Two local banks, followed by a name with a separate history
Homer Scott, Sr. began building the modern First Interstate franchise by buying Bank of Commerce in Sheridan, Wyoming, in 1968 and a second bank in Billings, Montana, in 1970. A holding company followed in 1971. The institution expanded through local acquisitions and newly established banks, pairing a community-banking identity with a growing regional organization. [3]
The name has a useful complication. In 1984, the group licensed the First Interstate identity from Los Angeles-based First Interstate Bancorp. When Wells Fargo acquired that separate company in 1996, it did not acquire this bank. The Montana organization obtained an exclusive regional license to the name and logo and bought six former franchise offices. First Interstate Bank today is the Billings insured bank at FDIC certificate 1105, owned by First Interstate BancSystem, Inc. Its FDIC establishment date of October 9, 1916 predates Scott’s later franchise-building story. [2][3]
Great Western made the geographic leap
On February 1, 2022, Great Western Bancorp merged into First Interstate BancSystem, and Great Western Bank merged into First Interstate Bank. The bank remained the surviving insured institution. The acquisition carried the franchise into eight additional states; the acquired locations adopted the First Interstate identity in May. Legal closing and customer-facing conversion were separate milestones in a much larger integration. [3][4]
The combination extended the business across different local economies, but a wider map does not automatically produce a stronger operating model. Each market brings its own deposit competition, borrowing industries and service costs. The deal’s long-run economics depend on retaining relationships, integrating systems and allocating resources to markets where the bank can compete effectively. The later decision to sell selected branches demonstrates that acquiring a footprint need not mean keeping its exact boundaries indefinitely.
Branch sales changed both the map and the reported numbers
First Interstate sold its Arizona and Kansas branches in October 2025, then completed the sale of eleven Nebraska branches to Security First Bank on April 10, 2026. The Nebraska transaction transferred $244.2 million of deposits and $64.1 million of loans and generated a $19.5 million gain. By July 30, the company reported 271 banking offices, including detached drive-ups, across ten states. These dated counts are narrower than the footprint immediately after Great Western. [5][8]
The Nebraska customer notice shows that a branch sale is not necessarily a transfer of every relationship. Wealth management, credit-card accounts and some mortgages remained with First Interstate. For the accounts that moved, the buyer assumed the associated deposit and loan relationships alongside buildings and other assets. A decline in deposits following such a transaction includes balances deliberately transferred to another institution, not simply customers choosing to leave the continuing bank. [6]
The model retains local service within common controls
First Interstate reports one operating segment, community banking. Its annual filing describes local offices with authority to respond to customer and market needs, bounded by companywide standards and limits. Commercial and government banking sit alongside household deposits, mortgage services and wealth management. Income comes chiefly from loans and investments, supplemented by payments, deposit services, wealth fees and other activities. [7]
The model works through repeated use rather than only a single loan decision. A local business may borrow, accept customer payments and hold operating cash with the same bank; a government customer may maintain deposits while using transaction services. Local discretion can improve responsiveness, while shared risk standards and technology support a larger organization. The operating challenge is preserving that responsiveness without allowing different offices to develop incompatible controls or costly duplicate processes.
Product exits reduce balances before replacement relationships mature
In 2025, First Interstate stopped originating indirect consumer loans and outsourced its consumer credit-card portfolio. The annual filing placed those decisions within a shift toward relationship-based business and away from selected transactional exposures. Indirect loans were originated through dealers for vehicles and other consumer goods, a different distribution channel from a branch customer’s broader banking relationship. [7]
Existing loans do not disappear when new production ends. Borrowers continue repaying over their contractual lives, while the bank continues carrying the remaining credit and servicing obligations. As those assets run off, interest income can decline before other lending grows enough to replace it. This helps explain why a shrinking loan book can be partly intentional without making every decline evidence of success: the profitability and risk of the replacement business still have to emerge.
Deposits materially exceed the remaining net loan book
At June 30, 2026, the insured First Interstate Bank reported $25.795 billion of assets, $21.734 billion of deposits, $14.101 billion of net loans and leases and $3.251 billion of equity capital. Bank net income was $158.359 million for the calendar six months through June. These FDIC values describe the bank, rather than the consolidated parent or one quarter alone. [1]
Calculated from those balances, deposits were 84.3% of assets and net loans were 64.9% of deposits. The low net-loan-to-deposit ratio does not mean the remaining deposits sit idle: cash, securities and other assets also need funding. Nor is it a standalone verdict. Withdrawal behavior, asset maturities, collateral already pledged and the price at which securities can be sold all influence how flexible that balance sheet is under stress.
A securities-heavy balance sheet trades one set of risks for another
The parent’s June quarterly filing reported $7.986 billion of investment securities, including $2.216 billion classified as held to maturity. Their disclosed fair value was $2.000 billion. This gap illustrates interest-rate and market-value exposure that can exist even when scheduled principal payments are expected. The filing also estimated $7.9 billion of deposits above FDIC insurance limits, 36.9% of its reported deposit base. This estimate uses regulatory-report assumptions and is not a complete account-by-account insurance determination. [8]
Securities can supply cash through maturities, sales or collateralized borrowing, but those routes have different economic consequences. Selling can crystallize a market loss; borrowing commits collateral and incurs a funding cost. A bank with substantial deposits relative to loans therefore still has to manage repricing and carefully. Credit exposure and rate exposure can change in opposite directions when loans run off and investments make up a larger share of earning assets.
The second-quarter improvement was not solely recurring banking income
First Interstate BancSystem reported second-quarter 2026 net income of $83.9 million, compared with $71.7 million a year earlier. Net interest margin rose to 3.45% from 3.30%, while the Nebraska branch-sale gain made a substantial contribution to the quarter. Reported profit therefore combined changes in recurring banking income with the economics of a business disposition. These parent results are separate from the bank’s six-month regulatory income. [5]
The credit picture was mixed rather than uniformly improving. Criticized loans declined to $937.4 million from $1.033 billion in March, but quarterly net rose to $9.7 million, or an annualized 0.27% of average loans. Criticized balances identify heightened concern; charge-offs recognize losses, so improvement in one does not require simultaneous improvement in the other. The comparison is most informative when both measures and their different timing are retained. [5]
The next chapter is about what remains after expansion
James Reuter became president and chief executive in November 2024. His appointment preceded the subsequent branch and product reshaping. The resulting strategy is visible in the business itself: a smaller geographic footprint, fewer selected lending channels and more attention to the economics of retained customer relationships. The leadership change supplies chronology, without proving that one executive alone caused every subsequent outcome. [9]
First Interstate’s story is consequently more than a rise in asset size. Scott’s regional franchise expanded sharply through Great Western and then began redrawing the acquired footprint. Dated results show a stronger margin and lower criticized loans alongside asset runoff and a meaningful nonrecurring gain. Whether the remaining business produces durable earnings depends on new relationship formation, funding costs, securities repricing and the eventual losses in existing credits. [4][5][7][8]
Sources
- FDIC bank financials, June 30, 2026; dollar fields in thousands and income calendar-year-to-dateOfficial sourceBack to text: ↑
- FDIC institution directory, October 2, 2026 index; legal identity checked October 5, 2026Official sourceBack to text: ↑
- First Interstate official company history; Scott origins, name license and Great Western conversionSourceBack to text: ↑1↑2↑3
- Great Western Form 8-K, February 1, 2022; completed holding-company and bank mergersFiling / reportBack to text: ↑1↑2↑3
- First Interstate BancSystem second-quarter results, July 23, 2026; branch sales, earnings and credit measuresFiling / reportBack to text: ↑1↑2↑3↑4↑5
- First Interstate Nebraska branch-transition notice, March 10, 2026; relationship-transfer scopeSourceBack to text: ↑
- First Interstate BancSystem 2025 Form 10-K, filed February 26, 2026; business model and product exitsFiling / reportBack to text: ↑1↑2↑3↑4
- First Interstate BancSystem June 30, 2026 Form 10-Q, filed August 3, 2026; branch footprint, securities and fundingFiling / reportBack to text: ↑1↑2↑3↑4
- First Interstate appointment of James Reuter, October 9, 2024; effective November 1, 2024SourceBack to text: ↑