - The company expects net interest margin to be relatively flat in the first quarter, with the first quarter anticipated to be the low point of the year [27] - Management highlighted the importance of balancing growth with risk management, particularly in light of potential rising interest rates [11] Other Important Information - The company plans to realize cost synergies from the merger shortly after the system conversion scheduled for May 20 [14] - The company anticipates a reduction of around $5 million in NSF and overdraft fees in 2022 due to changes in practices [18] Q&A Session Summary Question: Loan growth outlook compared to peers - Management acknowledged the optimism but emphasized a conservative approach to projecting loan growth, citing the need to avoid overestimating [38] Question: Update on payoff activity and expectations - Management indicated that the current payoffs might subside as the market becomes less aggressive in booking low-rate deals [45] Question: Guidance on deposit growth - Management expects relatively flat deposit growth year-over-year, influenced by the absence of PPP loan impacts and seasonal trends [54] Question: Dividend strategy and potential buybacks - Management indicated that buybacks are unlikely at current levels, but dividends may increase if the merger integration is successful [59]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q3 2021 financial statements reflect asset growth to $19.4 billion, driven by deposits and investments, and a significant increase in nine-month net income due to credit loss provision reversal [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$19,372.2** | **$17,648.7** | | Total Cash and Cash Equivalents | $2,233.5 | $2,276.8 | | Total Investment Securities | $6,021.7 | $4,060.3 | | Net Loans Held for Investment | $9,487.4 | $9,663.2 | | **Total Liabilities** | **$17,387.4** | **$15,688.9** | | Total Deposits | $16,007.3 | $14,217.0 | | **Total Stockholders' Equity** | **$1,984.8** | **$1,959.8** | - Total assets grew by **9.8%** to **$19.37 billion** as of September 30, 2021, from **$17.65 billion** at the end of 2020[10](index=10&type=chunk) - The growth in assets was primarily funded by a **12.6% increase** in total deposits, which reached **$16.01 billion**[10](index=10&type=chunk) - Net loans held for investment slightly decreased to **$9.49 billion**, while total investment securities saw a significant increase of **48.3%** to **$6.02 billion**[10](index=10&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $126.9 | $123.0 | $366.4 | $368.6 | | (Reversal of) Provision for Credit Losses | $0.0 | $5.2 | $(5.1) | $53.7 | | Non-interest Income | $39.7 | $44.7 | $113.1 | $122.8 | | Non-interest Expense | $105.9 | $99.5 | $303.3 | $290.1 | | **Net Income** | **$47.1** | **$48.3** | **$141.0** | **$114.3** | | **Diluted EPS** | **$0.76** | **$0.76** | **$2.28** | **$1.78** | - For the nine months ended September 30, 2021, the company recorded a reversal of provision for credit losses of **$5.1 million**, compared to a provision of **$53.7 million** in the same period of 2020, significantly boosting net income[14](index=14&type=chunk) - Acquisition-related expenses of **$6.6 million** were incurred in Q3 2021, which were not present in the prior year period[14](index=14&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Income (in millions) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $47.1 | $48.3 | $141.0 | $114.3 | | Other Comprehensive (Loss) Income, net of tax | $(9.8) | $(3.3) | $(42.3) | $50.9 | | **Comprehensive Income, net of tax** | **$37.3** | **$45.0** | **$98.7** | **$165.2** | - For the nine months ended September 30, 2021, the company experienced a significant other comprehensive loss of **$42.3 million**, primarily due to a **$81.0 million** pre-tax change in net unrealized losses on available-for-sale investment securities[16](index=16&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity increased from **$1,959.8 million** at December 31, 2020, to **$1,984.8 million** at September 30, 2021[18](index=18&type=chunk)[22](index=22&type=chunk) - The increase in stockholders' equity was driven by net income of **$141.0 million**, partially offset by an other comprehensive loss of **$42.3 million** and common cash dividends of **$76.2 million** for the nine-month period[22](index=22&type=chunk) - The company declared cash dividends of **$0.41 per share** in Q3 2021 and **$1.23 per share** for the nine months ended September 30, 2021[18](index=18&type=chunk)[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in millions) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $205.4 | $162.8 | | Net Cash used in Investing Activities | $(1,873.9) | $(1,636.1) | | Net Cash from Financing Activities | $1,625.2 | $2,257.1 | | **Net (Decrease) Increase in Cash** | **$(43.3)** | **$783.8** | - Investing activities for the nine months ended September 30, 2021, were dominated by net purchases of investment securities, totaling **$2,149.2 million**[24](index=24&type=chunk) - Financing activities were primarily driven by a net increase in deposits of **$1,790.3 million** for the nine-month period[26](index=26&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) - The company's total investment securities portfolio grew to **$6.02 billion** at September 30, 2021, from **$4.06 billion** at year-end 2020, with a significant increase in held-to-maturity securities[30](index=30&type=chunk) - Total loans held for investment decreased slightly to **$9.64 billion** from **$9.83 billion** at year-end 2020, with real estate loans growing while commercial and consumer loans declined[46](index=46&type=chunk) - The allowance for credit losses decreased to **$135.1 million** at September 30, 2021, from **$144.3 million** at year-end 2020, reflecting a reversal of provision of **$4.6 million** for the nine-month period[52](index=52&type=chunk) - On September 16, 2021, the Company entered into a definitive agreement to acquire Great Western Bancorp, Inc. in an all-stock transaction valued at approximately **$2.0 billion**, expected to close in Q1 2022[132](index=132&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes asset growth to deposit increases and investment deployment, with Q3 2021 net interest income up, non-interest income down, and expenses rising due to acquisition costs, alongside the pending Great Western Bancorp acquisition [Executive Overview and Recent Developments](index=43&type=section&id=Executive%20Overview%20and%20Recent%20Developments) - First Interstate is a community banking-focused financial holding company with **147 banking offices** across six states: Idaho, Montana, Oregon, South Dakota, Washington, and Wyoming[180](index=180&type=chunk) - On September 15, 2021, the company announced a definitive agreement to acquire Great Western Bancorp, Inc. in an all-stock transaction valued at approximately **$2.0 billion**, expected to close in Q1 2022[185](index=185&type=chunk) - Management continues to monitor the impact of COVID-19, noting that while branches are operating normally, the long-term economic effect remains uncertain, particularly with the emergence of new variants[186](index=186&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Net Interest Income and Margin | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income (millions) | $126.9 | $123.0 | $366.4 | $368.6 | | Net FTE Interest Margin | 2.91% | 3.29% | 2.92% | 3.55% | - The company recorded no provision for credit losses in Q3 2021, compared to a **$5.2 million provision** in Q3 2020, due to improved asset quality and a better economic outlook[210](index=210&type=chunk) - Total non-interest income decreased **11.2% YoY** in Q3 2021, primarily due to an **18.9% decline** in mortgage banking revenues and a **72.0% drop** in other service charges, commissions, and fees[213](index=213&type=chunk)[215](index=215&type=chunk)[219](index=219&type=chunk) - Total non-interest expense increased **6.4% YoY** in Q3 2021, driven by **$6.6 million** in acquisition-related expenses[221](index=221&type=chunk)[224](index=224&type=chunk) [Financial Condition](index=51&type=section&id=Financial%20Condition) - Total assets increased by **$1.72 billion (9.8%)** to **$19.37 billion** at September 30, 2021, from year-end 2020, mainly from deposit growth deployed into investment securities[231](index=231&type=chunk) - Loans held for investment decreased by **1.9%** since year-end 2020, primarily due to a **$446.3 million reduction** in PPP loans and a decline in the consumer portfolio[232](index=232&type=chunk)[235](index=235&type=chunk) - Non-performing assets decreased to **$37.4 million (0.19% of total assets)** at September 30, 2021, from **$50.5 million (0.29% of total assets)** at year-end 2020[242](index=242&type=chunk) - The allowance for credit losses was **1.40%** of loans held for investment at September 30, 2021, down from **1.47%** at year-end 2020[251](index=251&type=chunk) - Total deposits grew by **$1.79 billion (12.6%)** since year-end 2020, attributed to government stimulus and the general economic health of the communities served[260](index=260&type=chunk) [Capital Resources and Liquidity Management](index=58&type=section&id=Capital%20Resources%20and%20Liquidity%20Management) - Stockholders' equity increased by **$25.0 million** to **$1,984.8 million** since year-end 2020, driven by retained earnings, partially offset by dividends and other comprehensive loss[265](index=265&type=chunk) - The company repurchased **72,700 shares** of Class A common stock for **$2.9 million** during the first nine months of 2021 under its stock repurchase program[268](index=268&type=chunk) - As of September 30, 2021, the company and its subsidiary bank exceeded all capital adequacy requirements to be deemed "well-capitalized"[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that there have been no material changes in its quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes in the quantitative and qualitative information about market risk from what was presented in the Annual Report on Form 10-K for the year ended December 31, 2020[278](index=278&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2021. There were no material changes to the company's internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of September 30, 2021[280](index=280&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, such control[281](index=281&type=chunk) [Part II - Other Information](index=56&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and legal actions arising in the ordinary course of business but believes their ultimate disposition will not have a material adverse effect on its financial condition or results of operations - The Company is involved in various claims and legal actions in the ordinary course of business, but management does not expect them to have a material adverse effect on financial condition or results of operations[284](index=284&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) Key risk factors primarily concern the pending Great Western Bancorp merger, including non-completion, regulatory hurdles, integration challenges, and the retention of key personnel - The merger with Great Western Bancorp, Inc. (GWB) may not be completed, which could lead to negative market reactions, unrecovered expenses, and a potential termination fee of **$105 million** payable to GWB[287](index=287&type=chunk)[288](index=288&type=chunk) - Regulatory approvals for the merger may be delayed, not received, or impose conditions that could adversely affect the combined company[291](index=291&type=chunk)[292](index=292&type=chunk) - Combining with GWB may be more difficult, costly, or time-consuming than expected, and the company may fail to realize the anticipated benefits and cost savings[296](index=296&type=chunk)[297](index=297&type=chunk) - The success of the merger depends on retaining key employees, and their potential departure could disrupt operations and adversely affect the business[299](index=299&type=chunk)[300](index=300&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter of 2021, the company repurchased a total of 574 shares of its Class A common stock at an average price of $43.54 per share. These repurchases were related to redemptions of vested restricted shares tendered by employees to cover income tax withholding amounts - There were no unregistered sales of equity securities during Q3 2021[306](index=306&type=chunk) Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plans | Maximum Shares Remaining for Purchase Under Plans | | :--- | :--- | :--- | :--- | :--- | | July 2021 | 168 | $41.88 | 0 | 1,889,158 | | August 2021 | 406 | $44.23 | 0 | 1,889,158 | | September 2021 | 0 | $— | 0 | 1,889,158 | | **Total** | **574** | **$43.54** | **0** | **1,889,158** | - The stock repurchases were redemptions of vested restricted shares tendered to cover income tax withholding for participants in the company's equity compensation plan[306](index=306&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income of $47.1 million or $0.76 per share, which includes $0.08 of merger-related expenses and $0.02 related to legal claims settlement. Excluding these items, earnings per share was $0.86, a 25% increase from the prior quarter [8][10] - Net interest income excluding PPP increased at a similar pace as the second quarter, and fee income showed strong sequential increases, resulting in a 12% growth in non-interest income [11][12] - Total deposits increased by $442 million, with nearly half of the growth coming from non-interest-bearing deposits [10][33] Business Line Data and Key Metrics Changes - Loan growth was below expectations, but annualized loan growth excluding Wyoming was over 4% for the quarter [12] - The digital mortgage application portal accounted for approximately 5% of total mortgage application volume, with rapid growth expected as training for staff is rolled out [14][15] - Non-interest income increased by $4.4 million quarter-over-quarter to $39.7 million, driven by higher business credit card volume and a return to historic levels of mortgage banking revenues [28][29] Market Data and Key Metrics Changes - Economic activity in the company's market remains healthy, driving strong inflows of core deposits despite supply chain and labor challenges [10] - The company noted strong demand and production across the organization, with the exception of Wyoming, indicating a robust market environment [12] Company Strategy and Development Direction - The company is focused on integrating the merger with Great Western Bancorp, with positive feedback from employees and a strong outlook for organic growth in attractive markets [18][19] - Investments in technology are expected to enhance productivity and service delivery across various business lines, including mortgage and small business services [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate higher levels of net interest income due to increased earning assets, despite challenges in loan growth [36] - The company is well-positioned to meet loan demand and is committed to maintaining pricing and underwriting standards [36][37] Other Important Information - The company recorded $6.6 million in acquisition expenses and $1.2 million for legal claims settlement, with non-interest expenses expected to rise approximately 1% year-over-year [30][31] - The allowance for loan losses remained stable at 1.4%, with no provision expense recorded due to stable asset quality [34][35] Q&A Session Summary Question: Update on Great Western results and conservative growth outlook - Management indicated that if problem assets are cleaned up before the acquisition closes, organic loan growth could occur sooner than expected [42][43] Question: Timing of the merger close and its impact - Management noted potential delays in acquisition approvals due to Fed leadership changes, but still expects the merger to close in the first quarter [44][45] Question: Expectations for fee income in 2022 - Management anticipates continued growth in fee income, contingent on improvements in supply chain and labor issues [46] Question: Non-interest expense guidance - Non-interest expense growth is based on last year's numbers, with expectations for consistency in operating run rate [47] Question: Liquidity and cash management going into the deal - Management plans to prudently manage cash levels as deposits continue to grow, aiming to reduce excess cash on the balance sheet [49][50] Question: Loan growth expectations for the fourth quarter - Management confirmed expectations for growth in average loans excluding PPP [51] Question: Allowance ratio and qualitative reserves - Management is considering adjustments to qualitative factors for allowance as economic conditions improve, potentially leading to a decrease toward day one levels [52]

| --- | --- | |----------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | UNITED STATES SECURITIES AND EXCHANGE Washington, D.C. 20549 | COMMISSION ___________________________________________________________________________________________________________________________________________________ | | FORM 10-Q | | ☒ Quarterly repo ...

First Interstate BancSystem, Inc. (NASDAQ:FIBK) Q2 2021 Results Conference Call July 28, 2021 11:00 AM ET Company Participants Lisa Slyter-Bray - Executive Assistant Kevin Riley - President and Chief Executive Officer Marcy Mutch - Executive Vice President and Chief Financial Officer Michael Lugli - Chief Credit Officer Conference Call Participants Jared Shaw - Wells Fargo Jeffrey Rulis - D.A. Davidson Jackie Bohlen - KBW Matthew Clark - Piper Sandler Andrew Terrell - Stephens Tim Coffey - Janney Operato ...

| --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | UNITED STATES SECURITIES AND EXCHANGE Washington, D.C. 20549 | COMMISSION _______________________________________________________________________________________ ...

First Interstate BancSystem, Inc. (NASDAQ:FIBK) Q1 2021 Earnings Conference Call April 28, 2021 11:00 AM ET Company Participants Lisa Slyter-Bray - Executive Assistant Kevin Riley - Chief Executive Officer Marcy Mutch - Chief Financial Officer Michael Lugli - Chief Credit Officer Conference Call Participants Jared Shaw - Wells Fargo Securities Levi Posen - D.A. Davidson Matthew Clark - Piper Sandler Jackie Bohlen - KBW Tim Coffey - Janney Operator Good day. And welcome to the First Interstate BancSystem Fir ...

Financial Performance and Position - As of December 31, 2020, the company had consolidated assets of $17.6 billion, deposits of $14.2 billion, loans held for investment of $9.8 billion, and total stockholders' equity of $2.0 billion[20]. - The company has a strategic focus on balance sheet management and financial rigor, which has contributed to its status as a top-performing bank[24]. - The company aims to continue its business in a disciplined manner, fueled by organic growth and expansion into new markets when appropriate opportunities arise[24]. - The company is currently well-capitalized and well-managed, allowing it to engage in authorized financial activities as a financial holding company[46]. - The company is required to maintain a common equity Tier 1 capital to risk-based assets ratio of 4.5%[57]. - The total capital to risk-based assets ratio must be at least 8.0%[57]. - The company’s ability to pay dividends is limited by state and federal laws, requiring prior consent from the Federal Reserve for distributions exceeding certain thresholds[52]. Community Banking and Services - The company operates 150 banking offices across six states, focusing on community banking and providing a comprehensive range of banking products and services[20]. - The company emphasizes a community banking model, granting banking offices significant authority to respond to local market conditions while maintaining accountability through company-wide standards[25]. - The company is committed to community service and aims to strengthen the communities in its market areas through service activities[25]. - The company operates primarily in community banking, offering commercial and consumer banking services, including deposits, credit extensions, and mortgage loan origination[25]. - The company emphasizes a commitment to community values, including integrity and client focus, as part of its business model[22]. Risk Management and Compliance - The company has established minimum underwriting standards to ensure loans are appropriately collateralized and supported by current credit information[27]. - The company maintains comprehensive credit policies to limit risk, ensuring loans meet minimum underwriting standards and are appropriately collateralized[26]. - The Bank is subject to extensive government regulation and supervision under federal and state laws, impacting its operational activities[38]. - The company is subject to enhanced risk management and corporate governance processes as it exceeds $10 billion in assets, as mandated by federal banking regulators[74]. - The company is required to maintain multiple layers of security controls to manage cyber risks and ensure business continuity after potential cyber-attacks[98]. - The USA PATRIOT Act requires financial institutions to have policies to detect and prevent money laundering and terrorist financing[94]. Employee Engagement and Workforce - As of December 31, 2020, the company employed 2,462 full-time equivalent employees, a decrease of 11 employees from the previous year[101]. - Approximately 72.3% of the full-time equivalent workforce was female, with an average tenure of 8.3 years, reflecting a 3.8% increase from 8.0 years in 2019[101]. - The company has taken significant measures for employee safety during the pandemic, including providing personal protective equipment and temperature screenings[104]. - The company actively engages in programs to attract, develop, and retain employees, reflecting a commitment to human capital[101]. - Employee engagement survey participation was approximately 95%, indicating favorable employee relations[101]. Cybersecurity and Technology - The company has not experienced significant data loss or material financial losses related to cybersecurity attacks to date, but risks remain high due to evolving threats[100]. - Cybersecurity risks are expected to remain high due to evolving threats and increased use of technology-based services[100]. - The company employs various preventative and detective controls to monitor and report suspicious activities related to cybersecurity[99]. - Federal regulators expect financial institutions to maintain sufficient business continuity planning processes for rapid recovery after cyber-attacks[98]. Strategic Growth and Acquisitions - The company has made strategic acquisitions to expand its market reach, including Mountain West Bank and Bank of the Cascades[20]. - The company aims to expand its market reach through organic growth and strategic acquisitions, having completed several acquisitions since its IPO[20]. - The company has established credit authorities at individual, branch, and market levels to ensure responsiveness to local market conditions[28]. Regulatory Environment - The Bank's ability to pay dividends is limited to current year net profits plus retained earnings from the previous two years unless prior consent from the Federal Reserve is obtained[52]. - The Bank's capital buffer rules require the common equity conservation buffer to exceed the minimum required capital ratio by 2.5% of risk-weighted assets for dividend payments[53]. - The company meets the criteria for grandfathering under the Dodd-Frank Act, allowing it to use hybrid capital instruments without current limitations, but risks losing Tier 1 qualification if assets exceed $15.0 billion[65]. - The Dodd-Frank Act prohibits incentive compensation arrangements that encourage excessive risk-taking, impacting how the company structures executive compensation[97]. - The FDIC assesses member institutions based on financial measures and supervisory ratings, with higher-risk banks paying higher assessments[76].