First Interstate BancSystem, Inc.

What they do

The company is a financial and bank holding company incorporated in Montana in 1971 that delivers banking products and services, including online and mobile banking, to individuals, businesses, government entities and others. It operates through its subsidiary First Interstate Bank across Colorado, Idaho, Iowa, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington and Wyoming. Lending and deposits span industries including agriculture, construction, education, government services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism and wholesale trade. As of December 31, 2025 it reported consolidated assets of $26.6 billion, deposits of $22.1 billion, loans held for investment of $15.2 billion and total stockholders' equity of $3.4 billion.

Revenue drivers

• Net interest income — Earned on loans held for investment of $15.2 billion as of December 31, 2025, funded largely by $22.1 billion of deposits; net interest income rose $1.5 million to $202.2 million in the second quarter of 2026.
• Community banking footprint — Roughly 290 banking offices, including branches and detached drive-up facilities, across 12 states provide the deposit gathering and lending base for the franchise.
• Fee-based services — The stated strategy targets deepening full client relationships across deposits, lending and fee-based services; specific fee revenue figures were not provided in the excerpts.
• Acquired market expansion — Historical growth came through acquisitions including Mountain West Bank, Bank of the Cascades, Idaho Independent Bank and Great Western Bank; the current strategy emphasizes organic growth instead.

Recent performance

Second quarter 2026 net income was $83.9 million, or $0.87 per diluted share, versus $60.2 million, or $0.61, in the first quarter of 2026 and $71.7 million, or $0.69, a year earlier. The quarter included a $19.5 million gain on the April 10, 2026 sale of eleven Nebraska branches, which carried $244.2 million of deposits. Net interest margin rose to 3.45%, up 4 basis points from the first quarter and 15 basis points from the second quarter of 2025. Criticized loans fell to $937.4 million at June 30, 2026 from $1,033.2 million at March 31, 2026 and $1,203.0 million a year earlier; net charge-offs rose to $9.7 million, or 0.27% annualized of average loans, from $2.4 million the prior quarter. Total deposits fell 2.0% to $21,441.3 million from the first quarter, and declined 5.3% year over year partly on the Arizona and Kansas branch sales that included $641.6 million of deposits.

Strategy

Management is executing a plan to refocus capital investment, optimize the balance sheet and improve core profitability, including enhancing credit processes and risk culture and reviewing the branch network to exit markets not aligned with the strategy. In October 2025 the company completed the divestiture of its Arizona and Kansas banking operations, and the eleven-branch Nebraska sale closed on April 10, 2026; one Montana branch opened February 2, 2026 while six branches were slated to close in February 2026. The company exited its indirect lending origination business in early 2025 and outsourced its consumer credit card portfolio in mid-2025. A fourth-quarter 2025 reorganization shifted from a layered regional and market structure to a flatter model with new State Presidents. Capital return is part of the plan: the board authorized a $300.0 million repurchase program in August 2025 and increased it by $150.0 million on July 22, 2026, to $450.0 million total.

Risks

• Regulatory and compliance burden — The company is extensively regulated under federal and state banking laws and expects to remain subject to extensive regulation and supervision, with increased scrutiny across the banking sector.
• Credit quality and loan concentrations — Company risk factors cite lending risks and risks associated with loan portfolio concentrations; criticized loans were still $937.4 million at June 30, 2026 and net charge-offs rose to 0.27% annualized of average loans in the quarter.
• Deposit and balance sheet runoff — Total deposits fell 5.3% year over year to $21,441.3 million at June 30, 2026, driven in part by branch divestitures that removed $641.6 million and $244.2 million of deposits.
• Regulatory capital requirements — Risk factors note more stringent capital requirements to the extent they become applicable; common equity tier 1 was 14.54% at June 30, 2026, up 24 basis points in the quarter.

Outlook

CEO James A. Reuter said the company is focused on strengthening the quality and earnings power of the franchise, citing continued net interest margin improvement and meaningful progress reducing criticized loans. He said production and underlying account growth improved during the quarter, though elevated prepayment activity offset that momentum in reported balances, and pointed to fixed asset repricing, disciplined capital deployment, operating model optimization and investment in relationship growth. Management said it remains confident in delivering improving returns over time, and on July 22, 2026 the board declared a $0.47 per share dividend and increased the repurchase authorization by $150.0 million.