First Business Bank Reports Third Quarter 2025 Net Income of $14.2 Million

--  Continued loan and deposit growth and record fee income drive robust earnings -- 

MADISON, Wis.--(BUSINESS WIRE)-- First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $14.2 million, or earnings per share ("EPS") of $1.70. This compares to net income available to common shareholders of $11.2 million, or $1.35 per share, in the second quarter of 2025 and $10.3 million, or $1.24 per share, in the third quarter of 2024.

“First Business Bank’s robust balance sheet growth and operating leverage drove outstanding financial performance during the quarter,” said Corey Chambas, Chief Executive Officer. “We continued to execute our relationship-based growth strategy, producing record pre-tax, pre-provision earnings, 10% loan growth, 9% core deposit growth, and a strong and stable net interest margin. We also experienced improved asset quality, including an 18% reduction in non-performing assets. This led to a 13% year-to-date increase in top-line revenue and drove exceptional growth in shareholder value, with tangible book value expanding 16% from the prior year.”

Quarterly Highlights

• Robust Loan Growth. Loans increased $84.6 million, or 10.4% annualized, from the second quarter of 2025, and $286.4 million, or 9.4%, from the third quarter of 2024, reflecting broad-based growth.
• Consistent Core Deposit Growth. Core deposits grew $59.0 million, or 9.3% annualized, from the linked quarter and $209.4 million, or 8.8%, from the third quarter of 2024. Core deposit funding mix improved to 73.12% compared to 71.82% in the linked quarter.
• Stable and Strong Net Interest Margin. The Company's effective match-funding strategy and pricing discipline produced a net interest margin of 3.68%, compared to 3.67% for the linked quarter and 3.64% for the prior year quarter. Net interest income increased 12.5% from the prior year quarter.
• Private Wealth Management Expansion. Private Wealth assets under management and administration grew to $3.814 billion, generating quarterly Private Wealth fee income of $3.7 million. Private Wealth fees increased by 13.0% from the prior year quarter and represented 45% of year-to-date total non-interest income.
• Record Pre-Tax, Pre-Provision ("PTPP") Income. PTPP income grew to $18.9 million, up 17.7% and 22.1% from the linked and prior year quarters, respectively. This performance reflects continued growth across the Company’s balance sheet coupled with record fee income and positive operating leverage.
• Continued Tangible Book Value Growth. The Company’s strong earnings and sound balance sheet management continued to drive growth in tangible book value per share, producing a 16.8% annualized increase compared to the linked quarter and a 15.6% increase compared to the prior year quarter.

Quarterly Financial Results

(Unaudited)		As of and for the Three Months Ended						As of and for the Nine Months Ended
(Dollars in thousands, except per share amounts)		September 30, 2025		June 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Net interest income		$34,886		$33,784		$31,007		$101,928		$91,059
Adjusted non-interest income (1)		9,406		7,255		7,064		24,241		21,254
Operating revenue (1)		44,292		41,039		38,071		126,169		112,313
Operating expense (1)		25,440		25,023		22,630		75,081		69,584
Pre-tax, pre-provision adjusted earnings (1)		18,852		16,016		15,441		51,088		42,729
Less:
Provision for credit losses		1,440		2,701		2,087		6,800		6,126
Loss on repossessed assets		31		4		11		27		162
Contribution to First Business Charitable Foundation		234		—		—		234		—
SBA recourse (benefit) provision		(5)		(59)		466		(64)		583
Impairment of tax credit investments		—		—		—		110		—
Add:
Bank-owned life insurance claim		234		—		—		234		—
Net loss on sale of securities		—		—		—		—		(8)
Income before income tax expense		17,386		13,370		12,877		44,215		35,850
Income tax expense		2,993		1,948		2,351		7,229		6,020
Net income		$14,393		$11,422		$10,526		$36,986		$29,830
Preferred stock dividends		218		219		218		656		656
Net income available to common shareholders		$14,175		$11,203		$10,308		$36,330		$29,174
Earnings per share, diluted		$1.70		$1.35		$1.24		$4.37		$3.50
Book value per share		$41.60		$39.98		$36.17		$41.60		$36.17
Tangible book value per share (1)		$40.16		$38.54		$34.74		$40.16		$34.74
Net interest margin (2)		3.68%		3.67%		3.64%		3.68%		3.62%
Adjusted net interest margin (1)(2)		3.44%		3.47%		3.50%		3.46%		3.46%
Fee income ratio (non-interest income / total revenue)		21.65%		17.68%		18.55%		19.36%		18.92%
Efficiency ratio (1)		57.44%		60.97%		59.44%		59.51%		61.96%
Return on average assets (2)		1.40%		1.14%		1.13%		1.23%		1.08%
Return on average tangible common equity (2)		17.29%		14.17%		14.40%		15.23%		13.98%
Period-end loans and leases receivable		$3,334,956		$3,250,925		$3,050,079		$3,334,956		$3,050,079
Average loans and leases receivable		$3,295,880		$3,239,840		$3,031,880		$3,240,908		$2,961,014
Period-end core deposits		$2,592,110		$2,533,099		$2,382,730		$2,592,110		$2,382,730
Average core deposits		$2,597,031		$2,396,517		$2,375,002		$2,453,005		$2,365,553
Allowance for credit losses, including unfunded commitment reserves		$38,382		$38,210		$35,509		$38,382		$35,509
Non-performing assets		$23,513		$28,664		$19,420		$23,513		$19,420
Allowance for credit losses as a percent of total gross loans and leases		1.15%		1.18%		1.16%		1.15%		1.16%
Non-performing assets as a percent of total assets		0.58%		0.72%		0.52%		0.58%		0.52%

1.

This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.

2.

Calculation is annualized.

Third Quarter 2025 Compared to Second Quarter 2025

Net interest income increased $1.1 million, or 3.3%, to $34.9 million.

• The increase in net interest income was driven by higher average loans and leases receivable and an increase in fees in lieu of interest. Average loans and leases receivable grew by $56.0 million, or 6.9% annualized, to $3.296 billion. Fees in lieu of interest, which vary from quarter to quarter based on client-driven activity, totaled $2.2 million, compared to $1.7 million in the prior quarter. Excluding fees in lieu of interest, net interest income increased $620,000, or 1.9%.
• The yield on average interest-earning assets increased seven basis points to 6.72% from 6.65%. Excluding fees in lieu of interest, the yield on average interest-earning assets increased two basis points to 6.49% from 6.47%.
• The rate paid for average core deposits increased 14 basis points to 2.89% from 2.75%. The rate paid for average total bank funding increased six basis points to 3.14% from 3.08%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances.
• Net interest margin was 3.68% compared to 3.67% for the linked quarter. Adjusted net interest margin¹ was 3.44%, down three basis points compared to 3.47% in the linked quarter. The decrease in adjusted net interest margin was driven by an increase in the rate paid on total bank funding partially offset by an increase in the yield on interest-earning assets, excluding fees in lieu of interest.
• The Company maintains a long-term target for net interest margin in the range of 3.60% - 3.65%. Performance in future quarters will vary due to factors such as the level of fees in lieu of interest and the timing, pace, and scale of future interest rate changes.

The Bank reported provision for credit losses of $1.4 million compared to $2.7 million in the linked quarter. The current quarter provision reflects net chargeoffs, loan growth, and an increase in unfunded commitments partially offset by improvement in the economic outlook in our model forecast and a decrease in general reserve qualitative factors.

Non-interest income increased $2.4 million, or 32.9%, to $9.6 million.

• Other non-interest income increased $1.2 million, or 148.1% to $2.0 million. The increase was primarily driven by higher returns on the Company’s investments in Small Business Investment Company ("SBIC") funds and $537,000 of nonrecurring fee income in accounts receivable financing. Income from SBIC funds was $854,000 in the second quarter, compared to $200,000 in the linked quarter. Income from SBIC funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.
• Commercial loan swap fee income increased $804,000 to $974,000. Swap fee income varies from period to period based on loan activity and the interest rate environment.
• Bank-owned life insurance income increased $350,000 or 56.9%, to $965,000 primarily due to a $234,000 insurance claim received during the quarter.

Non-interest expense increased $732,000, or 2.9%, to $25.7 million, while operating expense increased $417,000, or 1.7%, to $25.4 million.

• Compensation expense was $17.4 million, increasing $908,000, or 5.5%, primarily due to an increase in the annual cash bonus accrual. Excluding this accrual update, compensation was $16.4 million, reflecting a decrease of $183,000, or 1.1% from the linked quarter mainly due to a decrease in individual incentive compensation and social security taxes. Average full-time equivalents (“FTEs”) for the third quarter of 2025 were 366, up from 364 in the linked quarter.
• Professional fees expense was $1.1 million, decreasing $416,000, or 28%, primarily due to annual vesting of director share-based compensation in the second quarter.

_______________________
1.	Adjusted net interest margin is a non-GAAP measure representing net interest income excluding fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets.

• Data processing expense was $1.1 million, decreasing $245,000, or 17.9%, primarily due to annual expense related to tax processing on behalf of the Bank’s Private Wealth clients recognized in the second quarter.
• Marketing expense was $876,000, decreasing $186,000, or 17.5%, primarily due to seasonality in sponsorships.
• Computer software expense was $1.8 million, increasing $170,000, or 10.3%, due to ongoing investment in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.

Income tax expense increased $1.0 million to $3.0 million. The effective tax rate was 17.2% for the three months ended September 30, 2025, compared to 14.6% for the linked quarter. The increase in tax expense reflects an increase in pre-tax income and annual return to provision adjustments including updating tax credit partnership estimates. The effective tax rate for the nine months ended September 30, 2025 was 16.3%. The Company expects to report an effective tax rate between 16% and 18% for 2025.

Total period-end loans and leases receivable increased $84.6 million, or 10.4% annualized, to $3.337 billion. The average rate earned on average loans and leases receivable was 7.10%, up 11 basis points from 6.99% in the prior quarter. Excluding fees in lieu of interest, the average rate earned on average loans and leases receivable was 6.84%, up six basis points from 6.78% in the prior quarter.

• Commercial Real Estate (“CRE”) loans increased by $80.0 million, or 16.4% annualized, to $2.027 billion, primarily due to growth in our Northeast Wisconsin, Southeast Wisconsin, and Kansas City markets.
• C&I loans increased $4.9 million, or 1.57% annualized, to $1.264 billion. The increase was due to growth in our Northeast Wisconsin, Southeast Wisconsin, and Kansas City markets.

Total period-end core deposits increased $59.0 million, or 9.3% annualized, to $2.592 billion. The average rate paid was 2.89%, up 14 basis points from 2.75% in the prior quarter primarily due to an increase in higher-cost certificates of deposit.

Period-end wholesale funding, including FHLB advances and brokered deposits, decreased $40.6 million, or 4.1%, to $952.9 million. Consistent with the Bank’s long-held philosophy to minimize exposure to interest rate risk, management will continue to utilize the most efficient and cost-effective source of wholesale funds to match-fund fixed-rate loans, as necessary.

• Wholesale deposits decreased $31.2 million to $741.0 million. The average rate paid on wholesale deposits increased one basis point to 4.03% and the weighted average original maturity increased to 4.3 years from 4.1 years.
• FHLB advances decreased $9.5 million to $211.9 million. The average rate paid on FHLB advances decreased 16 basis points to 3.16% and the weighted average original maturity decreased to 5.3 years from 5.5 years.

Non-performing assets decreased $5.2 million to $23.5 million, or 0.58% of total assets, improving from 0.72% in the prior quarter. The decrease reflects pay downs on non-accrual C&I loans and charge-offs of previously reserved equipment finance loans, partially offset by new non-accrual equipment finance loans. We continue to expect full repayment of the previously disclosed Asset-Based Lending ("ABL") loan that defaulted during the second quarter of 2023. The liquidation process under Chapter 7 bankruptcy and related litigation has delayed final resolution. The current balance of this loan is $6.1 million. Excluding this ABL loan, non-performing assets totaled $17.4 million, or 0.43% of total assets in the current quarter and $22.6 million, or 0.56% of total assets in the linked quarter.

The allowance for credit losses, including the unfunded credit commitments reserve, increased $172,000, or 0.5%, primarily due to increases in general reserves driven by loan growth and an increase in unfunded commitments, partially offset by a decrease in specific reserve requirements, an improvement in the economic outlook in our model forecast, and improvement in qualitative factors. The allowance for credit losses, including unfunded credit commitment reserves, as a percent of total gross loans and leases was 1.15% compared to 1.18% in the prior quarter.

Third Quarter 2025 Compared to Third Quarter 2024

Net interest income increased $3.9 million, or 12.5%, to $34.9 million.

• Growth reflects higher average gross loans and leases as well as increased fees in lieu of interest, which grew by $1.0 million to $2.2 million, primarily due to a reclassification of loan fees that were previously classified as non-interest income as well as an increase in prepayment fees and non-accrual interest collected. Excluding fees in lieu of interest, net interest income increased $2.7 million, or 9.1%.
• The yield on average interest-earning assets decreased 25 basis points to 6.72% from 6.97%. Excluding fees in lieu of interest, the yield on average interest-earning assets measured 6.49% compared to 6.85%. This decrease in yield was primarily due to the decrease in short-term market rates partially offset by the reinvestment of cash flows from the securities and fixed-rate loan portfolios.
• The rate paid for average interest-bearing core deposits decreased 66 basis points to 3.44% from 4.10%. The rate paid for average total bank funding decreased 30 basis points to 3.14% from 3.44%.
• Net interest margin increased four basis points to 3.68% from 3.64%.

The Company reported provision for credit losses of $1.4 million, compared to $2.1 million in the third quarter of 2024. See the Provision for Credit Loss breakdown table below for more detail.

Non-interest income increased $2.6 million, or 36.5%, to $9.6 million.

• Other fee income increased $1.2 million, or 170.5%, to $2.0 million. The increase was primarily due to higher returns on the Company’s investments in SBIC funds and $537,000 of nonrecurring fee income in accounts receivable financing. Income from SBIC funds was $854,000 in the third quarter, compared to $193,000 in the prior year quarter. Income from SBIC funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.
• Bank-owned life insurance income increased $549,000 to $965,000 primarily due to the purchase of new policies and the aforementioned insurance claim.
• Commercial loan swap fee income increased $514,000 to $974,000. Swap fee income varies period to period based on loan activity and the interest rate environment.
• Private wealth fee income increased $423,000, or 13.0%, to $3.7 million. Private Wealth assets under management and administration measured $3.814 billion at September 30, 2025 up $415.9 million, or 12.2%.
• Loan fee income decreased $311,000 to $501,000 primarily due to a reclassification of certain types of C&I loan fees from non-interest income to interest income.
• Service charges on deposits increased $231,000, or 25.1%, to $1.2 million, primarily driven by new and expanded core deposit relationships.

Non-interest expense increased $2.6 million, or 11.2%, to $25.7 million. Operating expense increased $2.8 million, or 12.4%, to $25.4 million.

• Compensation expense increased $2.2 million, or 14.8%, to $17.4 million. Growth reflects an increase in average FTEs, annual merit increases and promotions, an increase in the cash bonus accrual, and decreased capitalized software development compensation. Average FTEs increased 3.1% to 366 in the third quarter of 2025, compared to 355 in the third quarter of 2024.
• Computer software expense increased $218,000, or 13.6%, to $1.8 million, due to ongoing investment in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
• Other non-interest expense increased $381,000, or 29.3%, to $1.7 million, primarily due to an increase in liquidation expenses, donations, and administrative costs in early stage limited partnership investments. This was partially offset by a decrease in SBA recourse provision.
• Professional fees decreased $234,000, or 17.9%, to $1.1 million, primarily due to timing of various consulting fees and legal fees.

Total period-end loans and leases receivable increased $286.4 million, or 9.4%, to $3.337 billion.

• CRE loans increased $110.1 million, or 6.0%, to $2.027 billion, primarily due to growth across the Wisconsin and Kansas City markets.
• C&I loans increased $112.4 million, or 9.6%, to $1.264 billion, primarily due to growth across our bank markets and in our floorplan and equipment finance businesses.

Total period-end core deposits grew $209.4 million, or 8.8%, to $2.592 billion. The average rate paid decreased 45 basis points to 2.89%, reflecting a decrease in short-term market rates. Total average core deposits grew $222.0 million, or 9.3%, to $2.597 billion.

Period-end wholesale funding increased $82.5 million, or 28.0%, to $952.9 million.

• Wholesale deposits increased $153.7 million, or 26.2%, to $741.0 million, as the Bank utilized more wholesale deposits in lieu of FHLB advances to maintain excess liquidity and to match-fund fixed-rate assets. The average rate paid on wholesale deposits decreased nine basis points to 4.03% and the weighted average original maturity increased to 4.3 years from 4.0 years.
• FHLB advances decreased $82.5 million to $211.9 million. The average rate paid on FHLB advances increased 20 basis points to 3.16% and the weighted average original maturity remained flat at 5.3 years.

Non-performing assets increased to $23.5 million, or 0.58% of total assets, compared to $19.4 million, or 0.52% of total assets, primarily driven by new non-accrual loans in the C&I transportation and logistics portfolio partially offset lower non-accrual equipment finance loans. Excluding the ABL loan described above for which we expect full repayment, non-performing assets totaled $17.4 million, or 0.43% of total assets and $13.0 million, or 0.35% of total assets in the prior year quarter.

The allowance for credit losses, including unfunded commitment reserves, increased $2.9 million to $38.4 million primarily due to higher general reserves as a result of loan growth and quantitative factors partially offset by lower specific reserves. The allowance for credit losses as a percent of total gross loans and leases was 1.15%, compared with 1.16% in the prior year.

2026 CEO Succession Plan

On May 5, 2025, the Company announced that Corey A. Chambas intends to retire from his role as Chief Executive Officer on May 2, 2026. The Company will name President and Chief Operating Officer David R. Seiler to succeed him as CEO effective the same date.

Earnings Release Supplement and Conference Call

On October 30, 2025, the Company posted an earnings release supplement to its website firstbusiness.bank under the “Investor Relations” tab which will also be furnished to the U.S. Securities and Exchange Commission on October 30, 2025. The information included in the supplement provides an overview of the Company’s recent operating performance, financial condition, and other data relevant to the quarter. The Company intends to use this supplement in connection with its third quarter 2025 earnings call to be held at 1:00 p.m. Central time on October 31, 2025. The conference call can be accessed at 800-549-8228 (646-564-2877 if outside the United States and Canada), using the conference call access code: FBIZ, 82881. Investors may also listen live via webcast at: https://events.q4inc.com/attendee/466645836. A replay of the call will be available through Friday, November 7, 2025, by calling 888-660-6264 (646-517-3975 if outside the United States and Canada). The webcast archive of the conference call will be available on the Company’s website, ir.firstbusiness.bank.

About First Business Bank

First Business Bank^® specializes in Business Banking, including Commercial Banking and Specialty Finance, Private Wealth, and Bank Consulting services, and through its refined focus delivers unmatched expertise, accessibility, and responsiveness. Specialty Finance solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC^®. First Business Bank is a wholly owned subsidiary of First Business Financial Services, Inc^®. (Nasdaq: FBIZ). For additional information, visit firstbusiness.bank.

This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:

• Adverse changes in the economy or business conditions, either nationally or in our markets including, without limitation, inflation, economic downturn, labor shortages, wage pressures, and the adverse effects of public health events on the global, national, and local economy.
• Uncertainty created by potential federal government actions relating to the authority of regulatory agencies (including bank regulators), international trade policy, prolonged shutdown of the federal government, and other significant policy matters.
• Competitive pressures among depository and other financial institutions nationally and in the Company’s markets.
• Increases in defaults by borrowers and other delinquencies.
• Management’s ability to manage growth effectively, including the successful expansion of our client support, administrative infrastructure, and internal management systems.
• Fluctuations in interest rates and market prices.
• Changes in legislative or regulatory requirements applicable to the Company and its subsidiaries.
• Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.
• Fraud, including client and system failure or breaches of our network security, including the Company’s internet banking activities.
• Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.
• Ongoing volatility in the banking sector may result in new legislation, regulations or policy changes that could subject the Company and the Bank to increased government regulation and supervision.
• The proportion of the Company’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.

For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2024, and other filings with the Securities and Exchange Commission.

SELECTED FINANCIAL CONDITION DATA
(Unaudited)		As of
(in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Assets
Cash and cash equivalents		$44,349		$123,208		$170,617		$157,702		$131,972
Securities available-for-sale, at fair value		411,111		382,365		359,394		341,392		313,336
Securities held-to-maturity, at amortized cost		5,584		5,714		6,590		6,741		6,907
Loans held for sale		13,482		12,415		10,523		13,498		8,173
Loans and leases receivable		3,334,956		3,250,925		3,184,400		3,113,128		3,050,079
Allowance for credit losses		(36,690)		(36,861)		(35,236)		(35,785)		(33,688)
Loans and leases receivable, net		3,298,266		3,214,064		3,149,164		3,077,343		3,016,391
Premises and equipment, net		4,936		5,063		5,017		5,227		5,478
Repossessed assets		—		31		36		51		56
Right-of-use assets		5,577		5,713		5,439		5,702		5,789
Bank-owned life insurance		83,255		82,761		57,647		57,210		56,767
Federal Home Loan Bank stock, at cost		9,605		10,027		10,434		11,616		12,775
Goodwill and other intangible assets		12,041		12,049		12,058		11,912		11,834
Derivatives		37,634		40,814		48,405		65,762		42,539
Accrued interest receivable and other assets		109,005		108,501		109,555		99,059		103,707
Total assets		$4,034,845		$4,002,725		$3,944,879		$3,853,215		$3,715,724
Liabilities and Stockholders’ Equity
Core deposits		$2,592,110		$2,533,099		$2,462,695		$2,396,429		$2,382,730
Wholesale deposits		740,961		772,123		780,348		710,711		587,217
Total deposits		3,333,071		3,305,222		3,243,043		3,107,140		2,969,947
Federal Home Loan Bank advances and other borrowings		266,677		276,131		286,590		320,049		349,109
Lease liabilities		7,687		7,887		7,604		7,926		8,054
Derivatives		38,726		41,228		45,612		57,068		45,399
Accrued interest payable and other liabilities		30,365		27,462		25,967		32,443		31,233
Total liabilities		3,676,526		3,657,930		3,608,816		3,524,626		3,403,742
Total stockholders’ equity		358,319		344,795		336,063		328,589		311,982
Total liabilities and stockholders’ equity		$4,034,845		$4,002,725		$3,944,879		$3,853,215		$3,715,724

STATEMENTS OF INCOME
(Unaudited)		As of and for the Three Months Ended										As of and for the Nine Months Ended
(Dollars in thousands, except per share amounts)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Total interest income		$63,746		$61,282		$59,530		$60,110		$59,327		$184,558		$173,020
Total interest expense		28,860		27,498		26,272		26,962		28,320		82,630		81,961
Net interest income		34,886		33,784		33,258		33,148		31,007		101,928		91,059
Provision for credit losses		1,440		2,701		2,659		2,701		2,087		6,800		6,126
Net interest income after provision for credit losses		33,446		31,083		30,599		30,447		28,920		95,128		84,933
Private wealth management service fees		3,687		3,748		3,492		3,426		3,264		10,928		9,835
Gain on sale of SBA loans		382		397		963		938		460		1,742		1,004
Service charges on deposits		1,151		1,103		1,048		960		920		3,303		2,810
Loan fees		501		424		388		914		812		1,313		2,486
Bank owned life insurance income		965		615		437		418		416		2,016		1,231
Loss on sale of securities		—		—		—		—		0		—		(8)
Swap fees		974		170		113		588		460		1,257		815
Other non-interest income		1,980		798		1,138		761		732		3,916		3,073
Total non-interest income		9,640		7,255		7,579		8,005		7,064		24,475		21,246
Compensation		17,442		16,534		16,747		15,535		15,198		50,723		47,570
Occupancy		567		564		590		588		585		1,721		1,785
Professional fees		1,071		1,487		1,459		1,323		1,305		4,016		4,348
Data processing		1,123		1,368		1,082		1,647		1,045		3,574		3,245
Marketing		876		1,062		968		928		922		2,906		2,591
Equipment		296		335		376		301		333		1,007		1,013
Computer software		1,826		1,656		1,603		1,585		1,608		5,085		4,581
FDIC insurance		817		834		780		728		810		2,432		2,032
Other non-interest expense		1,682		1,128		1,114		517		1,301		3,924		3,164
Total non-interest expense		25,700		24,968		24,719		23,152		23,107		75,388		70,329
Income before income tax expense		17,386		13,370		13,459		15,300		12,877		44,215		35,850
Income tax expense		2,993		1,948		2,288		885		2,351		7,229		6,020
Net income		$14,393		$11,422		$11,171		$14,415		$10,526		$36,986		$29,830
Preferred stock dividends		218		219		219		219		218		656		656
Net income available to common shareholders		$14,175		$11,203		$10,952		$14,196		$10,308		$36,330		$29,174
Per common share:
Basic earnings		$1.70		$1.35		$1.32		$1.71		$1.24		$4.37		$3.50
Diluted earnings		$1.70		$1.35		$1.32		$1.71		$1.24		$4.37		$3.50
Dividends declared		$0.29		$0.29		$0.29		$0.25		$0.25		$0.87		$0.75
Book value		$41.60		$39.98		$39.04		$38.17		$36.17		$41.60		$36.17
Tangible book value		$40.16		$38.54		$37.58		$36.74		$34.74		$40.16		$34.74
Weighted-average common shares outstanding(1)		8,171,404		8,141,159		8,130,743		8,107,308		8,111,215		8,153,181		8,149,949
Weighted-average diluted common shares outstanding(1)		8,171,404		8,141,159		8,130,743		8,107,308		8,111,215		8,153,181		8,149,949

(1)	Excluding participating securities.

NET INTEREST INCOME ANALYSIS
(Unaudited)		For the Three Months Ended
(Dollars in thousands)		September 30, 2025						June 30, 2025						September 30, 2024
		Average Balance		Interest		Average Yield/Rate(4)		Average Balance		Interest		Average Yield/Rate(4)		Average Balance		Interest		Average Yield/Rate(4)
Interest-earning assets
Commercial real estate and other mortgage loans(1)		$1,986,541		$31,819		6.41%		$1,932,593		$30,344		6.28%		$1,805,020		$30,340		6.72%
Commercial and industrial loans(1)		1,259,448		26,009		8.26		1,257,296		25,604		8.15		1,177,112		24,481		8.32
Consumer and other loans(1)		49,891		672		5.39		49,951		673		5.39		49,748		685		5.51
Total loans and leases receivable(1)		3,295,880		58,500		7.10		3,239,840		56,621		6.99		3,031,880		55,506		7.32
Mortgage-related securities(2)		350,971		3,745		4.27		334,159		3,533		4.23		269,842		2,662		3.95
Other investment securities(3)		47,367		266		2.25		46,416		250		2.15		51,446		315		2.45
FHLB stock		9,420		225		9.55		12,852		297		9.24		11,960		285		9.53
Short-term investments		90,852		1,010		4.45		52,772		581		4.40		40,406		559		5.53
Total interest-earning assets		3,794,490		63,746		6.72		3,686,039		61,282		6.65		3,405,534		59,327		6.97
Non-interest-earning assets		249,026						242,048						231,353
Total assets		$4,043,516						$3,928,087						$3,636,887
Interest-bearing liabilities
Transaction accounts		$1,050,822		8,809		3.35%		$985,606		$7,964		3.23%		$864,936		$8,451		3.91%
Money market		851,659		7,183		3.37		821,845		6,789		3.30		850,590		8,780		4.13
Certificates of deposit		278,191		2,751		3.96		178,643		1,720		3.85		219,315		2,584		4.71
Wholesale deposits		754,690		7,595		4.03		773,750		7,784		4.02		531,472		5,475		4.12
Total interest-bearing deposits		2,935,362		26,338		3.59		2,759,844		24,257		3.52		2,466,313		25,290		4.10
FHLB advances		207,762		1,639		3.16		284,428		2,358		3.32		278,103		2,059		2.96
Other borrowings		54,761		883		6.45		54,733		883		6.45		50,642		971		7.67
Total interest-bearing liabilities		3,197,885		28,860		3.61		3,099,005		27,498		3.55		2,795,058		28,320		4.05
Non-interest-bearing demand deposit accounts		416,359						410,423						440,161
Other non-interest-bearing liabilities		77,300						78,388						91,520
Total liabilities		3,691,544						3,587,816						3,326,739
Stockholders’ equity		351,972						340,271						310,148
Total liabilities and stockholders’ equity		$4,043,516						$3,928,087						$3,636,887
Net interest income				$34,886						$33,784						$31,007
Interest rate spread						3.11%						3.10%						2.92%
Net interest-earning assets		$596,605						$587,034						$610,476
Net interest margin						3.68%						3.67%						3.64%

(1)	The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.
(2)	Includes amortized cost basis of assets available for sale and held to maturity.
(3)	Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.
(4)	Represents annualized yields/rates.

PROVISION FOR CREDIT LOSS COMPOSITION
(Unaudited)		For the Three Months Ended										For the Nine Months Ended
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Change due to qualitative factors		$(243)		$590		$(355)		$(460)		$(444)		$(8)		$793
Change due to quantitative factors		(173)		746		1,560		(598)		(330)		2,133		(380)
Charge-offs		1,708		1,338		3,810		1,132		1,619		6,856		4,123
Recoveries		(440)		(332)		(398)		(190)		(91)		(1,170)		(509)
Change in reserves on individually evaluated loans, net		(550)		(247)		(2,495)		2,579		757		(3,292)		348
Change due to loan growth, net		795		536		741		577		616		2,072		1,652
Change in unfunded commitment reserves		343		70		(204)		(339)		(40)		209		99
Total provision for credit losses		$1,440		$2,701		$2,659		$2,701		$2,087		$6,800		$6,126

ALLOWANCE FOR CREDIT LOSS COMPOSITION
		As of
		September 30, 2025				June 30, 2025				March 31, 2025				December 31, 2024
		(In Thousands)		% of Total Loans and Leases		(In Thousands)		% of Total Loans and Leases		(In Thousands)		% of Total Loans and Leases		(In Thousands)		% of Total Loans and Leases
Allowance for credit losses:
Loans collectively evaluated		$31,065		0.93%		$30,685		0.94%		$28,813		0.90%		$26,867		0.86%
Loans individually evaluated		5,625		0.17%		6,176		0.19%		6,423		0.20%		8,918		0.29%
Unfunded commitments reserve		1,692				1,349				1,279				1,483
Total		38,382		1.15%		38,210		1.18%		36,515		1.15%		37,268		1.20%
Loans and lease receivables:		$3,334,956				$3,250,925				$3,184,400				$3,113,128

PERFORMANCE RATIOS
		For the Three Months Ended										For the Nine Months Ended
(Unaudited)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Return on average assets (annualized)		1.40%		1.14%		1.14%		1.52%		1.13%		1.23%		1.08%
Return on average tangible common equity (annualized)		17.29%		14.17%		14.13%		19.21%		14.40%		15.23%		13.98%
Efficiency ratio		57.44%		60.97%		60.28%		56.94%		59.44%		59.51%		61.96%
Interest rate spread		3.11%		3.10%		3.11%		3.11%		2.92%		3.11%		2.91%
Net interest margin		3.68%		3.67%		3.69%		3.77%		3.64%		3.68%		3.62%
Average interest-earning assets to average interest-bearing liabilities		118.66%		118.94%		119.95%		121.59%		121.84%		119.17%		121.78%

ASSET QUALITY RATIOS
(Unaudited)		As of
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Non-accrual loans and leases		$23,513		$28,633		$24,056		$28,367		$19,364
Repossessed assets		0		31		36		51		56
Total non-performing assets		$23,513		$28,664		$24,092		$28,418		$19,420
Non-accrual loans and leases as a percent of total gross loans and leases		0.70%		0.88%		0.76%		0.91%		0.63%
Non-performing assets as a percent of total gross loans and leases plus repossessed assets		0.70%		0.88%		0.76%		0.91%		0.64%
Non-performing assets as a percent of total assets		0.58%		0.72%		0.61%		0.74%		0.52%
Allowance for credit losses as a percent of total gross loans and leases		1.15%		1.18%		1.15%		1.20%		1.16%
Allowance for credit losses as a percent of non-accrual loans and leases		163.24%		133.45%		151.79%		131.38%		183.38%

NET CHARGE-OFFS (RECOVERIES)
(Unaudited)		For the Three Months Ended										For the Nine Months Ended
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Charge-offs		$1,708		$1,338		$3,810		$1,132		$1,619		$6,856		$4,123
Recoveries		(440)		(332)		(398)		(190)		(91)		(1,170)		(509)
Net charge-offs (recoveries)		$1,268		$1,006		$3,412		$942		$1,528		$5,686		$3,614
Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)		0.15%		0.12%		0.43%		0.12%		0.20%		0.23%		0.16%

CAPITAL RATIOS
		As of and for the Three Months Ended
(Unaudited)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Total capital to risk-weighted assets		12.18%		12.25%		12.20%		12.08%		11.72%
Tier I capital to risk-weighted assets		9.67%		9.66%		9.60%		9.45%		9.11%
Common equity tier I capital to risk-weighted assets		9.34%		9.33%		9.26%		9.10%		8.76%
Tier I capital to adjusted assets		8.87%		8.82%		8.77%		8.78%		8.68%
Tangible common equity to tangible assets		8.31%		8.04%		7.93%		7.93%		7.78%

LOAN AND LEASE RECEIVABLE COMPOSITION
(Unaudited)		As of
(in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Commercial real estate:
Commercial real estate - owner occupied		$287,005		$262,988		$258,050		$273,397		$259,532
Commercial real estate - non-owner occupied		871,807		846,990		838,634		845,298		768,195
Construction		236,590		218,840		215,613		221,086		266,762
Multi-family		565,102		573,208		549,220		530,853		494,954
1-4 family		66,735		45,171		48,450		46,496		39,933
Total commercial real estate		2,027,239		1,947,197		1,909,967		1,917,130		1,829,376
Commercial and industrial		1,264,111		1,259,171		1,229,098		1,151,720		1,174,295
Consumer and other		45,323		45,744		46,190		45,000		46,610
Total gross loans and leases receivable		3,336,673		3,252,112		3,185,255		3,113,850		3,050,281
Less:
Allowance for credit losses		36,690		36,861		35,236		35,785		33,688
Deferred loan fees		1,717		1,187		855		722		202
Loans and leases receivable, net		$3,298,266		$3,214,064		$3,149,164		$3,077,343		$3,016,391

DEPOSIT COMPOSITION
(Unaudited)		As of
(in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Non-interest-bearing transaction accounts		$400,697		$396,448		$433,201		$436,111		$428,012
Interest-bearing transaction accounts		1,050,233		1,047,434		1,015,846		965,637		930,252
Money market accounts		840,477		833,684		831,897		809,695		817,129
Certificates of deposit		300,703		255,533		181,751		184,986		207,337
Wholesale deposits		740,961		772,123		780,348		710,711		587,217
Total deposits		$3,333,071		$3,305,222		$3,243,043		$3,107,140		$2,969,947
Uninsured deposits		$1,100,868		$1,069,509		$1,055,347		$980,278		$1,088,496
Less: uninsured deposits collateralized by pledged assets		72,561		67,990		9,344		6,864		10,755
Total uninsured, net of collateralized deposits		$1,028,307		$1,001,519		$1,046,003		$973,414		$1,077,741
% of total deposits		30.9%		30.3%		32.3%		31.3%		36.3%

SOURCES OF LIQUIDITY
(Unaudited)		As of
(in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Short-term investments		$8,074		$72,520		$136,033		$128,207		$86,670
Collateral value of unencumbered pledged loans		906,042		893,499		973,494		444,453		397,852
Market value of unencumbered securities		376,783		347,196		324,365		310,125		279,191
Readily accessible liquidity		1,290,899		1,313,215		1,433,892		882,785		763,713
Fed fund lines		45,000		45,000		45,000		45,000		45,000
Excess brokered CD capacity(1)		732,951		645,843		477,468		981,463		1,102,767
Total liquidity		$2,068,850		$2,004,058		$1,956,360		$1,909,248		$1,911,480
Total uninsured, net of collateralized deposits		$1,028,307		$1,001,519		$1,046,003		$973,414		$1,077,741

1.	Bank internal policy limits brokered CDs to 50% of total bank funding when combined with value of unencumbered pledged loans.

PRIVATE WEALTH OFF-BALANCE SHEET COMPOSITION
(Unaudited)		As of
(in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Trust assets under management		$3,543,594		$3,461,659		$3,184,197		$3,160,449		$3,145,789
Trust assets under administration		270,222		268,996		240,366		258,255		252,152
Total trust assets		$3,813,816		$3,730,655		$3,424,563		$3,418,704		$3,397,941

NON-GAAP RECONCILIATIONS

Certain financial information provided in this release is determined by methods other than in accordance with generally accepted accounting principles (United States) (“GAAP”). Although the Company’s management believes that these non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies.

TANGIBLE BOOK VALUE

“Tangible book value per share” is a non-GAAP measure representing tangible common equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in period-to-period changes in book value per common share exclusive of changes in intangible assets. The information provided below reconciles tangible book value per share and tangible common equity to their most comparable GAAP measures.

(Unaudited)		As of
(Dollars in thousands, except per share amounts)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Common stockholders’ equity		$346,327		$332,803		$324,071		$316,597		$299,990
Less: Goodwill and other intangible assets		(12,041)		(12,049)		(12,058)		(11,912)		(11,834)
Tangible common equity		$334,286		$320,754		$312,013		$304,685		$288,156
Common shares outstanding		8,324,387		8,323,470		8,301,967		8,293,928		8,295,017
Book value per share		$41.60		$39.98		$39.04		$38.17		$36.17
Tangible book value per share		$40.16		$38.54		$37.58		$36.74		$34.74

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

“Tangible common equity to tangible assets” (“TCE”) is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. Adjusted TCE ratio is defined as TCE adjusted for net fair value adjustments of financial assets and liabilities. For more information on fair value adjustments please refer to Note 19 - Fair Value Disclosures in the annual report on Form 10-K for the year ended December 31, 2024. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. The information below reconciles tangible common equity and tangible assets to their most comparable GAAP measures.

(Unaudited)		As of
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Common stockholders’ equity		$346,327		$332,803		$324,071		$316,597		$299,990
Less: Goodwill and other intangible assets		(12,041)		(12,049)		(12,058)		(11,912)		(11,834)
Tangible common equity (a)		$334,286		$320,754		$312,013		$304,685		$288,156
Total assets		$4,034,845		$4,002,725		$3,944,879		$3,853,215		$3,715,724
Less: Goodwill and other intangible assets		(12,041)		(12,049)		(12,058)		(11,912)		(11,834)
Tangible assets (b)		$4,022,804		$3,990,676		$3,932,821		$3,841,303		$3,703,890
Tangible common equity to tangible assets		8.31%		8.04%		7.93%		7.93%		7.78%
Fair Value Adjustments:
Financial assets - MTM (c)		$(11,278)		$(30,996)		$(20,528)		$(26,580)		$(17,615)
Financial liabilities - MTM (d)		$2,601		$2,563		$5,460		$5,946		$8,358
Net MTM, after-tax e = (c-d)*(1-21%)		$(6,855)		$(22,462)		$(11,904)		$(16,301)		$(7,313)
Adjusted tangible equity f = (a-e)		$327,431		$298,292		$300,109		$288,384		$280,843
Adjusted tangible assets g = (b-c)		$4,011,526		$3,959,680		$3,912,293		$3,814,723		$3,686,275
Adjusted TCE ratio (f/g)		8.16%		7.53%		7.67%		7.56%		7.62%

EFFICIENCY RATIO & PRE-TAX, PRE-PROVISION ADJUSTED EARNINGS

“Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on repossessed assets, amortization of other intangible assets and other discrete items, if any, divided by operating revenue, which is equal to net interest income plus non-interest income less realized gains or losses on securities, if any. “Pre-tax, pre-provision adjusted earnings” is defined as operating revenue less operating expense. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Company’s operating expenses in relation to its core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items. The information provided below reconciles the efficiency ratio and pre-tax, pre-provision adjusted earnings to its most comparable GAAP measure.

(Unaudited)		For the Three Months Ended										For the Nine Months Ended
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Total non-interest expense		$25,700		$24,968		$24,719		$23,152		$23,107		$75,388		$70,329
Less:
Net (gain) loss on repossessed assets		31		4		(8)		5		11		27		72
Impairment of tax credit investments		—		—		110		400		—		110		—
Contribution to First Business Charitable Foundation		234										234		—
SBA recourse provision (benefit)		(5)		(59)		—		(687)		466		(64)		583
Total operating expense (a)		$25,440		$25,023		$24,617		$23,434		$22,630		$75,081		$69,674
Net interest income		$34,886		$33,784		$33,258		$33,148		$31,007		$101,928		$91,059
Total non-interest income		9,640		7,255		7,579		8,005		7,064		24,475		21,246
Less:
Net loss on sale of securities		—		—		—		—		—		—		(8)
Bank owned life insurance claim		234		—		—		—		—		234		0
Adjusted non-interest income		9,406		7,255		7,579		8,005		7,064		24,241		21,254
Total operating revenue (b)		$44,292		$41,039		$40,837		$41,153		$38,071		$126,169		$112,313
Efficiency ratio		57.44%		60.97%		60.28%		56.94%		59.44%		59.51%		62.04%
Pre-tax, pre-provision adjusted earnings (b - a)		$18,852		$16,016		$16,220		$17,719		$15,441		$51,088		$42,639
Average total assets		$4,043,516		$3,928,087		$3,842,368		$3,746,608		$3,636,887		$3,938,726		$3,585,868

ADJUSTED NET INTEREST MARGIN

“Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets. Fees in lieu of interest are defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. In the judgment of the Company’s management, the adjustments made to net interest income allow investors and analysts to better assess the Company’s net interest income in relation to its core client-facing loan and deposit rate changes by removing the volatility that is associated with these recurring but volatile components. The information provided below reconciles the net interest margin to its most comparable GAAP measure.

(Unaudited)		For the Three Months Ended										For the Nine Months Ended
(Dollars in thousands)		September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		September 30, 2025		September 30, 2024
Interest income		$63,746		$61,282		$59,530		$60,110		$59,327		$184,558		$173,020
Interest expense		28,860		27,498		26,272		26,962		28,320		82,630		81,961
Net interest income (a)		34,886		33,784		33,258		33,148		31,007		101,928		91,059
Less:
Fees in lieu of interest		2,155		1,673		2,052		2,359		1,002		5,880		3,157
FRB interest income and FHLB dividend income		1,229		874		848		1,062		841		2,950		3,235
Adjusted net interest income (b)		$31,502		$31,237		$30,358		$29,727		$29,164		$93,098		$84,667
Average interest-earning assets (c)		$3,794,490		$3,686,039		$3,602,292		$3,516,390		$3,405,534		$3,694,977		$3,349,299
Less:
Average FRB cash and FHLB stock		99,796		65,212		63,971		76,576		52,603		76,457		70,175
Average non-accrual loans and leases		29,796		24,833		27,228		19,077		18,954		27,295		19,761
Adjusted average interest-earning assets (d)		$3,664,898		$3,595,994		$3,511,093		$3,420,737		$3,333,977		$3,591,225		$3,259,363
Net interest margin (a / c)		3.68%		3.67%		3.69%		3.77%		3.64%		3.68%		3.62%
Adjusted net interest margin (b / d)		3.44%		3.47%		3.46%		3.48%		3.50%		3.46%		3.46%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20251030217647/en/

First Business Financial Services, Inc.

Brian D. Spielmann

Chief Financial Officer

608-232-5977

bspielmann@firstbusiness.bank

Source: First Business Financial Services, Inc.