First Business Financial Services (FBIZ) Q3 2024 earnings summary

Executive summary

• Achieved Q3 2024 net income of $10.3 million, driven by double-digit loan and deposit growth, stable net interest margin, and strong asset quality.

• Tangible book value per share increased 12.5% year-over-year and 9.7% annualized from the prior quarter, reflecting robust earnings and prudent balance sheet management.

• Private Wealth Management AUM reached $3.4 billion, up 16.6% year-over-year, with fee income up 10.8%.

• Strategic plan for 2024-2028 emphasizes innovative culture, talent development, digital transformation, and deepening business and private wealth relationships.

Financial highlights

• Loan balances grew $286 million (10.3% year-over-year); deposits increased $313 million (11.8% year-over-year).

• Net interest income rose 1.5% sequentially and 8.4% year-over-year; NIM for Q3 2024 was 3.64%, with adjusted NIM at 3.51%.

• Operating revenue reached $38.1 million, up from $37.0 million in Q3 2023.

• Efficiency ratio improved to 59.50% from 61.96% year-over-year; ROATCE at 13.4% YTD.

• Non-performing assets as a percentage of total assets remained low at 0.52%.

Outlook and guidance

• Management targets ROATCE ≥15% and tangible book value growth ≥10% per year by 2028.

• Long-term NIM target is 3.60%-3.65%, with some temporary pressure possible from deposit competition.

• Project continued double-digit loan and deposit growth, with C&I lending expected to outpace CRE.

• Fee income expected to recover in 2025, especially from SBA and SBIC mezzanine fund gains.

• Management expects positive annual operating leverage to resume in 2025 as NIM normalizes.