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    First Business Bank Reports First Quarter 2025 Net Income of $11.0 Million

    4/24/25 4:00:00 PM ET
    $FBIZ
    Major Banks
    Finance
    Get the next $FBIZ alert in real time by email

    -- Robust loan and deposit growth and stable asset quality drive tangible book value expansion --

    First Business Financial Services, Inc. (the "Company", the "Bank", or "First Business Bank") (NASDAQ:FBIZ) reported quarterly net income available to common shareholders of $11.0 million, or earnings per share ("EPS") of $1.32. This compares to net income available to common shareholders of $14.2 million, or $1.71 per share, in the fourth quarter of 2024 and $8.6 million, or $1.04 per share, in the first quarter of 2024. EPS for the fourth quarter of 2024 included income tax and Small Business Administration ("SBA") recourse reserve benefits totaling $0.28 per share.

    "First Business Bank's strong first quarter results reflect a consistent approach to profitable growth," said Corey Chambas, Chief Executive Officer. "Our exceptional team expanded loans by 9% and core deposits by 11%, driven by growth across our bank markets and portfolios. Core deposit growth outpaced loan growth on the strength of our deep and growing client relationships and our business development efforts. With stable asset quality and ongoing operational efficiency, these successes contributed to tangible book value expanding 14% from the prior year."

    "We are confident in the strength of our consistent underwriting, our interest-rate neutral balance sheet, and our ability to manage expenses to maintain positive operating leverage over the long term," Chambas continued. "In most economic conditions, our operating model is built to produce 10% annual growth in loans, deposits, and revenue. Irrespective of economic circumstances, our goal is to continue to outperform peers and the industry."

    Quarterly Highlights

    • Robust Deposit Growth. Total deposits grew $135.9 million, or 17.5% annualized, from the linked quarter and $487.6 million, or 17.7%, from the first quarter of 2024. Core deposits grew to a record $2.463 billion, up $66.3 million, or 11.1% annualized, from the linked quarter and $164.9 million, or 7.2%, from the first quarter of 2024.
    • Strong and Consistent Loan Growth. Loans increased $71.4 million, or 9.2% annualized, from the fourth quarter of 2024, and $274.7 million, or 9.4%, from the first quarter of 2024, reflecting growth throughout the Company.
    • Strong Net Interest Margin. The Company's long-held match-funding strategy and pricing discipline produced a net interest margin of 3.69%, compared to 3.77% for the linked quarter and 3.58% for the prior year quarter. Net interest income increased 0.3% from the linked quarter and 12.7% from the prior year quarter.
    • Solid Operating Revenue. Operating revenue of $40.8 million increased 12.6% from the prior year quarter. Beyond strong loan growth and NIM, operating revenue was boosted by a 12.2% increase in fee income.
    • Private Wealth Management Expansion. Private Wealth assets under management and administration grew to a record $3.425 billion, generating Private Wealth fee income of $3.5 million. Private Wealth fees increased by 12.2% from the prior year quarter and comprised 46% of total non-interest income.
    • Strong 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 9.2% annualized increase compared to the linked quarter and a 14.0% increase compared to the prior year quarter.

    Quarterly Financial Results

    (Unaudited)

     

    As of and for the Three Months Ended

    (Dollars in thousands, except per share amounts)

     

    March 31,

    2025

     

    December 31,

    2024

     

    March 31,

    2024

    Net interest income

     

    $33,258

     

    $33,148

     

    $29,511

    Adjusted non-interest income (1)

     

    7,579

     

    8,005

     

    6,765

    Operating revenue (1)

     

    40,837

     

    41,153

     

    36,276

    Operating expense (1)

     

    24,617

     

    23,434

     

    23,130

    Pre-tax, pre-provision adjusted earnings (1)

     

    16,220

     

    17,719

     

    13,146

    Less:

     

     

     

     

     

     

    Provision for credit losses

     

    2,659

     

    2,701

     

    2,326

    Net (gain) loss on repossessed assets

     

    (8)

     

    5

     

    86

    SBA recourse (benefit) provision

     

    —

     

    (687)

     

    126

    Impairment of tax credit investments

     

    110

     

    400

     

    —

    Add:

     

     

     

     

     

     

    Net loss on sale of securities

     

    —

     

    —

     

    (8)

    Income before income tax expense

     

    13,459

     

    15,300

     

    10,600

    Income tax expense

     

    2,288

     

    885

     

    1,752

    Net income

     

    $11,171

     

    $14,415

     

    $8,848

    Preferred stock dividends

     

    219

     

    219

     

    219

    Net income available to common shareholders

     

    $10,952

     

    $14,196

     

    $8,629

    Earnings per share, diluted

     

    $1.32

     

    $1.71

     

    $1.04

    Book value per share

     

    $39.04

     

    $38.17

     

    $34.41

    Tangible book value per share (1)

     

    $37.58

     

    $36.74

     

    $32.97

     

     

     

     

     

     

     

    Net interest margin (2)

     

    3.69%

     

    3.77%

     

    3.58%

    Adjusted net interest margin (1)(2)

     

    3.46%

     

    3.48%

     

    3.43%

    Fee income ratio (non-interest income / total revenue)

     

    18.56%

     

    19.45%

     

    18.63%

    Efficiency ratio (1)

     

    60.28%

     

    56.94%

     

    63.76%

    Return on average assets (2)

     

    1.14%

     

    1.52%

     

    0.98%

    Return on average tangible common equity (2)

     

    14.12%

     

    19.21%

     

    12.79%

     

     

     

     

     

     

     

    Period-end loans and leases receivable

     

    $3,184,400

     

    $3,113,128

     

    $2,910,864

    Average loans and leases receivable

     

    $3,185,796

     

    $3,103,703

     

    $2,887,454

    Period-end core deposits

     

    $2,462,695

     

    $2,396,429

     

    $2,297,843

    Average core deposits

     

    $2,362,894

     

    $2,416,919

     

    $2,346,453

    Allowance for credit losses, including unfunded commitment reserves

     

    $36,515

     

    $37,268

     

    $34,629

    Non-performing assets

     

    $24,092

     

    $28,418

     

    $20,146

    Allowance for credit losses as a percent of total gross loans and leases

     

    1.15%

     

    1.20%

     

    1.19%

    Non-performing assets as a percent of total assets

     

    0.61%

     

    0.74%

     

    0.57%

    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.

    First Quarter 2025 Compared to Fourth Quarter 2024

    Net interest income increased $110,000, or 0.3%, to $33.3 million.

    • The increase in net interest income was driven by higher average loans and leases receivable, partially offset by a decrease in fees in lieu of interest and adjusted net interest margin. Average loans and leases receivable grew by $82.1 million, or 10.6% annualized, to $3.186 billion. Fees in lieu of interest, which vary from quarter to quarter based on client-driven activity, totaled $2.1 million, compared to $2.4 million in the prior quarter. Excluding fees in lieu of interest, net interest income increased $417,000, or 1.4%.
    • The yield on average interest-earning assets decreased 23 basis points to 6.61% from 6.84%. Excluding fees in lieu of interest, the yield on average interest-earning assets decreased 19 basis points to 6.38% from 6.57%. The adjusted interest-earning asset beta1 compared to the prior quarter was 71.9%. The change in yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in the effective daily fed funds rate is commonly referred to as beta.
    • The rate paid for average interest-bearing core deposits decreased 36 basis points to 3.29% from 3.65%. The rate paid for average total bank funding decreased 16 basis points to 3.02% from 3.18%. Total bank funding is defined as total deposits plus Federal Home Loan Bank ("FHLB") advances. The total core deposit beta compared to the prior quarter was 84.4%. The total bank funding beta compared to the prior quarter was 50.0%.
    • Net interest margin was 3.69% compared to 3.77% for the linked quarter. Adjusted net interest margin2 was 3.46%, down 2 basis points compared to 3.48% in the linked quarter. The decrease in adjusted net interest margin was driven by a decrease in the yield on interest-earning assets partially offset by a decrease in rate paid on total bank funding.
    • 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 a credit loss provision expense of $2.7 million in both periods of comparison. The provision expense was driven by a deterioration in the economic outlook in our model forecast and loan growth.

    Non-interest income decreased $426,000, or 5.3%, to $7.6 million.

    • Private Wealth fee income increased $66,000, or 1.9% to $3.5 million. Private Wealth assets under management and administration measured $3.425 billion on March 31, 2025, up $5.9 million, or 0.7% annualized from the prior quarter. Fee income is based on overall asset levels and may vary based on seasonal activity and the timing of fluctuations in market values.
    • Loan fee income decreased $526,000 or 57.5% to $388,000 primarily due to a reclassification of certain types of C&I loan fees from non-interest income to interest income.
    • Commercial loan swap fee income of $113,000 decreased by $475,000, or 80.8%. Swap fee income varies from period to period based on loan activity and the interest rate environment.
    • Gains on sale of SBA loans increased $25,000, or 2.7%, to $963,000. Gain on sale of SBA loans varies period to period based on the amount of closed and fully funded loans. While quarterly gains may vary, management expects the SBA loan sales to continue growing year-over-year.
    • Service charges on deposits increased $88,000, or 9.2%, to $1.0 million, primarily driven by new core deposit relationships.
    ____________________
    1.

    The change in yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta. Adjusted interest earning assets is a non-GAAP measure representing interest earnings assets excluding recurring, but volatile items.

    2.

    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.

    • Other non-interest income increased $395,000 or 33.5% to $1.6 million. The increase was primarily due to higher returns on the Company's investments in Small Business Investment Company ("SBIC") funds. Income from SBIC funds was $569,000 in the first quarter, compared to $251,000 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.

    Non-interest expense increased $1.6 million, or 6.8%, to $24.7 million, while operating expense increased $1.2 million, or 5.0%, to $24.6 million.

    • Compensation expense was $16.7 million, reflecting an increase of $1.2 million, or 7.8%, from the linked quarter due to higher seasonal payroll taxes, 401k match contributions paid in the quarter on the annual cash bonus payout, annual merit increases, and an expanded workforce. This was partially offset by a decrease in incentive compensation. Average full-time equivalents ("FTEs") for the first quarter of 2025 were 353, up from 349 in the linked quarter.
    • Data processing expense was $1.1 million, decreasing $565,000, or 34.3%, from the linked quarter primarily due to a one-time expense as result of a change in credit card vendors in the linked quarter.
    • Professional fees were $1.5 million, increasing $136,000, or 10.3%, from the linked quarterly primarily due to an increase in recruiting expense and other consulting expenses.
    • Other non-interest expense was $1.1 million, increasing $597,000, or 115.5%, from the linked quarter primarily due to an SBA recourse provision benefit of $687,000 in the linked quarter. This benefit, considered a change in estimate, is the result of a review of assumptions which identified that actual losses over the past three years were significantly below estimated losses. Management evaluates the need for a recourse provision on a loan-by-loan basis.

    Income tax expense increased $1.4 million to $2.3 million. The effective tax rate was 17.0% for the three months ended March 31, 2025, compared to 5.8% for the linked quarter which included the benefit of releasing a portion of the Bank's state deferred income tax valuation allowance. The Company expects to report an effective tax rate between 16% and 18% for 2025.

    Total period-end loans and leases receivable increased $71.4 million, or 9.2% annualized, to $3.185 billion. The average rate earned on average loans and leases receivable was 6.94%, down 27 basis points from 7.21% in the prior quarter. Excluding fees in lieu of interest, the average rate earned on average loans and leases receivable was 6.68%, down 23 basis points from 6.91% in the prior quarter. This decrease in yield was primarily due to the decrease in short-term market rates.

    • Commercial Real Estate ("CRE") loans decreased by $7.2 million, or 1.5% annualized, to $1.910 billion. The decrease was primarily due to payoffs.
    • C&I loans increased $77.4 million, or 26.87% annualized, to $1.229 billion. The increase was due to growth across products and markets.

    Total period-end core deposits increased $66.3 million, or 11.1% annualized, to $2.463 billion, compared to $2.396 billion. The average rate paid was 2.71%, down 27 basis points from 2.98% in the prior quarter.

    • New non-maturity deposit balances of $28.3 million were added at a weighted average rate of 2.98%. Certificate of deposit maturities of $120.5 million at a weighted average rate of 4.7% were replaced by new and renewed certificates of deposit of $123.0 million at a weighted average rate of 3.7%.

    Period-end wholesale funding, including FHLB advances and brokered deposits, increased $36.2 million, or 3.7%, to $1.012 billion. 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 increased $69.6 million, or 9.8%, to $780.3 million, compared to $710.7 million. The average rate paid on wholesale deposits decreased eight basis points to 4.03% and the weighted average original maturity increased to 4.1 years from 3.9 years.
    • FHLB advances decreased $33.5 million, or 12.6%, to $231.9 million, compared to $265.4 million. The average rate paid on FHLB advances increased 20 basis points to 3.11% and the weighted average original maturity remained flat at 5.4 years.

    Non-performing assets decreased $4.3 million to $24.1 million, or 0.61% of total assets, decreasing as a percentage of total assets from 0.74% in the prior quarter. The decrease is primarily driven by net charge-offs on Equipment Finance loans and SBA lending in the C&I portfolio. Charge-offs on Equipment Finance loans were higher this quarter due to a change in calculation which accelerated charge-offs by approximately one quarter. Management believes this change better reflects the impact of an accelerated collection and liquidation process. 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 $6.2 million, unchanged from the linked quarter. Excluding this ABL loan, non-performing assets totaled $17.9 million, or 0.45% of total assets in the current quarter and $22.2 million, or 0.58% of total assets in the linked quarter.

    The allowance for credit losses, including the unfunded credit commitments reserve, decreased $753,000, or 2.0%, primarily due to net charge-offs partially offset by additional general reserves due to deterioration in the economic outlook in our model forecast and loan growth. The allowance for credit losses, including unfunded credit commitment reserves, as a percent of total gross loans and leases was 1.15% compared to 1.20% in the prior quarter.

    First Quarter 2025 Compared to First Quarter 2024

    Net interest income increased $3.7 million, or 12.7%, to $33.3 million.

    • The increase in net interest income primarily reflects an increase in average gross loans and leases and an increase in fees in lieu of interest. Fees in lieu of interest increased to $2.1 million from $849,000. Excluding fees in lieu of interest, net interest income increased $2.5 million, or 8.9%.
    • The yield on average interest-earning assets decreased 16 basis points to 6.61% from 6.77%. Excluding fees in lieu of interest, the yield on average interest-earning assets measured 6.38% compared to 6.67%. 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 75 basis points to 3.29% from 4.04%. The rate paid for average total bank funding decreased 29 basis points to 3.02% from 3.31%.
    • Net interest margin increased 11 basis points to 3.69% from 3.58%. Adjusted net interest margin increased 3 basis points to 3.46% from 3.43%.

    The Company reported a credit loss provision expense of $2.7 million, compared to $2.3 million in the first quarter of 2024. See the provision breakdown table below for more detail on the components of provision for credit losses expense.

    Non-interest income increased $822,000, or 12.2%, to $7.6 million.

    • Private Wealth fee income increased $381,000, or 12.2%, to $3.5 million. Private Wealth assets under management and administration measured $3.425 billion at March 31, 2025, up $104.4 million, or 3.1%.
    • Gain on sale of SBA loans increased $768,000 to $963,000. Gain on sale of SBA loans varies period to period based on the number of closed and fully funded commitments. Management expects the SBA production to continue to grow year-over-year.
    • Loan fee income decreased $459,000 to $388,000 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 $108,000, or 11.5%, to $1,048,000, primarily driven by new core deposit relationships.

    Non-interest expense increased $1.4 million, or 5.9%, to $24.7 million. Operating expense increased $1.5 million, or 6.4%, to $24.6 million.

    • Compensation expense increased $590,000, or 3.7%, to $16.7 million. The increase in compensation expense was primarily due to an increase in average FTEs and annual merit increases and promotions. Average FTEs increased 2% to 353 in the first quarter of 2025, compared to 346 in the first quarter of 2024.
    • Computer software expense increased $185,000, or 13.0%, to $1.6 million, primarily due to our commitment to innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
    • FDIC Insurance increased $170,000, or 27.9%, to $780,000 primarily due to an increase in assessment rate and assessable base.
    • Marketing expense increased $150,000, or 18.3%, to $968,000, primarily due to increased business development efforts and advertising projects to support Company growth goals.
    • Other expense increased $316,000, or 39.6%, to $1.1 million, primarily due to an increase in collateral liquidation costs and early stage expenses related to SBIC investments costs.

    Total period-end loans and leases receivable increased $274.7 million, or 9.4%, to $3.185 billion.

    • CRE loans increased $170.2 million, or 9.8%, to $1.910 billion, primarily due to increases in all loan categories in the Wisconsin market.
    • C&I loans increased $108.3 million, or 9.7%, to $1.229 billion, primarily due to growth across all [most] categories [excluding Asset-Based Lending].

    Total period-end core deposits grew $164.9 million, or 7.2%, to $2.463 billion, and the average rate paid decreased 27 basis points to 2.71%. The decrease in average rate paid on core deposits was primarily due to a decrease in short-term market rates. Total average core deposits grew $16.4 million, or 0.7%, to $2.363 billion.

    Period-end wholesale funding increased $222.4 million, or 28.2%, to $1.012 billion.

    • Wholesale deposits increased $322.8 million to $780.3 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 remained flat at 4.03% and the weighted average original maturity decreased to 4.1 years from 4.4 years. Consistent with our balance sheet strategy to use the most efficient and cost-effective source of wholesale funding, the Company has entered into derivative contracts which hedge a portion of the wholesale deposits to reduce the fixed rate funding costs.
    • FHLB advances decreased $100.4 million to $231.9 million. The average rate paid on FHLB advances increased 72 basis points to 3.11% and the weighted average original maturity increased to 5.4 years from 4.5 years.

    Non-performing assets increased to $24.1 million, or 0.61% of total assets, compared to $20.1 million, or 0.57% of total assets, primarily driven by new non-accrual loans in the C&I portfolio. Excluding the ABL loan described above for which we expect full repayment, non-performing assets totaled $17.9 million, or 0.45% of total assets and $12.0 million, or 0.34% of total assets in the prior year quarter.

    The allowance for credit losses, including unfunded commitment reserves, increased $1.9 million to $36.5 million, compared to $34.6 million primarily due to deterioration in the economic outlook in our model forecast and loan growth, partially offset by net charge-offs. The allowance for credit losses as a percent of total gross loans and leases was 1.15%, compared 1.19% in the prior year.

    Earnings Release Supplement and Conference Call

    On April 25, 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 April 25, 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 first quarter 2025 earnings call to be held at 1:00 p.m. Central time on April 25, 2025. The conference call can be accessed at 800-549-8228 (289-819-1520 if outside the United States and Canada), using the conference call access code: FBIZ, 86182. Investors may also listen live via webcast at: https://events.q4inc.com/attendee/869301015. A replay of the call will be available through Friday, May 2, 2025, by calling 888-660-6264 or 289-819-1325 for international participants. 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, 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.
    • The Company may be subject to increases in FDIC insurance assessments.

    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)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Assets

     

     

     

     

     

     

     

     

     

     

    Cash and cash equivalents

     

    $170,617

     

    $157,702

     

    $131,972

     

    $81,080

     

    $72,040

    Securities available-for-sale, at fair value

     

    359,394

     

    341,392

     

    313,336

     

    308,852

     

    314,114

    Securities held-to-maturity, at amortized cost

     

    6,590

     

    6,741

     

    6,907

     

    7,082

     

    8,131

    Loans held for sale

     

    10,523

     

    13,498

     

    8,173

     

    6,507

     

    4,855

    Loans and leases receivable

     

    3,184,400

     

    3,113,128

     

    3,050,079

     

    2,985,414

     

    2,910,864

    Allowance for credit losses

     

    (35,236)

     

    (35,785)

     

    (33,688)

     

    (33,088)

     

    (32,799)

    Loans and leases receivable, net

     

    3,149,164

     

    3,077,343

     

    3,016,391

     

    2,952,326

     

    2,878,065

    Premises and equipment, net

     

    5,017

     

    5,227

     

    5,478

     

    6,381

     

    6,268

    Repossessed assets

     

    36

     

    51

     

    56

     

    54

     

    317

    Right-of-use assets

     

    5,439

     

    5,702

     

    5,789

     

    6,041

     

    6,297

    Bank-owned life insurance

     

    57,647

     

    57,210

     

    56,767

     

    56,351

     

    55,948

    Federal Home Loan Bank stock, at cost

     

    10,434

     

    11,616

     

    12,775

     

    11,901

     

    13,326

    Goodwill and other intangible assets

     

    12,058

     

    11,912

     

    11,834

     

    11,841

     

    11,950

    Derivatives

     

    48,405

     

    65,762

     

    42,539

     

    70,773

     

    69,703

    Accrued interest receivable and other assets

     

    109,555

     

    99,059

     

    103,707

     

    97,872

     

    90,344

    Total assets

     

    $3,944,879

     

    $3,853,215

     

    $3,715,724

     

    $3,617,061

     

    $3,531,358

    Liabilities and Stockholders' Equity

     

     

     

     

     

     

     

     

     

     

    Core deposits

     

    $2,462,695

     

    $2,396,429

     

    $2,382,730

     

    $2,309,635

     

    $2,297,843

    Wholesale deposits

     

    780,348

     

    710,711

     

    587,217

     

    575,548

     

    457,563

    Total deposits

     

    3,243,043

     

    3,107,140

     

    2,969,947

     

    2,885,183

     

    2,755,406

    Federal Home Loan Bank advances and other borrowings

     

    286,590

     

    320,049

     

    349,109

     

    327,855

     

    381,718

    Lease liabilities

     

    7,604

     

    7,926

     

    8,054

     

    8,361

     

    8,664

    Derivatives

     

    45,612

     

    57,068

     

    45,399

     

    61,821

     

    61,133

    Accrued interest payable and other liabilities

     

    25,967

     

    32,443

     

    31,233

     

    28,671

     

    26,649

    Total liabilities

     

    3,608,816

     

    3,524,626

     

    3,403,742

     

    3,311,891

     

    3,233,570

    Total stockholders' equity

     

    336,063

     

    328,589

     

    311,982

     

    305,170

     

    297,788

    Total liabilities and stockholders' equity

     

    $3,944,879

     

    $3,853,215

     

    $3,715,724

     

    $3,617,061

     

    $3,531,358

    STATEMENTS OF INCOME

     

    (Unaudited)

     

    As of and for the Three Months Ended

    (Dollars in thousands, except per share amounts)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Total interest income

     

    $59,530

     

    $60,110

     

    $59,327

     

    $57,910

     

    $55,783

    Total interest expense

     

    26,272

     

    26,962

     

    28,320

     

    27,370

     

    26,272

    Net interest income

     

    33,258

     

    33,148

     

    31,007

     

    30,540

     

    29,511

    Provision for credit losses

     

    2,659

     

    2,701

     

    2,087

     

    1,713

     

    2,326

    Net interest income after provision for credit losses

     

    30,599

     

    30,447

     

    28,920

     

    28,827

     

    27,185

    Private wealth management service fees

     

    3,492

     

    3,426

     

    3,264

     

    3,461

     

    3,111

    Gain on sale of SBA loans

     

    963

     

    938

     

    460

     

    349

     

    195

    Service charges on deposits

     

    1,048

     

    960

     

    920

     

    951

     

    940

    Loan fees

     

    388

     

    914

     

    812

     

    826

     

    847

    Loss on sale of securities

     

    —

     

    —

     

    0

     

    —

     

    (8)

    Swap fees

     

    113

     

    588

     

    460

     

    157

     

    198

    Other non-interest income

     

    1,575

     

    1,179

     

    1,148

     

    1,681

     

    1,474

    Total non-interest income

     

    7,579

     

    8,005

     

    7,064

     

    7,425

     

    6,757

    Compensation

     

    16,747

     

    15,535

     

    15,198

     

    16,215

     

    16,157

    Occupancy

     

    590

     

    588

     

    585

     

    593

     

    607

    Professional fees

     

    1,459

     

    1,323

     

    1,305

     

    1,472

     

    1,571

    Data processing

     

    1,082

     

    1,647

     

    1,045

     

    1,182

     

    1,018

    Marketing

     

    968

     

    928

     

    922

     

    850

     

    818

    Equipment

     

    376

     

    301

     

    333

     

    335

     

    345

    Computer software

     

    1,603

     

    1,585

     

    1,608

     

    1,555

     

    1,418

    FDIC insurance

     

    780

     

    728

     

    810

     

    612

     

    610

    Other non-interest expense

     

    1,114

     

    517

     

    1,301

     

    1,065

     

    798

    Total non-interest expense

     

    24,719

     

    23,152

     

    23,107

     

    23,879

     

    23,342

    Income before income tax expense

     

    13,459

     

    15,300

     

    12,877

     

    12,373

     

    10,600

    Income tax expense

     

    2,288

     

    885

     

    2,351

     

    1,917

     

    1,752

    Net income

     

    $11,171

     

    $14,415

     

    $10,526

     

    $10,456

     

    $8,848

    Preferred stock dividends

     

    219

     

    219

     

    218

     

    219

     

    219

    Net income available to common shareholders

     

    $10,952

     

    $14,196

     

    $10,308

     

    $10,237

     

    $8,629

    Per common share:

     

     

     

     

     

     

     

     

     

     

    Basic earnings

     

    $1.32

     

    $1.71

     

    $1.24

     

    $1.23

     

    $1.04

    Diluted earnings

     

    1.32

     

    1.71

     

    1.24

     

    1.23

     

    1.04

    Dividends declared

     

    0.29

     

    0.25

     

    0.25

     

    0.25

     

    0.25

    Book value

     

    39.04

     

    38.17

     

    36.17

     

    35.35

     

    34.41

    Tangible book value

     

    37.58

     

    36.74

     

    34.74

     

    33.92

     

    32.97

    Weighted-average common shares outstanding(1)

     

    8,130,743

     

    8,107,308

     

    8,111,215

     

    8,113,246

     

    8,125,319

    Weighted-average diluted common shares outstanding(1)

     

    8,130,743

     

    8,107,308

     

    8,111,215

     

    8,113,246

     

    8,125,319

    (1) Excluding participating securities.

    NET INTEREST INCOME ANALYSIS

     

    (Unaudited)

     

    For the Three Months Ended

    (Dollars in thousands)

     

    March 31, 2025

     

    December 31, 2024

     

    March 31, 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)

     

    $1,925,661

     

    $29,886

     

    6.21%

     

    $1,879,136

     

    $30,580

     

    6.51%

     

    $1,721,186

     

    $28,120

     

    6.54%

    Commercial and industrial loans(1)

     

    1,212,656

     

    24,727

     

    8.16

     

    1,176,175

     

    24,709

     

    8.40

     

    1,115,724

     

    22,724

     

    8.15

    Consumer and other loans(1)

     

    47,479

     

    661

     

    5.57

     

    48,392

     

    663

     

    5.48

     

    50,544

     

    705

     

    5.58

    Total loans and leases receivable(1)

     

    3,185,796

     

    55,274

     

    6.94

     

    3,103,703

     

    55,952

     

    7.21

     

    2,887,454

     

    51,549

     

    7.14

    Mortgage-related securities(2)

     

    308,656

     

    3,195

     

    4.14

     

    290,471

     

    2,858

     

    3.94

     

    241,940

     

    2,276

     

    3.76

    Other investment securities(3)

     

    43,145

     

    209

     

    1.94

     

    45,174

     

    231

     

    2.05

     

    67,980

     

    518

     

    3.05

    FHLB stock

     

    13,623

     

    294

     

    8.63

     

    11,788

     

    274

     

    9.30

     

    12,271

     

    282

     

    9.19

    Short-term investments

     

    51,072

     

    558

     

    4.37

     

    65,254

     

    795

     

    4.87

     

    85,072

     

    1,158

     

    5.44

    Total interest-earning assets

     

    3,602,292

     

    59,530

     

    6.61

     

    3,516,390

     

    60,110

     

    6.84

     

    3,294,717

     

    55,783

     

    6.77

    Non-interest-earning assets

     

    240,076

     

     

     

     

     

    230,218

     

     

     

     

     

    233,224

     

     

     

     

    Total assets

     

    $3,842,368

     

     

     

     

     

    $3,746,608

     

     

     

     

     

    $3,527,941

     

     

     

     

    Interest-bearing liabilities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Transaction accounts

     

    $927,250

     

    7,412

     

    3.20

     

    $928,428

     

    8,161

     

    3.52

     

    $862,896

     

    8,447

     

    3.92

    Money market

     

    831,598

     

    6,751

     

    3.25

     

    833,501

     

    7,571

     

    3.63

     

    761,893

     

    7,565

     

    3.97

    Certificates of deposit

     

    189,547

     

    1,861

     

    3.93

     

    210,307

     

    2,282

     

    4.34

     

    278,248

     

    3,210

     

    4.61

    Wholesale deposits

     

    694,431

     

    6,992

     

    4.03

     

    594,578

     

    6,106

     

    4.11

     

    457,536

     

    4,615

     

    4.03

    Total interest-bearing deposits

     

    2,642,826

     

    23,016

     

    3.48

     

    2,566,814

     

    24,120

     

    3.76

     

    2,360,573

     

    23,837

     

    4.04

    FHLB advances

     

    305,549

     

    2,374

     

    3.11

     

    270,476

     

    1,969

     

    2.91

     

    287,307

     

    1,717

     

    2.39

    Other borrowings

     

    54,708

     

    882

     

    6.45

     

    54,672

     

    874

     

    6.39

     

    49,457

     

    718

     

    5.81

    Total interest-bearing liabilities

     

    3,003,083

     

    26,272

     

    3.50

     

    2,891,962

     

    26,963

     

    3.73

     

    2,697,337

     

    26,272

     

    3.90

    Non-interest-bearing demand deposit accounts

     

    414,499

     

     

     

     

     

    444,683

     

     

     

     

     

    443,416

     

     

     

     

    Other non-interest-bearing liabilities

     

    90,683

     

     

     

     

     

    90,555

     

     

     

     

     

    93,307

     

     

     

     

    Total liabilities

     

    3,508,265

     

     

     

     

     

    3,427,200

     

     

     

     

     

    3,234,060

     

     

     

     

    Stockholders' equity

     

    334,103

     

     

     

     

     

    319,408

     

     

     

     

     

    293,881

     

     

     

     

    Total liabilities and stockholders' equity

     

    $3,842,368

     

     

     

     

     

    $3,746,608

     

     

     

     

     

    $3,527,941

     

     

     

     

    Net interest income

     

     

     

    $33,258

     

     

     

     

     

    $33,147

     

     

     

     

     

    $29,511

     

     

    Interest rate spread

     

     

     

     

     

    3.11%

     

     

     

     

     

    3.11%

     

     

     

     

     

    2.88%

    Net interest-earning assets

     

    $599,209

     

     

     

     

     

    $624,428

     

     

     

     

     

    $597,380

     

     

     

     

    Net interest margin

     

     

     

     

     

    3.69%

     

     

     

     

     

    3.77%

     

     

     

     

     

    3.58%

    (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.

    BETA ANALYSIS

     

     

     

    For the Three Months Ended

    (Unaudited)

     

    March 31, 2025

     

    December 31, 2024

     

     

     

    March 31, 2024

     

     

     

     

    Average Yield/Rate

     

    Average Yield/Rate

     

    Increase (Decrease)

     

    Average Yield/Rate

     

    Increase (Decrease)

    Total loans and leases receivable (a)

     

    6.94%

     

    7.21%

     

    (0.27)%

     

    7.14%

     

    (0.20)%

    Total interest-earning assets(b)

     

    6.61%

     

    6.84%

     

    (0.23)%

     

    6.77%

     

    (0.16)%

    Adjusted total loans and leases receivable (1)(c)

     

    6.68%

     

    6.91%

     

    (0.23)%

     

    7.03%

     

    (0.35)%

    Adjusted total interest-earning assets (1)(d)

     

    6.38%

     

    6.57%

     

    (0.19)%

     

    6.68%

     

    (0.30)%

    Total core deposits(e)

     

    2.71%

     

    2.98%

     

    (0.27)%

     

    3.28%

     

    (0.57)%

    Total bank funding(f)

     

    3.02%

     

    3.18%

     

    (0.16)%

     

    3.31%

     

    (0.29)%

    Net interest margin(g)

     

    3.69%

     

    3.77%

     

    (0.08)%

     

    3.58%

     

    0.11%

    Adjusted net interest margin(h)

     

    3.46%

     

    3.48%

     

    (0.02)%

     

    3.43%

     

    0.03%

     

     

     

     

     

     

     

     

     

     

     

    Effective fed funds rate (2)(i)

     

    4.33%

     

    4.65%

     

    (0.32)%

     

    5.33%

     

    (1.00)%

     

     

     

     

     

     

     

     

     

     

     

    Beta Calculations:

     

     

     

     

     

     

     

     

     

     

    Total loans and leases

    receivable(a)/(i)

     

     

     

     

     

    84.4%

     

     

     

    20.0%

    Total interest-earning assets(b)/(i)

     

     

     

     

     

    71.9%

     

     

     

    16.0%

    Adjusted total loans and leases receivable (1)(c)/(i)

     

     

     

     

     

    71.9%

     

     

     

    35.0%

    Adjusted total interest-earning assets (1)(d)/(i)

     

     

     

     

     

    59.4%

     

     

     

    30.0%

    Total core deposits(e/i)

     

     

     

     

     

    84.4%

     

     

     

    57.0%

    Total bank funding(f)/(i)

     

     

     

     

     

    50.0%

     

     

     

    29.0%

    Net interest margin(g/i)

     

     

     

     

     

    25.0%

     

     

     

    (11.0)%

    Adjusted net interest margin(h/i)

     

     

     

     

     

    6.2%

     

     

     

    (3.0)%

    PROVISION FOR CREDIT LOSS COMPOSITION

     

    (Unaudited)

     

    For the Three Months Ended

    (Dollars in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Change due to qualitative factor changes

     

    $(355)

     

    $(460)

     

    $(444)

     

    $496

     

    $740

    Change due to quantitative factor changes

     

    1,560

     

    (598)

     

    (330)

     

    150

     

    (199)

    Charge-offs

     

    3,810

     

    1,132

     

    1,619

     

    1,583

     

    921

    Recoveries

     

    (398)

     

    (190)

     

    (91)

     

    (191)

     

    (227)

    Change in reserves on individually evaluated loans, net

     

    (2,495)

     

    2,579

     

    757

     

    (1,037)

     

    629

    Change due to loan growth, net

     

    741

     

    577

     

    616

     

    680

     

    354

    Change in unfunded commitment reserves

     

    (204)

     

    (339)

     

    (40)

     

    32

     

    108

    Total provision for credit losses

     

    $2,659

     

    $2,701

     

    $2,087

     

    $1,713

     

    $2,326

    ALLOWANCE FOR CREDIT LOSS COMPOSITION

     

     

     

    As of

     

    March 31,

    2025

     

    December 31,

    2024

     

     

    (in thousands)

     

    % of total loans

     

    (in thousands)

     

    % of total loans

    Allowance for credit losses:

     

     

     

     

     

     

    Loans collectively evaluated

     

    $28,813

    0.90%

     

    $26,867

    0.86%

    Loans individually evaluated

     

    6,423

    0.20%

     

    8,918

    0.29%

    Unfunded commitments reserve

     

    1,279

     

     

    1,483

     

    Total

     

    36,515

    1.15%

     

    37,268

    1.20%

    Loans and lease receivables:

     

    3,184,400

     

     

    3,113,128

     

    PERFORMANCE RATIOS

     

     

     

    For the Three Months Ended

    (Unaudited)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Return on average assets (annualized)

     

    1.14%

     

    1.52%

     

    1.13%

     

    1.14%

     

    0.98%

    Return on average tangible common equity (annualized)

     

    14.13%

     

    19.21%

     

    14.40%

     

    14.12%

     

    12.79%

    Efficiency ratio

     

    60.28%

     

    56.94%

     

    59.44%

     

    62.75%

     

    63.76%

    Interest rate spread

     

    3.11%

     

    3.11%

     

    2.92%

     

    2.95%

     

    2.88%

    Net interest margin

     

    3.69%

     

    3.77%

     

    3.64%

     

    3.65%

     

    3.58%

    Average interest-earning assets to average interest-bearing liabilities

     

    119.95%

     

    121.59%

     

    121.84%

     

    121.37%

     

    122.15%

    ASSET QUALITY RATIOS

     

    (Unaudited)

     

    As of

    (Dollars in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Non-accrual loans and leases

     

    $24,056

     

    $28,367

     

    $19,364

     

    $18,999

     

    $19,829

    Repossessed assets

     

    36

     

    51

     

    56

     

    54

     

    317

    Total non-performing assets

     

    $24,092

     

    $28,418

     

    $19,420

     

    $19,053

     

    $20,146

    Non-accrual loans and leases as a percent of total gross loans and leases

     

    0.76%

     

    0.91%

     

    0.63%

     

    0.64%

     

    0.68%

    Non-performing assets as a percent of total gross loans and leases plus repossessed assets

     

    0.76%

     

    0.91%

     

    0.64%

     

    0.64%

     

    0.69%

    Non-performing assets as a percent of total assets

     

    0.61%

     

    0.74%

     

    0.52%

     

    0.53%

     

    0.57%

    Allowance for credit losses as a percent of total gross loans and leases

     

    1.15%

     

    1.20%

     

    1.16%

     

    1.17%

     

    1.19%

    Allowance for credit losses as a percent of non-accrual loans and leases

     

    151.79%

     

    131.38%

     

    183.38%

     

    183.96%

     

    174.64%

    NET CHARGE-OFFS (RECOVERIES)

     

    (Unaudited)

     

    For the Three Months Ended

    (Dollars in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Charge-offs

     

    $3,810

     

    $1,132

     

    $1,619

     

    $1,583

     

    $921

    Recoveries

     

    (398)

     

    (190)

     

    (91)

     

    (191)

     

    (227)

    Net charge-offs (recoveries)

     

    $3,412

     

    $942

     

    $1,528

     

    $1,392

     

    $694

    Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)

     

    0.43%

     

    0.12%

     

    0.20%

     

    0.19%

     

    0.10%

    CAPITAL RATIOS

     

     

     

    As of and for the Three Months Ended

    (Unaudited)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Total capital to risk-weighted assets

     

    12.20%

     

    12.08%

     

    11.72%

     

    11.45%

     

    11.36%

    Tier I capital to risk-weighted assets

     

    9.60%

     

    9.45%

     

    9.11%

     

    8.99%

     

    8.86%

    Common equity tier I capital to risk- weighted assets

     

    9.26%

     

    9.10%

     

    8.76%

     

    8.64%

     

    8.51%

    Tier I capital to adjusted assets

     

    8.77%

     

    8.78%

     

    8.68%

     

    8.51%

     

    8.45%

    Tangible common equity to tangible assets

     

    7.93%

     

    7.93%

     

    7.78%

     

    7.80%

     

    7.78%

    LOAN AND LEASE RECEIVABLE COMPOSITION

     

    (Unaudited)

     

    As of

    (in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

    Commercial real estate - owner occupied

     

    $258,050

     

    $273,397

     

    $259,532

     

    $258,636

     

    $263,748

    Commercial real estate - non-owner occupied

     

    838,634

     

    845,298

     

    768,195

     

    777,704

     

    792,858

    Construction

     

    215,613

     

    221,086

     

    266,762

     

    229,181

     

    202,382

    Multi-family

     

    549,220

     

    530,853

     

    494,954

     

    470,176

     

    453,321

    1-4 family

     

    48,450

     

    46,496

     

    39,933

     

    39,680

     

    27,482

    Total commercial real estate

     

    1,909,967

     

    1,917,130

     

    1,829,376

     

    1,775,377

     

    1,739,791

    Commercial and industrial

     

    1,229,098

     

    1,151,720

     

    1,174,295

     

    1,161,711

     

    1,120,779

    Consumer and other

     

    46,190

     

    45,000

     

    46,610

     

    48,145

     

    50,020

    Total gross loans and leases receivable

     

    3,185,255

     

    3,113,850

     

    3,050,281

     

    2,985,233

     

    2,910,590

    Less:

     

     

     

     

     

     

     

     

     

     

    Allowance for credit losses

     

    35,236

     

    35,785

     

    33,688

     

    33,088

     

    32,799

    Deferred loan fees

     

    855

     

    722

     

    202

     

    (181)

     

    (274)

    Loans and leases receivable, net

     

    $3,149,164

     

    $3,077,343

     

    $3,016,391

     

    $2,952,326

     

    $2,878,065

    DEPOSIT COMPOSITION

     

    (Unaudited)

     

    As of

    (in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Non-interest-bearing transaction accounts

     

    $433,201

     

    $436,111

     

    $428,012

     

    $406,804

     

    $400,267

    Interest-bearing transaction accounts

     

    1,015,846

     

    965,637

     

    930,252

     

    841,146

     

    818,080

    Money market accounts

     

    831,897

     

    809,695

     

    817,129

     

    837,569

     

    813,467

    Certificates of deposit

     

    181,751

     

    184,986

     

    207,337

     

    224,116

     

    266,029

    Wholesale deposits

     

    780,348

     

    710,711

     

    587,217

     

    575,548

     

    457,563

    Total deposits

     

    $3,243,043

     

    $3,107,140

     

    $2,969,947

     

    $2,885,183

     

    $2,755,406

     

     

     

     

     

     

     

     

     

     

     

    Uninsured deposits

     

    $1,055,347

     

    $980,278

     

    $1,088,496

     

    $1,011,977

     

    $995,428

    Less: uninsured deposits collateralized by pledged assets

     

    9,344

     

    6,864

     

    10,755

     

    34,810

     

    16,622

    Total uninsured, net of collateralized deposits

     

    1,046,003

     

    973,414

     

    1,077,741

     

    977,167

     

    978,806

    % of total deposits

     

    32.3%

     

    31.3%

     

    36.3%

     

    33.9%

     

    35.5%

    SOURCES OF LIQUIDITY

     

    (Unaudited)

     

    As of

    (in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Short-term investments

     

    $136,033

     

    $128,207

     

    $86,670

     

    $54,680

     

    $46,984

    Collateral value of unencumbered pledged loans

     

    501,268

     

    444,453

     

    397,852

     

    401,602

     

    340,639

    Market value of unencumbered securities

     

    324,365

     

    310,125

     

    279,191

     

    289,104

     

    288,965

    Readily accessible liquidity

     

    961,666

     

    882,785

     

    763,713

     

    745,386

     

    676,588

     

     

     

     

     

     

     

     

     

     

     

    Fed fund lines

     

    45,000

     

    45,000

     

    45,000

     

    45,000

     

    45,000

    Excess brokered CD capacity(1)

     

    948,949

     

    981,463

     

    1,102,767

     

    1,051,678

     

    1,166,661

    Total liquidity

     

    $1,955,615

     

    $1,909,248

     

    $1,911,480

     

    $1,842,064

     

    $1,888,249

    Total uninsured, net of collateralized deposits

     

    1,046,003

     

    973,414

     

    1,077,741

     

    977,167

     

    978,806

     

    1. Bank internal policy limits brokered CDs to 50% of total bank funding when combined with FHLB advances.

    PRIVATE WEALTH OFF-BALANCE SHEET COMPOSITION

     

    (Unaudited)

     

    As of

    (in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Trust assets under management

     

    $3,184,197

     

    $3,160,449

     

    $3,145,789

     

    $3,008,897

     

    $3,080,951

    Trust assets under administration

     

    240,366

     

    258,255

     

    252,152

     

    239,766

     

    239,249

    Total trust assets

     

    $3,424,563

     

    $3,418,704

     

    $3,397,941

     

    $3,248,663

     

    $3,320,200

    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)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Common stockholders' equity

     

    $324,071

     

    $316,597

     

    $299,990

     

    $293,178

     

    $285,796

    Less: Goodwill and other intangible assets

     

    (12,058)

     

    (11,912)

     

    (11,834)

     

    (11,841)

     

    (11,950)

    Tangible common equity

     

    $312,013

     

    $304,685

     

    $288,156

     

    $281,337

     

    $273,846

    Common shares outstanding

     

    8,301,967

     

    8,293,928

     

    8,295,017

     

    8,294,589

     

    8,306,573

    Book value per share

     

    $39.04

     

    $38.17

     

    $36.17

     

    $35.35

     

    $34.41

    Tangible book value per share

     

    37.58

     

    36.74

     

    34.74

     

    33.92

     

    32.97

    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)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Common stockholders' equity

     

    $324,071

     

    $316,597

     

    $299,990

     

    $293,178

     

    $285,796

    Less: Goodwill and other intangible assets

     

    (12,058)

     

    (11,912)

     

    (11,834)

     

    (11,841)

     

    (11,950)

    Tangible common equity (a)

     

    $312,013

     

    $304,685

     

    $288,156

     

    $281,337

     

    $273,846

    Total assets

     

    $3,944,879

     

    $3,853,215

     

    $3,715,724

     

    $3,617,061

     

    $3,531,358

    Less: Goodwill and other intangible assets

     

    (12,058)

     

    (11,912)

     

    (11,834)

     

    (11,841)

     

    (11,950)

    Tangible assets (b)

     

    $3,932,821

     

    $3,841,303

     

    $3,703,890

     

    $3,605,220

     

    $3,519,408

    Tangible common equity to tangible assets

     

    7.93%

     

    7.93%

     

    7.78%

     

    7.80%

     

    7.78%

     

     

     

     

     

     

     

     

     

     

     

    Fair Value Adjustments:

     

     

     

     

     

     

     

     

     

     

    Financial assets - MTM (c)

     

    $(20,528)

     

    $(26,580)

     

    $(17,615)

     

    $(17,432)

     

    $(29,019)

    Financial liabilities - MTM (d)

     

    $5,460

     

    $5,946

     

    $8,358

     

    $9,032

     

    $12,560

    Net MTM, after-tax e = (c-d)*(1-21%)

     

    $(11,904)

     

    $(16,301)

     

    $(7,313)

     

    $(6,636)

     

    $(13,003)

     

     

     

     

     

     

     

     

     

     

     

    Adjusted tangible equity f = (a-e)

     

    $300,109

     

    $288,384

     

    $280,843

     

    $274,701

     

    $260,843

    Adjusted tangible assets g = (b-c)

     

    $3,912,293

     

    $3,814,723

     

    $3,686,275

     

    $3,587,788

     

    $3,490,389

    Adjusted TCE ratio (f/g)

     

    7.67%

     

    7.56%

     

    7.62%

     

    7.66%

     

    7.47%

    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

    (Dollars in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Total non-interest expense

     

    $24,719

     

    $23,152

     

    $23,107

     

    $23,879

     

    $23,342

    Less:

     

     

     

     

     

     

     

     

     

     

    Net (gain) loss on repossessed assets

     

    (8)

     

    5

     

    11

     

    65

     

    86

    Impairment of tax credit investments

     

    110

     

    400

     

    —

     

    —

     

    —

    SBA recourse provision (benefit)

     

    —

     

    (687)

     

    466

     

    (9)

     

    126

    Total operating expense (a)

     

    $24,617

     

    $23,434

     

    $22,630

     

    $23,823

     

    $23,130

    Net interest income

     

    $33,258

     

    $33,148

     

    $31,007

     

    $30,540

     

    $29,511

    Total non-interest income

     

    7,579

     

    8,005

     

    7,064

     

    7,425

     

    6,757

    Less:

     

     

     

     

     

     

     

     

     

     

    Net loss on sale of securities

     

    —

     

    —

     

    —

     

    —

     

    (8)

    Adjusted non-interest income

     

    7,579

     

    8,005

     

    7,064

     

    7,425

     

    6,765

    Total operating revenue (b)

     

    $40,837

     

    $41,153

     

    $38,071

     

    $37,965

     

    $36,276

    Efficiency ratio

     

    60.28%

     

    56.94%

     

    59.44%

     

    62.75%

     

    63.76%

     

     

     

     

     

     

     

     

     

     

     

    Pre-tax, pre-provision adjusted earnings (b - a)

     

    $16,220

     

    $17,719

     

    $15,441

     

    $14,142

     

    $13,146

    Average total assets

     

    $3,842,368

     

    $3,746,608

     

    $3,636,887

     

    $3,592,215

     

    $3,527,941

    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

    (Dollars in thousands)

     

    March 31,

    2025

     

    December 31,

    2024

     

    September 30,

    2024

     

    June 30,

    2024

     

    March 31,

    2024

    Interest income

     

    $59,530

     

    $60,110

     

    $59,327

     

    $57,910

     

    $55,783

    Interest expense

     

    26,272

     

    26,962

     

    28,320

     

    27,370

     

    26,272

    Net interest income (a)

     

    33,258

     

    33,148

     

    31,007

     

    30,540

     

    29,511

    Less:

     

     

     

     

     

     

     

     

     

     

    Fees in lieu of interest

     

    2,052

     

    2,359

     

    1,002

     

    1,306

     

    849

    FRB interest income and FHLB dividend income

     

    848

     

    1,062

     

    841

     

    959

     

    1,436

    Adjusted net interest income (b)

     

    $30,358

     

    $29,727

     

    $29,164

     

    $28,275

     

    $27,226

    Average interest-earning assets (c)

     

    $3,602,292

     

    $3,516,390

     

    $3,405,534

     

    $3,347,027

     

    $3,294,717

    Less:

     

     

     

     

     

     

     

     

     

     

    Average FRB cash and FHLB stock

     

    63,971

     

    76,576

     

    52,603

     

    61,082

     

    97,036

    Average non-accrual loans and leases

     

    27,228

     

    19,077

     

    18,954

     

    19,807

     

    20,541

    Adjusted average interest-earning assets (d)

     

    $3,511,093

     

    $3,420,737

     

    $3,333,977

     

    $3,266,138

     

    $3,177,140

    Net interest margin (a / c)

     

    3.69%

     

    3.77%

     

    3.64%

     

    3.65%

     

    3.58%

    Adjusted net interest margin (b / d)

     

    3.46%

     

    3.48%

     

    3.50%

     

    3.46%

     

    3.43%

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20250424603714/en/

    First Business Financial Services, Inc.

    Brian D. Spielmann

    Chief Financial Officer

    608-232-5977

    [email protected]

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