FIRST INTERSTATE BANCSYSTEM INC (FIBK): what the price requires
At today's price, FIRST INTERSTATE BANCSYSTEM INC (FIBK) is priced for 10.7% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FIBK
Headline
| Field | Value |
|---|---|
| Ticker | FIBK |
| Company | FIRST INTERSTATE BANCSYSTEM INC |
| Current price | $38.79/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 10.7% |
| Return on equity now | 8.8% |
| ROE gap | +1.9pp |
| Price-to-book | 1.12x |
Solve inputs: computed at a 10% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.95σ |
| cohort percentile (of 119 peers) | 19 |
| sustained it ~10 years at this level | 74% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.14x | 3 | expensive |
| Earnings | 0.78x | 2 | justifies |
| Relative | 0.36x | 3 | justifies |
| Growth | 1.09x | 2 | expensive |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.0%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $21.78 | 1.78x | yes | TBVPS $22.75 × 0.96x (ROE (TTM) 9.3% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.35% allowance/loans → ×0.95) |
| Relative Valuation | Relative | $30.60 | 1.27x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.5x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $65.32 | 0.59x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $34.00 | 1.14x | yes | BV/sh $33.84, ROE (TTM) 9.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $34.08 | 1.14x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $24.37 | 1.59x | yes | Rev $0.8B, growth -1% (input: historical growth; tapered), Terminal P/S: 4.0x / 4.7x / 5.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $107.10 | 0.36x | yes | EPS $3.06, growth 35% (input: historical EPS growth), PEG=0.35 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $48.27 | 0.80x | yes | √(22.5 × EPS $3.06 × BVPS $33.84) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $98.74 | 0.39x | yes | EPS $3.06 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $114.75 | 0.34x | yes | EPS $3.06 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $33.08 | 1.17x | yes | EPS $3.06 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 1.7% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
The market is pricing First Interstate as a recovery story.
The fundamentals are more modest than the price implies. Return on equity sits right at the 9.3% cost of capital, the breakeven line, so the bank is earning its cost of capital and not much more.
Q1 2026 was a small miss: EPS of $0.61 against a $0.63 estimate, softer revenue, a $0.47 dividend, and $84 million of buybacks. The capital return is generous, but it rests on a high payout and a margin recovery that has to keep going.
Bull Case
Start with what the market is pricing in, then check it against the fundamentals, because the gap is the whole question. What it is paying for is visible in the margin: net interest income divided by average earning assets, which the 10-K describes as the core profitability measure (accession 0000860413-26-000011), rose to 3.41% in Q1 2026, a 5-basis-point gain over the prior quarter and 22 basis points over the year. A regional bank with a widening margin and a stable, low-cost deposit base across its Rocky Mountain footprint is exactly the kind of name that re-rates as profitability recovers.
The fundamentals are catching up to the price, even if they have not fully arrived. Return on equity sits at about 9.3%, right at the cost of capital, which means the franchise has moved back to earning what its equity costs after a softer stretch. The excess-return methods land at $34, the relative-valuation method at $31, and the earnings-yield method at $33, all close to the price, so the market is not paying a fanciful premium; it is paying for a bank back at its earnings-based fair value with the margin trend still pointed up.
Capital return sweetens the wait. The board declared a $0.47 quarterly dividend, a high-single-digit-percentage yield, and the company repurchased about $84 million of stock in the quarter. For a value buyer who believes the margin recovery has further to run and that the breakeven return is a floor rather than a ceiling, a well-capitalized regional bank at roughly fair value, returning cash aggressively while it re-rates, is a reasonable bet.
Bear Case
The concern that should give a holder pause is governance and capital allocation, not the valuation in isolation. In mid-2026 First Interstate terminated its executive vice president and chief operating officer, with the chief executive temporarily absorbing the role, and around the same window a ten-percent owner sold 15,000 shares worth roughly $540,000. A C-suite departure that the company handled as a termination, paired with insider selling, is the kind of signal that rarely accompanies a clean recovery story, and it deserves more weight than a single-quarter margin tick.
The capital-return generosity that the bull case celebrates is the second worry, because of how it is funded. The dividend payout ratio sits near 76%, which ranks worse than the large majority of banks, and the company is also buying back stock, all while return on equity merely matches the 9.3% cost of capital. A bank distributing three-quarters of earnings and repurchasing shares while earning only its cost of capital is returning capital it is not comfortably out-earning. That is fine in a stable environment and a problem if credit costs rise or the margin recovery stalls, because the buffer to sustain both the dividend and the buyback is thin.
The valuation already reflects the optimistic case, so there is little cushion. The most rigorous bank frame, the one that does not assume a sharp growth ramp, places the stock well below the price, and the rate-robustness flag on the inversion is off, meaning a less favorable rate path would pressure the very margin recovery the price depends on. Revenue already came in soft in Q1 and EPS missed, so the fundamentals are not running ahead of expectations. A bank earning its cost of capital, paying out more than it earns, with a fresh management gap and insider selling, is priced for a recovery that the recent evidence has only partially delivered.
Valuation
First Interstate is a financial, so the read is the return on equity against its cost and the multiple of book it earns. The bank earns about 9.3% on equity against a 9.3% cost of capital, exactly breakeven, which is why the bank-specific tangible-book model assigns it just under one times TBVPS of $22.75 and lands at $22. That is the conservative anchor, and it sits well below the current price near $36.
The earnings-based methods are friendlier and explain why the stock holds above that anchor. The simple and two-stage excess-return methods both land at $34, the earnings-yield method at $33, the relative-valuation method at $31, and the Graham number at $48. The future-market-cap method, weighed down by slightly negative recent revenue growth, lands lower at $23, and the dividend-discount method, the most optimistic, at $65. The blended view across the applicable methods is near $34, just below the price.
The resulting band runs from about $19 at the low end to $27 at the base and $31 at the high, with reliability tagged as ok, and today's price sits above that high mark. That is the tension: on the excess-return and earnings methods the stock is roughly fair, but on its own band and on tangible book it is full. The composite reads within range as a value-supported name, but with the return only at breakeven, the deciding variable is whether the margin keeps recovering, because the price has already discounted that it will.
Catalysts
Q1 2026, reported in late April, was the most recent data point and it was a modest miss. EPS came in at $0.61 against a $0.63 estimate on revenue of $243.1 million, slightly below the $247.6 million expected, but the net interest margin improved to 3.41%, up 5 basis points sequentially and 22 basis points year over year. The next print is the test of whether the margin recovery continues or has plateaued.
The management transition is the catalyst that changes the narrative. The company terminated its chief operating officer in mid-2026, with the chief executive temporarily covering the role, and a ten-percent owner sold shares around the same period. How quickly the role is permanently filled, and whether further insider activity follows, will shape sentiment more than the quarterly numbers.
Capital return is the supporting thread, but a watchful one. The board declared a $0.47 quarterly dividend and the company repurchased about $84 million of stock, generous distributions against a payout ratio near 76% and a return on equity at breakeven. The most recent analyst action was a Buy at a $38 target, while a model-driven read landed at Neutral, citing supportive valuation against limited upside. The balance of evidence frames FIBK as fairly valued with a margin recovery to prove and a governance question to resolve.
Sources: stocktitan.net (Q1 2026 8-K), theglobeandmail.com (Q1 results and capital actions), sahmcapital.com (COO exit and insider sale), gurufocus.com (FIBK payout ratio).
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- HWC (HANCOCK WHITNEY CORPORATION)
- (no filing in the citation store)
- FULT (FULTON FINANCIAL CORP)
- (no filing in the citation store)
- FRME (FIRST MERCHANTS CORP)
- (no filing in the citation store)
- OFG (OFG Bancorp)
- (no filing in the citation store)
- WSFS (WSFS FINANCIAL CORPORATION)
- (no filing in the citation store)
- TCBK (TriCo Bancshares)
- (no filing in the citation store)
- CVBF (CVB FINANCIAL CORP.)
- (no filing in the citation store)
- CATY (Cathay General Bancorp)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.