First Business Financial Services, Inc. (NASDAQ: FBIZ) announced robust financial results for the second quarter of 2025 during its earnings call on July 25, 2025. The company demonstrated strong core deposit growth and maintained a solid net interest margin, showcasing the effectiveness of its strategic plan aimed at achieving double-digit growth annually.
CEO Corey Chambas highlighted that the latest quarter saw significant progress in various sectors. Core deposits increased by $70 million, reflecting an annualized growth rate of 11% from the first quarter and a 10% increase compared to the same period last year. Alongside this, the company saw loan balances rise by approximately $267 million, marking a year-on-year growth of 9%.
Chambas pointed out that the company not only achieved growth in its loan portfolio but also maintained a strong net interest margin, which was reported at 3.67%. This performance led to a 13% increase in pretax pre-provision adjusted earnings and a 10% rise in earnings per share compared to the previous year’s second quarter.
Strategic Growth and Future Outlook
The company’s success can be attributed to a well-executed revenue diversification strategy. Operating revenues were solid, despite variability in fee income sources. The growth in tangible book value per share was particularly noteworthy, with an impressive 14% increase from a year ago, contributing positively to stock valuation.
President and Chief Operating Officer Dave Seiler added that the bank’s focus on cultivating long-term relationships with clients has led to significant opportunities. He mentioned that service charges on deposits increased by 16% year-on-year, reinforcing the bank’s success in core deposit gathering.
Seiler also discussed the performance of the private wealth division, which experienced a remarkable 36% annualized growth in assets under management during the quarter. Approximately 63% of this growth stemmed from transfers from both new and existing clients, highlighting the effectiveness of relationship development in this segment.
Managing Challenges and Asset Quality
In terms of asset quality, both Chambas and Seiler expressed satisfaction with the low levels of net charge-offs for the quarter. The slight increase in non-performing assets (NPAs) was linked to a single credit in the transportation and logistics sector, which is well-collateralized. The company is no longer extending new loans in this segment, which has led to increased confidence regarding overall loss risk.
Chief Financial Officer Brian Spielmann provided insights into the company’s operating expenses, which remained well-contained. He noted the importance of achieving positive operating leverage and maintaining an effective tax rate of 15.8%, aligning with the company’s expectations.
The earnings call concluded with an optimistic outlook for the remainder of 2025. Chambas reinforced the bank’s commitment to strategic initiatives, emphasizing a strong year-to-date performance with 10% growth in operating revenue, 18% growth in pretax pre-provision earnings, and 17% growth in net income compared to the same period in 2024.
As the call wrapped up, the leadership team welcomed questions from analysts, indicating confidence in the bank’s trajectory and commitment to transparency in its operations.
