FIRST BUSINESS FINANCIAL SERVICES, INC. [FBIZ] Filings

10-Q 1 fbiz-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑		Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2024


☐		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-34095

FIRST BUSINESS FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)


Wisconsin		39-1576570
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


401 Charmany Drive		53719
Madison	Wisconsin
(Address of Principal Executive Offices)		(Zip Code)

(608) 238-8008

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FBIZ	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	þ	Non-accelerated filer	¨	Smaller reporting company	þ	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares outstanding of the registrant’s sole class of common stock, par value $0.01 per share, on July 22, 2024 was 8,294,589 shares.

FIRST BUSINESS FINANCIAL SERVICES, INC.

INDEX — FORM 10-Q


PART I. Financial Information	1
Item 1. Financial Statements	1
Consolidated Balance Sheets (Unaudited)	1
Consolidated Statements of Income (Unaudited)	2
Consolidated Statements of Comprehensive Income (Unaudited)	3
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	4
Consolidated Statements of Cash Flows (Unaudited)	5
Notes to Unaudited Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures about Market Risk	55
Item 4. Controls and Procedures	55
PART II. Other Information	56
Item 1. Legal Proceedings	56
Item 1A. Risk Factors	56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 5. Other Information	56
Item 6. Exhibits	57
Signatures	58

PART I. Financial Information

Item 1. Financial Statements

First Business Financial Services, Inc.

Consolidated Balance Sheets


	June 30, 2024			December 31, 2023
	(Unaudited)
	(In Thousands, Except Share Data)
Assets
Cash and due from banks	$	26,400		$	32,348
Short-term investments		54,680			107,162
Cash and cash equivalents		81,080			139,510
Securities available-for-sale, at fair value		308,852			297,006
Securities held-to-maturity, at amortized cost		7,082			8,503
Loans held for sale		6,507			4,589
Loans and leases receivable, net of allowance for credit losses of $33,088 and $31,275, respectively		2,952,326			2,818,986
Premises and equipment, net		6,381			6,190
Repossessed assets		54			247
Right-of-use assets, net		6,041			6,559
Bank-owned life insurance		56,351			55,536
Federal Home Loan Bank stock, at cost		11,901			12,042
Goodwill and other intangible assets		11,841			12,023
Derivatives		70,773			55,597
Accrued interest receivable and other assets		97,872			91,058
Total assets	$	3,617,061		$	3,507,846
Liabilities and Stockholders’ Equity
Deposits	$	2,885,183		$	2,796,779
Federal Home Loan Bank advances and other borrowings		327,855			330,916
Lease liabilities		8,361			8,954
Derivatives		61,821			51,949
Accrued interest payable and other liabilities		28,671			29,660
Total liabilities		3,311,891			3,218,258
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, 12,500 shares of 7% non-cumulative perpetual preferred stock, Series A, outstanding at June 30, 2024 and December 31, 2023		11,992			11,992
Common stock, $0.01 par value, 25,000,000 shares authorized, 9,433,759 and 9,418,463 shares issued, 8,294,589 and 8,314,778 shares outstanding at June 30, 2024 and December 31, 2023, respectively		95			95
Additional paid-in capital		91,967			90,616
Retained earnings		245,431			230,728
Accumulated other comprehensive loss		(12,944	)		(13,717	)
Treasury stock, 1,139,170 and 1,103,685 shares at June 30, 2024 and December 31, 2023, respectively, at cost		(31,371	)		(30,126	)
Total stockholders’ equity		305,170			289,588
Total liabilities and stockholders’ equity	$	3,617,061		$	3,507,846

See accompanying Notes to Unaudited Consolidated Financial Statements.

First Business Financial Services, Inc.

Consolidated Statements of Income (Unaudited)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2024		2023			2024			2023
	(In Thousands, Except Per Share Data)
Interest income
Loans and leases	$	53,892	$	44,279		$	105,441		$	84,094
Securities		3,053		1,813			5,847			3,403
Short-term investments		965		1,069			2,405			1,729
Total interest income		57,910		47,161			113,693			89,226
Interest expense
Deposits		24,676		16,541			48,512			28,971
Federal Home Loan Bank advances and other borrowings		2,694		2,873			5,130			5,802
Total interest expense		27,370		19,414			53,642			34,773
Net interest income		30,540		27,747			60,051			54,453
Provision for credit losses		1,713		2,231			4,039			3,793
Net interest income after provision for credit losses		28,827		25,516			56,012			50,660
Non-interest income
Private wealth management service fees		3,461		2,893			6,571			5,547
Gain on sale of Small Business Administration loans		349		444			544			920
Service charges on deposits		951		766			1,890			1,448
Loan fees		826		905			1,674			1,708
Increase in cash surrender value of bank-owned life insurance		403		363			815			729
Net loss on sale of securities		—		(45	)		(8	)		(45	)
Swap fees		157		977			355			1,534
Other non-interest income		1,278		1,071			2,341			3,943
Total non-interest income		7,425		7,374			14,182			15,784
Non-interest expense
Compensation		16,215		15,129			32,372			31,037
Occupancy		593		603			1,200			1,234
Professional fees		1,472		1,240			3,043			2,583
Data processing		1,182		1,061			2,200			1,936
Marketing		850		779			1,669			1,407
Equipment		335		355			680			650
Computer software		1,555		1,197			2,973			2,379
FDIC insurance		612		580			1,222			974
Other non-interest expense		1,065		1,087			1,863			1,598
Total non-interest expense		23,879		22,031			47,222			43,798
Income before income tax expense		12,373		10,859			22,972			22,646
Income tax expense		1,917		2,522			3,668			5,330
Net income		10,456		8,337			19,304			17,316
Preferred stock dividend		219		219			438			438
Net income available to common shareholders	$	10,237	$	8,118		$	18,866		$	16,878
Earnings per common share
Basic	$	1.23	$	0.98		$	2.26		$	2.02
Diluted		1.23		0.98			2.26			2.02
Dividends declared per share		0.25		0.2275			0.50			0.4550

See accompanying Notes to Unaudited Consolidated Financial Statements.

First Business Financial Services, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
	(In Thousands)
Net income	$	10,456		$	8,337		$	19,304		$	17,316
Other comprehensive (loss) income
Securities available-for-sale:
Unrealized securities losses arising during the period		(644	)		(4,015	)		(3,505	)		(252	)
Reclassification adjustment for net loss realized in net income		—			45			8			45
Securities held-to-maturity:
Amortization of net unrealized losses transferred from available-for-sale		—			1			1			3
Interest rate swaps:
Unrealized gains on interest rate swaps arising during the period		382			3,693			5,304			2,131
Income tax (expense) benefit		(506	)		70			(1,035	)		(494	)
Total other comprehensive (loss) income		(768	)		(206	)		773			1,433
Comprehensive income	$	9,688		$	8,131		$	20,077		$	18,749

See accompanying Notes to Unaudited Consolidated Financial Statements.

First Business Financial Services, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


	Common Shares Outstanding			Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2022		8,362,085		$	11,992	$	94	$	87,512	$	203,507		$	(15,310	)	$	(27,155	)	$	260,640
Cumulative change in accounting principle		—			—		—		—		(1,353	)		—			—			(1,353	)
Balance at January 1, 2023		8,362,085			11,992		94		87,512		202,154			(15,310	)		(27,155	)		259,287
Net income		—			—		—		—		8,979			—			—			8,979
Other comprehensive income		—			—		—		—		—			1,639			—			1,639
Share-based compensation - restricted shares and employee stock purchase plan		(426	)		—		—		634		—			—			—			634
Issuance of common stock under the employee stock purchase plan		1,005			—		—		27		—			—			—			27
Preferred stock dividends		—			—		—		—		(219	)		—			—			(219	)
Cash dividends ($0.2275 per share)		—			—		—		—		(1,906	)		—			—			(1,906	)
Treasury stock purchased		(56,394	)		—		—		—		—			—			(1,860	)		(1,860	)
Balance at March 31, 2023		8,306,270		$	11,992	$	94	$	88,173	$	209,008		$	(13,671	)	$	(29,015	)	$	266,581
Net income		—			—		—		—		8,337			—			—			8,337
Other comprehensive loss		—			—		—		—		—			(206	)		—			(206	)
Share-based compensation - restricted shares and employee stock purchase plan		45,280			—		1		1,071		—			—			—			1,072
Issuance of common stock under the employee stock purchase plan		1,044			—		—		28		—			—			—			28
Preferred stock dividends		—			—		—		—		(219	)		—			—			(219	)
Cash dividends ($0.2275 per share)		—			—		—		—		(1,889	)		—			—			(1,889	)
Treasury stock purchased		(37,129	)		—		—		—		—			—			(1,072	)		(1,072	)
Balance at June 30, 2023		8,315,465		$	11,992	$	95	$	89,272	$	215,237		$	(13,877	)	$	(30,087	)	$	272,632


	Common Shares Outstanding			Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2023		8,314,778		$	11,992	$	95	$	90,616	$	230,728		$	(13,717	)	$	(30,126	)	$	289,588
Net income		—			—		—		—		8,848			—			—			8,848
Other comprehensive income		—			—		—		—		—			1,541			—			1,541
Share-based compensation - restricted shares and employee stock purchase plan		6,940			—		—		665		—			—			—			665
Issuance of common stock under the employee stock purchase plan		913			—		—		31		—			—			—			31
Preferred stock dividends		—			—		—		—		(219	)		—			—			(219	)
Cash dividends ($0.25 per share)		—			—		—		—		(2,087	)		—			—			(2,087	)
Treasury stock purchased		(16,058	)		—		—

FIRST BUSINESS FINANCIAL SERVICES, INC. [FBIZ] Filings
10-Q	[2024-07-26]
10-Q	[2024-04-26]
10-K	[2024-02-28]
10-Q	[2023-10-27]
10-Q	[2023-07-28]
10-Q	[2023-04-28]
10-K	[2023-02-22]
10-Q	[2022-10-28]
10-Q	[2022-07-29]
10-Q	[2022-04-29]
10-K	[2022-02-23]
10-Q	[2021-10-29]
10-Q	[2021-07-30]
10-Q	[2021-04-30]
10-K	[2021-02-24]
10-Q	[2020-10-23]
10-Q	[2020-07-24]
10-Q	[2020-04-24]
10-K	[2020-02-27]
10-Q	[2019-10-25]
10-Q	[2019-07-26]
10-Q	[2019-04-26]
10-K	[2019-02-28]
10-Q	[2018-10-26]
10-Q	[2018-07-27]
10-Q	[2018-04-27]
10-K	[2018-03-09]
10-Q	[2017-10-27]
10-Q	[2017-07-28]
10-Q	[2017-04-28]
10-K	[2017-03-10]
10-Q	[2016-10-28]
10-Q	[2016-07-29]
10-Q	[2016-04-29]
10-K	[2016-03-11]
10-Q	[2015-10-30]
10-Q	[2015-08-07]
10-Q	[2015-05-01]
10-K	[2015-03-06]
10-Q	[2014-11-03]
10-Q	[2014-08-01]
10-Q	[2014-05-02]
10-K	[2014-03-07]
10-Q	[2013-10-25]
10-Q	[2013-07-26]
10-Q	[2013-04-26]
10-K	[2013-03-08]
S-1	[2012-11-01]
10-Q	[2012-10-26]
10-Q	[2012-07-27]
10-Q	[2012-04-27]
10-K	[2012-03-09]

FIRST BUSINESS FINANCIAL SERVICES, INC. [FBIZ] Filings

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