FIRST INTERSTATE BANCSYSTEM INC

Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As of December 31, 2023, our management evaluated, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of December 31, 2023, were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods required by the SEC’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with proper authorizations; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

All internal control over financial reporting processes and systems, no matter how well designed, have inherent limitations. Therefore, even processes and systems deemed to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the criteria and guidelines established in the Internal Control--Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management determined that the Company’s internal control over financial reporting was not effective as of December 31, 2023, to the extent of the material weakness discussed below. Notwithstanding the foregoing determination, the deficiencies in our internal control over financial reporting and the material weakness described in this report did not result in any material misstatement in our consolidated financial statements or other disclosures included in this Annual Report on Form 10-K.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with its evaluation and assessment, the following combined deficiencies culminating in a material weakness have been identified by management.

Our management concluded that the Company’s control over the establishment of new deposit accounts was not effectively designed to fully consider all of the relevant attributes and the sufficiency of the coverage of this control was not documented or assessed. In addition, segregation of duties over the establishment of new loan accounts and the maintenance of loan and deposit accounts was not adequately enforced by the workflow system. The Company also did not have effective information technology general controls (ITGCs) supporting the Company’s internal control over financial reporting related to the documentation of the completeness and accuracy of user access to systems, change management segregation of duties over two systems, and sufficient identification of transfers between systems. These combined deficiencies, which in aggregate result in a material weakness, impact other automated and manual business process controls in the control environment that are dependent on the ineffective controls.

A discussion of the remediation steps that the Company has undertaken, including subsequent to year-end, to better define and document the appropriateness of its control environment and eliminate each of the deficiencies is provided below in this Item 9A under the caption “—Management’s Remediation Plan”, which immediately follows the more specific description of the above identified deficiencies.

Importantly, and as noted above, the deficiencies in our internal control over financial reporting and the material weakness described in this report did not result in any material misstatement in our consolidated financial statements or other disclosures. These deficiencies merely were determined to create a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis.

RSM US LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an audit report on our internal control over financial reporting as of December 31, 2023. RSM US LLP’s report is presented below this management report in Item 9A of this Annual Report on Form 10-K.

Management’s Remediation Plan

Beginning in July 2023, we pivoted from 100% testing of new deposit account attributes to sampling at up to a 30% testing approach of new deposit account attributes. The redesign did not adequately define the sampling methodology, including escalation procedures, and did not include all key deposit account attributes.

Regarding the remediation of the deficiency concerning the testing of new deposit account attributes, subsequent to year-end we engaged independent third-party consultants to assist us in evaluating the appropriateness and effectiveness of our testing approach and quantifying the reasonableness of the sample size. In addition, subsequent to year-end, we performed further testing over 2023 new deposit accounts with no material findings. We also took steps to ensure inclusion of all relevant fields to financial reporting within the scope of the review of new deposit accounts, revise sampling procedures to achieve additional precision, included rationale for sampling approach based on required exception rates for a material misstatement to be possible, and will include escalation procedures.

With respect to our workflow system associated with the establishment of new loan accounts and the maintenance of loan and deposit accounts, our workflow system is configured to automatically identify individuals who performed a deposit or loan boarding or maintenance activity and deny them access to perform a review of the activity performed. It was determined, however, that the workflow system had a vulnerability that could allow employees to edit some keywords associated with documents and workflows. It was determined that this vulnerability could pose segregation of duties concerns as employees with account boarding and maintenance access could bypass the control to allow them to perform quality control on their own activity.

With respect to the remediation of the segregation of duties deficiency related to our workflow system, upon identification of the deficiency, management promptly removed the ability of an employee to edit relevant ‘keyword’ fields in the workflow system to ensure appropriate level of system access. Following the remediation efforts, management performed a review of activity, including a review of workflow system logs, engaged in during 2023 to seek to identify any potential instances of unauthorized changes to keywords and investigate instances of actual segregation of duties violations related to deposit account maintenance and loan boarding and maintenance activity, and no unauthorized changes or violations were identified.

Our ITGC user access review and validation control activity has been established to ensure that system and application access remain appropriate for each employee’s job role. During 2023, the Company onboarded a new system to increase the automation of user access reviews, intending to ensure complete and accurate populations were considered as part of the control activity. During the third quarter of 2023, it was determined that existing procedures should have more detail, and management updated the Company’s processes and expanded its written procedures for obtaining complete and accurate populations of user access reviews for each system with a manual population and held training sessions with system administrators to increase detail and add support and seek to remediate the deficiency. Additionally, during the fourth quarter of 2023, a quality assurance process was implemented to add another layer of control prior to the finalization of each periodic user’s access review. Management further intends to continue to identify systems that are compatible with the automation feature to further reduce manual processes, to consider timing of testing for systems subject to annual user access review, to review and enhance written procedures for obtaining accurate populations of user access, and conduct additional training with system administrators to further communicate the requirements of the periodic access review process, all with a view to promptly eliminate this deficiency.

Regarding the identified ITGC change management deficiency, technical limitations resulting in segregation of duties conflicts in the standard control environment were identified for changes deployed for two systems. A documented, weekly attestation and sign off is completed by management to attest to the review period; however, the preparer and reviewer are not independent of the activity to which they are attesting. In addition, due to an employee’s leave of absence, the existing control activity was not operational for part of 2023. The employee resumed documentation of the review and the related attestation of implemented changes process upon return from leave, and thereafter a retroactive review was performed to ensure that there were no unauthorized changes to the systems while the employee was on leave. Because the remediation efforts to alleviate the segregation of duties concerns were not completed prior to year-end, it was determined that the existing technical limitations resulted in segregation of duties conflicts in the standard control environment at year end.

In order to remediate the identified change management deficiency, management has initiated a project to migrate to an alternate cloud solution that is expected to enable logical access implementation to support segregation of duties requirements through automation.

The ITGCs deficiency related to the sufficient identification of transfers between only those systems supporting the Company’s internal control over financial reporting relates to the listing of relevant, specific transfers not being produced until December 2023. The Company identified all transfers between systems, which by definition included those systems supporting the Company’s internal control over financial reporting, but it did not produce separately the more limited universe of systems subsumed by the larger universe. In addition, the control did not include sufficient logging and monitoring activities to demonstrate the effective execution of the control.

To remediate the Company’s deficiency in producing the sufficient identification of transfers between only those systems supporting the Company’s internal control over financial reporting, management in December 2023 enhanced its reporting capabilities to identify only data transfers supporting the Company’s internal control over financial reporting. Furthermore, documentation of the control is being enhanced to ensure adequate system logging and monitoring for the prompt elimination of the deficiency.

By completing these remediation steps, our automated and manual business process controls that are dependent on the effectiveness of these remediated controls and ITGCs have been and will continue to be improved, with the effect that management believes that it will be able to remediate and eliminate the material weakness during 2024.

We have already completed some and are in the process of effecting other remediation efforts related to the deficiencies identified above. Remediation will not be considered complete until such controls have been properly tested for design and operating effectiveness by management and the external auditor.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than as described above regarding the remediation activities concerning the onboarding of a new system to increase the automation of user access reviews and the Company’s deficiency in producing the sufficient identification of transfers between only those systems supporting the Company’s internal control over financial reporting, the discussion with respect to which is incorporated herein by reference.

To the Shareholders and the Board of Directors of First Interstate BancSystem, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited First Interstate BancSystem, Inc.'s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements and our report dated February 29, 2024 expressed an unqualified opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment:

The Company’s control over the establishment of new deposit accounts was not effectively designed to fully consider all of the relevant attributes and the sufficiency of the coverage of this control was not documented or assessed. In addition, segregation of duties over the establishment of new loan accounts and the maintenance of loan and deposit accounts was not adequately enforced by the workflow system. The Company also did not have effective information technology general controls (ITGCs) supporting the Company’s internal control over financial reporting related to the documentation of the completeness and accuracy of user access to systems, change management segregation of duties over two systems, and sufficient identification of transfers between systems. These combined deficiencies impact other automated and manual business process controls in the control environment that are dependent on the ineffective controls.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 financial statements, and this report does not affect our report dated February 29, 2024 on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

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

/s/ RSM US LLP

Des Moines, Iowa

February 29, 2024