First Business(FBIZ) - 2022 Q4 - Annual Report

Financial Performance - Net income available to common shareholders for the year ended December 31, 2022, was $40.2 million, increasing 12.4% compared to $35.8 million for the year ended December 31, 2021[229]. - Diluted earnings per common share were $4.75 for the year ended December 31, 2022, increasing 13.9% compared to $4.17 in the prior year[229]. - Top line revenue grew 13.4% to $127.9 million for the year ended December 31, 2022, compared to $112.8 million for the year ended December 31, 2021[229]. - PTPP adjusted earnings for 2022 were $47.9 million, up from $41.2 million in 2021, reflecting a 16.3% increase[238]. - Total operating revenue for 2022 reached $127.041 million, a 12.7% increase compared to $112.733 million in 2021[240]. - Net income for 2022 was $40,858,000, compared to $35,755,000 in 2021, marking an increase of 14.8%[389]. Asset and Liability Management - Total assets increased by $323.7 million, or 12.2%, to $2.977 billion as of December 31, 2022, from $2.653 billion at December 31, 2021[229]. - Total liabilities increased to $2,503,689 thousand in 2022 from $2,384,497 thousand in 2021, an increase of 5.00%[246]. - Stockholders' equity grew to $249,227 thousand in 2022, up from $220,511 thousand in 2021, reflecting an increase of 13.00%[246]. - The total stockholders' equity increased to $260,640,000 in 2022 from $232,422,000 in 2021, representing an increase of 12.1%[387]. Loan and Lease Performance - Period-end gross loans and leases receivable increased $203.7 million, or 9.1%, to $2.443 billion as of December 31, 2022[229]. - Total loans and leases receivable reached $2,304,990 thousand in 2022, a rise from $2,179,154 thousand in 2021, marking a 5.73% increase[246]. - The commercial and industrial (C&I) loan portfolio increased by $110.4 million, or 15.1%, to $841.2 million at December 31, 2022[302]. - As of December 31, 2022, loans and leases receivable increased by $203.8 million, or 9.2%, to $2.419 billion from $2.215 billion at December 31, 2021[299]. Interest Income and Margin - Net interest income increased by 16.3% to $98.422 million in 2022 from $84.662 million in 2021[240]. - The net interest margin improved to 3.82% in 2022, up from 3.44% in 2021[246]. - Net interest income for the year ended December 31, 2022, was $98,422,000, up from $84,662,000 in 2021, reflecting a growth of 16.5%[389]. - The yield on average earning assets rose to 4.71%, an increase of 81 basis points from 3.90% in 2021[257]. Non-Interest Income and Expenses - Non-interest income rose by $1.3 million, or 4.7%, to $29.4 million for the year ended December 31, 2022, contributing to 23.0% of total revenues[265]. - Total non-interest expense rose to $79.474 million in 2022, an increase of 11.1% from $71.535 million in 2021[240]. - Compensation expense increased by $6.0 million, or 11.7%, to $57.7 million for the year ended December 31, 2022, primarily due to increases in salaries and performance-based compensation[279]. Deposit Growth - Total deposits increased by $210.3 million to $2.168 billion in 2022, primarily driven by a $172.6 million increase in wholesale deposits and a $99.7 million increase in certificates of deposit[334][336]. - Average in-market deposits for the year ended December 31, 2022, were approximately $1.929 billion, or 80.6% of total bank funding, compared to $1.784 billion, or 78.2%, in 2021[338]. - Period-end in-market deposits increased by $37.7 million, or 2.0%, to $1.966 billion as of December 31, 2022, driven by business development efforts[363]. Provision for Loan Losses - The provision for loan and lease losses decreased to $3,868,000 in 2022 from $5,803,000 in 2021, indicating improved asset quality[389]. - The allowance for loan and lease losses decreased by $106,000, or 0.4%, to $24.2 million as of December 31, 2022, with the allowance as a percentage of gross loans and leases at 0.99%[322]. Cash Flow and Liquidity - The Corporation had a net cash inflow of $38.6 million from operating activities, with net cash used in investing activities totaling $245.3 million[368]. - The Bank's readily accessible liquidity was $449.6 million as of December 31, 2022, down from $529.5 million in 2021[361]. - The company reported a net cash provided by operating activities of $38,645,000 for 2022, up from $35,992,000 in 2021[398]. Market and Securities - The fair value of the company's available-for-sale securities was $212.0 million, down from $205.7 million in 2021, while the amortized cost was $239.8 million[290]. - The company recognized unrealized holding losses of $27.7 million before income taxes due to an increase in interest rates[288]. - The unrealized losses on securities available-for-sale were $27,730,000 in 2022, compared to $4,312,000 in 2021, highlighting market volatility[391].