First Business Financial Services, Inc. (Nasdaq: FBIZ) announced a quarterly net income available to common shareholders of $10.2 million, with earnings per share of $1.23 on a diluted basis. This marks an improvement from $8.6 million, or $1.04 per share, in Q1 2024, and $8.1 million, or $0.98 per share, in Q2 2023.
Corey Chambas, CEO, stated, “First Business Bank’s consistent growth strategy drove outstanding second-quarter results, highlighted by continued double-digit loan growth, record top-line revenue, improved net interest margin, and stable credit trends. We grew both net interest income and margin by executing high-quality loan production and utilizing our long-held and effective funding strategy. We continued to differentiate our business model with strong fee income sources, most notably from our Private Wealth Management group’s $3.2 billion in assets under management and administration. The company’s strong performance has generated exceptional shareholder value with 13.5% growth in tangible book value from the prior year.”
Chambas added, “Our balance sheet, interest rate positioning, and higher level of fees in lieu of interest during the quarter produced a net interest margin at the top of our long-term target range of 3.60%-3.65%. We believe our neutrally positioned balance sheet is poised for stable and strong relative performance in varied interest rate scenarios.”
Quarterly Highlights
- Consistent Loan Growth: Loans increased by $74.6 million, or 10.3% annualized, from Q1 2024 and $310.8 million, or 11.6%, from Q2 2023.
- Expanded Net Interest Margin: The net interest margin was 3.65%, a seven-basis point increase from the linked quarter. Net interest income grew 3.5% from the linked quarter and 10.1% from the prior year quarter.
- Robust Private Wealth Management Business: Private Wealth assets under management and administration grew to $3.249 billion as of June 30, 2024, up $341.5 million, or 11.7% from the prior year. Private Wealth and Company Retirement Plan fee income reached a record $3.5 million, a 19.6% increase from June 30, 2023.
- Strong Pre-Tax, Pre-Provision (PTPP) Income: PTPP income increased to $14.1 million, up 7.6% and 5.0% from the linked and prior year quarters, respectively. PTPP adjusted return on average assets was 1.57%.
- Stable Asset Quality: Non-performing assets measured $19.1 million, down $1.1 million, or 5.4%, from the linked quarter. Non-performing assets as a percentage of total assets were 0.53%.
- Tangible Book Value Growth: The company’s strong earnings and sound balance sheet management drove tangible book value per share growth, with an 11.5% annualized increase compared to the linked quarter and a 13.5% increase compared to the prior year quarter.
Financial Results
- Net interest income: $30.5 million (up 3.5% from Q1 2024)
- Adjusted non-interest income: $7.4 million (up 9.9% from Q1 2024)
- Operating revenue: $38.0 million (up 4.7% from Q1 2024)
- Operating expense: $23.8 million (up 3.0% from Q1 2024)
- Net income: $10.5 million (up from $8.8 million in Q1 2024)
- Earnings per share, diluted: $1.23 (up from $1.04 in Q1 2024)
- Tangible book value per share: $33.92 (up from $32.97 in Q1 2024)
The company continues to execute its growth strategy, reflected in significant loan growth, expanded net interest margin, and strong performance in Private Wealth Management.
