FIRST BUSINESS FINANCIAL SERVICES, INC.
For the period ended Dec 31, 2025. Filed Feb 25, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 25, 2026
FBIZ$74.18-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0000950170-25-027715
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-25.
0001193125-26-071523
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 206 previous paragraphs and 205 current paragraphs.
97 unchanged; 87 reworded; 17 added; 21 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 24 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Efficiency ratio measured 58.78% for the year ended December 31, 2025, compared to 60.61% for the year ended December 31, 2024.
Current report
Net interest margin was 3.64% for the year ended December 31, 2025, compared to 3.66% for the year ended December 31, 2024.
Current report
Effective tax rate was 16.8% for the year ended December 31, 2025, compared to 13.5% for the year ended December 31, 2024.
Current report
Net interest income increased $12.5 million, or 10.1% during the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in net interest income reflected an increase in average gross loans and leases, the reclassification of certain types of C&I loan fees from non-interest income to interest income, and lower cost of interest-bearing liabilities due to decreases in interest rates. These changes were partially offset by a decrease in yield on loans, non-accrual interest reversals, and a decrease in asset-based loan fees. Average gross loans and leases of $3.272 billion increased by $275.0 million, or 9.2%, for the year ended December 31, 2025, compared to $2.997 billion for the same period in 2024.
Current report
Net interest margin decreased to 3.64% for the year ended December 31, 2025, compared to 3.66% for the year ended December 31, 2024. The decrease in net interest margin was due to lower yields on interest-earning assets, partially offset by lower costs of interest-bearing liabilities due to lower interest rates and the reclassification of certain types of C&I loan fees from non-interest income to net interest income.
Current report
Bank-owned life insurance policy income increased $1.1 million, or 67.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is primarily due to the purchase of new policies, totaling $24.5 million in the second quarter of 2025 and an insurance claim of $234,000 in the third quarter of 2025.
Current report
Other non-interest income increased $541,000, or 14.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily due to nonrecurring fee income in accounts receivable financing and increases in credit card fee income, bank consulting fee income, and other equipment finance related fees. These increases were partially offset by a decrease in limited partnership investment income.
Current report
Loan fee income decreased $1.7 million, or 49.3%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The change is primarily due to the reclassification of certain types of C&I loan fees from non-interest income to interest income. Excluding this reclassification, loan fee income increased $113,000, or 7.0%. The change excluding the reclassification is primarily due to an increase in traditional commercial loan fees.
Current report
Other non-interest expense increased $468,000, or 12.7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily due to an increase in liquidation expenses and a release of SBA recourse reserve in the prior year period.
Current report
Investments in Limited Partnerships
Current report
The Corporation has invested in a number of limited partnerships that provide income tax, financial, and regulatory benefits due to the nature of the partnerships. These investments included: seven Small Business Investment Companies ("SBIC") and four other limited partnership investments, whose purpose is to provide funding to small companies which meet certain criteria based on each particular fund's focus, five Historic Rehabilitation Tax Credit funds ("HTC"), whose purpose is to develop and operate real estate projects related to historical properties and communities, and 12 Low-Income Housing Tax Credits ("LIHTC") projects, whose purpose is to invest in approved low-income housing investment tax credit projects.
Current report
These investments are unconsolidated variable interest entities ("VIE") because we are not considered the primary beneficiary. We have determined that we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact their economic performance.
Current report
All of our limited partnership investments are privately held and their market values are not readily available. These investments are accounted for using the equity method of accounting for SBIC, other limited partnerships, and HTC funds and the proportional amortization method for LIHTC investments and are included in Other Assets in the Consolidated Balance Sheets. Income from the SBIC and other limited partnerships are included in Other Non-interest Income in the Consolidated Statements of Income and totaled $1.2 million, $1.9 million, and $5.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. Income or loss from the HTC and LIHTC investments is included in income tax expense. Income from investments in limited partnerships varies from period to period based on timing of new investments and investment performance.
Current report
Non-accrual loans and leases increased $15.5 million, to $43.9 million at December 31, 2025, compared to $28.4 million at December 31, 2024. The Corporation's non-accrual loans and leases as a percentage of total gross loans and leases measured 1.30% and 0.91% at December 31, 2025, and 2024, respectively. The increase in non-accrual loans and leases is primarily driven by a downgrade of $20.4 million of CRE loans from a single client relationship and a new non-accrual in accounts receivable financing, partially offset by a payoff of a large C&I loan from the prior year and lower non-accrual loans in equipment financing.
Current report
The ACL reserve increased compared to prior year primarily driven by higher general reserve requirements and higher reserves on unfunded commitments partially offset by lower specific reserve requirements. General reserves as a percentage of total loans increased to 0.90% as of December 31, 2025 from 0.86% as of December 31, 2024. Specific reserves as a percentage of total loans decreased to 0.16% as of December 31, 2025 from 0.29% as of December 31, 2024.
Current report
Sources of Liquidity
Current report
Bank internal policy limits brokered CDs to 50% of total bank funding when combined with value of unencumbered pledged loans.
Removed paragraphs (21)
Previous report
The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.
Previous report
Overview
Previous report
We are a registered bank holding company incorporated under the laws of the State of Wisconsin and are engaged in the commercial banking business through our wholly-owned banking subsidiary, FBB. All of our operations are conducted through FBB and First Business Specialty Finance, LLC (“FBSF”), a wholly-owned subsidiary of FBB. We operate as a business bank focusing on delivering a full line of commercial banking products and services tailored to meet the specific needs of small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals. Our products and services include those for business banking, private wealth management services, and bank consulting. Within business banking, we offer commercial lending, asset-based lending, accounts receivable financing, equipment financing, floorplan financing, vendor financing, SBA lending and servicing, treasury management services, and company retirement plans. Our private wealth management services include trust and estate administration, financial planning, investment management, and private banking for executives and owners of our business banking clients and others. Our bank consulting experts provide investment portfolio administrative services, asset liability management services, and asset liability management process validation for other financial institutions. We do not utilize a branch network to attract retail clients. Our operating model is predicated on deep client relationships, financial expertise, and an efficient, centralized administration function delivering best in class client satisfaction. Our focused model allows experienced staff to provide the level of financial expertise needed to develop and maintain long-term relationships with our clients.
Previous report
Excluding tax and SBA recourse benefits, the 2024 ROATCE was 14.6%.
Previous report
Fees in lieu of interest, defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization, totaled $5.5 million for the year ended December 31, 2024, compared to $3.5 million for the year ended December 31, 2023.
Previous report
Net interest margin was 3.66% for the year ended December 31, 2024, compared to 3.78% for the year ended December 31, 2023. Adjusted net interest margin, which excludes certain one-time and volatile items including fees in lieu of interest, was 3.47% for the year ended December 31, 2024, compared to 3.62% for the year ended December 31, 2023.
Previous report
Effective tax rate, including the benefit from Low-Income Housing Tax Credits, was 13.5% for the year ended December 31, 2024, compared to 21.5% for the year ended December 31, 2023.
Previous report
ROACE for the year ended December 31, 2024, was 14.73%, compared to 13.79% for the year ended December 31, 2023. The reasons for the change in ROACE are consistent with the net income variance explanation as discussed under ROAA above. We view
Previous report
Weighted average rate of junior subordinated notes and debentures reflects the accelerated amortization of subordinated debt issuance costs as a result of the early redemption of the junior subordinated notes during the first quarter of 2022.
Previous report
Excluding fees in lieu of interest.
Previous report
Represents annualized yields/rates.
Previous report
Net interest income increased $11.6 million, or 10.3% during the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in net interest income reflected an increase in average gross loans and leases and an increase in fees in lieu of interest, partially offset by net interest margin compression. Average gross loans and leases of $2.997 billion increased by $349.0 million, or 13.2%, for the year ended December 31, 2024, compared to $2.648 billion for the same period in 2023. Loan fees collected in lieu of interest increased 59.8% to $5.5 million, compared to $3.5 million during the same period of comparison.
Previous report
Net interest margin decreased to 3.66% for the year ended December 31, 2024, compared to 3.78% for the year ended December 31, 2023. Adjusted net interest margin measured 3.47% for the year ended December 31, 2024, compared to 3.62% for the year ended December 31, 2023. The decrease in net interest margin is due to increased total bank funding costs in a higher rate environment. This was partially offset by an increase in fees collected in lieu of interest and an increase in earning asset yields due to the reinvestment of cash flows from the fixed-rate loan and securities portfolios in a higher rate environment. Adjusted net interest margin is a non-GAAP measure representing net interest income excluding the impact of fees in lieu of interest, and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets.
Previous report
Other non-interest income decreased $3.1 million, or 44.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The change was primarily due to a decrease from unexpectedly high 2023 returns on the Corporation's investments in SBIC funds. Income from SBIC funds varies from period to period based on changes in the realized and unrealized fair value of underlying investments.
Previous report
Gain on sale of SBA loans decreased $113,000, or 5.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. Management expects the SBA loan sales to increase in 2025 as production increases and previously closed commitments fully fund and become eligible for sale, due to additions to the business development team.
Previous report
Data processing expense increased $1.1 million, or 27.9%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to an increase in core processing costs due to loan and deposit account growth, private wealth asset growth, and a one-time expense resulting from a change in credit card vendors.
Previous report
Other non-interest expense decreased $851,000, or 18.8%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease was primarily due to a decrease in SBA recourse provision and liquidation expenses partially offset by an impairment on historical tax credit investments at exit.
Previous report
The repayment of commercial real estate loans generally is dependent on sufficient income from the occupants of properties securing the loans to cover operating expenses and debt service. Payments on commercial real estate loans are often dependent on external market conditions impacting the successful operation or development of the property or business involved. Therefore, repayment of such loans is often sensitive to conditions in the real estate market or the general economy, which are outside the borrower’s control. In the event that the cash flow from the property is reduced, the borrower’s ability to repay the loan could be negatively impacted. The deterioration of one or a few of these loans could cause a material increase in our level of non-accrual loans, which would result in a loss of revenue from these loans and could result in an increase in the provision for credit losses and an increase in charge-offs, all of which could have a material adverse impact on our net income. Additionally, many of these loans have real estate as a primary or secondary component of collateral. The market value of real estate can fluctuate significantly in a short period of time as a result of economic conditions. Adverse developments affecting real estate values in one or more of our markets could impact collateral coverage associated with the commercial real estate segment of our portfolio, possibly leading to increased specific reserves or charge-offs, which would adversely affect profitability.
Previous report
Non-accrual loans and leases increased $7.8 million, to $28.4 million at December 31, 2024, compared to $20.6 million at December 31, 2023. The Corporation's non-accrual loans and leases as a percentage of total gross loans and leases measured 0.91% and 0.72% at December 31, 2024, and 2023, respectively. The change in non-accrual loans and leases is primarily driven by a conventional C&I loan that management identified as non-performing and recognized a specific reserve. While we continue to expect full repayment of the one ABL loan that defaulted during the second quarter of 2023, the liquidation process under Chapter 7 bankruptcy has delayed final resolution. Through our collection efforts, the current balance of this loan is $6.2 million, down from $8.8 million in the prior year. Excluding this credit, non-performing assets totaled $22.2 million, or 0.58% of total assets and $12.0 million, or 0.34% of total assets in the prior year.
Previous report
The increase in ACL was primarily driven by loan growth and net increase in specific reserves within the Commercial and Industrial portfolio.
Previous report
Goodwill Impairment Assessment. Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. The Corporation conducted its annual impairment test as of July 1, 2024, utilizing a qualitative assessment, and concluded that it was more likely than not the estimated fair value of the reporting unit exceeded its carrying value, resulting in no impairment. Although no goodwill impairment was noted, there can be no assurances that future goodwill impairment will not occur.
Reworded paragraphs (87)
Previous wording
Adverse changes in the economy or business conditions, either nationally or in our markets including, without limitation, inflation, economic downturn, labor shortages, wage pressures, and the adverse effects of public health events on the global, national, and local economy.
Current wording
Adverse changes in the economy or business conditions, either nationally or in the Corporation's markets including, without limitation, inflation, economic downturn, labor shortages, wage pressures, and the adverse effects of public health events on the global, national, and local economy.
Previous wording
Uncertainty created by potential federal government actions relating to the authority of regulatory agencies (including bank regulators), international trade policy, and other significant policy matters.
Current wording
Uncertainty created by potential federal government actions relating to the authority of regulatory agencies (including bank regulators), international trade policy, prolonged shutdown of the federal government, and other significant policy matters.
Previous wording
Competitive pressures among depository and other financial institutions nationally and in our markets.
Current wording
Competitive pressures among depository and other financial institutions nationally and in the Corporation's markets.
Previous wording
Our ability to manage growth effectively, including the successful expansion of our client support, administrative infrastructure, and internal management systems.
Current wording
Management's ability to manage growth effectively, including the successful expansion of client support, administrative infrastructure, and internal management systems.
Previous wording
Changes in legislative or regulatory requirements applicable to us and our subsidiaries.
Current wording
Changes in legislative or regulatory requirements applicable the Corporation and its subsidiaries.
Previous wording
Fraud, including client and system failure or breaches of our network security, including our internet banking activities.
Current wording
Fraud, including client and system failure or breaches of the Corporation's network security, including the Corporation's internet banking activities.
Previous wording
The table below shows the Corporation’s performance for the years ended December 31, 2024, 2023, and 2022 in comparison to the key performance indicators included in the Corporation’s 2024 strategic plan.
Current wording
The table below shows the Corporation’s performance for the years ended December 31, 2025, 2024, and 2023 in comparison to the key performance indicators included in the Corporation’s current strategic plan.
Previous wording
Net income available to common shareholders for the year ended December 31, 2024 was $43.4 million, increasing 20.0% compared to $36.2 million for the year ended December 31, 2023.
Current wording
Net income available to common shareholders for the year ended December 31, 2025 was $49.4 million, compared to $43.4 million for the year ended December 31, 2024.
Previous wording
Diluted earnings per common share were $5.20 for the year ended December 31, 2024, increasing 20.0% compared to $4.33 in the prior year.
Current wording
Diluted earnings per common share were $5.94 for the year ended December 31, 2025, compared to $5.20 in the prior year.
Previous wording
Return on average assets (“ROAA”) for the year ended December 31, 2024, was 1.20%, compared to 1.13% for 2023.
Current wording
Return on average assets (“ROAA”) for the year ended December 31, 2025, was 1.24%, compared to 1.20% for 2024.
Previous wording
Return on average common equity (“ROACE”) is defined as net income available to common shareholders divided by average equity less average preferred stock. ROACE was 14.73% for the year ended December 31, 2024, compared to 13.79% for the year ended December 31, 2023.
Current wording
Return on average tangible common equity (“ROATCE”) is defined as net income available to common shareholders divided by average equity less average preferred stock and less intangibles. ROATCE was 15.25% for the year ended December 31, 2025, compared to 15.35% for the year ended December 31, 2024.
Previous wording
Pre-tax, pre-provision (“PTPP”) adjusted earnings, which excludes certain one-time and discrete items, was $60.4 million for the year ended December 31, 2024, compared to $56.2 million for the year ended December 31, 2023.
Current wording
Pre-tax, pre-provision (“PTPP”) adjusted earnings, which excludes certain one-time and discrete items, was $69.4 million for the year ended December 31, 2025, compared to $60.4 million for the year ended December 31, 2024.
Previous wording
Top line revenue, defined as net interest income plus non-interest income, totaled $153.5 million for the year ended December 31, 2024, compared to $143.9 million in the year ended December 31, 2023.
Current wording
Top line revenue, defined as net interest income plus non-interest income, totaled $168.6 million for the year ended December 31, 2025, compared to $153.5 million in the year ended December 31, 2024.
Previous wording
Provision for credit loss expense was $8.8 million for the year ended December 31, 2024, compared to $8.2 million for the year ended December 31, 2023.
Current wording
Provision for credit loss expense was $8.7 million for the year ended December 31, 2025, compared to $8.8 million for the year ended December 31, 2024.
Previous wording
Total assets at December 31, 2024, increased $345.4 million, or 9.8%, to $3.853 billion from $3.508 billion at December 31, 2023.
Current wording
Total assets at December 31, 2025, increased $228.7 million, or 5.9%, to $4.082 billion from $3.853 billion at December 31, 2024.
Previous wording
Period-end gross loans and leases receivable increased $263.8 million, or 9.3%, to $3.114 billion as of December 31, 2024, compared to $2.850 billion as of December 31, 2023. Average gross loans and leases of $2.997 billion increased $349.0 million, or 13.2%, for the year ended December 31, 2024, compared to $2.648 billion for the year ended December 31, 2023.
Current wording
Period-end gross loans and leases receivable increased $261.4 million, or 8.4%, to $3.375 billion as of December 31, 2025, compared to $3.114 billion as of December 31, 2024. Average gross loans and leases of $3.272 billion increased $275.0 million, or 9.2%, for the year ended December 31, 2025, compared to $2.997 billion for the year ended December 31, 2024.
Previous wording
Non-performing assets were $28.4 million and 0.74% of total assets as of December 31, 2024, compared to $20.8 million and 0.59% of total assets as of December 31, 2023.
Current wording
Non-performing assets were $43.9 million and 1.07% of total assets as of December 31, 2025, compared to $28.4 million and 0.74% of total assets as of December 31, 2024.
Previous wording
The allowance for credit losses, including reserve for unfunded credit commitments, increased $4.3 million compared to December 31, 2023. The allowance for credit losses, including reserve for unfunded credit commitments, was 1.20% of total loans, compared to 1.16% at December 31, 2023.
Current wording
The allowance for credit losses, including reserve for unfunded credit commitments, increased $424,000 compared to December 31, 2024. The allowance for credit losses, including reserve for unfunded credit commitments, was 1.12% of total loans, compared to 1.20% at December 31, 2024.
Previous wording
Period-end core deposits at December 31, 2024, increased $57.4 million, or 2.5%, to $2.396 billion from $2.339 billion as of December 31, 2023. Average core deposits of $2.378 billion increased $280.3 million, or 13.4%, for the year ended December 31, 2024, compared to $2.098 billion for the year ended December 31, 2023.
Current wording
Period-end core deposits at December 31, 2025, increased $276.6 million, or 11.5%, to $2.673 billion from $2.396 billion as of December 31, 2024. Average core deposits of $2.532 billion increased $153.4 million, or 6.4%, for the year ended December 31, 2025, compared to $2.378 billion for the year ended December 31, 2024.
Previous wording
Private wealth and trust assets under management and administration increased by $297.2 million, or 9.5%, to $3.419 billion at December 31, 2024, compared to $3.122 billion at December 31, 2023. Private wealth management service fees increased $1.8 million, or 16.1%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Current wording
Private wealth and trust assets under management and administration increased by $396.0 million, or 11.58%, to $3.815 billion at December 31, 2025, compared to $3.419 billion at December 31, 2024. Private wealth management service fees increased $1.5 million, or 11.0%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Previous wording
Top line revenue, comprised of net interest income and non-interest income, increased $9.6 million, or 6.6%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, due to a 10.3% increase in net interest income partially offset by a 6.6% decrease in non-interest income. The increase in net interest income was driven by an increase in average gross loans and leases outstanding. The decrease in non-interest income was due to lower returns on investments in SBIC funds, commercial loan swap fee income, and gains on the sale of SBA loans; partially offset by increases in private wealth fee income.
Current wording
Top line revenue, comprised of net interest income and non-interest income, increased $15.2 million, or 9.9%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, due to a 10.1% increase in net interest income and a 9.2% increase in non-interest income. The increase in net interest income was driven by an increase in average gross loans and leases partially offset by net interest margin compression. The increase in non-interest income was due to increases in private wealth fee income, bank owned life insurance policy income, service charges on deposits, and commercial loan swap fee income, partially offset by a decrease in loan fees driven by a reclassification of certain items to net interest income.
Previous wording
Return on Average Assets and Return on Average Common Equity
Current wording
Return on Average Assets and Return on Average Tangible Common Equity
Previous wording
ROAA was 1.20% for the year ended December 31, 2024, compared to 1.13% for the year ended December 31, 2023. The increase in ROAA was due to the increase in net interest income and a lower effective tax rate, partially offset by a decrease in non-interest income. We consider ROAA a critical metric to measure the profitability of our organization and how efficiently our assets are deployed. ROAA also allows us to better benchmark our profitability to our peers without the need to consider different degrees of leverage which can ultimately influence return on equity measures.
Current wording
ROAA was 1.24% for the year ended December 31, 2025, compared to 1.20% for the year ended December 31, 2024. The increase in ROAA was due to the increase in net interest income and non-interest income, partially offset by an increase in operating expenses and a higher effective tax rate. We consider ROAA a critical metric to measure the profitability of our organization and how efficiently our assets are deployed. ROAA also allows us to better benchmark our profitability to our peers without the need to consider different degrees of leverage which can ultimately influence return on equity measures.
Previous wording
ROACE as an important measurement for monitoring profitability and continue to focus on improving our return to our shareholders by enhancing the overall profitability of our client relationships, controlling our expenses, and minimizing our costs of credit.
Current wording
ROATCE for the year ended December 31, 2025 was 15.25%, compared to 15.35% for the year ended December 31, 2024. We view ROATCE as an important measurement for monitoring profitability and continue to focus on improving our return to our shareholders by enhancing the overall profitability of our client relationships, controlling our expenses, and minimizing our costs of credit.
Previous wording
Efficiency ratio measured 60.61% for the year ended December 31, 2024, compared to 60.99% for the year ended December 31, 2023. Efficiency ratio is a non-GAAP measure representing operating expense divided by operating revenue. Operating expense is defined as non-interest expense excluding the effects of the SBA recourse benefit or provision, impairment of tax credit investments, net gains or losses on repossessed assets, amortization of other intangible assets, and other discrete items, if any. Operating revenue is defined as net interest income plus non-interest income less realized net gains or losses on securities, if any, and other discrete items.
Current wording
Efficiency ratio measured 58.78% for the year ended December 31, 2025, compared to 60.61% for the year ended December 31, 2024. Efficiency ratio is a non-GAAP measure representing operating expense divided by operating revenue. Operating expense is defined as non-interest expense excluding the effects of the SBA recourse benefit or provision, impairment of tax credit investments, net gains or losses on repossessed assets, amortization of other intangible assets, and other discrete items, if any. Operating revenue is defined as net interest income plus non-interest income less realized net gains or losses on securities, if any, and other discrete items.
Previous wording
PTPP adjusted earnings for the year ended December 31, 2024, was $60.4 million, compared to $56.2 million for the year ended December 31, 2023. PTPP adjusted earnings is a non-GAAP measure defined as operating revenue less operating expense. In the judgment of the Corporation’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Corporation’s operating expenses in relation to its core operating revenue by removing the volatility associated with certain one-time items and other discrete items. PTPP adjusted earnings allows management to benchmark performance of our model to our peers without the influence of the loan loss provision and tax considerations, which will ultimately influence other traditional financial measurements, including ROA and ROAE. The information provided below reconciles the efficiency ratio to its most comparable GAAP measure.
Current wording
PTPP adjusted earnings for the year ended December 31, 2025, was $69.4 million, increasing 14.8%, compared to $60.4 million for the year ended December 31, 2024. PTPP adjusted earnings is a non-GAAP measure defined as operating revenue less operating expense. In the judgment of the Corporation’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Corporation’s operating expenses in relation to its core operating revenue by removing the volatility associated with certain one-time items and other discrete items. PTPP adjusted earnings allows management to benchmark performance of our model to our peers without the influence of the loan loss provision and tax considerations, which will ultimately influence other traditional financial measurements, including ROA and ROATCE. The information provided below reconciles the efficiency ratio and PTPP adjusted earnings to their most comparable GAAP measure.
Previous wording
The change in yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta. The table below displays the beta calculations for loans and leases, total interest earning assets, core deposits, interest-bearing deposits and total interest-bearing liabilities for the year ended December 31, 2024, and 2023. Additionally, adjusted total loans and leases and total interest-earning assets excludes the volatile impact of fees in lieu of interest.
Current wording
The change in yield of the respective interest-earning assets or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta. The table below displays the beta calculations for loans and leases, total interest earning assets, core deposits, interest-bearing deposits and total interest-bearing liabilities for the year ended December 31, 2025, and 2024.
Previous wording
Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rates (DFF) retried from FRED, Federal Reserve Bank of St. Louis.
Current wording
Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rates (DFF) retrieved from FRED, Federal Reserve Bank of St. Louis.
Previous wording
The yield on average interest-earning assets for the year ended December 31, 2024, was 6.87%, compared to 6.54% for the year ended December 31, 2023. The increase in yield was primarily due to the reinvestment of cash flows from fixed-rate loan portfolios and securities in a higher rate environment. Excluding loan fees in lieu of interest, the yield on average interest-earning assets for the year ended December 31, 2024, was 6.71%, compared to 6.42% for the year ended December 31, 2023.
Current wording
The yield on average interest-earning assets for the year ended December 31, 2025, was 6.59%, compared to 6.87% for the year ended December 31, 2024. The decrease in yield was primarily due to lower interest rates, partially offset by the reinvestment of cash flows from the securities and fixed-rate loan portfolios.
Previous wording
The average rate paid on total interest-bearing liabilities was 3.91% for the year ended December 31, 2024, an increase from 3.46% for the year ended December 31, 2023. Total interest-bearing liabilities includes interest-bearing deposits, FHLB advances, subordinated and junior subordinated notes and debentures payable, federal funds purchased, and other borrowings. The average rates paid increased due to the increase in short-term market rates, the replacement of maturing wholesale funds at higher fixed rates, and client movement from non-interest bearing to interest bearing core deposit products.
Current wording
The average rate paid on total interest-bearing liabilities was 3.51% for the year ended December 31, 2025, a decrease from 3.91% for the year ended December 31, 2024. Total interest-bearing liabilities includes interest-bearing deposits, FHLB advances, subordinated and junior subordinated notes and debentures payable, federal funds purchased, and other borrowings. The average rates paid decreased due to lower short-term interest rates, the replacement of maturing wholesale funds at higher fixed rates, and client movement from non-interest bearing to interest bearing core deposit products.
Previous wording
The Corporation maintains a long-term target for net interest margin in the range of 3.60% - 3.65%. Performance in future periods will vary due to factors such as the level of fees in lieu of interest and the timing, pace, and scale of future interest rate changes.
Current wording
The Corporation maintains a target for net interest margin in the range of 3.60% to 3.65%. Performance in future periods will vary due to factors such as the level of fees in lieu of interest and the timing, pace, and scale of future interest rate changes.
Previous wording
Management adopted ASC 326 on January 1, 2023. Prior periods are presented under the incurred loss model.
Current wording
Management adopted ASC 326 on January 1, 2023.
Previous wording
Non-interest income decreased by $2.1 million, or 6.6%, to $29.3 million for the year ended December 31, 2024, from $31.3 million for the year ended December 31, 2023. Management continues to focus on revenue growth from multiple non-interest income sources to maintain a diversified revenue stream through greater contributions from fee-based revenues. Total non-interest income accounted for 19.1% of total revenues for the year ended December 31, 2024, compared to 21.8% in 2023. The decrease in total non-interest income for the year ended December 31, 2024, was driven by lower returns on investments in SBIC funds, commercial loan swap fee income, and gains on the sale of SBA loans, partially offset by an increase in private wealth fee income and service charges on deposits.
Current wording
Non-interest income increased by $2.7 million, or 9.2%, to $31.9 million for the year ended December 31, 2025, from $29.3 million for the year ended December 31, 2024. Management continues to focus on revenue growth from multiple non-interest income sources to maintain a diversified revenue stream through greater contributions from fee-based revenues. Total non-interest income accounted for 18.9% of total revenues for the year ended December 31, 2025, compared to 19.1% in 2024 as net interest income increased at a greater rate than non-interest income. The increase in total non-interest income for the year ended December 31, 2025, was driven by private wealth fee income, bank-owned life insurance policy income, commercial loan swap fee income, and service charges on deposits, partially offset by a reduction in loan fees driven by the reclassification of certain types of C&I fees from non-interest income to net interest income.
Previous wording
Private wealth fee income increased $1.8 million, or 16.1%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. Private wealth fee income is up compared to prior year primarily due to an increase in assets under management and administration, increases in fee rates across the client base, and non-recurring transaction fees in the 2024 period. Private wealth fee income can vary due to the mix of business at different fee structures and can be positively or negatively influenced by the timing and magnitude of volatility within the capital markets. As of December 31, 2024, private wealth and trust assets under management and administration totaled $3.419 billion, increasing $297.2 million, or 9.5%, compared to $3.122 billion as of December 31, 2023, due to an increase in market values, new clients, and new money from existing clients.
Current wording
Private wealth fee income increased $1.5 million, or 11.0%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. Private wealth fee income increased compared to the prior year primarily due to an increase in assets under management and administration and increases in fee rates across the client base. Private wealth fee income can vary due to the mix of business at different fee structures and can be positively or negatively influenced by the timing and magnitude of volatility within the capital markets. As of December 31, 2025, private wealth and trust assets under management and administration totaled $3.815 billion, increasing $396.0 million, or 11.6%, compared to $3.419 billion as of December 31, 2024, due to an increase in market values, new clients, and new money from existing clients.
Previous wording
Service charges on deposits increased $640,000, or 20.4%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase is primarily driven by new and expanded core deposit relationships. Treasury management business development efforts remain robust as gross treasury management service charges increased $647,000, or 11.1%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. Management believes growth in gross analyzed service charges is a strong indicator of success for the Corporation given the direct correlation to adding and expanding core business relationships.
Current wording
Service charges on deposits increased $720,000, or 19.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is primarily driven by new and expanded core deposit relationships and a reduction in earnings credit rates. Treasury management business development efforts remain robust as gross treasury management service charges increased $473,000, or 7.3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. Management believes growth in gross analyzed service charges is a strong indicator of success for the Corporation given the direct correlation to adding and expanding core business relationships.
Previous wording
Commercial loan interest rate swap fee income decreased $1.6 million, or 52.7%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. We originate commercial real estate loans in which we offer clients a floating rate and an interest rate swap. The client’s swap is then offset with a counter-party dealer. The execution of these transactions generates swap fee income. The aggregate amortizing notional value of interest rate swaps with various borrowers was $1.022 billion as of December 31, 2024, compared to $939.2 million as of December 31, 2023. Interest rate swaps can be an attractive product for our commercial borrowers, although associated fee income varies from period to period based on loan activity and the interest rate environment.
Current wording
Commercial loan interest rate swap fee income increased $592,000, or 42.2%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. We originate commercial real estate loans in which we offer clients a floating rate and an interest rate swap. The client’s swap is then offset with a counter-party dealer. The execution of these transactions generates swap fee income. Interest rate swaps can be an attractive product for our commercial borrowers, although associated fee income varies from period to period based on loan activity, the interest rate environment, and the duration of the swap contracts.
Previous wording
Non-interest expense increased by $4.9 million, or 5.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. Operating expense, which excludes certain one-time and discrete items as defined in the Efficiency Ratio table above, increased $5.2 million, or 6.0%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in operating expense was primarily due to an increase in compensation expense, computer software expense, and data processing expense.
Current wording
Non-interest expense increased by $6.0 million, or 6.5%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. Operating expense, which excludes certain one-time and discrete items as defined in the Efficiency Ratio table above, increased $6.0 million, or 6.4%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Previous wording
Compensation expense increased by $2.0 million, or 3.4%, for the year ended December 31, 2024, compared to the year ended December 31, 2024, principally due to an increase in average FTEs, annual merit increases, growth in employee benefit costs, and increase in incentive compensation. The increase reflects a $2.7 million, or 7.2%, increase in employee salaries and a $428,000, or 8.4%, increase in estimated annual cash bonuses compared to 2023. These increases were partially offset by a $768,000, or 17.2% decrease in individual production incentive compensation. Average FTEs were 350 for the year ended December 31, 2024, increased by seven, or 2.0%, from 343 for the year ended December 31, 2023.
Current wording
Compensation expense increased by $4.8 million, or 7.6%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, principally due to an increase in average FTEs, salary increases, growth in employee benefit costs, and increase in the annual cash bonus accrual. The increase reflects a $2.5 million, or 6.2%, increase in employee salaries and a $1.1 million, or 18.4%, increase in estimated annual cash bonuses compared to 2024. Average FTEs of 363 for the year ended December 31, 2025, increased by 13, or 3.7%, from 350 for the year ended December 31, 2024.
Previous wording
Computer software expense increased $1.2 million, or 23.7%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily due to our commitment to innovative technology to support growth initiatives, enhance productivity, and improve the client experience.
Current wording
Computer software expense increased $821,000, or 13.3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily due to our commitment to innovative technology to support growth initiatives, enhance productivity and security, and improve the client experience.
Previous wording
FDIC insurance increased $522,000, or 23.3%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily due to an increase in total assets and use of brokered deposits.
Current wording
FDIC insurance increased $471,000, or 17.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was commensurate with the increase in total assets, brokered deposits, and non-accrual loans.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
A summary of annual maturities of core and wholesale certificates of deposit at December 31, 2025 is as follows:
Current report — wording carried from elsewhere
The Corporation expects to pay dividends on the Series A Preferred Stock when and if declared by its Board, at a fixed rate of 7.0% per annum, payable quarterly, in arrears, on March 15, June 15, September 15 and December 15 of each year up to, but excluding, March 15, 2027. For each dividend period from and including March 15, 2027, dividends will be paid at a floating rate of
Current report — wording carried from elsewhere
FRB recorded in short-term investments, respectively. Any excess funds not used for loan funding or satisfying other cash obligations were maintained as part of our readily accessible liquidity in our interest-bearing accounts with the FRB, as we value the safety and soundness provided by the FRB. We plan to utilize excess liquidity to fund loan and lease portfolio growth, pay down maturing debt, allow run off of maturing wholesale certificates of deposit or invest in securities to maintain adequate liquidity at an improved margin.
Current report — wording carried from elsewhere
We will continue to use wholesale funds in specific maturity periods, typically three to five years, needed to effectively mitigate the interest rate risk measured through our asset/liability management process or in shorter time periods if core deposit balances decline. In order to provide for ongoing liquidity and funding, none of our wholesale certificates of deposit allow for withdrawal at the option of the depositor before the stated maturity date and FHLB advances have contractual maturity terms. The Bank limits the percentage of wholesale funds to total bank funds in accordance with liquidity policies approved by its Board. The Bank was in compliance with its policy limits as of December 31, 2025.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Corporation and its shareholders, any time with no expiration date. As of December 31, 2024, the Corporation has not repurchased any shares under this repurchase program.