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

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

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

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

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%

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%

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.

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 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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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:

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

—

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

—

(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

218

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

$0.25

$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

(204)

(339)

(40)

209

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%

1.52%

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%

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

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%

7.78%

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

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

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%

7.78%

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

(8)

Impairment of tax credit investments

—

110

400

—

110

—

Contribution to First Business Charitable Foundation

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

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%