FBIZ Q3 Net Income Soars 37% on Strong Loan Growth, Non-Interest Gains

TL;DR

**FBIZ is crushing it with a 37% net income jump, making it a strong buy in the regional bank space.**

AI Summary

FIRST BUSINESS FINANCIAL SERVICES, INC. (FBIZ) reported a robust financial performance for the quarter ended September 30, 2025, with net income increasing by 36.7% to $14.393 million from $10.526 million in the prior year. Diluted earnings per common share also saw a significant jump to $1.70, up from $1.24 in Q3 2024. Total interest income rose to $63.746 million, a 7.4% increase from $59.327 million in Q3 2024, driven primarily by a $2.994 million increase in interest from loans and leases. Non-interest income surged by 36.5% to $9.640 million, largely due to a $1.248 million increase in other non-interest income and a $549,000 increase in bank-owned life insurance income. Total assets grew to $4.034 billion as of September 30, 2025, from $3.853 billion at December 31, 2024, reflecting a healthy expansion of the balance sheet. The provision for credit losses decreased to $1.440 million from $2.087 million, indicating improved credit quality or a more favorable economic outlook. However, cash and cash equivalents significantly decreased by $113.353 million for the nine months ended September 30, 2025, primarily due to net cash used in investing activities totaling $322.273 million, including substantial purchases of available-for-sale securities and investments in bank-owned life insurance policies.

Why It Matters

This strong performance from FBIZ, particularly the significant increase in net income and EPS, signals a healthy and growing regional bank, which is positive for investors seeking stable returns in the financial sector. The growth in loans and leases, alongside a decrease in the provision for credit losses, suggests effective risk management and a robust lending environment, potentially attracting more customers. For employees, this indicates a stable and potentially expanding company, while customers benefit from a financially sound institution. In a competitive market, FBIZ's ability to increase non-interest income and manage expenses effectively positions it well against larger banks, demonstrating its agility and specialized service offerings.

Risk Assessment

Risk Level: medium — While net income and EPS are up significantly, the substantial decrease in cash and cash equivalents by $113.353 million for the nine months ended September 30, 2025, raises liquidity concerns. This was driven by $322.273 million in net cash used in investing activities, including large purchases of available-for-sale securities and bank-owned life insurance, which could impact short-term financial flexibility.

Analyst Insight

Investors should consider FBIZ as a potential buy, given the strong net income growth and increased earnings per share. However, closely monitor the company's cash flow statements in future filings for any continued significant declines in cash and cash equivalents, as this could signal liquidity challenges despite strong profitability.

Financial Highlights

debt To Equity

9.69

revenue

$184,558,000

operating Margin

N/A

total Assets

$4,034,845,000

total Debt

$266,677,000

net Income

$14,393,000

eps

$1.70

gross Margin

N/A

cash Position

$44,349,000

revenue Growth

+6.7%

Revenue Breakdown

Key Numbers

• $14.393M — Net Income (Increased by 36.7% from $10.526M in Q3 2024)
• $1.70 — Diluted EPS (Increased from $1.24 in Q3 2024)
• $63.746M — Total Interest Income (Increased by 7.4% from $59.327M in Q3 2024)
• $9.640M — Total Non-Interest Income (Increased by 36.5% from $7.064M in Q3 2024)
• $4.034B — Total Assets (Increased from $3.853B at December 31, 2024)
• $1.440M — Provision for Credit Losses (Decreased from $2.087M in Q3 2024)
• $113.353M — Net Decrease in Cash and Cash Equivalents (For the nine months ended September 30, 2025, indicating significant cash outflow from investing activities)
• $322.273M — Net Cash Used in Investing Activities (For the nine months ended September 30, 2025, contributing to the decrease in cash and cash equivalents)

Key Players & Entities

• FIRST BUSINESS FINANCIAL SERVICES, INC. (company) — Registrant
• FBIZ (company) — Trading Symbol
• The Nasdaq Stock Market LLC (regulator) — Exchange where common stock is registered
• Securities and Exchange Commission (regulator) — Regulatory body for filing
• $14,393 (dollar_amount) — Net income for Q3 2025
• $10,526 (dollar_amount) — Net income for Q3 2024
• $1.70 (dollar_amount) — Diluted earnings per common share for Q3 2025
• $1.24 (dollar_amount) — Diluted earnings per common share for Q3 2024
• $4.034 billion (dollar_amount) — Total assets as of September 30, 2025
• $113,353 (dollar_amount) — Net decrease in cash and cash equivalents for the nine months ended September 30, 2025

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: The company's profitability is sensitive to changes in interest rates. Fluctuations in market interest rates can impact net interest income and the fair value of its investment portfolio. For example, rising rates could increase funding costs while not being fully passed on to loan customers, compressing margins.
• Credit Risk [high — financial]: The company is exposed to credit risk through its lending activities. The allowance for credit losses was $36,690,000 as of September 30, 2025. A significant increase in non-performing loans or a deterioration in the credit quality of borrowers could lead to higher provisions for credit losses and impact earnings.
• Economic Conditions [medium — market]: The company's financial performance is influenced by the overall economic environment. A recession or significant economic downturn could lead to increased loan delinquencies, reduced demand for financial services, and negatively impact asset values.
• Regulatory Compliance [medium — regulatory]: As a financial institution, the company is subject to extensive regulation. Changes in banking laws, regulations, or monetary policy could increase compliance costs or restrict business activities. Failure to comply could result in fines or other penalties.
• Cybersecurity and Data Security [medium — operational]: The company relies on technology to conduct its business and holds sensitive customer information. A breach of cybersecurity or data security could result in significant financial losses, reputational damage, and regulatory scrutiny.

Industry Context

First Business Financial Services, Inc. operates within the highly competitive banking and financial services sector. The industry is characterized by evolving customer preferences, technological advancements, and a dynamic interest rate environment. Banks are increasingly focusing on non-interest income streams and efficient balance sheet management to maintain profitability amidst margin pressures.

Regulatory Implications

As a regulated financial institution, FBIZ faces ongoing scrutiny regarding capital adequacy, liquidity, and consumer protection. Changes in monetary policy by the Federal Reserve and potential shifts in regulatory frameworks could impact its operating costs and strategic flexibility. Compliance with evolving regulations remains a critical operational focus.

What Investors Should Do

1. Monitor Net Interest Margin (NIM) trends.
2. Analyze the drivers of non-interest income growth.
3. Evaluate the impact of investing activities on liquidity.
4. Assess credit quality trends and provision levels.

Key Dates

• 2025-09-30: Quarterly Financial Reporting — Reported net income of $14.393 million, a 36.7% increase year-over-year, and diluted EPS of $1.70, up from $1.24 in Q3 2024. Total assets grew to $4.034 billion.
• 2025-09-30: Balance Sheet Date — Total assets stood at $4.034 billion, an increase from $3.853 billion at December 31, 2024. Deposits increased to $3.333 billion.
• 2025-09-30: Cash Flow Reporting Period End — For the nine months ended September 30, 2025, net cash used in investing activities was $322.273 million, leading to a $113.353 million decrease in cash and cash equivalents.

Glossary

Allowance for credit losses

An estimate of the amount of uncollectible loans and leases within a company's loan portfolio. (Indicates the company's assessment of potential loan defaults. A decrease from $35,785,000 to $36,690,000 (net increase) suggests a more conservative stance or anticipated credit deterioration, though the provision for credit losses decreased.)

Securities available-for-sale

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value on the balance sheet. (The company increased its holdings in these securities significantly, from $341,392,000 to $411,111,000, contributing to the use of cash in investing activities.)

Bank-owned life insurance (BOLI)

Life insurance policies purchased by a bank on the lives of its key employees or directors, with the bank as the beneficiary. (The company's investment in BOLI increased from $57,210,000 to $83,255,000, representing a strategic use of capital and a source of non-interest income.)

Federal Home Loan Bank stock

Stock purchased by member institutions from the Federal Home Loan Bank system, which provides liquidity to its members. (The company's investment in FHLB stock decreased from $11,616,000 to $9,605,000, potentially reflecting changes in liquidity needs or strategic asset allocation.)

Derivatives

Financial contracts whose value is derived from an underlying asset, index, or rate. Used for hedging or speculation. (The company holds significant derivative positions, with assets decreasing from $65,762,000 to $37,634,000 and liabilities decreasing from $57,068,000 to $38,726,000, indicating a reduction in derivative exposure or a change in market conditions.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, FIRST BUSINESS FINANCIAL SERVICES, INC. (FBIZ) has demonstrated strong top-line growth, with total interest income increasing by 6.7% to $184.558 million for the nine months ended September 30, 2025. Net income saw a substantial surge of 36.7% to $14.393 million, accompanied by a rise in diluted EPS to $1.70. Non-interest income also experienced robust growth of 36.5%, driven by increases in other non-interest income and bank-owned life insurance. Total assets expanded by 4.7% to $4.034 billion, indicating balance sheet growth. The provision for credit losses decreased, suggesting an improved outlook on credit quality or more favorable economic conditions.

Key Financial Figures

• $0.01 — nge on which registered Common Stock, $0.01 par value FBIZ The Nasdaq Stock Mar

Filing Documents

• fbiz-20250930.htm (10-Q) — 8563KB
• fbiz-ex31_1.htm (EX-31.1) — 15KB
• fbiz-ex31_2.htm (EX-31.2) — 15KB
• fbiz-ex32.htm (EX-32) — 10KB
• 0001193125-25-260778.txt ( ) — 33675KB
• fbiz-20250930.xsd (EX-101.SCH) — 1924KB
• fbiz-20250930_htm.xml (XML) — 10260KB

Financial Information

PART I. Financial Information 1

Financial Statements

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) 6 Notes to Unaudited Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 59

Controls and Procedures

Item 4. Controls and Procedures 59

Other Information

PART II. Other Information 61

Legal Proceedings

Item 1. Legal Proceedings 61

Risk Factors

Item 1A. Risk Factors 61

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61

Other Information

Item 5. Other Information 61

Exhibits

Item 6. Exhibits 62

Signatures

Signatures 63 Table of Contents

Fina ncial Information

PART I. Fina ncial Information

Financial Statements

Item 1. Financial Statements First Business Financial Services, Inc. Consolidated Balance Sheets (Unaudited) September 30, 2025 December 31, 2024 (Unaudited) (In Thousands, Except Share Data) Assets Cash and due from banks $ 36,275 $ 29,495 Short-term investments 8,074 128,207 Cash and cash equivalents 44,349 157,702 Securities available-for-sale, at fair value 411,111 341,392 Securities held-to-maturity, at amortized cost 5,584 6,741 Loans held for sale 13,482 13,498 Loans and leases receivable, net of allowance for credit losses of $ 36,690 and $ 35,785 , respectively 3,298,266 3,077,343 Premises and equipment, net 4,936 5,227 Repossessed assets — 51 Right-of-use assets, net 5,577 5,702 Bank-owned life insurance 83,255 57,210 Federal Home Loan Bank stock, at cost 9,605 11,616 Goodwill and other intangible assets 12,041 11,912 Derivatives 37,634 65,762 Accrued interest receivable and other assets 109,005 99,059 Total assets $ 4,034,845 $ 3,853,215 Liabilities and Stockholders' Equity Deposits $ 3,333,071 $ 3,107,140 Federal Home Loan Bank advances and other borrowings 266,677 320,049 Lease liabilities 7,687 7,926 Derivatives 38,726 57,068 Accrued interest payable and other liabilities 30,365 32,443 Total liabilities 3,676,526 3,524,626 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 September 30, 2025 and December 31, 2024 11,992 11,992 Common stock, $ 0.01 par value, 25,000,000 shares authorized, 9,491,981 and 9,433,637 shares issued, 8,324,387 and 8,293,928 shares outstanding at September 30, 2025 and December 31, 2024, respectively 96 95 Additional paid-in capital 95,814 93,545 Retained earnings 294,837 265,778 Accumulated other comprehensive loss (

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