FIRST INTERSTATE BANCSYSTEM INC

Previous wording

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 March 31, 2025, we operate 300 banking offices, including branches and detached drive-up facilities, in communities across fourteen states—Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, 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 lending opportunities to clients that participate in a wide variety of industries, including:

Current wording

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 June 30, 2025, we operate 301 banking offices, including branches and detached drive-up facilities, in communities across fourteen states—Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, 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 lending opportunities to clients that participate in a wide variety of industries, including:

Previous wording

As of March 31, 2025, we had consolidated assets of $28.3 billion, deposits of $22.7 billion, loans held for investment of $17.2 billion, and total stockholders’ equity of $3.4 billion.

Current wording

As of June 30, 2025, we had consolidated assets of $27.6 billion, deposits of $22.6 billion, net loans held for investment of $16.1 billion, and total stockholders’ equity of $3.4 billion.

Previous wording

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, 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 acquisitions, divestitures and other transactions.

Current wording

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 acquisitions, divestitures and other transactions.

Previous wording

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. Historically, we have not relied on brokered deposits as a source of funding. We have also utilized wholesale funding sources to a limited extent.

Current wording

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. Historically, we have not relied on brokered deposits as a source of funding. We have also utilized wholesale funding sources to a limited extent.

Previous wording

In January 2025, we announced our plans to stop originating indirect loans as of February 28, 2025, in which indirect loans were created when we purchase 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. At March 31, 2025, indirect loans represented approximately 3.9% of loan balances and 76.7% of our consumer loan portfolio.

Current wording

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. At June 30, 2025, indirect loans represented approximately 3.7% of loan balances and 81.9% of our consumer loan portfolio.

Previous wording

As previously disclosed, on April 28, 2025, the Bank entered into a Purchase and Assumption Agreement (the “Purchase Agreement”) with Enterprise Bank & Trust (“Enterprise Bank”), a wholly-owned subsidiary of Enterprise Financial Services Corp, pursuant to which Enterprise Bank will acquire twelve branches (the "Branches") from the Bank, including approximately $740 million in deposits and certain, mostly commercially-oriented, loans with outstanding balances of roughly $200 million as of March 31, 2025, and the owned real estate and fixed and other assets associated with the Branches. The Branches include all of the Bank’s Kansas and Arizona locations, with ten branches in Arizona and two branches in Kansas. Consummation of the transaction is subject to regulatory approvals and other customary conditions to closing. It is currently anticipated that the closing of the transaction will take place by early fourth quarter of 2025.

Current wording

As previously disclosed, on April 28, 2025, the Bank entered into a Purchase and Assumption Agreement with Enterprise Bank & Trust (“Enterprise Bank”), a wholly-owned subsidiary of Enterprise Financial Services Corp, pursuant to which Enterprise Bank will acquire twelve branches from the Bank, including approximately $705 million in deposits and certain commercially-oriented loans with outstanding balances of $331 million as of June 30, 2025, and the owned real estate and fixed and other assets associated with the branches. The branches include all of the Bank’s Kansas and Arizona locations, with ten branches in Arizona and two branches in Kansas. Consummation of the transaction is subject to regulatory approvals and other customary conditions to closing. It is currently anticipated that the closing of the transaction will take place by early fourth quarter of 2025. In the second quarter of 2025, $338.3 million of loans held for investment related to the pending sale of the Arizona and Kansas branches were transferred to loans held-for-sale. For more information, see “Note 3 - Loans Held For Sale” in the accompanying “Notes to Unaudited Consolidated Financial Statements” included in this report.

Previous wording

As of March 31, 2025, our FDIC insured deposits were 65.7% of total deposits, including accounts eligible for pass-through insurance. As of April 30, 2025, the Bank had available borrowing capacity of $4.2 billion with the Federal Home Loan Bank (“FHLB”) and $2.6 billion with the Federal Reserve Bank (“FRB”) based on pledged investment securities and loan collateral.

Current wording

As of June 30, 2025, our FDIC insured deposits were 64.6% of total deposits, including accounts eligible for pass-through insurance. As of July 31, 2025, the Bank had available borrowing capacity of $5.2 billion with the Federal Home Loan Bank (“FHLB”) and $2.4 billion with the Federal Reserve Bank (“FRB”) based on pledged investment securities and loan collateral.

Previous wording

The Company’s quarterly yield on interest earning assets decreased to 4.75% as of March 31, 2025 from 4.86% as of December 31, 2024, and increased from 4.74% as of March 31, 2024. The decrease between March 31, 2025 and December 31, 2024 was primarily related to lower purchase accounting accretion and fewer accrual days in the first quarter of 2025.

Current wording

The Company’s quarterly yield on interest earning assets increased to 4.76% as of June 30, 2025 from 4.75% as of March 31, 2025, and decreased from 4.80% as of June 30, 2024.

Previous wording

The recent declines in short-term interest rates have benefited the Company’s cost of funds, primarily resulting in reduced rates on variable rate debt. The Company’s cost of funds decreased to 1.59% during the three months ended March 31, 2025 from 1.72% during the three months ended December 31, 2024, and decreased from 1.87% during the three months ended March 31, 2024. During the first quarter of 2025, the change in the mix and yield on earning assets was more than offset by the changes in the mix and cost of funds, resulting in an increase of the Company’s net interest margin during the three months ended March 31, 2025 to 3.19% from 3.18% during the three months ended December 31, 2024 and from 2.91% for the three months ended March 31, 2024. The Company’s FTE net interest margin increased to 3.22% during the three months ended March 31, 2025, from 3.20% during the three months ended December 31, 2024, and increased from 2.93% during the three months ended March 31, 2024.

Current wording

The recent declines in short-term interest rates have benefited the Company’s cost of funds, primarily resulting in reduced rates on variable rate debt. The Company’s cost of funds decreased to 1.50% during the three months ended June 30, 2025 from 1.59% during the three months ended March 31, 2025, and decreased from 1.86% during the three months ended June 30, 2024. During the second quarter of 2025, the changes in the mix and cost of funds was partially offset by the change in the mix and yield on earning assets, resulting in an increase of the Company’s net interest margin during the three months ended June 30, 2025 to 3.30% from 3.19% during the three months ended March 31, 2025 and from 2.97% for the three months ended June 30, 2024. The Company’s FTE net interest margin, a non-GAAP financial measure, increased to 3.32% during the three months ended June 30, 2025, from 3.22% during the three months ended March 31, 2025, and increased from 3.00% during the three months ended June 30, 2024.

Previous wording

The Company expects to see continued volatility in the economic markets, which may include recessionary signs in the economy resulting from, among other things, uncertain conditions due to changes in U.S. policies like the implementation of new tariffs and other trade policies. These uncertain conditions could have adverse impacts on the balance sheet and income statement of the Company for the remainder of the year.

Current wording

The Company expects to see continued volatility in the economic markets, which may include recessionary signs in the economy resulting from, among other things, uncertain conditions due to changes in U.S. policies like the implementation of new tariffs, retaliatory tariffs, and other trade policies. These uncertain conditions could have adverse impacts on the balance sheet and income statement of the Company for the remainder of the year.

Previous wording

A slowdown, downturn, or recession in the U.S. economy or changes in U.S. trade policies could impact the Company 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.

Current wording

A slowdown, downturn, or recession in the U.S. economy or changes in U.S. trade policies could impact the Company 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, we believe macroeconomic conditions have contributed to slower lease-up in our multifamily portfolio, which resulted in an increase in criticized assets during the second quarter of 2025. For additional information regarding criticized assets, see “Note – Loans Held for Investment – Credit Quality Indicators” in the accompanying “Notes to Unaudited Consolidated Financial Statements” included in this report.

Previous wording

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, 2024, 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 first quarter of 2025 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, 2024.

Current wording

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, 2024, 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 second quarter of 2025 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, 2024.

Previous wording

Net income decreased $8.2 million to $50.2 million, or $0.49 per diluted share, during the three months ended March 31, 2025, as compared to net income of $58.4 million, or $0.57 per diluted share, for the same period in 2024, which is primarily attributable to a higher provision for credit losses, partially offset by higher net interest income. The net interest income increase was the result of lower interest expense on interest bearing liabilities during the 2025 period.

Current wording

Net income increased $11.7 million to $71.7 million, or $0.69 per diluted share, during the three months ended June 30, 2025, as compared to net income of $60.0 million, or $0.58 per diluted share, for the same period in 2024, which is primarily attributable to a $9.3 million lower provision for credit losses and higher net interest income, partially offset by higher income tax expense. The net interest income increase was the result of lower interest expense on interest bearing liabilities during the 2025 period.

Previous wording

Net interest income increased $4.9 million during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to a decrease in interest expense resulting from decreased rates on other borrowed funds along with a decrease in average other borrowed funds balances, partially offset by lower interest income on investment securities as a result of a decrease in average rates and average investment security balances and as a result of a decrease in average loan balances.

Current wording

Net interest income increased $5.5 million during the three months ended June 30, 2025, as compared to the same period in 2024, primarily due to a decrease in interest expense resulting from decreased rates on other borrowed funds along with a decrease in average other borrowed funds balances, partially offset by lower interest income on investment securities as a result of a decrease in average rates and average investment security balances and as a result of a decrease in average loan balances.

Previous wording

Net interest income included interest accretion related to the fair value of acquired loans of $4.7 million during the three months ended March 31, 2025, compared to interest accretion of $6.5 million during the three months ended March 31, 2024.

Current wording

Net interest income included interest accretion related to the fair value of acquired loans of $4.2 million during the three months ended June 30, 2025, compared to interest accretion of $5.1 million during the three months ended June 30, 2024.

Previous wording

Our net interest margin ratio increased 28 basis points to 3.19% for the three months ended March 31, 2025, as compared to 2.91% for the same period in 2024 and our net FTE interest margin ratio, a non-GAAP financial measure, increased 29 basis points for the three months ended March 31, 2025, as compared to the same period in 2024. Exclusive of the impact of interest accretion on acquired loans, the net FTE interest margin ratio increased 30 basis points to 3.14% during the three months ended March 31, 2025, as compared to 2.84% for the same period in 2024. The increases in net interest margin ratio were primarily as a result of lower interest expense resulting from decreased rates on borrowings and decreased other borrowed funds balances.

Current wording

Our net interest margin ratio increased 33 basis points to 3.30% for the three months ended June 30, 2025, as compared to 2.97% for the same period in 2024 and our net FTE interest margin ratio, a non-GAAP financial measure, increased 32 basis points for the three months ended June 30, 2025, as compared to the same period in 2024. Exclusive of the impact of interest accretion on acquired loans, the net FTE interest margin ratio increased 34 basis points to 3.26% during the three months ended June 30, 2025, as compared to 2.92% for the same period in 2024. The increases in net interest margin ratio were primarily as a result of lower interest expense resulting from decreased rates on borrowings and decreased other borrowed funds balances.

Previous wording

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 months ended March 31, 2025 and 2024. 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.

Current wording

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 June 30, 2025 and 2024. 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.

Previous wording

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 underlying loans, loan loss trends, and estimated effects of current and forecasted economic conditions on our loans held for investment and investment securities portfolios.

Current wording

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.

Previous wording

The Company recorded a $20.0 million provision for credit losses, which included a provision for credit losses of $20.2 million on loans held for investment, a reduction of credit losses for unfunded commitments of $0.1 million, and a reduction of credit losses for investment securities of $0.1 million during the three months ended March 31, 2025, as compared to a $5.3 million provision for credit losses during same period in 2024. The provision incorporated the impact of credit movement during the quarter, changes in loan balances, the attributes of the current portfolio, a review of the current economic outlook, and net charge-offs of $9.0 million. Net charge-offs were an annualized 0.21% of average loans outstanding during the three months ended March 31, 2025, as compared to net charge-offs of $8.4 million, or an annualized 0.18% of average loans outstanding during the same period in 2024. Net loan charge-offs in the first quarter of 2025 were composed of charge-offs of $10.8 million, which were partially offset by recoveries of $1.8 million.

Current wording

The Company recorded a $0.3 million reduction of credit losses, which included a provision for credit losses of $0.1 million on loans held for investment, a reduction of credit losses for unfunded commitments of $0.3 million, and a reduction of credit losses for investment securities of $0.1 million during the three months ended June 30, 2025, as compared to a $9.0 million provision for credit losses during same period in 2024. Net charge-offs were $5.8 million or an annualized 0.14% of average loans outstanding during the three months ended June 30, 2025, as compared to net charge-offs of $13.5 million, or an annualized 0.30% of average loans outstanding during the same period in 2024. Net loan charge-offs in the second quarter of 2025 were composed of charge-offs of $13.0 million, which were partially offset by recoveries of $7.2 million.

Previous wording

Noninterest income also contributes to our operating results with fee-based revenues such as payment services, mortgage banking and wealth management revenues, service charges on deposit accounts, and other service charges, commissions and fees. The following table presents the composition of our noninterest income, which was stable, for the periods indicated:

Current wording

Noninterest income also contributes to our operating results with fee-based revenues such as payment services, mortgage banking and wealth management revenues, service charges on deposit accounts, and other service charges, commissions and fees. The following table presents the composition of our noninterest income for the periods indicated:

Previous wording

Salaries and wages expense increased $3.4 million during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to higher severance including the discontinuation of Indirect Lending, higher short-term incentive accruals, and less deferred loan costs, which were partially offset by lower salaries as a result of fewer employees.

Current wording

Salaries and wages expense decreased $1.3 million during the three months ended June 30, 2025 as compared to the same period in 2024, primarily due to lower short-term incentive accruals, which were partially offset by higher salaries and deferred loan costs. Salaries and wages expense increased $2.1 million during the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to higher severance expense, deferred loan costs, and salaries, which were partially offset by lower short-term incentive accruals.

Previous wording

Occupancy, net expense increased $1.4 million during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to an increase in janitorial, maintenance, repairs, and snow removal costs.

Current wording

Occupancy, net expense increased $1.7 million during the three months ended June 30, 2025 and increased $3.1 million during the six months ended June 30, 2025, as compared to the same periods in 2024, primarily due to increases in janitorial, maintenance, repairs, and snow removal costs.

Previous wording

Other Real Estate Owned (“OREO”) expense, net of income decreased $1.5 million during the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to a decrease in OREO valuation write-downs.

Current wording

Other Real Estate Owned (“OREO”) expense, net of income decreased $2.0 million during the three months ended June 30, 2025 and decreased $3.5 million during the six months ended June 30, 2025, as compared to the same periods in 2024, primarily due to a decrease in OREO valuation write-downs.

Previous wording

FDIC insurance premiums decreased $3.1 million during the three months ended March 31, 2025, primarily resulting from lower assessment fees including a $1.5 million special assessment accrual recorded during the same period in 2024.

Current wording

FDIC insurance premiums decreased $2.6 million during the three months ended June 30, 2025 and decreased $5.7 million during the six months ended June 30, 2025, primarily resulting from lower assessment fees as a result of lower average assets compared to the same periods in 2024, which included a $1.5 million special assessment accrual recorded during the first quarter of 2024.

Previous wording

Our effective federal tax rate was 18.8% for the three months ended March 31, 2025 compared to 18.5% for the three months ended March 31, 2024. Fluctuations in effective federal income tax rates are primarily driven by changes in actual and forecasted pre-tax income.

Current wording

Our effective federal tax rate was 18.4% for the three months ended June 30, 2025 and 2024, and was 18.6% for the six months ended June 30, 2025 compared to 18.4% for the six months ended June 30, 2024. Fluctuations in effective federal income tax rates are primarily driven by changes in actual and forecasted pre-tax income.

Previous wording

State income tax applies primarily to pretax earnings generated within Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, and South Dakota. Our effective state tax rate was 5.6% for the three months ended March 31, 2025 compared to 5.3% for the three months ended March 31, 2024.

Current wording

State income tax applies primarily to pretax earnings generated within Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, and South Dakota. Our effective state tax rate was 4.9% for the three months ended June 30, 2025 compared to 5.1% for the three months ended June 30, 2024 and was 5.2% for the six months ended June 30, 2025 and 2024.

Previous wording

Total assets decreased $857.6 million, or 2.9%, to $28,279.8 million as of March 31, 2025, from $29,137.4 million as of December 31, 2024, primarily due to decreases in investment securities and loans. Significant fluctuations in balance sheet accounts are discussed below. More information regarding the results as of December 31, 2024 can be found in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Total assets decreased $1,571.0 million, or 5.4%, to $27,566.4 million as of June 30, 2025, from $29,137.4 million as of December 31, 2024, primarily due to decreases in investment securities and loans. Significant fluctuations in balance sheet accounts are discussed below. More information regarding the results as of December 31, 2024 can be found in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

We manage our investment portfolio to obtain the highest yield possible while meeting our risk tolerance and liquidity guidelines and satisfying the pledging requirements for deposits of state and political subdivisions and securities sold under repurchase agreements. Our portfolio principally comprises U.S. treasury notes, U.S. government agency, U.S. government agency commercial mortgage-backed securities, U.S. government residential mortgage-backed securities, U.S. government agency collateralized mortgage obligations, corporate securities, and tax-exempt municipal securities.

Current wording

We manage our investment portfolio to obtain the highest yield possible while meeting our risk tolerance and liquidity guidelines and satisfying the pledging requirements for deposits of state and political subdivisions and securities sold under repurchase agreements. Our portfolio principally comprises U.S. treasury notes, U.S. government agency, U.S. government agency commercial mortgage-backed securities, U.S. government residential mortgage-backed securities, U.S. government agency collateralized mortgage obligations, collateralized loan obligation, corporate securities, and tax-exempt municipal securities.

Previous wording

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 93.3% and 94.4% of the investment portfolio’s available-for-sale and held-to maturity segments, respectively, at March 31, 2025. All other held-to-maturity debt securities rated below AAA, not backed by the U.S. Government or government sponsored agencies, or which are not rated represented approximately 5.6% of total held-to maturity debt securities at March 31, 2025.

Current wording

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 93.0% and 94.2% of the investment portfolio’s available-for-sale and held-to maturity segments, respectively, at June 30, 2025. All other held-to-maturity debt securities rated below AAA, not backed by the U.S. Government or government sponsored agencies, or which are not rated represented approximately 5.8% of total held-to maturity debt securities at June 30, 2025.

Previous wording

Investment securities decreased $240.8 million, or 3.1%, to $7,503.8 million, or 26.5% of total assets, as of March 31, 2025, from $7,744.6 million, or 26.6% of total assets, as of December 31, 2024. The decrease was primarily resulting from called securities and normal pay-downs and maturities, partially offset by a $70.7 million increase in fair market values and $52.6 million in purchases of investment securities during the period.

Current wording

Investment securities decreased $432.4 million, or 5.6%, to $7,312.2 million, or 26.5% of total assets, as of June 30, 2025, from $7,744.6 million, or 26.6% of total assets, as of December 31, 2024. The decrease was primarily resulting from called securities and normal pay-downs and maturities, partially offset by a $115.4 million increase in fair market values and $78.3 million in purchases of investment securities during the period.

Previous wording

As of March 31, 2025 and December 31, 2024, we had $6,249.5 million and $6,296.7 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 $627.2 million as of March 31, 2025, and were attributable to changes in interest rates. At March 31, 2025 and December 31, 2024, the Company hadno allowance for credit losses on available-for-sale securities and an allowance for credit losses on held-to maturity securities classified as corporate and municipal securities of $0.8 million and $0.9 million, respectively.

Current wording

As of June 30, 2025 and December 31, 2024, we had $6,087.1 million and $6,296.7 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 $560.9 million as of June 30, 2025, and were attributable to changes in interest rates. At June 30, 2025 and December 31, 2024, the Company hadno allowance for credit losses on available-for-sale securities and an allowance for credit losses on held-to maturity securities classified as corporate and municipal securities of $0.7 million and $0.9 million, respectively.

Previous wording

Loans held for investment, net of deferred fees and costs, decreased $467.6 million as of March 31, 2025 as compared to December 31, 2024.

Current wording

Loans held for investment, net of deferred fees and costs, decreased $1,491.5 million to $16,353.4 million as of June 30, 2025 as compared to $17,844.9 million as of December 31, 2024.

Previous wording

The Company discontinued accepting applications to originate indirect loans during the first quarter of 2025. See “—Indirect Loans” above for additional information.

Current wording

The Company discontinued accepting applications to originate indirect loans during the first quarter of 2025, which resulted in $73.1 million of continued amortization for the indirect portfolio in the second quarter of 2025. See “—Indirect Loans” above for additional information. The Company sold $74.2 million of consumer credit card loans in the second quarter of 2025. See “—Consumer Credit Card Outsourcing” above for additional information. Additionally, the Company transferred during the second quarter of 2025 $338.3 million of loans held for investment to loans held for sale related to the pending sale of the Arizona and Kansas branches. See “—Pending Sale of Arizona and Kansas Branches” above for additional information regarding the pending transaction.

Previous wording

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 $53.6 million, or 38.8%, to $191.9 million as of March 31, 2025, from $138.3 million as of December 31, 2024, primarily due to an increase in non-accrual commercial real estate of $27.5 million, agricultural real estate of $15.2 million, and agricultural loans of $10.6 million during the first quarter of 2025. As of March 31, 2025 there were approximately $116.5 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.

Current wording

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 $54.4 million, or 39.3%, to $192.7 million as of June 30, 2025, from $138.3 million as of December 31, 2024, primarily due to an increase in non-accrual commercial real estate of $25.6 million, agricultural real estate of $15.5 million, and commercial loans of $10.9 million during 2025. As of June 30, 2025 there were approximately $130.3 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.

Previous wording

Loans contractually past due 90 days or more and still accruing interest. Loans past due 90 days or more accruing interest were $3.0 million as of March 31, 2025 and December 31, 2024.

Current wording

Loans contractually past due 90 days or more and still accruing interest. Loans past due 90 days or more accruing interest were $1.4 million as of June 30, 2025 compared to $3.0 million as of December 31, 2024.

Previous wording

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 decreased $0.8 million, or 18.6%, to $3.5 million as of March 31, 2025, from $4.3 million as of December 31, 2024, primarily resulting from the disposal of two commercial properties.

Current wording

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 decreased $0.9 million, or 20.9%, to $3.4 million as of June 30, 2025, from $4.3 million as of December 31, 2024.

Previous wording

Our allowance for credit losses was $215.3 million, or 1.24% of loans held for investment as of March 31, 2025 compared to $204.1 million, or 1.14% of loans held for investment, as of December 31, 2024. The increase reflected changes in loan balances, the attributes of the current portfolio, and changes in general economic outlook. The Company’s allowance for off-balance sheet credit losses was $5.1 million as of March 31, 2025, compared to $5.2 million as of December 31, 2024, due to a decline in off-balance sheet commitments.

Current wording

Our allowance for credit losses was $209.6 million, or 1.28% of loans held for investment as of June 30, 2025 compared to $204.1 million, or 1.14% of loans held for investment, as of December 31, 2024. The increase reflected changes in the mix of loan balances, the attributes of the current portfolio, and changes in the general economic outlook. The Company’s allowance for off-balance sheet credit losses was $4.8 million as of June 30, 2025, compared to $5.2 million as of December 31, 2024, due to a decline in off-balance sheet commitments.

Previous wording

Total liabilities decreased $914.9 million, or 3.5%, to $24,918.5 million as of March 31, 2025, from $25,833.4 million as of December 31, 2024, primarily due to decreases in other borrowed funds. Significant fluctuations in liability accounts are discussed below.

Current wording

Total liabilities decreased $1,688.8 million, or 6.5%, to $24,144.6 million as of June 30, 2025, from $25,833.4 million as of December 31, 2024, primarily due to decreases in deposits and other borrowed funds which was partially offset by an increase in long-term debt. Significant fluctuations in liability accounts are discussed below.

Previous wording

Our deposits consist of noninterest bearing and interest bearing demand, savings, individual retirement, and time deposit accounts. Total deposits decreased $282.8 million, or 1.2%, to $22,732.8 million as of March 31, 2025, from $23,015.6 million as of December 31, 2024, with decreases in all types of deposits except interest bearing savings deposits.

Current wording

Our deposits consist of noninterest bearing and interest bearing demand, savings, individual retirement, and time deposit accounts. Total deposits decreased $385.0 million, or 1.7%, to $22,630.6 million as of June 30, 2025, from $23,015.6 million as of December 31, 2024, with decreases in all types of deposits except interest bearing time, $250 and over deposits.

Previous wording

(1)Included in “Time, other” are IntraFi Network Deposits, or Intrafi, deposits of $12.4 million and $12.5 million as of March 31, 2025 and December 31, 2024, respectively.

Current wording

(1)Included in “Time, other” are IntraFi Network Deposits, or Intrafi, deposits of $13.4 million and $12.5 million as of June 30, 2025 and December 31, 2024, respectively.