KBRA Assigns Ratings to BancIndependent, Inc.

KBRA assigns a senior unsecured debt rating of BBB, a subordinated debt rating of BBB-, and a short-term debt rating of K3 to Florence, Alabama-based BancIndependent, Inc. ("BI" or "the company"). In addition, KBRA assigns deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 to its main subsidiary, Bank Independent ("the bank"). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

BI’s ratings are underpinned by its solid funding profile, driven by a healthy and stable deposit base. Core deposit funding is a credit strength, with a loan-to-core deposit ratio of 79% at 3Q25 relative to the rated-peer average of 104%. The deposit base has historically demonstrated stability, with no major outflows amidst liquidity stress experienced by the banking sector in early-to-mid 2023. This reflects the bank’s dominant deposit market share in its legacy markets, where its brand reputation is quite strong.

The earnings profile is supported by an above-average NIM, stemming from the mid-teens loan yields in the IBS business and also aided by a 1.36% cost of deposits owing to BI’s legacy markets. This is partly offset by an above-peer efficiency ratio (~70%) due to recent investments in infrastructure, tech, and office consolidation. However, profitability should benefit moving forward as these expenses come off the books and the associated revenues of the newly opened branches build.

Consolidated capital ratios (CET1 ratio of 10.6%) are reasonable in the context of BI’s business model and risk profile. That said, as a privately owned bank, capital flexibility is relatively constrained as BI is unlikely to raise outside equity. Therefore, it is reliant upon internal generation of CET1 capital from BI’s steady earnings profile. Looking ahead, capital retention is an area of emphasis, and KBRA expects BI’s capital ratios to build.

KBRA views asset quality as a strength relative to peers, as evidenced by low NCOs in recent years driven by BI’s proactive approach to NPAs. The portfolio is also conservatively underwritten and supported by a management team with extensive experience in market. That said, KBRA notes BI’s heavy exposure to the economic condition of northern AL.

Rating Sensitivities

Over the longer term, positive rating sentiment could emanate from sustained improvement in capital, efficiency, and maintenance of the strong credit and funding positions. Although a rating downgrade is unlikely, deterioration in capital without a credible plan to rebuild due to earnings pressure, or an unexpected weakening in asset quality or funding could pressure ratings.

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Methodologies