FBIZ First Business Financial Services Inc

Robust pre-tax, pre-provision earnings supported by double-digit loan growth, net interest margin expansion, and record private wealth fee income

First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $10.2 million, or earnings per share of $1.23 on a diluted basis. This compares to net income available to common shareholders of $8.6 million, or $1.04 per share, in the first quarter of 2024 and $8.1 million, or $0.98 per share, in the second quarter of 2023.

“First Business Banks’s consistent growth strategy drove outstanding second quarter results, highlighted by continued double-digit loan growth, record top line revenue, improved net interest margin, and stable credit trends,” said Corey Chambas, Chief Executive Officer. "We grew both net interest income and margin by executing high-quality loan production and utilizing our long-held and effective funding strategy. We continued to differentiate our business model with strong fee income sources, most notably from fees generated by our Private Wealth Management group’s $3.2 billion in assets under management and administration. The Company's consistently strong performance has generated exceptional shareholder value with 13.5% growth in tangible book value from the prior year.”

“We are pleased that our balance sheet, interest rate positioning, and higher level of fees in lieu of interest during the quarter produced a net interest margin at the top of our long-term target range of 3.60%-3.65%,” Chambas continued. “We believe our neutrally positioned balance sheet is poised for stable and strong relative performance in varied interest rate scenarios.”

Quarterly Highlights

• Consistent Loan Growth. Loans increased $74.6 million, or 10.3% annualized, from the first quarter of 2024, and $310.8 million, or 11.6%, from the second quarter of 2023, reflecting the addition and retention of valuable client relationships across the Company’s products and geographies.
• Expanded Net Interest Margin. Net interest margin measured 3.65%, elevated by strong fees in lieu of interest, expanding seven basis points from the linked quarter and improving for the first time in five quarters following recent industry-wide net interest margin compression. Net interest income grew 3.5% from the linked quarter and 10.1% from the prior year quarter. The Company’s continued success in driving balance sheet growth was supported by its long-held match-funding strategy.
• Robust Private Wealth Management Business. Private Wealth assets under management and administration grew to $3.249 billion as of June 30, 2024, up $341.5 million, or 11.7% from the prior year. Private Wealth and Company Retirement Plan ("Private Wealth") fee income reached a record $3.5 million, increasing by 19.6% percent from June 30, 2023 and comprising 47% of total non-interest income.
• Strong Pre-Tax, Pre-Provision ("PTPP") Income. PTPP income grew to $14.1 million, up 7.6% and 5.0% from the linked and prior year quarters, respectively. This performance reflects solid growth across the Company’s balance sheet and diversified sources of non-interest income. PTPP adjusted return on average assets measured 1.57%, compared to 1.49% for the linked quarter and 1.72% for the prior year quarter.
• Stable Asset Quality. Non-performing assets measured $19.1 million, down $1.1 million, or 5.4%, from the linked quarter. Non-performing assets as a percent of total assets measured 0.53%, compared to 0.57% and 0.48% for the linked and prior year periods, respectively.
• Tangible Book Value Growth. The Company’s strong earnings generation and sound balance sheet management continued to drive tangible book value per share growth, producing a 11.5% annualized increase compared to the linked quarter and a 13.5% increase compared to the prior year quarter. With a conservatively managed investment portfolio, the Company's tangible book value is minimally impacted by unrealized gains or losses in its investment portfolio.

Quarterly Financial Results

(Unaudited)

 

As of and for the Three Months Ended

 

As of and for the Six Months Ended

(Dollars in thousands, except per share amounts)

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Net interest income

 

$

30,540

 

 

$

29,511

 

 

$

27,747

 

 

$

60,051

 

 

$

54,453

 

Adjusted non-interest income (1)

 

 

7,425

 

 

 

6,765

 

 

 

7,419

 

 

 

14,190

 

 

 

15,829

 

Operating revenue (1)

 

 

37,965

 

 

 

36,276

 

 

 

35,166

 

 

 

74,241

 

 

 

70,282

 

Operating expense (1)

 

 

23,823

 

 

 

23,130

 

 

 

21,692

 

 

 

46,954

 

 

 

43,471

 

Pre-tax, pre-provision adjusted earnings (1)

 

 

14,142

 

 

 

13,146

 

 

 

13,474

 

 

 

27,287

 

 

 

26,811

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

1,713

 

 

 

2,326

 

 

 

2,231

 

 

 

4,039

 

 

 

3,793

 

Net loss on repossessed assets

 

 

65

 

 

 

86

 

 

 

(2

)

 

 

151

 

 

 

4

 

SBA recourse provision

 

 

(9

)

 

 

126

 

 

 

341

 

 

 

117

 

 

 

323

 

Add:

 

 

 

 

 

 

 

 

 

 

Net loss on sale of securities

 

 

0

 

 

 

(8

)

 

 

(45

)

 

 

(8

)

 

 

(45

)

Income before income tax expense

 

 

12,373

 

 

 

10,600

 

 

 

10,859

 

 

 

22,972

 

 

 

22,646

 

Income tax expense

 

 

1,917

 

 

 

1,752

 

 

 

2,522

 

 

 

3,668

 

 

 

5,330

 

Net income

 

$

10,456

 

 

$

8,848

 

 

$

8,337

 

 

$

19,304

 

 

$

17,316

 

Preferred stock dividends

 

 

219

 

 

 

219

 

 

 

219

 

 

 

438

 

 

 

438

 

Net income available to common shareholders

 

$

10,237

 

 

$

8,629

 

 

$

8,118

 

 

$

18,866

 

 

$

16,878

 

Earnings per share, diluted

 

$

1.23

 

 

$

1.04

 

 

$

0.98

 

 

$

2.26

 

 

$

2.02

 

Book value per share

 

$

35.35

 

 

$

34.41

 

 

$

31.34

 

 

$

35.35

 

 

$

31.34

 

Tangible book value per share (1)

 

$

33.92

 

 

$

32.97

 

 

$

29.89

 

 

$

33.92

 

 

$

29.89

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

 

3.65

%

 

 

3.58

%

 

 

3.81

%

 

 

3.62

%

 

 

3.83

%

Adjusted net interest margin (1)(2)

 

 

3.47

%

 

 

3.43

%

 

 

3.63

%

 

 

3.45

%

 

 

3.69

%

Fee income ratio (non-interest income / total revenue)

 

 

19.56

%

 

 

18.63

%

 

 

21.00

%

 

 

19.10

%

 

 

22.47

%

Efficiency ratio (1)

 

 

62.75

%

 

 

63.76

%

 

 

61.68

%

 

 

63.25

%

 

 

61.85

%

Return on average assets (2)

 

 

1.14

%

 

 

0.98

%

 

 

1.04

%

 

 

1.06

%

 

 

1.10

%

Pre-tax, pre-provision adjusted return on average assets (1)(2)

 

 

1.57

%

 

 

1.49

%

 

 

1.72

%

 

 

1.53

%

 

 

1.75

%

Return on average common equity (2)

 

 

14.12

%

 

 

12.24

%

 

 

12.58

%

 

 

13.20

%

 

 

13.26

%

 

 

 

 

 

 

 

 

 

 

 

Period-end loans and leases receivable

 

$

2,985,414

 

 

$

2,910,864

 

 

$

2,674,583

 

 

$

2,985,414

 

 

$

2,674,583

 

Average loans and leases receivable

 

$

2,962,927

 

 

$

2,887,454

 

 

$

2,583,237

 

 

$

2,925,191

 

 

$

2,532,500

 

Period-end core deposits

 

$

2,309,635

 

 

$

2,297,843

 

 

$

2,073,744

 

 

$

2,309,635

 

 

$

2,073,744

 

Average core deposits

 

$

2,375,101

 

 

$

2,346,453

 

 

$

2,035,856

 

 

$

2,360,776

 

 

$

2,018,327

 

Allowance for credit losses, including unfunded commitment reserves

 

$

34,950

 

 

$

34,629

 

 

$

29,697

 

 

$

34,950

 

 

$

29,697

 

Non-performing assets

 

$

19,053

 

 

$

20,146

 

 

$

15,786

 

 

$

19,053

 

 

$

15,786

 

Allowance for credit losses as a percent of total gross loans and leases

 

 

1.17

%

 

 

1.19

%

 

 

1.11

%

 

 

1.17

%

 

 

1.11

%

Non-performing assets as a percent of total assets

 

 

0.53

%

 

 

0.57

%

 

 

0.48

%

 

 

0.53

%

 

 

0.48

%

(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.

Second Quarter 2024 Compared to First Quarter 2024

Net interest income increased $1.03 million, or 3.5%, to $30.5 million.

• The increase in net interest income was driven by increases in net interest margin, average loans and leases receivable, and fees in lieu of interest. Average loans and leases receivable increased $75.5 million, or 10.5% annualized, to $2.963 billion. Fees in lieu of interest, which vary from quarter to quarter based on client-driven activity, totaled $1.2 million, compared to $793,000 in the prior quarter. Excluding fees in lieu of interest, net interest income increased $595,000, or 2.1%.
• The yield on average interest-earning assets increased 15 basis points to 6.92% from 6.77%. Excluding fees in lieu of interest, the yield earned on average interest-earning assets increased 9 basis points to 6.77% from 6.68%. The cumulative adjusted interest-earning asset beta1 since December 31, 2021 was 59.3%.
• The rate paid for average interest-bearing core deposits increased 5 basis points to 4.09% from 4.04% due to ongoing competition for deposits. The rate paid for average wholesale deposits increased 6 basis points to 4.09% from 4.03%. The cumulative total bank funding beta since December 31, 2021 was 58.3%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances.
• Net interest margin was 3.65%, up 7 basis points compared to 3.58% in the linked quarter. Adjusted net interest margin2 was 3.47%, up 4 basis points compared to 3.43% in the linked quarter. The increase in adjusted net interest margin was driven by an increase in the yield on interest-earning assets partially offset by an increase in rate paid on interest-bearing core deposits and wholesale funding.
• 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 a provision expense of $1.7 million, compared to $2.3 million in the first quarter of 2024. The quarterly decrease was driven by lower specific reserve requirements for equipment finance borrowers in the commercial and industrial ("C&I") loan portfolio. The $1.7 million expense consisted of $1.4 million of net charge-offs, $680,000 due to loan growth, a general reserve increase of $496,000 due to qualitative factor changes, and $150,000 related to deterioration in the economic outlook, partially offset by a decrease in specific reserves of $1.0 million. The increase in qualitative factors was primarily driven by above target growth in several loan portfolios. Charge-offs exceeded newly identified non-accrual loans in the quarter in the transportation and logistics segment of equipment finance.

Non-interest income increased $668,000, or 9.9%, to $7.4 million.

• Private Wealth fee income increased $350,000, or 11.3% to $3.5 million. Private Wealth assets under management and administration measured $3.249 billion on June 30, 2024, down $71.5 million, or 8.6% annualized from the prior quarter. Fee income is based on overall asset levels and may vary based on seasonal activity and the timing of fluctuations in market values.
• Gains on sale of SBA loans increased $154,000, or 79.0%, to $349,000. Management expects the SBA loan sales pipeline to continue to build in the second half of the year as production increases and previously closed commitments fully fund and become eligible for sale.
• Commercial loan swap fee income of $157,000 decreased by $41,000, or 20.7%. Swap fee income varies from period to period based on loan activity and the interest rate environment.
• Other fee income increased $207,000 or 14.0% to $1.7 million. The increase was primarily due to higher returns on the Company’s investments in Small Business Investment Company ("SBIC") mezzanine funds. Income from SBIC funds was $796,000 in the second quarter, compared to $653,000 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.

_____________________________________

1

The change in yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta.

2

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.

Non-interest expense increased $537,000, or 2.3%, to $23.9 million, while operating expense increased $693,000, or 3.0%, to $23.8 million.

• Compensation expense was $16.2 million, reflecting an increase of $58,000, or 0.4%, from the linked quarter primarily due to an expanded workforce, increased incentive compensation based on strong second quarter production, and a higher cash bonus accrual based on above-target Company performance. These increases were almost fully offset by decreases in 401(k) employer match and payroll taxes that were paid in the prior quarter on the annual cash bonus payout. Average full-time equivalents (“FTEs”) for the second quarter of 2024 were 351, up from 346 in the linked quarter. Management anticipates compensation expense will approximate this level for the remainder of 2024.
• Computer software expense was $1.6 million, increasing $137,000, or 9.7%, from the linked quarter primarily due to new investments in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
• Data processing expense was $1.2 million, increasing $164,000, or 16.1%, from the linked quarter primarily due to an increase in core processing costs commensurate with loan and deposit account growth, Private Wealth assets under management and administration growth, and various project implementations.
• Other non-interest expense was $1.1 million, increasing $267,000, or 33.5%, from the linked quarter primarily due to an increase in other non-recurring expenses and liquidation expense partially offset by a decrease in SBA recourse provision.

Income tax expense increased $165,000, or 9.4%, to $1.9 million. The effective tax rate was 15.5% for the three months ended June 30, 2024, compared to 16.5% for the linked quarter. The decrease reflects an increase in tax exempt loans and investments, adjustments to compensation estimates, and adjustments to estimated timing of cashflows on federal tax credit projects. The Company expects to report an effective tax rate between 16% and 18% for 2024.

Total period-end loans and leases receivable increased $74.6 million, or 10.3% annualized, to $2.985 billion. Management intends to continue to manage loan growth towards our long-term target of 10%. The average rate earned on average loans and leases receivable was 7.28%, up 14 basis points from 7.14% in the prior quarter. Excluding fees in lieu of interest, the average rate earned on average loans and leases receivable was 7.11%, up 8 basis points from 7.03% in the prior quarter. Additionally, $219.6 million of new and renewed loans were originated in the quarter at a weighted average yield of 8.33%, compared to $197.2 million at a weighted average yield of 7.95% in the prior quarter.

• Commercial Real Estate (“CRE”) loans increased by $35.6 million, or 8.2% annualized, to $1.775 billion. The increase was primarily due to an increase in construction and multi-family loans in the Wisconsin markets.
• Commercial & Industrial (“C&I”) loans increased $40.9 million, or 14.6% annualized, to $1.162 billion. The increase was primarily due to growth in traditional commercial lending, accounts-receivable financing, and equipment financing.

Total period-end core deposits increased $11.8 million to $2.310 billion, compared to $2.298 billion. The average rate paid was 3.34%, up 14 basis points from 3.28% in the prior quarter. Average core deposits increased $28.6 million, or 4.9%, to $2.375 billion.

• New non-maturity deposit balances of $44.0 million were added at a weighted average rate of 3.05%. Certificate of deposit maturities of $151.3 million at a weighted average rate of 4.48% were replaced by new and renewed certificates of deposit of $112.1 million at a weighted average rate of 4.58%.

Period-end wholesale funding, including FHLB advances, brokered deposits, and deposits gathered through internet deposit listing services, increased $64.1 million, or 30.6% annualized, to $853.9 million. Of the total increase, $53.0 million was short-term brokered deposits swapped into longer term fixed rate contracts. Consistent with the Bank’s long-held philosophy to manage 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 increased $118.0 million to $575.5 million, compared to $457.6 million. The average rate paid on wholesale deposits increased 6 basis points to 4.09% and the weighted average original maturity decreased to 4.0 years from 4.4 years.
• FHLB advances and other borrowings decreased $53.9 million to $327.9 million. The average rate paid on FHLB advances increased 30 basis points to 2.69% and the weighted average original maturity increased to 5.3 years from 4.5 years.

Non-performing assets decreased $1.1 million to $19.1 million, or 0.53% of total assets, down from 0.57% in the prior quarter due to net charge-offs and payments on non-accrual loans. While we continue to expect full repayment of the one asset-based lending (ABL) loan that defaulted during the second quarter of 2023, the liquidation process has transitioned into Chapter 7 bankruptcy, likely delaying final resolution until late 2024 or 2025. Through our collection efforts, the current balance of this loan is $6.5 million, down from $10.9 million in the prior year quarter. Excluding this ABL loan, non-performing assets totaled $12.6 million, or 0.35% of total assets in the current quarter and $12.7 million, or 0.36% of total assets in the linked quarter.

The allowance for credit losses, including the unfunded credit commitments reserve, increased $321,000, or 0.9%, as increases in the general reserve from loan growth, increase in qualitative and quantative factors, and new specific reserves were partially offset by charge-offs. The allowance for credit losses, including unfunded credit commitment reserves, as a percent of total gross loans and leases was 1.17% compared to 1.19% in the prior quarter.

Second Quarter 2024 Compared to Second Quarter 2023

Net interest income increased $2.8 million, or 10.1%, to $30.5 million.

• The increase in net interest income primarily reflects an increase in average gross loans and leases and an increase in fees in lieu of interest, partially offset by net interest margin compression. Fees in lieu of interest increased to $1.2 million from $936,000. Excluding fees in lieu of interest, net interest income increased $2.5 million, or 9.3%.
• The yield on average interest-earning assets measured 6.92% compared to 6.47%. Excluding fees in lieu of interest, the yield on average interest-earning assets measured 7.11%, compared to 6.35%. This increase in yield was primarily due to the increase in short-term market rates and the reinvestment of cash flows from the securities and fixed-rate loan portfolios in a rising rate environment. The daily average effective federal funds rate increased 34 basis points compared to the prior year quarter, which equates to an average adjusted interest-earning asset beta of 132.35% for the three months ended June 30, 2024, compared to the prior year period.
• The rate paid for average interest-bearing core deposits increased 84 basis points to 4.09% from 3.25%. The rate paid for average total bank funding increased 61 basis points to 3.39% from 2.78%. The total bank funding beta was 179.41% for the three months ended June 30, 2024, compared to the prior year period.
• Net interest margin decreased 16 basis points to 3.65% from 3.81%. Adjusted net interest margin decreased 16 basis points to 3.47% from 3.63%.

The Company reported a credit loss provision expense of $1.7 million, compared to $2.2 million in the second quarter of 2023. The decrease compared to the prior year quarter is mainly due to a decrease in specific reserves related to the Equipment Finance borrowers in the commercial and industrial lending portfolio and lower loan growth, partially offset by quantative factors.

Non-interest income increased $51,000, or 0.7%, to $7.4 million.

• Private Wealth fee income increased $568,000, or 19.6%, to $3.5 million. Private Wealth assets under management and administration measured $3.249 billion at June 30, 2024, up $341.5 million, or 11.7%. The increase was due to successful new money efforts as well as market performance.
• Commercial loan swap fee income decreased by $820,000, or 83.9%, to $157,000. Swap fee income varies from period to period based on loan activity and the interest rate environment.
• Gain on sale of SBA loans decreased $95,000, or 21.4%, to $349,000. Management expects the SBA loan sales pipeline to build in the second half of the year as production increases and previously closed commitments fully fund and become eligible for sale.
• Service charges on deposits increased $185,000, or 24.2%, to $951,000, driven by new core deposit relationships.
• Other fee income increased $247,000, or 17.2%, to $1.7 million. The increase was primarily due to higher returns on the Company’s investments in SBIC mezzanine funds in the second quarter, partially offset by a decrease in gain on sale of lease assets. Income from SBIC mezzanine funds was $796,000 in the second quarter, compared to $389,000 in the prior year quarter. Income from SBIC mezzanine funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.

Non-interest expense increased $1.8 million, or 8.4%, to $23.9 million. Operating expense increased $2.1 million, or 9.8%, to $23.8 million.

• Compensation expense increased $1.1 million, or 7.2%, to $16.2 million. The increase in compensation expense was primarily due to an increase in average FTEs, annual merit increases, and promotions. These increases were partially offset by a decrease in share-based compensation. Average FTEs increased 3% to 351 in the second quarter of 2024, compared to 341 in the second quarter of 2023.
• Computer software expense increased $358,000, or 29.9%, to $1.6 million, primarily due to new investments in innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
• Professional fees expense increased $232,000, or 18.7%, to $1.5 million, primarily due to an increase in recruiting expense and a general increase in other professional consulting services for various projects.
• Data processing expense increased $121,000, or 11.4%, to $1.2 million, primarily due to an increase in core processing costs commensurate with loan and deposit account growth, Private Wealth assets under management and administration growth, and various project implementations.

Total period-end loans and leases receivable increased $310.8 million, or 11.6%, to $2.985 billion.

• CRE loans increased $183.6 million, or 11.5%, to $1.775 billion, primarily due to increases in non-owner occupied CRE and multi-family loans in the Wisconsin market.
• C&I loans increased $124.8 million, or 12.0%, to $1.162 billion, due to growth across the majority of the Bank’s products and geographies.

Total period-end core deposits grew $235.9 million, or 11.4%, to $2.310 billion, and the average rate paid increased 78 basis points to 3.34%. The increase in average rate paid on core deposits was primarily due to heightened competition and a change in deposit mix. Total average core deposits grew $339.2 million, or 16.7%, to $2.375 billion.

Period-end wholesale funding increased $78.2 million to $853.9 million.

• Wholesale deposits increased $120.4 million to $575.5 million, as the Bank utilized more wholesale deposits in lieu of FHLB advances to build excess liquidity and to match-fund fixed rate assets. The average rate paid on wholesale deposits decreased 15 basis points to 4.09 and the weighted average effective maturity increased to 4.0 years from 3.7 years. Consistent with our balance sheet strategy to use the most efficient and cost-effective source of wholesale funding, the Company has entered into derivative contracts which hedge a portion of the wholesale deposits to reduce the fixed rate funding costs.
• FHLB advances and other borrowings decreased $42.3 million to $327.9 million. The average rate paid on FHLB advances increased 2 basis points to 2.69 and the weighted average original maturity increased to 5.3 years from 5.2 years.

Non-performing assets increased to $19.1 million, or 0.53% of total assets, compared to $15.8 million, or 0.48% of total assets, driven by past-due Equipment Finance loans within the C&I portfolio. Excluding one ABL loan for which we expect full repayment, non-performing assets totaled $12.6 million, or 0.35% of total assets.

The allowance for credit losses, including unfunded commitment reserves, increased $5.3 million to $35.0 million, compared to $29.7 million primarily due to an increase in specific reserves and loan growth, partially offset by an improvement in the economic forecast. The allowance for credit losses as a percent of total gross loans and leases was 1.17%, compared 1.11% in the prior year.

Investor Presentation

The Company has prepared investor presentation materials that management intends to use from time to time in discussions about the Company’s operations and performance. The presentation will be available for viewing in the Investor Relations section of the Company’s website at firstbusiness.bank and will also be furnished to the U.S. Securities and Exchange Commission on July 25, 2024.

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.
• 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 service, 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.
• The Company may be subject to increases in FDIC insurance assessments.

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, 2023 and other filings with the Securities and Exchange Commission.

 

SELECTED FINANCIAL CONDITION DATA

 

(Unaudited)

 

As of

(in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

81,080

 

 

$

72,040

 

 

$

139,510

 

 

$

132,915

 

 

$

112,809

 

Securities available-for-sale, at fair value

 

 

308,852

 

 

 

314,114

 

 

 

297,006

 

 

 

272,163

 

 

 

253,626

 

Securities held-to-maturity, at amortized cost

 

 

7,082

 

 

 

8,131

 

 

 

8,503

 

 

 

8,689

 

 

 

9,830

 

Loans held for sale

 

 

6,507

 

 

 

4,855

 

 

 

4,589

 

 

 

4,168

 

 

 

2,191

 

Loans and leases receivable

 

 

2,985,414

 

 

 

2,910,864

 

 

 

2,850,261

 

 

 

2,764,014

 

 

 

2,674,583

 

Allowance for credit losses

 

 

(33,088

)

 

 

(32,799

)

 

 

(31,275

)

 

 

(29,331

)

 

 

(28,115

)

Loans and leases receivable, net

 

 

2,952,326

 

 

 

2,878,065

 

 

 

2,818,986

 

 

 

2,734,683

 

 

 

2,646,468

 

Premises and equipment, net

 

 

6,381

 

 

 

6,268

 

 

 

6,190

 

 

 

6,157

 

 

 

5,094

 

Repossessed assets

 

 

54

 

 

 

317

 

 

 

247

 

 

 

61

 

 

 

65

 

Right-of-use assets

 

 

6,041

 

 

 

6,297

 

 

 

6,559

 

 

 

6,800

 

 

 

7,049

 

Bank-owned life insurance

 

 

56,351

 

 

 

55,948

 

 

 

55,536

 

 

 

55,123

 

 

 

54,747

 

Federal Home Loan Bank stock, at cost

 

 

11,901

 

 

 

13,326

 

 

 

12,042

 

 

 

13,528

 

 

 

14,482

 

Goodwill and other intangible assets

 

 

11,841

 

 

 

11,950

 

 

 

12,023

 

 

 

12,110

 

 

 

12,073

 

Derivatives

 

 

70,773

 

 

 

69,703

 

 

 

55,597

 

 

 

93,702

 

 

 

70,440

 

Accrued interest receivable and other assets

 

 

97,872

 

 

 

90,344

 

 

 

91,058

 

 

 

78,751

 

 

 

76,864

 

Total assets

 

$

3,617,061

 

 

$

3,531,358

 

 

$

3,507,846

 

 

$

3,418,850

 

 

$

3,265,738

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Core deposits

 

$

2,309,635

 

 

$

2,297,843

 

 

$

2,339,071

 

 

$

2,189,264

 

 

$

2,073,744

 

Wholesale deposits

 

 

575,548

 

 

 

457,563

 

 

 

457,708

 

 

 

467,743

 

 

 

455,108

 

Total deposits

 

 

2,885,183

 

 

 

2,755,406

 

 

 

2,796,779

 

 

 

2,657,007

 

 

 

2,528,852

 

Federal Home Loan Bank advances and other borrowings

 

 

327,855

 

 

 

381,718

 

 

 

330,916

 

 

 

363,891

 

 

 

370,113

 

Lease liabilities

 

 

8,361

 

 

 

8,664

 

 

 

8,954

 

 

 

9,236

 

 

 

9,499

 

Derivatives

 

 

61,821

 

 

 

61,133

 

 

 

51,949

 

 

 

78,696

 

 

 

61,147

 

Accrued interest payable and other liabilities

 

 

28,671

 

 

 

26,649

 

 

 

29,660

 

 

 

29,262

 

 

 

23,495

 

Total liabilities

 

 

3,311,891

 

 

 

3,233,570

 

 

 

3,218,258

 

 

 

3,138,092

 

 

 

2,993,106

 

Total stockholders’ equity

 

 

305,170

 

 

 

297,788

 

 

 

289,588

 

 

 

280,758

 

 

 

272,632

 

Total liabilities and stockholders’ equity

 

$

3,617,061

 

 

$

3,531,358

 

 

$

3,507,846

 

 

$

3,418,850

 

 

$

3,265,738

 

 

STATEMENTS OF INCOME

 

(Unaudited)

 

As of and for the Three Months Ended

 

As of and for the Six Months Ended

(Dollars in thousands, except per share amounts)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Total interest income

 

$

57,910

 

$

55,783

 

 

$

54,762

 

$

50,941

 

$

47,161

 

 

$

113,693

 

 

$

89,226

 

Total interest expense

 

 

27,370

 

 

26,272

 

 

 

25,222

 

 

22,345

 

 

19,414

 

 

 

53,642

 

 

 

34,773

 

Net interest income

 

 

30,540

 

 

29,511

 

 

 

29,540

 

 

28,596

 

 

27,747

 

 

 

60,051

 

 

 

54,453

 

Provision for credit losses

 

 

1,713

 

 

2,326

 

 

 

2,573

 

 

1,817

 

 

2,231

 

 

 

4,039

 

 

 

3,793

 

Net interest income after provision for credit losses

 

 

28,827

 

 

27,185

 

 

 

26,967

 

 

26,779

 

 

25,516

 

 

 

56,012

 

 

 

50,660

 

Private wealth management service fees

 

 

3,461

 

 

3,111

 

 

 

2,933

 

 

2,945

 

 

2,893

 

 

 

6,571

 

 

 

5,547

 

Gain on sale of SBA loans

 

 

349

 

 

195

 

 

 

284

 

 

851

 

 

444

 

 

 

544

 

 

 

920

 

Service charges on deposits

 

 

951

 

 

940

 

 

 

848

 

 

835

 

 

766

 

 

 

1,890

 

 

 

1,448

 

Loan fees

 

 

826

 

 

847

 

 

 

869

 

 

786

 

 

905

 

 

 

1,674

 

 

 

1,708

 

Loss on sale of securities

 

 

—

 

 

(8

)

 

 

—

 

 

—

 

 

(45

)

 

 

(8

)

 

 

(45

)

Swap fees

 

 

157

 

 

198

 

 

 

438

 

 

992

 

 

977

 

 

 

355

 

 

 

1,534

 

Other non-interest income

 

 

1,681

 

 

1,474

 

 

 

1,722

 

 

2,021

 

 

1,434

 

 

 

3,156

 

 

 

4,672

 

Total non-interest income

 

 

7,425

 

 

6,757

 

 

 

7,094

 

 

8,430

 

 

7,374

 

 

 

14,182

 

 

 

15,784

 

Compensation

 

 

16,215

 

 

16,157

 

 

 

14,450

 

 

15,573

 

 

15,129

 

 

 

32,372

 

 

 

31,037

 

Occupancy

 

 

593

 

 

607

 

 

 

571

 

 

575

 

 

603

 

 

 

1,200

 

 

 

1,234

 

Professional fees

 

 

1,472

 

 

1,571

 

 

 

1,313

 

 

1,429

 

 

1,240

 

 

 

3,043

 

 

 

2,583

 

Data processing

 

 

1,182

 

 

1,018

 

 

 

936

 

 

953

 

 

1,061

 

 

 

2,200

 

 

 

1,936

 

Marketing

 

 

850

 

 

818

 

 

 

724

 

 

758

 

 

779

 

 

 

1,669

 

 

 

1,407

 

Equipment

 

 

335

 

 

345

 

 

 

340

 

 

349

 

 

355

 

 

 

680

 

 

 

650

 

Computer software

 

 

1,555

 

 

1,418

 

 

 

1,317

 

 

1,289

 

 

1,197

 

 

 

2,973

 

 

 

2,379

 

FDIC insurance

 

 

612

 

 

610

 

 

 

585

 

 

680

 

 

580

 

 

 

1,222

 

 

 

974

 

Other non-interest expense

 

 

1,065

 

 

798

 

 

 

1,352

 

 

1,583

 

 

1,087

 

 

 

1,863

 

 

 

1,598

 

Total non-interest expense

 

 

23,879

 

 

23,342

 

 

 

21,588

 

 

23,189

 

 

22,031

 

 

 

47,222

 

 

 

43,798

 

Income before income tax expense

 

 

12,373

 

 

10,600

 

 

 

12,473

 

 

12,020

 

 

10,859

 

 

 

22,972

 

 

 

22,646

 

Income tax expense

 

 

1,917

 

 

1,752

 

 

 

2,703

 

 

2,079

 

 

2,522

 

 

 

3,668

 

 

 

5,330

 

Net income

 

$

10,456

 

$

8,848

 

 

$

9,770

 

$

9,941

 

$

8,337

 

 

$

19,304

 

 

$

17,316

 

Preferred stock dividends

 

 

219

 

 

219

 

 

 

219

 

 

218

 

 

219

 

 

 

438

 

 

 

438

 

Net income available to common shareholders

 

$

10,237

 

$

8,629

 

 

$

9,551

 

$

9,723

 

$

8,118

 

 

$

18,866

 

 

$

16,878

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings

 

$

1.23

 

$

1.04

 

 

$

1.15

 

$

1.17

 

$

0.98

 

 

$

2.26

 

 

$

2.02

 

Diluted earnings

 

 

1.23

 

 

1.04

 

 

 

1.15

 

 

1.17

 

 

0.98

 

 

 

2.26

 

 

 

2.02

 

Dividends declared

 

 

0.2500

 

 

0.2500

 

 

 

0.2275

 

 

0.2275

 

 

0.2275

 

 

 

0.5000

 

 

 

0.4550

 

Book value

 

 

35.35

 

 

34.41

 

 

 

33.39

 

 

32.32

 

 

31.34

 

 

 

35.35

 

 

 

31.34

 

Tangible book value

 

 

33.92

 

 

32.97

 

 

 

31.94

 

 

30.87

 

 

29.89

 

 

 

33.92

 

 

 

29.89

 

Weighted-average common shares outstanding(1)

 

 

8,113,246

 

 

8,125,319

 

 

 

8,110,462

 

 

8,107,641

 

 

8,061,841

 

 

 

8,154,445

 

 

 

8,140,831

 

Weighted-average diluted common shares outstanding(1)

 

 

8,113,246

 

 

8,125,319

 

 

 

8,110,462

 

 

8,107,641

 

 

8,061,841

 

 

 

8,154,445

 

 

 

8,140,831

 

(1)

Excluding participating securities.

 

NET INTEREST INCOME ANALYSIS

 

(Unaudited)

 

For the Three Months Ended

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

 

 

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)

 

$

1,765,743

 

$

29,299

 

6.64

%

 

$

1,721,186

 

$

28,120

 

6.54

%

 

$

1,546,487

 

$

23,671

 

6.12

%

Commercial and industrial loans(1)

 

 

1,146,312

 

 

23,869

 

8.33

 

 

 

1,115,724

 

 

22,724

 

8.15

 

 

 

987,534

 

 

20,020

 

8.11

 

Consumer and other loans(1)

 

 

50,872

 

 

725

 

5.70

 

 

 

50,544

 

 

705

 

5.58

 

 

 

49,216

 

 

588

 

4.78

 

Total loans and leases receivable(1)

 

 

2,962,927

 

 

53,893

 

7.28

 

 

 

2,887,454

 

 

51,549

 

7.14

 

 

 

2,583,237

 

 

44,279

 

6.86

 

Mortgage-related securities(2)

 

 

261,828

 

 

2,609

 

3.99

 

 

 

241,940

 

 

2,276

 

3.76

 

 

 

192,564

 

 

1,421

 

2.95

 

Other investment securities(3)

 

 

60,780

 

 

443

 

2.92

 

 

 

67,980

 

 

518

 

3.05

 

 

 

60,790

 

 

392

 

2.58

 

FHLB stock

 

 

12,656

 

 

291

 

9.20

 

 

 

12,271

 

 

282

 

9.19

 

 

 

15,844

 

 

302

 

7.62

 

Short-term investments

 

 

48,836

 

 

674

 

5.52

 

 

 

85,072

 

 

1,158

 

5.44

 

 

 

61,316

 

 

767

 

5.00

 

Total interest-earning assets

 

 

3,347,027

 

 

57,910

 

6.92

 

 

 

3,294,717

 

 

55,783

 

6.77

 

 

 

2,913,751

 

 

47,161

 

6.47

 

Non-interest-earning assets

 

 

245,188

 

 

 

 

 

 

233,224

 

 

 

 

 

 

213,483

 

 

 

 

Total assets

 

$

3,592,215

 

 

 

 

 

$

3,527,941

 

 

 

 

 

$

3,127,234

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction accounts

 

$

880,752

 

 

8,737

 

3.97

 

 

$

862,896

 

 

8,447

 

3.92

 

 

$

670,698

 

 

5,455

 

3.25

 

Money market

 

 

815,846

 

 

8,264

 

4.05

 

 

 

761,893

 

 

7,565

 

3.97

 

 

 

633,817

 

 

4,617

 

2.91

 

Certificates of deposit

 

 

241,535

 

 

2,803

 

4.64

 

 

 

278,248

 

 

3,210

 

4.61

 

 

 

295,785

 

 

2,946

 

3.98

 

Wholesale deposits

 

 

476,149

 

 

4,871

 

4.09

 

 

 

457,536

 

 

4,615

 

4.03

 

 

 

332,387

 

 

3,523

 

4.24

 

Total interest-bearing deposits

 

 

2,414,282

 

 

24,675

 

4.09

 

 

 

2,360,573

 

 

23,837

 

4.04

 

 

 

1,932,687

 

 

16,541

 

3.42

 

FHLB advances

 

 

294,043

 

 

1,974

 

2.69

 

 

 

287,307

 

 

1,717

 

2.39

 

 

 

367,129

 

 

2,452

 

2.67

 

Other borrowings

 

 

49,481

 

 

721

 

5.83

 

 

 

49,457

 

 

718

 

5.81

 

 

 

34,538

 

 

421

 

4.88

 

Total interest-bearing liabilities

 

 

2,757,806

 

 

27,370

 

3.97

 

 

 

2,697,337

 

 

26,272

 

3.90

 

 

 

2,334,354

 

 

19,414

 

3.33

 

Non-interest-bearing demand deposit accounts

 

 

436,968

 

 

 

 

 

 

443,416

 

 

 

 

 

 

435,556

 

 

 

 

Other non-interest-bearing liabilities

 

 

95,484

 

 

 

 

 

 

93,307

 

 

 

 

 

 

87,148

 

 

 

 

Total liabilities

 

 

3,290,258

 

 

 

 

 

 

3,234,060

 

 

 

 

 

 

2,857,058

 

 

 

 

Stockholders’ equity

 

 

301,957

 

 

 

 

 

 

293,881

 

 

 

 

 

 

270,176

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,592,215

 

 

 

 

 

$

3,527,941

 

 

 

 

 

$

3,127,234

 

 

 

 

Net interest income

 

 

 

$

30,540

 

 

 

 

 

$

29,511

 

 

 

 

 

$

27,747

 

 

Interest rate spread

 

 

 

 

 

2.95

%

 

 

 

 

 

2.88

%

 

 

 

 

 

3.15

%

Net interest-earning assets

 

$

589,221

 

 

 

 

 

$

597,380

 

 

 

 

 

$

579,397

 

 

 

 

Net interest margin

 

 

 

 

 

3.65

%

 

 

 

 

 

3.58

%

 

 

 

 

 

3.81

%

(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.

 

For the Six Months Ended June 30,

 

 

2024

 

2023

 

 

Average Balance

 

Interest

 

Average Yield/Rate(4)

 

Average Balance

 

Interest

 

Average Yield/Rate(4)

 

 

(Dollars in Thousands)

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate and other mortgage loans(1)

 

$

1,743,465

 

$

57,419

 

6.59

%

 

$

1,532,348

 

$

45,389

 

5.92

%

Commercial and industrial loans(1)

 

 

1,131,018

 

 

46,593

 

8.24

 

 

 

952,192

 

 

37,577

 

7.89

 

Consumer and other loans(1)

 

 

50,708

 

 

1,430

 

5.64

 

 

 

47,960

 

 

1,128

 

4.70

 

Total loans and leases receivable(1)

 

 

2,925,191

 

 

105,442

 

7.21

 

 

 

2,532,500

 

 

84,094

 

6.64

 

Mortgage-related securities(2)

 

 

251,884

 

 

4,885

 

3.88

 

 

 

187,556

 

 

2,691

 

2.87

 

Other investment securities(3)

 

 

64,380

 

 

961

 

2.99

 

 

 

58,270

 

 

712

 

2.44

 

FHLB and FRB stock

 

 

12,464

 

 

574

 

9.21

 

 

 

16,481

 

 

629

 

7.63

 

Short-term investments

 

 

66,953

 

 

1,831

 

5.47

 

 

 

45,022

 

 

1,100

 

4.89

 

Total interest-earning assets

 

 

3,320,872

 

 

113,693

 

6.85

 

 

 

2,839,829

 

 

89,226

 

6.28

 

Non-interest-earning assets

 

 

239,206

 

 

 

 

 

 

216,482

 

 

 

 

Total assets

 

$

3,560,078

 

 

 

 

 

$

3,056,311

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Transaction accounts

 

$

871,824

 

 

17,184

 

3.94

 

 

$

619,352

 

 

9,295

 

3.00

 

Money market accounts

 

 

788,869

 

 

15,829

 

4.01

 

 

 

666,385

 

 

9,114

 

2.74

 

Certificates of deposit

 

 

259,891

 

 

6,013

 

4.63

 

 

 

266,099

 

 

5,064

 

3.81

 

Wholesale deposits

 

 

466,843

 

 

9,486

 

4.06

 

 

 

260,485

 

 

5,498

 

4.22

 

Total interest-bearing deposits

 

 

2,387,427

 

 

48,512

 

4.06

 

 

 

1,812,321

 

 

28,971

 

3.20

 

FHLB advances

 

 

290,675

 

 

3,691

 

2.54

 

 

 

382,533

 

 

4,913

 

2.57

 

Other borrowings

 

 

49,469

 

 

1,439

 

5.82

 

 

 

35,660

 

 

889

 

4.99

 

Total interest-bearing liabilities

 

 

2,727,571

 

 

53,642

 

3.93

 

 

 

2,230,514

 

 

34,773

 

3.12

 

Non-interest-bearing demand deposit accounts

 

 

440,192

 

 

 

 

 

 

466,491

 

 

 

 

Other non-interest-bearing liabilities

 

 

94,396

 

 

 

 

 

 

92,716

 

 

 

 

Total liabilities

 

 

3,262,159

 

 

 

 

 

 

2,789,721

 

 

 

 

Stockholders’ equity

 

 

297,919

 

 

 

 

 

 

266,590

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,560,078

 

 

 

 

 

$

3,056,311

 

 

 

 

Net interest income

 

 

 

$

60,051

 

 

 

 

 

$

54,453

 

 

Interest rate spread

 

 

 

 

 

2.91

%

 

 

 

 

 

3.17

%

Net interest-earning assets

 

$

593,301

 

 

 

 

 

$

609,315

 

 

 

 

Net interest margin

 

 

 

 

 

3.62

%

 

 

 

 

 

3.83

%

 

ASSET AND LIABILITY BETA ANALYSIS

 

 

 

For the Three Months Ended

(Unaudited)

 

June 30, 2024

 

March 31, 2024

 

 

 

June 30, 2023

 

 

 

December 31, 2021

 

 

 

 

Average Yield/Rate(3)

 

Average Yield/Rate(3)

 

Increase (Decrease)

 

Average Yield/Rate(3)

 

Increase (Decrease)

 

Average Yield/Rate(3)

 

Increase (Decrease)

Total loans and leases receivable (a)

 

7.28

%

 

7.21

%

 

0.07

%

 

6.86

%

 

0.42

%

 

4.13

%

 

3.15

%

Total interest-earning assets(b)

 

6.92

%

 

6.85

%

 

0.07

%

 

6.47

%

 

0.45

%

 

3.81

%

 

3.11

%

Adjusted total loans and leases receivable (1)(c)

 

7.11

%

 

7.06

%

 

0.05

%

 

6.71

%

 

0.40

%

 

3.82

%

 

3.29

%

Adjusted total interest-earning assets (1)(d)

 

6.77

%

 

6.71

%

 

0.06

%

 

6.35

%

 

0.42

%

 

3.54

%

 

3.23

%

Total core deposits(e)

 

3.34

%

 

3.20

%

 

0.14

%

 

2.56

%

 

0.78

%

 

0.13

%

 

3.21

%

Total bank funding(f)

 

3.39

%

 

3.27

%

 

0.12

%

 

2.78

%

 

0.61

%

 

0.33

%

 

3.06

%

Net interest margin(g)

 

3.65

%

 

3.69

%

 

(0.04

)%

 

3.81

%

 

(0.16

)%

 

3.39

%

 

0.26

%

Adjusted net interest margin(h)

 

3.47

%

 

3.50

%

 

(0.03

)%

 

3.63

%

 

(0.16

)%

 

3.18

%

 

0.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective fed funds rate (2)(i)

 

5.33

%

 

5.33

%

 

—

 

 

4.99

%

 

0.34

%

 

0.08

%

 

5.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beta Calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases receivable(a)/(i)

 

 

 

 

 

 

 

 

 

122.2

%

 

 

 

59.9

%

Total interest-earning assets(b)/(i)

 

 

 

 

 

 

 

 

 

132.6

%

 

 

 

59.3

%

Adjusted total loans and leases receivable (1)(c)/(i)

 

 

 

 

 

 

 

 

 

117.6

%

 

 

 

62.7

%

Adjusted total interest-earning assets (1)(d)/(i)

 

 

 

 

 

 

 

 

 

123.5

%

 

 

 

61.5

%

Total core deposits(e/i)

 

 

 

 

 

 

 

 

 

229.4

%

 

 

 

61.1

%

Total bank funding(f)/(i)

 

 

 

 

 

 

 

 

 

179.4

%

 

 

 

58.3

%

Net interest margin(g/i)

 

 

 

 

 

 

 

 

 

(47.1

)%

 

 

 

5.0

%

Adjusted net interest margin(h/i)

 

 

 

 

 

 

 

 

 

(47.1

)%

 

 

 

5.5

%

(1)

Excluding fees in lieu of interest.

(2)

Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rate [DFF]. Retrieved from FRED, Federal Reserve Bank of St. Louis. Represents average daily rate.

(3)

Represents annualized yields/rates.

 

PROVISION FOR CREDIT LOSS COMPOSITION

 

(Unaudited)

 

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Change due to qualitative factor changes

 

$

496

 

 

$

740

 

 

$

(432

)

 

$

506

 

 

$

(50

)

 

$

1,237

 

 

$

(41

)

Change due to quantitative factor changes

 

 

150

 

 

 

(199

)

 

 

(260

)

 

 

(1,372

)

 

 

(295

)

 

 

(49

)

 

 

179

 

Charge-offs

 

 

1,583

 

 

 

921

 

 

 

724

 

 

 

562

 

 

 

329

 

 

 

2,504

 

 

 

495

 

Recoveries

 

 

(191

)

 

 

(227

)

 

 

(114

)

 

 

(84

)

 

 

(245

)

 

 

(418

)

 

 

(351

)

Change in reserves on individually evaluated loans, net

 

 

(1,037

)

 

 

629

 

 

 

2,008

 

 

 

1,265

 

 

 

1,093

 

 

 

(409

)

 

 

1,057

 

Change due to loan growth, net

 

 

680

 

 

 

354

 

 

 

629

 

 

 

817

 

 

 

1,227

 

 

 

1,035

 

 

 

2,206

 

Change in unfunded commitment reserves

 

 

32

 

 

 

108

 

 

 

17

 

 

 

123

 

 

 

172

 

 

 

139

 

 

 

248

 

Total provision for credit losses

 

$

1,713

 

 

$

2,326

 

 

$

2,572

 

 

$

1,817

 

 

$

2,231

 

 

$

4,039

 

 

$

3,793

 

 

PERFORMANCE RATIOS

 

 

 

For the Three Months Ended

 

For the Six Months Ended

(Unaudited)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Return on average assets (annualized)

 

1.14

%

 

0.98

%

 

1.11

%

 

1.19

%

 

1.04

%

 

1.06

%

 

1.10

%

Return on average common equity (annualized)

 

14.12

%

 

12.24

%

 

13.99

%

 

14.62

%

 

12.58

%

 

13.20

%

 

13.26

%

Efficiency ratio

 

62.75

%

 

63.76

%

 

58.34

%

 

61.96

%

 

61.68

%

 

63.25

%

 

61.85

%

Interest rate spread

 

2.95

%

 

2.88

%

 

2.97

%

 

3.07

%

 

3.15

%

 

2.91

%

 

3.17

%

Net interest margin

 

3.65

%

 

3.58

%

 

3.69

%

 

3.76

%

 

3.81

%

 

3.62

%

 

3.83

%

Average interest-earning assets to average interest-bearing liabilities

 

121.37

%

 

122.15

%

 

123.02

%

 

123.59

%

 

124.82

%

 

121.75

%

 

127.32

%

 

ASSET QUALITY RATIOS

 

(Unaudited)

 

As of

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Non-accrual loans and leases

 

$

18,999

 

 

$

19,829

 

 

$

20,597

 

 

$

17,628

 

 

$

15,721

 

Repossessed assets

 

 

54

 

 

 

317

 

 

 

247

 

 

 

61

 

 

 

65

 

Total non-performing assets

 

$

19,053

 

 

$

20,146

 

 

$

20,844

 

 

$

17,689

 

 

$

15,786

 

Non-accrual loans and leases as a percent of total gross loans and leases

 

 

0.64

%

 

 

0.68

%

 

 

0.72

%

 

 

0.64

%

 

 

0.59

%

Non-performing assets as a percent of total gross loans and leases plus repossessed assets

 

 

0.64

%

 

 

0.69

%

 

 

0.73

%

 

 

0.64

%

 

 

0.59

%

Non-performing assets as a percent of total assets

 

 

0.53

%

 

 

0.57

%

 

 

0.59

%

 

 

0.52

%

 

 

0.48

%

Allowance for credit losses as a percent of total gross loans and leases

 

 

1.17

%

 

 

1.19

%

 

 

1.16

%

 

 

1.12

%

 

 

1.11

%

Allowance for credit losses as a percent of non-accrual loans and leases

 

 

183.96

%

 

 

174.64

%

 

 

160.21

%

 

 

176.06

%

 

 

188.90

%

 

NET CHARGE-OFFS (RECOVERIES)

 

(Unaudited)

 

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Charge-offs

 

$

1,583

 

 

$

921

 

 

$

724

 

 

$

562

 

 

$

329

 

 

$

2,504

 

 

$

495

 

Recoveries

 

 

(191

)

 

 

(227

)

 

 

(114

)

 

 

(84

)

 

 

(245

)

 

 

(418

)

 

 

(351

)

Net charge-offs (recoveries)

 

$

1,392

 

 

$

694

 

 

$

610

 

 

$

478

 

 

$

84

 

 

$

2,086

 

 

$

144

 

Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)

 

 

0.19

%

 

 

0.10

%

 

 

0.09

%

 

 

0.07

%

 

 

0.01

%

 

 

0.07

%

 

 

0.01

%

 

CAPITAL RATIOS

 

 

 

As of and for the Three Months Ended

(Unaudited)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Total capital to risk-weighted assets

 

11.45

%

 

11.36

%

 

11.19

%

 

11.20

%

 

10.70

%

Tier I capital to risk-weighted assets

 

8.99

%

 

8.86

%

 

8.74

%

 

8.74

%

 

8.70

%

Common equity tier I capital to risk- weighted assets

 

8.64

%

 

8.51

%

 

8.38

%

 

8.37

%

 

8.32

%

Tier I capital to adjusted assets

 

8.51

%

 

8.45

%

 

8.43

%

 

8.65

%

 

8.80

%

Tangible common equity to tangible assets

 

7.80

%

 

7.78

%

 

7.60

%

 

7.53

%

 

7.64

%

 

LOAN AND LEASE RECEIVABLE COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

Commercial real estate - owner occupied

 

$

258,636

 

 

$

263,748

 

 

$

256,479

 

 

$

236,058

 

 

$

244,039

 

Commercial real estate - non-owner occupied

 

 

777,704

 

 

 

792,858

 

 

 

773,494

 

 

 

753,517

 

 

 

715,309

 

Construction

 

 

229,181

 

 

 

202,382

 

 

 

193,080

 

 

 

211,828

 

 

 

217,069

 

Multi-family

 

 

470,176

 

 

 

453,321

 

 

 

450,529

 

 

 

409,714

 

 

 

392,297

 

1-4 family

 

 

39,680

 

 

 

27,482

 

 

 

26,289

 

 

 

24,235

 

 

 

23,063

 

Total commercial real estate

 

 

1,775,377

 

 

 

1,739,791

 

 

 

1,699,871

 

 

 

1,635,352

 

 

 

1,591,777

 

Commercial and industrial

 

 

1,161,711

 

 

 

1,120,779

 

 

 

1,105,835

 

 

 

1,083,698

 

 

 

1,036,921

 

Consumer and other

 

 

48,145

 

 

 

50,020

 

 

 

44,312

 

 

 

44,808

 

 

 

45,743

 

Total gross loans and leases receivable

 

 

2,985,233

 

 

 

2,910,590

 

 

 

2,850,018

 

 

 

2,763,858

 

 

 

2,674,441

 

Less:

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

33,088

 

 

 

32,799

 

 

 

31,275

 

 

 

29,331

 

 

 

28,115

 

Deferred loan fees

 

 

(181

)

 

 

(274

)

 

 

(243

)

 

 

(156

)

 

 

(142

)

Loans and leases receivable, net

 

$

2,952,326

 

 

$

2,878,065

 

 

$

2,818,986

 

 

$

2,734,683

 

 

$

2,646,468

 

 

DEPOSIT COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Non-interest-bearing transaction accounts

 

$

406,804

 

 

$

400,267

 

 

$

445,376

 

 

$

430,011

 

 

$

419,294

 

Interest-bearing transaction accounts

 

 

841,146

 

 

 

818,080

 

 

 

895,319

 

 

 

779,789

 

 

 

719,198

 

Money market accounts

 

 

837,569

 

 

 

813,467

 

 

 

711,245

 

 

 

694,199

 

 

 

641,969

 

Certificates of deposit

 

 

224,116

 

 

 

266,029

 

 

 

287,131

 

 

 

285,265

 

 

 

293,283

 

Wholesale deposits

 

 

575,548

 

 

 

457,563

 

 

 

457,708

 

 

 

467,743

 

 

 

455,108

 

Total deposits

 

$

2,885,183

 

 

$

2,755,406

 

 

$

2,796,779

 

 

$

2,657,007

 

 

$

2,528,852

 

 

 

 

 

 

 

 

 

 

 

 

Uninsured deposits

 

$

1,011,977

 

 

$

995,428

 

 

$

994,687

 

 

$

916,083

 

 

$

867,397

 

Less: uninsured deposits collateralized by pledged assets

 

 

34,810

 

 

 

16,622

 

 

 

17,051

 

 

 

28,873

 

 

 

37,670

 

Total uninsured, net of collateralized deposits

 

 

977,167

 

 

 

978,806

 

 

 

977,636

 

 

 

887,210

 

 

 

829,727

 

% of total deposits

 

 

33.9

%

 

 

35.5

%

 

 

35.0

%

 

 

33.4

%

 

 

32.8

%

 

SOURCES OF LIQUIDITY

 

(Unaudited)

 

As of

(in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Short-term investments

 

$

54,680

 

$

46,984

 

$

107,162

 

$

109,612

 

$

80,510

Collateral value of unencumbered pledged loans

 

 

401,602

 

 

340,639

 

 

367,471

 

 

315,067

 

 

265,884

Market value of unencumbered securities

 

 

289,104

 

 

288,965

 

 

259,791

 

 

236,618

 

 

217,074

Readily accessible liquidity

 

 

745,386

 

 

676,588

 

 

734,424

 

 

661,297

 

 

563,468

 

 

 

 

 

 

 

 

 

 

 

Fed fund lines

 

 

45,000

 

 

45,000

 

 

45,000

 

 

45,000

 

 

45,000

Excess brokered CD capacity(1)

 

 

1,051,678

 

 

1,166,661

 

 

1,231,791

 

 

1,090,864

 

 

1,017,590

Total liquidity

 

$

1,842,064

 

$

1,888,249

 

$

2,011,215

 

$

1,797,161

 

$

1,626,058

Total uninsured, net of collateralized deposits

 

 

977,167

 

 

978,806

 

 

977,636

 

 

887,210

 

 

829,727

(1)

Bank internal policy limits brokered CDs to 50% of total bank funding when combined with FHLB advances.

 

PRIVATE WEALTH OFF-BALANCE SHEET COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Trust assets under management

 

$

3,008,897

 

$

3,080,951

 

$

2,898,516

 

$

2,715,801

 

$

2,707,390

Trust assets under administration

 

 

239,766

 

 

239,249

 

 

223,013

 

 

198,864

 

 

199,729

Total trust assets

 

$

3,248,663

 

$

3,320,200

 

$

3,121,529

 

$

2,914,665

 

$

2,907,119

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)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Common stockholders’ equity

 

$

293,178

 

 

$

285,796

 

 

$

277,596

 

 

$

268,766

 

 

$

260,640

 

Less: Goodwill and other intangible assets

 

 

(11,841

)

 

 

(11,950

)

 

 

(12,023

)

 

 

(12,110

)

 

 

(12,073

)

Tangible common equity

 

$

281,337

 

 

$

273,846

 

 

$

265,573

 

 

$

256,656

 

 

$

248,567

 

Common shares outstanding

 

 

8,294,589

 

 

 

8,306,573

 

 

 

8,314,778

 

 

 

8,315,186

 

 

 

8,315,465

 

Book value per share

 

$

35.35

 

 

$

34.41

 

 

$

33.39

 

 

$

32.32

 

 

$

31.34

 

Tangible book value per share

 

 

33.92

 

 

 

32.97

 

 

 

31.94

 

 

 

30.87

 

 

 

29.89

 

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, 2023. 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)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

Common stockholders’ equity

 

$

293,178

 

 

$

285,796

 

 

$

277,596

 

 

$

268,766

 

 

$

260,640

 

Less: Goodwill and other intangible assets

 

 

(11,841

)

 

 

(11,950

)

 

 

(12,023

)

 

 

(12,110

)

 

 

(12,073

)

Tangible common equity (a)

 

$

281,337

 

 

$

273,846

 

 

$

265,573

 

 

$

256,656

 

 

$

248,567

 

Total assets

 

$

3,617,061

 

 

$

3,531,358

 

 

$

3,507,846

 

 

$

3,418,850

 

 

$

3,265,738

 

Less: Goodwill and other intangible assets

 

 

(11,841

)

 

 

(11,950

)

 

 

(12,023

)

 

 

(12,110

)

 

 

(12,073

)

Tangible assets (b)

 

$

3,605,220

 

 

$

3,519,408

 

 

$

3,495,823

 

 

$

3,406,740

 

 

$

3,253,665

 

Tangible common equity to tangible assets

 

 

7.80

%

 

 

7.78

%

 

 

7.60

%

 

 

7.53

%

 

 

7.64

%

 

 

 

 

 

 

 

 

 

 

 

Fair Value Adjustments:

 

 

 

 

 

 

 

 

 

 

Financial assets - MTM (c)

 

$

(17,432

)

 

$

(29,019

)

 

$

(29,136

)

 

$

(45,489

)

 

$

(43,403

)

Financial liabilities - MTM (d)

 

$

(721

)

 

$

12,560

 

 

$

11,945

 

 

$

23,436

 

 

$

21,916

 

Net MTM, after-tax e = (c-d)*(1-21%)

 

$

(14,341

)

 

$

(13,003

)

 

$

(13,581

)

 

$

(17,422

)

 

$

(16,975

)

 

 

 

 

 

 

 

 

 

 

 

Adjusted tangible equity f = (a-e)

 

$

266,996

 

 

$

260,843

 

 

$

251,992

 

 

$

239,234

 

 

$

231,592

 

Adjusted tangible assets g = (b-c)

 

$

3,587,788

 

 

$

3,490,389

 

 

$

3,466,687

 

 

$

3,361,251

 

 

$

3,210,262

 

Adjusted TCE ratio (f/g)

 

 

7.44

%

 

 

7.47

%

 

 

7.27

%

 

 

7.12

%

 

 

7.21

%

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 Six Months Ended

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Total non-interest expense

 

$

23,879

 

 

$

23,342

 

 

$

21,588

 

 

$

23,189

 

 

$

22,031

 

 

$

47,222

 

 

$

43,798

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (gain) on repossessed assets

 

 

65

 

 

 

86

 

 

 

4

 

 

 

4

 

 

 

(2

)

 

 

151

 

 

 

4

 

SBA recourse provision (benefit)

 

 

(9

)

 

 

126

 

 

 

210

 

 

 

242

 

 

 

341

 

 

 

117

 

 

 

323

 

Total operating expense (a)

 

$

23,823

 

 

$

23,130

 

 

$

21,374

 

 

$

22,943

 

 

$

21,692

 

 

$

46,954

 

 

$

43,471

 

Net interest income

 

$

30,540

 

 

$

29,511

 

 

$

29,540

 

 

$

28,596

 

 

$

27,747

 

 

$

60,051

 

 

$

54,453

 

Total non-interest income

 

 

7,425

 

 

 

6,757

 

 

 

7,094

 

 

 

8,430

 

 

 

7,374

 

 

 

14,182

 

 

 

15,784

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss on sale of securities

 

 

0

 

 

 

(8

)

 

 

—

 

 

 

—

 

 

 

(45

)

 

 

(8

)

 

 

(45

)

Adjusted non-interest income

 

 

7,425

 

 

 

6,765

 

 

 

7,094

 

 

 

8,430

 

 

 

7,419

 

 

 

14,190

 

 

 

15,829

 

Total operating revenue (b)

 

$

37,965

 

 

$

36,276

 

 

$

36,634

 

 

$

37,026

 

 

$

35,166

 

 

$

74,241

 

 

$

70,282

 

Efficiency ratio

 

 

62.75

%

 

 

63.76

%

 

 

58.34

%

 

 

61.96

%

 

 

61.68

%

 

 

63.25

%

 

 

61.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision adjusted earnings (b - a)

 

$

14,142

 

 

$

13,146

 

 

$

15,260

 

 

$

14,083

 

 

$

13,474

 

 

$

27,287

 

 

$

26,811

 

Average total assets

 

$

3,592,215

 

 

$

3,527,941

 

 

$

3,454,652

 

 

$

3,276,240

 

 

$

3,127,234

 

 

$

3,560,078

 

 

$

3,056,311

 

Pre-tax, pre-provision adjusted return on average assets

 

 

1.57

%

 

 

1.49

%

 

 

1.77

%

 

 

1.72

%

 

 

1.72

%

 

 

1.53

%

 

 

1.75

%

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 Six Months Ended

(Dollars in thousands)

 

June 30, 2024

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Interest income

 

$

57,910

 

 

$

55,783

 

 

$

54,762

 

 

$

50,941

 

 

$

47,161

 

 

$

113,693

 

 

$

89,226

 

Interest expense

 

 

27,370

 

 

 

26,272

 

 

 

25,222

 

 

 

22,345

 

 

 

19,414

 

 

 

53,642

 

 

 

34,773

 

Net interest income (a)

 

 

30,540

 

 

 

29,511

 

 

 

29,540

 

 

 

28,596

 

 

 

27,747

 

 

 

60,051

 

 

 

54,453

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees in lieu of interest

 

 

1,227

 

 

 

793

 

 

 

1,075

 

 

 

582

 

 

 

936

 

 

 

2,020

 

 

 

1,587

 

FRB interest income and FHLB dividend income

 

 

959

 

 

 

1,436

 

 

 

1,466

 

 

 

870

 

 

 

1,064

 

 

 

2,395

 

 

 

1,720

 

Adjusted net interest income (b)

 

$

28,354

 

 

$

27,282

 

 

$

26,999

 

 

$

27,144

 

 

$

25,747

 

 

$

55,636

 

 

$

51,146

 

Average interest-earning assets (c)

 

$

3,347,027

 

 

$

3,294,717

 

 

$

3,199,485

 

 

$

3,038,776

 

 

$

2,913,751

 

 

$

3,320,872

 

 

$

2,839,829

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average FRB cash and FHLB stock

 

 

61,082

 

 

 

97,036

 

 

 

99,118

 

 

 

54,677

 

 

 

76,678

 

 

 

79,059

 

 

 

61,001

 

Average non-accrual loans and leases

 

 

19,807

 

 

 

20,540

 

 

 

18,602

 

 

 

15,775

 

 

 

3,781

 

 

 

20,172

 

 

 

3,599

 

Adjusted average interest-earning assets (d)

 

$

3,266,138

 

 

$

3,177,141

 

 

$

3,081,765

 

 

$

2,968,324

 

 

$

2,833,292

 

 

$

3,221,641

 

 

$

2,775,229

 

Net interest margin (a / c)

 

 

3.65

%

 

 

3.58

%

 

 

3.69

%

 

 

3.76

%

 

 

3.81

%

 

 

3.62

%

 

 

3.83

%

Adjusted net interest margin (b / d)

 

 

3.47

%

 

 

3.43

%

 

 

3.50

%

 

 

3.66

%

 

 

3.63

%

 

 

3.45

%

 

 

3.69

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725162504/en/

First Business Financial Services, Inc. Brian D. Spielmann Chief Financial Officer 608-232-5977 bspielmann@firstbusiness.bank