First Business Financial Services (FBIZ) investor relations material

Executive summary

• Net income available to common shareholders rose to $15.4 million ($1.84 EPS) in Q2 2026, up 37% year-over-year, aided by a $1.5 million deferred tax valuation allowance release and partially offset by $405,000 in SBA-related severance costs.

• Record pre-tax, pre-provision earnings reached $19.8 million, up 15% sequentially and 23.7% year-over-year, reflecting strong balance sheet growth and positive operating leverage.

• Tangible book value per share increased 15.2% year-over-year to $44.38, driven by robust earnings and capital management.

• Double-digit growth in loans (+12.6% annualized) and core deposits (+15.3% annualized) supported by core market expansion and private wealth.

• Completed exit from out-of-footprint SBA 7(a) lending, redirecting resources to more profitable opportunities.

Financial highlights

• Operating revenue for Q2 2026 was $46.7 million, up 13.8% year-over-year; net interest income grew 12.9% to $38.1 million, and non-interest income rose 18.1% to $8.6 million.

• Net interest margin improved to 3.78% in Q2 2026 from 3.56% in Q1 2026 and 3.67% in Q2 2025, driven by loan growth and higher prepayment fees.

• Efficiency ratio improved to 57.57% for Q2 2026, down from 60.97% in Q2 2025 and 61.14% in Q1 2026.

• Fee income grew 18% year-over-year, with private wealth management fees up 13.6%.

• Return on average assets was 1.43% and return on average tangible common equity was 16.89% for Q2 2026.

Outlook and guidance

• Management targets 10% annual growth in loans, core deposits, revenue, and tangible book value, with a net interest margin of 3.60%-3.65% for 2026.

• Full-year 2026 effective tax rate expected between 13% and 15%, normalizing to 15%-17% thereafter.

• SBA lending exit expected to lower annual efficiency ratio by 30-50 bps and provide a modest EPS benefit in 2027.

• Strategic plan targets ≥15% ROATCE and ≥10% annual growth in tangible book value and revenue by 2028.