Key Highlights

  • Net income available to common shareholders was a record $16.4 million, or $1.95 per diluted share, versus $1.70.
  • Net interest Margin was 3.80%, compared with 3.68% in the third quarter of 2025.
  • Core deposits grew $386.8 million, or 14.9%, from a year earlier to $2.979 billion.
  • Loans increased $340.2 million, or 10.2%, from the prior year quarter to $3.677 billion.
  • Tangible Book Value per share rose to $45.56 from $40.16 a year earlier.

A record quarter built on net interest income

First Business Financial Services (NASDAQ:FBIZ), the Madison, Wisconsin parent of First Business Bank, reported third quarter 2026 results on October 29, 2026. The bank focuses on business banking, including commercial banking and specialty finance, along with private Wealth and bank consulting services.

Net income available to common shareholders was $16.4 million, or $1.95 per diluted share, compared with $15.4 million, or $1.84, in the second quarter and $14.2 million, or $1.70, a year earlier. On a calculated basis, diluted EPS rose about 14.7% from the prior year quarter.

Net interest income increased 12.0% to $39.1 million, reflecting a 9.72% rise in average gross loans and leases, plus higher prepayment and asset-based Loan fees.

Core deposits outrun loan growth

Loans increased $88.6 million, or 9.9% annualized, from the linked quarter, led by Commercial Real Estate loans, which grew 14.3% annualized to $2.239 billion. Commercial and industrial loans were $1.390 billion, up 9.9% from a year earlier.

Core deposits rose $101.3 million, or 14.1% annualized, from the second quarter, and core deposits reached 76.7% of total bank funding. That allowed period-end wholesale funding to fall $103.1 million to $903.3 million, and Federal Home Loan Bank advances dropped $159.4 million to $132.5 million.

Net interest margin of 3.80% sits above the long term target

Net interest margin was 3.80%, compared with 3.78% in the second quarter and 3.68% a year ago. Management cited favorable loan yields, deposit mix and a modest day-count benefit, and said fee income in lieu of interest continued to support the year over year comparison.

The company expects margin to stay above its long term target range of 3.60% to 3.65% in the fourth quarter, but to moderate from the third quarter level as fee income normalizes.

The efficiency ratio improved to 55.12% from 57.44% a year earlier, and return on average Assets was 1.49%. Pre-tax, pre-provision adjusted Earnings reached a record $21.3 million, up 13.1% from the prior year quarter.

Fee income, expenses and Credit quality

Non-interest income fell 12.6% from a year earlier to $8.4 million, partly because the company exited out-of-market SBA 7(a) lending. Private wealth fee income increased 13.2% to $4.2 million, and wealth assets under management and administration were $4.227 billion.

Operating expense declined 2.6% from the second quarter to $26.2 million on lower SBA related compensation, though management expects expenses to rise as it invests in talent, Marketing and technology.

Non-performing assets increased to $40.2 million, or 0.91% of total assets, from $23.5 million a year earlier, mainly from a $22.7 million southeast Wisconsin commercial real estate relationship. The allowance for credit losses was 1.06% of gross loans, and the provision was $1.9 million.

Capital, Dividend and what to watch

Total stockholders' Equity was $404.6 million, and total assets were $4.44 billion. The common equity Tier 1 ratio rose to 9.65% and the tangible common equity ratio to 8.59%.

The board declared a quarterly dividend of $0.34 per share, payable November 30, 2026, to holders of record on November 12, 2026. Readers will likely watch how fast expenses rise, whether margin eases toward the target range and how the non-accrual relationship develops.