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 September 30, 2022 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 | --- | --- | --- | |-------------------------- ...

Financial Performance - Net income available to common shareholders for Q2 2022 was $11.0 million, or diluted earnings per share of $1.29, compared to $8.2 million, or $0.95 per share in Q2 2021, representing a 34.1% increase in net income [186]. - Pre-tax, pre-provision adjusted earnings for Q2 2022 totaled $10.8 million, an increase of $835,000, or 8.3%, from Q2 2021 [186]. - Net interest income for the three months ended June 30, 2022, was $23,660,000, an increase of 9.3% from $21,652,000 in the same period of 2021 [193]. - Non-interest income for the three months ended June 30, 2022, was $6,872,000, reflecting an 8.7% increase from $6,321,000 in the prior year [193]. - Total operating revenue for the six months ended June 30, 2022, was $59,345,000, a 5.9% increase from $56,031,000 for the same period in 2021 [193]. Asset and Loan Growth - Total assets increased by $124.1 million, or 9.4% annualized, to $2.777 billion as of June 30, 2022, compared to $2.653 billion at the end of 2021 [188]. - Period-end gross loans and leases receivable rose by $50.1 million, or 4.5% annualized, to $2.291 billion as of June 30, 2022 [188]. - Total loans and leases receivable increased to $2,272,946, generating interest income of $25,687 with an average yield of 4.52% [213]. - Total commercial real estate loans increased by $33.9 million to $1.488 billion as of June 30, 2022, compared to $1.455 billion at December 31, 2021 [256]. - Excluding PPP loans, C&I loans increased by $30.1 million to $733.1 million as of June 30, 2022, from $703.0 million at December 31, 2021 [258]. Efficiency and Expense Management - Total non-interest expense for the three months ended June 30, 2022, was $19,456,000, a 7.0% increase from $18,184,000 in the prior year [200]. - The efficiency ratio for the three months ended June 30, 2022, was 64.47%, slightly up from 64.17% in the same period of 2021 [200]. - Total operating expense for the first half of 2022 was $38,573 thousand, reflecting a 9.0% increase from $35,383 thousand in the same period of 2021 [205]. - Non-interest expense increased by $1.3 million, or 7.0%, for the three months ended June 30, 2022, and by $2.8 million, or 7.8%, for the six months ended June 30, 2022, compared to the same periods in 2021 [239]. Asset Quality and Loan Losses - Non-performing assets decreased to $5.7 million, or 0.21% of total assets, down from $6.5 million, or 0.25% of total assets at the end of 2021 [188]. - The allowance for loan and lease losses decreased to 1.05% of total loans as of June 30, 2022, compared to 1.09% at the end of 2021 [188]. - Total impaired assets decreased to $5.897 billion as of June 30, 2022, from $6.739 billion as of December 31, 2021, representing a reduction of approximately 12.5% [280]. - The ratio of allowance for loan and lease losses to gross loans and leases was 1.05% as of June 30, 2022, down from 1.09% as of December 31, 2021 [286]. - The net recoveries on impaired loans and leases for the six months ended June 30, 2022, were $4.4 million, consisting of $107,000 in charge-offs and $4.5 million in recoveries [289]. Deposits and Funding - Average in-market deposits increased by $187.8 million, or 10.9%, for the six months ended June 30, 2022, compared to the same period in 2021 [188]. - As of June 30, 2022, deposits decreased by $88.6 million to $1.869 billion from $1.958 billion at December 31, 2021, primarily due to a decrease in transaction accounts and money market accounts [263]. - FHLB advances and other borrowings increased by $193.2 million, or 47.9%, to $596.6 million as of June 30, 2022, from $403.5 million at December 31, 2021 [265]. - Outstanding wholesale funds increased to $566.4 million, representing 23.4% of total bank funding, up from 17.1% at the end of 2021 [300]. Strategic Initiatives - The corporation aims to enhance long-term efficiency through strategic initiatives focused on revenue growth and process improvement [206]. - The corporation anticipates generating positive operating leverage on an annual basis, excluding the impact of PPP loans [206]. - Management aims to maintain a net interest margin of at least 3.50% over the long term, despite expected volatility from loan fees in lieu of interest [221].

Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 2022 present the company's financial position, performance, and cash flows, with total assets reaching **$2.72 billion** Consolidated Balance Sheet Highlights (Unaudited) | (In Thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$2,724,082** | **$2,652,905** | | Loans and leases receivable, net | $2,227,580 | $2,215,072 | | Securities (AFS & HTM) | $240,898 | $225,448 | | **Total Liabilities** | **$2,479,031** | **$2,420,483** | | Deposits | $2,023,694 | $1,957,923 | | FHLB advances and other borrowings | $414,487 | $403,451 | | **Total Stockholders' Equity** | **$245,051** | **$232,422** | Consolidated Statement of Income Highlights (Unaudited) | For the Three Months Ended March 31, (In Thousands, Except Per Share Data) | 2022 | 2021 | | :--- | :--- | :--- | | Net Interest Income | $21,426 | $20,863 | | Provision for loan and lease losses | ($855) | ($2,068) | | Non-interest Income | $7,386 | $7,195 | | Non-interest Expense | $18,823 | $17,330 | | **Net Income** | **$8,672** | **$9,731** | | **Diluted Earnings Per Common Share** | **$1.02** | **$1.12** | Consolidated Statement of Cash Flows Highlights (Unaudited) | For the Three Months Ended March 31, (In Thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,098 | $6,829 | | Net cash used in investing activities | ($40,085) | ($79,492) | | Net cash provided by financing activities | $76,480 | $74,628 | | **Net increase in cash and cash equivalents** | **$38,493** | **$1,965** | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial items, and significant transactions, including the upcoming CECL adoption and recent capital issuances - The Corporation will adopt the **Current Expected Credit Losses (CECL) standard** on **January 1, 2023**, establishing a committee and implementing a third-party software solution for the transition[28](index=28&type=chunk) - On **March 4, 2022**, the Corporation issued **12,500 shares** of **7.0% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A**, for net proceeds of **$12.0 million**[120](index=120&type=chunk) - The Corporation issued a new **$20.0 million subordinated note** on **March 4, 2022**, bearing a fixed rate of **3.50%** and maturing in **2032**, using proceeds to redeem **$10.3 million** of **10.50% junior subordinated notes** on **March 30, 2022**[118](index=118&type=chunk) Loan Portfolio Composition (In Thousands) | Loan Category | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Commercial real estate | $1,469,678 | $1,454,628 | | Commercial and industrial | $720,695 | $730,819 | | Direct financing leases, net | $14,551 | $15,743 | | Consumer and other | $47,589 | $39,741 | | **Total gross loans and leases** | **$2,252,513** | **$2,240,931** | Allowance for Loan and Lease Losses Activity (In Thousands) | For the Three Months Ended March 31, 2022 | Commercial Real Estate | Commercial and Industrial | Consumer and Other | Total | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | $15,110 | $8,413 | $813 | $24,336 | | Net recoveries (charge-offs) | $116 | $62 | $10 | $188 | | Provision for loan and lease losses | ($1,461) | $437 | $169 | ($855) | | **Ending balance** | **$13,765** | **$8,912** | **$992** | **$23,669** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a decrease in net income to **$8.7 million** in Q1 2022, alongside successful capital raising, strong asset quality, and loan and deposit growth [Financial Performance Summary](index=44&type=section&id=Financial%20Performance%20Summary) Q1 2022 net income was **$8.7 million**, with annualized ROA of **1.30%** and ROE of **14.47%**, supported by **$32.5 million** in new capital and improved asset quality Key Performance Metrics (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $8.7M | $9.7M | | Diluted EPS | $1.02 | $1.12 | | Annualized ROA | 1.30% | 1.51% | | Annualized ROE | 14.47% | 18.48% | - The company completed a private placement of **$32.5 million** in new capital, comprising a **$20.0 million subordinated note** and **$12.5 million of Series A Preferred Stock**, partially used to redeem **$10.3 million** of higher-cost trust preferred securities[178](index=178&type=chunk) - Non-performing assets decreased to **$5.7 million**, or **0.21%** of total assets, from **$6.5 million**, or **0.25%** of total assets, at year-end 2021[180](index=180&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q1 2022 top-line revenue increased **2.7%** to **$28.8 million**, driven by net interest and non-interest income growth, while non-interest expense rose **8.6%** to **$18.8 million** - Top line revenue increased by **$754,000**, or **2.7%**, to **$28.8 million** in Q1 2022, with adjusted top line revenue growing **13.9%** excluding PPP impacts and one-time costs[182](index=182&type=chunk)[183](index=183&type=chunk) - Net interest margin was **3.39%** for Q1 2022, down from **3.44%** in Q1 2021, while adjusted net interest margin increased to **3.24%** from **3.20%**[178](index=178&type=chunk)[208](index=208&type=chunk) - Private wealth management fees increased **18.0%** to **$2.8 million**, while gain on sale of SBA loans decreased **45.7%** to **$585,000**[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Compensation expense increased **7.8%** to **$13.6 million**, driven by merit increases, higher payroll taxes on bonuses, and an expanded workforce[227](index=227&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) As of March 31, 2022, total assets grew **2.7%** to **$2.72 billion**, driven by increases in loans, securities, and deposits, alongside strategic debt management - Total assets increased by **$71.2 million** (**2.7%**) to **$2.724 billion** at **March 31, 2022**, from **December 31, 2021**[234](index=234&type=chunk) - Net loans and leases receivable increased by **$12.5 million**, with the portfolio growing **$21.6 million** excluding PPP loans, despite nearly **$90 million** in payoffs[239](index=239&type=chunk) - Deposits increased by **$65.8 million** (**13.4% annualized**) to **$2.024 billion**, primarily driven by an **$83.1 million** increase in in-market deposits[246](index=246&type=chunk)[285](index=285&type=chunk) [Asset Quality](index=59&type=section&id=Asset%20Quality) Asset quality remained strong in Q1 2022, with non-performing assets decreasing to **$5.7 million** (**0.21%** of total assets) and ALLL coverage of non-accrual loans increasing to **421.38%** Asset Quality Metrics | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Non-performing assets (NPAs) | $5.7M | $6.5M | | NPAs / Total Assets | 0.21% | 0.25% | | Non-accrual loans / Gross loans | 0.25% | 0.28% | | ALLL / Gross loans | 1.05% | 1.09% | | ALLL / Non-accrual loans | 421.38% | 382.76% | - The company recorded net recoveries of **$188,000** in Q1 2022, compared to net recoveries of **$2.5 million** in Q1 2021[272](index=272&type=chunk)[278](index=278&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The Corporation maintains strong liquidity and capital, with **$638.9 million** in immediate on-balance sheet liquidity and all capital ratios exceeding regulatory minimums for well-capitalized status - Immediate on-balance sheet liquidity stood at **$638.9 million** as of **March 31, 2022**, an increase from **$529.5 million** at **year-end 2021**[283](index=283&type=chunk) - A new **$5.0 million** share repurchase program was authorized on **March 4, 2022**, with **4,502 shares** repurchased for approximately **$148,000** during March[291](index=291&type=chunk)[303](index=303&type=chunk) - As of **March 31, 2022**, the Corporation's and the Bank's capital levels exceeded all regulatory minimums to be considered **well-capitalized**, with the Corporation's **Tier 1 leverage ratio at 9.09%** and **Total capital ratio at 11.87%**[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for this reporting period - The report states that this item is **not applicable**[295](index=295&type=chunk) [Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Corporation's disclosure controls and procedures were effective as of **March 31, 2022**, with no material changes during the quarter - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were **effective** as of **March 31, 2022**[296](index=296&type=chunk) - There were **no material changes** to internal control over financial reporting during the quarter ended **March 31, 2022**[297](index=297&type=chunk) Part II [Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The Corporation is involved in ordinary course legal proceedings, with management anticipating no material adverse effect on financial position or results - Management believes that any liability from existing or threatened legal proceedings will **not have a material adverse effect** on the Corporation's financial condition or results[301](index=301&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2021 - **No material changes** to risk factors were reported for the quarter[302](index=302&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board approved a new **$5 million** share repurchase program on **March 4, 2022**, with **18,223 shares** repurchased in Q1 2022, including **4,502** under the new program - A new **$5.0 million** share repurchase program was authorized on **March 4, 2022**[303](index=303&type=chunk) Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | Jan 2022 | 0 | $ - | 0 | | Feb 2022 | 13,721 | $33.60 | 0 | | Mar 2022 | 4,502 | $32.87 | 4,502 | | **Total** | **18,223** | **$33.42** | **4,502** | [Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Articles of Amendment, the new Subordinated Note form, and CEO/CFO certifications - Filed exhibits include **Articles of Amendment**, the form of the **3.50% Fixed-to-Floating Rate Subordinated Note**, and **CEO/CFO certifications** (31.1, 31.2, 32)[313](index=313&type=chunk)

Part I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) The company is a commercial bank holding company focused on business banking, private wealth, and consulting services - The Corporation is a registered bank holding company engaged in commercial banking through its wholly-owned subsidiary, First Business Bank (FBB), targeting small to medium-sized businesses, owners, and high net worth individuals[7](index=7&type=chunk) - The company and its bank subsidiary are extensively regulated by federal and state agencies, including the Federal Reserve, FDIC, and WDFI, affecting capital levels, liquidity, and dividend payments[55](index=55&type=chunk) - The Corporation opted out of the Community Bank Leverage Ratio (CBLR) framework for each reporting period in 2021 but retains the option to opt-in for future periods[72](index=72&type=chunk) - In response to the COVID-19 pandemic, the company participated in government relief programs, including the Paycheck Protection Program (PPP)[121](index=121&type=chunk) Key Financial Metrics as of December 31, 2021 | Metric | Amount (Billions) | | :--- | :--- | | Total Assets | $2.653 | | Total Gross Loans and Leases | $2.241 | | Total Deposits | $1.958 | | Total Stockholders' Equity | $0.232 | Loan and Lease Portfolio Composition as of December 31, 2021 | Loan Type | Percentage of Total Gross Loans | | :--- | :--- | | Conventional Commercial Real Estate & Commercial Loans | ~78% | | Asset-Based Lending | ~8% | | Equipment Financing | ~5% | | Accounts Receivable Financing | ~3% | | Floorplan Financing | ~2% | | SBA Loans (On-balance sheet portion) | ~2% | | Consumer and Other Loans | ~2% | Assets Under Management and Administration as of December 31, 2021 | Service Line | Assets (Millions) | | :--- | :--- | | Company Retirement Plans | $363.8 | | Private Wealth | $2,557.0 | [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces credit, liquidity, operational, and strategic risks, notably from its commercial real estate loan concentration - A significant portion of the loan portfolio consists of commercial real estate loans, representing **64.9% of total loans** at December 31, 2021, making repayment sensitive to economic conditions[127](index=127&type=chunk) - The company's operations are heavily concentrated in Wisconsin and the Kansas City Metro area, making its financial condition dependent on the economic health of these regions[144](index=144&type=chunk) - The transition away from **LIBOR** to alternative reference rates like **SOFR** by June 30, 2023, introduces uncertainty and could impact funding costs and existing contracts[135](index=135&type=chunk) - The company faces increasing information security risks from cyber-attacks targeting its systems and those of its third-party service providers, which could lead to significant losses[136](index=136&type=chunk)[138](index=138&type=chunk) - The **COVID-19 pandemic** poses an ongoing risk, with potential adverse effects on credit quality, loan portfolio losses, and revenue[143](index=143&type=chunk) - The company operates in a highly regulated industry, and changes in laws, tax regulations, or accounting principles could increase costs and limit business activities[155](index=155&type=chunk) [Item 1B. Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[168](index=168&type=chunk) [Item 2. Properties](index=30&type=section&id=Item%202.%20Properties) The company operates from four principal leased banking locations and smaller nationwide business development offices Principal Leased Properties as of December 31, 2021 | Location | Function | Lease Expiration | | :--- | :--- | :--- | | 401 Charmany Drive, Madison, WI | Full-service banking & FBFS office | 2028 | | 18500 W. Corporate Drive, Brookfield, WI | Full-service banking | 2022 | | 11300 Tomahawk Creek Pkwy, Leawood, KS | Full-service banking | 2023 | | 3913 West Prospect Avenue, Appleton, WI | Full-service banking | 2025 | [Item 3. Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in any material litigation outside the ordinary course of business - The company believes no pending or threatened litigation could materially affect its consolidated financial position, results of operations, or cash flows[170](index=170&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[171](index=171&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq, it pays quarterly dividends, and completed a $5 million share repurchase in 2021 - The Corporation's common stock is traded on the Nasdaq Global Select Market under the symbol **"FBIZ"** with 377 registered shareholders as of February 16, 2022[173](index=173&type=chunk) - A share repurchase program authorizing up to **$5 million** was completed in October 2021, with **182,151 shares** repurchased at a weighted average price of **$27.40** per share[175](index=175&type=chunk) - The company did not have an active share repurchase plan as of December 31, 2021[175](index=175&type=chunk) [Item 6. Selected Financial Data](index=32&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company - Not applicable[180](index=180&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income grew significantly in 2021, driven by higher net interest income and a large reduction in loan loss provisions - Top line revenue grew **8.4% to $112.8 million** in 2021, driven by a 9.8% increase in net interest income and a 4.3% increase in non-interest income[198](index=198&type=chunk)[199](index=199&type=chunk) - The provision for loan and lease losses was a **net benefit of $5.8 million** for 2021, a significant reversal from the $16.8 million expense in 2020 due to net recoveries and improved loss rates[227](index=227&type=chunk) - Gross loans and leases, excluding PPP loans, **increased by $291.5 million, or 15.18%**, to $2.212 billion at year-end 2021[195](index=195&type=chunk) - Asset quality improved significantly, with **non-performing assets decreasing to $6.5 million (0.25% of total assets)** from $26.7 million (1.04% of total assets) at the end of 2020[195](index=195&type=chunk)[289](index=289&type=chunk) - The allowance for loan and lease losses decreased to $24.3 million, representing **1.09% of total loans**, while the coverage ratio of allowance to non-accrual loans increased to **382.76%**[297](index=297&type=chunk)[299](index=299&type=chunk) 2021 vs. 2020 Financial Performance Summary | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $35.8M | $17.0M | +110.6% | | Diluted EPS | $4.17 | $1.97 | +111.4% | | Return on Average Assets (ROAA) | 1.37% | 0.70% | N/A | | Return on Average Equity (ROAE) | 16.21% | 8.64% | N/A | | Top Line Revenue | $112.8M | $104.0M | +8.4% | | Provision for Loan & Lease Losses | ($5.8M) | $16.8M | N/A | | Total Assets (End of Period) | $2.653B | $2.568B | +3.3% | | Non-Performing Assets / Total Assets | 0.25% | 1.04% | N/A | [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, with an asset-sensitive balance sheet poised to benefit from rising rates - The company's primary market risk is interest rate risk, which it measures using earnings simulation[358](index=358&type=chunk)[359](index=359&type=chunk) - The company maintained a **neutral-to-asset-sensitive balance sheet** throughout 2021, positioning it to benefit from potential rising short-term interest rates in 2022[361](index=361&type=chunk) Estimated Impact of Interest Rate Changes on Net Interest Income (Next 12 Months) | Change in Interest Rate (Basis Points) | Impact on Net Interest Income | | :--- | :--- | | Down 50 | (2.48)% | | No Change | 0.00% | | Up 100 | 0.77% | | Up 200 | 5.64% | | Up 300 | 10.67% | [Item 8. Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements and the unqualified opinion from the independent auditor - The independent auditor, Crowe LLP, issued an **unqualified opinion** on the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[622](index=622&type=chunk) - The critical audit matter identified by the auditor was the estimation of the **allowance for loan and lease losses**, specifically the subjective judgments involved in applying qualitative factors[627](index=627&type=chunk) Consolidated Balance Sheet Summary (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Total Assets | $2,652,905 | $2,567,837 | | **Liabilities & Equity** | | | | Total Deposits | $1,957,923 | $1,855,516 | | Total Liabilities | $2,420,483 | $2,361,675 | | Total Stockholders' Equity | $232,422 | $206,162 | Consolidated Statement of Income Summary (in thousands) | | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Interest Income | $84,662 | $77,071 | | Provision for Loan & Lease Losses | ($5,803) | $16,808 | | Non-interest Income | $28,100 | $26,940 | | Non-interest Expense | $71,535 | $68,898 | | **Net Income** | **$35,755** | **$16,978** | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=117&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no disagreements with its accountants on accounting or financial disclosure - None[631](index=631&type=chunk) [Item 9A. Controls and Procedures](index=117&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of year-end 2021 - The Corporation's management, including the CEO and CFO, concluded that **disclosure controls and procedures were effective** as of December 31, 2021[632](index=632&type=chunk) - There were **no material changes** in internal control over financial reporting during the fourth quarter of 2021[633](index=633&type=chunk) - Management's assessment concluded that the Corporation's **internal control over financial reporting was effective** as of December 31, 2021, a conclusion supported by an unqualified opinion from the independent auditor[635](index=635&type=chunk)[636](index=636&type=chunk) [Item 9B. Other Information](index=118&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[638](index=638&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=118&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[639](index=639&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=118&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Director, officer, and corporate governance information is incorporated by reference from the company's Proxy Statement - Information regarding directors and the audit committee is incorporated by reference from the Proxy Statement for the April 29, 2022 Annual Meeting of Shareholders[640](index=640&type=chunk) - The company has adopted a code of ethics applicable to all employees, which is available on its website[640](index=640&type=chunk) [Item 11. Executive Compensation](index=118&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the company's Proxy Statement - Information regarding executive compensation is incorporated by reference from the Proxy Statement for the April 29, 2022 Annual Meeting of Shareholders[641](index=641&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=118&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Security ownership and equity plan information is incorporated by reference from the company's Proxy Statement - Information regarding security ownership is incorporated by reference from the Proxy Statement for the April 29, 2022 Annual Meeting of Shareholders[642](index=642&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transaction and director independence details are incorporated by reference from the Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement for the April 29, 2022 Annual Meeting of Shareholders[646](index=646&type=chunk) [Item 14. Principal Accountant Fees and Services](index=120&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services are incorporated by reference from the company's Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the Proxy Statement for the April 29, 2022 Annual Meeting of Shareholders[647](index=647&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=121&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, with financial statements located in Item 8 - This section contains the index of exhibits filed with the Form 10-K, including articles of incorporation, bylaws, descriptions of securities, various compensatory plans, and required certifications[650](index=650&type=chunk)[672](index=672&type=chunk)[674](index=674&type=chunk) [Item 16. Form 10-K Summary](index=122&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[675](index=675&type=chunk)

Financial Performance - Net income for Q3 2021 was $9.2 million, or diluted earnings per share of $1.07, compared to $4.3 million, or $0.50 per share in Q3 2020, representing a 113.95% increase [188]. - Top line revenue for Q3 2021 was $28.2 million, an increase of 8.5% from the same period in 2020 [188]. - Net interest income for the three months ended September 30, 2021, was $21,223,000, reflecting a 14.0% increase from $18,621,000 in the prior year [214]. - Total operating revenue for the three months ended September 30, 2021, was $28,238,000, an increase of 8.5% compared to $26,029,000 for the same period in 2020 [214]. - Non-interest income for the nine months ended September 30, 2021, was $20,531 thousand, reflecting a $390 thousand, or 1.9%, increase compared to the same period in 2020 [204]. Asset and Loan Growth - Total assets increased by $16.6 million to $2.584 billion as of September 30, 2021, from $2.568 billion at December 31, 2020 [190]. - Average gross loans and leases increased by $226.2 million, or 11.6%, to $2.179 billion for the nine months ended September 30, 2021, compared to $1.953 billion for the same period in 2020 [190]. - Total commercial real estate loans increased $28.6 million to $1.388 billion as of September 30, 2021, with non-owner occupied CRE loans driving the growth [276]. - The average balance of total loans and leases receivable was $2,131,099 thousand in 2021, slightly down from $2,139,439 thousand in 2020, reflecting a decrease of 0.39% [223]. Asset Quality and Non-Performing Loans - Non-performing assets decreased to $7.6 million, or 0.29% of total assets, as of September 30, 2021, down from $26.7 million, or 1.04% of total assets at December 31, 2020 [190]. - Total impaired assets amounted to $7.658 million as of September 30, 2021, down from $26.697 million at December 31, 2020 [291]. - Non-accrual loans decreased by $19.2 million, or 72.1%, to $7.4 million at September 30, 2021, compared to $26.6 million at December 31, 2020 [291]. - The allowance for loan and lease losses decreased by $3.8 million, or 13.5%, to $24.7 million as of September 30, 2021, from $28.5 million as of December 31, 2020 [298]. Efficiency and Expenses - The efficiency ratio was 65.68% for the three months ended September 30, 2021, compared to 64.16% for the same period in 2020 [209]. - Total non-interest expense for the three months ended September 30, 2021, was $18,490,000, representing a 10.3% increase from $16,758,000 in the same period of 2020 [214]. - The increase in operating revenue was partially offset by a $5.6 million, or 16.5%, increase in compensation expense for the nine months ended September 30, 2021 [209]. - Compensation expense for the three and nine months ended September 30, 2021 was $13.4 million, an increase of $1.5 million, or 12.6%, and $39.3 million, an increase of $5.6 million, or 16.5%, respectively, compared to the same periods in 2020 [258]. Capital and Dividends - The Corporation declared a regular quarterly dividend of $0.18 per share, representing a payout ratio of 16.8% against diluted earnings per share of $1.07 [320]. - As of September 30, 2021, total capital to risk-weighted assets was 11.14%, exceeding regulatory requirements [318]. - Stockholders' equity increased to $224,489 thousand in 2021, up from $200,175 thousand in 2020, representing a growth of 12.1% [223]. Deposits and Borrowings - Average in-market deposits increased by $228.9 million, or 15.0%, to $1.756 billion for the nine months ended September 30, 2021, compared to $1.528 billion for the same period in 2020 [190]. - Period-end in-market deposits increased by $146.6 million, or 11.6% annualized, reaching $1.830 billion as of September 30, 2021 [314]. - FHLB advances and other borrowings decreased by $25.1 million, or 6.0%, to $394.1 million as of September 30, 2021, from $419.2 million at December 31, 2020 [282]. Future Outlook - Management expects to achieve a net interest margin of at least 3.50% on average over the long term, despite near-term expectations of slightly lower margins [234]. - The long-term impact of COVID-19 on the economy is uncertain, but management believes the long-term impact on the loan portfolio will be limited [237].

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, 2021 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 other jurisdiction of incorporation or org ...

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 March 31, 2021 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 | --- | --- | --- | |------------------------------ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | --- | |-------------------------------------------------------------------|-------------------------------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Common Stock, $0.01 par value FBIZ The Nasdaq Stock Market LLC FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2020 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) Wisco ...

| --- | --- | --- | |----------------------------------|-------|-------| | | | | | | | | | | | | | INVESTOR PRESENTATION | | | | SECOND QUARTER 2020 Nasdaq: FBIZ | | | n III First Business® Forward-Looking Statements When used in this presentation, and in any other oral statements made with the approval of an authorized executive officer, the words or phrases "may," "could," "should," "hope," "might," "believe," "expect," "plan," "assume," "intend," "estimate," "anticipate," "project," "likely," or similar ...