Financial Data and Key Metrics Changes - First Business Bank reported a pre-tax, pre-provision earnings growth of nearly 15% over 2024, with a return on average tangible common equity exceeding 15% for the year [5][6] - Tangible book value per share increased by 14% year-over-year, and earnings per share (EPS) grew by 14% over 2024, surpassing the long-term annual goal of 10% earnings growth [5][6] - The net interest margin (NIM) for the fourth quarter declined by 15 basis points to 3.53%, primarily due to a non-accrual interest reversal, but the target range for NIM remains at 3.60%-3.65% [16][17] Business Line Data and Key Metrics Changes - The private wealth business generated a record $3.8 million in fee income, up 11% year-over-year, while service charges increased nearly 20% year-over-year [9] - Net interest income for the full year grew by 10%, meeting the double-digit growth goal, attributed to robust loan and deposit growth [9][10] - Non-interest income showed resilience despite lower SBA gains and variable income streams, achieving 10% operating revenue growth for the full year [10][11] Market Data and Key Metrics Changes - Loan balances grew by approximately $39 million, or 5% annualized during the fourth quarter, and $261 million, or 8% over the same period last year [11] - Core deposit balances increased by 12% from both the linked and prior year quarters, primarily from core interest-bearing and money market accounts [14] - The company expects loan growth to rebound to typical double-digit rates in 2026, driven by solid loan demand and a strong regional economy [12][13] Company Strategy and Development Direction - The company aims to continue achieving double-digit growth by investing in talent, technology, and maintaining prudent underwriting practices [24] - The board approved a 17% increase in the quarterly cash dividend, reflecting confidence in future financial success [6] - The company emphasizes organic growth as the best way to drive shareholder value, rather than pursuing M&A opportunities [72][73] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong pipelines in commercial real estate and C&I loans, as well as potential benefits from changes in federal tax policy [13][72] - The company is confident in maintaining a strong and stable margin, with expectations for continued double-digit growth in net interest income [17][18] - Management acknowledged challenges from elevated CRE payoff activity but remains committed to achieving growth targets [12][81] Other Important Information - The company experienced an isolated credit situation with a $20.4 million downgrade in CRE loans related to a single borrower, but overall asset quality remains strong [7][8] - An accounting classification change was made to present the net benefit of partnership investments, which will continue going forward [18][19] Q&A Session Summary Question: Details on the CRE relationship affecting NPAs - Management provided insights on appraisals and loan-to-value ratios, indicating a 72% LTV across seven properties [30][31] Question: Expectations for credit costs in the coming year - Management clarified that charge-offs for the quarter were primarily related to equipment finance, with no specific reserves needed for the downgraded CRE loans [32][33] Question: Fee income growth guidance - Management confirmed a 10% growth expectation for overall fees, excluding certain non-recurring items [35][36] Question: Equipment finance portfolio balance and expectations - The transportation segment of the Equipment Finance portfolio was reported at $21 million, down from $61 million previously [53][54] Question: Confidence in achieving double-digit loan growth - Management expressed confidence based on strong pipelines and improved team performance, despite recent higher payoff levels impacting growth [80][81]