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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2025 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-34095 FIRST BUSINESS FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) | Wisconsin | 39-1576570 | | --- | --- | | (State or ot ...

Financial Data and Key Metrics Changes - Operating revenue grew by 10% year-to-date compared to the same period in 2024, with pre-tax pre-provision earnings increasing by 18% and net income by 17% [20] - Tangible book value per share increased by 14% from a year ago, indicating strong stock valuation gains [5] - The net interest margin for the second quarter was reported at 3.67%, reflecting strong balance sheet management [15] Business Line Data and Key Metrics Changes - Core deposits increased by $70 million, or 11% annualized from the first quarter, and up 10% from last year's second quarter [7] - Loan balances grew by approximately $267 million, or 9%, year-over-year, with solid demand for conventional and niche commercial and industrial (C&I) products [8] - Private wealth assets under management grew by 36% annualized during the quarter and were up 15% from a year ago [11] Market Data and Key Metrics Changes - The company reported a 16% increase in service charges on deposits compared to last year's second quarter, indicating strong core deposit gathering [7] - The company has seen broad-based growth in its conventional markets, particularly in the Southeast and Northeast regions [25] Company Strategy and Development Direction - The company is focused on achieving a five-year strategic plan aimed at driving double-digit growth annually [4] - The strategy includes a target of 75% in-market deposits and 25% wholesale funding, with flexibility based on match funding needs [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, believing that strategic initiatives will continue to serve the company well into the future [20] - The management noted that while deposit competition has increased, they remain confident in maintaining their net interest margin targets [29] Other Important Information - The company reported a low level of net charge-offs during the quarter, with a slight increase in non-performing assets (NPAs) attributed to a single credit in the transportation and logistics sector [13] - The company is no longer lending to the transportation and logistics industry in its small ticket equipment finance business, which is expected to lower overall loss risk [13] Q&A Session Summary Question: Loan growth outlook - Management indicated that they are currently running at about 8.9% loan growth and are optimistic about reaching the 10% target [24][25] Question: Deposit competition and margin impact - Management acknowledged that deposit competition has increased but does not foresee negative implications for their long-term net interest margin targets [29] Question: Non-performing assets increase - The increase in NPAs was due to a specific $6 million loan, which is fully collateralized [32] Question: SBA loan sale gains outlook - Management expects SBA loan sale gains to bounce back closer to Q1 levels for the remainder of the year [36] Question: Transportation portfolio outlook - Management feels confident about the remainder of the transportation portfolio, noting that they stopped lending in that area in May 2023 [41] Question: Expense outlook - Management anticipates typical modest growth in expenses, aiming for positive operating leverage [42] Question: Provision outlook - Management indicated that the provision for loan losses should be enough to support growth while keeping reserve levels flat [44] Question: Core deposit growth targets - Management aims to grow core deposits in line with loan growth, targeting a 10% increase [53] Question: Margin sensitivity to interest rates - Management noted slight asset sensitivity and plans to redeploy cash to maintain margin targets [59]

Financial Performance Highlights - Private Wealth Management assets under management and administration reached a record of $3.731 billion[5] - Private Wealth Management fee income totaled $3.7 million for Q2 2025, an increase of 8.3% compared to Q2 2024[5] - The company experienced consistent loan growth, with an annualized increase of 8.4% from the linked quarter and 8.9% from Q2 2024[5] - Core deposits grew at an annualized rate of 11.4% from the linked quarter and 9.7% from Q2 2024[5] - The net interest margin (NIM) was strong at 3.67%, compared to 3.69% for the linked quarter and 3.65% for the prior-year quarter[5] - Tangible book value per share (TBVPS) increased at an annualized rate of 10.2% from the linked quarter and 13.6% from Q2 2024[5] - Operating revenue increased by 8.1% from Q2 2024, and year-to-date operating revenue increased by 10.3% over the first six months of 2024[5] - Pre-tax, pre-provision earnings grew by 18% year-to-date, and net income grew by 17% for the first six months of 2025 compared to the prior-year period[7] Balance Sheet and Liquidity - As of June 30, 2025, readily accessible liquidity was $1.313 billion, with total liquidity reaching $2.004 billion[35] - 70% of deposits are insured or collateralized, with FDIC insured deposits at $3.305 billion[36]

Financial Performance - First Business Financial Services reported quarterly earnings of $1.35 per share, matching the Zacks Consensus Estimate, and an increase from $1.23 per share a year ago [1] - The company posted revenues of $41.04 million for the quarter ended June 2025, which was 0.79% below the Zacks Consensus Estimate, compared to $37.97 million in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - First Business Financial Services shares have increased approximately 15.6% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $1.34 on revenues of $42.37 million, and for the current fiscal year, it is $5.45 on revenues of $167.8 million [7] - The outlook for the industry, specifically the Banks - Midwest sector, is currently in the top 29% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Exhibit 99.1 FIRST BUSINESS BANK REPORTS SECOND QUARTER 2025 NET INCOME OF $11.2 MILLION -- Robust balance sheet expansion supports continued earnings and tangible book value growth -- MADISON, Wis., July 24, 2025 (BUSINESS WIRE) -- First Business Financial Services, Inc. (the "Company", the "Bank", or "First Business Bank") (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $11.2 million, or earnings per share ("EPS") of $1.35. This compares to net income available to common sh ...

First Business Financial Services (FBIZ) closed the last trading session at $47.69, gaining 1.2% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $60.20 indicates a 26.2% upside potential.The average comprises five short-term price targets ranging from a low of $57 to a high of $62, with a standard deviation of $2.05. While the lowest estimate indicates an increase of 19.5% from the ...

Group 1: Company Overview - First Business Financial Services (FBIZ) currently has a Zacks Rank of 2 (Buy) and an A grade for Value [3][8] - FBIZ has a P/E ratio of 8.44, compared to the industry average of 10.01 [3] - FBIZ's Forward P/E has fluctuated between 6.79 and 10.58 over the past 52 weeks, with a median of 8.55 [3] Group 2: Valuation Metrics - FBIZ's P/B ratio is 1.26, which is lower than the industry average of 1.93 [4] - The P/B ratio for FBIZ has ranged from 0.96 to 1.48 in the past 52 weeks, with a median of 1.22 [4] - FBIZ has a P/S ratio of 1.49, compared to the industry's average P/S of 1.85 [5] - FBIZ's P/CF ratio is 6.92, significantly lower than the industry average of 14.81 [6] - The P/CF ratio for FBIZ has varied between 5.92 and 8.66 over the past 12 months, with a median of 7.19 [6] Group 3: Comparison with Other Companies - First Financial Bank (FFBC) also has a Zacks Rank of 2 (Buy) and a Value grade of A [7] - FFBC's P/B ratio is 0.87, which is lower than the industry average of 1.93 [7] - FFBC's P/B ratio has ranged from 0.84 to 1.18 in the past 52 weeks, with a median of 1.01 [7] Group 4: Investment Outlook - Both FBIZ and FFBC are considered undervalued based on their strong earnings outlook and valuation metrics [8]

Financial Performance - Net income available to common shareholders for Q1 2025 was $11.0 million, or diluted earnings per share of $1.32, compared to $8.6 million, or $1.04 per share in Q1 2024, representing a 28% increase in net income [129]. - Top line revenue for Q1 2025 reached $40.8 million, a 12.6% increase from $36.3 million in Q1 2024, attributed to a 12.7% rise in net interest income and a 12.2% rise in non-interest income [131]. - Pre-tax, pre-provision adjusted earnings for Q1 2025 were $16.2 million, a 23.4% increase from $13.1 million in Q1 2024 [137]. - Efficiency ratio improved to 60.3% in Q1 2025 from 63.8% in Q1 2024, indicating better operational efficiency [136]. Asset and Loan Growth - Total assets increased by $91.7 million, or 9.5% annualized, to $3.945 billion as of March 31, 2025, compared to $3.853 billion at the end of 2024 [135]. - Period-end gross loans and leases receivable rose to $3.185 billion, a 9.2% annualized increase from $3.114 billion at the end of 2024 [135]. - Average gross loans and leases rose by $298.3 million, or 10.3%, for the three months ended March 31, 2025, compared to the same period in 2024 [149]. - Period-end loans and leases receivable increased by $71.8 million, or 9.3% annualized, to $3.149 billion as of March 31, 2025, from $3.077 billion at December 31, 2024 [180]. Income and Interest Metrics - Net interest income increased by $3.7 million, or 12.7%, for the three months ended March 31, 2025, compared to the same period in 2024 [149]. - Net interest margin improved to 3.69% for the three months ended March 31, 2025, compared to 3.58% for the same period in 2024 [148]. - The yield on average loans and leases decreased to 6.94% for the three months ended March 31, 2025, down from 7.14% for the same period in 2024 [150]. - The yield on average interest-earning assets was 6.61% for the three months ended March 31, 2025, compared to 6.77% for the same period in 2024 [150]. Credit Quality - Provision for credit losses was $2.7 million in Q1 2025, up from $2.3 million in Q1 2024 [135]. - Non-performing assets decreased to $24.1 million, or 0.61% of total assets, down from $28.4 million, or 0.74%, at the end of 2024 [135]. - The allowance for credit losses decreased by $753,000, or 2.0%, to $36.5 million as of March 31, 2025, with the allowance as a percentage of gross loans and leases at 1.15% [208]. - Net charge-offs for the three months ended March 31, 2025, were $3.4 million, consisting of $3.8 million in charge-offs and $398,000 in recoveries [210]. Deposits and Funding - Total deposits increased by $135.9 million, or 4.3%, to $3.243 billion as of March 31, 2025, from $3.107 billion at December 31, 2024 [189]. - Core deposits increased by $66.3 million, or 11.1% annualized, to $2.463 billion as of March 31, 2025 [189]. - Outstanding wholesale funds increased to $1.012 billion as of March 31, 2025, representing 29.1% of total bank funding [221]. - FHLB advances and other borrowings decreased by $33.5 million, or 41.8%, to $286.6 million as of March 31, 2025 [191]. Liquidity - As of March 31, 2025, the Corporation's total liquidity was $1.955 billion, an increase from $1.909 billion as of December 31, 2024 [219]. - Readily accessible liquidity increased to $961.7 million as of March 31, 2025, compared to $882.8 million as of December 31, 2024 [220]. - The Bank's accessible liquidity was in excess of the stated policy minimum as of March 31, 2025, ensuring funding for at least one year of maturities [224]. - The Corporation plans to utilize excess liquidity to fund loan and lease portfolio growth and maintain adequate liquidity margins [220]. Other Financial Metrics - Total stockholders' equity increased by $7.5 million, or 9.1%, to $336.1 million at March 31, 2025, compared to $328.6 million at December 31, 2024 [176]. - The effective tax rate for the three months ended March 31, 2025, was 17.00%, compared to 16.5% for the same period in 2024 [172]. - The Corporation paid $219,000 in cash dividends on the Series A Preferred Stock during the three months ended March 31, 2025 [194]. - The Corporation recognized a pre-tax unrealized loss of $5.7 million in other comprehensive income for the three months ended March 31, 2025, related to cash flow hedges [197].

Financial Data and Key Metrics Changes - Pre-tax pre-provision adjusted earnings increased by 23% year-over-year, with earnings per share rising by 27% to $1.32 [6][12] - Tangible book value per share grew by 14% [6] - Net interest margin for the first quarter was 3.69%, reflecting strong balance sheet management [17][18] - Total deposits grew by $488 million, or 18%, compared to the same quarter last year [9] - Loan balances increased by approximately $275 million, or nearly 10% year-over-year [8] Business Line Data and Key Metrics Changes - Core deposits grew by $66 million, or over 11% [9] - Commercial and Industrial (C&I) loans led growth with balances expanding by $77 million, or 27% annualized [10] - Private wealth management assets and fees also saw growth [6] Market Data and Key Metrics Changes - Non-performing assets (NPAs) declined by $4.3 million from the linked quarter [13] - The weighted average risk rating of the portfolio remained stable, indicating no significant deterioration [14] Company Strategy and Development Direction - The company aims for 10% annual growth, focusing on relationship-based deposit growth and loan expansion [5][24] - The strategic plan emphasizes controlling the controllable and delivering shareholder returns that exceed peers [24][25] - The company is optimistic about 2025 and believes its strategic initiatives will support future growth [25] Management's Comments on Operating Environment and Future Outlook - Management noted rising uncertainty related to U.S. trade policy and potential economic recession but remains confident in outperforming peers [15][16] - The company is positioned to capture growth opportunities in countercyclical lending areas, such as asset-based lending [10][11] Other Important Information - Total expenses increased by $1.6 million compared to the fourth quarter, primarily due to workforce-related costs [21] - The effective tax rate for the first quarter returned to a normalized level of 17% [22] Q&A Session Summary Question: Inquiry about new loan yields and spread tightening - Management indicated that new loan yields were consistent with the prior quarter, with slight narrowing of spreads for competitive credits [29][30] Question: Impact of tariffs on clients - Management reported no significant impact from tariffs on clients, although there is ongoing uncertainty [38][40] Question: Equipment finance losses and charge-offs - Management confirmed that the increase in net charge-offs was a one-quarter anomaly, with expectations of continued credit costs in the equipment finance portfolio [42][43] Question: Provision expectations related to loan growth - Management acknowledged a correlation between increased provisions and charge-offs, with expectations for provisions to remain in line with recent quarters [46][48] Question: Cash and securities balances strategy - Management stated that the high cash and securities balances were intentional but temporary, aimed at maintaining liquidity [49][50] Question: SBA lending changes and revenue impact - Management does not foresee significant changes in volume due to recent SBA underwriting changes, attributing volume growth to the sales team [64][65] Question: Credit quality and migration trends - Management reported benign trends in credit quality with little change quarter-over-quarter [69][70] Question: Loan deposit ratio target - Management indicated a focus on maintaining a loan-to-deposit ratio below 100, with a target of 75% core funding to total bank funding [75][77]