Key Highlights

  • Net income available to common shareholders hit a record $16.4 million, or $1.95 per diluted share, versus $1.70.
  • Net interest Margin stood at 3.80%, compared with 3.68% in the third quarter of 2025.
  • Core deposits rose $386.8 million, or 14.9%, from a year earlier to $2.979 billion.
  • Loans grew $340.2 million, or 10.2%, from the prior year quarter to $3.677 billion.
  • Tangible Book Value per share increased 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 Holding Company for First Business Bank, released record third quarter 2026 results on October 29, 2026. The bank serves business clients with commercial banking and specialty finance, and also offers private Wealth and bank consulting services.

Net income available to common shareholders was $16.4 million, or $1.95 per diluted share, versus $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 climbed about 14.7% from the prior year quarter.

Net interest income rose 12.0% to $39.1 million, reflecting a 9.72% increase in average gross loans and leases, along with higher prepayment and asset-based Loan fees.

Core deposits outrun loan growth

Loans rose $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 totaled $1.390 billion, up 9.9% from a year earlier.

Core deposits increased $101.3 million, or 14.1% annualized, from the second quarter, and made up 76.7% of total bank funding. As a result, period-end wholesale funding fell $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%, versus 3.78% in the second quarter and 3.68% a year ago. Management credited 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 remain above its long term target range of 3.60% to 3.65% in the fourth quarter, though it should 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 hit a record $21.3 million, up 13.1% from the prior year quarter.

Fee income, expenses and Credit quality

Non-interest income declined 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 rose 13.2% to $4.2 million, and wealth assets under management and administration totaled $4.227 billion.

Operating expense fell 2.6% from the second quarter to $26.2 million on lower SBA related compensation, although management expects expenses to climb 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 due to a $22.7 million southeast Wisconsin commercial real estate relationship. The allowance for credit losses equaled 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 improved to 9.65%, and the tangible common equity ratio rose 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 quickly expenses grow, whether margin moves closer to the target range and how the non-accrual relationship develops.