Annual Report 2018 | First International Bank & Trust

A MESSAGE FROM THE CEO

The journey of a successful, enduring business is inevitably a story of evolution. First International Bank & Trust started as a single branch in Arnegard, North Dakota, and over the course of 109 years has evolved into a bank with 27 locations spanning three states. At a time when most other community banks have been closing branches, we have experienced exponential growth. That’s been possible through holding tight to a very speci c set of beliefs, and accepting change in everything else.

We believe in living rst, but recognize that what that means is different for everyone. We believe in family values, but know every family is unique. We believe in honoring and learning from the past, but realize that the past doesn’t equal the future.

2018 was a year of exceptional change for our First International Bank & Trust family. Throughout this report you’ll learn about acquisitions that we believe have positioned us for continued growth in 2019, and will carry our business well into the future. We will continue providing exceptional banking, insurance, and investment products and services, while pushing the envelope of what‘s traditionally thought of as possible for a community bank.

Our family also underwent some exceptional change in the past year. As a father, it’s been rewarding seeing my children, the fourth generation of Stenehjem bankers, grow in their roles at First International Bank & Trust. It’s been beyond rewarding watching them grow their own families. Gretchen and I were overjoyed with the births of two grandchildren this year. The arrival of a fth generation has instilled in all of us an even greater sense of duty, to ensure continued growth of the bank.

Peter Stenehjem, Kira Stenehjem-Noll, Stephen L. Stenehjem, Gretchen Stenehjem, Erik Stenehjem

Speaking with customers at branches across our footprint offers me as CEO an opportunity to learn what truly makes their lives easier, and what they want a bank to do for them. First International Bank & Trust has always been proactive in responding to that feedback. That’s why we build branches that are more than just banks, they’re gathering places. Increasingly, I’m hearing customers need faster solutions that they can utilize on their own time. In 2018 our mortgage department rolled out a program that gets home buyers through the loan application process and into their new home in less than 20 days on average. At a number of our locations we rolled out Interactive Teller Machines, which allow a customer to have access to a personal banker through video beyond branch hours.

The past few years at the bank have been strong; our total assets grew 20 percent in a single calendar year, and nearly 80 percent over ve years. In 2019 we expect that trend to continue. We hope our country’s administration continues to provide regulatory relief, freeing us to concentrate less on government processes and more on what truly matters, serving our customers. While international trade issues and volatile gas and oil pricing continues, the overall economic outlook for the country and our region remains strong.

On behalf of the Stenehjem family, thank you to our employees, and our customers. Long lasting, quality relationships built between our clients and our bankers are the foundation we’ve built upon for more than a century. As we expand and grow, we remain committed to those relationships, and to our beliefs.

2017 - 2018

1-YEAR GROWTH

ACTUAL, YEAR OVER YEAR TOTAL LOANS

Stephen L. Stenehjem CEO/Chairman

20% TOTAL DEPOSITS

21% TOTAL ASSETS 19%

2013 - 2018

5-YEAR GROWTH

ACTUAL, YEAR OVER YEAR TOTAL LOANS 92% TOTAL DEPOSITS 77% TOTAL ASSETS 80%

We celebrated major milestones in 2018, and thank everyone who made our events and expansion successful. At the same time the year marked a new era for FIBT. Our expansion into the financial technology sector will allow us to remain competitive in an industry full of disruptors, and enable us to offer fresh customer first solutions .

-Stephen L. Stenehjem, CEO/Chairman

kotapay.com

Community banking will be taken beyond at First International Bank & Trust through its partnership with Kotapay. In April 2018, we added a leading electronic payments processor. Behind the scenes of an electronic transaction, multiple nancial institutions, including the Federal Reserve Bank, form a complex network to ensure the movement of funds. That process is made seamless with Kotapay, which manages the transactions, and makes sure your money reaches its intended destination.

Since its inception in 1993, Kotapay has been the behind the scenes processor at the forefront of technology, creating evolving solutions for payroll processors, accounting rms and other nancial institutions. The purchase allows First International Bank & Trust to move electronic solutions in house, cutting out problematic third parties. The move also gives Kotapay customers more peace of mind, since it’s now backed by the security and soundness of a regulated, high-performing bank.

Together, First International Bank & Trust and Kotapay are positioned to expand product and service offerings, better enabling both entities to create solutions and respond to needs than ever before.

-Peter Stenehjem, President

Instead of us having to wait for some third party software to develop or think of ideas, we can create our own. We can make things easier to access, providing all-encompassing financial information for our clients on multiple platforms.

44 MILLION TOTAL TRANSACTIONS PROCESSED

$62 BILLION MOVED/PROCESSED

74,000 CUSTOMERS ACROSS 50 STATES

6 AAP S

ACCREDITED ACH PROFESSIONALS ON STAFF

Front row: Greg Sagedahl, Jim Haug, Connie Mosier

Back row: Christy Stock, Michael Toy, Chad Schornack, Ember Verkuehlen

Kotapay headquarters; Fargo, ND

ODIN AWARD

Every year since 2012, we have awarded one employee with the Odin Award, named after Bank founder, Odin Stenehjem. The honor is given to those who best exemplify First International Bank & Trust’s Mission, Vision, and Values. It recognizes those who execute service at its highest level, and inspire those around them.

This year’s Odin Award is given to Rural Market President, Mark Friedt. He’s worked at First International Bank & Trust for 26 years. Mark is an active member of the community of Harvey, ND, volunteering for the Boy Scouts of America, and taking on fundraising efforts to improve the parks and recreation facilities.

In his nomination, a peer writes that Mark “…has the ability to wear multiple hats in the same day. He cares. He’s empathetic when he needs to be. He does not demand respect, but earns your respect. He allows his staff the freedom to do their job.”

HONORED EMPLOYEES

We are proud of the involvement our employees have in their communities and the leadership they provide both inside and outside of our bank walls.

BROCK DESLAURIERS

VP/NORTH HILL BRANCH MANAGER; MINOT, ND

Named to Prairie Business Magazine’s 40 under 40 list of top business professionals in the Northern Plains.

BANKING MADE EXTRAORDINARY

Every day we think about how we can make our bank better, our relationships more meaningful, and our communities stronger. We were recognized for those efforts on a national stage in 2018. The Institute for Extraordinary Banking™ named First International Bank & Trust its top bank at the Best Banks in America™ Super Conference.

This national honor was awarded for exemplary performance in ve areas of banking: philanthropy, customer service, thought leadership, workplace culture, and nancial literacy education. The awards recognize the top 1% of banks and highlight the vital role community banks play in the economy.

VICKI KARPYAK

SVP/DIRECTOR

OF OPERATIONS

Named to Prairie Business Magazine’s list of the Top 25 Women in Business in the Northern Plains.

Prairie Business Magazine

For a fth straight year, First International Bank & Trust was recognized by Prairie Business Magazine as one of the 50 Best Places to Work.

Minot Daily News

The bank was honored to once again be recognized by the Minot Daily News through the Reader’s Choice Awards for 2018.

Being recognized for our hard work in community banking feels amazing.

It’s nice to win awards, and reflect on how we’ve gotten here. But, this is not the finish line. We recognize the need to keep moving forward .

-Stephen L. Stenehjem, CEO/Chairman

NATIONALLY RECOGNIZED EXTRAORDINARY BANK OF THE YEAR

Justin Walseth, Michael Toy, Peter Stenehjem, Anita Quale, Blaine DesLauriers, Brian Hagen

EXPANDING INSURANCE OPTIONS

First International Insurance saw an evolution of its own in 2018, growing revenue a staggering 32% in a single year. We’ve positioned of ces in new markets, and increased our total number of agents by 30%.

Our new Grand Forks location is now home to two new agents, and we acquired a small existing agency in that same market. Through the purchase of Moorhead based Johnson & Johnson Insurance in late 2018, we brought additional agents with years of valuable experience to the First International Insurance family. These acquisitions also allowed First International Insurance agents to offer insurance through more companies, furthering our ability to offer existing and new clients better solutions for their needs.

Expansion at First International Insurance was not limited to geography. A dedicated life insurance division was added in 2018, further solidifying our position as the community bank offering solutions for every nancial need.

Continued growth is expected in 2019, with an emphasis on nding customer rst solutions. Right now, statistics show most people who purchase insurance research online, and buy in-person. In addition to integrating our new employees, we are working to integrate new web based solutions. We’re exploring online and app based options to print ID cards, pay bills, and even submit claims.

2018 REVENUE GROWTH ACTUAL, YEAR OVER YEAR

32%

Dan Toy, Vice President/Director of Insurance

MINERAL AND LAND SERVICES

Since the beginning, First International Bank & Trust has been based in the Bakken and Three Forks Formations of North Dakota, the second highest producing oil resource in the United States. Our Mineral and Land Services help those with mineral rights navigate this complex industry, and simplify how to make the most of those rights.

Five of seven Certi ed Mineral Managers (CMMs) in the state of North Dakota are with First International Bank & Trust, managing minerals under more than half of the states 15,000 active wells. Our CMMs are experts in negotiating leases and identifying lease strategies to help you make the most from your land and mineral rights. New state of the art software, implemented in 2018 provides owners with 24/7 access to their resources. First International Bank & Trust clients can view real-time maps of their wells and mines, monitor changes in activity, and monitor revenue all on one easy to use platform.

PRIVATE BANKING

First International Bank & Trust now offers Private Banking Services, to provide custom tailored banking solutions for you and your family. Your dedicated private banker will work with you to understand your values as well as your short and long term goals. With one-on-one service, your private banker is an experienced specialist in the use of customized and creative banking solutions. We will regularly re-evaluate your strategy with you, to stay aligned with changes in your life.

Our private banking experience is designed for the af uent and emerging af uent clientele, delivering services when and where it works best for you. Private banking clients can expect exclusive customized bene ts, a team of experts ready to assist in all areas of nancial services, and expedited access to capital.

We understand that it’s about more than just money in your account. It’s about building a trusted relationship. Your private banker is here to take care of your nancial service needs; to build that trust, to accomplish your goals, so you can do what matters most, Live First.

Charles Cooper Private Banking Manager East ND Market

Renee Daf nrud Private Banking Manager Central ND Market

Whether you have sole ownership or share your mineral rights with a diverse group, tools from our Mineral & Land Services put everything you need at your ngertips.

CELEBRATING SUCCESS

BISMARCK, ND

After years of planning and construction, First International Bank & Trust’s newest building in Bismarck opened its doors to the public in 2018, and we celebrated in a big way. An invitation only Toby Keith concert was held in September. More than two thousand guests from across our footprint were treated to performances by Keith and Ned LeDoux on a stage set up on the FIBT grounds. Extensive behind the scenes efforts were necessary to make this special night happen, but the investment of time and resources paid off. The Bismarck community has embraced First International Bank & Trust through its evolution in the market. The branch started with three employees in a single room in 2015, growing to more than 50 by the end of 2018. The new building has become a community gathering place, hosting events in the gallery and on the roof.

The state of the art 40 million dollar project houses the bank of ces, Stonehome Brewing Co., Sanford Health and Sanford Health Foundation administration and executives, and additional of ce space. The building’s footprint is matched by its nancial impact. Overall deposits at the location grew more than 100 percent in 2018, with lending keeping pace. The number of employees at the branch grew 29% over the course of the year.

GRAND FORKS, ND

Our Grand Forks branch celebrated its grand opening in early 2018, and within months, it was apparent we needed more space. Additional of ces were built out at the Columbia Commons location, to provide room for insurance agents and wealth management advisors, solidifying our presence as a full service community bank in one of North Dakota’s most populated cities.

CHANDLER, AZ

Mason,

Our footprint continues growing in Arizona, with plans for a new of ce in Chandler well underway. The new full service location will open in 2019, as a complement to our three existing of ces in the Phoenix metro area. Along with solid relationships built by our bankers, this new location will help strengthen our trend of solid growth in Arizona.

As good as 2018 was, it will not be the end of our impacting our community; this was simply the start. We now have Bismarck/Mandan’s attention and we fully intend to help lead our community into a great future.

-Dave

Bismarck Market President

CHANDLER PHOENIX

SCOTTSDAL E GILBER T

Every customer leaves feeling like family.

CORPORATE VALUES

Own the Choices You Make

Speak Up Respectfully

Make Decisions with Integrity

Take Pride in Your Work

Act Like Your Ride is Waiting

Learn from Yesterday, Rush for Mastery

Leave Your Mark on Our Communities

Seek the Sunshine Every Day

MOVING FORWARD, BY GIVING BACK

We believe in giving back to our communities and neighbors because ultimately, if they’re healthy and thriving, so are we. That’s why as a bank and as individuals we give of our time and money. Across our footprint, First International Bank & Trust donated millions of dollars to community and non-pro t organizations, and our employees volunteered nearly 4,000 hours.

The Family Splash Center at Bismarck’s YMCA, made possible by a First International Bank & Trust grant of $250,000, will offer a year round space for families to enjoy water activities.

When a tornado tore through Watford City in July, First International Bank & Trust employees were among the rst to respond, collecting food, water and other supplies for those in need, and setting up a bene t account to assist those affected.

Minot High School’s “Magic Carpet Fund” to install turf at its football stadium took ight with a $100,000 gift from the bank.

These are a few of the big ways we’ve stepped up to help our communities in 2018. We’d like to thank our individual branches and employees for lending a hand wherever, and whenever they saw it was needed.

PLOTTING PROGRESS

STATEMENT OF CONDITION GROWTH IN ASSETS

OF THE PAST, POISED FOR THE FUTURE

Odin Stenehjem Peter Stenehjem

PROUD

BOARD OF DIRECTORS

Jim Poolman Independent Consultant JIM POOLMAN CONSULTING

Ty LeSueur President LESUEUR INVESTMENTS

Mark Tollefson General Partner

TNT REAL ESTATE & PRAIRIE HEIGHTS APTS CEO Retired

RETAIL GROUP

Nancy Slotten Executive Vice President/Treasurer

Dennis Walsh Chief Credit Of cer

Michael Toy Chief Operating & Strategy Of cer

Blaine DesLauriers Vice Chairman

Peter Stenehjem President

Anita Quale Chief Financial Of cer

Erik Stenehjem President, Phoenix

Chairman of the Board

Stephen L. Stenehjem CEO/Chairman