First Business(US:FBIZ)2024-10-25 20:05Financial Performance - Net income available to common shareholders for Q3 2024 was $10.3 million, or diluted earnings per share of $1.24, compared to $9.7 million, or $1.17 per share in Q3 2023 [120]. - Top line revenue for Q3 2024 was $38.1 million, an increase of $1.0 million, or 2.8%, compared to $37.0 million in Q3 2023; for the nine months ended September 30, 2024, top line revenue was $112.3 million, up $5.0 million, or 4.7%, from $107.3 million in the same period in 2023 [123][126]. - Pre-tax, pre-provision adjusted earnings increased to $15.4 million for Q3 2024, up from $14.1 million in Q3 2023, representing a 9.6% increase [131]. - Net interest income rose by 8.4% to $31.0 million in Q3 2024 compared to $28.6 million in Q3 2023 [132]. - Non-interest income decreased by 16.2% to $7.1 million in Q3 2024 compared to $8.4 million in Q3 2023 [132]. Asset and Loan Growth - Total assets increased by $207.9 million, or 7.9% annualized, to $3.716 billion as of September 30, 2024, from $3.508 billion at December 31, 2023 [123]. - Period-end gross loans and leases receivable increased by $200.3 million, or 9.4% annualized, to $3.050 billion as of September 30, 2024, compared to $2.850 billion at December 31, 2023 [124]. - Total loans and leases receivable increased to $3,031,880 thousand, up from $2,711,851 thousand, representing a growth of 11.8% year-over-year [136]. - Average gross loans and leases increased by $320.0 million, or 11.8%, for the three months ended September 30, 2024, and by $368.1 million, or 14.2%, for the nine months ended September 30, 2024, compared to the same periods in 2023 [139]. Efficiency and Ratios - Efficiency ratio improved to 59.4% for Q3 2024 from 62.0% in Q3 2023, indicating better operational efficiency [130]. - The efficiency ratio for the nine months ended September 30, 2024, was 61.96%, consistent with the previous year [132]. - Return on average assets (ROAA) for Q3 2024 was 1.13%, down from 1.19% in Q3 2023; for the nine months ended September 30, 2024, ROAA was 1.08%, compared to 1.13% in the same period in 2023 [120][128]. - Return on average common equity (ROACE) for Q3 2024 was 13.83%, compared to 14.62% in Q3 2023; for the nine months ended September 30, 2024, ROACE was 13.41%, down from 13.72% in the same period in 2023 [121][129]. Non-Performing Assets and Credit Quality - Non-performing assets were $19.4 million, or 0.52% of total assets, as of September 30, 2024, down from $20.8 million, or 0.59% of total assets, at December 31, 2023 [124]. - The allowance for credit losses increased by $2.5 million, or 10.2% annualized, to $35.5 million as of September 30, 2024, maintaining a ratio of 1.16% of gross loans and leases [202]. - The ratio of non-performing assets to total assets improved to 0.52% at September 30, 2024, compared to 0.59% at December 31, 2023 [195]. - Approximately 99.4% of the total loan portfolio was in current payment status as of September 30, 2024, compared to 99.2% at December 31, 2023 [195]. Deposits and Funding - As of September 30, 2024, total period-end deposits increased by $173.2 million to $2.970 billion from $2.797 billion at December 31, 2023, driven by increases in wholesale deposits, money market accounts, and interest-bearing transaction accounts [176]. - Average core deposits increased by $317.8 million, or 15.5%, to $2.366 billion for the nine months ended September 30, 2024, compared to $2.048 billion for the same period in 2023 [178]. - Total core deposits rose by $43.7 million, or 2.5% annualized, to $2.383 billion compared to $2.339 billion at December 31, 2023, with significant contributions from money market accounts and interest-bearing transaction accounts [177]. Tax and Regulatory Compliance - The effective tax rate for the nine months ended September 30, 2024, was 16.8%, down from 21.4% in the same period in 2023 [123]. - The Bank's capital ratios met all applicable regulatory capital adequacy requirements as of September 30, 2024, in compliance with Basel III standards [211]. Interest Rate Risk Management - The Corporation's strategy focuses on managing interest rate risk through efficient use of wholesale funds, including FHLB advances and brokered certificates of deposit [182]. - The Asset/Liability Management Committee regularly reviews the sensitivity of the company's assets and liabilities to interest rate changes [224]. - The company employs a simulation model to assess interest rate risk exposure, incorporating various assumptions about future growth and pricing behavior [225].