First Interstate BancSystem, Inc. Announces Acquisitions to Expand Presence in Idaho

BILLINGS, Mont. & COEUR D’ALENE, Idaho & POST FALLS, Idaho–(BUSINESS WIRE)–First Interstate BancSystem, Inc. (“First Interstate”) (NASDAQ: FIBK),
parent company of First Interstate Bank and Inland Northwest Bank,
announced today the concurrent signing of two separate definitive merger
agreements. Under one agreement, First Interstate will acquire Idaho
Independent Bank (“IIB”) (OTC Pink: IIBK), headquartered in Coeur
d’Alene, Idaho. Under the other agreement, First Interstate will acquire
Community 1st Bank (OTC Pink: “CMYF”), headquartered in Post
Falls, Idaho. Upon completion of each acquisition, the banks will merge
into First Interstate Bank, a wholly-owned subsidiary of First
Interstate.

Founded in 1993, IIB is a full-service community bank, with
approximately $725 million in assets, $362 million in loans, $610
million in deposits, and $69 million in shareholders’ equity at June 30,
2018. IIB operates 11 branches throughout Idaho, with a large presence
in both the greater Boise-Nampa area and the Coeur d’Alene markets.

CMYF has three locations in North Idaho with $130 million in assets, $78
million in loans, $116 million in deposits, and $13 million in
shareholders’ equity at June 30, 2018.

“We are excited to announce these partnerships that build upon our
growing commitment to Idaho,” said Kevin Riley, Chief Executive Officer
and President of First Interstate. “Idaho Independent Bank and Community
1st bring solid and experienced bankers and each have a
commitment to clients very similar to First Interstate. The combination
will further leverage our significant investment in people, processes,
and technology while positioning First Interstate as a leading
institution in Idaho’s fastest growing markets. Both are a great fit for
us geographically, strategically, financially, and culturally. Idaho
Independent Bank and Community 1st Bank both share an
operating philosophy, commitment to community banking, and view of
corporate responsibility similar to us, which should allow for a
seamless integration of our companies.”

Each transaction complements First Interstate’s existing footprint,
which spans six states (Idaho, Montana, Oregon, South Dakota,
Washington, and Wyoming). Riley added, “Expanding in Idaho will increase
the growth profile of our franchise by adding to our presence in higher
growth markets. Both Idaho Independent Bank and Community 1st
Bank have achieved compound annual loan growth of greater than 9% since
2013. We believe the addition of these attractive franchises will
positively impact our balance sheet growth and earnings potential. We
are excited to deepen our presence throughout Idaho, and look forward to
welcoming our new clients and employees to the First Interstate family.”

Pro forma including both acquisitions, First Interstate will have
approximately $14.1 billion in total assets, $8.9 billion in total
loans, $11.4 billion in total deposits, and $1.8 billion in
shareholders’ equity.

Subject to the terms of the IIB merger agreement, IIB stockholders will
receive 0.5 First Interstate Class A common shares per IIB share, or
approximately 3.87 million First Interstate shares in aggregate. Using a
price per share of First Interstate Class A common stock of $45.45 per
share as of October 5, 2018, the transaction results in an implied
purchase price of $22.73 per share, which equates to an aggregate value
of $181.3 million, including $5.4 million in cash consideration for
option holders.

“We are excited to join the First Interstate team and look forward to
the opportunities and benefits this combination will bring to our
clients, employees, and shareholders,” said Jack Gustavel, Executive
Chairman and founder of IIB. As part of the transaction, Kurt Gustavel,
current President and Chief Executive Officer of IIB, will be retained
by First Interstate and serve as Regional President for Idaho and
Eastern Washington.

Subject to the terms of the CMYF merger agreement, CMYF stockholders
will receive 0.3784 First Interstate Class A common shares per CMYF
share, or approximately 0.46 million First Interstate shares in
aggregate. Using a price per share of First Interstate Class A common
stock of $45.45 per share as of October 5, 2018, the transaction results
in implied purchase price of $17.20 per share, which equates to an
aggregate value of $21.5 million, including $0.6 million in cash
consideration for option holders.

“Our bank has a long-standing history of service excellence and giving
back to the community,” said David Bobbitt, Chairman and Chief Executive
Officer of CMYF. “First Interstate Bank is just the right partner to
extend and build upon this proud legacy.”

First Interstate expects the transactions will result in annual earnings
per share (EPS) accretion of over 3% in the first full year after
acquisition and beyond. First Interstate is expected to recover the
minimal tangible book value dilution resulting from these transactions
in less than two years.

Each of the IIB and CMYF merger agreements has been unanimously approved
by the First Interstate and First Interstate Bank boards of directors.
The board of directors of IIB has unanimously approved the IIB merger
agreement, and the CMYF board of directors has unanimously approved the
CMYF merger agreement. Completion of the merger with IIB is subject to
customary closing conditions, including receipt of required regulatory
approvals and the approval by the stockholders of IIB. Completion of the
CMYF merger is also subject to customary closing conditions, including
receipt of required regulatory approvals and the approval by the
stockholders of CMYF. Each of the transactions is expected to close and
convert its data processing systems to First Interstate in the first
half of 2019. Neither transaction is conditioned on the completion of
the other.

Piper Jaffray & Co. served as financial advisor and Luse Gorman, PC
served as legal counsel to First Interstate. Sandler O’Neill & Partners,
L.P. served as financial advisor and Witherspoon Kelley served as legal
counsel to IIB. D.A. Davidson & Co. served as financial advisor and
Breyer & Associates PC served as legal counsel to CMYF.

CONFERENCE CALL

First Interstate management will review additional information regarding
the transactions during the third quarter earnings conference call
beginning at 11 a.m. Eastern Time on Thursday, October 25, 2018. The
call may be accessed by dialing 1-877-507-0356. To participate via the
Internet, log on to www.FIBK.com.
A replay will be available approximately one hour after the end of the
conference call by dialing 1-877-344-7529. The conference ID is
10124778. The call will also be archived on First Interstate’s website, www.FIBK.com.
Additionally, a presentation with information about these transactions
can be accessed on the Webcasts and Presentations page of First
Interstate’s investor relations website.

About First Interstate BancSystem, Inc. and First Interstate Bank:

First Interstate BancSystem, Inc. is a financial services holding
company, headquartered in Billings, Montana, with $12.2 billion in
assets as of June 30, 2018. It is the parent company of First Interstate
Bank, a community bank operating over 120 banking offices, including
online and mobile banking services, throughout Idaho, Montana, Oregon,
South Dakota, Washington, and Wyoming. It is also the parent company of
Inland Northwest Bank (“INB”), which was acquired by First Interstate in
August 2018. The data processing conversion and merger of INB with and
into First Interstate Bank will take place in November 2018; INB’s 20
locations in Idaho, Oregon, and Washington will officially open their
doors as First Interstate Bank on Tuesday, November 13, 2018.

As a recognized leader in community banking services, First Interstate
is driven by strong values, as well as a commitment to delivering a
rewarding experience to its employees, strong returns to shareholders,
exceptional products and services to its clients, and resources to the
communities it serves.

About Idaho Independent Bank:

IIB was established in 1993 as an Idaho state-chartered, commercial bank
and currently operates branches in Boise, Caldwell, Coeur d’Alene,
Hayden, Meridian, Mountain Home, Nampa, Star, and Sun Valley/Ketchum,
Idaho. IIB was named (in a 2018 survey conducted by Populus) as one of
the Top Ten Best Places to Work in Idaho, is one of the 2018 Top Ranked
Community Banks in the Idaho Business Review Reader Rankings, and
was named among the top 1% most extraordinary banks in the U.S. by The
Institute for Extraordinary BankingTM in 2016. To learn more
about IIB, visit theidahobank.com.

About Community 1st Bank:

Established in 2007, CMYF was the first chartered community bank in Post
Falls, Idaho in over 104 years. CMYF was built on the service philosophy
of “Do the Right Thing” and serves customers throughout North Idaho with
three full-service branch locations in Post Falls and Coeur d’Alene. As
of June 30, 2018, CMYF had $130 million in total assets, $78 million in
loans, $116 million in deposits, and $13 million in shareholders’
equity. To learn more about CMYF, visit com1stbankid.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Rule 175 promulgated thereunder, and Section 21E of the Securities
Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder,
that involve inherent risks and uncertainties. Any statements about
First Interstate’s or the combined company’s plans, objectives,
expectations, strategies, beliefs, or future performance or events
constitute forward-looking statements. Such statements are identified as
those that include words or phrases such as “believes,” “expects,”
“anticipates,” “plans,” “trend,” “objective,” “continue,” or similar
expressions or future or conditional verbs such as “will,” “would,”
“should,” “could,” “might,” “may,” or similar expressions.
Forward-looking statements involve known and unknown risks,
uncertainties, assumptions, estimates, and other important factors that
could cause actual results to differ materially from any results,
performance, or events expressed or implied by such forward-looking
statements. Such forward-looking statements include but are not limited
to statements about the benefits of the business combination transaction
involving First Interstate Bank and IIB, and First Interstate Bank and
CMYF, including future financial and operating results, the combined
company’s plans, objectives, expectations and intentions, and other
statements that are not historical facts. These forward-looking
statements are subject to risks and uncertainties that may cause actual
results to differ materially from those projected, including but not
limited to the following: the possibility that the merger does not close
when expected or at all because required regulatory, shareholder, or
other approvals and other conditions to closing are not received or
satisfied on a timely basis or at all; the risk that the benefits from
the transaction may not be fully realized or may take longer to realize
than expected, including as a result of changes in general economic and
market conditions, interest and exchange rates, monetary policy, laws
and regulations and their enforcement, and the degree of competition in
the geographic and business areas in which First Interstate, IIB, and
CMYF operate; the ability to promptly and effectively integrate the
businesses of First Interstate Bank and IIB, and First Interstate Bank
and CMYF; the reaction of the companies’ customers, employees, and
counterparties to the transaction; and the diversion of management time
on merger-related issues.

These factors are not necessarily all of the factors that could cause
First Interstate’s or the combined company’s actual results,
performance, or achievements to differ materially from those expressed
in or implied by any of the forward-looking statements. Other unknown or
unpredictable factors also could harm First Interstate’s or the combined
company’s results.

All forward-looking statements attributable to First Interstate’s,
IIB’s, CMYF’s, or the combined company’s or persons acting on First
Interstate’s, IIB’s, or CMYF’s behalf are expressly qualified in their
entirety by the cautionary statements set forth above. Forward-looking
statements speak only as of the date they are made and First Interstate,
IIB, and CMYF do not undertake or assume any obligation to update
publicly any of these statements to reflect actual results, new
information or future events, changes in assumptions, or changes in
other factors affecting forward-looking statements, except to the extent
required by applicable laws. If First Interstate, IIB, or CMYF update
one or more forward-looking statements, no inference should be drawn
that First Interstate, IIB, or CMYF will make additional updates with
respect to those or other forward-looking statements.

Additional Information about the IIB Merger and Where to Find It

This communication is being made with respect to the proposed
transaction involving First Interstate and IIB. This material is not a
solicitation of any vote or approval of the IIB stockholders and is not
a substitute for the proxy statement/prospectus or any other documents
that IIB may send to stockholders in connection with the proposed
merger. This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities.

In connection with the proposed merger, First Interstate will file with
the Securities and Exchange Commission (the “SEC”) a Registration
Statement on Form S-4 that will include a proxy statement of IIB and a
prospectus of First Interstate, as well as other relevant documents
concerning the proposed merger with IIB. Before making any
voting or investment decisions, investors and stockholders are urged to
read the Registration Statement and the proxy statement/prospectus
regarding the proposed merger with IIB, as well as any other relevant
documents filed with the SEC and any amendments or supplements to those
documents, because they will contain important information.
IIB will
mail the proxy statement/prospectus to its stockholders. Stockholders
are also urged to carefully review and consider each of First
Interstate’s public filings with the SEC, including, but not limited to,
its Annual Reports on Form 10-K, its proxy statements, its Quarterly
Reports on Form 10-Q, and its Current Reports on Form 8-K. Copies of the
Registration Statement and proxy statement/prospectus and other filings
incorporated by reference therein, as well as other filings containing
information about First Interstate, may be obtained as they become
available at the SEC’s Internet site (http://www.sec.gov).
You will also be able to obtain these documents, free of charge, from
First Interstate at www.fibk.com
or by contacting First Interstate BancSystem, Inc., 401 N. 31st
Street, Billings, Montana, 59116, Attention: Marcy Mutch, Chief
Financial Officer, telephone: 406-255-5312.

First Interstate, IIB, and certain of their directors and executive
officers may be deemed to be participants in the solicitation of proxies
of IIB’s stockholders in connection with the proposed transaction.
Information about the directors and executive officers of First
Interstate and their ownership of First Interstate common stock is set
forth in the proxy statement for First Interstate’s 2018 Annual Meeting
of Stockholders, as filed with the SEC on Schedule 14A on March 16,
2018. Additional information regarding the interests of those
participants and other persons who may be deemed participants in the
transaction with IIB may be obtained by reading the proxy
statement/prospectus regarding the proposed merger when it becomes
available. Free copies of this document may be obtained as described in
the preceding paragraph.

Additional Information about the CMYF Merger and Where to Find It

This communication is being made with respect to the proposed
transaction involving First Interstate and CMYF. This material is not a
solicitation of any vote or approval of the CMYF stockholders and is not
a substitute for the proxy statement/prospectus or any other documents
that CMYF may send to stockholders in connection with the company’s
proposed merger. This communication does not constitute an offer to sell
or the solicitation of an offer to buy any securities.

In connection with the proposed merger, First Interstate will file with
the Securities and Exchange Commission (the “SEC”) a Registration
Statement on Form S-4 that will include a proxy statement of CMYF and a
prospectus of First Interstate, as well as other relevant documents
concerning the proposed merger with CMYF. Before making any
voting or investment decisions, investors and stockholders are urged to
read the Registration Statement and the proxy statement/prospectus
regarding the proposed merger with CMYF, as well as any other relevant
documents filed with the SEC and any amendments or supplements to those
documents, because they will contain important information.
CMYF
will mail the proxy statement/prospectus to its stockholders.
Stockholders are also urged to carefully review and consider each of
First Interstate’s public filings with the SEC, including, but not
limited to, its Annual Reports on Form 10-K, its proxy statements, its
Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K.
Copies of the Registration Statement and proxy statement/prospectus and
other filings incorporated by reference therein, as well as other
filings containing information about First Interstate, may be obtained
as they become available at the SEC’s Internet site (http://www.sec.gov).
You will also be able to obtain these documents, free of charge, from
First Interstate at www.fibk.com
or by contacting First Interstate BancSystem, Inc., 401 N. 31st
Street, Billings, Montana, 59116, Attention: Marcy Mutch, Chief
Financial Officer, telephone: 406-255-5312.

First Interstate, CMYF, and certain of their directors and executive
officers may be deemed to be participants in the solicitation of proxies
of CMYF’s stockholders in connection with the proposed transaction with
CMYF. Information about the directors and executive officers of First
Interstate and their ownership of First Interstate common stock is set
forth in the proxy statement for First Interstate’s 2018 Annual Meeting
of Shareholders, as filed with the SEC on Schedule 14A on March 16,
2018. Additional information regarding the interests of those
participants and other persons who may be deemed participants in the
transaction may be obtained by reading the proxy statement/prospectus
regarding the proposed merger with CMYF when it becomes available. Free
copies of this document may be obtained as described in the preceding
paragraph..

Contacts

First Interstate BancSystem, Inc.:
Marcy Mutch, 406-255-5312
Chief
Financial Officer
marcy.mutch@fib.com
or
Idaho
Independent Bank:

Kurt Gustavel, 208-947-1130
President
and Chief Executive Officer
kurt.gustavel@iibk.com
or
Community
1
st Bank:
David Bobbitt, 208-667-6060
Chairman
and Chief Executive Officer
david.bobbitt@com1stbankid.com

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