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Stockholders' Equity and Regulatory Capital
 12 Months Ended
Dec. 31, 2023
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]  
Stockholders' Equity and Regulatory Capital Regulatory Capital
The Corporation and the Bank are subject to various regulatory capital requirements administered by Federal and Wisconsin banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory practices. The Corporation’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Corporation regularly reviews and updates, when appropriate, its Capital and Liquidity Action Plans, which is designed to help ensure appropriate capital adequacy, to plan for future capital needs, and to ensure that the Corporation serves as a source of financial strength to the Bank. The Corporation’s and the Bank’s Board and management teams adhere to the appropriate regulatory guidelines on decisions which affect their respective capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.
As a bank holding company, the Corporation’s ability to pay dividends is affected by the policies and enforcement powers of the Board of Governors of the Federal Reserve system (the “Federal Reserve”). Federal Reserve guidance urges financial institutions to strongly consider eliminating, deferring, or significantly reducing dividends if: (i) net income available to common shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividend; (ii) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios. Management intends, when appropriate under regulatory guidelines, to consult with the FRB of Chicago and provide it with information on the Corporation’s then-current and prospective earnings and capital position in advance of declaring any cash dividends. As a Wisconsin corporation, the Corporation is subject to the limitations of the Wisconsin Business Corporation Law, which prohibit the Corporation from paying dividends if such payment would: (i) render the Corporation unable to pay its debts as they become due in the usual course of business, or (ii) result in the Corporation’s assets being less than the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of any shareholders with preferential rights superior to those shareholders receiving the dividend.
The Bank is also subject to certain legal, regulatory, and other restrictions on their ability to pay dividends to the Corporation. As a bank holding company, the payment of dividends by the Bank to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments. Future dividend decisions by the Bank and the Corporation will continue to be subject to compliance with various legal, regulatory, and other restrictions as defined from time to time.
Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios of Total Common Equity Tier 1 and Tier 1 capital to risk-weighted assets and of Tier 1 capital to
adjusted total assets. These risk-based capital requirements presently address credit risk related to both recorded and off-balance sheet commitments and obligations.
In July 2013, the FRB and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks. These rules are applicable to all financial institutions that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as bank and savings and loan holding companies other than “small bank holding companies” (generally non-publicly traded bank holding companies with consolidated assets of less than $1 billion). Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Corporation. The rules include a new Common Equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. The rules also permit banking organizations with less than $15 billion in assets to retain, through a one-time election, the past treatment for accumulated other comprehensive income, which did not affect regulatory capital. The Corporation elected to retain this treatment, which reduces the volatility of regulatory capital ratios. The Corporation also must comply with the 2.5% conservation buffer, which the Corporation met as of December 31, 2023.
As of December 31, 2023, the Corporation’s capital levels exceeded the regulatory minimums and the Bank’s capital levels remained characterized as well capitalized under the regulatory framework. The following tables summarize both the Corporation’s and the Bank’s capital ratios and the ratios required by their federal regulators:
As of December 31, 2023
 
Actual(1)
Minimum Required for Capital Adequacy PurposesFor Capital Adequacy Purposes Plus Capital Conservation BufferMinimum Required to Be Well Capitalized Under Prompt Corrective Action
Requirements
 AmountRatioAmountRatioAmountRatioAmountRatio
 (Dollars in Thousands)
Total capital
(to risk-weighted assets)
Consolidated$375,440 11.19 %$268,500 8.00 %$352,406 10.50 %N/AN/A
First Business Bank376,310 11.21 268,595 8.00 352,531 10.50 $335,744 10.00 %
Tier 1 capital
(to risk-weighted assets)
Consolidated$293,338 8.74 %$201,375 6.00 %$285,281 8.50 %N/AN/A
First Business Bank343,604 10.23 201,446 6.00 285,382 8.50 $268,595 8.00 %
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated$281,346 8.38 %$151,031 4.50 %$234,937 7.00 %N/AN/A
First Business Bank343,604 10.23 151,085 4.50 235,021 7.00 $218,233 6.50 %
Tier 1 leverage capital
(to adjusted assets)
Consolidated$293,338 8.43 %$139,145 4.00 %$139,145 4.00 %N/AN/A
First Business Bank343,604 9.87 139,262 4.00 139,262 4.00 $174,077 5.00 %
(1)     2023 capital amounts include $1.0 million of additional stockholders’ equity as elected by the Corporation and permitted by federal banking regulatory agencies. Risk-weighted assets were also adjusted accordingly.
As of December 31, 2022
 ActualMinimum Required for Capital Adequacy PurposesFor Capital Adequacy Purposes Plus Capital Conservation BufferMinimum Required to Be Well Capitalized Under Prompt Corrective Action
Requirements
 AmountRatioAmountRatioAmountRatioAmountRatio
 (Dollars in Thousands)
Total capital
(to risk-weighted assets)
Consolidated$323,893 11.26 %$230,180 8.00 %$302,111 10.50 %N/AN/A
First Business Bank323,021 11.22 230,367 8.00 302,357 10.50 $287,959 10.00 %
Tier 1 capital
(to risk-weighted assets)
Consolidated$264,843 9.20 %$172,635 6.00 %$244,566 8.50 %N/AN/A
First Business Bank298,312 10.36 172,775 6.00 244,765 8.50 $230,367 8.00 %
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated$252,851 8.79 %$129,476 4.50 %$201,407 7.00 %N/AN/A
First Business Bank298,312 10.36 129,581 4.50 201,571 7.00 $187,173 6.50 %
Tier 1 leverage capital
(to adjusted assets)
Consolidated$264,843 9.17 %$115,464 4.00 %$115,464 4.00 %N/AN/A
First Business Bank298,312 10.34 115,402 4.00 115,402 4.00 $144,252 5.00 %
The following table reconciles stockholders’ equity to federal regulatory capital at December 31, 2023 and 2022, respectively:
 As of December 31,
 20232022
 (In Thousands)
Stockholders’ equity of the Corporation$289,588 $260,640 
Net unrealized and accumulated losses on specific items
13,717 15,310 
Disallowed servicing assets(614)(706)
Disallowed goodwill and other intangibles(10,368)(10,401)
ASC 326 Phase-in1,015 — 
Tier 1 capital293,338 264,843 
Allowable general valuation allowances and subordinated debt82,102 59,050 
Total capital$375,440 $323,893