KBRA Affirms Ratings for First Interstate BancSystem, Inc.

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Billings, Montana-based First Interstate BancSystem, Inc. (NASDAQ: FIBK) (“First Interstate" or "the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for the bank subsidiary, First Interstate Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

FIBK’s ratings are supported by conservative balance sheet management, a strong deposit franchise, diversified geographic footprint, and a historically sound earnings profile. The balance sheet is constructed and maintained with a conservative risk profile, reflected in average risk-weighted asset density below 70% (approximately 10% below rated peers) and limited leverage, with a loan-to-deposit ratio of 69% (10%–20% below peers) at 4Q25. The company operates across ten states, supported by a diversified, low-cost deposit base, with a #10 or better market share in seven of those states. This strong deposit franchise drives total deposit costs that average 60–80 bps below peers and supports a high proportion of core deposits, representing 93% of total funding sources at 3Q25. While earnings performance has recently been weaker than historical ROAs of approximately 1%+, largely due to the liability-sensitive balance sheet during the interest rate hiking cycle, performance has improved more recently, driven by net interest margin expansion and lower provision expense. Management maintains a conservative credit philosophy and underwriting standards that have historically supported performance through periods of economic stress. Following the acquisition of Great Western Bancorp in 2022, First Interstate experienced some negative credit migration, largely attributable to idiosyncratic issues within the acquired loan portfolio. However, FIBK’s credit profile appears to have stabilized as the company has aggressively worked through acquired credits and further derisked the loan book.

Rating Sensitivities

Overall financial performance that is more consistent with the higher rating category—including strong asset quality metrics and conservative capital management—along with further expansion of durable, non–spread-related revenue, could support positive rating momentum over time. Conversely, any material, unforeseen losses or outsized asset quality deterioration could have negative rating implications. Additionally, a significantly more aggressive risk appetite, weaker liquidity profile, or less conservative capital management could pressure the ratings.

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