Annual Report 2022 | First International Bank & Trust

PROUD ANNUAL REPORT 2022

of the past

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FIRST INTERNATIONAL BANK & TRUST

a message from

STEPHEN L. STENEHJEM C E O/C H A I R M A N O F F I R ST I N T E R N AT I O N A L B A N K & T R U ST

First International Bank & Trust saw loan

why we embrace change and encourage new

Farmers State Bank in Arnegard, North Dakota

ideas within our organization. We consciously

growth take off with our total loans growing

in 1910, he envisioned a strong community bank

put independent consultants on our Board of

by 19.56%. We’re focused on maintaining both

built on sound principles and an unwavering

Directors to gain valuable outside perspective.

loan and deposit growth.

dedication to our customers. Over the past

We provide vigorous leadership training for our

112 years, First International Bank & Trust has

employees and encourage life-long learning to

weathered two world wars, the Great Depression,

make sure they’re prepared for future years. We

technological revolution, and catastrophic world

diversify our assets through specialized divisions

events. Anything you can imagine, we’ve been

such as Kotapay and MineralTracker® which helps

through it before - from high unemployment rates

protect us from the ebbs and flows of market

and high taxes to economic booms and financial

conditions and demands. We do these things so

prosperity. The one constant is we always come

we can continue to be the community bank our

out of those challenging situations stronger than

customers want, need and appreciate.

we were before.

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•

When my grandfather Odin Stenehjem founded

To give you a glimpse of our accomplishments

It’s a fact of life businesses need to change with

over this past year, I’m pleased to share the 2022

the times to best serve their customers. That’s

Annual Report.

•

Banking operations in Arizona continued to build on the momentum from the previous year with robust increases in both our loan and deposit portfolios. We feel our continued focus on relationship-building and customer service has been the key to our success.

•

We’re continuing to grow in Sioux Falls and are seeing success in bringing our “Live First” form of community banking to South Dakota. The opening of our newest branch is allowing us to form deeper relationships

•

with our customers and serve the

some loan business or work on some

community in new ways.

operational improvements. Instead,

Kotapay saw incredible growth in 2022 and experienced yet another year with zero fraud losses. The team set some new records including most dollars processed in a day, and highest number of monthly transactions. It’s a exceeded our income and revenue goals and are poised to serve more clients than ever before in 2023.

This past year, I celebrated my 40th anniversary with the bank. When I first moved back to Watford City in 1982, it was hard to imagine the future that was in store for both me, my family, and the bank. I’m not only

banker, I’d spend a lot of my time keeping our small town alive. What that meant to my dad, and now to me, was investing time into the things that matter and making a difference in ways that improve the standard of living and economics for our communities. That’s something we’ll

THANK YOU For 112 years, First International Bank & Trust has developed a bond between our employees and our customers. We currently serve a wide range of rural and urban communities across North Dakota, South Dakota, Minnesota, and Arizona. On behalf of the Stenehjem family, thank you for your continued support. We remain committed to those relationships we’ve worked so hard to build and to our values that have helped us get to where we are today.

always be dedicated to, regardless

O UR M ISSI ON

of the circumstances or economic

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

environment.

As we look forward to another year, I’m thankful for the continued support of our customers. On behalf of the entire First International Bank & Trust family, thank you for trusting us with your financial needs.

O UR VIS ION Our customers leave feeling like family.

O UR VALUES Own the Choices You Make

proud of our growth,

Speak Up Respectfully

but also the culture

Make Decisions with Integrity

we’ve created. At First

Take Pride in Your Work

International Bank &

Act Like Your Ride is Waiting

Trust, we are truly a

Learn from Yesterday, Rush for Mastery

family.

Leave Your Mark on Our Communities

Shortly after starting

FIRST INTERNATIONAL BANK & TRUST

credit to the whole team that we

he told me that as a community

Seek the Sunshine Every Day

at the bank, I sat down with my dad and asked him what I should focus on. I thought he’d tell me to go out and develop ON THE COVER: ODIN STENEHJEM

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LIVE FIRST

say yes to

LIVING FIRST We all want to spend our time on the things that truly matter, don’t we? At First International Bank & Trust, we have a phrase for that – we call it Living First. Our customers, employees, and future customers all have a different vision of what “Live First” means. That’s the beautiful part! Whether someone wants to buy a house with a bigger yard so the kids can run around or pack up to travel the country in a new RV, Living First always starts with a choice. It requires us to Say Yes. 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 continue to grow, we remain committed to that personal touch. We place tremendous importance on remaining local, caring for our customers, and staying involved in our communities.

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Last year, we announced a $200,000 donation to the Staples-Motley Independent School District in Minnesota.

The contribution, of which $100,000 has already been delivered, is supporting the school district on its upcoming activities and wellness facilities addition. We strongly believe this collaboration to enhance phase one of the school’s improvement plan will contribute to a healthier community for all and a pooling of resources will result in smart, collective, and impactful investments.

We also contributed to the Nistler College of Business and Public Administration capital project at the University of North Dakota. The new building features the Stenehjem Family/First International Bank & Trust Executive Boardroom on the second floor of the facility.

Medical Center for a new medical facility in Rugby, North Dakota. The Heart of America Medical Center is Rugby’s largest employer, and this new facility will assure state of the art healthcare services for 11,000 citizens in the region.

LIVE FIRST

FIBT was a significant donor to the Heart of America

FIBT also donated $50,000 to the Trinity Health Foundation’s Capital Campaign in support of its new hospital and medical facility that are currently under construction in Minot, North Dakota. We are passionate about funding projects that create and sustain strong communities and are honored to partner with Trinity in contributing to the health and wellness of our community members.

We continue to support Sanford Health initiatives and STENEHJEM FAMILY MEMBERS IN SIOUX FALL, SD TO CELEBRATE THE GRAND OPENING OF THE NEW FIBT BRANCH.

events in the Bismarck, Fargo, and Sioux Falls regions, particularly highlighting pediatric and adult behavioral health, children’s cancer treatment, and endowment funding.

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DIGITAL INNOVATION

the digital

FRONTIER At its core, digital innovation is about optimizing processes and creating efficiencies so we can focus on relationships and better serving our customers. Through technology, there are many ways we’re able to protect you or your business. One of the most valuable tools for businesses is Positive Pay, our solution that helps you be proactive in reducing the possibility of losses incurred by fraud.

In the pages to come, you’ll hear about other ways we’re continuing to expand our services to help our customers, such as our brand-new Evolve Payment Solutions program. No matter the business climate or economic environment, we remain committed to innovation and finding new ways to optimize your banking experience.

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MINIMIZING RISK Our check Positive Pay system compares checks presented for payment to your issued-check files verifying check numbers, dollar amounts, and issue dates. It also gives you the control to designate approved payees. Exception items are presented to you daily for “pay or return” decisions, giving you peace of mind. ACH Positive Pay provides your business with similar control by allowing you to accept ACH transactions you authorize and return those you do not.

We also offer the FIBT CardApp, available for consumers and businesses in both Apple and Android app stores. CardApp allows you real-time access to transactional information and you the capability to turn your card on and off with the click of a button. You can also restrict the use of your card to only certain types of transactions to protect yourself against fraud or put checks and balances in place.

KOTAPAY Our electronic payments division, Kotapay, serves more than 107,268 companies nationwide and experienced remarkable growth in 2022. The team came together to enhance our

DIGITAL INNOVATION

the ability to manage and monitor your spending. It gives

internal processes, improve customer experience, and overall run an effective and streamlined service for our clients.

Our comprehensive underwriting process, top-notch fraud detection systems, and the diligence of the Kotapay team, allowed for another year with zero fraud losses. In 2023,

“Working with Kotapay, I know the people on the other end of the phone/computer, and they know me. I’m not just a number to them. They are always happy to provide assistance when I call [and] ensure my company’s direct deposit transactions are handled properly, timely, and accurately. They provide an unrivaled service at a very reasonable price.”

- Rebecca Tompkins, Forest Acres Payroll, LLC

Kotapay will celebrate its 30th year of providing fast, accurate electronic transaction ®

services to companies of all sizes.

$99 BILLION PROCESSED IN 2022 UP FROM $90 BILLION IN 2021 | UP FROM $83 BILLION IN 2020

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CUSTOMERS FIRST

leading with

SERVICE Not only did we launch our updated business card program, but we were also hard at work preparing an enhanced online banking experience for our business users. Rolling out in 2023, we are excited for the new features and functionality. Our goal will always be to elevate the experience for both our personal banking and business banking customers, so you can continue to effortlessly manage your finances from anywhere.

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COMMERCIAL & AG BANKING Overall, our Ag producers overcame weather concerns and high input costs to have a profitable 2022. A number of our communities were affected by an unprecedented April blizzard in North Dakota which caused losses for livestock operations and set back spring planting for many. Growing conditions in the upper Midwest were favorable early but the lack of late summer moisture reduced some crop yields.

Commodity markets for grains were favorable with high levels in late summer, but declined later in the year. Cattle prices prices have been variable.

Our portfolio of Ag loans for producers increased by 11% in 2022 and our loans for agriculture real estate increased by 12% in 2022. Agriculture in the Dakotas and Minnesota is impacted by weather and economic conditions. Much of the region is drier than normal so timely moisture will be necessary in 2023 for strong production. Agriculture input

CUSTOMERS FIRST

have improved over the prior four years while dairy and pork

costs remain at high levels, and we anticipate the 2023 crop will be the most expensive on record in terms of input costs.

We were excited to launch Evolve Payment Solutions. While it’s tempting to think of them as just credit or payment cards, they are much more. They are sophisticated payment mechanisms that allow your business to maximize cash flow, gain efficiencies and cost savings while earning rewards – just for directing payments through this payment resource.

Evolve comes with an online system, eZBusiness, that allows the business administrators to access reports, control access levels for end users, and much more.

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WEALTH MANAGEMENT During times of uncertainty, managing your wealth is more important than ever. It takes skill to efficiently create, preserve, and grow wealth and having experts in your corner makes the job easier. First International Bank & Trust’s Wealth Management Division provides custombuilt solutions tailored specifically to you. We can help with retirement planning, annuities, mutual funds, stocks & bonds, estate planning, and college funding. Whatever your long-term goals, our financial planners listen to your needs and manage your investments, so you can focus on what

CUSTOMERS FIRST

matters most – Living First.

Oil prices have bounced back since 2020 and both oil and natural gas production is growing. First International Bank & Trust’s MineralTracker recently produced and presented a 40-page summary to the North Dakota Land Board estimating the total value of North Dakota-owned oil and gas mineral rights at $2.8 billion, an 18% increase from prior year. Joel Brown, Mineral Services Manager, says that North Dakota’s mineral rights may bring in an estimated $10 billion in royalties over the next few decades. To continue enhancing service to our customers, we updated our MineralTracker alert system so that users receive automatic alert emails when a new well is added. * Not FDIC or any Federal agency insured | no bank guarantee | may lose value

WEALTH MANAGEMENT

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“...North Dakota’s mineral rights may bring in an estimated $10 billion in royalties over the next few decades” - Joel Brown, Mineral Services Manager

RESERVE BASED LENDING

MORTGAGE

A new niche opportunity with Reserve Based Lending, that is

Throughout 2022, the rate environment had an impact on

secured by oil and gas assets brought in nearly $100 million

our Mortgage Division. Market conditions caused a shift in

of new loans. Reserves Based Lending allows individuals and

buyer behaviors resulting in a drop in mortgage purchase

enterprises to obtain a loan by putting their oil or gas field or

volume. Despite that, we had a successful year. By the end

a portfolio of undeveloped or developed and producing oil

of December, we were able to streamline our application-

and gas assets up as collateral. The loan is then repaid using

to-final-approval time from 25 days to less than 15 days,

the proceeds from sales in the field or portfolio.

which is nearly 50% faster than the industry norm of 30 days.

INSURANCE

We are always looking to improve our experience so that we deliver the mortgage journey in the best way possible.

When it comes down to it, we believe that a decision as

moment, whether it’s a medical emergency, an unexpected

big as homeownership should come with confidence and

death, or damage to your vehicle or property. For many,

a team who cares. With First International Bank & Trust,

bearing the financial impact of these situations can prove to

not only will you work with our local experts to make the

be a major challenge. That’s why insurance is a key part of

mortgage process simple and comfortable, but you’ll also

financial planning. Proper coverage for the things that matter

have peace of mind knowing you’re partnering with a

most can provide you with greater peace of mind.

family-owned community bank that has your best interest

Whether it’s life insurance or coverage for your home, car, or business, our independent insurance agents will help you find the best policy to suit your needs and budget, giving you access to a wide portfolio of insurance products from more

at heart. If you’re thinking about buying a different home, refinancing, using the equity in your home, or becoming a

CUSTOMERS FIRST

Throughout life, unforeseen circumstances can pop up at any

landlord, our mortgage loan officers can help you Say Yes to the next step toward your dreams.

than 35 companies we represent. * Not FDIC or any Federal agency insured | no bank guarantee | may lose value

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COMMUNITY INVOLVEMENT

leaving a mark on our

COMMUNITIES Whether it’s a significant donation or spending a few hours helping a local organization, we believe in giving back to our communities. We challenge our employees to leave a mark on the areas we serve. They continually rise to the challenge and amaze bank and community leaders with their dedication to service.

Thank you for the FIBT team members who made a commitment to better their communities in 2022!

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COMMUNITY GIVING $4.25 million donated to charitable organizations Since its creation in 2014, our Live First Community Giving Campaign has awarded more than $185,000 in grants to 66 nonprofit organizations and community projects. This year, more than 150 community organizations applied for our Eighth Annual Live First Community Giving Campaign. We awarded $43,000 in grants to 15 nonprofits and community projects, including our grand prize winner: Camp Metigoshe out of Bottineau, North Dakota.

Camp Metigoshe is a summer camp located in North Dakota’s Turtle Mountains. Rooted in the Lutheran tradition, the camp welcomes people of all background and faith traditions including those who may not know what they believe.

In addition to our charitable donations and Community Giving Campaign, we also provide funding for higher education.

Including fall semester of 2022, FIBT has given out $970,300 in student grants to our employees and employee’s students who are attending post-secondary education since the

COMMUNITY INVOLVEMENT

$15,000 Grand Prize Award – Camp Metigoshe, Bottineau, ND

beginning of the program in 1997.

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EXPANSION

a mindset of

GROWTH Our priority is to deliver a top-notch experience to every customer, from start to finish. Taking great care in the design and layout of our locations helps us make an impactful first impression and sets a positive tone for the interaction ahead. To better serve our customers and expand our South Dakota and Minnesota footprints, we opened two new locations in early 2023.

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THE WAITING AREA IN THE

EXPANSION & RENOVATION

NEW SIOUX FALLS, SD BRANCH

Sioux Falls, South Dakota Near the end of 2021, First International Bank & Trust purchased property on the southwest corner of 14th and Minnesota Avenue. This past year, we were hard at work on the beautiful building and celebrated the grand opening in January 2023.

In February 2023, First International Bank & Trust opened the doors of its new Moorhead location. The brand-new building is

EXPANSION

Moorhead, Minnesota

8,200 square feet and features ten offices, two teller pods, and a two-lane drive-thru. It houses both the Moorhead banking and insurance teams.

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AWARDS & HONORS

recipient of the

2022 ODIN AWARD J O H N D R A DY, M A R K E T P R E S I D E N T

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 inspires those around them.

John Drady, our 2022 Odin Award recipient, currently serves as Market President of our Central North Dakota region and leads Treasury Management at FIBT. He has been with the bank for 29 years and is a prominent member of the Minot community. John has impacted countless customers and employees across our footprint. His confidence, banking expertise, and integrity will leave a legacy for years to come.

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BOARD OF DIRECTORS

AWARDS & HONORS

CHAIRMAN OF THE BOARD

HONORED EMPLOYEES

Stephen L. Stenehjem, CEO/Chairman

ICBND 2022 Distinguished Community Banker Award STEPHEN L. STENEHJEM C E O/C H A I R M A N | WAT FO R D C I T Y

DIRECTORS

For the past 24 years, Independent Community Banks of North

Blaine DesLauriers, Vice Chairman

Dakota (ICBND) has given this prestigious award to an active or

Peter Stenehjem, President

former community banker for exemplary and outstanding service

Erik Stenehjem, Chief Credit Administrator Officer

to community banking over an extended career. The recipient

Dennis Walsh, Chief Credit Officer

must have served at the local and state level and may have

Michael Toy, Chief Operating & Strategy Officer

served at the national level as well. Stephen’s father Leland M. Stenehjem was posthumously honored in 2017, making Stephen

Jim Poolman Consulting Top 25 Women in Business | Prairie Business Magazine

Mark Tollefson, General Partner, TNT Real Estate & Prairie Heights Apts., CEO Retired Tollefson’s Retail Group Michelle Kommer, Founder and Owner, HighRoad Partners, LLC

Top 40 Business Professionals Under 40 | Prairie Business Magazine

WENDY WILLS

DREW FLAAGAN

CHIEF EXPERIENCE OFFICER SIOUX FALLS, SD

COMMERCIAL LOAN OFFICER WATFORD CITY, ND

AWARDS & HONORS

the second Stenehjem to receive the award

Jim Poolman, Independent Consultant,

Ty LeSueur, President, LeSueur Investments Nancy Slotten, Executive Vice President, Treasurer,

BANK HONORS

Border States Paving, Inc.

PB 50 Best Places to Work 2022 N A M E D TO P R A I R I E B U S I N E SS M AG A Z I N E ’ S L I ST O F T H E TO P 5 0 B E ST P L AC E S TO WO R K FO R N I N E CO N S E C U T I V E Y E A R S .

After 19 years of dedicated service, Nancy Slotten retired from the First International Bank & Trust Board of Directors. Thank you, Nancy!

READERS

CHOICE

AWARDS 2022

Minot’s Readers’ Choice Awards 2022 VOT E D B E ST C U STO M E R S E RV I C E BY T H E M I N OT DA I LY N E WS R E A D E R ’ S C H O I C E AWA R DS

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STAT EM EN T O F CO N D ITIO N ASSETS 1 2022

2021

Cash and Due From Banks

$100,269,195

$377,711,787

U.S. Government Bonds

$266,432,317

$390,705,907

State and Municipal Obligations

$292,260,391

$368,757,800

Other Securities

$32,360,296

$15,398,958

$ 6 9 1 , 3 2 2 ,1 9 9

$ 1 ,1 52 , 574 , 4 52

$4,023,864,028

$3,365,517,627

($36,936,602)

($32,386,751)

$3,986,927,426

$3,333,130,876

$153,365,239

$155,966,807

$77,685,131

$64,996,279

$231,050,370

$220,963,086

$4,909,299,995

$4,706,668,414

2022

2021

Demand Deposits

$2,678,867,104

$2,689,298,782

Time & Savings Deposits

$ 1 , 4 6 5 ,73 3 , 8 1 8

$ 1 , 478 , 972 , 9 41

Total Deposits

$4,144,600,922

$4,168,27 1,723

Borrowed Funds

$390,000,000

$140,000,000

Other Liabilities

$29,855,996

$20,961,330

$4,564,456,918

$4,329,233,053

$344,843,077

$377,435,361

$4,909,299,995

$4,706,668,414

Current Assets Loans and Lease Financing Receivables Reserve for Possible Losses

BY THE NUMBERS

Net Loans Bank Premises & Equipment Other Assets Total Other Assets Total Assets

LIABILITIES & CAPITAL1

Total Deposits & Other Liabilities Total Capital Total Liabilities & Capital

1

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Assets, Liabilities and Capital as of December 31 - Unaudited

Y E A R - E ND TOTA L ASSE TS

$ 4, 909, 299, 995

2022

$ 4,706, 668 , 414

2021

$4,163,724, 913

2020

$2,939,331,138

2018

$ 2 ,463,2 83,849

2017

$ 2 ,2 6 2 ,0 02 ,873

2016 0

BY THE NUMBERS

$3,460,539,345

2019

1 .0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5

G ROW T H BY N UMB E R S | YE A R OVER YEAR

24.84%

IN C R EAS E Ne t I n co m e

19.56%

I N C RE ASE

Total Loan Growth

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poised for the

FUTURE ANNUAL REPORT 2022

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