FIBK 10-K & 10-Q changes, risk factors and insider trading

Regulations, along with the currently existing tax, accounting, securities, insurance, employment, monetary, and other laws and regulations, rules, standards, policies, and interpretations control the methods by which we conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. In addition, the Company is subject to changes in federal and state laws as well as changes in banking and credit regulations and governmental economic and monetary policies. Congress may enact legislation from time-to-time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time-to-time affecting the regulation of financial institutions chartered by or operating in those states. Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the application of existing regulations. In recent years, the CFPB has increased its scrutiny of fee-based business models and various fees on consumer financial products and services, including depositor, overdraft and late fee charges. ForMore example,recently, CFPB leadership has publicly indicated potential shifts in Marchsupervisory 2024,and theenforcement CFPBpriorities, finalizedincluding an increased focus on conciliation, correction, and remediation efforts with supervised entities to resolve problems, and a rule that limits the amount of late fees that could be charged for late credit card payments. Certain elements of the federal government have also expressed an interest in increased regulation of these types of fees. The CFPB has also focusedfocus on consumeraddressing dataactual accessfraud issuingagainst itsconsumers, finalwhere rulethere implementingare Sectionidentifiable 1033victims ofwith the Dodd-Frank Wall Street Reformmaterial and Consumermeasurable Protectionconsumer Act,damages; commonlyhowever, referredsuch topriorities asmay thechange “openover banking” rule to empower consumers and authorized third parties to access account data controlled by financial institutions. Open banking rulemaking has long been expected to have a significant impact on both financial institutions and third parties.time.

In addition, in June 2024, the U.S. Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory agencies. As a result of this decision, we cannot be sure whether there will be increased challenges to existing regulations with which we are required to comply or how lower courts will apply the decision in the context of regulatory schemes applicable to us, leading to increased regulatory uncertainty and potential changes in the way laws or regulations applicable to us are interpreted or enforced. Further, it is difficult to predict the legislative, regulatory and other changes that may result under the new Trump administration. Early actions and statements by the new Trump administration suggest a significantly different regulatory agenda from the Biden administration. With the advent of efforts by the newcurrent administration to enhance regulatory efficiency, including the elimination of regulationsderegulation and tailoring of regulatory proposals, cutreducing expenditures,agency budgets, and the restructure of federal agencies, there could be a significant impact on rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, including agencies like the Consumer Finance Protection Bureau.CFPB. In addition, future changes in the presidential administration or in makeup of the Senate and the House of Representatives may lead to new or changed laws and regulations applicable to us, and there may also be significant changes to the fiscal and monetary policies of the federal government of the United States and its agencies, including the Federal Reserve. Changes in leadership at the Federal Reserve, in connection with the scheduled end of the current Chair’s term in May 2026 or otherwise, could also result in shifts in interest rate policy, the Federal Reserve’s balance sheet management, or supervisory priorities.

Any of these changes or new legislation could increase our future compliance and other operating expenses and could have a material adverse effect on our business, financial condition, and results of operation.operations.

Events like the recent2023 bank failures and the related negative media that involve adverse developments affecting financial institutions, transactional counterparties or other companies in the banking industry, or the development of concerns or rumors about these or similar events, have in the past and may in the future lead to erosion of confidence in the banking system, deposit volatility, liquidity issues, stock price volatility, and other adverse developments.

New tax legislative initiatives, including increaseschanges in the corporate tax rate, may be enacted, negatively impacting our effective tax rate at the federal and state level, and potentially adversely affecting our tax positions or tax liabilities. For example, the U.S. has implemented a 15% minimum tax on corporations and a 1% excise tax on certain share buybacks. We have adopted and completed material share repurchase programs over the past several years as a means by which to return value to shareholders, and the new excise tax may have a material and negative impact on our willingness to engage in such programs in the future or may materially increase our costs associated with engaging in any such programs to the extent we determine to engage in them in the future. In addition, unilateral or multi-jurisdictional actions by various tax authorities, including an increase in tax audit activity, could have an adverse impact on our tax liabilities. In any event, significant uncertainties exist with respect to the amount of our tax liabilities, including those arising from potential and already implemented changes in tax laws. These and other tax related items could increase our future tax expense, could change our future intentions regarding the use of our earnings, and could have a material adverse effect on our business, financial condition and results of operations.

Federal and state banking regulators possess broad powers to take supervisory actions as they deem appropriate. These supervisory actions may result in higher capital requirements, higher deposit insurance premiums,assessment rates, and limitations on the Company’s activities that could have a material adverse effect on its business and profitability. For example, the FDIC and the federal banking agencies implemented “Basel III” regulatory capital reforms, which became effective in 2015 and were fully phased in as of January 2019, that substantially amended the regulatory risk-based capital rules applicable to us, as further described in Part I, Item 1. “Business” included herein.

While the current risk-based guidelines applicable to us and the Bank are based on the Basel III framework, regulators may, from time to time, implement changes to the regulatory capital adequacy and liquidity requirements applicable to us. For example, in September 2022, the federal banking regulators announced their intent to revise U.S. regulatory capital requirements to align with Basel IV requirements, more recently referred to as the Basel III “Endgame,” and in July 2023 issued a notice of proposed rulemaking for comment that would substantially revise the regulatory capital framework for banking organizations with total assets of $100 billion or more and their depository institutions subsidiaries and banking organizations with significant trading activity. Public review and comment commenced with no final rule being issued. In Septembernumerous 2024,speeches by the Federal ReserveReserve’s Vice ChairmanChair for SupervisionSupervision, outlinedthe regulator has signaled a more focused method to and re-evaluation of the capital rules, which may result in a speechmore recommendedinstitution-specific revisions to the proposed Basel III “Endgame” capital requirements, including a new round of public review and comment. The proposal would not amend the capital requirements applicable to smaller, less complex banking organizations. It is unclear, however, when further guidance will become available and when any changes will go into effect.approach. The impact of Basel IV will depend upon the way it is implemented in the U.S. with respect to institutions like First Interstate and FIB, but to the extent its implementation or other more stringent capital requirements become applicable to us and our operations, our results of operations and profitability could be materially and adversely affected.

We are subject to regulation and supervision by the FDIC and Federal Reserve. We must comply with the CRA, the Equal Credit Opportunity Act, the Fair Housing Act, and other fair lending laws and regulations, as well as all other applicable laws and regulations that impose non-discriminatory lending and other requirements on financial institutions. A failure to comply with these laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity, and restrictions on expansion. In addition to actions by the U.S. Department of Justice and other federal agencies, including the Federal Reserve and CFPB, who are responsible for enforcing these laws, our compliance with fair lending laws could be challenged in private class action litigation. The costs of defending any such challenge and any adverse outcome arising from such a challenge could damage our reputation or could have a material adverse effect on our business, financial condition, or results of operations. Even absent formal enforcement, the costs of remediating compliance deficiencies, maintaining ongoing compliance, and defending against potential regulatory actions could divert management resources, reduce earnings, and negatively impact stockholder returns.

Federal deposit insurance premiumsassessment rates could increase further in the future.

The FDIC insures deposits at FDIC-insured financial institutions, including the Bank. The FDIC charges insured financial institutions premiumsassessment rates to maintain the DIF at a specific level. Historically, unfavorable economic conditions increased bank failures and these additional bank failures decreased the DIF.DIF Extraordinarybalance. As further described in Item 1. Business - Government Regulation and Supervision – Deposit Insurance, extraordinary growth in insured deposits during the COVID-19 pandemic caused the ratio of the DIF to total insured deposits to fall below the current statutory minimum of 1.35%. To restore the DIF to its statutorily mandated minimums, the FDIC significantly increased deposit insurance premiumassessment rates, including the Bank's premiumassessment rates, and imposed special assessments as discussed above, resulting in increased expenses.expenses to the Bank.

The FDIC may further increase the assessment rates or impose additional special assessments in the future to restore and then steadily increase the DIF to these statutory target levels. Any increase in the Bank's FDIC premiumsassessment rates could have an adverse effect on its business, financial condition and results of operations. FDIC insurance premiumsassessment rates could increase in the future in response to similar declining economic conditions.

We may be subject to lending risks and risks associated with loan sectorportfolio concentrations, which could adversely affect the Company.

Commercial loans may involve greater risks than our other types of lending. Because payments on such loans are often dependent on the successful operation or development of the property or business involved, repayment of such loans can be more sensitive to adverse conditions in the real estate market or the general economy. Commercial loans typically are made based on borrowers’ ability to make repayment from the cash flow of their commercial venture. If the cash flow from business operations is reduced because of adverse conditions, the borrower’s ability to repay the loan may be impaired. Commercial loans are, on average, larger loans as compared to other loans with less readily marketable collateral. Given these factors, losses incurred on commercial real estate and commercial loans could have a material adverse impact on our business, financial condition, and results of operations. For example, in the fourth quarter of 2024,2025, we recognized a material partial charge-off of approximately $49.3$15.8 million relating to a single commercial andreal industrialestate loan relationship that had become impaired as a result of adverse developments impacting the borrower’s business, as further described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.business.

In addition, many of our borrowers operate in industries that are directly or indirectly impacted by changes in commodity prices, such as agriculture and livestock businesses, as well as businesses indirectly impacted by commodities prices, such as businesses that transport commodities or manufacture equipment used in production of commodities. Changes in commodity products prices depend on local, regional, and global events or conditions that affect supply and demand for the relevant commodity. DeteriorationFor example, in economic2025 we experienced increased credit stress in certain of our grain credit relationships as lower commodity prices and elevated input costs pressured borrower cash flows. If such conditions persist or inrecur, the real estate marketwe could resultexperience inhigher increasedcriticized delinquenciesor and foreclosures and could have an adverse effect on the collateral value for many of thesenonperforming loans and onincreased thecredit repayment ability of many of our borrowers. Deteriorationlosses in economicthese conditions or in the real estate market could also reduce the number of loans we make to businesses in the construction and real estate industry, which could negatively impact our interest income and results of operations. Similarly, the occurrence of a natural or man-made disaster in our market areas could impair the value of the collateral we hold for real estate secured loans. Any factor or combination of factors identified above could negatively impact our business, financial condition, and results of operations.portfolios.

Our clients are located predominantly in Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington, and Wyoming. Unlike larger banks that are more geographically diversified, our profitability largely depends on the general economic conditions in these areas. Deterioration in economic conditions could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity, and results of operations:

Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and consumers and potentially contribute to poor business and economic conditions generally, may enhance or contribute to some of the risks discussed herein. For example, higher inflation, or volatility and uncertainty related to inflation, could reduce demand for our products, adversely affect the creditworthiness of the Company’s borrowers, increase our operating costs, or result in lower values for our investment securities and other interest-earning assets. TheFollowing a period of elevated inflation during 2022 and 2023, the Federal Reserve has stated that its current objective is to return the rate of inflation to 2% and itactions has been aggressively actingtaken to achievepursue thisthat goal.objective, Throughoutincluding 2022changes in monetary policy and throughinterest Julyrates, 2023,could thefurther Federalaffect Reserveeconomic raisedactivity, theborrowing federal funds rate to a targeted rate between 5.25%demand and 5.5% in an effort to curb inflation. With the general inflationary pressures easing, the Federal Reserve paused raising interest rates during the second half of 2023 and decreased the federal funds rate by 100 basis points between September and December 2024. As market interest rates rise, we experience competitive pressures to increase the rates we pay on deposits, which may decrease our netfunding interest income. In addition, inflationary pressures will increase our operating costs and could have a significant negative effect on our borrowers and the values of collateral securing loans, which could negatively affect our financial performance.costs. To the extent theseinflationary pressures persist, monetary policiespolicy actions do not mitigate the volatility and uncertainty related to inflation and the effects of inflation, or to the extenteconomic conditions otherwise worsen, we could experience adverse effects on our business, financial condition, and results of operations. For additional discussion of the risks related to Federal Reserve action related to changes in interest rates, see “Changes in interest rates may have an adverse effect on demand for our products and services and on our profitability” under “Market Risks” below.

Deflationary pressures, while possibly lowering some of our operating costs, could also weaken economic activity and have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our business, financial condition, and results of operations.

Additionally, a significant decline in general economic conditions caused by the economic slowdown in Europe and the United States, the impact of trade negotiations, escalating tensions with China, economic conditions in China, including the global economic impacts of the Chinese economy, China’s regulation of commerce, escalating military tensions in Europe as a result of Russia’s military action in Ukraine, escalating military tensions in South America or other impacts related to the United States’ actions related to Venezuela, heightened geopolitical uncertainty involving Greenland, and the conflict in Israel and the surrounding regions, the outbreak of other international or domestic hostilities or other unrest, a default by the United States or other governments in repaying financial obligations, a shutdown of all or part of the United States government or other governments, the effects of pandemics or other health crises, acts of terrorism, climate-related events such as prolonged drought, unemployment, or other economic and geopolitical factors beyond our control, could further impact these local economic conditions and negatively affect our business and results of operations.

If we experience loan credit losses on loans in excess of estimated amounts, our earnings could be adversely affected.

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

UncertaintiesThe continueU.S. government recently announced changes to its trade policies including increasing tariffs on imports, in some cases significantly, and potentially renegotiating or terminating existing trade agreements. The current tariff environment is dynamic and uncertain, as the U.S. government has announced widespread tariff reform, with the timing of the tariffs delayed in many cases. For example, in January 2026, the President announced (and later rescinded) additional tariffs on imports from certain European countries (including EU member states) in connection with public statements regarding Greenland, and such actions (and any retaliatory measures) could further increase trade uncertainty and market volatility. Changes to tariffs and other trade restrictions can be announced at any time with little or no notice. We cannot predict with certainty the potentialfuture fortrade a renegotiationpolicy of international trade agreements by the Trump administration after changes in United States tradeor policies,other legislation, treaties, and tariffs were taken by the Biden administration.countries. These changes, including trade policies and tariffs affecting other countries, including China, countries comprising the European Union or Middle East, Canada, and Mexico, and retaliatory tariffs by such countries, could materially harm our business. Tariffs and retaliatory tariffs have been imposed, and additional tariffs and retaliatory tariffs are periodically discussed.

If maintained, the newly announced tariffs and the potential escalation of trade disputes, a trade war or other governmental action related to tariffs or international trade agreements or policies, as well as potential epidemics or pandemics, have the potential to negatively impact our and/or our clients’ costs, demand for our clients’ products, and/or the U.S. economy or certain sectors thereof and, thus, adversely affect our business, financial condition, and results of operations. In addition, changes in U.S. trade policies could impact us by impacting the level of deposits (one of our primary lending sources) held by our clients, whether through a higher volume of withdrawals or through a lower volume of deposits.

Additionally, deposit levels may be affected by several factors, including rates paid by competitors, general interest rate levels, regulatory capital requirements, returns available to clients on alternative investments or other cash management, payment, or store-of-value products (including stablecoin or other digital-asset-based products offered by non-bank providers) and general economic conditions. We may experience potential stresses on liquidity management. We may see deposit levels decrease as clients adjust to distressed economic conditions by using the funds that would otherwise be savings. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. We maintain a portfolio of investment securities that may be used as a secondary source of liquidity to the extent the securities are not pledged as collateral. Other potential sources of liquidity include the sale of loans, the utilization of available government and regulatory assistance programs, the ability to acquire brokered deposits, the issuance of additional collateralized borrowings such as Federal Home Loan Bank advances, the issuance of debt or equity securities, the sale of available-for-sale securities which may require the sale of securities in a loss position, securities sold under repurchase agreements, federal funds purchased, and borrowings through the Federal Reserve’s discount window. Without sufficient liquidity from these potential sources, we may not be able to meet the cash flow requirements of our depositors and borrowers.

Factors outside of the Company’s control, such as a general market disruption or an operational problem that affects third parties, could impair the Company’s ability to access short-term funding or create an unforeseen outflow of cash due to, among other factors, draws on unfunded commitments or deposit attrition. Such deposit attrition or withdrawals could be amplified by rapid electronic movement of funds to non-bank platforms, including digital-asset and stablecoin-based products offered by non-bank providers, which may increase the speed and severity of outflows and our liquidity needs. Large-scale withdrawals of deposits could require us to access short-term funding sources to meet immediate cash needs or pay significantly higher interest rates to obtain or maintain our deposits, which would have an adverse impact on our net interest income and net income. In addition, changes to the underwriting guidelines or lending policies may limit or restrict our ability to borrow, and therefore could have a significant adverse impact on our liquidity. In the event of future turmoil in the banking industry or other events, there is no guarantee that the U.S. government will invoke the systemic risk exception, create additional liquidity programs, or take any other action to stabilize the banking industry or provide liquidity. The Company’s inability to monetize liquid assets or to access short-term funding or capital markets could limit the Company’s ability to make new loans or meet existing lending commitments and could impact the Company’s liquidity and capitalization.

Our earnings and cash flows are largely dependent on net interest income, which is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds. The level of net interest income is primarily a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. The narrowing of interest rate spreads could adversely affect our earnings and financial condition. TheAfter Federalmaterially Reservetightening increasedmonetary thepolicy federal funds target range by 525 basis points between March 16,in 2022 and July 26, 2023 in an effort to dampencurb increasing inflation rates. With the general inflationary pressures easing since July 2023,inflation, the Federal Reserve hadhas more recently paused anyand furtherbegun changesreducing tothe target federal funds rate. The Federal Reserve decreased the federal funds rates only to decrease themrate by 100 basis points between September and December 2024.2024 and decreased the federal funds rate by an additional 75 basis points in 2025. The Federal Reserve also indicated in December 20242025 that there may be further interest rate decreases during 2025,2026, although we cannot control or predict with certainty changes in interest rates. Regional and local economic conditions, competitive pressures, and the policies of regulatory authorities, including monetary policies of the Federal Reserve and the speed of their implementation, affect interest income and interest expense.

As of December 31, 2024,2025, 40.3%41.1% of our loans were advanced to our clients on a variable or adjustable-rate basis. TheAny prolonged higher borrowing costs resulting from the increases by the Federal Reserve may cause financial hardship on our borrowers, reducing the ability of borrowers to repay their current loan obligations. As a result, theseany increases in interest rates could result in increased loan defaults, foreclosures, and charge-offs and could necessitate further increases to the ACL,allowance for credit losses, any of which could have a material adverse effect on our business, financial condition, or results of operations. In addition, a decrease in interest rates could negatively impact our margins and profitability and uncertainty about the timing and magnitude of future interest rate changes could reduce borrowing demand and, thus, the need for our lending services.

Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but could also adversely affect (1) our ability to originate loans and obtain deposits, (2) the fair value of our financial assets and liabilities, including mortgage servicing rights, (3) our ability to realize gains on the sale of assets, and (4) the average duration of our mortgage-backed securities and collateralized mortgage obligations portfolios. For example, rising interest rates could adversely affect our mortgage banking business because higher interest rates could cause clients to apply for fewer mortgages. Similarly, rising interest rates would increase the required periodic payment for variable rate loans and may result in an increase in non-performing loans.loans Additionally, rising interest ratesand may increase the cost of our deposits, which are a primary source of funding. AnyConversely, in a declining interest rate environment, we may experience compression of loan and securities yields, lower reinvestment rates on cash flows from our investment portfolio, faster repayments on mortgage and other fixed-rate loans and securities, and potential reductions in the value of certain interest rate risk management positions. Accordingly, any substantial, unexpected, or prolonged change in market interest rates could have a material, adverse effect on our cash flows, financial condition, and results of operations.

Our Company faces cybersecurity risks, including denial-of-service attacks, network intrusions, business e-mail compromise, and other malicious behavior that could result in the disclosure of confidential information, adversely affect our business or reputation, and create significant legal, operational, and financial exposure.

The Company relies on otherthird companiesparties to provide certain key components of its business infrastructure.

We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations and we currently outsource, or may outsource in the future, many of our major systems, such as certain data processing, loan servicing, credit card issuance and servicing, and deposit processing systems. Through our contractual relationships, external vendors are subject to some of the same rules and regulations that are applicable to the Company and their compliance with regulatory requirements is our responsibility. While the Company has selected these external vendors and systems carefully and continues to manage and oversee these vendors, it does not control their operations. Failure of certain external vendors or systems to perform or provide services in accordance with contractual arrangements could be disruptive to our operations and limit our ability to provide certain products and services demanded by our clients. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience disruptions if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained, or repeated, a system failure or disruption could compromise our ability to operate effectively, damage our reputation, result in a loss of client business, and/or subject us to additional regulatory scrutiny and possible financial liability. Any of the failures or disruptions mentioned above could negatively impact our financial condition, results of operations, and cash flows. Replacing these third-party vendors could also entail significant delay and expense.

Our clients expect us to deliver personalized financial services with the highest standards of performance, professionalism, compliance, and ethics. If our clients or others were to sue us,by class action or otherwise, claiming that we or third parties for whom they say we are responsible have failed to perform under a contract or failed to carry out a duty perceived to be owed to them,our reputation could be damaged, even if any such suit were to be determined to be frivolous. This risk may be heightened when we act as a fiduciary for our clients and may be further heightened during periods when credit, equity or other financial markets are experiencing deterioration in value or volatility, or when clients or investors are experiencing losses. Damage to our reputation from any of these circumstances could undermine retention of our current clients and our ability to attract potential clients while also impairing the confidence of our counterparties and vendors, the result of which affectscould affect our ability to effect transactions. Maintaining our reputation depends, in part, on our ability to identify and promptly address issues that may arise such as potential conflicts of interest, anti-money laundering,laundering concerns, fair lending issues, client personal information and privacy issues, cybersecurity, employee, client and other third-party fraud, record-keeping,record-keeping matters, regulatory investigations, and any litigation that may arise from the failure or perceived failure of us to comply with applicable legal and regulatory requirements. To maintain our reputation, we also must prevent third parties from infringing on the “First Interstate Bank” brand and associated trademarks and our other intellectual property. Our reputation or prospects could be significantly damaged by adverse publicity or negative information regarding our Company, whether or not true, that may be posted on social media, reported in the news, or posted in other parts of the internet. Defending our reputation, trademarks, and other intellectual property, including through litigation, could result in costs that could have a material adverse effect on our business, financial condition, or results of operations. Furthermore, claims made or actions brought against us, whether founded or unfounded, may result in other lawsuits, injunctions, settlements, damages, fines or penalties, any of which could have a material adverse effect on our financial condition or results of operations or require changes to our business and damage our reputation. Even if we were to defend ourselves successfully in such an instance, litigation can be costly and time-consuming and distract our management, and public reports regarding claims made against us may cause damage to our reputation among existing and prospective clients or negatively impact the confidence of counterparties, rating agencies and stockholders, consequently affecting negatively our business, financial condition, or results of operations.

Our future success and profitability are substantially dependent upon the management skills of senior management and directors. The unanticipated loss or unavailability of key employees could harm our ability to operate our business or execute our business strategy. TheWe Company facesface significant competition in the recruitment of highly motivated individuals who can deliver our Company’s purpose, mission,vision and values,core principles, which has recently intensified as a result of changes in the labor market. The FRB, FDIC, SEC, and other federal regulatory agenciesRegulators have jointlyfrom time to time considered or proposed rules,rules whichthat wouldcould affect incentive compensation.compensation Ifpractices finalized,at thesebanking rulesorganizations, maywhich resultcould in additionalincrease costs and restrictionslimit onflexibility thein formattracting ofand theretaining Company’s incentive compensation.talent. We may not be successful in retaining key employees or finding and integrating suitable successors in the event of key employee loss or unavailability.

As an SEC reporting company, we are required to, among other things, maintain a system of effective internal control over financial reporting. We establish and maintain systems of internal operational and accounting controls that provide us with critical information used to manage our business. These systems are subject to various inherent limitations, including cost, judgments used in decision-making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, controls may become inadequate because of changes in conditions or processes and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, any system of internal operating controls may not be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management. From time-to-time, control deficiencies and losses from operational malfunctions or fraud have occurred and may occur in the future. For example, as initially disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 29, 2024, we previously identified control deficiencies that, in the aggregate, constituted a material weakness in our internal control over financial reporting. While our management has since remediated the material weakness and concluded that our internal control over financial reporting was effective as of June 30, 2024, control deficiencies or material weaknesses in our internal controls may be discovered in the future. Any future deficiencies, weaknesses, or losses related to internal operating control systems could have an adverse effect on our business, financial condition, results of operations, and prospects.

If we are unable to maintain effective internal control over financial reporting:reporting, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected; our liquidity, our access to capital markets, the perceptions of our creditworthiness, and our ability to complete acquisitions may be adversely affected; and we may be unable to maintain compliance with applicable securities laws and the rules and listing standards of the NASDAQ, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses which may negatively impact results of operations and financial condition, could negatively affect investor confidence in the accuracy and completeness of our financial statements, and could adversely impact our stock price.

The development and use of AI by us or others, or in our inability to effectively and timely implement its use, may adversely affect the Company.

In addition to post-acquisition integration relatedintegration-related risks, inherent uncertainties exist when assessing or integrating the operations of another business into which we may make an investment or with which we may enter a commercial relationship. We may not be able to fully achieve the strategic objectives and planned operating efficiencies relevant to an investment or strategic relationship. In addition, the markets and industries in which we and the potential investment targets operate are highly competitive. Investment targets and commercial contract counterparties may lose clients or otherwise perform poorly or unprofitably, or in the case of a strategic relationship, cause us to lose clients or perform poorly or unprofitably. Future investment activities and efforts to monitor or reap the benefits of a new strategic relationship may require us to devote substantial time and resources and may cause these investments and relationships to be unprofitable or cause us to be unable to pursue other business opportunities, any of which could harm our business.

Other transactions,transactions includingand actions taken as part of our strategic plan to optimize our branch network, such as divestitures or planned closures of any of our branches or other financial assets, also present a number of risks, including, in the case of any divestiture, the risks of not being able to timely or fully replace liquidity previously provided by deposits which may be transferred as part of such divestiture, and any divestituredivestiture, strategic action or other transaction we undertake could adversely affect our business, financial condition, results of operations and cash flows. DivestituresFor example, as further described in Part I, Item 1. “Business”, we recently sold 12 branches in Kansas and Arizona, entered into an agreement to sell 11 branches in Nebraska, which transaction is expected to close at the beginning of the second quarter of 2026, disclosed our intent to close four additional Nebraska branches, one branch in Minnesota, and one branch in North Dakota at the end of February 2026, and opened one branch in Montana in February 2026. These divestitures and planned closures and other transactionssimilar strategic actions or transactions, may involve significant uncertainty and execution complexity, which may cause us not to achieve our strategic objectives, realize expected cost savings, or obtain other benefits from such transaction. Whether such divestitures or other transactions are completed or not, their pendency could have a number of negative effects on our current business, including potentially disrupting our regular operations, harming our reputation, and diverting the attention of our workforce and management team. It could also disrupt existing business relationships, make it harder to develop new business relationships, or otherwise negatively impact the way that we operate our business. In addition, any divestitures or planned closures reduce our physical presence in certain markets and may increase our dependence on deposits and customer relationships in our remaining markets. If we are unable to retain or replace deposits and customer relationships associated with these branch sales and closures on acceptable terms, our funding costs, liquidity, and results of operations could be adversely affected.

There is intense competition among banks in the Company’s market areas. In addition, the Company competes with other providers of financial services, such as savings and loan associations, credit unions, consumer finance companies, securities firms, insurance companies, commercial finance and leasing companies, factoring companies, the mutual funds industry, financial technology (“fintech”) companies, full-service brokerage firms, and discount brokerage firms, some of which are subject to less extensive regulations than us with respect to the products and services they provide. Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and client expectations. There is increasing pressure to provide products and services at lower prices. Lower prices can reduce our net interest margin and revenues from our fee-based products and services. In 2025, we also experienced in some cases heightened competition for certain commercial lending opportunities in some of our markets. In light of our underwriting standards and risk appetite, we may determine that we are not willing to assume the same level or type of risk as certain more aggressive competitors, even if doing so results in the loss of business, which could adversely affect our loan growth, net interest income, and overall results of operations.

A major catastrophe, such as a pandemic, disease outbreak, or other natural disaster including extreme weather or other events, such as an earthquake, tornados, tsunami, flood, fire, drought, winter storms, or other type of natural disaster, could adversely affect our financial condition or resultsresult in a prolonged interruption of our business. We have operations and clients in the West and Midwest, a geographical region that has been or may be affected by disease, earthquake, volcano, tsunami, tornados, fires, drought, and flooding activity, which could be adversely impacted by these natural disasters or other severe weather in the region. Unpredictable natural and other disasters could have an adverse effect on the Company in that such events could materially disrupt our operations or the ability or willingness of our clients to access the financial services offered by the Company. These events could reduce our earnings and cause volatility in itsour financial results for any fiscal quarter or year and have a material, adverse effect on our financial condition and/or results of operations.

There iscontinues anto increasingbe concern over the risks of climate change and related environmental sustainability matters. The physical risks of climate change include discrete events, such as flooding and wildfires, and longer-term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought. Such events could disrupt our operations or those of our clients or third parties on which we rely, including through direct damage to assets and indirect impacts from supply chain disruption and market volatility. Additionally, transitioning to a low carbon economy may entail extensive policy, legal, technology, and market initiatives. Transition risks, including changes in consumer preferences and additional regulatory requirements or taxes, could increase our expenses and undermine our strategies. In addition, due to divergent policies and viewpoints regarding climate change, we are at increased risk of being subject to different and potentially conflicting legal or regulatory requirements and stakeholder expectations. Further, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients’ involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. As climate risk is interconnected with all key risk types, we have developed and continue to enhance processes to embed climate risk considerations into our risk management strategies such as market, credit and operational risks; however, because the timing and severity of climate change may not be predictable, our risk management strategies may not be effective in mitigating climate risk exposure.

In addition to financial measures presented in accordance with generally accepted accounting principles generally accepted(“GAAP”) in the United States of America (“GAAP”),States, this document contains non-GAAP financial measures where management believes it towould be helpful into understandingunderstand our results of operations or financial position. The Company’s management believes that the non-GAAP financial measures provide additional information about ongoing operations and enhance comparability of results of operations with prior periods by presenting financial results without the impact of items or events that may obscure trends in the Company’s underlying performance. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.

Fully-Taxable Equivalent Basis. The Company adjusts its net interest income to include its interest income on a fully-taxable equivalent (FTE) basis and further adjusts to exclude purchase accounting interest accretion on acquired loans. Interest income, yields, and ratios on an FTE basis are considered non-GAAP financial measures. Net interest margin (FTE) is calculated as annualized net interest income on an FTE basis divided by average earning assets. Management believes net interest income on an FTE basis provides an insightful picture of the interest margin for comparison purposes. The FTE basis also allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The FTE basis assumes a federal statutory tax rate of 21 percent. These measures are considered standard measures of comparison within the banking industry. We encourage readers to consider the Consolidated Financial Statements and other financial information contained in this Form 10-K in their entirety, and not to rely on any single financial measure. See Non-GAAP Financial Measures included herein for a reconciliation to the most directly comparable GAAP financial measures.

As of December 31, 2024,2025, we hadoperated 300289 banking offices in operation,offices, including branches and detached drive-up facilities, in communities across Arizona,twelve states— Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington, and Wyoming. Through our bank subsidiary, FIB,First Interstate Bank, we deliver a comprehensive range of banking products and services—including online and mobile banking—to individuals, businesses, governmentalgovernment entities, and others throughout our market areas. OurWe are proud to provide financial services and products to clients that participate in a wide variety of industries, including:

Our principal expenses include: (i) interest expense on deposit accounts and other borrowings; (ii) salaries and employee benefits; (iii) information technology and communication costs primarily associated with maintaining loan and deposit functions; (iv) furniture, equipment, and occupancy expenses for maintaining our facilities; (v) professional fees, including FDIC insurance assessments; (vi) income tax expense; (vii) provisions for credit losses; (viii) intangible amortization; (ix) other real estate owned expenses; and (x) other segment expenses including legal expenses, advertising and promotion, donations, credit card rewards expense, fees associated with originating and closing loans, insurance, and other expenses necessary to support our employees and service our clients. From time to time, we have incurred, and may incur in the future, costs related to our strategic acquisitionsacquisitions, divestitures and other transactions.

Our loan portfolio consists of a mix of real estate, consumer, commercial, agricultural, and other loans, including fixed, adjustable, and variable rate loans. Our real estate loans comprise commercial real estate, construction (including residential, commercial, and land development construction loans), residential, agricultural, and other real estate loans. Fluctuations in the loan portfolio are directly related to the economies of the communities we serve. While each loan we originate must meet minimum underwriting standards we establish through our credit policies, our bankers are granted limited discretion to approve and price loans within pre-approved limits which assures that we are responsive to community needs in each market area and remain competitive. We fund our loan portfolio primarily with the core deposits from our clients and cash flows off of the investment portfolio.clients. Historically, we have not relied on brokered deposits as a source of funding. We have also utilized wholesale funding sources to a limited extent. For additional information about our underwriting standards and loan approval process, see “Business—Lending Activities,” included in Part I, Item 1 of this report.

In January 2025, we announced our plans to stop originating indirect loans as of February 28, 2025,2025. inUnder whichour indirect lending program, indirect loans arewere created when we purchasepurchased consumer loan contracts advanced for the purchase of automobiles, boats, recreational vehicles, and other consumer goods from the consumer product dealer network within the market areas we serve. The decision was based on the operating performance of the indirect loan business and our desire to focus our resources on relationship banking opportunities. At December 31, 2024,2025, indirect loans represented approximately 4.0%3.1% of loan balances and 77.4%78.4% of our consumer loan portfolio. Approximately 30% to 40% of our indirect loan balances are estimated to amortize over the 12 months after we stop originating indirect loans.

As of December 31, 2024,2025, our FDIC insured deposits consistedwere of 64.4%63.8% of total deposits, including accounts eligible for pass-through insurance. As of February 25,19, 2025,2026, the Bank had available borrowing capacity of $4.4$5.0 billion with the Federal Home Loan Bank (“FHLB”) and $1.9$3.9 billion with the Federal Reserve Bank (“FRB”) based on pledged investment securities and loan collateral.

The Company’s quarterly yield on interest earning assets increaseddecreased to 4.67% as of December 31, 2025 from 4.73% as of September 30, 2025, and decreased from 4.86% as of December 31, 2024 from 4.83% as of September 30, 2024, and 4.69% as of December 31, 2023.2024.

The sustainedrecent elevationdeclines ofin short-term interest rates impactedhave benefited the Company’s cost of funds, primarily resulting fromin thereduced shiftrates of noninterest-bearing deposits into higher-cost, interest-bearing, and time deposit balances as well ason variable rate debt.debt and deposits. The Company’s cost of funds decreased to 1.35% during the three months ended December 31, 2025, from 1.45% during the three months ended September 30, 2025, and decreased from 1.72% during the three months ended December 31, 2024, from 1.86% during the three months ended September 30, 2024, and was stable compared to the three months ended December 31, 2023.2024. During the fourth quarter of 2024,2025, the lowerchanges interestin expensethe mix and cost of funds was partially offset by the change in the mix and yield on earning assets, resulting from decreased borrowings resulted in an increase of the Company’s net interest margin during the three months ended December 31, 20242025 to 3.18%3.36% from 3.01%3.34% during the three months ended September 30, 20242025 and from 2.99%3.18% for the three months ended December 31, 2023.2024. The Company’s FTE net interest marginmargin, a non-GAAP financial measure, increased to 3.38% during the three months ended December 31, 2025, from 3.36% during the three months ended September 30, 2025, and increased from 3.20% during the three months ended December 31, 2024,2024. fromFor 3.04%annual duringcomparisons therefer threeto months“Results endedof SeptemberOperations 30,– 2024,Net andInterest fromIncome” 3.01%included duringin thethis threereport months ended December 31, 2023.below.

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

Principal tools we use to manage and evaluate the results of our operations include tracking performance through metrics such as return on average equity, return on average tangible common equity, return on average assets, efficiency ratio, noninterest expense as a percent of total average assets, earnings per share, credit quality metrics, total shareholder return, net interest income, noninterest income, noninterest expense, and net income.

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

We manage and evaluate our financial condition by focusing on liquidity, the diversification and quality of our loans, the adequacy of our ACL,allowance for credit losses, the diversification and terms of our deposits, the level of our short-term borrowings and other funding sources, the re-pricing characteristics and maturities of our assets and liabilities, including potential interest rate exposure, and the adequacy of our capital levels. We seek to maintain sufficient levels of cash and investment securities to meet potential payment and funding obligations, and we evaluate our liquidity on factors that include the levels of cash and highly liquid assets relative to our liabilities, the quality and maturities of our investment securities, the ratio of loans held for investment to deposits, and any reliance on brokered certificates of deposit or other wholesale funding sources.

We seek to maintain a diverse and high-quality loan portfolio and evaluate our asset quality on factors that include the allocation of our loans among loan types, credit exposure to any single borrower or industry type, non-performing assets as a percentage of loans held for investment and other real estate owned (“OREO”), and loan charge-offs as a percentage of average loans. We maintain our ACLallowance for credit losses based on an estimate of expected credit losses in the loans held for investment portfolio over the life of the loan, including the incorporation of a two-year forecast period atas eachof the balance sheet date.

The ACLallowance for credit losses represents our estimate of credit losses expected over the life of loans at each balance sheet date,loans, which is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Increases in the ACLallowance for credit losses are recorded through net income as a provision for credit loss expense. Decreases in the ACLallowance for credit losses are recorded through net income as a reversal of provision for credit loss expense. Loans are charged-off against the ACLallowance for credit losses when management confirms the uncollectibility of a loan balance. Expected recoveries recorded do not exceed the aggregate of loan amounts previously charged-off. The ACLallowance for credit losses represents management’s estimate of expected credit losses in the loans held for investment portfolio over the life of the loan, including the incorporation of a two-year forecast period with one-year reversion period for economic conditions.

We perform a quarterly assessment of the risks inherent in our loan portfolio, as well as a detailed review of each significant loan we have assessed to have weaknesses that does not share common risk characteristics with other loans. Based on this analysis, we record a provision for credit losses in order to maintain the ACLallowance for credit losses at appropriate levels. In determining the ACL,allowance for credit losses, management estimates the ACLallowance for credit losses balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The ACLallowance for credit losses is maintained at an amount we believe to be sufficient to provide for estimated losses expected over the life of the loans at each balance sheet date resulting from management’s assessment of the quantitative and qualitative factors utilized to determine the ACL.allowance for credit losses. Management monitors trends in the loan portfolio, including changes in the levels of past due, internally classified, and non-performing loans. Changes in the estimates and assumptions are possible and may have a material impact on our ACL,allowance for credit losses, and as a result, on our consolidated financial statements or results of operations.

See “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies” for a description of the methodology used to determine the ACLallowance for credit losses and our policy pertaining to acquired loans. See “Notes to Consolidated Financial Statements—Loans Held for Investment” for a discussion on the factors driving changes in the amount of the ACL.allowance for credit losses. See also Part I, Item 1A, “Risk Factors—Credit Risks.”

The following discussion and analysis is intended to provide detail about the results of operations by comparing the years ended December 31, 20242025 to December 31, 2023.2024. A similar discussion and analysis that compares the fiscal year 2023ended December 31, 2024 to the fiscal year ended December 31, 2022,2023, may be found in Part II, Item 7, “Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on February 29,28, 2024,2025, which is incorporated herein by reference.

Net interest income decreasedincreased $57.2$3.8 million during 2024,2025, as compared to the same period in 2023,2024, primarily due to increasedlower interestcosts incomeof on loansfunds as a result of higherdecreased loaninterest yields,expense due to lower average other borrowed funds balances and decreased interest expense as a result of lower rates on savings and time deposits, which was more thanpartially offset by higher interest expense on deposits and declines inlower interest and dividends on investment securities and loans as a result of a decrease in average investment security balances during the comparable periods.

Net interest income included interest accretion related to the fair value of acquired loans of $24.6$15.0 million during 20242025 as compared to $20.4$24.6 million in 2023,2024, of which $7.2$3.0 million was the result of early loan payoffs during 2024,2025, as compared to $2.5$7.2 million in 2023. There were $5.5 million and no material recoveries of previously charged-off loan interest in 2024 and 2023, respectively.2024.

Our net interest margin ratio decreasedincreased 1028 basis points to 3.02%3.30% during 2024,2025, as compared to 3.12%3.02% in 2023.2024. Our net FTE interest margin ratio, a non-GAAP financial measure, decreasedincreased 1028 basis points to 3.04%3.32% during 2024,2025, as compared to 3.14%3.04% in 2023.2024. Exclusive of the impact of interest accretion on acquired loans, our 20242025 net FTE interest margin ratio decreasedincreased 1231 basis points over our similarly calculated net interest margin ratio in 2023.2024.

The following table presents, forFor the periods indicated, condensedthe following table presents average balance sheet information using daily average balances,information, together with interest income and yields earned on average interest earning assets and interest expense and rates paid on average interest-bearing liabilities.

The table below provides a reconciliation of the GAAPnon-GAAP measurefinancial of net interest marginmeasures to the non-GAAPmost measuredirectly ofcomparable netGAAP FTEfinancial interest margin.measure.

Fluctuations in the provision for credit losses reflect charge-offs and recoveries as well as management’s estimate of possible credit losses based upon the composition of our loan portfolio, evaluation of the borrowers’ ability to repay, collateral value of underlying loans, loan loss trends, and estimated effects of current and forecasted economic conditions on our loans held for investment and investment securities portfolios.

We are a financial and bank holding company focused on community banking. Since our incorporation in Montana in 1971, we have grown both organically and through strategic acquisitions. As of AprilJuly 30, 2026, we operated 273271 banking offices, including branches and detached drive-up facilities, in communities across ten states—Colorado, Idaho, Iowa, Missouri, Montana, Nebraska, Oregon, South Dakota, Washington, and Wyoming. Through our bank subsidiary, First Interstate Bank, we deliver a comprehensive range of banking products and services—including online and mobile banking—to individuals, businesses, government entities, and others throughout our market areas. We are proud to provide financial services and products to clients that participate in a wide variety of industries, including:

As of MarchJune 31,30, 2026, we had consolidated assets of $26.4$25.9 billion, deposits of $21.9$21.4 billion, net loans held for investment of $14.5$14.1 billion, and total stockholders’ equity of $3.4$3.3 billion.

Our current strategy emphasizes disciplined, relationship-driven organic growth by deepening and expanding client relationships across deposits, lending and fee-based services. We continue to execute our strategic plan to refocus capital investment, optimize our balance sheet and improve core profitability, including by prioritizing investment in core markets where we have brand density and attractive growth prospects, optimizing our branch network, emphasizing relationship-based business and disciplined underwriting, and aligning our organization to support timely local decision-making.

On April 10, 2026, the Bank closed the previously disclosed transaction with Security First Bank (“Security First”) for a gain of $19.5 million, pursuant to which Security First acquired eleven Nebraska branches from the Bank, including approximately $244.2 million in deposits and loans with outstanding balances of $64.1 million and the owned real estate and fixed and other assets associated with the branches.

Pending Closure of Iowa Branch and Oregon Branch, and Pending Closure of Washington Branch

As previously announced, following a strategic review, the Company intends to closeclosed two branches, one branch in Iowa and one branch in Oregon,Oregon aton theJuly beginning10, of2026 and intends to close one branch in Washington during the third quarter of 2026. These branch closures are intended to enhance operational efficiency and better position the Company for long-term success.

In January 2025, we announced our plans to stop originating indirect loans as of February 28, 2025. Under our indirect lending program, indirect loans were created when we purchased consumer loan contracts advanced for the purchase of automobiles, boats, recreational vehicles, and other consumer goods from the consumer product dealer network within the market areas we serve. Since discontinuing new originations, the indirect loan portfolio has continued to decline through scheduled amortization and normal portfolio runoff. This runoff is expected to continue over the remaining contractual terms of the existing loans, which generally mature in seven years or less. At MarchJune 31,30, 2026, the Company’s $369.0 million of indirect loans represented approximately 2.8%2.6% of loan balances and 76.6%74.7% of our consumer loan portfolio.

The Company has ample liquidity, and its capital ratios exceed all regulatory requirements to be deemed “well-capitalized” as of MarchJune 31,30, 2026. Our deposit base is diversified, including by depositor, which includes individuals, businesses across multiple industries, governmental units, and other entities, as well as geographically, across the communities we serve in our 10-state footprint.

As of MarchJune 31,30, 2026, our FDIC insured deposits were 64.4%63.1% of total deposits, including accounts eligible for pass-through insurance. As of AprilJuly 30, 2026, the Bank had available borrowing capacity of $5.0$4.8 billion with both the Federal Home Loan Bank (“FHLB”) and $5.0 billion with the Federal Reserve Bank (“FRB”) based on pledged investment securities and loan collateral.

The Company’s quarterly yield on interest earning assets decreasedincreased to 4.65% for the three months ended June 30, 2026 from 4.63% for the three months ended March 31, 20262026, and decreased from 4.67%4.76% for the three months ended DecemberJune 31, 2025, and decreased from 4.75% for the three months ended March 31,30, 2025.

Lower short-term interest rates have benefited the Company’s cost of funds, primarily resulting in reduced rates on variable rate debt and deposits. The Company’s cost of funds decreased to 1.23% during the three months ended June 30, 2026 from 1.27% during the three months ended March 31, 2026 from 1.35% during the three months ended December 31, 2025.2026.

During the firstsecond quarter of 2026, the changes in the mix and cost of funds were partially offsetsupported by the changes in the mix and yield on earning assets, resulting in an increase in the Company’s net interest margin to 3.45% during the three months ended June 30, 2026, from 3.41% during the three months ended March 31, 2026 to 3.41% from 3.36% during the three months ended December 31, 2025.2026. The Company’s net FTE interest margin, a non-GAAP financial measure, increased to 3.48% during the three months ended June 30, 2026, from 3.43% during the three months ended March 31, 2026, from 3.38% during the three months ended December 31, 2025.2026.

A slowdown, downturn, or recession in the U.S. economy or changes in U.S. trade policies could impact the Company, including by impacting the level of deposits held by our clients, whether through a higher volume of withdrawals or through a lower volume of deposits. Client deposits are one of the Company’s primary lending sources. The credit quality of the Company’s loans may also be impacted if clients must weather adverse economic conditions which could result in an increase in credit losses or other related expenses. For example, the estimated effects of current and forecasted economic conditions are reflected in the Company’s provision for credit losses and allowance for credit losses. During the firstsecond quarter of 2026, the Company recorded a $6.7$3.2 million reversal of provision for credit losses, and the allowance for credit losses increaseddecreased to 1.33%1.28% of loans held for investment at MarchJune 31,30, 2026, from 1.26%1.33% at DecemberMarch 31, 2025.2026. During the same period, non-performing assets increased approximately 17.5%,1.5% primarilywhile duecriticized toloans adecreased single client relationship comprised of commercial and commercial real estate loans.9.3%. For additional information regarding non-performing assets, allowance for credit losses, and credit quality indicators, see “Note – Loans Held for Investment – Credit Quality Indicators” in the accompanying “Notes to Unaudited Consolidated Financial Statements” included in this report.

Our consolidated financial statements are prepared in accordance with GAAP and follow general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant accounting policies we follow are summarized in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, and are also referenced in “Note 1 – Basis of Presentation” in the accompanying “Notes to Unaudited Consolidated Financial Statements” included in this report. There have been no material changes during the firstsecond quarter of 2026 in our critical accounting estimates and policies from the critical accounting estimates and policies as described in our Annual Report on Form 10-K for the year ended December 31, 2025.

Net income increased $10.0$12.2 million to $60.2$83.9 million, or $0.61$0.87 per diluted share, during the three months ended MarchJune 31,30, 2026, as compared to net income of $50.2$71.7 million, or $0.49$0.69 per diluted share, for the same period in 2025, which is primarily attributable to athe $13.3$19.5 million lowergain provisionrecorded forfrom creditthe losses,previously announced sale of the eleven Nebraska branches during the second quarter of 2026, partially offset by lower net interest income.

Net interest income, the largest source of our operating income, is derived from interest, dividends, and fees received on interest earning assets, less interest expense incurred on interest bearing liabilities. Interest earning assets primarily include loans and investment securities. Interest bearing liabilities include deposits, short-term borrowings, and various other forms of indebtedness. Net interest income is affected by the level of interest rates, changes in interest rates, the speed of changes to interest rates, and changes in the volume and composition of interest earning assets and interest-bearinginterest bearing liabilities. Changes in the interest rate spread, which is the difference between interest earned on assets and interest paid on liabilities, has the most significant impact on net interest income. Other factors like volume of loans, investment securities, and other interest earning assets compared to the volume of interest-bearinginterest bearing deposits, short-term borrowings, and other indebtedness also cause changes in our net interest income between periods. Noninterest-bearingNoninterest bearing sources of funds, such as demand deposits and stockholders’ equity, help to support earning assets.

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

Net interest income included interest accretion related to the fair value of acquired loans of $3.1$3.5 million during the three months ended MarchJune 31,30, 2026, compared to interest accretion of $4.7$4.2 million during the three months ended MarchJune 31,30, 2025.

Our net interest margin ratio increased 2215 basis points to 3.41%3.45% for the three months ended MarchJune 31,30, 2026, as compared to 3.19%3.30% for the same period in 2025 and our net FTE interest margin ratio, a non-GAAP financial measure, increased 2116 basis points for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. Exclusive of the impact of interest accretion on acquired loans, the net FTE interest margin ratio increased 2416 basis points to 3.38%3.42% during the three months ended MarchJune 31,30, 2026, as compared to 3.14%3.26% for the same period in 2025. The increases in the net interest margin ratio were primarily a result of lower interest expense resulting from decreased other borrowed funds balances.

The table below sets forth a summary of the changes in interest income and interest expense resulting from estimated changes in average asset and liability balances (volume) and estimated changes in average interest rates (referred to as “rate”) for the three and the six months ended MarchJune 31,30, 2026 and 2025. Changes which are not due solely to volume or rate have been allocated to these categories based on the respective percent changes in average volume and average rate as they compare to each other.

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

(2)Dividends on FHLB and FRB stock isare used to determine the rate.

The Company recorded a $6.7$3.2 million provisionreduction forof credit losses, resulting from a provisionreduction forof credit losses of $6.8$3.9 million on loans held for investmentinvestment, a provision for credit losses for unfunded commitments of $1.1 million, and a reduction of credit losses foron unfundedinvestment commitmentssecurities of $0.1$0.4 million during the three months ended MarchJune 31,30, 2026, as compared to a $20.0$0.3 million provisionreduction forof credit losses during the same period in 2025. Net charge-offs were $2.4$9.7 million or an annualized 0.06%0.27% of average loans outstanding during the three months ended MarchJune 31,30, 2026, as compared to net charge-offs of $9.0$5.8 million, or an annualized 0.21%0.14% of average loans outstanding during the same period in 2025. Net loan charge-offs in the firstsecond quarter of 2026 were composed of charge-offs of $6.5$14.0 million, which were partially offset by recoveries of $4.1$4.3 million.

Noninterest expense decreasedincreased $3.0$3.8 million during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025.2025, and increased $0.8 million during the six months ended June 30, 2026.

Employee benefits expense increased $1.2$1.1 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, primarily due to higher health insurance costs of $3.1$1.0 million during the second quarter of 2026. Employee benefits expense increased $2.3 million during the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to higher health insurance costs of $4.1 million, partially offset by $1.6 million of lower long-term incentiveincentives accrualsof $1.4 million during the first2026 quarter of 2026.period.

Outsourced technology services increased $1.7$3.4 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, and increased $5.1 million during the six months ended June 30, 2026 primarily due to increases in account processing software costs and maintenancean increase in software service costs.

Other Real Estate Owned (“OREO”) expense, net decreasedincreased $1.6$0.6 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, and decreased $1.0 million during the six months ended June 30, 2026, as compared to the same period in 2025. The decrease during the six months ended June 30, 2026 was primarily due to a positive fair value adjustment to a commercial property.property during the first quarter of 2026.

FDIC insurance premiums decreased $1.5$0.6 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, and decreased $2.1 million during the six months ended June 30, 2026, primarily attributable to lower FDIC assessment rates in 2026 due to lower average assets and as a result of an adjustment to the special assessment accrual to cover the losses incurred by the Deposit Insurance Fund (“DIF”) in response to the 2023 bank failures.

Other expenses primarily include advertising and public relations costs; office supply, postage, freight, telephone, and travel expenses; donations expense; debit and credit card expenses; board of director fees; legal expenses; and other losses. Other expenses decreased $1.9$0.3 million during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and decreased $2.2 million during the six months ended June 30, 2026, primarily resulting from decreases in donation expense and losses on sale of fixed assets compared to the same period in 2025.assets.

Our effective federal tax rate was 17.8%17.4% for the three months ended MarchJune 31,30, 2026 compared to 18.8%18.4% for the three months ended MarchJune 31,30, 2025, and was 17.6% for the six months ended June 30, 2026 compared to 18.6% for the same period in 2025. Fluctuations in effective federal income tax rates are primarily driven by changes in actual and forecasted pre-tax income.

State income tax applies primarily to pretax earnings generated within Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Oregon, and South Dakota. Our effective state tax rate was 4.5%5.1% for the three months ended MarchJune 31,30, 2026 compared to 5.6%4.9% for the three months ended MarchJune 31,30, 2025.2025 and was 4.8% and 5.2% for the six months ended June 30, 2026 and 2025, respectively.

Total assets decreased $213.8$755.6 million, or 0.8%,2.8%, to $26,426.8$25,885.0 million as of MarchJune 31,30, 2026, from $26,640.6 million as of December 31, 2025, primarily due to decreases in loans and cash and cash equivalents which were partially offset by an increase in investment securities. Significant fluctuations in balance sheet accounts are discussed below. More information regarding the results as of December 31, 2025 can be found in our Annual Report on Form 10-K for the year ended December 31, 2025.

Debt securities rated in the highest category by nationally recognized rating agencies and debt securities backed by the U.S. Government and government sponsored agencies, both on a direct and indirect basis, represented approximately 95.8%96.4% and 94.1%95.1% of the investment portfolio’s available-for-sale and held-to-maturity segments, respectively, at MarchJune 31,30, 2026.

Investment securities increased $379.8$355.4 million, or 5.0%,4.7%, to $8,010.0$7,985.6 million, or 30.3%30.9% of total assets, as of MarchJune 31,30, 2026, from $7,630.2 million, or 28.6% of total assets, as of December 31, 2025. The increase was primarily resulting from purchases of investment securities, partially offset by pay-downs, maturities, called securities, and a $23.5$33.9 million decrease in fair market values during the period.

As of MarchJune 31,30, 2026 and December 31, 2025, the estimated duration of our investment portfolio was 3.2 and 3.3 years.years, respectively.

As of MarchJune 31,30, 2026 and December 31, 2025, we had $5,297.6$5,078.3 million and $5,645.8 million, respectively, of investment securities that had been in a continuous loss position for more than twelve months. Gross unrealized losses on these securities totaled $455.8$462.1 million as of MarchJune 31,30, 2026, and were attributable to changes in interest rates. At MarchJune 31,30, 2026 and December 31, 2025, the Company had no allowance for credit losses on available-for-sale securities and an allowance for credit losses on held-to maturityheld-to-maturity securities classified as corporate and municipal securities of $0.1 million and $0.5 million.million, respectively.

Loans held for investment, net of deferred fees and costs, decreased $473.2$920.2 million to $14,728.4$14,281.4 million as of MarchJune 31,30, 2026 as compared to $15,201.6 million as of December 31, 2025.

The Company discontinued accepting applications to originate indirect loans during the first quarter of 2025, which resulted in $58.1$108.5 million of continued amortization for the indirect portfolio inas of June 30, 2026. The Company sold $64.1 million of loans related to the firstsale of the eleven Nebraska branches during the second quarter of 2026. The remaining decline in loan balances is due to larger agricultural loan payoffs, and other loan paydowns and payoffs during the first quarterhalf of 2026.

Non-accrual loans. We generally place loans on non-accrual status when they become 90 days past due unless they are well secured and in the process of collection or if the collection of principal and interest is in doubt. When a loan is placed on non-accrual status, any interest previously accrued but not collected is reversed from income. Non-accrual loans increased approximately $21.3$24.9 million, or 16.0%,18.7%, to $154.8$158.4 million as of MarchJune 31,30, 2026, from $133.5 million as of December 31, 2025, primarily due to a single client relationship comprised of commercial and commercial real estate loans. As of MarchJune 31,30, 2026, there were approximately $53.1$55.5 million of non-accrual loans for which there was no related allowance for credit losses, as these loans had sufficient collateral securing the loan for repayment.

Loans contractually past due 90 days or more and still accruing interest. Loans past due 90 days or more accruing interest were $1.1$1.3 million as of MarchJune 31,30, 2026 compared to $1.4 million as of December 31, 2025.

Other Real Estate Owned (OREO). OREO consists of real property acquired through foreclosure on the collateral underlying defaulted loans. We record OREO at fair value less estimated selling costs. Any excess of loan carrying value over the fair value of the real estate at the time it is acquired, is recorded as a charge against the allowance for credit losses. Estimated losses that result from the ongoing periodic valuation of these properties are charged to earnings in the period in which they are identified. OREO increased $3.2$1.9 million, or 94.1%,55.9%, to $6.6$5.3 million as of MarchJune 31,30, 2026, from $3.4 million as of December 31, 2025.

For loans acquired in business combinations with evidence of deterioration in credit quality since origination, the Company determines the fair value of the loans by estimating the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest. An allowance for credit losses is recognized by estimating the expected credit losses of the purchased asset and recording an adjustment to the acquisition date fair value to establish the initial amortized cost basis of the asset. Differences between the established amortized cost basis, and the unpaid principal balance of the asset, isare considered to be a non-credit discount/premium and is accreted/amortized into interest income using the level yield interest method. Subsequent changes to the allowance for credit losses are recorded through provision expense using the same methodology as other loans held for investment.

Our allowance for credit losses was $195.8$182.2 million, or 1.33%1.28% of loans held for investment as of MarchJune 31,30, 2026 compared to $191.4 million, or 1.26% of loans held for investment, as of December 31, 2025. The percentage increase reflected changes related to the specific valuation allowance on nonaccrualnon-accrual loans, partially offset by changes in the mix of loan balances. The Company’s allowance for off-balance sheet credit losses was $5.8$6.9 million as of MarchJune 31,30, 2026, compared to $5.9 million as of December 31, 2025.

Although weWe have established our allowance for credit losses in accordance with GAAP in the United States and we believe that the allowance for credit losses is appropriate to provide for known and expected losses in the portfolio, future provisions will be subject to on-going evaluations of the risks in the loan portfolio. If the economy declines or asset quality deteriorates, material additional provisions could be required.

Total liabilities decreased $125.3$631.2 million, or 0.5%,2.7%, to $23,068.3$22,562.4 million as of MarchJune 31,30, 2026, from $23,193.6 million as of December 31, 2025, primarily due to a decrease in deposits which was partially offset by an increase in accrued expenses related to unsettled investment security purchases.deposits.

Our deposits consist of noninterest bearing and interest bearing demand, savings, individual retirement, and time deposit accounts. Total deposits decreased $205.3$647.0 million, or 0.9%,2.9%, to $21,883.0$21,441.3 million as of MarchJune 31,30, 2026, from $22,088.3 million as of December 31, 2025, with decreases inacross all types of deposits except interest bearing savings.deposit categories.

(1)Included in “Time, other” are IntraFi Network Deposits, or Intrafi, depositsDeposits of $13.5$5.6 million and $13.4 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

The deposits of the Bank are insured up to the applicable limits by the DIF of the FDIC, generally up to $250,000 per insured depositor. The Bank pays deposit insurance premiums based on assessment rates established by the FDIC. The estimated amount of deposits in excess of the FDIC insurance limit at MarchJune 31,30, 2026 was $7.8$7.9 billion, or 35.6%36.9% of total deposits. Estimates of uninsured deposits are based on the methodologies and assumptions used in the Bank’s call reports and do not necessarily reflect an evaluation of all scenarios that potentially would determine the availability of deposit insurance to customer accounts based on FDIC regulations.