First Business Financial Services Reports Strong Earnings Growth

First Business Financial Services ((FBIZ)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for First Business Financial Services painted a picture of a strong quarter with notable earnings growth, robust deposit and loan increases, and stable asset quality. Despite some challenges in the equipment finance portfolio and economic uncertainties related to trade policy and potential recession, the company remains optimistic about its prospects for 2025, driven by strategic initiatives and a diversified revenue stream.

Strong Financial Performance

First Business Financial Services reported a significant 23% increase in pre-tax pre-provision adjusted earnings over last year’s first quarter. Earnings per share saw a remarkable rise of 27%, reaching $1.32. Additionally, the tangible book value per share grew by 14%, underscoring the company’s solid financial footing.

Robust Deposit Growth

The company achieved impressive double-digit core deposit growth, with deposits increasing by $488 million or 18% from last year’s first quarter. Core deposits alone grew by $66 million, marking an over 11% increase, which highlights the company’s strong deposit base.

Loan and Revenue Growth

Loan balances grew by $275 million, nearly 10% over the same period last year, aligning with the company’s long-term growth objectives. First quarter revenue also increased by nearly 13% compared to the first quarter of 2024, showcasing healthy revenue expansion.

Stable Asset Quality

The company maintained stable asset quality, with non-performing assets declining by $4.3 million from the linked quarter. The weighted average risk rating showed minimal movement, indicating consistent asset management.

SBA Lending Momentum

SBA lending continued its strong momentum, with expectations for strong loan sale premiums to significantly contribute to revenue in 2025. This segment remains a key driver of the company’s growth strategy.

Equipment Finance Portfolio Challenges

Challenges were noted in the equipment finance portfolio, particularly in the transportation sector, where net charge-offs increased due to specific reserves on credits. This impacted the overall allowance for credit losses.

Economic Uncertainty

The company acknowledged rising economic uncertainties, particularly concerning changes in US trade policy and potential recession risks. These factors could pose challenges to the company’s growth trajectory.

Quarterly Variability in Fee Income

Fee income showed variability, with swap fee income decreasing by $475,000 in the first quarter. This variability was influenced by CRE activity, the rate environment, and client preferences.

Forward-Looking Guidance

Looking ahead, First Business Financial Services remains focused on maintaining strong asset quality and executing its strategic plan for long-term growth. The company achieved a 10% growth in loans and an 18% increase in total deposits over the same period last year. The net interest margin stood at 3.69%, reflecting stable balance sheet management. The company is optimistic about its strategic initiatives and diversified revenue streams driving future growth.

In summary, First Business Financial Services delivered a strong performance in the recent quarter, with notable growth in earnings, deposits, and loans. While challenges exist in the equipment finance portfolio and economic uncertainties loom, the company remains optimistic about its future, driven by strategic initiatives and a diversified revenue stream.