KBRA Affirms Ratings for First National of Nebraska, Inc.

KBRA affirms the senior unsecured debt rating of A-, the subordinated debt rating of BBB+, and the short-term debt rating of K2 for First National of Nebraska, Inc. (OTC: FINN or “the company”), a closely-held bank holding company headquartered in Omaha, Nebraska. KBRA also affirms the deposit and senior unsecured debt ratings of A, the subordinated debt rating of A-, and the short-term deposit and debt ratings of K1 for First National Bank of Omaha, the lead subsidiary. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by FINN’s differentiated earnings profile which includes a more diverse business model generating greater revenues through both spread-based and noninterest income sources. FINN has generally outperformed rated peers in recent years, including an ROAA of 1.8% for 1H26. FINN’s various fee generating business lines (credit cards, wealth/trust and investment advisory services, broker dealer, IT managed services, insurance, etc.) have consistently provided peer-leading noninterest income, totaling $385 million through 1H26 (2.2% of average assets). Historically, noninterest income has been driven by the company’s sizable credit card business, however, growth across its other fee generating business lines has created much greater revenue diversification with interchange fees representing 20% of total noninterest income through 1H26 (as compared to 34% in 2023). Moreover, FINN’s leadership is highly experienced within the credit card space and has demonstrated its ability to manage the risks associated with credit cards as reflected by the strong risk adjusted yields generated over a multi-year period (above 11% since 2023). Overall, KBRA maintains a favorable view towards FINN’s leadership and its robust risk management practices that cover its diverse set of business lines.

FINN maintains a durable, primarily core deposit funding base, supported by a broad retail branch network, complemented by its small business and commercial banking segments. The company’s funding costs have tracked in-line with rated peers (2.09% for 2Q26), further augmenting its NIM (6.39% at 2Q26), which greatly benefits from its higher yielding credit card portfolio (total loan portfolio yield was 9.78% at 2Q26). FINN’s capital ratios have been somewhat volatile in recent years, largely due to its activity in the M&A space, though the company has demonstrated, over time, its ability and willingness to rapidly rebuild capital ratios following a merger (FINN’s CET1 ratio increased ~100 bps since its acquisition of Country Club Bank in 4Q25 to 12.8% at 2Q26).

Rating Sensitivities

The Stable Outlook reflects KBRA's view that a rating change is not likely over the medium term. However, should FINN experience a material shift in credit quality, including risk-adjusted yields in the CC portfolio falling measurably below historical norms, impacting the profitability of the company, or should FINN become more aggressive with regard to its capital management strategy, with capital ratios consistently tracking below peer levels, negative rating action could ensue.

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Methodology