First Interstate Bank President and CEO Kevin Riley is stepping down after nine years at the helm of the $30.5 billion-asset company.
Riley, who
"Succession planning has been a key focus for the board for the past several years," Sara Becker, First Interstate's director of marketing and communications, wrote Monday in an email to American Banker.
Riley's retirement announcement comes a little more than two years after First Interstate completed the biggest deal in company history,
It also comes less than a month after Riley, who serves also as CEO of holding company First Interstate BancSystem, was reelected to a three-year term on First Interstate's board in overwhelming fashion, receiving support from 79.5 million shares against 1.3 million voting no. Though all four company-supported nominees cruised to reelection at First Interstate's May 20 annual meeting, Riley's level of support was strongest, eclipsing even Jim Scott and John Heyneman, son and grandson respectively of company founder Homer Scott.
"I am extremely proud of First Interstate's significant growth from a $7 billion community bank located in three states to an over $30 billion regional community covering a 14-state footprint over my tenure," Riley said Friday in the press release. "We've accomplished so much as an organization and I'm grateful to have had the opportunity to work alongside so many talented people."
First Interstate also
"Growth and acquisition is part of my DNA," Riley said Monday in an interview. "I would say I'm pleased with what we've been able to accomplish over nine years."
In a research note on Monday, analyst Timothy Coffey, who covers First Interstate for Janney Montgomery Scott, wrote the pending CEO transition would likely be a watershed for the company. A new leader, according to Coffey, may opt to shift focus from the growth-through-acquisition model that has characterized the Riley era to one more focused on integration and consolidation "which could slow balance-sheet growth."
A new CEO might also initiate "a deep nosedive review of credit quality and the long-term validity of retaining certain business lines," Coffey added.
"A departure from the company's growth-through-M&A model … could change the market's perception of First Interstate," Coffey wrote. "It will be up to the next CEO to establish a new one."
Certainly, dealmaking was central to Riley's strategy. His father, Victor Riley, served as CEO of KeyCorp for 26 years, building it from a small community bank to a significant regional player largely through M&A, including its 1994 merger of equals with Cleveland-based Society Corp.
"Victor Riley was the one who made KeyCorp into the national regional bank it is," Kevin Riley said of his father. The elder Riley also lured his son, who had become a certified public accountant, away from a job at Ernst & Young to help KeyBank negotiate deals. "One night [in 1986], my father called me," Riley said. "He was putting some deals together in Oregon and didn't have a finance person. He said, `Get on a plane, get out there and start putting some deals together for me.'"
Kevin Riley joined Boston-based Berkshire Hills Bancorp as chief financial officer in 2007. When the same position opened up at First Interstate, Riley jumped at the opportunity to move to the Mountain West. "My father retired to Cody, Wyoming — he had a ranch out there," Riley said. "For probably a good 15 years, I was flying into Billings, driving down to Cody to go hunting for elk and deer. When I heard [First Interstate] was looking for somebody, I said, 'This job was actually made for me. I love the mountains, I love hunting and I love banking.'"
Beyond mergers and acquisitions, Riley has been instrumental in transforming First Interstate's culture and modernizing its technology, Chief Financial Officer Marcy Mutch said Monday in an interview. "The company has been transformed in the nine years Kevin has been CEO," Mutch said. First Interstate has reported a profit in each of Riley's eight full years at the helm, including $258 million in 2023. Net income totaled $84 million in 2014, the year before Riley's appointment as CEO.
First Interstate is embarking on its executive search "from a position of strength," Chairman Stephen Bowman said Friday in the press release. "We have a strong balance sheet underpinned by a diverse loan portfolio, strong capital position and deep liquidity profile, which makes this the right moment to embark on a new chapter," Bowman said.
"Most of the focus" during the executive search will be on outside candidates, according to Riley.
Riley plans to step down from First Interstate's board when he leaves the company. He did not, however, rule out a return to banking. "This chapter in my career is ending," Riley said. "If something comes around that interests me going forward, I'll take a look at it."
All that is on hold for now. "I am focused on my job of continuing to lead the company's day-to-day operations," Riley said.
