Annual Report 2019 | First International Bank & Trust

A MESSAGE FROM THE CEO

It's with great gratitude and pride I reflect on 2019. As we begin a new decade, I find myself humbled by the accomplishments of the men and women who work for First International Bank & Trust, and the work of our community partners who've ensured our cities and towns continue to thrive.

2019 was another year of growth for First International Bank & Trust. We generated record revenue, opened a fourth location in the Phoenix Metro area, went through a major overhaul and expansion of our wealth management services, and expanded our workforce by more than 6 percent. You'll read more about those changes in pages ahead. That's why, internally, we've spent the past year highlighting our FIBT values. As we dive into 2020 and face some uncertainty in this election year, I feel it's essential to lean-in to things we are confident in, including those values.

Own the Choices You Make

During my time as CEO, we've made some bold decisions. We've expanded into rural communities, and built new branches at a time when other banks are retracting their footprints. We've built facilities that invite people in for social experiences, rather than just account transactions. We've purchased a fintech company to expand our technical and transmission capabilities beyond what you'd expect of a traditional community bank. Beyond these big choices, we're proud that our universal and personal bankers choose to greet you with a smile every time you walk into the bank, and that our lenders work with clients to get them qualified for a new home.

Speak up Respectfully

We understand growth doesn't come from doing things the same way you've always done them. That's why we encourage everyone in the organization to speak up when they see a better solution, a better way forward, or a way to make your experience better.

OUR MISSION

To be nationally recognized as a community bank whose innovation and drive for excellence is propelled by the best financial experts with heart.

OUR COMPANY VISION

Our customers leave feeling like family.

WE BELIEVE IN “LIVING FIRST”

Make Decisions with Integrity

Until 2013 our slogan at FIBT was "Never a loss of a depositor's dollar." It was a saying born out of the Great Depression. When periodic runs on banks caused many financial institutions to liquidate loans or, in many cases, fail, First International returned every dollar requested. The bank was able to do so because it made sound lending decisions and tough choices to liquidate assets. While we've since moved on from the slogan, our bankers and support staff bring the same line of thinking to the table today. We never want to jeopardize the confidence you instill in us to keep your money, property and personal information safe.

Take Pride in Your Work

Before I walk through the doors of our Watford City location in the morning, I take a moment to survey my surroundings and make sure everything is in its proper place; that there's no trash lying around. If there is, I take care of it. We rebuilt that location, our main branch, in 2006. I'm proud of everything our team at First International Bank & Trust has built, and I'm not too proud to get my hands dirty. Everyone at FIBT takes that stance. When there's a job to be done, they're ready to take it on, whatever it might be.

Act Like Your Ride is Waiting

You've probably heard it on our commercials, at First International Bank & Trust, we believe in “living first”. We understand, your time is valuable, and we recognize it's hard to get back to your life if you're waiting in line or on a decision from a lender. That's why we continue to refine our deposit and lending processes to get you accurate answers faster.

Learn from Yesterday, Rush for Mastery

We've learned some valuable lessons over the last 110 years in business. The economy has bloomed, boomed, crashed, and cycled time and again. Technology has evolved and changed our day to day operations. With these cycles and changes, we've had to adopt new ways of doing things. We've been nimble in our approach to lending, and in the way we do business. There have been setbacks along the way: complicated acquisitions, downturns in prices, and inflation. Rather than let those things define us, we used what we learned to shape our future.

Leave Your Mark on Our Communities

Some national banks claim to be your "ally," but when's the last time one of those banks sponsored your kids' baseball team, helped fund a facility in your community, or sent a banker to teach financial literacy at the local school? At First International Bank & Trust, investment in our communities is made in the hope for a better tomorrow through dollars and hours.

Seek the Sunshine Every Day

There's a saying, about sunshine being to flowers, what smiles are to people. My wife, Gretchen, and my daughter, Kira, work down the hall from me. If you've ever had the pleasure of meeting either one of them, you'd understand why even during long, cold, North Dakota winters, I can find sunshine pretty much anytime. One of our customer care representatives has a customer who uses the video capabilities on our interactive teller machine to deposit cash from walking dogs every single week. He tells me this gentleman always has a story that brings a smile to his face. No matter the depth of the relationship, it's essential to find those connections that will unfailingly bring value and joy to your life.

THANK YOU

First International Bank & Trust celebrates 110 years in 2020. Our foundation has been built on the bonds between our employees and our customers. On behalf of the Stenehjem family, thank you for your continued support. We remain committed to those relationships that we’ve worked so hard to build and to our values.

Stephen L. Stenehjem CEO/Chairman

WEALTH MANAGEMENT

Wealth Management Reimagined

At First International Wealth Management, our advisors understand, it’s not just about money. It’s about what you can achieve with your wealth. Whether your focus is on living your best life or saving for future generations, our experts can help you realize your dreams.

In 2019, First International Bank & Trust reimagined Private Banking and Wealth Management, to come up with a team approach, offering a custom-tailored experience for clients. Our process involves taking a step back and starting from the beginning with a straightforward question - what is most important to you?

We are committed to having exceptional people on staff who bring years of experience from various backgrounds. Having five attorneys on staff, along with other leaders in their fields, elevates our team’s capacity to provide guidance and perspectives to grow and protect our clients’ wealth.

Members of our Arizona Wealth Management Team

Back Row: James Vaccaro, Douglas Krebs, Chad Maze, Christina Ray, David Gryp

Front Row: Maralena Gardea, Jena Lugo, Anna Popova, Sue Hayes

Members of our Fargo Wealth Management Team: Eric Isaak, Charles Cooper, Teresa Harland

Private Wealth Management

Our Private Wealth Management clients have unfettered access to investment, trust, insurance, lending, and deposit experts. Based on your wants, needs and dreams, we assemble a team of experts with in-depth knowledge in specific areas of wealth management who also are driven to care for our clients in extraordinary ways. These experts analyze your unique circumstances and create a customized plan to get you to where you want to be.

Enterprise Retirement Solutions

With the addition of several key players, First International Bank & Trust has expanded our Enterprise Retirement Solutions team and offerings. We understand a retirement plan is among the most valuable benefits a business owner can set up for themselves and their employees. Our ERS experts have the experience and the knowledge to get you set up with the right combination of tools for a successful retirement savings plan,

such as 401(k) or ESOP plans. We also offer risk-mitigation through taking on fiduciary responsibility, for business owners who would like to outsource administrative duties.

First International Investments

Financial planning at some investment firms can feel like it’s less about you and more about selling you a particular brand of products. First International Investment Services is different. Here, we work to understand your specific goals, strategize with you, and provide investment options aligned with your particular needs. Whether you need traditional or non-traditional options, a first-time investor, or you’re planning your retirement, our experts can build a portfolio to help you reach your financial goals.

Mineral & Land Services

Cathrine Grimsrud joined First International Bank & Trust in 2019, as Managing Director of Mineral & Land Services. Cathrine works with our mineral clients to help guide them through the complexities of oil and gas rights, contracts, and payments.

Cathrine has more than a decade of experience in the oil & gas industry. Most recently, she served as senior attorney for an oil company based in Houston, Texas. Her diversified experience makes her a valuable asset to our FIBT team and our clients.

For more than 100 years, First International Bank & Trust has been based in the Bakken and Three Forks Formations of North Dakota—the second-largest producer of oil in the United States. Cathrine and the team at First International Bank & Trust have the experience and reputation for helping you negotiate the best lease terms and bonuses for your mineral interests.

“Negotiations with oil companies can be complicated and, at times, contentious. I’m thrilled to be back in North Dakota, using my expertise to give mineral owners peace of mind that their rights are being protected, and being an advocate in helping make the most of their assets,” Cathrine says of her move.

CREATING VALUE

Enhancing the FIBT Experience

Building relationships and reliable customer service have always been top priorities at FIBT. In 2019 we increasingly focused on how to cultivate the strongest possible connections with our customers and employees. Wendy Wills was made our Chief Experience Officer, charged with creating and enhancing memorable experiences between our brand, products, customers and employees.

“People have so many choices for financial services. Our goal is to build such strong relationship connections and value for our customers that they wouldn’t ever consider going anywhere else and openly refer their family and friends to us. We are making significant investments in making our experiences best-in-class, regardless if in-person, over the phone or through digital channels.”

Wendy Wills, Chief Experience Officer

Creating Connections with Customers

At its core, community banking is about just that: community. Whether the connection exists because of physical proximity or because of shared values, FIBT is always looking to expand its community of customers. That’s why we create beautiful, inviting physical spaces and invest in technology to enhance our digital experience while keeping personal connections at the forefront.

Our website is the busiest front-door we have to FIBT. In December of 2019 alone, we had 31,000 unique visitors to our site. An extraordinary effort has been made to change our website for the better. From how FIBT.com looks and reads, to how it functions; the redesign intends to improve the customer journey, from the home page through the application process.

Engaging our Employees

Any great customer experience starts with fulfilled employees. First International Bank & Trust has consistently been recognized as a top employer by various trade publications and industry organizations.

Organizational Development was created to enhance our internal structure, people, process, and tools to heighten capability and reach higher levels of performance. The team will be responsible for the employee journey at FIBT, from creating a consistent onboarding experience, through supporting and improving leadership ability, and empowering our customers and employees to Live First.

In 2019 we went about systemizing the development of our culture and people, shifting our focus from meeting immediate needs of individuals, to long-term team development.

Organizational Development Team Members: Laurette DeWulf, Tiffaney Holm, Tina Lemi, Matt Schirado, and Kacie Weber

Our electronic payments solution provider, Kotapay, experienced phenomenal growth in 2019. Increased enforcement of money transmitter licensing and regulation in several states left traditional payroll processors in need of a secure, immediate solution. As a division of FIBT, a federally regulated bank, Kotapay was uniquely positioned to offer that solution.

The unexpected closure of one of Kotapay’s competitors left more than 100,000 employers looking for payment solutions. Kotapay was able to step up; on-boarding nearly 30,000 new clients from the end of Q3 through Q4.

Another exciting and bittersweet change at Kotapay took place at the close of the year. Connie Mosier, who had been with Kotapay for nearly 20 years stepped down as Director, and into retirement. Connie had been instrumental in shaping the course of Kotapay through many internal changes as well as changes within the industry. Her knowledge of managing risk, working within the guidelines set by NACHA and banking regulations has positioned Kotapay as a leader within the ACH industry. Her dedication, knowledge and leadership will be missed.

Kotapay Expansion

Kotapay and First International Bank & Trust Operations employees moved to a new Fargo location in May of 2019. At more than 13,500 square feet, the new space is now home to nearly 60 Kotapay and First International Bank & Trust team members. Training and conference rooms were designed and outfitted with technology to enhance collaboration. A video wall at the entrance keeps our visitors and employees up to date on our current plans, projects, and products.

Jim Haug Director of Kotapay

+30,000

FROM THE END OF Q3 - Q4

After 17 years with Kotapay, Jim Haug has been promoted to Director of Kotapay. As the National Sales Manager, Jim has built solid relationships with industry leaders and our customers. As the landscape of electronic transactions continues to evolve, Jim is committed to providing the high standard of security and service customers have come to expect from Kotapay.

GROWTH & CHANGES

69 BILLION DOLLARS PROCESSED

Up from $62 Billion in 2018

103 , 000+ CLIENTS IN THE US

Up from 74,000 Clients in 2018

46 MILLION TRANSACTIONS

Up from 44 Million Transactions in 2018

5 AAPS ON STAFF

Accredited ACH Professionals

EXPANSION IN 2019

Chandler, Arizona

First International Bank & Trust opened the doors to its newest branch in Chandler, Arizona, in August 2019. The Chandler location is the 28th branch across our footprint and our fourth in the Phoenix Metro area. In addition to accommodating day-to-day personal and commercial banking needs, First International Bank & Trust provides mortgage, private wealth management, and insurance services. The building was fully renovated and boasts an elegant modern space. It is staffed with financial experts whose mission is to welcome guests and have them leave feeling like family.

"When we were looking at possible locations, Chandler was a natural fit. It complements our existing locations, in Gilbert, Scottsdale, and Phoenix to ensure our customers can easily access a banking professional, no matter where their day's travels take them."

Erik Stenehjem, FIBT Arizona President

Ribbon Cutting and Grand Opening Celebration of our newest FIBT office. Chandler, Arizona, October 2019.

Scottsdale, Arizona

In March of 2019, First International Bank & Trust welcomed customers and community partners to its newly remodeled location in Scottsdale, Arizona for its official grand reopening event.

The reimagined and completely redesigned space boasts larger conference rooms, new offices for more bankers, and covered parking for customers. Along with the new space, new technology enhances the customer experience at the branch. An Interactive Teller Machine gives clients access to live bankers via video beyond normal branch hours.

Moorhead, MN

First International Insurance celebrated its Grand Reopening in Moorhead in August. Formerly Johnson & Johnson Insurance Agency, LLC, the addition of the office, and its talented agents and support staff helped lead to one of the most successful years to date for First International Insurance.

Clockwise from top: Sleek Conference room, inviting entryway, and open concept lobby in our remodeled Scottsdale, Arizona office.

Bottom right: Cutting the ribbon for our new insurance office Moorhead, Minnesota, August 2019.

communities

Reported

2 , 708 ORGANIZATIONS 8 , 234 HOURS

Logged

Thank you to the hundreds of FIBT team members who made a commitment to better their communities in 2019.

Just a few of the ways FIBT and our employees gave back to organizations across our footprint in 2019.

Top: Live First Community Grant gifted to Harvey Ambulance Service. Arizona Helping Hands Gift Presentation. Zamboni Wrap Presentation at Cullen Hockey Center, Moorhead, Minnesota. Bottom: Amtryke Presentation, Bismarck, North Dakota. Amberley Snyder Community Event, Watford City, North Dakota. Volunteering at Missouri Slope Areawide United Way’s Annual Day of Caring.

AWARDS & HONORS

The

Banking™

BANK HONORS

Prairie Business 50 Best Places to Work

First International Bank & Trust is proud to be named to Prairie Business magazine's list of the Top 50 Best Places to Work, six years running.

In September of 2019, First International Bank & Trust was recognized with the Institute’s highest and most exclusive honor, being inducted into the Hall of Fame, for exemplary commitment to community banking.

In addition, we were recognized with the Institute’s Banky™ Award, and we received awards for company culture, community giving, and extraordinary bank practices.

Minot

The bank was honored to be once again recognized by the Minot Daily News through the Reader’s Choice Awards for 2019.

FIBT representatives at the Institute of Extraordinary Banking Awards, September 2019, Minneapolis, Minnesota. From left, Blaine DesLauriers, Wendy Wills, Anita Quale, Peter Stenehjem, Michael Toy, Brian Hagen.

THE READER’S CHOICE AWARDS

Extraordinary

Awards recognize the best of what community banks offer to our cities, towns, and nation: a true commitment to the success of the small businesses and local community they serve.

2019 Odin Award Recipient

Named after Odin Stenehjem, who founded our Bank in 1910, this award is given annually to the employee who best exemplifies FIBT’s Mission, Vision and Values. It recognizes those who execute service at its highest level, and inspire those around them.

Shannon Hammeren, our 2019 Odin Award recipient, is a Watford City native, growing up in First International Bank’s home town. Shannon has been with FIBT since 1995. He started as a college intern and made his way up through the information technology ranks. In his current role as IT Director, Shannon is the driver behind implementing change and being proactive in adapting new technologies and services.

Throughout his tenure with FIBT, Shannon has worked in Watford City, Minot, and he was our first employee in Bismarck, years before the branch there was built. He’s an active member of his church, and many area non-profits.

COMMUNITY LEADERSHIP HONORED EMPLOYEES

Peter Stenehjem was appointed to the Fargo Moorhead West Fargo Chamber of Commerce Board of Directors in September 2019. Peter is in the first of two possible three-year terms, and will assist in setting policy for The Chamber.

Dave Mason was appointed Chairman of the Independent Community Banks of North Dakota in August, 2019. In his role at ICBND, Dave advocates for the community banking industry, and our customers’ best interests.

Prairie Business 40 Under 40

Steve Stenehjem was named to Prairie Business Magazine’s inaugural list of Leaders & Legacies, recognizing regions best executives. The award is given to those who’ve done great things for business.

Perry Olson was recognized as one of the top 40 business professionals under the age of 40 in the Dakotas and western Minnesota. The award is given to the region’s rising stars, and Perry fits the bill, making a significant impact at FIBT and in the community of Minot.

Steve Stenehjem Chairman/CEO Watford City, North Dakota

Prairie Business Leaders & Legacies

Perry Olson Business Development Specialist Minot, North Dakota

Peter Stenehjem FIBT President

FMWF Chamber of Commerce

Board of Directors

Dave Mason Bismarck Branch President ICBND Chairman

Shannon Hammeren

IT Director

18

BOARD OF DIRECTORS

“2019 was all about building strength in capital, and income-stream diversification. FIBT remains well above the 10% benchmark for strong capital adequacy, maintaining its top tier status of “well capitalized” with the FDIC.

Considering the steady influx of non-traditional banks and fintech companies disrupting the industry, First International continues to expand its products and services, and looks for new opportunities to grow both in its core banking sector, as well as in new and innovative ways that will strengthen our status as one of the top community banks in the country.”

CHAIRMAN OF THE BOARD DIRECTORS

Dennis Walsh, Chief Credit Officer

Blaine DesLauriers, Vice Chairman

Anita Quale, Chief Financial Officer

Michael Toy, Chief Operating & Strategy Officer

Peter Stenehjem, President

Erik Stenehjem, President, Phoenix

Jim Poolman, Independent Consultant

Jim Poolman Consulting

Ty LeSueur, President

LeSueur Investments

Mark Tollefson, General Partner

TNT Real Estate & Prairie Heights Apts.

CEO Retired

Tollefson’s Retail Group

Nancy Slotten, Executive Vice President, Treasurer

Border States Paving, Inc.

Peter Stenehjem, President

STATEMENT OF CONDITION

GROWTH BY NUMBERS

15% Average assets 2019 over 2018 INCREASE

21% Net income 2019 over 2018 INCREASE

50% Total processed mortgages INCREASE