Press release
October 30, 2025
First Business Bank Reports Third Quarter 2025 Net Income of $14.2 Million
First Business Financial Services, Inc. (FBIZ)
First Business Bank Reports Third Quarter 2025 Net Income of $14.2 Million
October 30, 2025
-- Continued loan and deposit growth and record fee income drive robust earnings --
First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $14.2 million, or earnings per share ("EPS") of $1.70. This compares to net income available to common shareholders of $11.2 million, or $1.35 per share, in the second quarter of 2025 and $10.3 million, or $1.24 per share, in the third quarter of 2024.
“First Business Bank’s robust balance sheet growth and operating leverage drove outstanding financial performance during the quarter,” said Corey Chambas, Chief Executive Officer. “We continued to execute our relationship-based growth strategy, producing record pre-tax, pre-provision earnings, 10% loan growth, 9% core deposit growth, and a strong and stable net interest margin. We also experienced improved asset quality, including an 18% reduction in non-performing assets. This led to a 13% year-to-date increase in top-line revenue and drove exceptional growth in shareholder value, with tangible book value expanding 16% from the prior year.”
Quarterly Highlights
Robust Loan Growth. Loans increased $84.6 million, or 10.4% annualized, from the second quarter of 2025, and $286.4 million, or 9.4%, from the third quarter of 2024, reflecting broad-based growth.Consistent Core Deposit Growth. Core deposits grew $59.0 million, or 9.3% annualized, from the linked quarter and $209.4 million, or 8.8%, from the third quarter of 2024. Core deposit funding mix improved to 73.12% compared to 71.82% in the linked quarter.Stable and Strong Net Interest Margin. The Company's effective match-funding strategy and pricing discipline produced a net interest margin of 3.68%, compared to 3.67% for the linked quarter and 3.64% for the prior year quarter. Net interest income increased 12.5% from the prior year quarter.Private Wealth Management Expansion. Private Wealth assets under management and administration grew to $3.814 billion, generating quarterly Private Wealth fee income of $3.7 million. Private Wealth fees increased by 13.0% from the prior year quarter and represented 45% of year-to-date total non-interest income.Record Pre-Tax, Pre-Provision ("PTPP") Income. PTPP income grew to $18.9 million, up 17.7% and 22.1% from the linked and prior year quarters, respectively. This performance reflects continued growth across the Company’s balance sheet coupled with record fee income and positive operating leverage.Continued Tangible Book Value Growth. The Company’s strong earnings and sound balance sheet management continued to drive growth in tangible book value per share, producing a 16.8% annualized increase compared to the linked quarter and a 15.6% increase compared to the prior year quarter.
Quarterly Financial Results
(Unaudited)
As of and for the Three Months Ended
As of and for the Nine Months Ended
(Dollars in thousands, except per share amounts)
September 30,
2025
June 30,
2025
September 30,
2024
September 30,
2025
September 30,
2024
Net interest income
$34,886
$33,784
$31,007
$101,928
$91,059
Adjusted non-interest income (1)
9,406
7,255
7,064
24,241
21,254
Operating revenue(1)
44,292
41,039
38,071
126,169
112,313
Operating expense(1)
25,440
25,023
22,630
75,081
69,584
Pre-tax, pre-provision adjusted earnings(1)
18,852
16,016
15,441
51,088
42,729
Less:
Provision for credit losses
1,440
2,701
2,087
6,800
6,126
Loss on repossessed assets
31
4
11
27
162
Contribution to First Business Charitable Foundation
234
—
—
234
—
SBA recourse (benefit) provision
(5)
(59)
466
(64)
583
Impairment of tax credit investments
—
—
—
110
—
Add:
Bank-owned life insurance claim
234
—
—
234
—
Net loss on sale of securities
—
—
—
—
(8)
Income before income tax expense
17,386
13,370
12,877
44,215
35,850
Income tax expense
2,993
1,948
2,351
7,229
6,020
Net income
$14,393
$11,422
$10,526
$36,986
$29,830
Preferred stock dividends
218
219
218
656
656
Net income available to common shareholders
$14,175
$11,203
$10,308
$36,330
$29,174
Earnings per share, diluted
$1.70
$1.35
$1.24
$4.37
$3.50
Book value per share
$41.60
$39.98
$36.17
$41.60
$36.17
Tangible book value per share(1)
$40.16
$38.54
$34.74
$40.16
$34.74
Net interest margin(2)
3.68%
3.67%
3.64%
3.68%
3.62%
Adjusted net interest margin(1)(2)
3.44%
3.47%
3.50%
3.46%
3.46%
Fee income ratio (non-interest income / total revenue)
21.65%
17.68%
18.55%
19.36%
18.92%
Efficiency ratio(1)
57.44%
60.97%
59.44%
59.51%
61.96%
Return on average assets(2)
1.40%
1.14%
1.13%
1.23%
1.08%
Return on average tangible common equity (2)
17.29%
14.17%
14.40%
15.23%
13.98%
Period-end loans and leases receivable
$3,334,956
$3,250,925
$3,050,079
$3,334,956
$3,050,079
Average loans and leases receivable
$3,295,880
$3,239,840
$3,031,880
$3,240,908
$2,961,014
Period-end core deposits
$2,592,110
$2,533,099
$2,382,730
$2,592,110
$2,382,730
Average core deposits
$2,597,031
$2,396,517
$2,375,002
$2,453,005
$2,365,553
Allowance for credit losses, including unfunded commitment reserves
$38,382
$38,210
$35,509
$38,382
$35,509
Non-performing assets
$23,513
$28,664
$19,420
$23,513
$19,420
Allowance for credit losses as a percent of total gross loans and leases
1.15%
1.18%
1.16%
1.15%
1.16%
Non-performing assets as a percent of total assets
0.58%
0.72%
0.52%
0.58%
0.52%
1.
This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.
2.
Calculation is annualized.
Third Quarter 2025 Compared to Second Quarter 2025
Net interest income increased $1.1 million, or 3.3%, to $34.9 million.
The increase in net interest income was driven by higher average loans and leases receivable and an increase in fees in lieu of interest. Average loans and leases receivable grew by $56.0 million, or 6.9% annualized, to $3.296 billion. Fees in lieu of interest, which vary from quarter to quarter based on client-driven activity, totaled $2.2 million, compared to $1.7 million in the prior quarter. Excluding fees in lieu of interest, net interest income increased $620,000, or 1.9%.The yield on average interest-earning assets increased seven basis points to 6.72% from 6.65%. Excluding fees in lieu of interest, the yield on average interest-earning assets increased two basis points to 6.49% from 6.47%.The rate paid for average core deposits increased 14 basis points to 2.89% from 2.75%. The rate paid for average total bank funding increased six basis points to 3.14% from 3.08%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances.Net interest margin was 3.68% compared to 3.67% for the linked quarter. Adjusted net interest margin 1 was 3.44%, down three basis points compared to 3.47% in the linked quarter. The decrease in adjusted net interest margin was driven by an increase in the rate paid on total bank funding partially offset by an increase in the yield on interest-earning assets, excluding fees in lieu of interest.The Company maintains a long-term target for net interest margin in the range of 3.60% - 3.65%. Performance in future quarters will vary due to factors such as the level of fees in lieu of interest and the timing, pace, and scale of future interest rate changes.
The Bank reported provision for credit losses of $1.4 million compared to $2.7 million in the linked quarter. The current quarter provision reflects net chargeoffs, loan growth, and an increase in unfunded commitments partially offset by improvement in the economic outlook in our model forecast and a decrease in general reserve qualitative factors.
Non-interest income increased $2.4 million, or 32.9%, to $9.6 million.
Other non-interest income increased $1.2 million, or 148.1% to $2.0 million. The increase was primarily driven by higher returns on the Company’s investments in Small Business Investment Company ("SBIC") funds and $537,000 of nonrecurring fee income in accounts receivable financing. Income from SBIC funds was $854,000 in the third quarter, compared to $200,000 in the linked quarter. Income from SBIC funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.Commercial loan swap fee income increased $804,000 to $974,000. Swap fee income varies from period to period based on loan activity and the interest rate environment.Bank-owned life insurance income increased $350,000 or 56.9%, to $965,000 primarily due to a $234,000 insurance claim received during the quarter.
Non-interest expense increased $732,000, or 2.9%, to $25.7 million, while operating expense increased $417,000, or 1.7%, to $25.4 million.
Compensation expense was $17.4 million, increasing $908,000, or 5.5%, primarily due to an increase in the annual cash bonus accrual. Excluding this accrual update, compensation was $16.4 million, reflecting a decrease of $183,000, or 1.1% from the linked quarter mainly due to a decrease in individual incentive compensation and social security taxes. Average full-time equivalents (“FTEs”) for the third quarter of 2025 were 366, up from 364 in the linked quarter.Professional fees expense was $1.1 million, decreasing $416,000, or 28%, primarily due to annual vesting of director share-based compensation in the second quarter._______________________
1.
Adjusted net interest margin is a non-GAAP measure representing net interest income excluding fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets.
Data processing expense was $1.1 million, decreasing $245,000, or 17.9%, primarily due to annual expense related to tax processing on behalf of the Bank’s Private Wealth clients recognized in the second quarter.Marketing expense was $876,000, decreasing $186,000, or 17.5%, primarily due to seasonality in sponsorships.Computer software expense was $1.8 million, increasing $170,000, or 10.3%, due to ongoing investment in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
Income tax expense increased $1.0 million to $3.0 million. The effective tax rate was 17.2% for the three months ended September 30, 2025, compared to 14.6% for the linked quarter. The increase in tax expense reflects an increase in pre-tax income and annual return to provision adjustments including updating tax credit partnership estimates. The effective tax rate for the nine months ended September 30, 2025 was 16.3%. The Company expects to report an effective tax rate between 16% and 18% for 2025.
Total period-end loans and leases receivable increased $84.6 million, or 10.4% annualized, to $3.337 billion. The average rate earned on average loans and leases receivable was 7.10%, up 11 basis points from 6.99% in the prior quarter. Excluding fees in lieu of interest, the average rate earned on average loans and leases receivable was 6.84%, up six basis points from 6.78% in the prior quarter.
Commercial Real Estate (“CRE”) loans increased by $80.0 million, or 16.4% annualized, to $2.027 billion, primarily due to growth in our Northeast Wisconsin, Southeast Wisconsin, and Kansas City markets.C&I loans increased $4.9 million, or 1.57% annualized, to $1.264 billion. The increase was due to growth in our Northeast Wisconsin, Southeast Wisconsin, and Kansas City markets.
Total period-end core deposits increased $59.0 million, or 9.3% annualized, to $2.592 billion. The average rate paid was 2.89%, up 14 basis points from 2.75% in the prior quarter primarily due to an increase in higher-cost certificates of deposit.
Period-end wholesale funding, including FHLB advances and brokered deposits, decreased $40.6 million, or 4.1%, to $952.9 million. Consistent with the Bank’s long-held philosophy to minimize exposure to interest rate risk, management will continue to utilize the most efficient and cost-effective source of wholesale funds to match-fund fixed-rate loans, as necessary.
Wholesale deposits decreased $31.2 million to $741.0 million. The average rate paid on wholesale deposits increased one basis point to 4.03% and the weighted average original maturity increased to 4.3 years from 4.1 years.FHLB advances decreased $9.5 million to $211.9 million. The average rate paid on FHLB advances decreased 16 basis points to 3.16% and the weighted average original maturity decreased to 5.3 years from 5.5 years.
Non-performing assets decreased $5.2 million to $23.5 million, or 0.58% of total assets, improving from 0.72% in the prior quarter. The decrease reflects pay downs on non-accrual C&I loans and charge-offs of previously reserved equipment finance loans, partially offset by new non-accrual equipment finance loans. We continue to expect full repayment of the previously disclosed Asset-Based Lending ("ABL") loan that defaulted during the second quarter of 2023. The liquidation process under Chapter 7 bankruptcy and related litigation has delayed final resolution. The current balance of this loan is $6.1 million. Excluding this ABL loan, non-performing assets totaled $17.4 million, or 0.43% of total assets in the current quarter and $22.6 million, or 0.56% of total assets in the linked quarter.
The allowance for credit losses, including the unfunded credit commitments reserve, increased $172,000, or 0.5%, primarily due to increases in general reserves driven by loan growth and an increase in unfunded commitments, partially offset by a decrease in specific reserve requirements, an improvement in the economic outlook in our model forecast, and improvement in qualitative factors. The allowance for credit losses, including unfunded credit commitment reserves, as a percent of total gross loans and leases was 1.15% compared to 1.18% in the prior quarter.
Third Quarter 2025 Compared to Third Quarter 2024
Net interest income increased $3.9 million, or 12.5%, to $34.9 million.
Growth reflects higher average gross loans and leases as well as increased fees in lieu of interest, which grew by $1.0 million to $2.2 million, primarily due to a reclassification of loan fees that were previously classified as non-interest income as well as an increase in prepayment fees and non-accrual interest collected. Excluding fees in lieu of interest, net interest income increased $2.7 million, or 9.1%.The yield on average interest-earning assets decreased 25 basis points to 6.72% from 6.97%. Excluding fees in lieu of interest, the yield on average interest-earning assets measured 6.49% compared to 6.85%. This decrease in yield was primarily due to the decrease in short-term market rates partially offset by the reinvestment of cash flows from the securities and fixed-rate loan portfolios.The rate paid for average interest-bearing core deposits decreased 66 basis points to 3.44% from 4.10%. The rate paid for average total bank funding decreased 30 basis points to 3.14% from 3.44%.Net interest margin increased four basis points to 3.68% from 3.64%.
The Company reported provision for credit losses of $1.4 million, compared to $2.1 million in the third quarter of 2024. See the Provision for Credit Loss breakdown table below for more detail.
Non-interest income increased $2.6 million, or 36.5%, to $9.6 million.
Other fee income increased $1.2 million, or 170.5%, to $2.0 million. The increase was primarily due to higher returns on the Company’s investments in SBIC funds and $537,000 of nonrecurring fee income in accounts receivable financing. Income from SBIC funds was $854,000 in the third quarter, compared to $193,000 in the prior year quarter. Income from SBIC funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.Bank-owned life insurance income increased $549,000 to $965,000 primarily due to the purchase of new policies and the aforementioned insurance claim.Commercial loan swap fee income increased $514,000 to $974,000. Swap fee income varies period to period based on loan activity and the interest rate environment.Private wealth fee income increased $423,000, or 13.0%, to $3.7 million. Private Wealth assets under management and administration measured $3.814 billion at September 30, 2025 up $415.9 million, or 12.2%.Loan fee income decreased $311,000 to $501,000 primarily due to a reclassification of certain types of C&I loan fees from non-interest income to interest income.Service charges on deposits increased $231,000, or 25.1%, to $1.2 million, primarily driven by new and expanded core deposit relationships.
Non-interest expense increased $2.6 million, or 11.2%, to $25.7 million. Operating expense increased $2.8 million, or 12.4%, to $25.4 million.
Compensation expense increased $2.2 million, or 14.8%, to $17.4 million. Growth reflects an increase in average FTEs, annual merit increases and promotions, an increase in the cash bonus accrual, and decreased capitalized software development compensation. Average FTEs increased 3.1% to 366 in the third quarter of 2025, compared to 355 in the third quarter of 2024.Computer software expense increased $218,000, or 13.6%, to $1.8 million, due to ongoing investment in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.Other non-interest expense increased $381,000, or 29.3%, to $1.7 million, primarily due to an increase in liquidation expenses, donations, and administrative costs in early stage limited partnership investments. This was partially offset by a decrease in SBA recourse provision.Professional fees decreased $234,000, or 17.9%, to $1.1 million, primarily due to timing of various consulting fees and legal fees.
Total period-end loans and leases receivable increased $286.4 million, or 9.4%, to $3.337 billion.
CRE loans increased $110.1 million, or 6.0%, to $2.027 billion, primarily due to growth across the Wisconsin and Kansas City markets.C&I loans increased $112.4 million, or 9.6%, to $1.264 billion, primarily due to growth across our bank markets and in our floorplan and equipment finance businesses.
Total period-end core deposits grew $209.4 million, or 8.8%, to $2.592 billion. The average rate paid decreased 45 basis points to 2.89%, reflecting a decrease in short-term market rates. Total average core deposits grew $222.0 million, or 9.3%, to $2.597 billion.
Period-end wholesale funding increased $82.5 million, or 28.0%, to $952.9 million.
Wholesale deposits increased $153.7 million, or 26.2%, to $741.0 million, as the Bank utilized more wholesale deposits in lieu of FHLB advances to maintain excess liquidity and to match-fund fixed-rate assets. The average rate paid on wholesale deposits decreased nine basis points to 4.03% and the weighted average original maturity increased to 4.3 years from 4.0 years.FHLB advances decreased $82.5 million to $211.9 million. The average rate paid on FHLB advances increased 20 basis points to 3.16% and the weighted average original maturity remained flat at 5.3 years.
Non-performing assets increased to $23.5 million, or 0.58% of total assets, compared to $19.4 million, or 0.52% of total assets, primarily driven by new non-accrual loans in the C&I transportation and logistics portfolio partially offset lower non-accrual equipment finance loans. Excluding the ABL loan described above for which we expect full repayment, non-performing assets totaled $17.4 million, or 0.43% of total assets and $13.0 million, or 0.35% of total assets in the prior year quarter.
The allowance for credit losses, including unfunded commitment reserves, increased $2.9 million to $38.4 million primarily due to higher general reserves as a result of loan growth and quantitative factors partially offset by lower specific reserves. The allowance for credit losses as a percent of total gross loans and leases was 1.15%, compared with 1.16% in the prior year.
2026 CEO Succession Plan
On May 5, 2025, the Company announced that Corey A. Chambas intends to retire from his role as Chief Executive Officer on May 2, 2026. The Company will name President and Chief Operating Officer David R. Seiler to succeed him as CEO effective the same date.
Earnings Release Supplement and Conference Call
On October 30, 2025, the Company posted an earnings release supplement to its website firstbusiness.bank under the “Investor Relations” tab which will also be furnished to the U.S. Securities and Exchange Commission on October 30, 2025. The information included in the supplement provides an overview of the Company’s recent operating performance, financial condition, and other data relevant to the quarter. The Company intends to use this supplement in connection with its third quarter 2025 earnings call to be held at 1:00 p.m. Central time on October 31, 2025. The conference call can be accessed at 800-549-8228 (646-564-2877 if outside the United States and Canada), using the conference call access code: FBIZ, 82881. Investors may also listen live via webcast at: https://events.q4inc.com/attendee/466645836. A replay of the call will be available through Friday, November 7, 2025, by calling 888-660-6264 (646-517-3975 if outside the United States and Canada). The webcast archive of the conference call will be available on the Company’s website, ir.firstbusiness.bank.
About First Business Bank
First Business Bank® specializes in Business Banking, including Commercial Banking and Specialty Finance, Private Wealth, and Bank Consulting services, and through its refined focus delivers unmatched expertise, accessibility, and responsiveness. Specialty Finance solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC®. First Business Bank is a wholly owned subsidiary of First Business Financial Services, Inc®. (Nasdaq: FBIZ). For additional information, visit firstbusiness.bank.
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:
Adverse changes in the economy or business conditions, either nationally or in our markets including, without limitation, inflation, economic downturn, labor shortages, wage pressures, and the adverse effects of public health events on the global, national, and local economy.Uncertainty created by potential federal government actions relating to the authority of regulatory agencies (including bank regulators), international trade policy, prolonged shutdown of the federal government, and other significant policy matters.Competitive pressures among depository and other financial institutions nationally and in the Company’s markets.Increases in defaults by borrowers and other delinquencies.Management’s ability to manage growth effectively, including the successful expansion of our client support, administrative infrastructure, and internal management systems.Fluctuations in interest rates and market prices.Changes in legislative or regulatory requirements applicable to the Company and its subsidiaries.Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.Fraud, including client and system failure or breaches of our network security, including the Company’s internet banking activities.Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.Ongoing volatility in the banking sector may result in new legislation, regulations or policy changes that could subject the Company and the Bank to increased government regulation and supervision.The proportion of the Company’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.
For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2024, and other filings with the Securities and Exchange Commission.
SELECTED FINANCIAL CONDITION DATA
(Unaudited)
As of
(in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Assets
Cash and cash equivalents
$44,349
$123,208
$170,617
$157,702
$131,972
Securities available-for-sale, at fair value
411,111
382,365
359,394
341,392
313,336
Securities held-to-maturity, at amortized cost
5,584
5,714
6,590
6,741
6,907
Loans held for sale
13,482
12,415
10,523
13,498
8,173
Loans and leases receivable
3,334,956
3,250,925
3,184,400
3,113,128
3,050,079
Allowance for credit losses
(36,690)
(36,861)
(35,236)
(35,785)
(33,688)
Loans and leases receivable, net
3,298,266
3,214,064
3,149,164
3,077,343
3,016,391
Premises and equipment, net
4,936
5,063
5,017
5,227
5,478
Repossessed assets
—
31
36
51
56
Right-of-use assets
5,577
5,713
5,439
5,702
5,789
Bank-owned life insurance
83,255
82,761
57,647
57,210
56,767
Federal Home Loan Bank stock, at cost
9,605
10,027
10,434
11,616
12,775
Goodwill and other intangible assets
12,041
12,049
12,058
11,912
11,834
Derivatives
37,634
40,814
48,405
65,762
42,539
Accrued interest receivable and other assets
109,005
108,501
109,555
99,059
103,707
Total assets
$4,034,845
$4,002,725
$3,944,879
$3,853,215
$3,715,724
Liabilities and Stockholders’ Equity
Core deposits
$2,592,110
$2,533,099
$2,462,695
$2,396,429
$2,382,730
Wholesale deposits
740,961
772,123
780,348
710,711
587,217
Total deposits
3,333,071
3,305,222
3,243,043
3,107,140
2,969,947
Federal Home Loan Bank advances and other borrowings
266,677
276,131
286,590
320,049
349,109
Lease liabilities
7,687
7,887
7,604
7,926
8,054
Derivatives
38,726
41,228
45,612
57,068
45,399
Accrued interest payable and other liabilities
30,365
27,462
25,967
32,443
31,233
Total liabilities
3,676,526
3,657,930
3,608,816
3,524,626
3,403,742
Total stockholders’ equity
358,319
344,795
336,063
328,589
311,982
Total liabilities and stockholders’ equity
$4,034,845
$4,002,725
$3,944,879
$3,853,215
$3,715,724
STATEMENTS OF INCOME
(Unaudited)
As of and for the Three Months Ended
As of and for the Nine Months Ended
(Dollars in thousands, except per share amounts)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Total interest income
$63,746
$61,282
$59,530
$60,110
$59,327
$184,558
$173,020
Total interest expense
28,860
27,498
26,272
26,962
28,320
82,630
81,961
Net interest income
34,886
33,784
33,258
33,148
31,007
101,928
91,059
Provision for credit losses
1,440
2,701
2,659
2,701
2,087
6,800
6,126
Net interest income after provision for credit losses
33,446
31,083
30,599
30,447
28,920
95,128
84,933
Private wealth management service fees
3,687
3,748
3,492
3,426
3,264
10,928
9,835
Gain on sale of SBA loans
382
397
963
938
460
1,742
1,004
Service charges on deposits
1,151
1,103
1,048
960
920
3,303
2,810
Loan fees
501
424
388
914
812
1,313
2,486
Bank owned life insurance income
965
615
437
418
416
2,016
1,231
Loss on sale of securities
—
—
—
—
0
—
(8)
Swap fees
974
170
113
588
460
1,257
815
Other non-interest income
1,980
798
1,138
761
732
3,916
3,073
Total non-interest income
9,640
7,255
7,579
8,005
7,064
24,475
21,246
Compensation
17,442
16,534
16,747
15,535
15,198
50,723
47,570
Occupancy
567
564
590
588
585
1,721
1,785
Professional fees
1,071
1,487
1,459
1,323
1,305
4,016
4,348
Data processing
1,123
1,368
1,082
1,647
1,045
3,574
3,245
Marketing
876
1,062
968
928
922
2,906
2,591
Equipment
296
335
376
301
333
1,007
1,013
Computer software
1,826
1,656
1,603
1,585
1,608
5,085
4,581
FDIC insurance
817
834
780
728
810
2,432
2,032
Other non-interest expense
1,682
1,128
1,114
517
1,301
3,924
3,164
Total non-interest expense
25,700
24,968
24,719
23,152
23,107
75,388
70,329
Income before income tax expense
17,386
13,370
13,459
15,300
12,877
44,215
35,850
Income tax expense
2,993
1,948
2,288
885
2,351
7,229
6,020
Net income
$14,393
$11,422
$11,171
$14,415
$10,526
$36,986
$29,830
Preferred stock dividends
218
219
219
219
218
656
656
Net income available to common shareholders
$14,175
$11,203
$10,952
$14,196
$10,308
$36,330
$29,174
Per common share:
Basic earnings
$1.70
$1.35
$1.32
$1.71
$1.24
$4.37
$3.50
Diluted earnings
$1.70
$1.35
$1.32
$1.71
$1.24
$4.37
$3.50
Dividends declared
$0.29
$0.29
$0.29
$0.25
$0.25
$0.87
$0.75
Book value
$41.60
$39.98
$39.04
$38.17
$36.17
$41.60
$36.17
Tangible book value
$40.16
$38.54
$37.58
$36.74
$34.74
$40.16
$34.74
Weighted-average common shares outstanding(1)
8,171,404
8,141,159
8,130,743
8,107,308
8,111,215
8,153,181
8,149,949
Weighted-average diluted common
shares outstanding(1)
8,171,404
8,141,159
8,130,743
8,107,308
8,111,215
8,153,181
8,149,949
(1)
Excluding participating securities.
NET INTEREST INCOME ANALYSIS
(Unaudited)
For the Three Months Ended
(Dollars in thousands)
September 30, 2025
June 30, 2025
September 30, 2024
Average
Balance
Interest
Average
Yield/Rate(4)
Average
Balance
Interest
Average
Yield/Rate(4)
Average
Balance
Interest
Average
Yield/Rate(4)
Interest-earning assets
Commercial real estate and other mortgage loans(1)
$1,986,541
$31,819
6.41%
$1,932,593
$30,344
6.28%
$1,805,020
$30,340
6.72%
Commercial and industrial loans(1)
1,259,448
26,009
8.26
1,257,296
25,604
8.15
1,177,112
24,481
8.32
Consumer and other loans(1)
49,891
672
5.39
49,951
673
5.39
49,748
685
5.51
Total loans and leases receivable(1)
3,295,880
58,500
7.10
3,239,840
56,621
6.99
3,031,880
55,506
7.32
Mortgage-related securities(2)
350,971
3,745
4.27
334,159
3,533
4.23
269,842
2,662
3.95
Other investment securities(3)
47,367
266
2.25
46,416
250
2.15
51,446
315
2.45
FHLB stock
9,420
225
9.55
12,852
297
9.24
11,960
285
9.53
Short-term investments
90,852
1,010
4.45
52,772
581
4.40
40,406
559
5.53
Total interest-earning assets
3,794,490
63,746
6.72
3,686,039
61,282
6.65
3,405,534
59,327
6.97
Non-interest-earning assets
249,026
242,048
231,353
Total assets
$4,043,516
$3,928,087
$3,636,887
Interest-bearing liabilities
Transaction accounts
$1,050,822
8,809
3.35%
$985,606
$7,964
3.23%
$864,936
$8,451
3.91%
Money market
851,659
7,183
3.37
821,845
6,789
3.30
850,590
8,780
4.13
Certificates of deposit
278,191
2,751
3.96
178,643
1,720
3.85
219,315
2,584
4.71
Wholesale deposits
754,690
7,595
4.03
773,750
7,784
4.02
531,472
5,475
4.12
Total interest-bearing deposits
2,935,362
26,338
3.59
2,759,844
24,257
3.52
2,466,313
25,290
4.10
FHLB advances
207,762
1,639
3.16
284,428
2,358
3.32
278,103
2,059
2.96
Other borrowings
54,761
883
6.45
54,733
883
6.45
50,642
971
7.67
Total interest-bearing liabilities
3,197,885
28,860
3.61
3,099,005
27,498
3.55
2,795,058
28,320
4.05
Non-interest-bearing demand deposit accounts
416,359
410,423
440,161
Other non-interest-bearing liabilities
77,300
78,388
91,520
Total liabilities
3,691,544
3,587,816
3,326,739
Stockholders’ equity
351,972
340,271
310,148
Total liabilities and stockholders’ equity
$4,043,516
$3,928,087
$3,636,887
Net interest income
$34,886
$33,784
$31,007
Interest rate spread
3.11%
3.10%
2.92%
Net interest-earning assets
$596,605
$587,034
$610,476
Net interest margin
3.68%
3.67%
3.64%
(1)
The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.
(2)
Includes amortized cost basis of assets available for sale and held to maturity.
(3)
Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.
(4)
Represents annualized yields/rates.
PROVISION FOR CREDIT LOSS COMPOSITION
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Change due to qualitative factors
$(243)
$590
$(355)
$(460)
$(444)
$(8)
$793
Change due to quantitative factors
(173)
746
1,560
(598)
(330)
2,133
(380)
Charge-offs
1,708
1,338
3,810
1,132
1,619
6,856
4,123
Recoveries
(440)
(332)
(398)
(190)
(91)
(1,170)
(509)
Change in reserves on individually evaluated loans, net
(550)
(247)
(2,495)
2,579
757
(3,292)
348
Change due to loan growth, net
795
536
741
577
616
2,072
1,652
Change in unfunded commitment reserves
343
70
(204)
(339)
(40)
209
99
Total provision for credit losses
$1,440
$2,701
$2,659
$2,701
$2,087
$6,800
$6,126
ALLOWANCE FOR CREDIT LOSS COMPOSITION
As of
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
(In Thousands)
% of Total
Loans and
Leases
(In Thousands)
% of Total
Loans and
Leases
(In Thousands)
% of Total
Loans and
Leases
(In Thousands)
% of Total
Loans and
Leases
Allowance for credit losses:
Loans collectively evaluated
$31,065
0.93%
$30,685
0.94%
$28,813
0.90%
$26,867
0.86%
Loans individually evaluated
5,625
0.17%
6,176
0.19%
6,423
0.20%
8,918
0.29%
Unfunded commitments reserve
1,692
1,349
1,279
1,483
Total
38,382
1.15%
38,210
1.18%
36,515
1.15%
37,268
1.20%
Loans and lease receivables:
$3,334,956
$3,250,925
$3,184,400
$3,113,128
PERFORMANCE RATIOS
For the Three Months Ended
For the Nine Months Ended
(Unaudited)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Return on average assets (annualized)
1.40%
1.14%
1.14%
1.52%
1.13%
1.23%
1.08%
Return on average tangible common equity (annualized)
17.29%
14.17%
14.13%
19.21%
14.40%
15.23%
13.98%
Efficiency ratio
57.44%
60.97%
60.28%
56.94%
59.44%
59.51%
61.96%
Interest rate spread
3.11%
3.10%
3.11%
3.11%
2.92%
3.11%
2.91%
Net interest margin
3.68%
3.67%
3.69%
3.77%
3.64%
3.68%
3.62%
Average interest-earning assets to average interest-bearing liabilities
118.66%
118.94%
119.95%
121.59%
121.84%
119.17%
121.78%
ASSET QUALITY RATIOS
(Unaudited)
As of
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Non-accrual loans and leases
$23,513
$28,633
$24,056
$28,367
$19,364
Repossessed assets
0
31
36
51
56
Total non-performing assets
$23,513
$28,664
$24,092
$28,418
$19,420
Non-accrual loans and leases as a percent of total gross loans and leases
0.70%
0.88%
0.76%
0.91%
0.63%
Non-performing assets as a percent of total gross loans and leases plus repossessed assets
0.70%
0.88%
0.76%
0.91%
0.64%
Non-performing assets as a percent of total assets
0.58%
0.72%
0.61%
0.74%
0.52%
Allowance for credit losses as a percent of total gross loans and leases
1.15%
1.18%
1.15%
1.20%
1.16%
Allowance for credit losses as a percent of non-accrual loans and leases
163.24%
133.45%
151.79%
131.38%
183.38%
NET CHARGE-OFFS (RECOVERIES)
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Charge-offs
$1,708
$1,338
$3,810
$1,132
$1,619
$6,856
$4,123
Recoveries
(440)
(332)
(398)
(190)
(91)
(1,170)
(509)
Net charge-offs (recoveries)
$1,268
$1,006
$3,412
$942
$1,528
$5,686
$3,614
Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)
0.15%
0.12%
0.43%
0.12%
0.20%
0.23%
0.16%
CAPITAL RATIOS
As of and for the Three Months Ended
(Unaudited)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Total capital to risk-weighted assets
12.18%
12.25%
12.20%
12.08%
11.72%
Tier I capital to risk-weighted assets
9.67%
9.66%
9.60%
9.45%
9.11%
Common equity tier I capital to risk-weighted assets
9.34%
9.33%
9.26%
9.10%
8.76%
Tier I capital to adjusted assets
8.87%
8.82%
8.77%
8.78%
8.68%
Tangible common equity to tangible assets
8.31%
8.04%
7.93%
7.93%
7.78%
LOAN AND LEASE RECEIVABLE COMPOSITION
(Unaudited)
As of
(in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Commercial real estate:
Commercial real estate - owner occupied
$287,005
$262,988
$258,050
$273,397
$259,532
Commercial real estate - non-owner occupied
871,807
846,990
838,634
845,298
768,195
Construction
236,590
218,840
215,613
221,086
266,762
Multi-family
565,102
573,208
549,220
530,853
494,954
1-4 family
66,735
45,171
48,450
46,496
39,933
Total commercial real estate
2,027,239
1,947,197
1,909,967
1,917,130
1,829,376
Commercial and industrial
1,264,111
1,259,171
1,229,098
1,151,720
1,174,295
Consumer and other
45,323
45,744
46,190
45,000
46,610
Total gross loans and leases receivable
3,336,673
3,252,112
3,185,255
3,113,850
3,050,281
Less:
Allowance for credit losses
36,690
36,861
35,236
35,785
33,688
Deferred loan fees
1,717
1,187
855
722
202
Loans and leases receivable, net
$3,298,266
$3,214,064
$3,149,164
$3,077,343
$3,016,391
DEPOSIT COMPOSITION
(Unaudited)
As of
(in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Non-interest-bearing transaction accounts
$400,697
$396,448
$433,201
$436,111
$428,012
Interest-bearing transaction accounts
1,050,233
1,047,434
1,015,846
965,637
930,252
Money market accounts
840,477
833,684
831,897
809,695
817,129
Certificates of deposit
300,703
255,533
181,751
184,986
207,337
Wholesale deposits
740,961
772,123
780,348
710,711
587,217
Total deposits
$3,333,071
$3,305,222
$3,243,043
$3,107,140
$2,969,947
Uninsured deposits
$1,100,868
$1,069,509
$1,055,347
$980,278
$1,088,496
Less: uninsured deposits collateralized by pledged assets
72,561
67,990
9,344
6,864
10,755
Total uninsured, net of collateralized deposits
$1,028,307
$1,001,519
$1,046,003
$973,414
$1,077,741
% of total deposits
30.9%
30.3%
32.3%
31.3%
36.3%
SOURCES OF LIQUIDITY
(Unaudited)
As of
(in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Short-term investments
$8,074
$72,520
$136,033
$128,207
$86,670
Collateral value of unencumbered pledged loans
906,042
893,499
973,494
444,453
397,852
Market value of unencumbered securities
376,783
347,196
324,365
310,125
279,191
Readily accessible liquidity
1,290,899
1,313,215
1,433,892
882,785
763,713
Fed fund lines
45,000
45,000
45,000
45,000
45,000
Excess brokered CD capacity(1)
732,951
645,843
477,468
981,463
1,102,767
Total liquidity
$2,068,850
$2,004,058
$1,956,360
$1,909,248
$1,911,480
Total uninsured, net of collateralized deposits
$1,028,307
$1,001,519
$1,046,003
$973,414
$1,077,741
1.
Bank internal policy limits brokered CDs to 50% of total bank funding when combined with value of unencumbered pledged loans.
PRIVATE WEALTH OFF-BALANCE SHEET COMPOSITION
(Unaudited)
As of
(in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Trust assets under management
$3,543,594
$3,461,659
$3,184,197
$3,160,449
$3,145,789
Trust assets under administration
270,222
268,996
240,366
258,255
252,152
Total trust assets
$3,813,816
$3,730,655
$3,424,563
$3,418,704
$3,397,941
NON-GAAP RECONCILIATIONS
Certain financial information provided in this release is determined by methods other than in accordance with generally accepted accounting principles (United States) (“GAAP”). Although the Company’s management believes that these non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure representing tangible common equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in period-to-period changes in book value per common share exclusive of changes in intangible assets. The information provided below reconciles tangible book value per share and tangible common equity to their most comparable GAAP measures.
(Unaudited)
As of
(Dollars in thousands, except per share amounts)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Common stockholders’ equity
$346,327
$332,803
$324,071
$316,597
$299,990
Less: Goodwill and other intangible assets
(12,041)
(12,049)
(12,058)
(11,912)
(11,834)
Tangible common equity
$334,286
$320,754
$312,013
$304,685
$288,156
Common shares outstanding
8,324,387
8,323,470
8,301,967
8,293,928
8,295,017
Book value per share
$41.60
$39.98
$39.04
$38.17
$36.17
Tangible book value per share
$40.16
$38.54
$37.58
$36.74
$34.74
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
“Tangible common equity to tangible assets” (“TCE”) is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. Adjusted TCE ratio is defined as TCE adjusted for net fair value adjustments of financial assets and liabilities. For more information on fair value adjustments please refer to Note 19 - Fair Value Disclosures in the annual report on Form 10-K for the year ended December 31, 2024. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. The information below reconciles tangible common equity and tangible assets to their most comparable GAAP measures.
(Unaudited)
As of
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
Common stockholders’ equity
$346,327
$332,803
$324,071
$316,597
$299,990
Less: Goodwill and other intangible assets
(12,041)
(12,049)
(12,058)
(11,912)
(11,834)
Tangible common equity (a)
$334,286
$320,754
$312,013
$304,685
$288,156
Total assets
$4,034,845
$4,002,725
$3,944,879
$3,853,215
$3,715,724
Less: Goodwill and other intangible assets
(12,041)
(12,049)
(12,058)
(11,912)
(11,834)
Tangible assets (b)
$4,022,804
$3,990,676
$3,932,821
$3,841,303
$3,703,890
Tangible common equity to tangible assets
8.31%
8.04%
7.93%
7.93%
7.78%
Fair Value Adjustments:
Financial assets - MTM (c)
$(11,278)
$(30,996)
$(20,528)
$(26,580)
$(17,615)
Financial liabilities - MTM (d)
$2,601
$2,563
$5,460
$5,946
$8,358
Net MTM, after-tax e = (c-d)*(1-21%)
$(6,855)
$(22,462)
$(11,904)
$(16,301)
$(7,313)
Adjusted tangible equity f = (a-e)
$327,431
$298,292
$300,109
$288,384
$280,843
Adjusted tangible assets g = (b-c)
$4,011,526
$3,959,680
$3,912,293
$3,814,723
$3,686,275
Adjusted TCE ratio (f/g)
8.16%
7.53%
7.67%
7.56%
7.62%
EFFICIENCY RATIO & PRE-TAX, PRE-PROVISION ADJUSTED EARNINGS
“Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on repossessed assets, amortization of other intangible assets and other discrete items, if any, divided by operating revenue, which is equal to net interest income plus non-interest income less realized gains or losses on securities, if any. “Pre-tax, pre-provision adjusted earnings” is defined as operating revenue less operating expense. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Company’s operating expenses in relation to its core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items. The information provided below reconciles the efficiency ratio and pre-tax, pre-provision adjusted earnings to its most comparable GAAP measure.
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Total non-interest expense
$25,700
$24,968
$24,719
$23,152
$23,107
$75,388
$70,329
Less:
Net (gain) loss on repossessed assets
31
4
(8)
5
11
27
72
Impairment of tax credit investments
—
—
110
400
—
110
—
Contribution to First Business Charitable Foundation
234
234
—
SBA recourse provision (benefit)
(5)
(59)
—
(687)
466
(64)
583
Total operating expense (a)
$25,440
$25,023
$24,617
$23,434
$22,630
$75,081
$69,674
Net interest income
$34,886
$33,784
$33,258
$33,148
$31,007
$101,928
$91,059
Total non-interest income
9,640
7,255
7,579
8,005
7,064
24,475
21,246
Less:
Net loss on sale of securities
—
—
—
—
—
—
(8)
Bank owned life insurance claim
234
—
—
—
—
234
0
Adjusted non-interest income
9,406
7,255
7,579
8,005
7,064
24,241
21,254
Total operating revenue (b)
$44,292
$41,039
$40,837
$41,153
$38,071
$126,169
$112,313
Efficiency ratio
57.44%
60.97%
60.28%
56.94%
59.44%
59.51%
62.04%
Pre-tax, pre-provision adjusted earnings (b - a)
$18,852
$16,016
$16,220
$17,719
$15,441
$51,088
$42,639
Average total assets
$4,043,516
$3,928,087
$3,842,368
$3,746,608
$3,636,887
$3,938,726
$3,585,868
ADJUSTED NET INTEREST MARGIN
“Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets. Fees in lieu of interest are defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. In the judgment of the Company’s management, the adjustments made to net interest income allow investors and analysts to better assess the Company’s net interest income in relation to its core client-facing loan and deposit rate changes by removing the volatility that is associated with these recurring but volatile components. The information provided below reconciles the net interest margin to its most comparable GAAP measure.
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
(Dollars in thousands)
September 30,
2025
June 30,
2025
March 31,
2025
December 31,
2024
September 30,
2024
September 30,
2025
September 30,
2024
Interest income
$63,746
$61,282
$59,530
$60,110
$59,327
$184,558
$173,020
Interest expense
28,860
27,498
26,272
26,962
28,320
82,630
81,961
Net interest income (a)
34,886
33,784
33,258
33,148
31,007
101,928
91,059
Less:
Fees in lieu of interest
2,155
1,673
2,052
2,359
1,002
5,880
3,157
FRB interest income and FHLB dividend income
1,229
874
848
1,062
841
2,950
3,235
Adjusted net interest income (b)
$31,502
$31,237
$30,358
$29,727
$29,164
$93,098
$84,667
Average interest-earning assets (c)
$3,794,490
$3,686,039
$3,602,292
$3,516,390
$3,405,534
$3,694,977
$3,349,299
Less:
Average FRB cash and FHLB stock
99,796
65,212
63,971
76,576
52,603
76,457
70,175
Average non-accrual loans and leases
29,796
24,833
27,228
19,077
18,954
27,295
19,761
Adjusted average interest-earning assets (d)
$3,664,898
$3,595,994
$3,511,093
$3,420,737
$3,333,977
$3,591,225
$3,259,363
Net interest margin (a / c)
3.68%
3.67%
3.69%
3.77%
3.64%
3.68%
3.62%
Adjusted net interest margin (b / d)
3.44%
3.47%
3.46%
3.48%
3.50%
3.46%
3.46%
First Business Financial Services, Inc.
Brian D. Spielmann
Chief Financial Officer
608-232-5977
[email protected]
Source: First Business Financial Services, Inc.