First Business Bank Posts Record Third-Quarter Earnings

The Tip Desk · November 10, 2026 · 4 min read

Net income available to common shareholders reached $16.4 million, or $1.95 a share, as core deposits funded loan growth and pre-tax, pre-provision earnings hit a record.

First Business Financial Services, Inc. (FBIZ), a Madison-based commercial bank, reported net income available to common shareholders of $16.4 million, or $1.95 a share, for the third quarter of 2026, a record that compared with $15.4 million, or $1.84 a share, in the second quarter.

Pre-tax, pre-provision adjusted earnings reached a record $21.3 million, up 7.6% from the linked quarter. Operating revenue was $47.5 million.

President and Chief Executive Officer Dave Seiler said annualized loan growth of approximately 10% was more than fully funded by 14% annualized core deposit growth, while a strong net interest margin and disciplined expense management drove the record pre-tax, pre-provision result.

Net interest income rose $936,000, or 2.5%, from the second quarter to $39.1 million. Average loans and leases receivable grew $66.0 million, or 7.4% annualized, and the yield on average interest-earning assets increased 2 basis points to 6.47%. A $193,000 decrease in prepayment fees partially offset the loan-growth contribution.

Net interest margin expanded 2 basis points from the linked quarter to 3.80%. The company said the linked-quarter increase reflected more favorable loan yields and deposit mix, including growth in non-interest-bearing demand deposits, as well as a modest favorable day-count impact, more than offsetting lower prepayment and asset-based loan fees. The company said net interest margin is expected to remain above its long-term target range of 3.60% to 3.65% during the fourth quarter and is expected to moderate from the third-quarter level as fee income normalizes.

Total gross period-end loans and leases receivable increased $88.6 million, or 9.9% annualized, to $3.677 billion. Commercial real estate loans rose $77.2 million, or 14.3% annualized, to $2.239 billion, primarily due to growth in Wisconsin markets. Commercial and industrial loans increased $9.4 million, or 2.7% annualized, to $1.390 billion, primarily due to growth in floorplan financing.

Period-end core deposits increased $101.3 million, or 14.1% annualized, to $2.979 billion, outpacing loan growth and lifting core deposits to 76.7% of total bank funding. The average rate paid on core deposits was stable at 2.41%. Wholesale funding, including FHLB advances and brokered deposits, decreased $103.1 million, or 10.24%, to $903.3 million. FHLB advances fell $159.4 million to $132.5 million.

Operating expense declined $706,000, or 2.6%, from the linked quarter to $26.2 million, primarily due to lower SBA-related compensation costs after the company’s exit from out-of-market SBA 7(a) lending. Compensation expense was $17.8 million. Average full-time equivalents were 352. The efficiency ratio improved to 55.12%. The company said it expects the operating expense run rate to increase from the third-quarter level, primarily reflecting investments in talent, technology, and marketing, and continues to expect modest positive operating leverage annually.

Non-interest income decreased $140,000, or 1.6%, to $8.4 million. Commercial loan swap fee income increased $393,000, or 242.6%, to $555,000. Other non-interest income decreased $494,000 to $1.0 million, primarily due to a decrease in limited partnership investment income.

The provision for credit losses was $1.9 million, down from $2.1 million in the linked quarter, primarily due to a smaller increase in quantitative factors and lower loan growth, partially offset by higher net charge-offs. Non-performing assets increased $2.2 million to $40.2 million, or 0.91% of total assets, primarily reflecting a new non-accrual multifamily loan associated with a previously disclosed Wisconsin relationship. That relationship represented $22.7 million of non-accrual loans, collateralized by commercial real estate, with $416,000 of reserves at September 30, 2026. The increase was partially offset by the charge-off of fully reserved C&I non-accrual loans.

The allowance for credit losses, including unfunded commitment reserves, decreased $668,000, or 1.7%, to $38.8 million, or 1.06% of total gross loans and leases.

Tangible book value per share increased 10.5% annualized from the linked quarter to $45.56. The common equity Tier 1 ratio increased to 9.65% and the tangible common equity ratio increased to 8.59%.

The board declared a quarterly common dividend of $0.34 a share, unchanged from the July 2026 declaration, a 17% payout on third-quarter earnings per share. From October 1 through October 23, 2026, the company repurchased 29,058 shares, bringing the $5.0 million program to 41,058 shares for approximately $2.9 million.