Financial Performance Highlights - Private Wealth Management (PWM) assets under management and administration reached a record of $3.425 billion[5] - PWM fee income totaled $3.5 million for Q1 2025, a 12.2% increase compared to Q1 2024[5] - Loans experienced consistent growth, with a 9.2% annualized increase from the linked quarter and a 9.4% increase from Q1 2024[5] - Core deposits grew by 11.1% annualized from the linked quarter and 7.2% from Q1 2024[5] - The company reported a strong net interest margin (NIM) of 3.69%[5] - Operating revenue increased by 13% year-over-year, driven by strong loan growth, NIM, and a 12% increase in fee income[5] - Tangible book value grew by 9% compared to the linked quarter and 14% compared to the prior year quarter[7] Asset Quality and Liquidity - Non-Performing Assets (NPAs) decreased by 15.2% from the linked quarter[5] - The ratio of NPAs to total assets decreased from 0.91% in Q4 2024 to 0.76%[5] - Approximately 68% of deposits are insured or collateralized[33]

Core Insights - First Business Financial Services (FBIZ) reported a revenue of $40.84 million for Q1 2025, marking a year-over-year increase of 12.6% and exceeding the Zacks Consensus Estimate by 1.92% [1] - The earnings per share (EPS) for the same quarter was $1.32, up from $1.04 a year ago, with an EPS surprise of 2.33% over the consensus estimate of $1.29 [1] Financial Performance Metrics - Efficiency ratio stood at 60.3%, better than the average estimate of 61.6% from three analysts [4] - Net Interest Margin was reported at 3.7%, slightly above the average estimate of 3.6% [4] - Net charge-offs as a percentage of average gross loans and leases were 0.4%, compared to the estimated 0.2% [4] - Total interest-earning assets averaged $3.60 billion, close to the estimated $3.62 billion [4] - Total Non-Interest Income was $7.58 million, below the estimated $7.88 million [4] - Net Interest Income reached $33.26 million, surpassing the average estimate of $32.19 million [4] - Gain on sale of SBA loans was $0.96 million, exceeding the estimate of $0.80 million [4] - Swap fees were reported at $0.11 million, significantly lower than the average estimate of $0.78 million [4] - Private wealth management service fees totaled $3.49 million, above the estimated $3.23 million [4] - Service charges on deposits were $1.05 million, slightly above the estimated $0.99 million [4] - Loan fees amounted to $0.39 million, below the average estimate of $0.96 million [4] Stock Performance - Shares of First Business Financial Services have returned +0.1% over the past month, while the Zacks S&P 500 composite has decreased by -5.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Company Performance - First Business Financial Services (FBIZ) reported quarterly earnings of $1.32 per share, exceeding the Zacks Consensus Estimate of $1.29 per share, and up from $1.04 per share a year ago [1] - The company achieved an earnings surprise of 2.33% for the quarter, and has surpassed consensus EPS estimates in all four of the last quarters [2] - Revenues for the quarter were $40.84 million, surpassing the Zacks Consensus Estimate by 1.92%, and up from $36.27 million year-over-year [3] Stock Movement and Outlook - The stock has increased approximately 5.1% since the beginning of the year, contrasting with the S&P 500's decline of -8.6% [4] - The current consensus EPS estimate for the upcoming quarter is $1.34 on revenues of $41 million, and for the current fiscal year, it is $5.46 on revenues of $166.73 million [8] Industry Context - The Banks - Midwest industry, to which First Business Financial Services belongs, is currently ranked in the top 10% of over 250 Zacks industries, indicating a favorable outlook [9] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [6]

Financial Performance - First Business Bank reported a net income of $11.0 million, or earnings per share (EPS) of $1.32, compared to $14.2 million (EPS of $1.71) in Q4 2024 and $8.6 million (EPS of $1.04) in Q1 2024[1]. - Operating revenue was $40.8 million, a 12.6% increase from the prior year quarter, driven by strong loan growth and a 12.2% increase in fee income[4]. - Net income available to common shareholders for Q1 2025 was $10,952 thousand, a 27.0% increase from $8,629 thousand in Q1 2024[36]. - Basic earnings per share for Q1 2025 were $1.32, up from $1.04 in Q1 2024, reflecting a 26.9% increase[36]. - The company declared dividends of $0.29 per share in Q1 2025, an increase from $0.25 per share in the same quarter of the previous year[36]. Deposits and Loans - Total deposits grew by $135.9 million, or 17.5% annualized, from the previous quarter and $487.6 million, or 17.7%, from Q1 2024, with core deposits reaching a record $2.463 billion, up $66.3 million, or 11.1% annualized, from the previous quarter[4]. - Loans increased by $71.4 million, or 9.2% annualized, from Q4 2024, and $274.7 million, or 9.4%, from Q1 2024, reflecting strong growth across the company[4]. - Total period-end loans and leases receivable increased by $274.7 million, or 9.4%, to $3.185 billion[26]. - Total deposits rose to $3,243,043 thousand as of March 31, 2025, up 17.7% from $2,755,406 thousand a year prior[35]. - Total deposits rose to $3,243,043 thousand as of March 31, 2025, up from $3,107,140 thousand at December 31, 2024, reflecting an increase of 4.4%[48]. Interest Income and Margin - The net interest margin was 3.69%, down from 3.77% in the previous quarter and up from 3.58% in the prior year quarter, with net interest income increasing by 0.3% from the previous quarter and 12.7% from the prior year[4]. - Net interest income for the first quarter of 2025 was $33,258 thousand, compared to $29,511 thousand in the same quarter of 2024, reflecting a year-over-year increase of 12.0%[36]. - Net interest income increased by $3.7 million, or 12.7%, to $33.3 million, driven by an increase in average gross loans and leases[22][24]. - The net interest margin for Q1 2025 was 3.69%, compared to 3.58% in Q1 2024, showing an improvement in profitability[37]. - The net interest margin decreased to 3.69% for the three months ended March 31, 2025, compared to 3.77% for the previous quarter, a decline of 0.08%[43]. Asset Quality - Non-performing assets decreased by $4.3 million to $24.1 million, or 0.61% of total assets, down from 0.74% in the prior quarter[20]. - The allowance for credit losses decreased by $753,000, or 2.0%, to $36.5 million, representing 1.15% of total gross loans and leases[21][30]. - The allowance for credit losses as a percentage of total loans was 1.15% as of March 31, 2025, compared to 1.20% at December 31, 2024[42]. - Non-accrual loans and leases decreased to $24,056 thousand as of March 31, 2025, from $28,367 thousand at December 31, 2024, a reduction of 15.5%[44]. - The allowance for credit losses decreased slightly to $(35,236) thousand from $(32,799) thousand a year earlier, indicating improved asset quality[35]. Expenses and Efficiency - Non-interest expense increased by $1.4 million, or 5.9%, to $24.7 million, primarily due to higher operating expenses[25]. - Compensation expense increased by $590,000, or 3.7%, to $16.7 million, attributed to an increase in average FTEs[29]. - The efficiency ratio increased to 60.28% for the three months ended March 31, 2025, compared to 56.94% in the previous quarter, indicating a decline in operational efficiency[43]. - Total operating revenue for the three months ended March 31, 2025, is $40,837, a decrease from $41,153 in the previous quarter[57]. Wealth Management - Private Wealth assets under management grew to a record $3.425 billion, generating fee income of $3.5 million, which increased by 12.2% from the prior year quarter[4]. - Non-interest income rose by $822,000, or 12.2%, to $7.6 million, with Private Wealth fee income increasing by $381,000, or 12.2%[23][24]. - Total non-interest income for Q1 2025 was $7,579 thousand, an increase from $6,757 thousand in Q1 2024, marking a growth of 12.2%[36]. Capital and Liquidity - The Tier I capital to risk-weighted assets ratio improved to 9.60% as of March 31, 2025, compared to 9.45% at December 31, 2024[46]. - Total liquidity as of March 31, 2025, is $1,955,615, an increase from $1,909,248 as of December 31, 2024[49]. - Tangible common equity increased to $312,013 as of March 31, 2025, compared to $304,685 as of December 31, 2024[53]. - Book value per share rose to $39.04 as of March 31, 2025, from $38.17 as of December 31, 2024[53].

Group 1 - First Business Financial Services (FBIZ) has experienced a downtrend with a 9% decline in stock price over the past four weeks, but it is now in oversold territory, indicating a potential for a turnaround [1] - The Relative Strength Index (RSI) for FBIZ is at 29.29, suggesting that the heavy selling pressure may be exhausting, which could lead to a reversal in the stock's trend [5] - Analysts have raised earnings estimates for FBIZ by 0.7% over the last 30 days, indicating a consensus that the company may report better earnings than previously predicted, which typically correlates with price appreciation [7] Group 2 - FBIZ holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8]

Financial Performance - Net income available to common shareholders for the year ended December 31, 2024, was $43.4 million, a 20.0% increase from $36.2 million in 2023[253] - Diluted earnings per common share increased to $5.20 for the year ended December 31, 2024, up 20.0% from $4.33 in the prior year[253] - PTPP adjusted earnings for the year ended December 31, 2024, increased to $60.4 million, up from $56.2 million in 2023, representing a growth of 4.3%[263] - The Corporation's net income for the year ended December 31, 2024, was $44.2 million, contributing to a $39.0 million increase in stockholders' equity[350] - Comprehensive income for 2024 was $46,537,000, up from $38,620,000 in 2023, reflecting a growth of 20%[392] Revenue and Income - Top line revenue grew by $9.6 million, or 6.6%, totaling $153.5 million for the year ended December 31, 2024, compared to $143.9 million in 2023[257] - Total operating revenue for 2024 reached $153.47 million, marking a $9.52 million increase or 6.6% from $143.94 million in 2023[265] - Total non-interest income decreased to $29.25 million in 2024, down by $2.06 million or 6.6% from $31.31 million in 2023[265] - The total non-interest income for 2024 was $29,251 thousand, a decrease from $31,308 thousand in 2023[390] Assets and Liabilities - Total assets increased by $345.4 million, or 9.8%, to $3.853 billion as of December 31, 2024, compared to $3.508 billion at the end of 2023[253] - Average total assets grew to $3.63 billion in 2024, an increase of $414.12 million or 12.9% from $3.21 billion in 2023[265] - Total liabilities increased by $306.4 million, or 9.5%, to $3.525 billion as of December 31, 2024, primarily due to an increase in deposits[303] - Total deposits rose by $310.4 million to $3.107 billion as of December 31, 2024, compared to $2.797 billion in 2023, marking an increase of 11.1%[341] Loans and Credit Quality - Average gross loans and leases increased by $349.0 million, or 13.2%, to $2.997 billion for the year ended December 31, 2024[260] - Period-end loans and leases receivable increased by $258.4 million, or 9.2%, to $3.077 billion at December 31, 2024, from $2.819 billion at December 31, 2023[317] - The total gross loans and leases receivable amounted to $3.113 billion as of December 31, 2024, compared to $2.850 billion in 2023[323] - The allowance for credit losses to gross loans and leases was 1.20% as of December 31, 2024, compared to 1.16% in 2023[331] - Non-accrual loans and leases increased by $7.8 million to $28.4 million at December 31, 2024, with a non-accrual ratio of 0.91%, up from 0.72% in 2023[331] Interest Income and Margin - Net interest income increased by $11.6 million, or 10.3%, to $124.2 million for the year ended December 31, 2024[258] - Net interest income rose to $124.21 million in 2024, reflecting an increase of $11.62 million or 10.3% from $112.59 million in 2023[265] - The net interest margin for 2024 was 3.66%, down from 3.78% in 2023, indicating a slight compression in profitability on interest-earning assets[268] - The yield on average interest-earning assets rose to 6.87% for the year ended December 31, 2024, up from 6.54% in 2023, primarily due to reinvestment in a higher rate environment[278] Expenses - Total non-interest expense for 2024 was $93.48 million, a rise of $4.91 million or 5.5% compared to $88.58 million in 2023[265] - Non-interest expense increased by $4.9 million, or 5.5%, to $93.480 million for the year ended December 31, 2024, with operating expenses rising by $5.2 million, or 6.0%[293] - Compensation expense increased by $2.0 million, or 3.4%, to $63.105 million for the year ended December 31, 2024, reflecting a $2.7 million increase in employee salaries[295] Shareholder Value - The return on average common equity (ROACE) was 14.73% for the year ended December 31, 2024, compared to 13.79% for 2023[259] - The return on average assets for 2024 was 1.20%, an increase from 1.13% in 2023, reflecting improved asset utilization[268] - Stockholders' equity increased to $328.6 million, representing 8.53% of total assets, up from $289.6 million or 8.26% as of December 31, 2023[350] Regulatory Compliance and Capital - The Bank's capital ratios met all applicable regulatory requirements as of December 31, 2024, including those imposed by Basel III[356] - The Corporation maintains a shelf registration allowing it to offer up to $75.0 million in various securities[363] Market and Economic Conditions - The company recognized unrealized holding losses of $2.2 million before income taxes due to an increase in interest rates for the year ended December 31, 2024[307] - The company reported unrealized gains on interest rate swaps of $5,046,000 in 2024, a significant recovery from unrealized losses of $(3,514,000) in 2023[392]

Group 1 - The stock of First Business Financial Services, Inc. (FBIZ) is experiencing significant attention due to high implied volatility in the options market, particularly the Mar 21, 2025 $25.00 Put option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - First Business Financial Services holds a Zacks Rank 2 (Buy) in the Banks - Midwest industry, which is in the top 2% of the Zacks Industry Rank, indicating a positive outlook [3] Group 2 - Over the past 60 days, analysts have adjusted their earnings estimates for First Business Financial Services, with the consensus estimate rising from $1.19 to $1.29 per share [3] - The high implied volatility may signal a developing trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility, aiming for the underlying stock to remain stable [4]

Financial Data and Key Metrics Changes - The company reported a 15% increase in earnings from the third quarter and a 24% increase from Q4 2023, even after accounting for unusual items that boosted earnings by about $0.28 [6][8] - Tangible book value per share increased by 23% annualized from the third quarter, and the efficiency ratio improved to its lowest level since Q4 2013 [8][10] Business Line Data and Key Metrics Changes - Loan balances grew by $264 million year-over-year, achieving approximately 10% growth, while total deposits increased by $310 million or 11% from last year's fourth quarter [10] - Treasury management fees grew by 11% year-over-year, indicating the addition of new commercial relationships [15][19] Market Data and Key Metrics Changes - The Southeast Wisconsin and Kansas City markets are expected to see continued improvement due to team growth in these areas [16] - The SBA lending team showed solid traction under new leadership, with gains on SBA loan sales and fee income more than doubling compared to the third quarter and tripling from Q4 2023 [17] Company Strategy and Development Direction - The company aims for 10% annual revenue growth and has a five-year plan targeting efficiency improvements, with a goal of achieving an efficiency ratio of less than 60% by 2028 [46][47] - The strategic focus includes revenue diversification and maintaining a stable net interest margin in the range of 360 to 365 basis points [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving targeted growth rates despite potential economic challenges, emphasizing the importance of maintaining a strong team and culture [49][50] - The company anticipates a strong 2025, with expectations for revenue growth and improved production in various areas [19][88] Other Important Information - The effective tax rate for the fourth quarter was reported at 5.8%, with expectations to maintain a rate between 16% and 18% in 2025 [40][41] - The company has a strong capital position, with CET1 above 9% as of year-end, allowing for organic growth and potential share buybacks [42][95] Q&A Session Summary Question: Loan growth guidance and C&I performance - Management expects C&I to be a larger portion of growth in 2025, with a higher growth rate compared to CRE [52][54] Question: Core deposits and wholesale funding mix - The company aims to maintain a mix of 70% to 80% in market deposits and 20% to 30% in wholesale funding to match fund [58][60] Question: Outlook on loan yields and repricing - Management is optimistic about improving loan yields in 2025, driven by a better mix of C&I business [68][70] Question: Non-accrual loans and reserve levels - The increase in non-accrual loans was primarily due to one C&I relationship, with reserves deemed appropriate for current conditions [78][86] Question: Fee income expectations from SBIC investments - The company expects to grow fee income from SBIC investments by 10% year-over-year, starting from a base of approximately $8 million in Q4 [88] Question: Capital deployment strategy - The primary focus is on organic growth, with dividends and share buybacks considered based on performance [95][97] Question: Efficiency ratio trends - Management anticipates a continued downward trend in the efficiency ratio due to positive operating leverage [100][102]

Financial Highlights - Record pre‐tax, pre‐provision earnings were driven by record operating revenue, strong net interest margin, and positive operating leverage[4] - The company's net interest margin was 377%[4] - Wealth Management assets grew to $3.4 Billion in Q4 2024, a 16.8% increase from Q4 2023[4] - Pre-tax, pre-provision income increased by 15%[4] Strategic Goals & Progress - The company's ROATCE was 15.4% in 2024[14] - Tangible book value growth was 15% in 2024[14] - Employee engagement reached 86% in 2024[14] Balance Sheet & Lending - Total assets amounted to $3.8 Billion[6] - The company's market capitalization was $405 million as of January 29, 2025[5] - SOFR loans amounted to $1.268 Billion, while managed rate, non-maturity deposits totaled $1.011 Billion[34] - 95% of the loan portfolio was classified in category I as of December 31, 2024[75]

Core Insights - First Business Financial Services (FBIZ) reported a revenue of $41.15 million for Q4 2024, marking a year-over-year increase of 12.4% and exceeding the Zacks Consensus Estimate of $39.3 million by 4.72% [1] - The company's earnings per share (EPS) for the same quarter was $1.43, up from $1.15 a year ago, and also surpassed the consensus EPS estimate of $1.27 by 12.60% [1] Financial Performance Metrics - Efficiency ratio stood at 56.9%, better than the three-analyst average estimate of 61% [4] - Net Interest Margin was reported at 3.8%, exceeding the three-analyst average estimate of 3.6% [4] - Net charge-offs as a percentage of average gross loans and leases (annualized) were 0.1%, compared to the two-analyst average estimate of 0.2% [4] - Average balance of total interest-earning assets was $3.52 billion, slightly above the two-analyst average estimate of $3.50 billion [4] - Total Non-Interest Income reached $8.01 million, surpassing the three-analyst average estimate of $7.27 million [4] - Net Interest Income was reported at $33.15 million, compared to the three-analyst average estimate of $31.69 million [4] - Service charges on deposits were $0.96 million, slightly below the two-analyst average estimate of $0.97 million [4] - Private wealth management service fees amounted to $3.43 million, exceeding the two-analyst average estimate of $3.20 million [4] - Loan fees were reported at $0.91 million, matching the two-analyst average estimate [4] Stock Performance - Shares of First Business Financial Services have returned +5.4% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]