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

FIRST BUSINESS BANK REPORTS FOURTH QUARTER 2022 NET INCOME OF $9.9 MILLION
-- Loan growth, net interest margin expansion, and strong asset quality support continued tangible book value growth --
MADISON, Wis., January 26, 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 $9.9 million, or $1.18 diluted earnings per share. This compares to net income available to common shareholders of $10.6 million, or $1.25 per share, in the third quarter of 2022 and $8.6 million, or $1.01 per share, in the fourth quarter of 2021. For the full year 2022, the Company reported net income available to common shareholders of $40.2 million, or $4.75 per share, compared to $35.8 million, or $4.17 per share, in 2021.
“Excellent execution across our commercial lending businesses continued through the fourth quarter, highlighted by 20% annualized loan growth,” Chief Executive Officer Corey Chambas said. “The impact of rising rates and strong balance sheet management, contributed to record net interest margin of 4.15%. We believe our core net interest margin will remain relatively stable in the near-term given the current interest rate environment. We bolstered our funding position with solid in-market deposit expansion, along with the use of wholesale deposits as part of our long-held strategy to match-fund our fixed rate loans.” Chambas added, “This important component of our interest rate risk management strategy resulted in favorable margin expansion compared to peer banks. Outstanding execution led to growth in tangible book value per share of 9% for the year, which compares very favorably to the industry. We enter 2023 with expectations for double-digit loan, deposit, and revenue growth, driving strong earnings performance.”

Quarterly Highlights
•Robust Loan Growth. Loans, excluding net Paycheck Protection Program (“PPP”) loans, grew $114.2 million, or 19.6% annualized, from the third quarter of 2022 and $230.4 million, or 10.4%, from the fourth quarter of 2021, reflecting balanced growth across the Company’s commercial and industrial (“C&I”) and commercial real estate (“CRE”) portfolios.
•Strong Deposit Growth. Total deposits grew to $2.168 billion, increasing 15.5% annualized from the linked quarter and 10.7% from the fourth quarter of 2021. In-market deposits grew to $1.966 billion, up $36.7 million, or 7.6% annualized, from the linked quarter.
•Record Net Interest Income. Net interest income grew to a record $27.5 million, increasing $1.6 million, or 6.1%, from the linked quarter and $6.5 million, or 31.2%, from the prior year quarter. This was driven by a combination of 11.6% annualized increase in average loans and leases as well as a record net interest margin of 4.15%.
•Exceptional Asset Quality. Continued positive asset quality trends resulted in non-performing assets of $3.8 million, measuring a historically low of 0.13% of total assets and improving from 0.25% of total assets on December 31, 2021.
•Tangible Book Value Growth. The Company’s strong earnings generation produced a 17.0% annualized increase in tangible book value per share compared to the linked quarter and 8.6% compared to the prior year quarter.


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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)December 31,
2022		September 30,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Net interest income
$27,452 $25,884 $20,924 $98,422 $84,662 
Adjusted non-interest income (1)
6,164 8,197 7,569 28,619 28,071 
Operating revenue (1)
33,616 34,081 28,493 127,041 112,733 
Operating expense (1)
20,658 19,925 17,644 79,155 71,571 
Pre-tax, pre-provision adjusted earnings (1)
12,958 14,156 10,849 47,886 41,162 
Less:
Provision for loan and lease losses702 12 (508)(3,868)(5,803)
Net loss on foreclosed properties22 7 7 49 15 
Amortization of other intangible assets
— — 2 — 25 
Contribution to First Business Charitable Foundation809 — — 809 — 
SBA recourse (benefit) provision(322)96 (122)(188)(76)
Tax credit investment impairment recovery— — — (351)— 
Add:
Bank-owned life insurance claim809 — — 809 — 
Net gain on sale of securities— — — — 29 
Income before income tax expense
12,556 14,041 11,470 52,244 47,030 
Income tax expense2,400 3,215 2,879 11,386 11,275 
Net income
$10,156 $10,826 $8,591 $40,858 $35,755 
Preferred stock dividends219 218 — 683 — 
Net income available to common shareholders$9,937 $10,608 $8,591 $40,175 $35,755 
Earnings per share, diluted
$1.18 $1.25 $1.01 $4.75 $4.17 
Book value per share$29.74 $28.58 $27.48 $29.74 $27.48 
Tangible book value per share (1)
$28.28 $27.13 $26.03 $28.28 $26.03 
Net interest margin (2)
4.15 %4.01 %3.39 %3.82 %3.44 %
Adjusted net interest margin (1)(2)
3.94 %3.89 %3.23 %3.64 %3.21 %
Fee income ratio (non-interest income / total revenue)20.26 %24.05 %26.56 %23.02 %24.92 %
Efficiency ratio (1)
61.45 %58.46 %61.92 %62.31 %63.49 %
Return on average assets (2)
1.39 %1.54 %1.32 %1.46 %1.37 %
Pre-tax, pre-provision adjusted return on average assets (1)(2)
1.81 %2.05 %1.66 %1.74 %1.58 %
Return on average common equity (2)
16.26 %17.44 %15.04 %16.79 %16.21 %
Period-end loans and leases receivable
$2,443,066 $2,330,700 $2,239,408 $2,443,066 $2,239,408 
Average loans and leases receivable
$2,384,091 $2,316,621 $2,179,769 $2,304,990 $2,179,154 
Period-end in-market deposits
$1,965,970 $1,929,224 $1,928,285 $1,965,970 $1,928,285 
Average in-market deposits
$1,950,625 $1,930,995 $1,866,875 $1,928,815 $1,784,302 
Allowance for loan and lease losses
$24,230 $24,143 $24,336 $24,230 $24,336 
Non-performing assets
$3,754 $3,796 $6,522 $3,754 $6,522 
Allowance for loan and lease losses as a percent of total gross loans and leases
0.99 %1.04 %1.09 %0.99 %1.09 %
Non-performing assets as a percent of total assets
0.13 %0.13 %0.25 %0.13 %0.25 %
(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.

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Quarterly Financial Results - Excluding PPP Loans, Interest Income, and Fees
(Unaudited)As of and for the Three Months EndedAs of and for the Year Ended
(Dollars in thousands, except per share amounts)December 31,
2022		September 30,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Net interest income
$27,444 $25,812 $19,898 $97,816 $75,826 
Adjusted non-interest income (1)
6,164 8,197 7,569 28,619 28,071 
Operating revenue (1)
33,608 34,009 27,467 126,435 103,897 
Operating expense (1)
20,658 19,925 17,644 79,155 71,571 
Pre-tax, pre-provision adjusted earnings (1)
$12,950 $14,084 $9,823 $47,280 $32,326 
Net interest margin (2)
4.15 %4.00 %3.29 %3.81 %3.29 %
Fee income ratio (non-interest income / total revenue)20.26 %24.10 %27.56 %23.13 %27.04 %
Efficiency ratio (1)
61.47 %58.59 %64.24 %62.61 %68.89 %
Pre-tax, pre-provision adjusted return on average assets (1)(2)
1.81 %2.05 %1.53 %1.72 %1.32 %
Period-end loans and leases receivable
$2,442,560 $2,328,376 $2,212,111 $2,442,560 $2,212,111 
Average loans and leases receivable
$2,381,958 $2,312,116 $2,126,846 $2,295,250 $2,026,890 
Allowance for loan and lease losses as a percent of total gross loans and leases
0.99 %1.04 %1.10 %0.99 %1.10 %
Non-performing assets as a percent of total assets
0.13 %0.13 %0.25 %0.13 %0.25 %
(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.

Fourth Quarter 2022 Compared to Third Quarter 2022
Net interest income increased $1.6 million, or 6.1%, to $27.5 million.
•Net interest income growth was driven by an increase in both average loans and leases and in fees in lieu of interest combined with net interest margin expansion. Average loans and leases receivable increased $67.5 million, or 11.6% annualized, to $2.384 billion. Fees in lieu of interest, which can vary from quarter to quarter based on client-driven activity, totaled $1.3 million, compared to $807,000 in the prior quarter. Excluding fees in lieu of interest and interest income from PPP loans, net interest income increased $1.1 million, or 17.0% annualized.
•The yield on average interest-earning assets increased 87 basis points to 5.79% from 4.92%. Excluding average net PPP loans, PPP loan interest income, and fees in lieu of interest, the yield earned on average interest-earning assets increased 79 basis points to 5.59% from 4.80%.
•The rate paid for average interest-bearing, in-market deposits increased 113 basis points to 2.01% from 0.88%. The rate paid for average total bank funding increased 78 basis points to 1.67% from 0.89%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances. The daily average effective federal funds rate increased 147 basis points compared to the linked quarter, which equates to a total bank funding beta of 53.1% for the three months ended December 31, 2022.
•Net interest margin was 4.15%, up 14 basis points compared to 4.01% in the linked quarter. Adjusted net interest margin1 was 3.94%, up 5 basis points compared to 3.89% in the linked quarter. Net interest margin expansion was due to an
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 average net PPP loans and other recurring, but volatile, components of average interest-earning assets.
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increase in fees of lieu of interest and the beta on interest earning assets exceeding the total bank funding beta.
•The Bank maintains an asset-sensitive balance sheet and ended the quarter positioned for net interest income to continue to benefit from rising rates. However, the Bank anticipates deposit betas will continue to rise at a greater rate, and adjusted net interest margin may begin to decline at a gradual pace in coming quarters.
The Bank reported a provision expense of $702,000, compared to $12,000 in the third quarter of 2022.
•The provision for loan and lease losses expense in the fourth quarter of 2022 was primarily due to net charge offs of $615,000 and an increase of $982,000 in the general reserve due to loan growth, partially offset by a $930,000 decrease in the general reserve due to a decrease in the historical loss factor as elevated losses during the Great Recession fall outside the model look-back period.
•The Bank adopted ASU No. 2016-13, “Financial Instruments- Credit Losses (Topic 326)", which is often referred to as CECL, on January 1, 2023.
Non-interest income decreased $1.2 million, or 14.9%, to $7.0 million.
•Private Wealth and Retirement assets (“Private Wealth”) fee income decreased $48,000, or 1.8% to $2.6 million. Private Wealth assets under management and administration measured $2.660 billion at December 31, 2022, up $167.4 million from the third quarter, with a majority of the growth occurring late in the fourth quarter.
•Gains on sale of Small Business Administration (“SBA”) loans decreased $463,000, or 63.3%, to $269,000. Premiums on the sale of SBA loans sold decreased compared to prior quarter and the Company elected to hold a higher proportion of SBA loans on its balance sheet in the current interest rate environment.
•Commercial loan swap fee income increased $415,000, or 121.7%, to $756,000. Swap fee income can vary from period to period based on loan activity and the interest rate environment.
•Service charges on deposits decreased $227,000, or 22.3%, to $791,000, driven by an increase in the earnings credit rate commensurate with the rising rate environment.
•Other fee income decreased $934,000 to $1.7 million, compared to $2.7 million in the third quarter. The decrease was primarily due to lower returns on the Company’s investments in mezzanine funds and lower income in the equipment financing business line. The fourth quarter decrease was partially offset by the recognition of a $809,000 bank-owned life insurance claim. Income on mezzanine funds can vary from period to period based on changes in the value of underlying investments.
Non-interest expense increased $1.1 million, or 5.7%, to $21.2 million, while operating expense increased $733,000, or 3.7%, to $20.7 million.
•Compensation expense was $15.3 million, reflecting an increase of $450,000, or 3.0%, from the linked quarter due to a $347,000 adjustment to the annual cash incentive bonus program accrual driven by above-target current year performance, as well as expanded hiring to support the Bank’s growth plans. The Bank’s compensation philosophy is to provide base salaries competitive with the market. To stay competitive in the tight labor market, the Company increased its base salaries consistent with 2021. Average full-time equivalents (FTEs) for the fourth quarter of 2022 were 336, up three from 333 in the linked quarter.
•Equipment expense increased $106,000, or 41.9%, to $359,000 from the linked quarter primarily due to one-time costs associated with an office relocation.
•Occupancy expense increased $103,000, or 18.2%, to $669,000 from the linked quarter primarily due to an office relocation and one-time costs associated with building repairs.
•Other non-interest expense increased $354,000, or 62.2%, to $923,000 from the linked quarter primarily due to a non-recurring contribution to the First Business Charitable Foundation totaling $809,000 during the fourth quarter partially offset by a recourse release of $322,000 and a swap credit valuation benefit of $153,000.
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Income tax expense decreased $815,000, or 25.3%, to $2.4 million. The effective tax rate was 19.1% for the three months ended December 31, 2022, compared to 22.9% for the linked quarter. The three months ended December 31, 2022 benefited from low income housing tax credits and a state return amendment. The Company expects to report an effective tax rate of 21-22% for 2023.
Total period-end loans and leases receivable increased $112.4 million, or 19.3% annualized, to $2.443 billion. Excluding net PPP loans, total period-end loans and leases receivable increased $114.2 million, or 19.6% annualized.
•Commercial real estate loans increased by $57.0 million, or 15.4% annualized, to $1.542 billion, compared to $1.485 billion. Growth spanned all commercial real estate categories, led by increases in non-owner occupied and multi-family loans.
•C&I loans increased $52.2 million, or 26.4% annualized, to $841.2 million, compared to $789.0 million. Excluding PPP loans, C&I loans increased $54.0 million, or 27.6% annualized, due to growth across products and geographies.
Total period-end in-market deposits increased $36.7 million, or 7.6% annualized, to $1.966 billion, compared to $1.929 billion. The average rate paid was 1.43%, up 82 basis points from 0.61% in the third quarter.
Period-end wholesale funding, including FHLB advances, brokered deposits, and deposits gathered through internet deposit listing services, increased $82.5 million to $618.6 million.
•Wholesale deposits increased $43.9 million to $202.2 million, compared to $158.3 million as the Bank continued to replace FHLB advances with wholesale deposits. The increase in wholesale funding is 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 our fixed-rate loan portfolio. The average rate paid on wholesale deposits increased 120 basis points to 3.66% and the weighted average original maturity increased to 2.1 years from 0.3 years.
•FHLB advances increased $38.6 million to $416.4 million. The average rate paid on FHLB advances increased 20 basis points to 2.21% and the weighted average original maturity decreased to 3.7 years from 4.8 years.
Non-performing assets were $3.8 million, or 0.13% of total assets in both periods of comparison.
The allowance for loan and lease losses increased $87,000, or 0.4%, as increases in the general reserve from loan growth and net charge-offs were partially offset by a decrease in the general reserve due to a change in loss factors derived from the historical look-back period. The allowance for loan and lease losses as a percent of total gross loans and leases was 0.99% compared to 1.04% in the third quarter.

Fourth Quarter 2022 Compared to Fourth Quarter 2021
Net interest income increased $6.5 million, or 31.2%, to $27.5 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 $1.7 million to $1.3 million, primarily due to a $889,000 reduction in PPP loan fee amortization. Excluding fees in lieu of interest and interest income from PPP loans, net interest income increased $7.0 million, or 36.9%. Excluding net PPP loans, average gross loans and leases increased $255.1 million, or 12.0%.
•Net interest margin increased 76 basis points to 4.15% from 3.39%. Adjusted net interest margin increased 71 basis points to 3.94% from 3.23%.
•The yield on average interest-earning assets measured 5.79% compared to 3.81%. Excluding fees in lieu of interest, PPP loan interest income, and net PPP loans, the yield on average interest-earning assets measured 5.59%, compared to 3.60%. 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 rate paid for average interest-bearing in-market deposits increased 183 basis points to 2.01% from 0.18%. The rate paid for average total bank funding increased 124 basis points to 1.67% from 0.33%.
The Company reported a provision expense of $702,000, compared to a provision benefit of $508,000 in the fourth quarter of 2021 primarily due to an increase in net charge-offs in the current quarter and improvement in subjective factors in the prior year quarter.
Non-interest income of $7.0 million decreased by $596,000, or 7.9%, from $7.6 million in the prior year period.
•Private Wealth fee income decreased $304,000, or 10.6%, to $2.6 million, due to a decline in market values. Private Wealth assets under management and administration measured $2.660 billion at December 31, 2022, down $260.7 million, or 8.9%.
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•Gain on sale of SBA loans decreased $773,000, or 74.2%, to $269,000. Premiums on the sale and notional value of SBA loans sold decreased compared to prior year quarter, as the Company elected to hold a higher proportion of SBA loans on its balance sheet in the current interest rate environment.
•Service charges on deposits decreased $232,000, or 22.7%, to $791,000. The reasons for the decrease are consistent with the explanations discussed above in the linked quarter analysis.
•Loan fees of $847,000 increased by $168,000, or 24.7%, primarily due to an increase in C&I lending activity.
•Other fee income increased $473,000, or 37.4%, to $1.7 million, due to the recognition of a $809,000 bank owned life insurance death benefit, partially offset by lower returns on the Company’s investments in mezzanine funds. Income on mezzanine funds can vary from period to period based on changes in the value of underlying investments.
Non-interest expense increased $3.6 million, or 20.7%, to $21.2 million. Operating expense increased $3.0 million, or 17.1%, to $20.7 million.
•Compensation expense increased $2.8 million, or 22.7%, to $15.3 million. Average FTEs increased 12% to 336 in the fourth quarter of 2022, compared to 301 in the fourth quarter of 2021. 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 company performance.
•Full year 2022 compensation included a $6.7 million annual incentive compensation accrual, which exceeded the Company’s target payout by $2.5 million.
•Professional fees increased $277,000, or 29.7%, to $1.2 million, primarily due to a general increase in other professional consulting services associated with various projects and an increase in audit expenses.
•Equipment expense increased $136,000, or 61.0%, to $359,000. The reasons for the increase in equipment expense are consistent with the explanations discussed above in the linked quarter analysis.
•Occupancy expense increased $118,000, or 21.4%, to $669,000. The reasons for the increase in occupancy expense are consistent with the explanations discussed above in the linked quarter analysis.
•Other non-interest expense increased $94,000, or 11.3%, to $923,000 primarily due to a non-recurring charitable contribution totaling $809,000 during the fourth quarter partially offset by a reduction in expenses related to swap credit valuations and recourse provision.
Total period-end loans and leases receivable increased $203.7 million, or 9.1%, to $2.443 billion. Excluding net PPP loans, total period-end loans and leases receivable increased $230.4 million, or 10.4%, to $2.443 billion.
•C&I loans increased $110.4 million, or 15.1% to $841.2 million. Excluding PPP loans, C&I loans increased $137.7 million, or 19.6%, to $840.6 million due to growth across categories and geographies.
•CRE loans increased $87.3 million, or 6.0%, to $1.542 billion, due to increases in most CRE categories.
Total period-end in-market deposits increased $37.7 million, or 2.0%, to $1.966 billion, and the average rate paid increased 130 basis points to 1.43%. The increase in in-market deposits was principally due to a $99.7 million increase in certificates of deposit, partially offset by a $55.9 million decline in money market accounts.
Period-end wholesale funding increased $220.2 million to $618.6 million.
•Wholesale deposits increased $172.6 million to $202.2 million, as the Bank utilized more wholesale deposits in lieu of short-term FHLB advances. The average rate paid on brokered certificates of deposit increased 263 basis points to 3.66% and the weighted average original maturity decreased to 2.1 years from 3.8 years.
•FHLB advances increased $47.6 million to $416.4 million. The average rate paid on FHLB advances increased 91 basis points to 2.21% and the weighted average original maturity decreased to 3.7 years from 5.9 years.
Non-performing assets decreased to $3.8 million, or 0.13% of total assets, compared to $6.5 million, or 0.25% of total assets.
The allowance for loan and lease losses decreased $106,000 to $24.2 million, compared to $24.3 million. The allowance for loan and lease losses as a percent of total gross loans and leases was 0.99%, compared to 1.09%.

Paycheck Protection Program
As of December 31, 2022, the Company had $554,000 in gross PPP loans outstanding and deferred processing fees outstanding of $48,000. The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness, as an adjustment of yield using the interest method. During the three and twelve months ended December 31, 2022, the Company recognized $3,000 and $509,000 of PPP processing fees in interest income, respectively, compared to
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$892,000 and $7.3 million for the three and twelve months ended December 31, 2021. The SBA provides a guaranty to the lender of 100% of principal and interest unless the lender violated an obligation under the agreement.
Share Repurchase Program Update
As previously announced, effective March 4, 2022, 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 March 4, 2022 through March 4, 2023. As of December 16, 2022, the Company had completed the share repurchase program, purchasing a total of 142,074 shares for approximately $5.0 million at an average cost of $35.14 per share.

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About First Business Financial Services, Inc.
First Business Financial Services, Inc., (Nasdaq: FBIZ) is the parent company of First Business Bank. First Business Bank specializes in business banking, including commercial banking and specialized lending, private wealth, and bank consulting services, and through its refined focus, delivers unmatched expertise, accessibility, and responsiveness. Specialized lending solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. 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, and the adverse effects of the COVID-19 pandemic on the global, national, and local economy.
•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.

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, 2021 and other filings with the Securities and Exchange Commission.
CONTACT:First Business Financial Services, Inc.
Edward G. Sloane, Jr.
Chief Financial Officer
608-232-5970
esloane@firstbusiness.bank

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SELECTED FINANCIAL CONDITION DATA
(Unaudited)As of
(in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Assets
Cash and cash equivalents$102,682 $110,965 $95,484 $95,603 $57,110 
Securities available-for-sale, at fair value212,024 196,566 208,643 223,631 205,702 
Securities held-to-maturity, at amortized cost12,635 13,531 13,968 17,267 19,746 
Loans held for sale2,632 773 2,256 2,418 3,570 
Loans and leases receivable2,443,066 2,330,700 2,290,100 2,251,249 2,239,408 
Allowance for loan and lease losses(24,230)(24,143)(24,104)(23,669)(24,336)
Loans and leases receivable, net2,418,836 2,306,557 2,265,996 2,227,580 2,215,072 
Premises and equipment, net4,340 3,143 1,899 1,621 1,694 
Foreclosed properties95 151 124 117 164 
Right-of-use assets
7,690 5,424 5,772 6,118 4,910 
Bank-owned life insurance
54,018 54,683 54,324 53,974 53,600 
Federal Home Loan Bank stock, at cost
17,812 15,701 22,959 12,863 13,336 
Goodwill and other intangible assets12,159 12,218 12,262 12,184 12,268 
Derivatives68,581 73,718 44,461 26,890 26,343 
Accrued interest receivable and other assets63,107 57,372 48,868 43,816 39,390 
Total assets$2,976,611 $2,850,802 $2,777,016 $2,724,082 $2,652,905 
Liabilities and Stockholders’ Equity
In-market deposits$1,965,970 $1,929,224 $1,857,010 $2,011,373 $1,928,285 
Wholesale deposits202,236 158,321 12,321 12,321 29,638 
Total deposits2,168,206 2,087,545 1,869,331 2,023,694 1,957,923 
Federal Home Loan Bank advances and other borrowings
456,808 420,297 596,642 414,487 403,451 
Junior subordinated notes— — — — 10,076 
Lease liabilities10,175 6,827 7,207 7,580 5,406 
Derivatives61,419 66,162 40,357 24,961 28,283 
Accrued interest payable and other liabilities19,363 16,967 13,556 8,309 15,344 
Total liabilities2,715,971 2,597,798 2,527,093 2,479,031 2,420,483 
Total stockholders’ equity260,640 253,004 249,923 245,051 232,422 
Total liabilities and stockholders’ equity
$2,976,611 $2,850,802 $2,777,016 $2,724,082 $2,652,905 











9

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)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Total interest income$38,319 $31,786 $27,031 $24,235 $23,576 $121,371 $95,995 
Total interest expense10,867 5,902 3,371 2,809 2,652 22,949 11,333 
Net interest income27,452 25,884 23,660 21,426 20,924 98,422 84,662 
Provision for loan and lease losses
702 12 (3,727)(855)(508)(3,868)(5,803)
Net interest income after provision for loan and lease losses
26,750 25,872 27,387 22,281 21,432 102,290 90,465 
Private wealth management service fees
2,570 2,618 2,852 2,841 2,874 10,881 10,784 
Gain on sale of SBA loans
269 732 951 585 1,042 2,537 4,044 
Service charges on deposits
791 1,018 1,041 999 1,023 3,849 3,837 
Loan fees847 814 697 652 679 3,010 2,506 
Net gain on sale of securities— — — — — — 29 
Swap fees756 341 471 225 684 1,793 1,368 
Other non-interest income1,740 2,674 860 2,084 1,267 7,358 5,532 
Total non-interest income
6,973 8,197 6,872 7,386 7,569 29,428 28,100 
Compensation15,267 14,817 14,020 13,638 12,447 57,742 51,710 
Occupancy669 566 568 555 551 2,358 2,180 
Professional fees
1,210 1,203 1,298 1,170 933 4,881 3,736 
Data processing
806 719 892 780 773 3,197 3,087 
Marketing
641 543 670 500 548 2,354 2,022 
Equipment
359 253 235 244 223 1,091 990 
Computer software
1,089 1,128 1,117 1,082 1,017 4,416 4,260 
FDIC insurance
203 230 296 313 210 1,042 1,143 
Other non-interest expense923 569 360 541 829 2,393 2,407 
Total non-interest expense
21,167 20,028 19,456 18,823 17,531 79,474 71,535 
Income before income tax expense12,556 14,041 14,803 10,844 11,470 52,244 47,030 
Income tax expense2,400 3,215 3,599 2,172 2,879 11,386 11,275 
Net income$10,156 $10,826 $11,204 $8,672 $8,591 $40,858 $35,755 
Preferred stock dividends219 218 246 — — 683 — 
Net income available to common shareholders$9,937 $10,608 $10,958 $8,672 $8,591 $40,175 $35,755 
Per common share:
Basic earnings$1.18 $1.25 $1.29 $1.02 $1.01 $4.75 $4.17 
Diluted earnings1.18 1.25 1.29 1.02 1.01 4.75 4.17 
Dividends declared0.1975 0.1975 0.1975 0.1975 0.18 0.79 0.72 
Book value29.74 28.58 28.08 27.46 27.48 29.74 27.48 
Tangible book value28.28 27.13 26.63 26.02 26.03 28.28 26.03 
Weighted-average common shares outstanding(1)
8,180,531 8,230,902 8,225,838 8,232,142 8,228,311 8,226,943 8,314,921 
Weighted-average diluted common shares outstanding(1)
8,180,531 8,230,902 8,225,838 8,232,142 8,228,311 8,226,943 8,314,921 
(1)Excluding participating securities.
10

NET INTEREST INCOME ANALYSIS
(Unaudited)For the Three Months Ended
(Dollars in thousands)December 31, 2022September 30, 2022December 31, 2021
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)
$1,515,975 $20,948 5.53 %$1,486,530 $17,280 4.65 %$1,417,498 $13,225 3.73 %
Commercial and industrial loans(1)
806,019 14,816 7.35 %765,440 12,266 6.41 %702,108 8,711 4.96 %
Direct financing leases(1)
13,747 156 4.54 %15,093 160 4.24 %17,662 200 4.53 %
Consumer and other loans(1)
48,350 514 4.25 %49,558 468 3.78 %42,501 376 3.54 %
Total loans and leases receivable(1)
2,384,091 36,434 6.11 %2,316,621 30,174 5.21 %2,179,769 22,512 4.13 %
Mortgage-related securities(2)
164,120 1,008 2.46 %168,433 915 2.17 %170,002 677 1.59 %
Other investment securities(3)
49,850 261 2.09 %51,812 250 1.93 %49,927 209 1.67 %
FHLB stock16,281 301 7.40 %18,167 289 6.36 %12,345 155 5.02 %
Short-term investments34,807 315 3.62 %27,912 158 2.26 %59,970 23 0.15 %
Total interest-earning assets2,649,149 38,319 5.79 %2,582,945 31,786 4.92 %2,472,013 23,576 3.81 %
Non-interest-earning assets218,326   176,016   140,892   
Total assets$2,867,475   $2,758,961   $2,612,905   
Interest-bearing liabilities        
Transaction accounts$492,586 2,360 1.92 %$486,704 1,005 0.83 %$497,743 239 0.19 %
Money market748,502 3,784 2.02 %746,227 1,610 0.86 %749,247 321 0.17 %
Certificates of deposit148,949 849 2.28 %113,529 340 1.20 %42,507 36 0.34 %
Wholesale deposits
128,908 1,180 3.66 %36,702 226 2.46 %62,342 161 1.03 %
Total interest-bearing deposits
1,518,945 8,173 2.15 %1,383,162 3,181 0.92 %1,351,839 757 0.22 %
FHLB advances389,310 2,149 2.21 %432,528 2,173 2.01 %353,637 1,149 1.30 %
Other borrowings41,143 545 5.30 %42,800 548 5.12 %35,270 466 5.28 %
Junior subordinated notes— — — %— — — %10,073 280 11.12 %
Total interest-bearing liabilities
1,949,398 10,867 2.23 %1,858,490 5,902 1.27 %1,750,819 2,652 0.61 %
Non-interest-bearing demand deposit accounts
560,588   584,535   577,378   
Other non-interest-bearing liabilities
100,998   60,705   56,280   
Total liabilities2,610,984   2,503,730   2,384,477   
Stockholders’ equity256,491   255,231   228,428   
Total liabilities and stockholders’ equity
$2,867,475   $2,758,961   $2,612,905   
Net interest income $27,452   $25,884   $20,924  
Interest rate spread 3.56 %  3.65 %  3.21 %
Net interest-earning assets$699,751  $724,455   $721,194 
Net interest margin 4.15 %  4.01 % 3.39 %
(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.

11

NET INTEREST INCOME ANALYSIS
(Unaudited)For the Year Ended
(Dollars in thousands)December 31, 2022December 31, 2021
Average
Balance		InterestAverage
Yield/Rate		Average
Balance		InterestAverage
Yield/Rate
Interest-earning assets      
Commercial real estate and other mortgage loans(1)
$1,484,239 $66,917 4.51 %$1,387,434 $51,930 3.74 %
Commercial and industrial loans(1)
755,837 45,893 6.07 %727,923 37,470 5.15 %
Direct financing leases(1)
15,219 682 4.48 %19,591 872 4.45 %
Consumer and other loans(1)
49,695 1,876 3.78 %44,206 1,572 3.56 %
Total loans and leases receivable(1)
2,304,990 115,368 5.01 %2,179,154 91,844 4.21 %
Mortgage-related securities(2)
173,495 3,486 2.01 %159,242 2,633 1.65 %
Other investment securities(3)
51,700 986 1.91 %44,739 777 1.74 %
FHLB stock16,462 989 6.01 %13,066 651 4.98 %
Short-term investments30,845 542 1.76 %64,308 90 0.14 %
Total interest-earning assets2,577,492 121,371 4.71 %2,460,509 95,995 3.90 %
Non-interest-earning assets175,424 144,499 
Total assets$2,752,916 $2,605,008 
Interest-bearing liabilities
Transaction accounts$503,668 3,963 0.79 %$506,693 988 0.19 %
Money market761,469 6,241 0.82 %693,608 1,183 0.17 %
Certificates of deposit97,448 1,358 1.39 %47,020 396 0.84 %
Wholesale deposits
48,825 1,616 3.31 %119,831 986 0.82 %
Total interest-bearing deposits
1,411,410 13,178 0.93 %1,367,152 3,553 0.26 %
FHLB advances414,191 7,024 1.70 %376,781 4,908 1.30 %
Other borrowings43,818 2,243 5.12 %31,935 1,759 5.51 %
Junior subordinated notes(4)
2,429 504 20.75 %10,068 1,113 11.05 %
Total interest-bearing liabilities
1,871,848 22,949 1.23 %1,785,936 11,333 0.63 %
Non-interest-bearing demand deposit accounts
566,230 536,981 
Other non-interest-bearing liabilities
65,611 61,580 
Total liabilities2,503,689 2,384,497 
Stockholders’ equity249,227 220,511 
Total liabilities and stockholders’ equity
$2,752,916 $2,605,008 
Net interest income$98,422 $84,662 
Interest rate spread3.48 %3.27 %
Net interest-earning assets$705,644 $674,573 
Net interest margin3.82 %3.44 %

(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)The calculation for the year ended December 31, 2022 includes $236,000 in accelerated amortization of debt issuance costs.















12

ASSET AND LIABILITY BETA ANALYSIS
For the Three Months EndedFor the Year Ended
(Unaudited)December 31, 2022September 30, 2022December 31, 2021December 31, 2022December 31, 2021
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)
6.11 %5.21 %0.90 %4.13 %1.98 %5.01 %4.21 %0.80 %
Total interest-earning assets(b)
5.79 %4.92 %0.87 %3.81 %1.98 %4.71 %3.90 %0.81 %
Adjusted total loans and leases receivable (1)(c)
5.90 %5.08 %0.82 %3.89 %2.01 %4.79 %3.91 %0.88 %
Adjusted total interest-earning assets (1)(d)
5.59 %4.80 %0.79 %3.60 %1.99 %4.52 %3.61 %0.91 %
Total in-market deposits(e)
1.43 %0.61 %0.82 %0.13 %1.30 %0.60 %0.14 %0.46 %
Total bank funding(f)
1.67 %0.89 %0.78 %0.33 %1.34 %0.84 %0.37 %0.47 %
Net interest margin(g)
4.15 %4.01 %0.14 %3.39 %0.76 %3.82 %3.44 %0.38 %
Adjusted net interest margin(h)
3.94 %3.89 %0.05 %3.23 %0.71 %3.64 %3.21 %0.43 %
Effective fed funds rate (2)(i)
3.65 %2.18 %1.47 %0.09 %3.56 %1.69 %0.08 %1.61 %
Beta Calculations:
Total loans and leases receivable(a)/(i)
61.42 %55.67 %49.69 %
Total interest-earning assets(b)/(i)
58.74 %55.36 %50.15 %
Adjusted total loans and leases receivable (1)(c)/(i)
55.61 %56.38 %54.66 %
Adjusted total interest-earning assets (1)(d)/(i)
53.50 %56.05 %56.39 %
Total in-market deposits(e/i)
55.78 %36.52 %28.57 %
Total bank funding(f)/(i)
53.06 %37.64 %29.19 %
Net interest margin(g/i)
9.52 %21.35 %23.60 %
Adjusted Net interest margin(h/i)
3.40 %19.94 %26.71 %

(1)Excluding average net PPP loans, PPP loan interest income, and 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.
















13

PROVISION FOR LOAN AND LEASE LOSS COMPOSITION
(Unaudited)For the Three Months EndedFor the Year Ended
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Change in general reserve due to qualitative factor changes$85 $132 $(185)$(416)$(805)$(384)$(426)
Change in general reserve due to historical loss factor changes(930)(940)64 (206)(862)(2,012)(4,456)
Charge-offs818 54 85 22 106 979 3,508 
Recoveries(203)(81)(4,247)(210)(274)(4,741)(5,126)
Change in specific reserves on impaired loans, net(50)447 29 (280)(64)146 (2,175)
Change due to loan growth, net982 400 527 235 1,391 2,144 2,872 
Total provision for loan and lease losses$702 $12 $(3,727)$(855)$(508)$(3,868)$(5,803)


PERFORMANCE RATIOS
 For the Three Months EndedFor the Year Ended
(Unaudited)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Return on average assets (annualized)
1.39 %1.54 %1.61 %1.30 %1.32 %1.46 %1.37 %
Return on average common equity (annualized)16.26 %17.44 %18.79 %14.70 %15.04 %16.79 %16.21 %
Efficiency ratio61.45 %58.46 %64.47 %65.55 %61.92 %62.31 %63.49 %
Interest rate spread
3.56 %3.65 %3.51 %3.22 %3.21 %3.48 %3.27 %
Net interest margin4.15 %4.01 %3.71 %3.39 %3.39 %3.82 %3.44 %
Average interest-earning assets to average interest-bearing liabilities
135.90 %138.98 %137.40 %138.64 %141.19 %137.70 %137.77 %


ASSET QUALITY RATIOS
(Unaudited)As of
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Non-accrual loans and leases
$3,659 $3,645 $5,585 $5,617 $6,358 
Foreclosed properties
95 151 124 117 164 
Total non-performing assets
3,754 3,796 5,709 5,734 6,522 
Performing troubled debt restructurings
156 172 188 203 217 
Total impaired assets
$3,910 $3,968 $5,897 $5,937 $6,739 
Non-accrual loans and leases as a percent of total gross loans and leases
0.15 %0.16 %0.24 %0.25 %0.28 %
Non-performing assets as a percent of total gross loans and leases plus foreclosed properties
0.15 %0.16 %0.25 %0.25 %0.29 %
Non-performing assets as a percent of total assets
0.13 %0.13 %0.21 %0.21 %0.25 %
Allowance for loan and lease losses as a percent of total gross loans and leases
0.99 %1.04 %1.05 %1.05 %1.09 %
Allowance for loan and lease losses as a percent of non-accrual loans and leases
662.20 %662.36 %431.58 %421.38 %382.76 %






14

ASSET QUALITY RATIOS - EXCLUDING NET PPP LOANS
(Unaudited)As of
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Non-accrual loans and leases as a percent of total gross loans and leases
0.15 %0.16 %0.24 %0.25 %0.29 %
Non-performing assets as a percent of total gross loans and leases plus foreclosed properties
0.15 %0.16 %0.25 %0.26 %0.29 %
Non-performing assets as a percent of total assets
0.13 %0.13 %0.21 %0.21 %0.25 %
Allowance for loan and lease losses as a percent of total gross loans and leases
0.99 %1.04 %1.06 %1.06 %1.10 %
PPP loans outstanding, net$506 $2,324 $8,172 $18,206 $27,297 


NET CHARGE-OFFS (RECOVERIES)
(Unaudited)For the Three Months EndedFor the Year Ended
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Charge-offs
$818 $54 $85 $22 $106 $979 $3,508 
Recoveries
(203)(81)(4,247)(210)(274)(4,741)(5,126)
Net charge-offs (recoveries)$615 $(27)$(4,162)$(188)$(168)$(3,762)$(1,618)
Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized)0.10 %— %(0.73)%(0.03)%(0.03)%(0.16)%(0.07)%
Annualized charge-offs (recoveries) as a percent of average gross loans and leases, excluding average net PPP loans0.10 %— %(0.74)%(0.03)%(0.03)%(0.16)%(0.08)%
Average PPP loans outstanding, net$2,133 $4,505 $11,650 $20,935 $52,923 $9,740 $152,264 


CAPITAL RATIOS
As of and for the Three Months Ended
(Unaudited)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Total capital to risk-weighted assets11.26 %11.66 %11.56 %11.87 %10.82 %
Tier I capital to risk-weighted assets9.20 %9.48 %9.34 %9.27 %8.94 %
Common equity tier I capital to risk-weighted assets8.79 %9.04 %8.90 %8.81 %8.55 %
Tier I capital to adjusted assets9.17 %9.34 %9.19 %9.09 %8.94 %
Tangible common equity to tangible assets7.98 %8.06 %8.16 %8.14 %8.34 %
Tangible common equity to tangible assets, excluding net PPP loans7.98 %8.07 %8.19 %8.20 %8.42 %


15

LOAN AND LEASE RECEIVABLE COMPOSITION
(Unaudited)As of
(in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Commercial real estate:  
Commercial real estate - owner occupied
$268,354 $265,989 $258,375 $254,237 $235,589 
Commercial real estate - non-owner occupied
687,091 657,975 651,920 656,185 661,423 
Land development50,803 49,458 42,545 40,092 42,792 
Construction167,948 162,051 203,913 200,472 179,841 
Multi-family350,026 332,782 314,392 302,494 320,072 
1-4 family17,728 16,678 17,335 16,198 14,911 
Total commercial real estate
1,541,950 1,484,933 1,488,480 1,469,678 1,454,628 
Commercial and industrial
841,178 788,983 741,363 720,695 730,819 
Direct financing leases, net12,149 11,109 13,718 14,551 15,743 
Consumer and other:     
Home equity and second mortgages
6,761 5,413 5,132 4,523 4,223 
Other41,177 40,710 42,387 43,066 35,518 
Total consumer and other
47,938 46,123 47,519 47,589 39,741 
Total gross loans and leases receivable
2,443,215 2,331,148 2,291,080 2,252,513 2,240,931 
Less:     
Allowance for loan and lease losses
24,230 24,143 24,104 23,669 24,336 
Deferred loan fees149 448 980 1,264 1,523 
Loans and leases receivable, net
$2,418,836 $2,306,557 $2,265,996 $2,227,580 $2,215,072 


DEPOSIT COMPOSITION
(Unaudited)As of
(in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Non-interest-bearing transaction accounts
$537,107 $564,141 $544,507 $600,987 $589,559 
Interest-bearing transaction accounts
576,601 461,883 466,785 539,492 530,225 
Money market accounts698,505 742,545 731,718 806,917 754,410 
Certificates of deposit153,757 160,655 114,000 63,977 54,091 
Wholesale deposits202,236 158,321 12,321 12,321 29,638 
Total deposits$2,168,206 $2,087,545 $1,869,331 $2,023,694 $1,957,923 

PRIVATE WEALTH OFF BALANCE SHEET COMPOSITION
(Unaudited)As of
(in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Trust assets under management
$2,483,811 $2,332,448 $2,386,637 $2,636,896 $2,711,760 
Trust assets under administration
176,225 160,171 167,095 197,160 208,954 
Total trust assets
$2,660,036 $2,492,619 $2,553,732 $2,834,056 $2,920,714 

16

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)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Common stockholders’ equity$248,648 $241,012 $237,931 $233,059 $232,422 
Goodwill and other intangible assets(12,159)(12,218)(12,262)(12,184)(12,268)
Tangible common equity$236,489 $228,794 $225,669 $220,875 $220,154 
Common shares outstanding8,362,085 8,432,048 8,474,699 8,488,585 8,457,564 
Book value per share$29.74 $28.58 $28.08 $27.46 $27.48 
Tangible book value per share
28.28 27.13 26.63 26.02 26.03 

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
“Tangible common equity to tangible assets” 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. 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)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Common stockholders’ equity$248,648 $241,012 $237,931 $233,059 $232,422 
Goodwill and other intangible assets(12,159)(12,218)(12,262)(12,184)(12,268)
Tangible common equity$236,489 $228,794 $225,669 $220,875 $220,154 
Total assets$2,976,611 $2,850,802 $2,777,016 $2,724,082 $2,652,905 
Goodwill and other intangible assets(12,159)(12,218)(12,262)(12,184)(12,268)
Tangible assets
$2,964,452 $2,838,584 $2,764,754 $2,711,898 $2,640,637 
Tangible common equity to tangible assets
7.98 %8.06 %8.16 %8.14 %8.34 %
Period-end net PPP loans506 2,324 8,172 18,206 27,297 
Tangible assets, excluding net PPP loans$2,963,946 $2,836,260 $2,756,582 $2,693,692 $2,613,340 
Tangible common equity to tangible assets, excluding net PPP loans7.98 %8.07 %8.19 %8.20 %8.42 %











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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 foreclosed properties, 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 expense. 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 Year Ended
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Total non-interest expense$21,167 $20,028 $19,456 $18,823 $17,531 $79,474 $71,535 
Less:
Net loss on foreclosed properties22 7 8 12 7 49 15 
Amortization of other intangible assets
— — — — 2 — 25 
SBA recourse provision (benefit)(322)96 114 (76)(122)(188)(76)
Contribution to First Business Charitable Foundation809 — — — — 809 — 
Tax credit investment impairment recovery— — (351)— — (351)— 
Total operating expense (a)
$20,658 $19,925 $19,685 $18,887 $17,644 $79,155 $71,571 
Net interest income$27,452 $25,884 $23,660 $21,426 $20,924 $98,422 $84,662 
Total non-interest income6,973 8,197 6,872 7,386 7,569 29,428 28,100 
Less:
Bank-owned life insurance claim809 — — — — 809 — 
Net gain on sale of securities— — — — — — 29 
Adjusted non-interest income6,164 8,197 6,872 7,386 7,569 28,619 28,071 
Total operating revenue (b)
$33,616 $34,081 $30,532 $28,812 $28,493 $127,041 $112,733 
Efficiency ratio61.45 %58.46 %64.47 %65.55 %61.92 %62.31 %63.49 %
Pre-tax, pre-provision adjusted earnings (b - a)
$12,958 $14,156 $10,847 $9,925 $10,849 $47,886 $41,162 
Less:
PPP fee income3 61 196 249 892 509 7,312 
PPP loan interest income
5 11 29 52 134 97 1,524 
Pre-tax, pre-provision adjusted earnings, excluding PPP$12,950 $14,084 $10,622 $9,624 $9,823 $47,280 $32,326 
Average total assets$2,867,475 $2,758,961 $2,716,707 $2,666,241 $2,612,905 $2,752,916 $2,605,008 
Less:
Average net PPP loans2,133 4,505 11,650 20,935 52,923 9,740 152,264 
Adjusted average total assets$2,865,342 $2,754,456 $2,705,057 $2,645,306 $2,559,982 $2,743,176 $2,452,744 
Pre-tax, pre-provision adjusted return on average assets1.81 %2.05 %1.60 %1.49 %1.66 %1.74 %1.58 %
Pre-tax, pre-provision adjusted return on average assets, excluding PPP1.81 %2.05 %1.57 %1.46 %1.53 %1.72 %1.32 %




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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 average net PPP loans, if any, and 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 Year Ended
(Dollars in thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		December 31,
2022		December 31,
2021
Interest income$38,319 $31,786 $27,031 $24,235 $23,576 $121,371 $95,995 
Interest expense10,867 5,902 3,371 2,809 2,652 22,949 11,333 
Net interest income (a)
27,452 25,884 23,660 21,426 20,924 98,422 84,662 
Less:
Fees in lieu of interest
1,318 807 1,865 1,293 1,700 5,283 11,160 
PPP loan interest income
5 11 29 52 134 97 1,524 
FRB interest income and FHLB dividend income
613 445 279 188 179 1,525 741 
Adjusted net interest income (b)
$25,516 $24,621 $21,487 $19,893 $18,911 $91,517 $71,237 
Average interest-earning assets (c)
$2,649,149 $2,582,945 $2,551,180 $2,525,272 $2,472,013 $2,577,492 $2,460,509 
Less:
Average net PPP loans2,133 4,505 11,650 20,935 52,923 9,740 152,264 
Average FRB cash and FHLB stock
50,522 45,351 46,334 44,577 71,939 46,708 76,880 
Average non-accrual loans and leases
3,591 4,416 5,429 6,195 6,796 5,011 14,172 
Adjusted average interest-earning assets (d)
$2,592,903 $2,528,673 $2,487,767 $2,453,565 $2,340,355 $2,516,033 $2,217,193 
Net interest margin (a / c)
4.15 %4.01 %3.71 %3.39 %3.39 %3.82 %3.44 %
Adjusted net interest margin (b / d)
3.94 %3.89 %3.45 %3.24 %3.23 %3.64 %3.21 %
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