FIRST INTERSTATE BANCSYSTEM INCFIBK
FIRST INTERSTATE BANCSYSTEM INC Income Taxes Disclosure
INCOME TAXES
Income tax expense consists of the following:
| Year ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 61.5 | $ | 38.1 | $ | 46.1 | |||||||||||
| State | 17.0 | 9.7 | 12.8 | ||||||||||||||
| Total current | 78.5 | 47.8 | 58.9 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 9.0 | 17.8 | 16.0 | ||||||||||||||
| State | 2.1 | 2.9 | 4.4 | ||||||||||||||
| Total deferred | 11.1 | 20.7 | 20.4 | ||||||||||||||
| Total income tax expense | $ | 89.6 | $ | 68.5 | $ | 79.3 | |||||||||||
Total income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate of 21% for the periods presented to income before income taxes due to the following:
| Year Ended December 31, 2025 | Amount(1) | Percent | ||||||
| Tax expense at the statutory tax rate | $ | 82.3 | 21.0 | % | ||||
State income tax, net of federal income tax benefit(2) | 15.1 | 3.9 | ||||||
Federal tax credits(3) | (2.2) | (0.3) | ||||||
| Nontaxable or nondeductible items: | ||||||||
| Tax-exempt interest income, net | (4.2) | (1.1) | ||||||
| Bank owned life insurance income | (3.3) | (0.8) | ||||||
Other, net(4) | 3.3 | 0.8 | ||||||
| Other adjustments | (1.4) | (0.5) | ||||||
| Tax expense at effective tax rate | $ | 89.6 | 23.0 | % | ||||
(1) Reflects prospective adoption of ASU 2023-09
(2) State taxes in Montana, Oregon, and South Dakota made up the majority (greater than 50%) of the tax effect in this category.
(3) Company has adopted proportional amortization for new markets, historic, and low income housing tax credits. Therefore, the tax credits category includes the tax credit, net of the proportional amortization.
(4) Includes nondeductible expenses, shortfalls, and windfalls
| Year ended December 31, | 2024 | 2023 | |||||||||
| Tax expense at the statutory tax rate | $ | 61.9 | $ | 70.7 | |||||||
| Increase (decrease) in tax resulting from: | |||||||||||
| Tax-exempt income | (7.4) | (8.1) | |||||||||
| State income tax, net of federal income tax benefit | 10.0 | 13.6 | |||||||||
| Deficiency (benefit) of stock-based compensation plans | 0.6 | 0.3 | |||||||||
| Federal tax credits | (0.3) | (0.2) | |||||||||
| FDIC premiums | 2.5 | 2.0 | |||||||||
| Other, net | 1.2 | 1.0 | |||||||||
| Tax expense at effective tax rate | $ | 68.5 | $ | 79.3 | |||||||
The tax effects of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax asset (liability) relate to the following:
| December 31, | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Loans, principally due to allowance for credit losses | $ | 47.7 | $ | 50.7 | |||||||
| Loan discount | 7.0 | 11.5 | |||||||||
| Investment securities, unrealized losses | 59.3 | 106.1 | |||||||||
| Derivatives, unrealized losses | — | 0.8 | |||||||||
| Deferred compensation | 20.3 | 22.5 | |||||||||
| Non-performing loan interest | 3.2 | 2.5 | |||||||||
Net operating loss carryforwards (1) | 0.6 | 1.0 | |||||||||
| Lease liabilities | 8.1 | 8.9 | |||||||||
| Other reserves | 6.0 | 7.2 | |||||||||
| Contract incentives | 5.3 | 6.4 | |||||||||
| Discount on acquired investment securities | 3.6 | 6.8 | |||||||||
| Other | 3.4 | 4.3 | |||||||||
| Deferred tax assets | 164.5 | 228.7 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets, principally differences in bases and depreciation | (17.3) | (20.6) | |||||||||
| Deferred loan costs | (2.8) | (3.2) | |||||||||
| Derivatives, unrealized gains | (0.1) | — | |||||||||
Investment in joint venture partnership, principally due to differences in depreciation of partnership assets | (1.6) | (0.8) | |||||||||
| Right of use assets | (7.5) | (8.2) | |||||||||
| Prepaid amounts | (0.6) | (0.8) | |||||||||
| Government agency stock dividends | (1.2) | (1.2) | |||||||||
| Goodwill and other intangibles | (67.6) | (68.6) | |||||||||
| Mortgage servicing rights | (5.8) | (6.4) | |||||||||
| Other | (0.4) | (0.5) | |||||||||
| Deferred tax liabilities | (104.9) | (110.3) | |||||||||
| Net deferred tax assets | $ | 59.6 | $ | 118.4 | |||||||
(1) As of December 31, 2025, the Company had remaining federal net operating loss carryforwards of $1.7 million from acquired companies, which is available to offset federal taxable income, and state net operating loss carryforwards in Idaho. The federal net operating losses will expire in 2030 and the state net operating losses of $10.4 million began expiring in 2023 and ending in 2036. The use of these carryforwards is subject to annual limitations. The Company believes it is more likely than not that these items will be utilized within the carryforward period.
A valuation allowance was not required for the deferred tax assets as of December 31, 2025 and 2024 because it is more likely than not these assets will be realized through future reversals of existing taxable temporary differences, and future taxable income. Uncertain tax positions were not significant at December 31, 2025 or 2024.
The Company had current net income tax payable of $9.3 million and income tax receivable of $22.2 million at December 31, 2025 and 2024, respectively.
The Company is subject to income tax in the U.S. federal jurisdiction and also in various states. The Company is no longer subject to examination by taxing authorities for years before 2022.
The Company holds investments in certain tax-advantaged limited partnerships whose purpose is to invest in qualified affordable housing projects and community revitalization projects. The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods.
The carrying value of the Company’s tax credit investments was $83.8 million and $103.8 million as of December 31, 2025 and 2024, respectively, reported within other assets on the consolidated balance sheets. For the years ended December 31, 2025, 2024, and 2023 the Company recorded $10.7 million, $11.6 million, and $9.3 million, respectively, of amortization related to these investments under the proportional amortization method within the , and $0.3 million, $0.4 million, and $2.8 million of amortization within other on the consolidated statements of income.
For the years ended December 31, 2025, 2024, and 2023 the Company recorded $14.2 million, $13.3 million, and $9.8 million, respectively, in tax credits and other tax benefits within the on its consolidated statements of income.
The Company's unfunded capital commitments to these investments were $5.2 million and $25.2 million as of December 31, 2025 and 2024, respectively, reported within accounts payable and accrued expenses on the consolidated balance sheets.
| Cash Taxes Paid in the Current Period | |||||
| Year ended December 31, | 2025 | ||||
| Federal | $ | 29.5 | |||
| State | |||||
| Montana | 4.0 | ||||
| Other | 3.1 | ||||
| Total | $ | 36.6 | |||
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.