0001521951false00015219512023-07-272023-07-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2023
First Business Financial Services, Inc.
(Exact name of registrant as specified in its charter) 
Wisconsin 1-34095 39-1576570
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		 (I.R.S. Employer
Identification No.)
401 Charmany Drive
Madison, Wisconsin 53719
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (608) 238-8008
N/A
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b- 2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueFBIZThe Nasdaq Stock Market LLC



Item 2.02. Results of Operations and Financial Condition.

    On July 27, 2023, First Business Financial Services, Inc. (the “Company”) announced its earnings for the quarter ended June 30, 2023. A copy of the Company’s press release containing this information is being “furnished” as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

    The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.


Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
    The following exhibit is being “furnished” as part of this Current Report on Form 8-K:
99.1 
104 Cover Page Interactive Data File (embedded within the Inline XBRL Document)


Signature
    Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
July 27, 2023 
FIRST BUSINESS FINANCIAL SERVICES, INC.
 By: /s/ Brian D. Spielmann
 Name: Brian D. Spielmann
 Title: Chief Financial Officer


Exhibit 99.1
[FOR IMMEDIATE RELEASE]                                     
First Business Financial Services, Inc.
401 Charmany Drive
Madison, WI 53719

FIRST BUSINESS BANK REPORTS SECOND QUARTER 2023 NET INCOME OF $8.1 MILLION
-- Strong performance driven by robust loan growth, sustained deposit growth, and positive operating leverage --
MADISON, Wis., July 27, 2023 (BUSINESS WIRE) -- First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $8.1 million, or $0.98 diluted earnings per share. This compares to net income available to common shareholders of $8.8 million, or $1.05 per share, in the first quarter of 2023 and $11.0 million, or $1.29 per share, in the second quarter of 2022.
“First Business Bank’s focus on fundamentals drove outstanding core performance for the quarter, continuing our success in achieving our strategic objectives,” Chief Executive Officer Corey Chambas said. “Net interest income grew more than 17% from the second quarter of 2022, and we continued to expand in-market deposits, up 11.0% annualized from year end. Strong client activity also drove loan growth, which exceeded 20% annualized for the quarter, and capped off an outstanding first half, well above the Company’s mid-year loan growth expectations. The revenue expansion accompanying this growth contributed to excellent pre-tax, pre-provision earnings, a key measure we use to track ongoing earnings power. Our ability to execute on strategic priorities in a volatile first half of 2023 for the banking industry underscores the strength of our business model and reinforces our capacity to deliver for our stakeholders.”
“Exceptional loan growth is a testament to our team’s solid strategic planning and outstanding execution,” Chambas added. “We’ve thoughtfully built robust asset-generating business lines in response to client needs and our desire for balance sheet diversification and growth. That, along with our strategic focus on Treasury Management, has allowed us to grow both loans and deposits in excess of 10% over the last two years. We expect this growth rate to moderate as we manage to our long-term target of 10%.”
“We are pleased with the continuation of First Business Bank’s positive asset quality in the first half of 2023,” Chambas continued. “The increase in non-performing assets during the second quarter was the result of one default that occurred in our Asset-Based Lending (“ABL”) portfolio. While defaults and liquidations are not atypical for ABL loans, these loans are fully collateralized and therefore, as usual, we do not expect any loss. Further, we do not believe it to be reflective of portfolio or industry stress. Excluding this credit, non-performing assets totaled less than $5 million.”
Quarterly Highlights
•Robust Loan Growth. Loans grew $135.2 million, or 21.3% annualized, from the first quarter of 2023, reflecting broad-based expansion across the Company’s products and geographies in the second quarter. Similar expansion across the Company’s portfolios drove loan growth totaling $384.5 million, or 16.8%, from the second quarter of 2022.
•Continued Deposit Growth. Total deposits grew to $2.529 billion, increasing 8.4% annualized from the linked quarter and 35.3% from the second quarter of 2022. In-market deposits grew to a record $2.074 billion, up $19.0 million, or 3.7% annualized, from the linked quarter and 11.7% from the second quarter of 2022. Importantly, gross treasury management service charges grew to $1.4 million in the quarter, expanding 15% compared to the second quarter of 2022.
•Net Interest Income Expansion. Net interest income grew 3.9% from the linked quarter and 17.3% from the prior year quarter. Consistent execution of the Company’s strategy to drive diversified portfolio growth supported this outcome. Net interest margin of 3.81% declined five basis points from the linked quarter and increased 10 basis points compared to second quarter of 2022.
•Strong Pre-tax, Pre-Provision (“PTPP”) Income. PTPP income grew to $13.5 million, up 1.0% from the prior quarter and 24.2% from the second quarter of 2022. This performance reflects solid growth across the Company’s balance sheet and diversified sources of non-interest income, which outpaced non-interest expense expansion in support of the Company’s growth initiatives. PTPP adjusted return on average assets measured 1.72%, compared to 1.79% for the linked quarter and up from 1.60% for the second quarter of 2022.
•Tangible Book Value Growth. The Company’s strong earnings generation produced a 9.7% annualized increase in tangible book value per share compared to the linked quarter and 12.3% compared to the prior year quarter.
1
Exhibit 99.1
Quarterly Financial Results
(Unaudited)As of and for the Three Months EndedAs of and for the Year Ended
(Dollars in thousands, except per share amounts)June 30,
2023		March 31,
2023		June 30,
2022		June 30,
2023		June 30,
2022
Net interest income
$27,747 $26,705 $23,660 $54,453 $45,087 
Adjusted non-interest income (1)
7,419 8,410 6,872 15,829 14,258 
Operating revenue (1)
35,166 35,115 30,532 70,282 59,345 
Operating expense (1)
21,692 21,779 19,685 43,471 38,573 
Pre-tax, pre-provision adjusted earnings (1)
13,474 13,336 10,847 26,811 20,772 
Less:
Provision for credit losses2,231 1,561 (3,727)3,793 (4,582)
Net (gain) loss on repossessed assets(2)6 8 4 20 
SBA recourse provision (benefit)341 (18)114 323 38 
Tax credit investment impairment recovery— — (351)— (351)
Add:
Net loss on sale of securities(45)— — (45)— 
Income before income tax expense
10,859 11,787 14,803 22,646 25,647 
Income tax expense2,522 2,808 3,599 5,330 5,771 
Net income
$8,337 $8,979 $11,204 $17,316 $19,876 
Preferred stock dividends219 219 246 438 246 
Net income available to common shareholders$8,118 $8,760 $10,958 $16,878 $19,630 
Earnings per share, diluted
$0.98 $1.05 $1.29 $2.02 $2.31 
Book value per share$31.34 $30.65 $28.08 $31.34 $28.08 
Tangible book value per share (1)
$29.89 $29.19 $26.63 $29.89 $26.63 
Net interest margin (2)
3.81 %3.86 %3.71 %3.83 %3.55 %
Adjusted net interest margin (1)(2)
3.63 %3.74 %3.44 %3.69 %3.33 %
Fee income ratio (non-interest income / total revenue)21.00 %23.95 %22.51 %22.47 %24.03 %
Efficiency ratio (1)
61.68 %62.02 %64.47 %61.85 %65.00 %
Return on average assets (2)
1.04 %1.17 %1.61 %1.10 %1.46 %
Pre-tax, pre-provision adjusted return on average assets (1)(2)
1.72 %1.79 %1.60 %1.75 %1.54 %
Return on average common equity (2)
12.58 %13.96 %18.79 %13.26 %16.74 %
Period-end loans and leases receivable
$2,674,583 $2,539,363 $2,290,100 $2,674,583 $2,290,100 
Average loans and leases receivable
$2,583,237 $2,481,200 $2,272,946 $2,532,500 $2,258,872 
Period-end in-market deposits
$2,073,744 $2,054,752 $1,857,010 $2,073,744 $1,857,010 
Average in-market deposits
$2,035,856 $2,000,602 $1,900,842 $2,018,327 $1,916,622 
Allowance for credit losses, including unfunded commitment reserves$29,697 $27,550 $24,104 $29,697 $24,104 
Non-performing assets
$15,786 $3,501 $5,709 $15,786 $5,709 
Allowance for credit losses as a percent of total gross loans and leases1.11 %1.08 %1.05 %1.11 %1.05 %
Non-performing assets as a percent of total assets
0.48 %0.11 %0.21 %0.48 %0.21 %
(1)This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.
(2)Calculation is annualized.

2
Exhibit 99.1
Second Quarter 2023 Compared to First Quarter 2023
Net interest income increased $1.0 million, or 3.9%, to $27.7 million.
•The increase in net interest income was driven by an increase in both average loans and leases receivable and fees in lieu of interest, partially offset by a decrease in net interest margin. Average loans and leases receivable increased $102.0 million, or 16.4% annualized, to $2.583 billion. Fees in lieu of interest, which vary from quarter to quarter based on client-driven activity, totaled $936,000, compared to $651,000 in the prior quarter. Excluding fees in lieu of interest, net interest income increased $757,000, or 11.6% annualized.
•The yield on average interest-earning assets increased 38 basis points to 6.47% from 6.09%. Excluding fees in lieu of interest, the yield earned on average interest-earning assets increased 36 basis points to 6.35% from 5.99%. The daily average effective federal funds rate increased 48 basis points compared to the linked quarter, which equates to an average adjusted interest-earning asset beta of 73.9% for the three months ended June 30, 2023, compared to 47.0% in the linked quarter. The cumulative adjusted interest earning asset beta since December 31, 2021 was 57.2%. 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 rate paid for average interest-bearing, in-market deposits increased 47 basis points to 3.25% from 2.78% due to the acceleration of exception pricing and the shift of client balances from non-interest bearing deposits to certificates of deposit and interest bearing demand deposit accounts. Similarly, the rate paid for average total bank funding increased 48 basis points to 2.78% from 2.30%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances. The total bank funding beta was 98.9% for the three months ended June 30, 2023, compared to 73.3% in the linked quarter. The cumulative bank funding beta since December 31, 2021 was 49.9%.
•Net interest margin was 3.81%, down 5 basis points compared to 3.86% in the linked quarter. Adjusted net interest margin1 was 3.63%, down 11 basis points compared to 3.74% in the linked quarter. The decline in net interest margin was due to an increase in the rate paid on total bank funding, partially offset by an increase in the yield on average adjusted interest earning assets.
•The Bank anticipates deposit betas may continue to rise and net interest margin may continue to decline at a gradual pace in coming quarters as the Federal Open Market Committee approaches a terminal federal funds rate. Based on current trends, we believe our net interest margin should stabilize meaningfully above our strategic plan goal of 3.50%.
The Bank reported a provision expense of $2.2 million, compared to $1.6 million in the first quarter of 2023. The second quarter provision expense included $1.2 million due to exceptional loan growth and $1.1 million of additional specific reserves. The increase in specific reserves was related to the equipment finance and SBA loan portfolios.
Non-interest income decreased $1.0 million, or 12.3%, to $7.4 million.
•Private Wealth and Retirement assets (“Private Wealth”) fee income increased $239,000, or 9.0% to $2.9 million. Private Wealth assets under management and administration measured $2.907 billion at June 30, 2023, up $103.0 million from the prior quarter.
•Commercial loan swap fee income increased $420,000, or 75.4%, to $977,000. Swap fee income varies from period to period based on loan activity and the interest rate environment.
•Other fee income decreased $1.8 million to $1.4 million, compared to $3.2 million in the prior quarter. The decrease was primarily due to higher returns on the Company’s investments in mezzanine funds in the first quarter. Income from mezzanine funds was $389,000 in the second quarter, compared to $2.4 million in the linked quarter. Income from mezzanine funds varies from period to period based on changes in the value of underlying investments.
Non-interest expense increased $264,000, or 1.2%, to $22.0 million, while operating expense decreased $87,000, or 0.4%, to $21.7 million.
•Compensation expense was $15.1 million, reflecting a decrease of $779,000, or 4.9%, from the linked quarter primarily due to 401(k) employer match and payroll taxes paid in the prior quarter on the annual cash bonus payout. Average full-time equivalents (FTEs) for the first quarter of 2023 were 341, up from 340 in the linked quarter.
•Professional fees were $1.2 million, decreasing $103,000, or 7.7%, from the linked quarter primarily due to expenses related to an office relocation in the prior quarter.
•Data processing expense was $1.1 million, increasing $186,000, or 21.3%, from the linked quarter primarily due to the recurring, annual expense related to tax processing on behalf of the Bank’s Private Wealth clients.
1 Adjusted net interest margin is a non-GAAP measure representing net interest income excluding 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.
3
Exhibit 99.1
•Marketing expenses were $779,000, increasing $151,000, or 24.0%, from the linked quarter primarily due to seasonal increases in client entertainment and sponsorships.
•FDIC insurance expense was $580,000, increasing $186,000, or 47.2%, from the linked quarter primarily due to an increase in the assessment rate and the assessable base.
•Other non-interest expense increased $577,000, or 113.1%, to $1.1 million from the linked quarter primarily due to a $359,000 increase in SBA recourse provision, a loss on disposal of fixed assets, and an increase in travel expenses related to normal business development activities.
Income tax expense decreased $286,000, or 10.2%, to $2.5 million. The effective tax rate was 23.2% for the three months ended June 30, 2023, compared to 23.8% for the linked quarter. Both quarters benefited from low-income housing tax credits. Based on expected earnings and future tax credit investments, the Company expects to report an effective tax rate between 21% and 22% for 2023.
Total period-end loans and leases receivable increased $135.2 million, or 21.3% annualized, to $2.675 billion. Management does not believe this level of loan growth is sustainable and expects growth to moderate in subsequent quarters. Additionally, management expects to evaluate loan sale strategies as a means of adding to and further diversifying fee income. The average rate earned on average loans and leases receivable was 6.86%, up 44 basis points from 6.42% in the prior quarter.
•Commercial Real Estate (“CRE”) loans increased by $62.6 million, or 16.4% annualized, to $1.592 billion. The increase was primarily due to an increase in non-owner occupied CRE loans.
•Commercial & Industrial (“C&I”) loans increased $73.6 million, or 30.4% annualized, to $1.037 billion. The increase was due to growth across the majority of the Bank’s C&I products and geographies.
Total period-end in-market deposits increased $19.0 million, or 3.7% annualized, to $2.074 billion, compared to $2.055 billion. The average rate paid was 2.56%, up 47 basis points from 2.09% in the prior quarter.
•Growth in interest-bearing transaction accounts, driven in part by client movement into extended insurance products, was partially offset by a decrease in non-interest bearing transaction accounts, money market accounts, and certificates of deposit.
Period-end wholesale funding, including FHLB advances, brokered deposits, and deposits gathered through internet deposit listing services, increased $61.2 million to $790.8 million.
•Wholesale deposits increased $33.0 million to $455.1 million, compared to $422.1 million as the Bank continued to replace FHLB advances with wholesale deposits consistent with the Company’s long-held philosophy to manage interest rate risk by utilizing the most efficient and cost-effective source of wholesale funds to match-fund fixed-rate loans. The average rate paid on wholesale deposits increased three basis points to 4.24% and the weighted average original maturity increased to 3.7 years from 1.8 years.
•FHLB advances decreased $28.2 million to $335.7 million. The average rate paid on FHLB advances increased 20 basis points to 2.67% and the weighted average original maturity increased to 5.2 years from 4.7 years.
Non-performing assets increased $12.3 million to $15.8 million, or 0.48% of total assets, up from 0.11% in the prior quarter. The increase was primarily due to the default of one $10.9 million fully collateralized ABL credit, for which the Company expects full repayment. Excluding this credit, non-performing assets totaled $4.9 million, or 0.15% of total assets.
The allowance for credit losses, including unfunded credit commitments reserve, increased $2.1 million, or 7.8%, primarily driven by loan growth and an increase in specific reserves. The allowance for credit losses, including unfunded credit commitment reserves, as a percent of total gross loans and leases was 1.11% compared to 1.08% in the prior quarter.

4
Exhibit 99.1
Second Quarter 2023 Compared to Second Quarter 2022
Net interest income increased $4.1 million, or 17.3%, to $27.7 million.
•The increase in net interest income primarily reflects an increase in average gross loans and leases and net interest margin expansion, partially offset by lower fees in lieu of interest. Fees in lieu of interest decreased from $1.9 million to $936,000, primarily due to a decrease in non-accrual interest recovery and loan fee amortization related to Paycheck Protection Program loans. Excluding fees in lieu of interest, net interest income increased $5.0 million, or 23.0%.
•The yield on average interest-earning assets measured 6.47% compared to 4.24%. Excluding fees in lieu of interest, the yield on average interest-earning assets measured 6.35%, compared to 3.95%. This increase in yield was primarily due to the increase in short-term market rates and the reinvestment of cash flows from the securities and fixed rate loan portfolios in a rising rate environment. The daily average effective federal funds rate increased 422 basis points compared to the prior year quarter, which equates to an average adjusted interest-earning asset beta of 56.9% for the three months ended June 30, 2023, compared to the prior year period.
•The rate paid for average interest-bearing in-market deposits increased 296 basis points to 3.25% from 0.29%. The rate paid for average total bank funding increased 232 basis points to 2.78% from 0.46%. The total bank funding beta was 55.0% for the three months ended June 30, 2023, compared to the prior year period.
•Net interest margin increased 10 basis points to 3.81% from 3.71%. Adjusted net interest margin increased 19 basis points to 3.63% from 3.44%.
The Company reported a provision expense of $2.2 million, compared to a provision benefit of $3.7 million in the second quarter of 2022, primarily due to loan growth and an increase in specific reserves. The prior year quarter benefited from net recoveries of $4.2 million.
Non-interest income of $7.4 million increased by $502,000, or 7.3%, from $6.9 million in the prior year period.
•Private Wealth fee income increased $41,000, or 1.4%, to $2.9 million. Private Wealth assets under management and administration measured $2.907 billion at June 30, 2023, up $353.4 million, or 13.8%.
•Gain on sale of SBA loans decreased $507,000, or 53.3%, to $444,000. The decrease was driven by lower premiums and a decrease in loan originations compared to prior year quarter. In addition, the Company elected to hold a higher number of SBA loans on its balance sheet in the current interest rate environment.
•Service charges on deposits decreased $275,000, or 26.4%, to $766,000, driven by an increase in the earnings credit rate commensurate with the rising rate environment.
•Loan fees of $905,000 increased by $208,000, or 29.8%, primarily due to an increase in C&I lending activity.
•Other fee income increased $574,000, or 66.7%, to $1.4 million, mainly due to higher returns on the Company’s investments in mezzanine funds and a gain on customer lease restructuring. Income from mezzanine funds was $389,000 in the second quarter, compared to $115,000 in the prior year quarter. Income on mezzanine funds varies from period to period based on changes in the value of underlying investments.
Non-interest expense increased $2.6 million, or 13.2%, to $22.0 million. Operating expense increased $2.0 million, or 10.2%, to $21.7 million.
•Compensation expense increased $1.1 million, or 7.9%, to $15.1 million. The increase in compensation expense was mainly due to an increase in average FTEs, annual merit increases and promotions, and an increase in incentive compensation due to outstanding production. Average FTEs increased 6% to 341 in the second quarter of 2023, compared to 321 in the second quarter of 2022, as a result of expanded hiring efforts that have successfully driven growth while maintaining positive operating leverage.
•FDIC insurance increased $284,000, or 95.9%, to $580,000, primarily due to an increase in the assessment rate and the assessable base.
•Marketing expense increased $109,000, or 16.3%, to $779,000, primarily due to an increase in business development efforts and advertising projects commensurate with our expanded sales force.
•Equipment expense increased $120,000, or 51.1%, to $355,000, primarily due to equipment needs for an increasing workforce and increased depreciation expense related to new office locations.
Total period-end loans and leases receivable increased $384.5 million, or 16.8%, to $2.675 billion.
•C&I loans increased $281.8 million, or 37.3% to $1.037 billion, due to growth across all categories and geographies.
•CRE loans increased $103.3 million, or 6.9%, to $1.592 billion, due to increases in most CRE categories and geographies.
5
Exhibit 99.1
Total period-end in-market deposits increased $216.7 million, or 11.7%, to $2.074 billion, and the average rate paid increased 236 basis points to 2.56%. The increase in in-market deposits was principally due to a $252.4 million and $179.3 million increase in interest bearing transaction accounts and certificates of deposits, respectively. This increase was partially offset by a $125.2 million and $89.7 million decrease in non-interest bearing deposit accounts and money market accounts, respectively.
Period-end wholesale funding increased $224.4 million to $790.8 million.
•Wholesale deposits increased $442.8 million to $455.1 million, as the Bank utilized more wholesale deposits in lieu of FHLB advances to build excess liquidity and to match-fund fixed rate assets. The average rate paid on brokered certificates of deposit increased 126 basis points to 4.24% and the weighted average original maturity decreased to 3.7 years from 4.8 years.
•FHLB advances decreased $218.4 million to $335.7 million. The average rate paid on FHLB advances increased 119 basis points to 2.67% and the weighted average original maturity increased to 5.2 years from 3.2 years.
Non-performing assets increased to $15.8 million, or 0.48% of total assets, compared to $5.7 million, or 0.21% of total assets.
The allowance for credit losses, including unfunded commitment reserves, increased $5.6 million to $29.7 million, compared to $24.1 million. The allowance for credit losses as a percent of total gross loans and leases was 1.11%, compared to the allowance for loan losses of 1.05% under the incurred loss model.

Share Repurchase Program Update
As previously announced, effective January 27, 2023, the Company’s Board of Directors authorized the repurchase by the Company of shares of its common stock with a maximum aggregate purchase price of $5.0 million, effective January 31, 2023 through January 31, 2024. As of June 30, 2023, the Company had repurchased a total of 65,112 shares for approximately $2.0 million at an average cost of $30.72 per share. The Company expects to continue its pause of the repurchase program, instead allocating capital to support continued exceptional balance sheet growth.

Investor Presentation
The Company has prepared investor presentation materials that management intends to use from time to time in discussions about the Company’s operations and performance. The presentation will be available for viewing in the Investor Relations section of the Company’s website at firstbusiness.bank and will also be furnished to the U.S. Securities and Exchange Commission on July 28, 2023.
6
Exhibit 99.1
About First Business Bank
First Business Bank specializes in Business Banking, including Commercial Banking and Specialty Finance, Private Wealth, and Bank Consulting services, and through its refined focus delivers unmatched expertise, accessibility, and responsiveness. Specialty Finance solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. First Business Bank is a wholly owned subsidiary of First Business Financial Services, Inc. (Nasdaq: FBIZ). For additional information, visit firstbusiness.bank.

This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:
•Adverse changes in the economy or business conditions, either nationally or in our markets including, without limitation, inflation, supply chain issues, labor shortages, or any future public health epidemics.
•Competitive pressures among depository and other financial institutions nationally and in the Company’s markets.
•Increases in defaults by borrowers and other delinquencies.
•Management’s ability to manage growth effectively, including the successful expansion of our client service, administrative infrastructure, and internal management systems.
•Fluctuations in interest rates and market prices.
•Changes in legislative or regulatory requirements applicable to the Company and its subsidiaries.
•Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.
•Fraud, including client and system failure or breaches of our network security, including the Company’s internet banking activities.
•Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.
•Recent volatility in the banking sector may result in new legislation, regulations or policy changes that could subject the Corporation and the Bank to increased government regulation and supervision.
•The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.
•The Corporation may be subject to increases in FDIC insurance assessments as a result of the recent bank failures.

For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission.
CONTACT:First Business Financial Services, Inc.
Brian D. Spielmann
Chief Financial Officer
608-232-5977
bspielmann@firstbusiness.bank

7
Exhibit 99.1
SELECTED FINANCIAL CONDITION DATA
(Unaudited)As of
(in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Assets
Cash and cash equivalents$112,809 $185,973 $102,682 $110,965 $95,484 
Securities available-for-sale, at fair value253,626 236,989 212,024 196,566 208,643 
Securities held-to-maturity, at amortized cost9,830 11,461 12,635 13,531 13,968 
Loans held for sale2,191 2,697 2,632 773 2,256 
Loans and leases receivable2,674,583 2,539,363 2,443,066 2,330,700 2,290,100 
Allowance for credit losses(28,115)(26,140)(24,230)(24,143)(24,104)
Loans and leases receivable, net2,646,468 2,513,223 2,418,836 2,306,557 2,265,996 
Premises and equipment, net5,094 4,933 4,340 3,143 1,899 
Repossessed assets65 89 95 151 124 
Right-of-use assets
7,049 7,355 7,690 5,424 5,772 
Bank-owned life insurance
54,747 54,383 54,018 54,683 54,324 
Federal Home Loan Bank stock, at cost
14,482 13,088 17,812 15,701 22,959 
Goodwill and other intangible assets12,073 12,160 12,159 12,218 12,262 
Derivatives70,440 54,612 68,581 73,718 44,461 
Accrued interest receivable and other assets76,864 67,448 63,107 57,372 48,868 
Total assets$3,265,738 $3,164,411 $2,976,611 $2,850,802 $2,777,016 
Liabilities and Stockholders’ Equity
In-market deposits$2,073,744 $2,054,752 $1,965,970 $1,929,224 $1,857,010 
Wholesale deposits455,108 422,088 202,236 158,321 12,321 
Total deposits2,528,852 2,476,840 2,168,206 2,087,545 1,869,331 
Federal Home Loan Bank advances and other borrowings
370,113 341,859 456,808 420,297 596,642 
Lease liabilities9,499 9,822 10,175 6,827 7,207 
Derivatives61,147 49,012 61,419 66,162 40,357 
Accrued interest payable and other liabilities23,495 20,297 19,363 16,967 13,556 
Total liabilities2,993,106 2,897,830 2,715,971 2,597,798 2,527,093 
Total stockholders’ equity272,632 266,581 260,640 253,004 249,923 
Total liabilities and stockholders’ equity
$3,265,738 $3,164,411 $2,976,611 $2,850,802 $2,777,016 












8
Exhibit 99.1
STATEMENTS OF INCOME
(Unaudited)As of and for the Three Months EndedAs of and for the Year Ended
(Dollars in thousands, except per share amounts)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Total interest income$47,161 $42,064 $38,319 $31,786 $27,031 $89,226 $51,266 
Total interest expense19,414 15,359 10,867 5,902 3,371 34,773 6,179 
Net interest income27,747 26,705 27,452 25,884 23,660 54,453 45,087 
Provision for credit losses2,231 1,561 702 12 (3,727)3,793 (4,582)
Net interest income after provision for credit losses25,516 25,144 26,750 25,872 27,387 50,660 49,669 
Private wealth management service fees
2,893 2,654 2,570 2,618 2,852 5,547 5,693 
Gain on sale of SBA loans
444 476 269 732 951 920 1,537 
Service charges on deposits
766 682 791 1,018 1,041 1,448 2,040 
Loan fees905 803 847 814 697 1,708 1,349 
Loss on sale of securities(45)— — — — (45)— 
Swap fees977 557 756 341 471 1,534 697 
Other non-interest income1,434 3,238 1,740 2,674 860 4,672 2,942 
Total non-interest income
7,374 8,410 6,973 8,197 6,872 15,784 14,258 
Compensation15,129 15,908 15,267 14,817 14,020 31,037 27,658 
Occupancy603 631 669 566 568 1,234 1,123 
Professional fees
1,240 1,343 1,210 1,203 1,298 2,583 2,468 
Data processing
1,061 875 806 719 892 1,936 1,673 
Marketing
779 628 641 543 670 1,407 1,170 
Equipment
355 295 359 253 235 650 479 
Computer software
1,197 1,183 1,089 1,128 1,117 2,379 2,199 
FDIC insurance
580 394 203 230 296 974 610 
Other non-interest expense1,087 510 923 569 360 1,598 900 
Total non-interest expense
22,031 21,767 21,167 20,028 19,456 43,798 38,280 
Income before income tax expense10,859 11,787 12,556 14,041 14,803 22,646 25,647 
Income tax expense2,522 2,808 2,400 3,215 3,599 5,330 5,771 
Net income$8,337 $8,979 $10,156 $10,826 $11,204 $17,316 $19,876 
Preferred stock dividends219 219 219 218 246 438 246 
Net income available to common shareholders$8,118 $8,760 $9,937 $10,608 $10,958 $16,878 $19,630 
Per common share:
Basic earnings$0.98 $1.05 $1.18 $1.25 $1.29 $2.02 $2.31 
Diluted earnings0.98 1.05 1.18 1.25 1.29 2.02 2.31 
Dividends declared0.2275 0.2275 0.1975 0.1975 0.1975 0.4550 0.395 
Book value31.34 30.65 29.74 28.58 28.08 31.34 28.08 
Tangible book value29.89 29.19 28.28 27.13 26.63 29.89 26.63 
Weighted-average common shares outstanding(1)
8,061,841 8,148,525 8,180,531 8,230,902 8,225,838 8,140,831 8,245,317 
Weighted-average diluted common shares outstanding(1)
8,061,841 8,148,525 8,180,531 8,230,902 8,225,838 8,140,831 8,245,317 
(1)Excluding participating securities.
9
Exhibit 99.1
NET INTEREST INCOME ANALYSIS
(Unaudited)For the Three Months Ended
(Dollars in thousands)June 30, 2023March 31, 2023June 30, 2022
Average
Balance		Interest
Average
Yield/Rate(4)
Average
Balance		Interest
Average
Yield/Rate(4)
Average
Balance		Interest
Average
Yield/Rate(4)
Interest-earning assets      
Commercial real estate and other mortgage loans(1)
$1,546,487 $23,671 6.12 %$1,518,053 $21,717 5.72 %$1,472,075 $15,343 4.17 %
Commercial and industrial loans(1)
987,534 20,020 8.11 %916,457 17,557 7.66 %749,826 9,886 5.27 %
Consumer and other loans(1)
49,216 588 4.78 %46,690 540 4.63 %51,045 458 3.59 %
Total loans and leases receivable(1)
2,583,237 44,279 6.86 %2,481,200 39,814 6.42 %2,272,946 25,687 4.52 %
Mortgage-related securities(2)
192,564 1,421 2.95 %182,494 1,270 2.78 %176,747 804 1.82 %
Other investment securities(3)
60,790 392 2.58 %55,722 320 2.30 %54,591 260 1.91 %
FHLB stock15,844 302 7.62 %17,125 327 7.64 %17,355 226 5.21 %
Short-term investments61,316 767 5.00 %28,546 333 4.67 %29,541 54 0.73 %
Total interest-earning assets2,913,751 47,161 6.47 %2,765,087 42,064 6.09 %2,551,180 27,031 4.24 %
Non-interest-earning assets213,483   219,513   165,527   
Total assets$3,127,234   $2,984,600   $2,716,707   
Interest-bearing liabilities        
Transaction accounts$670,698 5,455 3.25 %$567,435 3,840 2.71 %$502,763 343 0.27 %
Money market633,817 4,617 2.91 %699,314 4,497 2.57 %767,433 509 0.27 %
Certificates of deposit295,785 2,946 3.98 %236,083 2,117 3.59 %73,560 114 0.62 %
Wholesale deposits
332,387 3,523 4.24 %187,784 1,976 4.21 %12,350 92 2.98 %
Total interest-bearing deposits
1,932,687 16,541 3.42 %1,690,616 12,430 2.94 %1,356,106 1,058 0.31 %
FHLB advances367,129 2,452 2.67 %398,109 2,461 2.47 %449,599 1,666 1.48 %
Other borrowings34,538 421 4.88 %36,794 468 5.09 %51,018 647 5.07 %
Total interest-bearing liabilities
2,334,354 19,414 3.33 %2,125,519 15,359 2.89 %1,856,723 3,371 0.73 %
Non-interest-bearing demand deposit accounts
435,556   497,770   557,086   
Other non-interest-bearing liabilities
87,148   98,347   57,615   
Total liabilities2,857,058   2,721,636   2,471,424   
Stockholders’ equity270,176   262,964   245,283   
Total liabilities and stockholders’ equity
$3,127,234   $2,984,600   $2,716,707   
Net interest income $27,747   $26,705   $23,660  
Interest rate spread 3.15 %  3.19 %  3.51 %
Net interest-earning assets$579,397  $639,568   $694,457 
Net interest margin 3.81 %  3.86 % 3.71 %
(1)The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.
(2)Includes amortized cost basis of assets available for sale and held to maturity.
(3)Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.
(4)Represents annualized yields/rates.

10
Exhibit 99.1
NET INTEREST INCOME ANALYSIS
(Unaudited)For the Six Months Ended
(Dollars in thousands)June 30, 2023June 30, 2022
Average
Balance		Interest
Average
Yield/Rate(4)
Average
Balance		Interest
Average
Yield/Rate(4)
Interest-earning assets      
Commercial real estate and other mortgage loans(1)
$1,532,348 $45,389 5.92 %$1,466,017 $28,689 3.91 %
Commercial and industrial loans(1)
952,192 37,577 7.89 %742,406 19,176 5.17 %
Consumer and other loans(1)
47,960 1,128 4.70 %50,449 894 3.54 %
Total loans and leases receivable(1)
2,532,500 84,094 6.64 %2,258,872 48,759 4.32 %
Mortgage-related securities(2)
187,556 2,691 2.87 %180,832 1,564 1.73 %
Other investment securities(3)
58,270 712 2.44 %52,584 475 1.81 %
FHLB stock16,481 629 7.63 %15,688 398 5.07 %
Short-term investments45,022 1,100 4.89 %30,321 70 0.46 %
Total interest-earning assets2,839,829 89,226 6.28 %2,538,297 51,266 4.04 %
Non-interest-earning assets216,482 153,316 
Total assets$3,056,311 $2,691,613 
Interest-bearing liabilities
Transaction accounts$619,352 9,295 3.00 %$517,923 597 0.23 %
Money market666,385 9,114 2.74 %775,808 848 0.22 %
Certificates of deposit266,099 5,064 3.81 %63,098 169 0.54 %
Wholesale deposits
260,485 5,498 4.22 %14,282 210 2.94 %
Total interest-bearing deposits
1,812,321 28,971 3.20 %1,371,111 1,824 0.27 %
FHLB advances382,533 4,913 2.57 %417,518 2,702 1.29 %
Other borrowings35,660 889 4.99 %45,694 1,149 5.03 %
Junior subordinated notes(5)
— — — %4,898 504 20.58 %
Total interest-bearing liabilities
2,230,514 34,773 3.12 %1,839,221 6,179 0.67 %
Non-interest-bearing demand deposit accounts
466,491 559,793 
Other non-interest-bearing liabilities
92,716 50,117 
Total liabilities2,789,721 2,449,131 
Stockholders’ equity266,590 242,482 
Total liabilities and stockholders’ equity
$3,056,311 $2,691,613 
Net interest income$54,453 $45,087 
Interest rate spread3.17 %3.37 %
Net interest-earning assets$609,315 $699,076 
Net interest margin3.83 %3.55 %
(1)The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.
(2)Includes amortized cost basis of assets available for sale and held to maturity.
(3)Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.
(4)Represents annualized yields/rates.
(5)The calculation for the six months ended June 30, 2022, includes $248,000 in accelerated amortization of debt issuance costs.
11
Exhibit 99.1
ASSET AND LIABILITY BETA ANALYSIS
For the Three Months EndedFor the Six Months Ended
(Unaudited)June 30, 2023March 31, 2023June 30, 2022June 30, 2023June 30, 2022
Average Yield/Rate (3)
Average Yield/Rate (3)
Increase (Decrease)
Average Yield/Rate (3)
Increase (Decrease)Average Yield/RateAverage Yield/RateIncrease (Decrease)
Total loans and leases receivable (a)
6.86 %6.42 %0.44 %4.52 %2.34 %6.64 %4.32 %2.32 %
Total interest-earning assets(b)
6.47 %6.09 %0.38 %4.24 %2.23 %6.28 %4.04 %2.24 %
Adjusted total loans and leases receivable (1)(c)
6.71 %6.31 %0.40 %4.19 %2.52 %6.52 %4.04 %2.48 %
Adjusted total interest-earning assets (1)(d)
6.35 %5.99 %0.36 %3.95 %2.40 %6.17 %3.79 %2.38 %
Total in-market deposits(e)
2.56 %2.09 %0.47 %0.20 %2.36 %2.33 %0.17 %2.16 %
Total bank funding(f)
2.78 %2.30 %0.48 %0.46 %2.32 %2.55 %0.39 %2.16 %
Net interest margin(g)
3.81 %3.86 %(0.05)%3.71 %0.10 %3.83 %3.55 %0.28 %
Adjusted net interest margin(h)
3.63 %3.74 %(0.11)%3.44 %0.19 %3.69 %3.33 %0.36 %
Effective fed funds rate (2)(i)
4.99 %4.51 %0.48 %0.77 %4.22 %4.75 %0.45 %4.30 %
Beta Calculations:
Total loans and leases receivable(a)/(i)
91.2 %55.4 %53.95 %
Total interest-earning assets(b)/(i)
81.1 %53.0 %52.20 %
Adjusted total loans and leases receivable (1)(c)/(i)
82.9 %59.7 %57.67 %
Adjusted total interest-earning assets (1)(d)/(i)
73.9 %56.9 %55.39 %
Total in-market deposits(e/i)
97.9 %55.9 %50.23 %
Total bank funding(f)/(i)
98.9 %55.0 %50.23 %
Net interest margin(g/i)
(10.4)%2.4 %6.51 %
Adjusted net interest margin(h/i)
(22.9)%4.5 %8.37 %
(1)Excluding fees in lieu of interest.
(2)Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rate [DFF]. Retrieved from FRED, Federal Reserve Bank of St. Louis. Represents average daily rate.
(3)Represents annualized yields/rates.


PROVISION FOR CREDIT LOSS COMPOSITION
(Unaudited)For the Three Months EndedFor the Six Months Ended
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Change due to qualitative factor changes$(50)$9 $85 $132 $(185)$(41)$(601)
Change due to quantitative factor changes(295)474 (930)(940)64 179 (142)
Charge-offs329 166 818 54 85 495 107 
Recoveries(245)(107)(203)(81)(4,247)(351)(4,457)
Change in reserves on individually evaluated loans, net1,093 (36)(50)447 29 1,057 (251)
Change due to loan growth, net1,227 979 982 400 527 2,206 762 
Change in unfunded commitment reserves172 76 — — — 248 — 
Total provision for credit losses$2,231 $1,561 $702 $12 $(3,727)$3,793 $(4,582)

12
Exhibit 99.1
PERFORMANCE RATIOS
 For the Three Months EndedFor the Six Months Ended
(Unaudited)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Return on average assets (annualized)
1.04 %1.17 %1.39 %1.54 %1.61 %1.10 %1.46 %
Return on average common equity (annualized)12.58 %13.96 %16.26 %17.44 %18.79 %13.26 %16.74 %
Efficiency ratio61.68 %62.02 %61.45 %58.46 %64.47 %61.85 %65.00 %
Interest rate spread
3.15 %3.19 %3.56 %3.65 %3.51 %3.17 %3.37 %
Net interest margin3.81 %3.86 %4.15 %4.01 %3.71 %3.83 %3.55 %
Average interest-earning assets to average interest-bearing liabilities
124.82 %130.09 %135.90 %138.98 %137.40 %127.32 %138.01 %

ASSET QUALITY RATIOS
(Unaudited)As of
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Non-accrual loans and leases
$15,721 $3,412 $3,659 $3,645 $5,585 
Repossessed assets65 89 95 151 124 
Total non-performing assets
15,786 3,501 3,754 3,796 5,709 
Non-accrual loans and leases as a percent of total gross loans and leases
0.59 %0.13 %0.15 %0.16 %0.24 %
Non-performing assets as a percent of total gross loans and leases plus repossessed assets0.59 %0.14 %0.15 %0.16 %0.25 %
Non-performing assets as a percent of total assets
0.48 %0.11 %0.13 %0.13 %0.21 %
Allowance for credit losses as a percent of total gross loans and leases1.11 %1.08 %0.99 %1.04 %1.05 %
Allowance for credit losses as a percent of non-accrual loans and leases188.90 %807.44 %662.20 %662.36 %431.58 %

NET CHARGE-OFFS (RECOVERIES)
(Unaudited)For the Three Months EndedFor the Six Months Ended
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Charge-offs
$329 $166 $818 $54 $85 $495 $107 
Recoveries
(245)(107)(203)(81)(4,247)(351)(4,457)
Net charge-offs (recoveries)$84 $59 $615 $(27)$(4,162)$144 $(4,350)
Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)0.01 %0.01 %0.10 %— %(0.73)%0.01 %(0.39)%

CAPITAL RATIOS
As of and for the Three Months Ended
(Unaudited)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Total capital to risk-weighted assets10.70 %11.04 %11.26 %11.66 %11.56 %
Tier I capital to risk-weighted assets8.70 %9.01 %9.20 %9.48 %9.34 %
Common equity tier I capital to risk-weighted assets8.32 %8.61 %8.79 %9.04 %8.90 %
Tier I capital to adjusted assets8.80 %9.00 %9.17 %9.34 %9.19 %
Tangible common equity to tangible assets7.64 %7.69 %7.98 %8.06 %8.16 %


13
Exhibit 99.1
LOAN AND LEASE RECEIVABLE COMPOSITION
(Unaudited)As of
(in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Commercial real estate:  
Commercial real estate - owner occupied (1)
$244,039 $233,725 $268,354 $265,989 $258,375 
Commercial real estate - non-owner occupied (1)
715,309 675,087 687,091 657,975 651,920 
Construction (1)
217,069 212,916 218,751 211,509 246,458 
Multi-family (1)
392,297 384,043 350,026 332,782 314,392 
1-4 family (1)
23,063 23,404 17,728 16,678 17,335 
Total commercial real estate
1,591,777 1,529,175 1,541,950 1,484,933 1,488,480 
Commercial and industrial (1)
1,036,921 963,328 853,327 800,092 755,081 
Consumer and other (1)
45,743 46,773 47,938 46,123 47,519 
Total gross loans and leases receivable
2,674,441 2,539,276 2,443,215 2,331,148 2,291,080 
Less:     
Allowance for credit losses28,115 26,140 24,230 24,143 24,104 
Deferred loan fees(142)(87)149 448 980 
Loans and leases receivable, net
$2,646,468 $2,513,223 $2,418,836 $2,306,557 $2,265,996 
(1)     On January 1, 2023, the Bank adopted ASU 2016-03 Financial Instruments - Credit losses (“ASC 326”). The Bank adopted ASC 326 using the modified retrospective method which does not require restatement of prior periods. The balances as of March 31, 2023 reflect a reclassification of $43 million to commercial and industrial from commercial real estate, and $7 million from consumer and other to commercial real estate.


DEPOSIT COMPOSITION
(Unaudited)As of
(in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Non-interest-bearing transaction accounts
$419,294 $471,904 $537,107 $564,141 $544,507 
Interest-bearing transaction accounts
719,198 612,500 576,601 461,883 466,785 
Money market accounts641,969 662,157 698,505 742,545 731,718 
Certificates of deposit293,283 308,191 153,757 160,655 114,000 
Wholesale deposits455,108 422,088 202,236 158,321 12,321 
Total deposits$2,528,852 $2,476,840 $2,168,206 $2,087,545 $1,869,331 
Uninsured deposits867,397 974,242 967,465 1,007,935 935,101 
Less: uninsured deposits collateralized by pledged assets37,670 32,468 14,326 34,264 34,199 
Total uninsured, net of collateralized deposits829,727 941,774 953,139 973,671 900,902 
% of total deposits32.8 %38.0 %44.0 %46.6 %48.2 %

14
Exhibit 99.1
SOURCES OF LIQUIDITY

(Unaudited)As of
(in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Short-term investments$80,510 $159,859 $76,871 $86,707 $56,233 
Collateral value of unencumbered pledged loans265,884 296,393 184,415 289,513 174,315 
Market value of unencumbered securities217,074 200,332 188,353 173,013 182,429 
Readily available liquidity563,468 656,584 449,639 549,233 412,977 
Fed fund lines45,000 45,000 45,000 45,000 45,000 
Excess brokered CD capacity(1)
1,017,590 1,027,869 1,162,241 1,100,369 1,112,386 
Total liquidity$1,626,058 $1,729,453 $1,656,880 $1,694,602 $1,570,363 
Total uninsured, net of collateralized deposits829,727 941,774 953,139 973,671 900,902 
(1)Bank internal policy limits brokered CDs to 50% of total bank funding when combined with FHLB advances.


PRIVATE WEALTH OFF-BALANCE SHEET COMPOSITION
(Unaudited)As of
(in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Trust assets under management
$2,707,390 $2,615,670 $2,483,811 $2,332,448 $2,386,637 
Trust assets under administration
199,729 188,458 176,225 160,171 167,095 
Total trust assets
$2,907,119 $2,804,128 $2,660,036 $2,492,619 $2,553,732 








15
Exhibit 99.1
NON-GAAP RECONCILIATIONS
Certain financial information provided in this release is determined by methods other than in accordance with generally accepted accounting principles (United States) (“GAAP”). Although the Company’s management believes that these non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
 
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure representing tangible common equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in period-to-period changes in book value per common share exclusive of changes in intangible assets. The information provided below reconciles tangible book value per share and tangible common equity to their most comparable GAAP measures.
(Unaudited)As of
(Dollars in thousands, except per share amounts)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Common stockholders’ equity$260,640 $254,589 $248,648 $241,012 $237,931 
Less: Goodwill and other intangible assets(12,073)(12,160)(12,159)(12,218)(12,262)
Tangible common equity$248,567 $242,429 $236,489 $228,794 $225,669 
Common shares outstanding8,315,465 8,306,270 8,362,085 8,432,048 8,474,699 
Book value per share$31.34 $30.65 $29.74 $28.58 $28.08 
Tangible book value per share
29.89 29.19 28.28 27.13 26.63 

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
“Tangible common equity to tangible assets” (“TCE”) is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. Adjusted TCE ratio is defined as TCE adjusted for net fair value adjustments of financial assets and liabilities. For more information on fair value adjustments please refer to Note 19 - Fair Value Disclosures in the annual report on Form 10-K for the year ended December 31, 2022. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. The information below reconciles tangible common equity and tangible assets to their most comparable GAAP measures.
(Unaudited)As of
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022
Common stockholders’ equity$260,640 $254,589 $248,648 $241,012 $237,931 
Less: Goodwill and other intangible assets(12,073)(12,160)(12,159)(12,218)(12,262)
Tangible common equity (a)
$248,567 $242,429 $236,489 $228,794 $225,669 
Total assets$3,265,738 $3,164,411 $2,976,611 $2,850,802 $2,777,016 
Less: Goodwill and other intangible assets(12,073)(12,160)(12,159)(12,218)(12,262)
Tangible assets (b)
$3,253,665 $3,152,251 $2,964,452 $2,838,584 $2,764,754 
Tangible common equity to tangible assets7.64 %7.69 %7.98 %8.06 %8.16 %
Fair Value Adjustments:
Financial assets - MTM (c)
$(43,403)$(24,764)$(24,302)$(7,650)$(7,206)
Financial liabilities - MTM (d)
$21,916 $17,334 $17,328 $11,230 $9,474 
Net MTM, after-tax e = (c-d)*(1-21%)
$(16,975)$(5,870)$(5,509)$2,828 $1,792 
Adjusted tangible equity f = (a-e)
$231,592 $236,559 $230,980 $231,622 $227,461 
Adjusted tangible assets g = (b-c)
$3,210,262 $3,127,487 $2,940,150 $2,830,934 $2,757,548 
Adjusted TCE ratio (f/g)
7.21 %7.56 %7.86 %8.18 %8.25 %



16
Exhibit 99.1
EFFICIENCY RATIO & PRE-TAX, PRE-PROVISION ADJUSTED EARNINGS
“Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on repossessed assets, amortization of other intangible assets and other discrete items, if any, divided by operating revenue, which is equal to net interest income plus non-interest income less realized gains or losses on securities, if any. “Pre-tax, pre-provision adjusted earnings” is defined as operating revenue less operating expe-1nse. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Company’s operating expenses in relation to its core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items. The information provided below reconciles the efficiency ratio and pre-tax, pre-provision adjusted earnings to its most comparable GAAP measure.
(Unaudited)For the Three Months EndedFor the Six Months Ended
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Total non-interest expense$22,031 $21,767 $21,167 $20,028 $19,456 $43,798 $38,280 
Less:
Net loss on repossessed assets(2)6 22 7 8 4 20 
SBA recourse provision (benefit)341 (18)(322)96 114 323 38 
Contribution to First Business Charitable Foundation— — 809 — — — — 
Tax credit investment impairment recovery— — — — (351)— (351)
Total operating expense (a)
$21,692 $21,779 $20,658 $19,925 $19,685 $43,471 $38,573 
Net interest income$27,747 $26,705 $27,452 $25,884 $23,660 $54,453 $45,087 
Total non-interest income7,374 8,410 6,973 8,197 6,872 15,784 14,258 
Less:
Bank-owned life insurance claim— — 809 — — — — 
Net loss on sale of securities(45)— — — — (45)— 
Adjusted non-interest income7,419 8,410 6,164 8,197 6,872 15,829 14,258 
Total operating revenue (b)
$35,166 $35,115 $33,616 $34,081 $30,532 $70,282 $59,345 
Efficiency ratio61.68 %62.02 %61.45 %58.46 %64.47 %61.85 %65.00 %
Pre-tax, pre-provision adjusted earnings (b - a)
$13,474 $13,336 $12,958 $14,156 $10,847 $26,811 $20,772 
Average total assets$3,127,234 $2,984,600 $2,867,475 $2,758,961 $2,716,707 $3,056,311 $2,691,613 
Pre-tax, pre-provision adjusted return on average assets1.72 %1.79 %1.81 %2.05 %1.60 %1.75 %1.54 %
















17
Exhibit 99.1
ADJUSTED NET INTEREST MARGIN
“Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the 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. Fees in lieu of interest are defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. In the judgment of the Company’s management, the adjustments made to net interest income allow investors and analysts to better assess the Company’s net interest income in relation to its core client-facing loan and deposit rate changes by removing the volatility that is associated with these recurring but volatile components. The information provided below reconciles the net interest margin to its most comparable GAAP measure.
(Unaudited)For the Three Months EndedFor the Six Months Ended
(Dollars in thousands)June 30,
2023		March 31,
2023		December 31,
2022		September 30,
2022		June 30,
2022		June 30,
2023		June 30,
2022
Interest income$47,161 $42,064 $38,319 $31,786 $27,031 $89,226 $51,266 
Interest expense19,414 15,359 10,867 5,902 3,371 34,773 6,179 
Net interest income (a)
27,747 26,705 27,452 25,884 23,660 54,453 45,087 
Less:
Fees in lieu of interest
936 651 1,318 807 1,865 1,587 3,158 
FRB interest income and FHLB dividend income
1,064 656 613 445 279 1,720 467 
Adjusted net interest income (b)
$25,747 $25,398 $25,521 $24,632 $21,516 $51,146 $41,462 
Average interest-earning assets (c)
$2,913,751 $2,765,087 $2,649,149 $2,582,945 $2,551,180 $2,839,829 $2,538,297 
Less:
Average FRB cash and FHLB stock
76,678 45,150 50,522 45,351 46,334 61,001 45,461 
Average non-accrual loans and leases
3,781 3,536 3,591 4,416 5,429 3,659 5,810 
Adjusted average interest-earning assets (d)
$2,833,292 $2,716,401 $2,595,036 $2,533,178 $2,499,417 $2,775,169 $2,487,026 
Net interest margin (a / c)
3.81 %3.86 %4.15 %4.01 %3.71 %3.83 %3.55 %
Adjusted net interest margin (b / d)
3.63 %3.74 %3.93 %3.89 %3.44 %3.69 %3.33 %
18
v3.23.2
Cover Page
Jul. 27, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jul. 27, 2023
Entity Registrant Name First Business Financial Services, Inc.
Entity Incorporation, State or Country Code WI
Entity File Number 1-34095
Entity Tax Identification Number 39-1576570
Entity Address, Address Line One 401 Charmany Drive
Entity Address, City or Town Madison
Entity Address, State or Province WI
Entity Address, Postal Zip Code 53719
City Area Code 608
Local Phone Number 238-8008
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol FBIZ
Security Exchange Name NASDAQ
Entity Central Index Key 0001521951
Amendment Flag false
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