860413--2/19/2010--FIRST_INTERSTATE_BANCSYSTEM

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Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans. If we experience loan losses in excess of estimated amounts, our earnings will be adversely affected. Our goodwill may become impaired, which may adversely impact our results of operations and financial condition and may limit the ability of our wholly-owned subsidiary, First Interstate Bank, to pay dividends to us, thereby causing liquidity issues. Changes in interest rates could negatively impact our net interest income, may weaken demand for our products and services or harm our results of operations and cash flows. We may not continue to have access to low-cost funding sources. Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings. We may not be able to continue growing our business. Adverse economic conditions affecting Montana, Wyoming and western South Dakota could harm our business. We are subject to significant governmental regulation and new or changes in existing regulatory, tax and accounting rules and interpretations could significantly harm our business. Non-compliance with laws and regulations could result in fines, sanctions and other enforcement actions and the loss of our financial holding company status. The effects of recent legislative and regulatory efforts are uncertain. We are dependent upon the services of our management team. We may not be able to attract and retain qualified employees to operate our business effectively. A failure of the technology we use could harm our business and our information systems may experience a breach in security. An extended disruption of vital infrastructure and other business interruptions could negatively impact our business. Recent market disruptions have caused increased liquidity risks. We may not be able to meet the cash flow requirements of our depositors and borrowers unless we maintain sufficient liquidity. We may not be able to find suitable acquisition candidates. We may be unable to manage our growth due to acquisitions, which could have an adverse effect on our financial condition or results of operations. We face significant competition from other financial institutions and financial services providers. We may not be able to manage risks inherent in our business, particularly given the recent turbulent and dynamic market conditions. Our systems of internal operating controls may not be effective. We may become liable for environmental remediation and other costs on repossessed properties, which could adversely impact our results of operations, cash flows and financial condition. We may not effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. We are subject to claims and litigation pertaining to our fiduciary responsibilities. The Federal Reserve may require us to commit capital resources to support our bank subsidiary. Failure to meet our debt covenants could result in our debt becoming immediately due and payable, which could adversely impact our results from operations, cash flows and financial condition. We may be adversely affected by the soundness of other financial institutions. The short-term and long-term impact of the new Basel II capital standards and the forthcoming new capital rules to be proposed for non-Basel II U.S. banks is uncertain. Our Bank s ability to pay dividends to us is subject to regulatory limitations, which, to the extent we are not able to receive such dividends, may impair our ability to grow, pay dividends, cover operating expenses and meet debt service requirements. Risks Relating to Investments in Our Common Stock Our dividend policy may change. Our common stock is not publicly traded. Shares of our common stock are subject to contractual transfer restrictions. We have no obligation to repurchase outstanding shares of common stock and we are subject to limitations on the amount of common stock we may repurchase. Members of the Scott family have voting control of our company and are able to determine virtually all matters submitted to shareholders, including potential change in control transactions. Future equity issuances could result in dilution, which could cause the value of our common stock to decline. Our common stock is not an insured bank savings account or deposit.

Full 10-K form ▸

860413--2/19/2010--FIRST_INTERSTATE_BANCSYSTEM_INC