First Business Financial Services (FBIZ) Q4 2024 earnings summary

Executive summary

• Achieved record Q4 2024 earnings and operating revenue, driven by strong loan and deposit growth, stable net interest margin, and positive operating leverage.

• Tangible book value per share grew 23% annualized from Q3 and 15% year-over-year; efficiency ratio reached its lowest level since 2013.

• Full year 2024 return on average tangible common equity was 15.4%, or 14.6% excluding unusual items.

• EPS was $1.71, or $1.43 excluding a tax benefit and SBA recourse reserve; up 15% sequentially and 24% year-over-year.

• Private Wealth AUM reached $3.419 billion, with fee income up 16.8% year-over-year.

Financial highlights

• Net interest margin for Q4 was 3.77%, with adjusted NIM at 3.48% excluding elevated fees in lieu of interest.

• Earnings up 15% from Q3 and 24% year-over-year, even excluding a $0.28 per share boost from unusual items.

• Loan balances grew $264 million (10%) and total deposits increased $310 million (11%) year-over-year.

• Fee income rose 13% compared to both the previous quarter and prior year quarter.

• Efficiency ratio for 2024 was 60.61%, improving to 56.94% in Q4.

Outlook and guidance

• Management targets 10% annual loan, revenue, and fee income growth in 2025, with C&I lending expected to drive a higher share.

• Net interest margin expected to remain stable in the 3.60–3.65% range.

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

• Strategic plan targets ≥15% ROATCE and ≥10% annual TBV growth by 2028, with efficiency ratio below 60%.

• Continued focus on positive operating leverage and incremental efficiency improvements.