First Business Financial Services (FBIZ) Q1 2025 earnings summary

Executive summary

• Net income available to common shareholders rose to $11.0 million ($1.32 EPS) for Q1 2025, up from $8.6 million ($1.04 EPS) in Q1 2024, with ROAA at 1.14% and ROATCE at 14.12%.

• Achieved 9.2% annualized loan growth and 11.1% annualized core deposit growth from the previous quarter, with tangible book value per share up 9.2% annualized and 14% year-over-year.

• Operating revenue increased 13% year-over-year, driven by loan growth, net interest margin, and higher fee income.

• Private Wealth Management AUM reached a record $3.425 billion, with fee income up 12.2% year-over-year.

• Pre-tax, pre-provision adjusted earnings rose 23% year-over-year; efficiency ratio improved to 60.3% from 63.8%.

Financial highlights

• Net interest margin was 3.69%, up from 3.58% in Q1 2024; adjusted NIM (excluding fees in lieu of interest) was 3.46%.

• Loan balances grew $275 million (up nearly 10% year-over-year); total deposits increased $488 million (18% year-over-year), with core deposits up $66 million (over 11%).

• Non-performing assets declined 15.2% from the previous quarter to $24.1 million (0.61% of assets).

• Allowance for credit losses to total loans: 1.15%; to non-accrual loans: 151.8%.

• Tangible book value per share reached $37.58, up from $36.74 in Q4 2024 and $33.92 in Q1 2024.

Outlook and guidance

• Management targets 10% annual growth in loans, deposits, and revenue under most economic conditions.

• Net interest margin guidance remains at 3.60%-3.65%, likely at the higher end due to reclassification of loan fees.

• Effective tax rate expected between 16% and 18% for 2025.

• Strategic plan targets >15% ROATCE and ≥10% annual tangible book value growth by 2028.

• Expense growth to remain below targeted 10% revenue growth, aiming for positive operating leverage.