株探米国株
英語
エドガーで原本を確認する
000152195112/312023Q2FALSE00015219512023-01-012023-06-3000015219512023-07-21xbrli:shares00015219512023-06-30iso4217:USD00015219512022-12-31iso4217:USDxbrli:shares00015219512022-01-012022-12-31xbrli:pure00015219512023-04-012023-06-3000015219512022-04-012022-06-3000015219512022-01-012022-06-300001521951us-gaap:CommonStockMember2021-12-310001521951us-gaap:PreferredStockMember2021-12-310001521951us-gaap:AdditionalPaidInCapitalMember2021-12-310001521951us-gaap:RetainedEarningsMember2021-12-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001521951us-gaap:TreasuryStockCommonMember2021-12-3100015219512021-12-310001521951us-gaap:RetainedEarningsMember2022-01-012022-03-3100015219512022-01-012022-03-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001521951us-gaap:PreferredStockMember2022-01-012022-03-310001521951us-gaap:CommonStockMember2022-01-012022-03-310001521951us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001521951us-gaap:TreasuryStockCommonMember2022-01-012022-03-310001521951us-gaap:CommonStockMember2022-03-310001521951us-gaap:PreferredStockMember2022-03-310001521951us-gaap:AdditionalPaidInCapitalMember2022-03-310001521951us-gaap:RetainedEarningsMember2022-03-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001521951us-gaap:TreasuryStockCommonMember2022-03-3100015219512022-03-310001521951us-gaap:RetainedEarningsMember2022-04-012022-06-300001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001521951us-gaap:CommonStockMember2022-04-012022-06-300001521951us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001521951us-gaap:TreasuryStockCommonMember2022-04-012022-06-300001521951us-gaap:CommonStockMember2022-06-300001521951us-gaap:PreferredStockMember2022-06-300001521951us-gaap:AdditionalPaidInCapitalMember2022-06-300001521951us-gaap:RetainedEarningsMember2022-06-300001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001521951us-gaap:TreasuryStockCommonMember2022-06-3000015219512022-06-300001521951us-gaap:CommonStockMember2022-12-310001521951us-gaap:PreferredStockMember2022-12-310001521951us-gaap:AdditionalPaidInCapitalMember2022-12-310001521951us-gaap:RetainedEarningsMember2022-12-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001521951us-gaap:TreasuryStockCommonMember2022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMemberus-gaap:RetainedEarningsMember2022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember2022-12-310001521951us-gaap:RetainedEarningsMember2023-01-012023-03-3100015219512023-01-012023-03-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001521951us-gaap:CommonStockMember2023-01-012023-03-310001521951us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001521951us-gaap:TreasuryStockCommonMember2023-01-012023-03-310001521951us-gaap:CommonStockMember2023-03-310001521951us-gaap:PreferredStockMember2023-03-310001521951us-gaap:AdditionalPaidInCapitalMember2023-03-310001521951us-gaap:RetainedEarningsMember2023-03-310001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001521951us-gaap:TreasuryStockCommonMember2023-03-3100015219512023-03-310001521951us-gaap:RetainedEarningsMember2023-04-012023-06-300001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001521951us-gaap:CommonStockMember2023-04-012023-06-300001521951us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001521951us-gaap:TreasuryStockCommonMember2023-04-012023-06-300001521951us-gaap:CommonStockMember2023-06-300001521951us-gaap:PreferredStockMember2023-06-300001521951us-gaap:AdditionalPaidInCapitalMember2023-06-300001521951us-gaap:RetainedEarningsMember2023-06-300001521951us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001521951us-gaap:TreasuryStockCommonMember2023-06-3000015219512022-01-012022-09-300001521951us-gaap:RestrictedStockMember2021-12-310001521951us-gaap:PerformanceSharesMember2021-12-310001521951us-gaap:RestrictedStockUnitsRSUMember2021-12-310001521951us-gaap:RestrictedStockMember2022-01-012022-12-310001521951us-gaap:PerformanceSharesMember2022-01-012022-12-310001521951us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-12-310001521951us-gaap:RestrictedStockMember2022-12-310001521951us-gaap:PerformanceSharesMember2022-12-310001521951us-gaap:RestrictedStockUnitsRSUMember2022-12-310001521951us-gaap:RestrictedStockMember2023-01-012023-06-300001521951us-gaap:PerformanceSharesMember2023-01-012023-06-300001521951us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001521951us-gaap:RestrictedStockMember2023-06-300001521951us-gaap:PerformanceSharesMember2023-06-300001521951us-gaap:RestrictedStockUnitsRSUMember2023-06-300001521951us-gaap:USTreasurySecuritiesMember2023-06-300001521951fbiz:OtherAgencySecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:USStatesAndPoliticalSubdivisionsMember2023-06-300001521951us-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2023-06-300001521951us-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberfbiz:GNMAMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:USTreasurySecuritiesMember2022-12-310001521951fbiz:OtherAgencySecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:USStatesAndPoliticalSubdivisionsMember2022-12-310001521951us-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2022-12-310001521951us-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberfbiz:GNMAMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-31fbiz:securities0001521951fbiz:VariousObligationsMember2023-06-300001521951fbiz:VariousObligationsMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2023-06-300001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2022-12-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMember2022-12-310001521951fbiz:CategoryIMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951fbiz:CategoryIiMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951fbiz:CategoryIMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951fbiz:CategoryIiMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951fbiz:CategoryIMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CategoryIiMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberfbiz:CategoryIMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberfbiz:CategoryIiMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-06-300001521951fbiz:CategoryIMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951fbiz:CategoryIiMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951fbiz:CategoryIMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:CategoryIiMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:CategoryIMemberfbiz:OtherLoansReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberfbiz:CategoryIiMember2023-06-300001521951fbiz:OtherLoansReceivableMemberfbiz:CategoryIiiMember2023-06-300001521951fbiz:CategoryIvMemberfbiz:OtherLoansReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:PerformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:NonperformingFinancingReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetPastDueMember2023-06-300001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMember2023-06-300001521951us-gaap:FinancingReceivables60To89DaysPastDueMember2023-06-300001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-06-300001521951us-gaap:FinancialAssetPastDueMember2023-06-300001521951us-gaap:FinancialAssetNotPastDueMember2023-06-300001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:PerformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:NonperformingFinancingReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:FinancialAssetPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMemberfbiz:OtherLoansReceivableMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMemberfbiz:OtherLoansReceivableMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetPastDueMember2022-12-310001521951fbiz:OtherLoansReceivableMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001521951us-gaap:FinancingReceivables30To59DaysPastDueMember2022-12-310001521951us-gaap:FinancingReceivables60To89DaysPastDueMember2022-12-310001521951us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001521951us-gaap:FinancialAssetPastDueMember2022-12-310001521951us-gaap:FinancialAssetNotPastDueMember2022-12-31fbiz:loans0001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-01-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-01-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2023-01-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-01-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-01-012023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-01-012023-06-300001521951fbiz:OtherLoansReceivableMember2023-01-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2022-01-012022-12-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2022-01-012022-12-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2022-01-012022-12-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2022-01-012022-12-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2022-01-012022-12-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-01-012022-12-310001521951fbiz:OtherLoansReceivableMember2022-01-012022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-03-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-03-310001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2023-03-310001521951fbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-04-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMember2023-04-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableConstructionMember2023-04-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMember2023-04-012023-06-300001521951fbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-04-012023-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-04-012023-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2023-04-012023-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2023-06-300001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2022-03-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-03-310001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2022-03-310001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2022-04-012022-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-04-012022-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2022-04-012022-06-300001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2022-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2022-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2022-12-310001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberfbiz:CommercialRealEstateLoansReceivableOwnerOccupiedMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableNonOwnerOccupiedMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-06-300001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberfbiz:CommercialRealEstateLoansReceivableConstructionMember2023-06-300001521951fbiz:CommercialRealEstateLoansReceivableMultiFamilyMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-06-300001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberfbiz:CommercialRealEstateLoansReceivable14FamilyMember2023-06-300001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberfbiz:CommercialandIndustrialLoansandLeasesReceivableMember2023-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-06-300001521951srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2023-01-012023-06-300001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2021-12-310001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2021-12-310001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2021-12-310001521951us-gaap:CommercialRealEstatePortfolioSegmentMember2022-01-012022-06-300001521951fbiz:CommercialandIndustrialLoansandLeasesReceivableMember2022-01-012022-06-300001521951fbiz:TotalConsumerAndOtherLoansReceivableMember2022-01-012022-06-300001521951fbiz:KansasCityMetropolitanMember2023-01-012023-06-300001521951fbiz:KansasCityMetropolitanMember2023-06-300001521951fbiz:NoninterestbearingTransactionAccountsMember2023-06-300001521951fbiz:NoninterestbearingTransactionAccountsMember2023-01-012023-06-300001521951fbiz:NoninterestbearingTransactionAccountsMember2022-12-310001521951fbiz:NoninterestbearingTransactionAccountsMember2022-01-012022-12-310001521951fbiz:InterestbearingTransactionAccountsMember2023-06-300001521951fbiz:InterestbearingTransactionAccountsMember2023-01-012023-06-300001521951fbiz:InterestbearingTransactionAccountsMember2022-12-310001521951fbiz:InterestbearingTransactionAccountsMember2022-01-012022-12-310001521951fbiz:MoneyMarketAccountsMember2023-06-300001521951fbiz:MoneyMarketAccountsMember2023-01-012023-06-300001521951fbiz:MoneyMarketAccountsMember2022-12-310001521951fbiz:MoneyMarketAccountsMember2022-01-012022-12-310001521951fbiz:NonbrokeredCertificatesofDepositMember2023-06-300001521951fbiz:NonbrokeredCertificatesofDepositMember2023-01-012023-06-300001521951fbiz:NonbrokeredCertificatesofDepositMember2022-12-310001521951fbiz:NonbrokeredCertificatesofDepositMember2022-01-012022-12-310001521951fbiz:BrokeredCertificatesofDepositMember2023-06-300001521951fbiz:BrokeredCertificatesofDepositMember2023-01-012023-06-300001521951fbiz:BrokeredCertificatesofDepositMember2022-12-310001521951fbiz:BrokeredCertificatesofDepositMember2022-01-012022-12-310001521951fbiz:WholesaleCertificatesOfDepositMember2023-06-300001521951fbiz:NonReciprocalInterestBearingTransactionAccountsMember2023-06-300001521951fbiz:WholesaleCertificatesOfDepositMember2022-12-310001521951fbiz:NonReciprocalInterestBearingTransactionAccountsMember2022-12-310001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToCertificateOfDepositsMember2023-06-300001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToCertificateOfDepositsMember2023-01-012023-06-300001521951fbiz:CertificatesOfDepositsAndWholesaleDepositsMember2023-06-300001521951fbiz:CertificatesOfDepositsAndWholesaleDepositsMember2022-12-310001521951us-gaap:FederalFundsPurchasedMember2023-06-300001521951us-gaap:FederalFundsPurchasedMember2023-01-012023-06-300001521951us-gaap:FederalFundsPurchasedMember2022-12-310001521951us-gaap:FederalFundsPurchasedMember2022-01-012022-12-310001521951fbiz:FHLBadvancesMember2023-06-300001521951fbiz:FHLBadvancesMember2023-01-012023-06-300001521951fbiz:FHLBadvancesMember2022-12-310001521951fbiz:FHLBadvancesMember2022-01-012022-12-310001521951us-gaap:LineOfCreditMember2023-06-300001521951us-gaap:LineOfCreditMember2023-01-012023-06-300001521951us-gaap:LineOfCreditMember2022-12-310001521951us-gaap:LineOfCreditMember2022-01-012022-12-310001521951fbiz:OtherBorrowingsMember2023-06-300001521951fbiz:OtherBorrowingsMember2023-01-012023-06-300001521951fbiz:OtherBorrowingsMember2022-12-310001521951fbiz:OtherBorrowingsMember2022-01-012022-12-310001521951us-gaap:SubordinatedDebtMember2023-06-300001521951us-gaap:SubordinatedDebtMember2023-01-012023-06-300001521951us-gaap:SubordinatedDebtMember2022-12-310001521951us-gaap:SubordinatedDebtMember2022-01-012022-12-310001521951us-gaap:JuniorSubordinatedDebtMember2023-06-300001521951us-gaap:JuniorSubordinatedDebtMember2023-01-012023-06-300001521951us-gaap:JuniorSubordinatedDebtMember2022-12-310001521951us-gaap:JuniorSubordinatedDebtMember2022-01-012022-12-310001521951fbiz:SecuredBorrowingsMember2022-12-310001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToFHLBBorrowingsMember2023-06-300001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToFHLBBorrowingsMember2023-01-012023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-06-300001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-06-300001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberfbiz:GNMAMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberfbiz:GNMAMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:GNMAMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:GNMAMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberfbiz:GNMAMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberfbiz:GovernmentSponsoredEnterprisesMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001521951us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberfbiz:GNMAMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GNMAMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Memberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ResidentialMortgageBackedSecuritiesMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberfbiz:GNMAMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:GNMAMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:GNMAMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberfbiz:GNMAMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberfbiz:GovernmentSponsoredEnterprisesMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel2Member2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel3Member2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMember2023-06-300001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2023-06-300001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMember2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:LoanservicingrightsMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:LoanservicingrightsMember2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:LoanservicingrightsMember2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:LoanservicingrightsMember2023-06-300001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel2Member2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMemberus-gaap:FairValueInputsLevel3Member2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:ImpairedLoansMember2022-12-310001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310001521951fbiz:ForeclosedPropertiesMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:LoanservicingrightsMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel2Memberfbiz:LoanservicingrightsMember2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Memberfbiz:LoanservicingrightsMember2022-12-310001521951us-gaap:FairValueMeasurementsNonrecurringMemberfbiz:LoanservicingrightsMember2022-12-310001521951srt:MinimumMember2023-06-300001521951srt:MaximumMember2023-06-300001521951srt:WeightedAverageMember2023-06-300001521951us-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueInputsLevel2Member2023-06-300001521951us-gaap:FairValueInputsLevel3Member2023-06-300001521951us-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2023-06-300001521951us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-06-300001521951us-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueInputsLevel2Member2022-12-310001521951us-gaap:FairValueInputsLevel3Member2022-12-310001521951us-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2022-12-310001521951us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2022-12-310001521951us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2022-12-310001521951fbiz:InterestRateSwapAgreementsOnLoansWithThirdPartyCounterPartiesMember2023-06-300001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToFHLBBorrowingsMember2023-04-012023-06-300001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToFHLBBorrowingsMember2022-04-012022-06-300001521951us-gaap:DesignatedAsHedgingInstrumentMemberfbiz:InterestRateSwapRelatedToFHLBBorrowingsMember2022-01-012022-06-300001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-04-012023-06-300001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-06-300001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-012022-06-300001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-06-300001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithCommercialLoanCustomersMember2023-06-300001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithCommercialLoanCustomersMember2023-01-012023-06-300001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithThirdPartyCounterPartiesMember2023-06-300001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithThirdPartyCounterPartiesMember2023-01-012023-06-300001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-06-300001521951fbiz:InterestRateSwapRelatedToWholesaleFundingMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-06-300001521951fbiz:InterestRateSwapRelatedToWholesaleFundingMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-06-300001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithCommercialLoanCustomersMember2022-12-310001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithCommercialLoanCustomersMember2022-01-012022-12-310001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithThirdPartyCounterPartiesMember2022-12-310001521951us-gaap:NondesignatedMemberfbiz:InterestRateSwapAgreementsOnLoansWithThirdPartyCounterPartiesMember2022-01-012022-12-310001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-12-310001521951fbiz:InterestRateSwapRelatedToAFSSecuritiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-12-310001521951fbiz:InterestRateSwapRelatedToWholesaleFundingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-12-310001521951fbiz:InterestRateSwapRelatedToWholesaleFundingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-12-310001521951fbiz:FirstBusinessBankMember2023-06-300001521951fbiz:FirstBusinessBankMember2022-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑   Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2023
OR
☐   Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 001-34095
FIRST BUSINESS FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1576570
     
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
401 Charmany Drive 53719
Madison Wisconsin  
(Address of Principal Executive Offices) (Zip Code)
(608) 238-8008
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value FBIZ The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The number of shares outstanding of the registrant’s sole class of common stock, par value $0.01 per share, on July 21, 2023 was 8,315,465 shares.

Table of Contents
FIRST BUSINESS FINANCIAL SERVICES, INC.
INDEX — FORM 10-Q




Table of Contents
PART I. Financial Information
Item 1. Financial Statements
First Business Financial Services, Inc.
Consolidated Balance Sheets
June 30,
2023		 December 31,
2022
(Unaudited)
  (In Thousands, Except Share Data)
Assets    
Cash and due from banks $ 32,299  $ 25,811 
Short-term investments 80,510  76,871 
Cash and cash equivalents 112,809  102,682 
Securities available-for-sale, at fair value 253,626  212,024 
Securities held-to-maturity, at amortized cost
 9,830  12,635 
Loans held for sale
 2,191  2,632 
Loans and leases receivable, net of allowance for credit losses of $28,115 and $24,230, respectively
 2,646,468  2,418,836 
Premises and equipment, net 5,094  4,340 
Repossessed assets 65  95 
Right-of-use assets, net 7,049  7,690 
Bank-owned life insurance 54,747  54,018 
Federal Home Loan Bank stock, at cost 14,482  17,812 
Goodwill and other intangible assets 12,073  12,159 
Derivatives 70,440  68,581 
Accrued interest receivable and other assets 76,864  63,107 
Total assets $ 3,265,738  $ 2,976,611 
Liabilities and Stockholders’ Equity    
Deposits $ 2,528,852  $ 2,168,206 
Federal Home Loan Bank advances and other borrowings 370,113  456,808 
Lease liabilities 9,499  10,175 
Derivatives 61,147  61,419 
Accrued interest payable and other liabilities 23,495  19,363 
Total liabilities 2,993,106  2,715,971 
Stockholders’ equity:    
Preferred stock, $0.01 par value, 2,500,000 shares authorized, 12,500 shares of 7% non-cumulative perpetual preferred stock, Series A, outstanding at each June 30, 2023 and December 31, 2022
11,992  11,992 
Common stock, $0.01 par value, 25,000,000 shares authorized, 9,417,981 and 9,371,078 shares issued, 8,315,465 and 8,362,085 shares outstanding at June 30, 2023 and December 31, 2022, respectively
 95  94 
Additional paid-in capital 89,272  87,512 
Retained earnings 215,237  203,507 
Accumulated other comprehensive loss (13,877) (15,310)
Treasury stock, 1,102,516 and 1,008,993 shares at June 30, 2023 and December 31, 2022, respectively, at cost
 (30,087) (27,155)
Total stockholders’ equity 272,632  260,640 
Total liabilities and stockholders’ equity $ 3,265,738  $ 2,976,611 

See accompanying Notes to Unaudited Consolidated Financial Statements.

1
Table of Contents
First Business Financial Services, Inc.
Consolidated Statements of Income (Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,
  2023 2022 2023 2022
  (In Thousands, Except Per Share Data)
Interest income        
Loans and leases $ 44,279  $ 25,687  $ 84,094  $ 48,759 
Securities 1,813  1,064  3,403  2,039 
Short-term investments 1,069  280  1,729  468 
Total interest income 47,161  27,031  89,226  51,266 
Interest expense        
Deposits 16,541  1,058  28,971  1,824 
Federal Home Loan Bank advances and other borrowings 2,873  2,313  5,802  3,851 
Junior subordinated notes —  —  —  504 
Total interest expense 19,414  3,371  34,773  6,179 
Net interest income 27,747  23,660  54,453  45,087 
Provision for credit losses 2,231  (3,727) 3,793  (4,582)
Net interest income after provision for credit losses 25,516  27,387  50,660  49,669 
Non-interest income        
Private wealth management service fees 2,893  2,852  5,547  5,693 
Gain on sale of Small Business Administration loans 444  951  920  1,537 
Service charges on deposits 766  1,041  1,448  2,040 
Loan fees 905  697  1,708  1,349 
Increase in cash surrender value of bank-owned life insurance
 363  350  729  698 
Net loss on sale of securities (45) —  (45) — 
Swap fees 977  471  1,534  697 
Other non-interest income 1,071  510  3,943  2,244 
Total non-interest income 7,374  6,872  15,784  14,258 
Non-interest expense        
Compensation 15,129  14,020  31,037  27,658 
Occupancy 603  568  1,234  1,123 
Professional fees 1,240  1,298  2,583  2,468 
Data processing 1,061  892  1,936  1,673 
Marketing 779  670  1,407  1,170 
Equipment 355  235  650  479 
Computer software 1,197  1,117  2,379  2,199 
FDIC insurance 580  296  974  610 
Other non-interest expense 1,087  360  1,598  900 
Total non-interest expense 22,031  19,456  43,798  38,280 
Income before income tax expense 10,859  14,803  22,646  25,647 
Income tax expense 2,522  3,599  5,330  5,771 
Net income 8,337  11,204  17,316  19,876 
Preferred stock dividend 219  246  438  246 
Net income available to common shareholders $ 8,118  $ 10,958  $ 16,878  $ 19,630 
Earnings per common share        
Basic $ 0.98  $ 1.29  $ 2.02  $ 2.31 
Diluted 0.98  1.29  2.02  2.31 
Dividends declared per share 0.2275  0.1975  0.455  0.395 
See accompanying Notes to Unaudited Consolidated Financial Statements.
2
Table of Contents
First Business Financial Services, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 2023 2022
(In Thousands)
Net income $ 8,337  $ 11,204  $ 17,316  $ 19,876 
Other comprehensive (loss) income
Securities available-for-sale:
Unrealized securities losses arising during the period (4,015) (7,184) (252) (19,665)
Reclassification adjustment for net gain realized in net income 45  —  45  — 
Securities held-to-maturity:
Amortization of net unrealized losses transferred from available-for-sale 1  3  3  8 
Interest rate swaps:
Unrealized gains on interest rate swaps arising during the period 3,693  2,175  2,131  6,044 
Income tax benefit (expense) 70  1,281  (494) 3,482 
     Total other comprehensive (loss) income (206) (3,725) 1,433  (10,131)
Comprehensive income $ 8,131  $ 7,479  $ 18,749  $ 9,745 

See accompanying Notes to Unaudited Consolidated Financial Statements.
3
Table of Contents
First Business Financial Services, Inc.
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Common Shares Outstanding Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Loss		 Treasury
Stock		 Total
  (In Thousands, Except Share Data)
Balance at January 1, 2022 8,457,564  $ —  $ 93  $ 85,797  $ 170,020  $ (1,457) $ (22,031) $ 232,422 
Net income —  —  —  —  8,672  —  —  8,672 
Other comprehensive loss —  —  —  —  —  (6,406) —  (6,406)
Issuance of preferred stock, net of issuance costs —  11,992  —  —  —  —  —  11,992 
Share-based compensation - restricted shares and employee stock purchase plan 47,864  —  1  608  —  —  —  609 
Issuance of common stock under the employee stock purchase plan 1,380  —  —  40  —  —  —  40 
Treasury stock re-issued —  —  —  (1,002) —  —  1,002  — 
Cash dividends ($0.1975 per share)
 —  —  —  —  (1,670) —  —  (1,670)
Treasury stock purchased (18,223) —  —  —  —  —  (608) (608)
Balance at March 31, 2022 8,488,585  $ 11,992  $ 94  $ 85,443  $ 177,022  $ (7,863) $ (21,637) $ 245,051 
Net income —  —  —  —  11,204  —  —  11,204 
Other comprehensive loss —  —  —  —  —  (3,725) —  (3,725)
Share-based compensation - restricted shares and employee stock purchase plan 25,860  —  —  645  —  —  —  645 
Issuance of common stock under the employee stock purchase plan 1,254  —  —  35  —  —  —  35 
Preferred stock dividends —  —  —  —  (246) —  —  (246)
Cash dividends ($0.1975 per share)
 —  —  —  —  (1,678) —  —  (1,678)
Treasury stock purchased (41,000) —  —  —  —  —  (1,363) (1,363)
Balance at June 30, 2022 8,474,699  $ 11,992  $ 94  $ 86,123  $ 186,302  $ (11,588) $ (23,000) $ 249,923 
4
Table of Contents
Common Shares Outstanding Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Retained
Earnings		 Accumulated
Other
Comprehensive
Loss		 Treasury
Stock		 Total
  (In Thousands, Except Share Data)
Balance at December 31, 2022 8,362,085  $ 11,992  $ 94  $ 87,512  $ 203,507  $ (15,310) $ (27,155) $ 260,640 
Cumulative change in accounting principle —  —  —  —  (1,353) —  —  (1,353)
Balance at January 1, 2023 8,362,085  11,992  94  87,512  202,154  (15,310) (27,155) 259,287 
Net income —  —  —  —  8,979  —  —  8,979 
Other comprehensive income —  —  —  —  —  1,639  —  1,639 
Share-based compensation - restricted shares and employee stock purchase plan (426) —  —  634  —  —  —  634 
Issuance of common stock under the employee stock purchase plan 1,005  —  —  27  —  —  —  27 
Preferred stock dividends —  —  —  —  (219) —  —  (219)
Cash dividends ($0.2275 per share)
 —  —  —  —  (1,906) —  —  (1,906)
Treasury stock purchased (56,394) —  —  —  —  —  (1,860) (1,860)
Balance at March 31, 2023 8,306,270  11,992  94  88,173  209,008  (13,671) (29,015) 266,581 
Net income —  —  —  —  8,337  —  —  8,337 
Other comprehensive loss —  —  —  —  —  (206) —  (206)
Share-based compensation - restricted shares and employee stock purchase plan 45,280  —  1  1,071  —  —  —  1,072 
Issuance of common stock under the employee stock purchase plan 1,044  —  —  28  —  —  —  28 
Preferred stock dividends —  —  —  —  (219) —  —  (219)
Cash dividends ($0.2275 per share)
 —  —  —  —  (1,889) —  —  (1,889)
Treasury stock purchased (37,129) —  —  —  —  —  (1,072) (1,072)
Balance at June 30, 2023 8,315,465  $ 11,992  $ 95  $ 89,272  $ 215,237  $ (13,877) $ (30,087) $ 272,632 

See accompanying Notes to Unaudited Consolidated Financial Statements.

5
Table of Contents
First Business Financial Services, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30,
  2023 2022
(In Thousands)
Operating activities    
Net income $ 17,316  $ 19,876 
Adjustments to reconcile net income to net cash provided by operating activities:    
Deferred income taxes, net 510  (1,695)
Impairment of tax credit investments —  (351)
Provision for credit losses 3,793  (4,582)
Depreciation, amortization and accretion, net 1,872  2,025 
Share-based compensation 1,706  1,254 
Net loss on disposal of fixed assets 73  — 
Amortization of tax credit investments 870  — 
Bank-owned life insurance policy income (729) (698)
Origination of loans for sale (64,032) (61,278)
Sale of loans originated for sale 65,393  64,129 
Gain on sale of loans originated for sale (920) (1,537)
Net loss on repossessed assets 4  20 
Return on investment in limited partnerships 3,392  314 
Excess tax benefit expense from share-based compensation 128  183 
Net payments on operating lease liabilities (709) (727)
Net decrease in accrued interest receivable and other assets (9,513) (13,814)
Net increase in accrued interest payable and other liabilities 3,307  13,658 
Net cash provided by operating activities 22,461  16,777 
Investing activities    
Proceeds from maturities, redemptions, and paydowns of available-for-sale securities 10,047  20,185 
Proceeds from maturities, redemptions, and paydowns of held-to-maturity securities 2,797  5,761 
Proceeds from sale of available-for-sale securities 5,084  — 
Purchases of available-for-sale securities (57,281) (43,231)
Proceeds from sale of repossessed assets 25  37 
Net increase in loans and leases (231,661) (46,359)
Investments in limited partnerships (700) (363)
Returns of investments in limited partnerships 4  — 
Investment in tax credit investments (9,598) (5,937)
Distribution from tax credit investments 33  282 
Investment in Federal Home Loan Bank stock (24,375) (23,370)
Proceeds from the sale of Federal Home Loan Bank stock 27,705  13,746 
Purchases of leasehold improvements and equipment, net (1,255) (469)
Purchases of bank-owned life insurance policies —  (25)
Proceeds from redemption of Trust II stock —  315 
Net cash used in investing activities (279,175) (79,428)
Financing activities    
Net increase (decrease) in deposits 360,646  (88,592)
Repayment of Federal Home Loan Bank advances (1,228,050) (1,228,543)
Proceeds from Federal Home Loan Bank advances 1,147,375  1,413,844 
Proceeds from issuance of subordinated notes payable —  20,000 
Repayment of subordinated notes payable —  (9,090)
Repayment of junior subordinated notes payable —  (10,076)
6
Table of Contents
Net decrease in long-term borrowed funds (6,020) (3,020)
Cash dividends paid (3,795) (3,348)
Preferred stock dividends paid (438) (246)
Proceeds from issuance of common stock under ESPP 55  75 
Proceeds from issuance of preferred stock —  11,992 
Purchase of treasury stock (2,932) (1,971)
Net cash provided by financing activities 266,841  101,025 
Net increase in cash and cash equivalents 10,127  38,374 
Cash and cash equivalents at the beginning of the period 102,682  57,110 
Cash and cash equivalents at the end of the period $ 112,809  $ 95,484 
Supplementary cash flow information    
Cash paid during the period for:
Interest paid on deposits and borrowings $ 30,478  $ 5,707 
Net income taxes paid (received) 1,192  (31)
Non-cash investing and financing activities:
Transfer of loans to repossessed assets —  17 
7
Table of Contents
Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
See accompany Notes to Unaudited Consolidated Financial Statements The accounting and reporting practices of First Business Financial Services, Inc. (“FBFS” or the “Corporation”), through our wholly-owned subsidiary, First Business Bank (“FBB” or the “Bank”), have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). FBB operates as a commercial banking institution primarily in Wisconsin and the greater Kansas City metropolitan area. The Bank provides a full range of financial services to businesses, business owners, executives, professionals, and high net worth individuals. FBB also offers bank consulting services to community financial institutions. The Bank is subject to competition from other financial institutions and service providers, and is also subject to state and federal regulations. As of June 30, 2023, FBB had the following wholly-owned subsidiaries: First Business Specialty Finance, LLC (“FBSF”), First Madison Investment Corp. (“FMIC”), ABKC Real Estate, LLC (“ABKC”), FBB Real Estate 2, LLC (“FBB RE 2”), Mitchell Street Apartments Investment, LLC (“Mitchell Street”), and FBB Tax Credit Investment, LLC (“FBB Tax Credit”).
Basis of Presentation
The accompanying unaudited Consolidated Financial Statements were prepared in accordance with GAAP and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Corporation’s Consolidated Financial Statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022. The unaudited Consolidated Financial Statements include the accounts of the Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Management of the Corporation is required to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that could significantly change in the near-term include the value of securities and interest rate swaps, level of the allowance for credit losses, lease residuals, property under operating leases, goodwill, and income taxes. The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2023. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events have been evaluated through the date of the issuance of the unaudited Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.
The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2022 and updates from the adoption of new accounting standards disclosed in the Corporation’s Form 10-Q for the quarter ended March 31, 2023.
Recent Accounting Pronouncements
In March 2023, the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-02 “Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force).” The amendments in this Update permit reporting entities to elect to account for their tax equity investments, regardless of the program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments. The Corporation is assessing the impact of this standard.
8
Table of Contents
Note 2 — Earnings per Common Share
Earnings per common share are computed using the two-class method. Basic earnings per common share are computed by dividing net income allocated to common shares by the weighted-average number of shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include unvested restricted shares. Unvested restricted shares are considered participating securities because holders of these securities receive non-forfeitable dividends, or dividend equivalents, at the same rate as holders of the Corporation’s common stock. Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.
For the Three Months Ended June 30, For the Six Months Ended June 30,
  2023 2022 2023 2022
(Dollars in Thousands, Except Share Data)
Basic earnings per common share    
Net income $ 8,337  $ 11,204  $ 17,316  $ 19,876 
Less: preferred stock dividends 219  246  438  246 
Less: earnings allocated to participating securities 216  310  440  547 
Basic earnings allocated to common shareholders $ 7,902  $ 10,648  $ 16,438  $ 19,083 
Weighted-average common shares outstanding, excluding participating securities
 8,061,841  8,225,838  8,140,831  8,245,317 
Basic earnings per common share $ 0.98  $ 1.29  $ 2.02  $ 2.31 
Diluted earnings per common share    
Earnings allocated to common shareholders, diluted $ 7,902  $ 10,648  $ 16,438  $ 19,083 
Weighted-average diluted common shares outstanding, excluding participating securities
 8,061,841  8,225,838  8,140,831  8,245,317 
Diluted earnings per common share $ 0.98  $ 1.29  $ 2.02  $ 2.31 

Note 3 — Share-Based Compensation
The Corporation adopted the 2019 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2019. The Plan is administered by the Compensation Committee of the Board of Directors (the “Board”) of the Corporation and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options, restricted stock, restricted stock units, dividend equivalent units, and any other type of award permitted by the Plan. As of June 30, 2023, 328,085 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate, or lapse will again be available for the grant of awards under the Plan.
Restricted Stock
Under the Plan, the Corporation may grant restricted stock awards (“RSA”), restricted stock units (“RSU”), and other stock-based awards to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While restricted stock is subject to forfeiture, restricted stock award participants may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. RSUs do not have voting rights. RSUs granted prior to 2023 are provided dividend equivalents concurrent with dividends paid to shareholders while RSUs granted in 2023 and after will accrue dividend equivalents payable upon vesting. The restricted stock granted under the Plan is typically subject to a vesting period. Compensation expense for restricted stock is recognized over the requisite service period of generally three or four years for the entire award on a straight-line basis. Upon vesting of restricted stock, the benefit of tax deductions in excess of recognized compensation expense is reflected as an income tax benefit in the unaudited Consolidated Statements of Income.
The Corporation may also issue performance-based restricted stock units (“PRSU”). Vesting of the performance-based restricted stock units will be measured on the relative Total Shareholder Return (“TSR”) and relative Return on Average Equity (“ROAE”) for issuances prior to 2023 or Return on Average Common Equity (“ROACE”) for issuances after 2022, and will cliff-vest after a three-year measurement period based on the Corporation’s TSR performance and ROAE or ROACE performance compared to a broad peer group of over 100 banks.
9
Table of Contents
At the end of the performance period, the number of actual shares to be awarded varies between 0% and 200% of target amounts. The restricted stock awards and units issued to executive officers will vest ratably over a three-year period. Compensation expense is recognized for PRSU over the requisite service and performance period of generally three years for the entire expected award on a straight-line basis. The compensation expense for the awards expected to vest for the percentage of performance-based restricted stock units subject to the ROAE or ROACE metric will be adjusted if there is a change in the expectation of ROAE or ROACE. The compensation expense for the awards expected to vest for the percentage of performance based restricted stock units subject to the TSR metric are never adjusted, and are amortized utilizing the accounting fair value provided using a Monte Carlo pricing model.
Restricted stock activity for the year ended December 31, 2022 and the six months ended June 30, 2023 was as follows:
RSA Weighted Average Grant Price PRSU Weighted Average Grant Price RSU Weighted Average Grant Price Total Weighted Average Grant Price
Nonvested balance as of December 31, 2021 141,617  $ 23.06  63,120  $ 28.20  5,052  $ 23.56  209,789  $ 24.62 
Granted (1)
 62,560  34.04  37,335  24.71  3,115  27.95  103,010  30.47 
Vested (62,353) 23.21  (43,020) 18.91  (2,062) 23.20  (107,435) 21.49 
Forfeited (8,507) 26.15  —  —  —  —  (8,507) 26.15 
Nonvested balance as of December 31, 2022 133,317  27.95  57,435  32.89  6,105  25.92  196,857  29.32 
Granted (1)
 —  —  34,840  35.79  52,765  34.43  87,605  34.97 
Vested (53,214) 27.06  (36,120) 31.32  (3,253) 26.07  (92,587) 28.68 
Forfeited (2,638) 27.79  —  —  (180) 36.42  (2,818) 28.34 
Nonvested balance as of June 30, 2023 77,465  $ 28.56  56,155  $ 35.70  55,437  $ 33.98  189,057  $ 32.27 
Unrecognized compensation cost (in thousands) $ 1,790  $ 1,303  $ 1,682  $ 4,775 
Weighted average remaining recognition period (in years) 2.16 1.95 3.08 2.42
(1)The number of restricted shares/units shown includes the shares that would be granted if the target level of performance is achieved related to the performance based restricted stock units. The number of shares actually issued may vary. During the six months ended June 30, 2023, an additional 18,060 were issued related to actual performance results of previously granted awards.
Employee Stock Purchase Plan
During 2020, an employee stock purchase plan ("ESPP") was approved by the Corporation’s shareholders and is offered to all qualifying employees. The Corporation is authorized to issue up to 250,000 shares of common stock under the ESPP. The plan qualifies as an employee stock purchase plan under section 423 of the Internal Revenue Code of 1986. Under the ESPP, eligible employees may enroll in a three month offer period that begins January, April, July, and October of each year. Employees may elect to purchase a limited number of shares on the Corporation's common stock at 90% of the fair market value on the last day of the offering period. The ESPP is treated as a compensatory item for purposes of share-based compensation expense.
During the six months ended June 30, 2023, the Corporation issued 2,049 shares of common stock under the ESPP. As of June 30, 2023, 232,917 shares remained available for issuance under the ESPP.
Share-based compensation expense related to restricted stock and ESPP included in the unaudited Consolidated Statements of Income was as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 2023 2022
(In Thousands)
Share-based compensation expense $ 1,072  $ 645  $ 1,706  $ 1,254 

10
Table of Contents
Note 4 — Securities
The amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:
  As of June 30, 2023
Amortized Cost Gross
Unrealized Gains		 Gross
Unrealized Losses		 Fair Value
  (In Thousands)
Available-for-sale:
U.S. treasuries $ 9,105  $ 1  $ (508) 8,598 
U.S. government agency securities - government-sponsored enterprises 29,202  52  (625) 28,629 
Municipal securities 41,108  —  (5,344) 35,764 
Residential mortgage-backed securities - government issued 33,845  —  (2,837) 31,008 
Residential mortgage-backed securities - government-sponsored enterprises 132,823  11  (13,016) 119,818 
Commercial mortgage-backed securities - government issued 3,343  —  (535) 2,808 
Commercial mortgage-backed securities - government-sponsored enterprises 32,134  —  (5,133) 27,001 
  $ 281,560  $ 64  $ (27,998) $ 253,626 
  As of December 31, 2022
Amortized Cost Gross
Unrealized Gains		 Gross
Unrealized Losses		 Fair Value
  (In Thousands)
Available-for-sale:
U.S. treasuries $ 4,977  $ —  $ (532) $ 4,445 
U.S. government agency securities - government-sponsored enterprises
 13,666  70  (531) 13,205 
Municipal securities 45,088  90  (5,867) 39,311 
Residential mortgage-backed securities - government issued 21,790  —  (2,359) 19,431 
Residential mortgage-backed securities - government-sponsored enterprises
 119,265  —  (12,942) 106,323 
Commercial mortgage-backed securities - government issued 3,450  —  (518) 2,932 
Commercial mortgage-backed securities - government-sponsored enterprises 31,515  —  (5,138) 26,377 
  $ 239,751  $ 160  $ (27,887) $ 212,024 

11
Table of Contents
The amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrecognized gains and losses were as follows:
  As of June 30, 2023
Amortized Cost Gross
Unrecognized Gains		 Gross
Unrecognized Losses		 Fair Value
  (In Thousands)
Held-to-maturity:
Municipal securities $ 5,168  $ —  $ (72) $ 5,096 
Residential mortgage-backed securities - government issued 1,415  —  (101) 1,314 
Residential mortgage-backed securities - government-sponsored enterprises
 1,242  —  (78) 1,164 
Commercial mortgage-backed securities - government-sponsored enterprises 2,005  —  (110) 1,895 
  $ 9,830  $ —  $ (361) $ 9,469 
  As of December 31, 2022
Amortized Cost Gross
Unrecognized Gains		 Gross
Unrecognized Losses		 Fair Value
  (In Thousands)
Held-to-maturity:
Municipal securities $ 7,467  $ 7  $ (70) $ 7,404 
Residential mortgage-backed securities - government issued 1,625  —  (107) 1,518 
Residential mortgage-backed securities - government-sponsored enterprises
 1,537  —  (93) 1,444 
Commercial mortgage-backed securities - government-sponsored enterprises
 2,006  —  (102) 1,904 
  $ 12,635  $ 7  $ (372) $ 12,270 

U.S. Treasuries contain treasury bonds issued by the United States Treasury. U.S. government agency securities - government-sponsored enterprises represent securities issued by Federal National Mortgage Association (“FNMA”) and the SBA. Municipal securities include securities issued by various municipalities located primarily within Wisconsin and are primarily general obligation bonds that are tax-exempt in nature. Residential and commercial mortgage-backed securities - government issued represent securities guaranteed by the Government National Mortgage Association. Residential and commercial mortgage-backed securities - government-sponsored enterprises include securities guaranteed by the Federal Home Loan Mortgage Corporation, FNMA, and the FHLB. The Corporation sold 16 available-for-sale securities during the three and six months ended June 30, 2023 and none during the three and six months ended June 30, 2022.

At June 30, 2023 and December 31, 2022, securities with a fair value of $46.0 million and $35.9 million, respectively, were pledged to secure various obligations, including interest rate swap contracts and municipal deposits.
12
Table of Contents
The amortized cost and fair value of securities by contractual maturity at June 30, 2023 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations with or without call or prepayment penalties.
Available-for-Sale Held-to-Maturity
  Amortized Cost Fair Value Amortized Cost Fair Value
(In Thousands)
Due in one year or less $ 16,023  $ 15,968  $ 1,760  $ 1,747 
Due in one year through five years 17,490  16,197  3,006  2,952 
Due in five through ten years 14,973  13,662  402  397 
Due in over ten years 30,929  27,164  —  — 
79,415  72,991  5,168  5,096 
Residential mortgage-backed securities 166,668  150,826  2,657  2,478 
Commercial mortgage-backed securities 35,477  29,809  2,005  1,895 
  $ 281,560  $ 253,626  $ 9,830  $ 9,469 

The tables below show the Corporation’s gross unrealized losses and fair value of available-for-sale investments aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2023 and December 31, 2022. At June 30, 2023, the Corporation held 180 available-for-sale securities that were in an unrealized loss position. At June 30, 2023, the Corporation held 144 available-for-sale securities that have been in a continuous unrealized loss position for twelve months or greater.

The Corporation also has not specifically identified available-for-sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. The Corporation reviews its securities on a quarterly basis to assess declines in fair value for credit losses. Consideration is given to such factors as the credit rating of the borrower, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. For the three and six months ended June 30, 2023 and 2022, management concluded that in all instances securities with fair value less than carrying value was due to market and other factors; thus, no credit loss provision was required.
13
Table of Contents

A summary of unrealized loss information for securities available-for-sale, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:
  As of June 30, 2023
  Less than 12 Months 12 Months or Longer Total
Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses
  (In Thousands)
Available-for-sale:
U.S. treasuries $ —  $ —  $ 4,472  $ 508  $ 4,472  $ 508 
U.S. government agency securities - government-sponsored enterprises
 16,287  115  2,990  510  19,277  625 
Municipal securities
 999  23  34,765  5,321  35,764  5,344 
Residential mortgage-backed securities - government issued
 19,960  699  11,048  2,138  31,008  2,837 
Residential mortgage-backed securities - government-sponsored enterprises
 43,820  1,290  74,153  11,726  117,973  13,016 
Commercial mortgage-backed securities - government issued
 —  —  2,808  535  2,808  535 
Commercial mortgage-backed securities - government-sponsored enterprises
 886  32  26,115  5,101  27,001  5,133 
  $ 81,952  $ 2,159  $ 156,351  $ 25,839  $ 238,303  $ 27,998 
  As of December 31, 2022
  Less than 12 Months 12 Months or Longer Total
Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses		 Fair Value Unrealized
Losses
  (In Thousands)
Available-for-sale:
U.S. treasuries $ —  $ —  $ 4,446  $ 532  $ 4,446  $ 532 
U.S. government agency securities - government-sponsored enterprises
 —  —  2,969  531  2,969  531 
Municipal securities
 26,759  3,132  10,133  2,735  36,892  5,867 
Residential mortgage-backed securities - government issued
 9,624  436  9,807  1,923  19,431  2,359 
Residential mortgage-backed securities - government-sponsored enterprises
 71,474  6,433  34,849  6,509  106,323  12,942 
Commercial mortgage-backed securities - government issued
 1,236  112  1,696  406  2,932  518 
Commercial mortgage-backed securities - government-sponsored enterprises
 7,758  984  18,619  4,154  26,377  5,138 
  $ 116,851  $ 11,097  $ 82,519  $ 16,790  $ 199,370  $ 27,887 

The tables below show the Corporation’s gross unrealized losses and fair value of held-to-maturity investments, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2023 and December 31, 2022. At June 30, 2023, the Corporation held 34 held-to-maturity securities that were in an unrealized loss position. At June 30, 2023, the Corporation held 15 held-to-maturity securities that have been in a continuous unrealized loss position for twelve months or greater. Management assesses held-to-maturity securities for credit losses on a quarterly basis.
14
Table of Contents
The assessment includes review of credit ratings, identification of delinquency and evaluation of market factors. Based on this analysis, management concludes the decline in fair value is due to market factors, specifically changes in interest rates. Accordingly, no credit loss provision was recorded in the unaudited Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022.

A summary of unrecognized loss information for securities held-to-maturity, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:
  As of June 30, 2023
  Less than 12 Months 12 Months or Longer Total
Fair Value Unrecognized
Losses		 Fair Value Unrecognized
Losses		 Fair Value Unrecognized
Losses
  (In Thousands)
Held-to-maturity:
Municipal securities
 $ 4,764  $ 54  $ 332  $ 18  $ 5,096  $ 72 
Residential mortgage-backed securities - government issued
 —  —  1,314  101  1,314  101 
Residential mortgage-backed securities - government-sponsored enterprises
 221  19  943  59  1,164  78 
Commercial mortgage-backed securities - government-sponsored enterprises 1,895  110  —  —  1,895  110 
  $ 6,880  $ 183  $ 2,589  $ 178  $ 9,469  $ 361 
  As of December 31, 2022
  Less than 12 Months 12 Months or Longer Total
Fair Value Unrecognized
Losses		 Fair Value Unrecognized
Losses		 Fair Value Unrecognized
Losses
  (In Thousands)
Held-to-maturity:
Municipal securities
 $ 6,035  $ 52  $ 267  $ 18  $ 6,302  $ 70 
Residential mortgage-backed securities - government issued
 1,518  107  —  —  1,518  107 
Residential mortgage-backed securities - government-sponsored enterprises
 1,444  93  —  —  1,444  93 
Commercial mortgage-backed securities - government-sponsored enterprises 1,904  102  —  —  1,904  102 
  $ 10,901  $ 354  $ 267  $ 18  $ 11,168  $ 372 

On January 1, 2023, the Corporation adopted ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with a credit loss model. ASU 2016-13 requires an allowance on lifetime expected credit losses on held to maturity debt securities. As of January 1, 2023 and June 30, 2023, the Corporation estimated the expected credit losses to be immaterial based on the composition of the securities portfolio.
15
Table of Contents
Note 5 — Loans and Allowance for Credit Losses

Loan and lease receivables consist of the following:
June 30,
2023		 December 31,
2022
  (In Thousands)
Commercial real estate:    
Commercial real estate — owner occupied
 $ 244,039  $ 268,354 
Commercial real estate — non-owner occupied
 715,309  687,091 
Construction 217,069  218,751 
Multi-family
 392,297  350,026 
1-4 family
 23,063  17,728 
Total commercial real estate
 1,591,777  1,541,950 
Commercial and industrial 1,036,921  853,327 
Consumer and other 45,743  47,938 
Total gross loans and leases receivable
 2,674,441  2,443,215 
Less:    
   Allowance for credit losses 28,115  24,230 
   Deferred loan fees and costs, net (142) 149 
Loans and leases receivable, net
 $ 2,646,468  $ 2,418,836 
Loans transferred to third parties consist of the guaranteed portions of SBA loans which the Corporation sold in the secondary market and participation interests in other, non-SBA originated loans. The total principal amount of the guaranteed portions of SBA loans sold during the three months ended June 30, 2023, and 2022, was $4.9 million and $11.9 million, respectively. The total principal amount of the guaranteed portions of SBA loans sold during the six months ended June 30, 2023, and 2022, was $9.8 million and $17.4 million, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and six months ended June 30, 2023, and 2022, have been derecognized in the unaudited Consolidated Financial Statements. The guaranteed portions of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. The total outstanding balance of sold SBA loans at June 30, 2023, and December 31, 2022, was $87.7 million and $88.5 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended June 30, 2023, and 2022, was $32.0 million and $23.0 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. The total principal amount of transferred participation interests in other, non-SBA originated loans during the six months ended June 30, 2023, and 2022, was $54.7 million and $45.2 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. No gain or loss was recognized on participation interests in other, non-SBA originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total outstanding balance of these transferred loans at June 30, 2023, and December 31, 2022, was $252.7 million and $222.9 million, respectively. As of June 30, 2023, and December 31, 2022, the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $355.7 million and $339.0 million, respectively. As of June 30, 2023 and December 31, 2022, the non-SBA originated participation portfolio contained no non-performing loans. The Corporation does not share in the participant’s portion of any potential charge-offs. There were no loan participations purchased on the unaudited Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.




16
Table of Contents
The following table illustrates ending balances of the Corporation’s loan and lease portfolio, including non-performing loans by class of receivable, and considering certain credit quality indicators:
June 30, 2023 Term Loans Amortized Cost Basis by Origination Year
(In Thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total
Commercial real estate — owner occupied
Category
I $ 23,644  $ 35,157  $ 28,367  $ 47,336  $ 22,423  $ 77,763  $ 1,265  $ 235,955 
II —  —  —  294  —  2,207  —  2,501 
III —  —  —  5,131  —  452  —  5,583 
IV —  —  —  —  —  —  —  — 
Total $ 23,644  $ 35,157  $ 28,367  $ 52,761  $ 22,423  $ 80,422  $ 1,265  $ 244,039 
Commercial real estate — non-owner occupied
Category
I $ 48,857  $ 75,732  $ 74,036  $ 53,939  $ 62,498  $ 311,158  $ 29,828  $ 656,048 
II —  —  —  —  6,147  9,244  —  15,391 
III —  —  —  —  19,584  24,286  —  43,870 
IV —  —  —  —  —  —  —  — 
Total $ 48,857  $ 75,732  $ 74,036  $ 53,939  $ 88,229  $ 344,688  $ 29,828  $ 715,309 
Construction
Category
I $ 6,197  $ 81,740  $ 54,629  $ 34,823  $ 445  $ 30,654  $ 8,581  $ 217,069 
II —  —  —  —  —  —  —  — 
III —  —  —  —  —  —  —  — 
IV —  —  —  —  —  —  —  — 
Total $ 6,197  $ 81,740  $ 54,629  $ 34,823  $ 445  $ 30,654  $ 8,581  $ 217,069 
Multi-family
Category
I $ 44,240  $ 35,524  $ 49,521  $ 114,442  $ 23,103  $ 122,455  $ 3,012  $ 392,297 
II —  —  —  —  —  —  —  — 
III —  —  —  —  —  —  —  — 
IV —  —  —  —  —  —  —  — 
Total $ 44,240  $ 35,524  $ 49,521  $ 114,442  $ 23,103  $ 122,455  $ 3,012  $ 392,297 
1-4 family
Category
I $ —  $ 8,274  $ 2,727  $ 2,397  $ 459  $ 3,075  $ 6,008  $ 22,940 
II —  —  —  —  —  97  —  97 
III —  —  —  —  —  —  —  — 
IV —  —  —  —  —  26  —  26 
Total $ —  $ 8,274  $ 2,727  $ 2,397  $ 459  $ 3,198  $ 6,008  $ 23,063 
17
Table of Contents
June 30, 2023 Term Loans Amortized Cost Basis by Origination Year
(In Thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total
Commercial and industrial
Category
I $ 169,085  $ 175,555  $ 99,846  $ 49,115  $ 24,895  $ 32,063  $ 414,927  $ 965,486 
II 395  6,417  860  600  3,523  103  8,960  20,858 
III —  3,770  5,691  11,377  1,282  5,193  7,569  34,882 
IV 174  2,584  1,100  404  201  334  10,898  15,695 
Total $ 169,654  $ 188,326  $ 107,497  $ 61,496  $ 29,901  $ 37,693  $ 442,354  $ 1,036,921 
Consumer and other
Category
I $ 6,224  $ 9,317  $ 3,363  $ 12,978  $ 2,269  $ 4,503  $ 7,089  $ 45,743 
II —  —  —  —  —  —  —  — 
III —  —  —  —  —  —  —  — 
IV —  —  —  —  —  —  —  — 
Total $ 6,224  $ 9,317  $ 3,363  $ 12,978  $ 2,269  $ 4,503  $ 7,089  $ 45,743 
Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation primarily uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.
Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrowers’ management team, or the industry in which the borrower operates. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers, and continued review of such borrowers’ compliance with the terms of their respective agreements.
Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends, or collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by asset quality review committees.
Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Bank. Category III loans and leases generally exhibit undesirable characteristics, such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all contractual principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and asset quality review committees on a monthly basis.
Category IV — Loans and leases in this category are non-performing loans. Management has determined that it is unlikely that the Bank will receive the contractual principal and interest in accordance with the original terms of the agreement. Non-performing loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually.
18
Table of Contents
External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded. Loans and leases in this category are monitored by management and asset quality review committees on a monthly basis.
The delinquency aging of the loan and lease portfolio by class of receivable was as follows:
June 30, 2023
30-59
Days Past Due		 60-89
Days Past Due		 Greater
Than 90
Days Past Due		 Total Past Due Current Total Loans and Leases
  (Dollars in Thousands)
Performing loans and leases            
Commercial real estate:            
Owner occupied $ —  $ —  $ —  $ —  $ 244,039  $ 244,039 
Non-owner occupied —  —  —  —  715,309  715,309 
Construction —  —  —  —  217,069  217,069 
Multi-family —  —  —  —  392,297  392,297 
1-4 family —  —  —  —  23,037  23,037 
Commercial and industrial 1,907  499  —  2,406  1,018,820  1,021,226 
Consumer and other —  —  —  —  45,743  45,743 
Total 1,907  499  —  2,406  2,656,314  2,658,720 
Non-performing loans and leases            
Commercial real estate:            
Owner occupied —  —  —  —  —  — 
Non-owner occupied —  —  —  —  —  — 
Construction —  —  —  —  —  — 
Multi-family —  —  —  —  —  — 
1-4 family —  —  —  —  26  26 
Commercial and industrial 123  141  3,548  3,812  11,883  15,695 
Consumer and other —  —  —  —  —  — 
Total 123  141  3,548  3,812  11,909  15,721 
Total loans and leases            
Commercial real estate:            
Owner occupied —  —  —  —  244,039  244,039 
Non-owner occupied —  —  —  —  715,309  715,309 
Construction —  —  —  —  217,069  217,069 
Multi-family —  —  —  —  392,297  392,297 
1-4 family —  —  —  —  23,063  23,063 
Commercial and industrial 2,030  640  3,548  6,218  1,030,703  1,036,921 
Consumer and other —  —  —  —  45,743  45,743 
Total $ 2,030  $ 640  $ 3,548  $ 6,218  $ 2,668,223  $ 2,674,441 
Percent of portfolio 0.08  % 0.02  % 0.13  % 0.23  % 99.77  % 100.00  %
19
Table of Contents
December 31, 2022
30-59
Days Past Due		 60-89
Days Past Due		 Greater
Than 90
Days Past Due		 Total Past Due Current Total Loans and Leases
  (Dollars in Thousands)
Performing loans and leases            
Commercial real estate:            
Owner occupied $ —  $ —  $ —  $ —  $ 268,354  $ 268,354 
Non-owner occupied 215  —  —  215  686,876  687,091 
Construction —  —  —  —  218,751  218,751 
Multi-family —  —  —  —  350,026  350,026 
1-4 family —  —  —  —  17,698  17,698 
Commercial and industrial 1,437  403  —  1,840  847,858  849,698 
Consumer and other —  —  —  —  47,938  47,938 
Total 1,652  403  —  2,055  2,437,501  2,439,556 
Non-performing loans and leases            
Commercial real estate:            
Owner occupied —  —  —  —  —  — 
Non-owner occupied —  —  —  —  —  — 
Construction —  —  —  —  —  — 
Multi-family —  —  —  —  —  — 
1-4 family —  —  —  —  30  30 
Commercial and industrial 439  126  2,464  3,029  600  3,629 
Other —  —  —  —  —  — 
Total 439  126  2,464  3,029  630  3,659 
Total loans and leases            
Commercial real estate:            
Owner occupied —  —  —  —  268,354  268,354 
Non-owner occupied 215  —  —  215  686,876  687,091 
Construction —  —  —  —  218,751  218,751 
Multi-family —  —  —  —  350,026  350,026 
1-4 family —  —  —  —  17,728  17,728 
Commercial and industrial 1,876  529  2,464  4,869  848,458  853,327 
Consumer and other —  —  —  —  47,938  47,938 
Total $ 2,091  $ 529  $ 2,464  $ 5,084  $ 2,438,131  $ 2,443,215 
Percent of portfolio 0.09  % 0.02  % 0.10  % 0.21  % 99.79  % 100.00  %
20
Table of Contents
The Corporation’s total non-performing assets consisted of the following:
June 30,
2023		 December 31,
2022
  (In Thousands)
Non-performing loans and leases    
Commercial real estate:    
Commercial real estate — owner occupied $ —  $ — 
Commercial real estate — non-owner occupied —  — 
Construction —  — 
Multi-family —  — 
1-4 family 26  30 
Total non-performing commercial real estate 26  30 
Commercial and industrial 15,695  3,629 
Consumer and other —  — 
Total non-performing loans and leases 15,721  3,659 
Repossessed assets, net 65  95 
Total non-performing assets $ 15,786  $ 3,754 
June 30,
2023		 December 31,
2022
Total non-performing loans and leases to gross loans and leases 0.59  % 0.15  %
Total non-performing assets to total gross loans and leases plus repossessed assets, net 0.59  0.15 
Total non-performing assets to total assets 0.48  0.13 
Allowance for credit losses to gross loans and leases 1.11  0.99 
Allowance for credit losses to non-performing loans and leases 188.90  662.20 
Occasionally, the Corporation modifies loans to borrowers in financial distress. During the three and six months ended June 30, 2023 and 2022, no loans to borrowers experiencing financial distress were modified. There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the three and six months ended June 30, 2023 and 2022. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of June 30, 2023.

21
Table of Contents
The following represents additional information regarding the Corporation’s non-performing loans and leases, by portfolio segment:
As of and for the Six Months Ended June 30, 2023
Recorded
Investment(1)
 Unpaid
Principal
Balance		 Individual
Reserve
Average
Recorded
Investment(2)
 Foregone
Interest
Income		 Interest
Income
Recognized		 Net
Foregone
Interest
Income
  (In Thousands)
With no individual reserve recorded:              
Commercial real estate:              
Owner occupied $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Non-owner occupied —  —  —  —  —  —  — 
Construction
 —  —  —  —  —  —  — 
Multi-family —  —  —  —  —  —  — 
1-4 family 26  31  —  28  2  11  (9)
Commercial and industrial 11,264  11,265  —  1,138  46  59  (13)
Consumer and other —  —  —  —  —  —  — 
Total 11,290  11,296  —  1,166  48  70  (22)
With individual reserve recorded:              
Commercial real estate:              
Owner occupied —  —  —  —  —  —  — 
Non-owner occupied —  —  —  —  —  —  — 
Construction —  —  —  —  —  —  — 
Multi-family —  —  —  —  —  —  — 
1-4 family —  —  —  —  —  —  — 
Commercial and industrial 4,431  4,431  2,715  2,493  142  3  139 
Consumer and other —  —  —  —  —  —  — 
Total 4,431  4,431  2,715  2,493  142  3  139 
Total:              
Commercial real estate:              
Owner occupied —  —  —  —  —  —  — 
Non-owner occupied —  —  —  —  —  —  — 
Construction —  —  —  —  —  —  — 
Multi-family —  —  —  —  —  —  — 
1-4 family 26  31  —  28  2  11  (9)
Commercial and industrial 15,695  15,696  2,715  3,631  188  62  126 
Consumer and other —  —  —  —  —  —  — 
Grand total $ 15,721  $ 15,727  $ 2,715  $ 3,659  $ 190  $ 73  $ 117 
(1)The recorded investment represents the unpaid principal balance net of any partial charge-offs.
(2)Average recorded investment is calculated primarily using daily average balances.
22
Table of Contents
As of and for the Year Ended December 31, 2022
Recorded
Investment(1)
 Unpaid
Principal
Balance		 Individual
Reserve
Average
Recorded
Investment(2)
 Foregone
Interest
Income		 Interest
Income
Recognized		 Net
Foregone
Interest
Income
  (In Thousands)
With no individual reserve recorded:              
Commercial real estate:              
   Owner occupied $ —  $ —  $ —  $ 180  $ 14  $ 759  $ (745)
   Non-owner occupied —  —  —  —  —  1  (1)
   Construction —  —  —  —  —  47  (47)
   Multi-family —  —  —  —  —  —  — 
   1-4 family 30  35  —  112  8  41  (33)
Commercial and industrial 1,037  1,037  —  3,153  277  587  (310)
Consumer and other —  —  —  —  —  —  — 
      Total 1,067  1,072  —  3,445  299  1,435  (1,136)
With individual reserve recorded:              
Commercial real estate:              
   Owner occupied —  —  —  —  —  —  — 
   Non-owner occupied —  —  —  —  —  —  — 
   Construction —  —  —  —  —  —  — 
   Multi-family —  —  —  —  —  —  — 
   1-4 family —  —  —  —  —  —  — 
Commercial and industrial 2,592  2,612  1,650  1,454  101  1  100 
Consumer and other —  —  —  —  —  —  — 
      Total 2,592  2,612  1,650  1,454  101  1  100 
Total:              
Commercial real estate:              
   Owner occupied —  —  —  180  14  759  (745)
   Non-owner occupied —  —  —  —  —  1  (1)
   Construction —  —  —  —  —  47  (47)
   Multi-family —  —  —  —  —  —  — 
   1-4 family 30  35  —  112  8  41  (33)
Commercial and industrial 3,629  3,649  1,650  4,607  378  588  (210)
Consumer and other —  —  —  —  —  —  — 
      Grand total $ 3,659  $ 3,684  $ 1,650  $ 4,899  $ 400  $ 1,436  $ (1,036)
(1)The recorded investment represents the unpaid principal balance net of any partial charge-offs.
(2)Average recorded investment is calculated primarily using daily average balances.

The difference between the recorded investment of loans and leases and the unpaid principal balance of $6,000 and $26,000 as of June 30, 2023, and December 31, 2022, respectively, represents partial charge-offs of loans and leases resulting from losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to such loan’s principal. Foregone interest represents the interest that was contractually due on the loan but not received or recorded. To the extent the amount of principal on a non-accrual loan is fully collected and additional cash is received, the Corporation will recognize interest income.
23
Table of Contents
Allowance for Credit Losses
The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. A provision for credit losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors as discussed within Note 1 – Nature of Operations and Summary of Significant Accounting Policies included in the Corporation’s Form 10-Q for the period ended March 31, 2023.
During the first quarter of 2023, the Corporation adopted ASU 2016-13, including the CECL methodology for estimating the ACL. This standard was adopted using a modified retrospective approach on January 1, 2023, resulting in a $484,000 increase to the ACL and a $1.3 million increase to the unfunded credit commitments reserve. A cumulative effect adjustment resulting in an $1.4 million decrease to retained earnings and a $465,000 increase to deferred tax assets was also recorded as of the adoption of ASU 2016-13.
Quantitative Considerations
The ACL is primarily calculated utilizing a discounted cash flow (“DCF”) model. Key inputs and assumptions used in this model are discussed below:
•Forecast model - For each portfolio segment, a loss driver analysis (“LDA”) was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA analysis utilized peer FFIEC Call Report data for all pools. The Corporation plans to update the LDA annually.
•Probability of default – PD is the probability that an asset will be in default within a given time frame. The Corporation has defined default as when a charge-off has occurred, a loan goes to non-accrual status, or a loan is greater than 90 days past due. The forecast model is utilized to estimate PDs.
•Loss given default – LGD is the percentage of the asset not expected to be collected due to default. The LGD is derived from using a method referred to as Frye Jacobs which uses industry data.
•Prepayments and curtailments – Prepayments and curtailments are calculated based on the Corporation’s own data. This analysis is updated annually.
•Forecast and reversion – the Corporation has established a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average.
•Economic forecast – the Corporation utilizes a third party to provide economic forecasts under various scenarios, which are assessed against economic indicators and management’s observations in the market. As of March 31, 2023, the Corporation selected a forecast which forecasts unemployment between 3.95% and 4.73% and GDP growth change between 0.37% and 1.85% over the next four quarters. As of June 30, 2023, the Corporation selected a forecast which forecasts unemployment between 3.81% and 4.58% and GDP growth change between 0.66% and 1.39% over the next four quarters. Following the forecast period, the model reverts to long-term averages over four quarters. Management believes that the resulting quantitative reserve appropriately balances economic indicators with identified risks.

Qualitative Considerations
In addition to the quantitative model, management considers the need for qualitative adjustment for risks not considered in the DCF. Factors that are considered by management in determining loan collectability and the appropriate level of the ACL are listed below:
•The Corporation’s lending policies and procedures, including changes in lending strategies, underwriting standards and practices for collections, write-offs, and recoveries;
•Actual and expected changes in international, national, regional, and local economic and business conditions and developments in which the Corporation operates that affect the collectability of financial assets;
•The experience, ability, and depth of the Corporation’s lending, investment, collection, and other relevant management and staff;
•The volume of past due financial assets, the volume of non-performing assets, and the volume and severity of adversely classified or graded assets;
•The existence and effect of industry concentrations of credit;
•The nature and volume of the portfolio segment or class;
•The quality of the Corporation’s credit review function;
•The effect of other external factors such as the regulatory, legal and technological environments, competition, and events such as natural disasters or pandemics

24
Table of Contents
ACL Activity
A summary of the activity in the allowance for credit losses by portfolio segment is as follows:
  As of and for the Three Months Ended June 30, 2023
Owner Occupied Non-Owner Occupied Construction Multi-Family 1-4 Family Commercial
and
Industrial		 Consumer
and Other		 Total
  (In Thousands)
Beginning balance $ 1,656  $ 4,966  $ 2,287  $ 2,901  $ 221  $ 14,905  $ 614  $ 27,550 
Charge-offs —  —  —  —  —  (329) —  (329)
Recoveries 2  —  —  —  21  220  2  245 
Net recoveries (charge-offs) 2  —  —  —  21  (109) 2  (84)
Provision for credit losses 63  275  6  525  7  1,427  (72) 2,231 
Ending balance $ 1,721  $ 5,241  $ 2,293  $ 3,426  $ 249  $ 16,223  $ 544  $ 29,697 
Components:
Allowance for loan losses 1,703  5,182  1,483  3,414  228  15,624  481  28,115 
Allowance for unfunded credit commitments 18  59  810  12  21  599  63  1,582 
Total ACL $ 1,721  $ 5,241  $ 2,293  $ 3,426  $ 249  $ 16,223  $ 544  $ 29,697 
  As of and for the Three Months Ended June 30, 2022
Commercial Real Estate Commercial
and
Industrial		 Consumer and Other Total
  (In Thousands)
Beginning balance $ 13,765  $ 8,912  $ 992  $ 23,669 
Charge-offs —  (85) —  (85)
Recoveries 4,121  117  9  4,247 
Net recoveries 4,121  32  9  4,162 
Provision for credit losses (4,476) 922  (173) (3,727)
Ending balance $ 13,410  $ 9,866  $ 828  $ 24,104 
  As of and for the Six Months Ended June 30, 2023
Owner Occupied Non-Owner Occupied Construction Multi-Family 1-4 Family Commercial
and
Industrial		 Consumer
and Other		 Total
  (In Thousands)
Beginning balance $ 1,766  $ 5,108  $ 1,646  $ 2,634  $ 207  $ 12,403  $ 466  $ 24,230 
Impact of adopting ASC 326 (204) (242) 796  (386) (45) 1,873  26  1,818 
Charge-offs —  —  —  —  —  (495) —  (495)
Recoveries 2  1  —  —  21  314  13  351 
Net recoveries (charge-offs) 2  1  —  —  21  (181) 13  (144)
Provision for credit losses 157  374  (149) 1,178  66  2,128  39  3,793 
Ending balance $ 1,721  $ 5,241  $ 2,293  $ 3,426  $ 249  $ 16,223  $ 544  $ 29,697 
Components:
Allowance for loan losses 1,703  5,182  1,483  3,414  228  15,624  481  28,115 
Allowance for unfunded credit commitments 18  59  810  12  21  599  63  1,582 
Total ACL $ 1,721  $ 5,241  $ 2,293  $ 3,426  $ 249  $ 16,223  $ 544  $ 29,697 
25
Table of Contents
  As of and for the Six Months Ended June 30, 2022
Commercial Real Estate Commercial
and
Industrial		 Consumer and Other Total
  (In Thousands)
Beginning balance $ 15,110  $ 8,413  $ 813  $ 24,336 
Charge-offs —  (107) —  (107)
Recoveries 4,237  201  19  4,457 
Net recoveries (charge-offs) 4,237  94  19  4,350 
Provision for credit losses (5,937) 1,359  (4) (4,582)
Ending balance $ 13,410  $ 9,866  $ 828  $ 24,104 

ACL Summary
Loans collectively evaluated for credit losses in the following tables include all performing loans at June 30, 2023 and December 31, 2022. Loans individually evaluated for credit losses include all non-performing loans.

The following tables provide information regarding the allowance for credit losses and balances by type of allowance methodology.
  As of June 30, 2023
Owner Occupied Non-Owner Occupied Construction Multi-Family 1-4 Family Commercial
and
Industrial		 Consumer
and Other		 Total
  (In Thousands)
Allowance for credit losses:        
Collectively evaluated for credit losses $ 1,703  $ 5,182  $ 1,483  $ 3,414  $ 228  $ 12,909  $ 481  $ 25,400 
Individually evaluated for credit loss —  —  —  —  —  2,715  —  2,715 
Total $ 1,703  $ 5,182  $ 1,483  $ 3,414  $ 228  $ 15,624  $ 481  $ 28,115 
Loans and lease receivables:        
Collectively evaluated for credit losses $ 244,039  $ 715,309  $ 217,069  $ 392,297  $ 23,037  $ 1,021,226  $ 45,743  $ 2,658,720 
Individually evaluated for credit loss —  —  —  —  26  15,695  —  15,721 
Total $ 244,039  $ 715,309  $ 217,069  $ 392,297  $ 23,063  $ 1,036,921  $ 45,743  $ 2,674,441 
  As of December 31, 2022
Commercial Real Estate Commercial
and
Industrial		 Consumer
and Other		 Total
  (In Thousands)
Allowance for credit losses:        
Collectively evaluated for credit losses $ 11,361  $ 10,753  $ 466  $ 22,580 
Individually evaluated for credit loss —  1,650  —  1,650 
Total $ 11,361  $ 12,403  $ 466  $ 24,230 
Loans and lease receivables:        
Collectively evaluated for credit losses $ 1,541,920  $ 849,698  $ 47,938  $ 2,439,556 
Individually evaluated for credit loss 30  3,629  —  3,659 
Total $ 1,541,950  $ 853,327  $ 47,938  $ 2,443,215 


26
Table of Contents
Note 6 — Leases
The Corporation leases various office spaces and specialized lending production offices under non-cancellable operating leases which expire on various dates through 2033. The Corporation also leases office equipment. The Corporation recognizes a right-of-use asset and an operating lease liability for all leases, with the exception of short-term leases. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term.
In June 2023, the Corporation relocated its Kansas City metropolitan area office resulting in a $2.6 million right-of-use asset and $3.7 million lease liability. The Corporation received a $1.1 million tenant improvement allowance related to this lease, which is recognized as a lease incentive and deducted from the right-of-use asset.
The components of total lease expense were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 2023 2022
(In Thousands)
Operating lease cost
 $ 367  $ 382  $ 750  $ 765 
Short-term lease cost
 46  37  108  74 
Variable lease cost
 147  140  297  266 
Less: sublease income
 (30) (45) (75) (90)
Total lease cost, net
 $ 530  $ 514  $ 1,080  $ 1,015 

Quantitative information regarding the Corporation’s operating leases was as follows:
June 30, 2023 December 31, 2022
Weighted-average remaining lease term (in years)
 8.07 8.06
Weighted-average discount rate
 3.51  % 3.40  %
The following maturity analysis shows the undiscounted cash flows due on the Corporation’s operating lease liabilities:
(In Thousands)
2023 $ 726 
2024 1,527 
2025 1,408 
2026 1,400 
2027 1,428 
Thereafter 4,689 
Total undiscounted cash flows 11,178 
Discount on cash flows (1,679)
Total lease liability $ 9,499 


27
Table of Contents
Note 7 — Other Assets
A summary of accrued interest receivable and other assets was as follows:
  June 30, 2023 December 31, 2022
  (In Thousands)
Accrued interest receivable $ 11,209  $ 9,403 
Net deferred tax asset 11,726  11,711 
Investment in historic development entities 2,461  2,176 
Investment in low-income housing development entity 21,923  13,514 
Investment in limited partnerships 13,761  13,599 
Prepaid expenses 4,956  3,821 
Other assets 10,828  8,883 
Total accrued interest receivable and other assets $ 76,864  $ 63,107 

Note 8 — Deposits
The composition of deposits is shown below. Average balances represent year-to-date averages.
  June 30, 2023 December 31, 2022
Balance Average
Balance		 Average Rate Balance Average
Balance		 Average Rate
  (Dollars in Thousands)
Non-interest-bearing transaction accounts
 $ 419,294  $ 466,491  —  % $ 537,107  $ 566,230  —  %
Interest-bearing transaction accounts
 719,198  619,352  3.00  576,601  503,668  0.79 
Money market accounts 641,969  666,385  2.74  698,505  761,469  0.82 
Certificates of deposit 293,283  266,099  3.81  153,757  97,448  1.39 
Wholesale deposits 455,108  260,485  4.22  202,236  48,825  3.31 
Total deposits $ 2,528,852  $ 2,278,812  2.54  $ 2,168,206  $ 1,977,640  0.67 

A summary of annual maturities of in-market and wholesale certificates of deposit at June 30, 2023 is as follows:
(In Thousands)
Maturities during the year ended December 31,  
2023 $ 414,537 
2024 77,082 
2025 16,945 
2026 50,824 
2027 74,399 
Thereafter 14,604 
$ 648,391 

Wholesale deposits include $355.1 million and $100.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at June 30, 2023, compared to $187.2 million and $15.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at December 31, 2022. The Corporation has entered into derivative contracts hedging a portion of the certificates of deposit included in the 2023 maturities above. As of June 30, 2023, the notional amount of derivatives designated as cash flow hedges totaled $153.1 million with a weighted average remaining maturity of 6.2 years and a weighted average rate of 3.44%.

28
Table of Contents
Certificates of deposit and wholesale deposits denominated in amounts greater than $250,000 were $113.1 million at June 30, 2023 and $81.6 million at December 31, 2022.

Note 9 — FHLB Advances, Other Borrowings and Junior Subordinated Notes
The composition of borrowed funds is shown below. Average balances represent year-to-date averages.
  June 30, 2023 December 31, 2022
Balance Weighted Average
Balance		 Weighted
Average Rate		 Balance Weighted Average
Balance		 Weighted
Average Rate
  (Dollars in Thousands)
Federal funds purchased $ —  $ 6  5.32  % $ —  $ 14  7.42  %
FHLB advances
 335,705  382,533  2.57  416,380  414,191  1.70 
Line of credit —  76  7.20  —  85  2.78 
Other borrowings —  1,210  8.26  6,088  8,624  5.23 
Subordinated notes payable 34,408  34,368  4.83  34,340  35,095  5.06 
Junior subordinated notes(1)
 —  —  —  —  2,429  20.75 
  $ 370,113  $ 418,193  2.78  $ 456,808  $ 460,438  2.12 
(1)Weighted average rate of junior subordinated notes reflects the accelerated amortization of subordinated debt issuance costs as a result of the early redemption of the junior subordinated notes during the first quarter of 2022.
A summary of annual maturities of borrowings at June 30, 2023 is as follows:
(In Thousands)
Maturities during the year ended December 31,  
2023 $ 116,205 
2024 35,500 
2025 56,000 
2026 60,000 
2027 28,000 
Thereafter 74,408 
$ 370,113 
As of December 31, 2022, the Corporation had other borrowings of $6.1 million, which consisted of sold loans accounted for as secured borrowings because they did not qualify for true sale accounting. As of June 30, 2023, the Corporation had no other borrowings. The Corporation has entered into derivative contracts hedging a portion of the borrowings included in the 2023 maturities above. As of June 30, 2023, the notional amount of derivatives designated as cash flow hedges totaled $106.5 million with a weighted average remaining maturity of 2.7 years and a weighted average rate of 1.73%.
As of June 30, 2023 and December 31, 2022, the Corporation was in compliance with its debt covenants under its third-party secured senior line of credit. On February 20, 2023, the credit line was renewed for one additional year with pricing terms of 1-month term SOFR + 2.36% and a maturity date of February 19, 2024.
Note 10 — Preferred Stock
On March 4, 2022, the Corporation issued 12,500 shares, or $12.5 million in aggregate liquidation preference, of 7.0% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”) in a private placement to institutional investors. The net proceeds received from the issuance of the Series A Preferred Stock were $12.0 million.

The Corporation expects to pay dividends on the Series A Preferred Stock when and if declared by the Board, at a fixed rate of 7.0% per annum, payable quarterly, in arrears, on March 15, June 15, September 15 and December 15 of each year up to, but excluding, March 15, 2027. For each dividend period from and including March 15, 2027, dividends will be paid at a floating rate of Three-Month Term SOFR plus a spread of 539 basis points per annum. During the three and six months ended June 30, 2023, the Board of Directors declared an aggregate preferred stock dividend of $219,000 and $438,000, respectively.
29
Table of Contents
The Series A Preferred Stock is perpetual and has no stated maturity. The Corporation may redeem the Series A Preferred Stock at its option at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), subject to regulatory approval, on or after March 15, 2027 or within 90 days following a regulatory capital treatment event, in accordance with the terms of the Series A Preferred Stock.
Note 11 — Commitments and Contingencies
In the normal course of business, various legal proceedings involving the Corporation are pending. Management, based upon advice from legal counsel, does not anticipate any significant losses as a result of these actions. Management believes that any liability arising from any such proceedings currently existing or threatened will not have a material adverse effect on the Corporation’s financial position, results of operations, and cash flows.

The Corporation sells the guaranteed portions of SBA 7(a) and 504 loans, as well as participation interests in other, non-SBA originated, loans to third parties. The Corporation has a continuing involvement in each of the transferred lending arrangements by way of relationship management and servicing the loans, as well as being subject to normal and customary requirements of the SBA loan program and standard representations and warranties related to sold amounts. In the event of a loss resulting from default and a determination by the SBA that there is a deficiency in the manner in which the loan was originated, funded, or serviced by the Corporation, the SBA may require the Corporation to repurchase the loan, deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of the principal loss related to the deficiency from the Corporation. The Corporation must comply with applicable SBA regulations in order to maintain the guaranty. In addition, the Corporation retains the option to repurchase the sold guaranteed portion of an SBA loan if the loan defaults.

Management has assessed estimated losses inherent in the outstanding guaranteed portions of SBA loans sold in accordance with ASC 450, Contingencies, and determined a recourse reserve based on the probability of future losses for these loans to be $752,000 at June 30, 2023, which is reported in accrued interest payable and other liabilities on the unaudited Consolidated Balance Sheets.

The summary of the activity in the SBA recourse reserve is as follows:
As of and for the Three Months Ended June 30, As of and for the Six Months Ended June 30,
2023 2022 2023 2022
  (In Thousands)
Balance at the beginning of the period $ 423  $ 559  $ 441  $ 635 
SBA recourse provision 341  114  323  38 
Charge-offs, net (12) —  (12) — 
Balance at the end of the period $ 752  $ 673  $ 752  $ 673 

Note 12 — Fair Value Disclosures
The Corporation determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk, such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.
Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs, other than quoted prices included with Level 1, that are observable for the asset or liability either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
30
Table of Contents
Level 3 — Level 3 inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:
June 30, 2023
Fair Value Measurements Using  
Level 1 Level 2 Level 3 Total
  (In Thousands)
Assets:      
Securities available-for-sale:
U.S. treasuries $ —  $ 8,598  $ —  $ 8,598 
U.S. government agency securities - government-sponsored enterprises —  28,629  —  28,629 
Municipal securities —  35,764  —  35,764 
Residential mortgage-backed securities - government issued —  31,008  —  31,008 
Residential mortgage-backed securities - government-sponsored enterprises —  119,818  —  119,818 
Commercial mortgage-backed securities - government issued —  2,808  —  2,808 
Commercial mortgage-backed securities - government-sponsored enterprises —  27,001  —  27,001 
Interest rate swaps —  70,440  —  70,440 
Liabilities:      
Interest rate swaps —  61,147  —  61,147 
December 31, 2022
  Fair Value Measurements Using  
Level 1 Level 2 Level 3 Total
  (In Thousands)
Assets:      
Securities available-for-sale:
U.S. treasuries $ —  $ 4,445  $ —  $ 4,445 
U.S. government agency securities - government-sponsored enterprises —  13,205  —  13,205 
Municipal securities —  39,311  —  39,311 
Residential mortgage-backed securities - government issued —  19,431  —  19,431 
Residential mortgage-backed securities - government-sponsored enterprises —  106,323  —  106,323 
Commercial mortgage-backed securities - government issued —  2,932  —  2,932 
Commercial mortgage-backed securities - government-sponsored enterprises —  26,377  —  26,377 
Interest rate swaps —  68,581  —  68,581 
Liabilities:  
Interest rate swaps —  61,419  —  61,419 

31
Table of Contents
For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the three and six months ended June 30, 2023 or the year ended December 31, 2022 related to the above measurements.
Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:
June 30, 2023
  Fair Value Measurements Using
  Level 1 Level 2 Level 3 Total
  (In Thousands)
Collateral-dependent loans $ —  $ —  $ 1,742  $ 1,742 
Repossessed assets —  —  65  65 
Loan servicing rights —  —  1,406  1,406 
December 31, 2022
  Fair Value Measurements Using
  Level 1 Level 2 Level 3 Total
  (In Thousands)
Impaired loans $ —  $ —  $ 1,022  $ 1,022 
Repossessed assets —  —  95  95 
Loan servicing rights —  —  1,491  1,491 

Collateral-dependent loans were written down to the fair value of their underlying collateral less costs to sell of $1.7 million and $1.0 million at June 30, 2023 and December 31, 2022, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value of the underlying collateral of impaired loans. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value. These techniques included observable inputs for the individual impaired loans being evaluated, such as current appraisals, recent sales of similar assets, or other observable market data, and unobservable inputs, typically when discounts are applied to appraisal values to adjust such values to current market conditions or to reflect net realizable values. The quantification of unobservable inputs for Level 3 impaired loan values range from 10% - 100% as of the measurement date of June 30, 2023. The weighted average of those unobservable inputs was 36%. The majority of the impaired loans are considered collateral dependent loans or are supported by an SBA guaranty.
Repossessed assets, upon initial recognition, are remeasured and reported at fair value through a charge-off to the allowance for credit losses, if deemed necessary, based upon the fair value of the repossessed asset. The fair value of a repossessed asset, upon initial recognition, is estimated using a market approach or based on observable market data, typically a current appraisal, or based upon assumptions specific to the individual property or equipment, such as management applied discounts used to further reduce values to a net realizable value when observable inputs become stale.
Loan servicing rights represent the asset retained upon sale of the guaranteed portion of certain SBA loans. When SBA loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. The servicing rights are subsequently measured using the amortization method, which requires amortization into interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.
The Corporation periodically reviews this portfolio for impairment and engages a third-party valuation firm to assess the fair value of the overall servicing rights portfolio. Loan servicing rights do not trade in an active, open market with readily observable prices. While sales of loan servicing rights do occur, the precise terms and conditions typically are not readily available to allow for a “quoted price for similar assets” comparison. Accordingly, the Corporation utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of its loan servicing rights. The valuation model incorporates prepayment assumptions to project loan servicing rights cash flows based on the current interest rate scenario, which is then discounted to estimate an expected fair value of the loan servicing rights. The valuation model considers portfolio characteristics of the underlying serviced portion of the SBA loans and uses the following significant unobservable inputs: (1) constant prepayment rate (“CPR”) assumptions based on the SBA sold pools historical CPR as quoted in Bloomberg and (2) a discount rate. Due to the nature of the valuation inputs, loan servicing rights are classified in Level 3 of the fair value hierarchy.


32
Table of Contents
Fair Value of Financial Instruments
The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:
June 30, 2023
Carrying
Amount		 Fair Value
Total Level 1 Level 2 Level 3
  (In Thousands)
Financial assets:    
Cash and cash equivalents $ 112,809  $ 112,809  $ 112,809  $ —  $ — 
Securities available-for-sale 253,626  253,626  —  253,626  — 
Securities held-to-maturity 9,830  9,469  —  9,469  — 
Loans held for sale 2,191  2,355  —  2,355  — 
Loans and lease receivables, net 2,646,468  2,603,262  —  —  2,603,262 
Federal Home Loan Bank stock
 14,482  N/A N/A N/A N/A
Accrued interest receivable 11,209  11,209  11,209  —  — 
Interest rate swaps 70,440  70,440  —  70,440  — 
Financial liabilities:  
Deposits 2,528,852  2,522,771  1,880,462  642,309  — 
Federal Home Loan Bank advances and other borrowings 370,113  354,278  —  354,278  — 
Accrued interest payable 8,348  8,348  8,348  —  — 
Interest rate swaps 61,147  61,147  —  61,147  — 
Off-balance sheet items:  
Standby letters of credit 137  137  —  —  137 
N/A = The fair value is not applicable due to restrictions placed on transferability
33
Table of Contents
  December 31, 2022
Carrying
Amount		 Fair Value
Total Level 1 Level 2 Level 3
  (In Thousands)
Financial assets:    
Cash and cash equivalents $ 102,682  $ 102,682  $ 102,682  $ —  $ — 
Securities available-for-sale 212,024  212,024  —  212,024  — 
Securities held-to-maturity 12,635  12,270  —  12,270  — 
Loans held for sale 2,632  2,829  —  2,829  — 
Loans and lease receivables, net 2,418,836  2,394,702  —  —  2,394,702 
Federal Home Loan Bank stock
 17,812  N/A N/A N/A N/A
Accrued interest receivable 9,403  9,403  9,403  —  — 
Interest rate swaps 68,581  68,543  —  68,543  — 
Financial liabilities:  
Deposits 2,168,206  2,167,444  1,827,215  340,229  — 
Federal Home Loan Bank advances and other borrowings
 456,808  440,242  —  440,242  — 
Accrued interest payable 4,053  4,053  4,053  —  — 
Interest rate swaps 61,419  61,419  —  61,419  — 
Off-balance sheet items:  
Standby letters of credit 184  184  —  —  184 
N/A = The fair value is not applicable due to restrictions placed on transferability
Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the unaudited Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.
Securities: The fair value measurements of investment securities are determined by a third-party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information, and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification by another pricing source on a quarterly basis to review for reasonableness. Any significant differences in pricing are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans Held for Sale: Loans held for sale, which consist of the guaranteed portions of SBA 7(a) loans, are carried at the lower of cost or estimated fair value. The estimated fair value is based on what secondary markets are currently offering for portfolios with similar characteristics.
Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
34
Table of Contents
Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and are not considered in the estimates.

Note 13 — Derivative Financial Instruments
The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not considered hedging instruments and are marked-to-market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considered the impact of netting and any applicable credit enhancements such as collateral postings, thresholds, and guarantees. As of June 30, 2023 and December 31, 2022, the credit valuation allowance was $38,000.
The Corporation receives fixed rates and pays floating rates based upon designated benchmark interest rates used on the swaps with commercial borrowers. Commercial borrower swaps are completed independently with each borrower and are not subject to master netting arrangements. The Corporation pays fixed rates and receives floating rates based upon designated benchmark interest rates used on the swaps with dealer counterparties. Dealer counterparty swaps are subject to master netting agreements among the contracts within our Bank and are reported on the unaudited Consolidated Balance Sheet. The gross amount of dealer counterparty swaps, without regard to the enforceable master netting agreement, was a gross derivative asset of $61.1 million and gross liability of $1.8 million as of June 30, 2023. No right of offset existed with the dealer counterparty swaps as of June 30, 2023.

All changes in the fair value of these instruments are recorded in other non-interest income. Given the mirror-image terms of the outstanding derivative portfolio, the change in fair value for the three and six months ended June 30, 2023 and 2022 had an insignificant impact on the unaudited Consolidated Statements of Income.

The Corporation also enters into interest rate swaps to manage interest rate risk and reduce the cost of match-funding certain long-term fixed rate loans. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for the Corporation making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value. The instruments are designated as cash flow hedges as the receipt of floating rate interest from the counterparty is used to manage interest rate risk related to cash outflows attributable to future wholesale deposit or short-term FHLB advance borrowings. The change in the fair value of these hedging instruments is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transactions affect earnings. A pre-tax unrealized gain of $3.6 million and $2.2 million was recognized in other comprehensive income for the three and six months ended June 30, 2023 and there were no ineffective portions of the hedges. A pre-tax unrealized gain of $1.7 million and $5.7 million was recognized in other comprehensive income for the three and six months ended June 30, 2022 and there were no ineffective portions of the hedges.

The Corporation also enters into interest rate swaps to mitigate market value volatility on certain long-term fixed securities. The objective of the hedge is to protect the Corporation against changes in fair value due to changes in benchmark interest rates. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the hedged item attributable to changes in the SOFR swap rate, the designated benchmark interest rate.
35
Table of Contents
These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for the Corporation making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value. The change in the fair value of these hedging instruments is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transactions affect earnings. A pre-tax unrealized gain of $107,000 and a pre-tax unrealized loss of $68,000 was recognized in other comprehensive income for the three and six months ended June 30, 2023 and there was no ineffective portion of these hedges. A pre-tax unrealized gain of $426,000 and $376,000 was recognized in other comprehensive income for the three and six months ended June 30, 2022 and there was no ineffective portion of these hedges.

As of June 30, 2023
Number of Instruments Notional Amount Weighted Average Maturity (In Years) Fair Value
(Dollars in Thousands)
Included in Derivative assets
Derivatives not designated as hedging instruments
Interest rate swap agreements on loans with commercial loan clients 8  $ 122,930  6.02 $ 1,766 
Interest rate swap agreements on loans with third-party counterparties 91  $ 838,469  6.59 $ 59,381 
Derivatives designated as hedging instruments
Interest rate swap related to AFS securities 11  $ 12,500  8.78 $ 534 
Interest rate swap related to wholesale funding 29  312,655  4.22 8,759 
Included in Derivative liabilities
Derivatives not designated as hedging instruments
Interest rate swap agreements on loans with commercial loan clients 83  $ 715,539  6.69 $ 61,147 
As of December 31, 2022
Number of Instruments Notional Amount Weighted Average Maturity (In Years) Fair Value
(Dollars in Thousands)
Included in Derivative assets
Derivatives not designated as hedging instruments
Interest rate swap agreements on loans with commercial loan clients 2  $ 65,352  4.83 $ 1,010 
Interest rate swap agreements on loans with third-party counter parties 84  744,233  7.37 60,409 
Derivatives designated as hedging instruments
Interest rate swap related to AFS securities 11  $ 12,500  9.28 $ 602 
Interest rate swap related to wholesale funding 11  116,400  2.88 6,560 
Included in Derivative liabilities
Derivatives not designated as hedging instruments
Interest rate swap agreements on loans with commercial loan clients 82  $ 678,881  7.61 $ 61,419 

Note 14 — 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.
36
Table of Contents
The Corporation regularly reviews and updates, when appropriate, its Capital and Liquidity Action Plan, 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 Federal Reserve Bank (“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.
As of June 30, 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:
37
Table of Contents
As of June 30, 2023
Actual (1)
 Minimum Required for Capital Adequacy Purposes For Capital Adequacy Purposes Plus Capital Conservation Buffer Minimum Required to Be Well
Capitalized Under Prompt Corrective Action Requirements
  Amount Ratio Amount Ratio Amount Ratio Amount Ratio
  (Dollars in Thousands)
Total capital
(to risk-weighted assets)
Consolidated $ 340,045  10.70  % $ 254,308  8.00  % $ 333,780  10.50  % N/A N/A
First Business Bank 341,140  10.73  254,316  8.00  333,790  10.50  $ 317,895  10.00  %
Tier 1 capital
(to risk-weighted assets)
Consolidated $ 276,513  8.70  % $ 190,731  6.00  % $ 270,203  8.50  % N/A N/A
First Business Bank 312,016  9.82  190,737  6.00  270,211  8.50  $ 254,316  8.00  %
Common equity tier 1 capital
(to risk-weighted assets)
Consolidated $ 264,521  8.32  % $ 143,048  4.50  % $ 222,520  7.00  % N/A N/A
First Business Bank 312,016  9.82  143,053  4.50  222,527  7.00  $ 206,632  6.50  %
Tier 1 leverage capital
(to adjusted assets)
Consolidated $ 276,513  8.80  % $ 125,690  4.00  % $ 125,690  4.00  % N/A N/A
First Business Bank 312,016  9.93  125,646  4.00  125,646  4.00  $ 157,058  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
  Actual Minimum Required for Capital Adequacy Purposes For Capital Adequacy Purposes Plus Capital Conservation Buffer Minimum Required to Be Well
Capitalized Under Prompt Corrective Action Requirements
  Amount Ratio Amount Ratio Amount Ratio Amount Ratio
  (Dollars in Thousands)
Total capital
(to risk-weighted assets)		            
Consolidated $ 323,893  11.26  % $ 230,180  8.00  % $ 302,111  10.50  % N/A N/A
First Business Bank 323,021  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/A N/A
First Business Bank 298,312  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/A N/A
First Business Bank 298,312  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/A N/A
First Business Bank 298,312  10.34  115,402  4.00  115,402  4.00  $ 144,252  5.00  %
38
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
    Unless otherwise indicated or unless the context requires otherwise, all references in this Report to the “Corporation,” “we,” “us,” “our,” or similar references mean First Business Financial Services, Inc. together with our subsidiary. “FBB” or the “Bank” refers to our subsidiary, First Business Bank.
Forward-Looking Statements
    This report may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect our 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. 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, or any future public health epidemics.
•Competitive pressures among depository and other financial institutions nationally and in our markets.
•Increases in defaults by borrowers and other delinquencies.
•Our ability to manage growth effectively, including the successful expansion of our client support, administrative infrastructure, and internal management systems.
•Fluctuations in interest rates and market prices.
•Changes in legislative or regulatory requirements applicable to us and our 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 our internet banking activities.
•Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portions of SBA loans.
•Recent volatility in the banking sector may result in new legislation, regulations or policy changes that could subject the Corporation and the Bank to increased government regulation and supervision.
•The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.
•The Corporation may be subject to increases in FDIC insurance assessments as a result of the recent bank failures.
    These risks could cause actual results to differ materially from what we have anticipated or projected. These risk factors and uncertainties should be carefully considered by our shareholders and potential investors. See Part I, Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, Part II, Item 1A — Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, and in this report, below, for discussion relating to risk factors impacting us. Investors should not place undue reliance on any such forward-looking statements, which speak only as of the date made. These factors could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods.
    Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while our management believes such assumptions or bases are reasonable and are made in good faith, assumed facts or bases can vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, an expectation or belief is expressed as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.
    We do not intend to, and specifically disclaim any obligation to, update any forward-looking statements.
    The following discussion and analysis is intended as a review of significant events and factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes thereto presented in this Form 10-Q.

39
Table of Contents
Overview
    We are a registered bank holding company incorporated under the laws of the State of Wisconsin and are engaged in the commercial banking business through our wholly-owned banking subsidiary, FBB. All of our operations are conducted through FBB and First Business Specialty Finance, LLC (“FBSF”), a wholly-owned subsidiary of FBB. We operate as a business bank focusing on delivering a full line of commercial banking products and services tailored to meet the specific needs of small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals. Our products and services include those for business banking, private wealth, and bank consulting. Within business banking, we offer commercial lending, asset-based lending, accounts receivable financing, equipment financing, floorplan financing, vendor financing, SBA lending and servicing, treasury management services, and company retirement plans. Our private wealth management services include trust and estate administration, financial planning, investment management, and private banking for executives and owners of our business banking clients and others. Our bank consulting experts provide investment portfolio administrative services, asset liability management services, and asset liability management process validation for other financial institutions. We do not utilize a branch network to attract retail clients. Our operating model is predicated on deep client relationships, financial expertise, and an efficient, centralized administration function delivering best in class client satisfaction. Our focused model allows experienced staff to provide the level of financial expertise needed to develop and maintain long-term relationships with our clients.
Financial Performance Summary

    Results as of and for the three and six months ended June 30, 2023 include:

•Net income available to common shareholders totaled $8.1 million, or diluted earnings per share of $0.98, for the three months ended June 30, 2023, compared to $11.0 million, or diluted earnings per share of $1.29, for the same period in 2022. Net income available to common shareholders totaled $16.9 million, or diluted earnings per share of $2.02, for the six months ended June 30, 2023, compared to $19.6 million, or diluted earnings per share of $2.31, for the same period in 2022.
•Annualized return on average assets (“ROAA”) for the three months ended June 30, 2023 measured 1.04% compared to 1.61% for the same period in 2022. Annualized ROAA for the six months ended June 30, 2023 measured 1.10% compared to 1.46% for the same period in 2022.
•Return on average common equity (“ROACE”) is defined as net income available to common shareholders divided by average equity less average preferred stock, if any. ROACE was 12.58% for the three months ended June 30, 2023, compared to 18.79% for the same period in 2022. ROACE was 13.26% for the six months ended June 30, 2023, compared to 16.74% for the same period in 2022.
•Pre-tax, pre-provision (“PTPP”) adjusted earnings, which excludes certain one-time and discrete items, and PTPP ROAA were $13.5 million and 1.72%, respectively, for the three months ended June 30, 2023, increasing $2.6 million and 12 basis points from the same period in 2022. PTPP and PTPP ROAA were $26.8 million and 1.75%, respectively, for the six months ended June 30, 2023, increasing $6.0 million and 21 basis points from the same period in 2022.
•Fees in lieu of interest, defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization, totaled $936,000 for the three months ended June 30, 2023, compared to $1.9 million for the same period in 2022. Fees in lieu of interest totaled $1.6 million for the six months ended June 30, 2023, compared to $3.2 million for the same period in 2022.
•Net interest margin was 3.81% for the three months ended June 30, 2023 compared to 3.71% for the same period in 2022. Adjusted net interest margin, which excludes certain one-time and volatile items including fees in lieu of interest, was 3.63% for the three months ended June 30, 2023, up from 3.44% for the same period in 2022. Net interest margin was 3.83% for the six months ended June 30, 2023 compared to 3.55% for the same period in 2022. Adjusted net interest margin, which excludes certain one-time and volatile items, was 3.69% for the six months ended June 30, 2023, up from 3.33% for the same period in 2022.
•Top line revenue, defined as net interest income plus non-interest income, totaled $35.1 million for the three months ended June 30, 2023, up $4.6 million, or 15.0% from the same period in 2022. Top line revenue totaled $70.2 million for the six months ended June 30, 2023, up $10.9 million, or 18.4% from the same period in 2022.
•Effective tax rate was 24.3% for the six months ended June 30, 2023 compared to 23.7% for the same period in 2022.
•Provision for credit losses was an expense of $2.2 million for the three months ended June 30, 2023 compared to a benefit of $3.7 million for the same period in 2022. Provision for credit losses was an expense of $3.8 million for the six months ended June 30, 2023 compared to a benefit of $4.6 million for the same period in 2022.
•Total assets at June 30, 2023 increased $289.1 million, or 19.4% annualized, to $3.266 billion from $2.977 billion at December 31, 2022.
•Period-end gross loans and leases receivable increased $231.2 million, or 18.9% annualized, to $2.674 billion as of June 30, 2023 compared to $2.443 billion as of December 31, 2022. Average gross loans and leases of $2.533 billion increased $273.6 million, or 12.1%, for the six months ended June 30, 2023, compared to $2.259 billion for the same period in 2022.
40
Table of Contents
•Non-performing assets were $15.8 million and 0.48% of total assets as of June 30, 2023, compared to $3.8 million and 0.13% of total assets as of December 31, 2022.
•The allowance for credit losses, including reserve for unfunded credit commitments, increased $5.5 million compared to December 31, 2022. The allowance for credit losses increased to 1.11% of total loans, compared to 0.99% at December 31, 2022.
•Period-end in-market deposits at June 30, 2023 increased $107.8 million, or 11.0% annualized, to $2.074 billion from $1.966 billion as of December 31, 2022. Average in-market deposits of $2.018 billion increased $101.7 million, or 5.3%, for the six months ended June 30, 2023, compared to $1.917 billion for the same period in 2022.
•Private wealth and trust assets under management and administration increased by $247.1 million, or 18.6% annualized, to $2.907 billion at June 30, 2023, compared to $2.660 billion at December 31, 2022. Assets under management and administration increased $353.4 million, or 13.8%, compared to the same period in 2022.


Results of Operations
Top Line Revenue
    Top line revenue, comprised of net interest income and non-interest income, increased $4.6 million, or 15.0%, for the three months ended June 30, 2023, compared to the same period in 2022, due to a 17.3% and 7.3% increase in net interest income and non-interest income, respectively. The increase in net interest income was driven by an increase in net interest margin and average loans and leases outstanding. The increase in non-interest income was due to an increase in trust fee income, commercial loan swap fee income, loan fee income, and income from investments in mezzanine funds, partially offset by a reduction in gains on the sale of SBA loans and service charges on deposits.
Top line revenue increased $10.9 million, or 18.4%, for the six months ended June 30, 2023, compared to the same period in 2022, due to a 20.8% and 10.7% increase in net interest income and non-interest income, respectively. The increase in net interest income was driven by an increase in net interest margin and average loans and leases outstanding. The increase in non-interest income was due to an increase in commercial loan swap fee income, loan fee income, and income from investments in mezzanine funds, partially offset by a reduction in gains on the sale of SBA loans, service charges on deposits, and trust fee income.
    The components of top line revenue were as follows:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2023 2022 $ Change % Change 2023 2022 $ Change % Change
  (Dollars in Thousands)
Net interest income $ 27,747  $ 23,660  $ 4,087  17.3% $ 54,453  $ 45,087  $ 9,366  20.8%
Non-interest income 7,374  6,872  502  7.3 15,784  14,258  1,526  10.7
Top line revenue $ 35,121  $ 30,532  $ 4,589  15.0 $ 70,237  $ 59,345  $ 10,892  18.4
Annualized Return on Average Assets (“ROAA”) and Annualized Return on Average Common Equity (“ROACE”)
    ROAA for the three and six months ended June 30, 2023 decreased to 1.04% and 1.10%, respectively, compared to 1.61% and 1.46% for the three and six months ended June 30, 2022, respectively. The decrease in ROAA was due to an increase in credit loss provision and operating expenses, partially offset by an increase in top line revenue. We consider ROAA a critical metric to measure the profitability of our organization and how efficiently our assets are deployed. ROAA also allows us to better benchmark our profitability to our peers without the need to consider different degrees of leverage which can ultimately influence return on equity measures.
    ROACE for the three and six months ended June 30, 2023 was 12.58% and 13.26%, respectively, compared to 18.79% and 16.74% for the three and six months ended June 30, 2022, respectively. The primary reason for the change in ROACE is consistent with the net income variance explanation as discussed under Return on Average Assets above. We view ROACE as an important measurement for monitoring profitability and continue to focus on improving our return to our shareholders by enhancing the overall profitability of our client relationships, controlling our expenses, and minimizing our costs of credit.
41
Table of Contents
ROAA and ROACE for the three and six month ended June 30, 2022 were both favorably impacted by net recoveries of $4.2 million and $4.4 million, respectively.
Efficiency Ratio and Pre-Tax, Pre-Provision Adjusted Earnings
    Efficiency ratio measured 61.68% and 61.85% for the three and six months ended June 30, 2023, respectively, compared to 64.47% and 65.00% for the three and six ended June 30, 2022, respectively, as the percentage increase in top line revenue exceeded the percentage increase in operating expense resulting in positive operating leverage in both periods of comparison. Efficiency ratio is a non-GAAP measure representing operating expense, which is non-interest expense excluding the effects of the SBA recourse benefit or provision, impairment of tax credit investments, net gains or losses on repossessed assets, 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 net gains or losses on securities, if any.
PTPP adjusted earnings for three and six months ended June 30, 2023 was $13.5 million and $26.8 million, respectively, compared to $10.8 million and $20.8 million for the three and six months ended June 30, 2022, respectively. PTPP adjusted earnings is defined as operating revenue less operating expense. The increase in PTPP for both periods of comparison was primarily driven by an increase in average loans and leases outstanding and net interest margin expansion, partially offset by an increase in operating expenses as the Corporation continued to invest to achieve its strategic growth objectives. In the judgment of the Corporation’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Corporation’s operating expenses in relation to its core operating revenue by removing the volatility associated with certain one-time items and other discrete items. PTPP adjusted earnings allows management to benchmark performance of our model to our peers without the influence of the credit loss provision and tax considerations, which will ultimately influence other traditional financial measurements, including ROAA and ROACE. The information provided below reconciles the efficiency ratio to its most comparable GAAP measure.
    Please refer to the Non-Interest Income and Non-Interest Expense sections below for discussion on additional drivers of the year-over-year change in the efficiency ratio and PTPP adjusted earnings.
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 $ Change % Change 2023 2022 $ Change % Change
(Dollars in Thousands)
Total non-interest expense $ 22,031  $ 19,456  $ 2,575  13.2% $ 43,798  $ 38,280  $ 5,518  14.4%
Less:  
Net (gain) loss on repossessed assets (2) 8  (10) (125.0) 4  20  (16) NM
SBA recourse provision 341  114  227  199.1 323  38  285  NM
Tax credit investment impairment recovery —  (351) 351  NM —  (351) 351  NM
Total operating expense (a) $ 21,692  $ 19,685  $ 2,007  10.2 $ 43,471  $ 38,573  $ 4,898  12.7
Net interest income $ 27,747  $ 23,660  $ 4,087  17.3 $ 54,453  $ 45,087  $ 9,366  20.8
Total non-interest income 7,374  6,872  502  7.3 15,784  14,258  1,526  10.7
Less:
Net loss on sale of securities (45) —  (45) NM (45) —  (45) NM
Adjusted non-interest income 7,419  6,872  547  8.0 15,829  14,258  1,571  11.0
Operating revenue (b) $ 35,166  $ 30,532  $ 4,634  15.2 $ 70,282  $ 59,345  $ 10,937  18.4
Efficiency ratio 61.68  % 64.47  % 61.85  % 65.00  %
Pre-tax, pre-provision adjusted earnings (b-a) $ 13,474  $ 10,847  $ 2,627  24.2 $ 26,811  $ 20,772  $ 6,039  29.1
Average total assets $ 3,127,234  $ 2,716,707  $ 410,527  15.1 $ 3,056,311  $ 2,691,613  $ 364,698  13.5
Pre-tax, pre-provision adjusted return on average assets 1.72  % 1.60  % 1.75  % 1.54  %
42
Table of Contents
We believe the Corporation will generate positive operating leverage on an annual basis and progress towards enhancing the long-term efficiency ratio at a measured pace as we focus on strategic initiatives directed toward revenue growth, process improvement, and automation. The Corporation’s recent improvement during the period of comparison is due to the rising interest rate environment, and related expansion of net interest margin coupled with strong loan and in-market deposit growth.


Net Interest Income

    Net interest income levels depend on the amount of and yield on interest-earning assets as compared to the amount of and rate paid on interest-bearing liabilities. Net interest income is sensitive to changes in market rates of interest and the asset/liability management processes to prepare for and respond to such changes.
    The following table provides information with respect to (1) the change in net interest income attributable to changes in rate (changes in rate multiplied by prior volume) and (2) the change in net interest income attributable to changes in volume (changes in volume multiplied by prior rate) for the three and six months ended June 30, 2023 compared to the same period in 2022. The change in net interest income attributable to changes in rate and volume (changes in rate multiplied by changes in volume) has been allocated to the rate and volume changes in proportion to the relationship of the absolute dollar amounts of the change in each.
Increase (Decrease) for the Three Months Ended June 30, Increase (Decrease) for the Six Months Ended June 30,
  2023 Compared to 2022 2023 Compared to 2022
Rate Volume Net Rate Volume Net
  (In Thousands)
Interest-earning assets      
Commercial real estate and other mortgage loans(1)
 $ 7,517  $ 811  $ 8,328  $ 15,348  $ 1,352  $ 16,700 
Commercial and industrial loans(1)
 6,375  3,759  10,134  11,985  6,416  18,401 
Consumer and other loans(1)
 147  (17) 130  280  (46) 234 
Total loans and leases receivable 14,039  4,553  18,592  27,613  7,722  35,335 
Mortgage-related securities 539  78  617  1,067  60  1,127 
Other investment securities 100  32  132  182  55  237 
FHLB and FRB Stock 197  (121) 76  210  21  231 
Short-term investments 602  111  713  980  50  1,030 
Total net change in income on interest-earning assets
 15,477  4,653  20,130  30,052  7,908  37,960 
Interest-bearing liabilities
Transaction accounts 4,960  152  5,112  8,558  140  8,698 
Money market accounts 4,212  (104) 4,108  8,403  (137) 8,266 
Certificates of deposit 1,820  1,012  2,832  3,205  1,690  4,895 
Wholesale deposits 55  3,376  3,431  130  5,158  5,288 
Total deposits 11,047  4,436  15,483  20,296  6,851  27,147 
FHLB advances 2,628  (1,842) 786  2,454  (243) 2,211 
Other borrowings (24) (202) (226) (10) (250) (260)
Junior subordinated notes(2)
 —  —  —  (504) —  (504)
Total net change in expense on interest-bearing liabilities
 13,651  2,392  16,043  22,236  6,358  28,594 
Net change in net interest income $ 1,826  $ 2,261  $ 4,087  $ 7,816  $ 1,550  $ 9,366 
(1)The average balances of loans and leases include non-performing loans and leases and loans held for sale.
(2)The rate column for the six months ended June 30, 2022 included $248,000 in accelerated amortization of debt issuance costs.


43
Table of Contents
    The tables below show our average balances, interest, average yields/rates, net interest margin, and the spread between the combined average yields earned on interest-earning assets and average rates on interest-bearing liabilities for the three and six months ended June 30, 2023 and 2022. The average balances are derived from average daily balances.
  For the Three Months Ended June 30,
  2023 2022
Average
Balance		 Interest
Average
Yield/Rate(4)
 Average
Balance		 Interest
Average
Yield/Rate(4)
  (Dollars in Thousands)
Interest-earning assets            
Commercial real estate and other mortgage loans(1)
 $ 1,546,487  $ 23,671  6.12  % $ 1,472,075  $ 15,343  4.17  %
Commercial and industrial loans(1)
 987,534  20,020  8.11  749,826  9,886  5.27 
Consumer and other loans(1)
 49,216  588  4.78  51,045  458  3.59 
Total loans and leases receivable(1)
 2,583,237  44,279  6.86  2,272,946  25,687  4.52 
Mortgage-related securities(2)
 192,564  1,421  2.95  176,747  804  1.82 
Other investment securities(3)
 60,790  392  2.58  54,591  260  1.91 
FHLB and FRB stock 15,844  302  7.62  17,355  226  5.21 
Short-term investments 61,316  767  5.00  29,541  54  0.73 
Total interest-earning assets 2,913,751  47,161  6.47  2,551,180  27,031  4.24 
Non-interest-earning assets 213,483      165,527     
Total assets $ 3,127,234      $ 2,716,707     
Interest-bearing liabilities            
Transaction accounts $ 670,698  5,455  3.25  $ 502,763  343  0.27 
Money market accounts 633,817  4,617  2.91  767,433  509  0.27 
Certificates of deposit 295,785  2,946  3.98  73,560  114  0.62 
Wholesale deposits 332,387  3,523  4.24  12,350  92  2.98 
Total interest-bearing deposits 1,932,687  16,541  3.42  1,356,106  1,058  0.31 
FHLB advances 367,129  2,452  2.67  449,599  1,666  1.48 
Other borrowings 34,538  421  4.88  51,018  647  5.07 
Total interest-bearing liabilities 2,334,354  19,414  3.33  1,856,723  3,371  0.73 
Non-interest-bearing demand deposit accounts
 435,556      557,086     
Other non-interest-bearing liabilities 87,148      57,615     
Total liabilities 2,857,058      2,471,424     
Stockholders’ equity 270,176      245,283     
Total liabilities and stockholders’ equity
 $ 3,127,234      $ 2,716,707     
Net interest income   $ 27,747      $ 23,660   
Interest rate spread     3.15  %     3.51  %
Net interest-earning assets $ 579,397      $ 694,457     
Net interest margin     3.81  %     3.71  %
Average interest-earning assets to average interest-bearing liabilities
 124.82  %     137.40  %    
Return on average assets(4)
 1.04      1.61     
Return on average equity(4)
 12.58      18.79     
Average equity to average assets 8.64      9.03     
Non-interest expense to average assets(4)
 2.82      2.86     
(1)The average balances of loans and leases include non-performing loans and leases and loans held for sale. Interest income related to non-performing loans and leases is recognized when collected. Interest income includes net loan fees in lieu of interest.
(2)Includes amortized cost basis of assets available-for-sale and held-to-maturity.
(3)Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.
(4)Represents annualized yields/rates.

44
Table of Contents
  For the Six Months Ended June 30,
  2023 2022
Average
Balance		 Interest
Average
Yield/Rate(4)
 Average
Balance		 Interest
Average
Yield/Rate(4)
  (Dollars in Thousands)
Interest-earning assets            
Commercial real estate and other mortgage loans(1)
 $ 1,532,348  $ 45,389  5.92  % $ 1,466,017  $ 28,689  3.91  %
Commercial and industrial loans(1)
 952,192  37,577  7.89  742,406  19,176  5.17 
Consumer and other loans(1)
 47,960  1,128  4.70  50,449  894  3.54 
Total loans and leases receivable(1)
 2,532,500  84,094  6.64  2,258,872  48,759  4.32 
Mortgage-related securities(2)
 187,556  2,691  2.87  180,832  1,564  1.73 
Other investment securities(3)
 58,270  712  2.44  52,584  475  1.81 
FHLB and FRB stock 16,481  629  7.63  15,688  398  5.07 
Short-term investments 45,022  1,100  4.89  30,321  70  0.46 
Total interest-earning assets 2,839,829  89,226  6.28  2,538,297  51,266  4.04 
Non-interest-earning assets 216,482      153,316     
Total assets $ 3,056,311      $ 2,691,613     
Interest-bearing liabilities            
Transaction accounts $ 619,352  9,295  3.00  $ 517,923  597  0.23 
Money market accounts 666,385  9,114  2.74  775,808  848  0.22 
Certificates of deposit 266,099  5,064  3.81  63,098  169  0.54 
Wholesale deposits 260,485  5,498  4.22  14,282  210  2.94 
Total interest-bearing deposits 1,812,321  28,971  3.20  1,371,111  1,824  0.27 
FHLB advances 382,533  4,913  2.57  417,518  2,702  1.29 
Other borrowings 35,660  889  4.99  45,694  1,149  5.03 
Junior subordinated notes(5)
 —  —  —  4,898  504  20.58 
Total interest-bearing liabilities 2,230,514  34,773  3.12  1,839,221  6,179  0.67 
Non-interest-bearing demand deposit accounts
 466,491      559,793     
Other non-interest-bearing liabilities 92,716      50,117     
Total liabilities 2,789,721      2,449,131     
Stockholders’ equity 266,590      242,482     
Total liabilities and stockholders’ equity
 $ 3,056,311      $ 2,691,613     
Net interest income   $ 54,453      $ 45,087   
Interest rate spread     3.17  %     3.37  %
Net interest-earning assets $ 609,315    $ 699,076   
Net interest margin     3.83  %     3.55  %
Average interest-earning assets to average interest-bearing liabilities
 127.32  %     138.01  %    
Return on average assets(4)
 1.10      1.46     
Return on average equity(4)
 13.26      16.74     
Average equity to average assets 8.72      9.01     
Non-interest expense to average assets(4)
 2.87      2.84     
(1)The average balances of loans and leases include non-performing loans and leases and loans held for sale. Interest income related to non-performing loans and leases is recognized when collected. Interest income includes net loan fees in lieu of interest.
(2)Includes amortized cost basis of assets available-for-sale and held-to-maturity.
(3)Yields on tax-exempt municipal securities are not presented on a tax-equivalent basis in this table.
(4)Represents annualized yields/rates.
(5)The rate column for the six months ended June 30, 2022 included $248,000 in accelerated amortization of debt issuance costs.



45
Table of Contents
The change in yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta. The table below displays the beta calculations for loans and leases, total interest earning assets, in-market deposits, interest-bearing deposits and total interest-bearing liabilities for the three and six months ended June 30, 2023 and 2022. Additionally, adjusted total loans and leases and total interest-earning assets excludes the volatile impact of fees in lieu of interest.
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 2023 2022
Asset and Liability Beta Analysis
Average Yield/Rate (4)
 Increase (Decrease)
Average Yield/Rate (3)
 Increase (Decrease)
Total loans and leases receivable (a)
 6.86  % 4.52  % 2.34  % 6.64  % 4.32  % 2.32  %
Total interest-earning assets(b)
 6.47  % 4.24  % 2.23  % 6.28  % 4.04  % 2.24  %
Adjusted total loans and leases receivable (1)(c)
 6.71  % 4.19  % 2.52  % 6.52  % 4.04  % 2.48  %
Adjusted total interest-earning assets (1)(d)
 6.35  % 3.95  % 2.40  % 6.17  % 3.79  % 2.38  %
Total in-market deposits(e)
 2.56  % 0.20  % 2.36  % 2.33  % 0.17  % 2.16  %
Total bank funding(f)
 2.78  % 0.46  % 2.32  % 2.55  % 0.39  % 2.16  %
Net interest margin(g)
 3.81  % 3.71  % 0.10  % 3.83  % 3.55  % 0.28  %
Adjusted net interest margin(h)
 3.63  % 3.44  % 0.19  % 3.69  % 3.33  % 0.36  %
Effective fed funds rate (3)(i)
 4.99  % 0.77  % 4.22  % 4.75  % 0.45  % 4.30  %
Beta Calculations:
Total loans and leases receivable(a)/(i)
 55.35  % 53.95  %
Total interest-earning assets(b)/(i)
 52.99  % 52.20  %
Adjusted total loans and leases receivable (1)(c)/(i)
 59.70  % 57.67  %
Adjusted total interest-earning assets (1)(d)/(i)
 56.87  % 55.39  %
Total in-market deposits(e)/(i)
 55.92  % 50.23  %
Total bank funding(2)(f)/(i)
 54.98  % 50.23  %
Net interest margin(g)/(i)
 2.37  % 6.51  %
Adjusted net interest margin(h)/(i)
 4.50  % 8.37  %
(1)Excluding fees in lieu of interest.
(2)Total bank funding represents total deposits plus FHLB advances.
(3)Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rates [DFF]. retrieved from FRED, Federal Reserve Bank of St. Louis.
(4)Represents annualized yields/rates.


Comparison of Net Interest Income for the Three and Six Months Ended June 30, 2023 and 2022

    Net interest income increased $4.1 million, or 17.3%, and $9.4 million, or 20.8%, during the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022. The increase in net interest income reflected an increase in net interest margin and increase in average gross loans and leases, partially offset by a reduction in fees in lieu of interest. Fees in lieu of interest, which vary from quarter to quarter, totaled $936,000 and $1.6 million for the three and six months ended June 30, 2023, respectively, compared to $1.9 million and $3.2 million for the same period in 2022. Excluding fees in lieu of interest, net interest income for the three and six months ended June 30, 2023 increased $5.0 million, or 23.0%, and $10.9 million, or 26.1%, respectively. Average gross loans and leases for the three and six months ended June 30, 2023 increased $310.3 million, or 13.7%, and $273.6 million, or 12.1%, respectively, compared to the three and six months ended June 30, 2022.
46
Table of Contents
The yield on average loans and leases for the three and six months ended June 30, 2023 was 6.86% and 6.64%, respectively, compared to 4.52% and 4.32% for the three and six months ended June 30, 2022. Excluding the impact of loan fees in lieu of interest, the yield on average loans and leases for the three and six months ended June 30, 2023 was 6.71% and 6.52%, respectively, compared to 4.19% and 4.04% for the three and six months ended June 30, 2022. The yield on average interest-earning assets for the three and six months ended June 30, 2023 measured 6.47% and 6.28%, respectively, compared to 4.24% and 4.04% for the three and six months ended June 30, 2022. Excluding loan fees in lieu of interest, the yield on average interest-earning assets for the three and six months ended June 30, 2023 was 6.35% and 6.17%, respectively, compared to 3.95% and 3.79% for the three and six months ended June 30, 2022. The increase in yields was primarily due to rising rates on variable-rate loans, following the Federal Open Market Committee’s (“FOMC”) decision to raise the target Fed Funds rate 350 basis points over the period of comparison, as well as the reinvestment of cash flows from the securities and fixed-rate loan portfolios in a rising rate environment. The daily average effective federal funds rate for the three and six months ended June 30, 2023 increased 422 and 430 basis points, compared to the same period in 2022. This equates to an interest-earning asset beta of 56.87% and 55.39%, respectively, for the three and six months ended June 30, 2023.
The rate paid on average interest-bearing in-market deposits for the three and six months ended June 30, 2023 increased to 3.25% and 3.03%, respectively, from 0.29% and 0.24% for the three and six months ended June 30, 2022. The average rate paid on total interest-bearing liabilities for the three and six months ended June 30, 2023 increased to 3.33% and 3.12%, respectively, from 0.73% and 0.67% for the three and six months ended June 30, 2022. Total interest-bearing liabilities include interest-bearing deposits, federal funds purchased, FHLB advances, subordinated and junior subordinated notes payable, and other borrowings. The average rates paid increased due to the increase in short-term market rates and the replacement of maturing wholesale funds at higher fixed rates. This equates to an interest-bearing liability beta of 61.62% and 56.88%, respectively, for the three and six months ended June 30, 2023.
Net interest margin increased to 3.81% and 3.83%, respectively, for the three and six months ended June 30, 2023, compared to 3.71% and 3.55% for the three and six months ended June 30, 2022. The primary driver of improved net interest margin was the aforementioned increase in earning asset yields, partially offset by corresponding increase in funding costs. Adjusted net interest margin measured 3.63% and 3.69%, respectively, for the three and six months ended June 30, 2023, compared to 3.44% and 3.33% for the three and six months ended June 30, 2022. Adjusted net interest margin is a non-GAAP measure representing net interest income excluding the impact of fees in lieu of interest, and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less other recurring, but volatile, components of average interest-earning assets.    
Management believes its success in growing in-market deposits, disciplined loan pricing, and increased production in existing higher-yielding commercial lending products will allow the Corporation to achieve a net interest margin that supports our long-term profitability goals. However, the collection of loan fees in lieu of interest is an expected source of volatility to quarterly net interest income and net interest margin. In addition, net interest margin may also experience volatility due to events such as the collection of interest on loans previously in non-accrual status or the accumulation of significant short-term deposit inflows. Management anticipates deposit betas may continue to rise and net interest margin may continue to decline at a gradual pace in coming quarters as the Federal Open Market Committee approaches a terminal federal funds rate. Based on current trends, we believe our net interest margin should stabilize meaningfully above our strategic plan goal of 3.50%.
Provision for Credit Losses
    We determine our provision for credit losses pursuant to our allowance for credit loss methodology, which was updated on January 1, 2023, for the adoption of ASC 326. It is based on a reasonable and supportable forecast as well as considerations for composition, risk, and performance indicators in our credit portfolio. Refer to Allowance for Credit Losses, below, for further information regarding our allowance for credit loss methodology.
The Corporation recognized a $2.2 million and $3.8 million provision expense for the three and six months ended June 30, 2023, respectively, compared to a benefit of $3.7 million and $4.6 million for the three and six months ended June 30, 2022. The provision expense for the three months ended June 30, 2023 was primarily due to an increase of $1.2 million related to loan growth and a $1.1 million increase in specific reserves.
47
Table of Contents
The following table shows the components of the provision for credit losses for the three and six months ended June 30, 2023 compared to the same periods in 2022.
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 2023 2022
(In Thousands)
Change in qualitative factor changes $ (50) $ (185) $ (41) $ (601)
Change in quantitative factor changes (295) 64  179  (142)
Charge-offs 329  85  495  107 
Recoveries (245) (4,247) (351) (4,457)
Change in reserves on individually evaluated loans, net 1,093  29  1,057  (251)
Change due to loan growth, net 1,227  527  2,206  762 
Change in unfunded credit commitment reserves 172  —  248  — 
Total provision for credit losses $ 2,231  $ (3,727) $ 3,793  $ (4,582)
     The addition of specific reserves on individually evaluated loans represents new specific reserves established when collateral shortfalls or government guaranty deficiencies are present, while the release of specific reserves represents the reduction of previously established reserves that are no longer required. Changes in the allowance for credit losses due to qualitative factor changes reflect management’s evaluation of the level of risk within the portfolio based upon several factors for each portfolio segment. Charge-offs in excess of previously established specific reserves require an additional provision for credit losses to maintain the allowance for credit losses at a level deemed appropriate by management. This amount is net of the release of any specific reserve that may have already been provided. Refer to Asset Quality, below, for further information regarding the overall credit quality of our loan and lease portfolio.
Comparison of Non-Interest Income for the Three and Six Months Ended June 30, 2023 and 2022
Non-Interest Income
    Non-interest income increased $502,000, or 7.3%, to $7.4 million for the three months ended June 30, 2023 compared to $6.9 million for the same period in 2022. The increase in total non-interest income for the three months ended June 30, 2023 was due to increases in other non-interest income, driven by mezzanine fund investment income, loan fee income, commercial loan swap fee income, and private wealth fee income. These favorable variances were partially offset by a decrease in services charges on deposits and gains on sale of SBA loans. Non-interest income for the six months ended June 30, 2023 increased $1.5 million, or 10.7%, to $15.8 million compared to $14.3 million for the same period in 2022. The increase in total non-interest income for the six months ended June 30, 2023 was driven by an increase in other non-interest income, led by mezzanine fund investment income, and an increase in commercial loan swap fee income and loan fee income. These favorable variances were partially offset by a decrease in gains on the sale of SBA loans, service charges on deposits, and private wealth fee income.
Management continues to focus on revenue growth from multiple non-interest income sources in order to maintain a diversified revenue stream through greater contributions from fee-based revenues. Total non-interest income accounted for 21.0% and 22.5% of total revenues for the three and six months ended June 30, 2023, respectively, compared to 22.5% and 24.0% for the three and six months ended June 30, 2022, respectively.
48
Table of Contents
    The components of non-interest income were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 $ Change % Change 2023 2022 $ Change % Change
(Dollars in Thousands)
Private wealth management services fee income
 $ 2,893  $ 2,852  $ 41  1.4% $ 5,547  $ 5,693  $ (146) (2.6)%
Gain on sale of SBA loans 444  951  (507) (53.3) 920  1,537  (617) (40.1)
Service charges on deposits 766  1,041  (275) (26.4) 1,448  2,040  (592) (29.0)
Loan fees 905  697  208  29.8 1,708  1,349  359  26.6
Increase in cash surrender value of bank-owned life insurance
 363  350  13  3.7 729  698  31  4.4
Net loss on sale of securities (45) —  (45) NM (45) —  (45) NM
Swap fees 977  471  506  107.4 1,534  697  837  120.1
Other non-interest income 1,071  510  561  110.0 3,943  2,244  1,699  75.7
Total non-interest income $ 7,374  $ 6,872  $ 502  7.3 $ 15,784  $ 14,258  $ 1,526  10.7
Fee income ratio(1)
 21.0  % 22.5  % 22.5  % 24.0  %
(1)     Fee income ratio is fee income, per the above table, divided by top line revenue (defined as net interest income plus non-interest income).
    Private wealth management service fees increased $41,000, or 1.4%, and decreased $146,000, or 2.6%, for the three and six months ended June 30, 2023, compared to the same period in 2022. Private wealth management fee income is primarily driven by the amount of assets under management and administration, as well as the mix of business at different fee structures, and can be positively or negatively influenced by the timing and magnitude of volatility within the capital markets. As of June 30, 2023, private wealth and trust assets under management and administration totaled $2.907 billion, increasing $353.4 million, or 13.8%, compared to $2.554 billion as of June 30, 2022, as an increase in market values was bolstered by new client relationships and new money from existing clients.
Other non-interest income increased $561,000, or 110.0%, and $1.7 million, or 75.7%, for the three and six months ended June 30, 2023, respectively, compared to the same period in 2022. The increase for the three and six months ended June 30, 2023 was primarily due to strong returns from the Corporation’s investments in mezzanine funds.
Commercial loan interest rate swap fee income increased $506,000, or 107.4%, and $837,000, or 120.1%, for the three and six months ended June 30, 2023, respectively, compared to the same period in 2022. We originate commercial real estate loans in which we offer clients a floating rate and an interest rate swap. The client’s swap is then offset with a counter-party dealer. The execution of these transactions generates swap fee income. The aggregate amortizing notional value of interest rate swaps with various borrowers was $838.5 million as of June 30, 2023, compared to $744.2 million and $646.1 million as of December 31, 2022 and June 30, 2022, respectively. Interest rate swaps can be an attractive product for our commercial borrowers, although associated fee income can be variable from period to period based on loan activity and the interest rate environment in any given quarter.
Service charges on deposits decreased $275,000, or 26.4%, and $592,000, or 29.0%, respectively, for the three and six months ended June 30, 2023, compared to the same period in 2022. The decrease was driven by an increase in the earnings credit rate which was adjusted with the rising rate environment. Treasury management business development efforts remain robust as gross treasury management service charges, net of waived fees, increased $184,000, or 14.9%, and $395,000, or 16.3%, for the three and six months ended June 30, 2023, compared to the same period in 2022. Management believes growth in gross analyzed service charges is a strong indicator of success for the Corporation given the direct correlation to adding and expanding core business relationships.
Loan fees increased by $208,000, or 29.8%, and $359,000, or 26.6%, for the three and six months ended June 30, 2023, respectively, compared to the same period in 2022. The increase was due to an increase in equipment financing and floorplan financing activity generating additional service fee income.
Gain on sale of SBA loans decreased $507,000, or 53.3%, and $617,000, or 40.1%, for the three and six months ended June 30, 2023, respectively, compared to the same period in 2022. The decrease was driven by lower premiums and a decrease in loan originations compared to prior year quarter. In addition, the Corporation elected to hold a higher number of SBA loans on its balance sheet in the current interest rate environment.
49
Table of Contents
Comparison of Non-Interest Expense for the Three and Six Months Ended June 30, 2023 and 2022
Non-Interest Expense    
Non-interest expense for the three and six months ended June 30, 2023 increased by $2.6 million, or 13.2%, and $5.5 million, or 14.4%, respectively compared to the same period in 2022. Operating expense, which excludes certain one-time and discrete items as defined in the Efficiency Ratio table above, increased $2.0 million, or 10.2%, and $4.9 million, or 12.7%, respectively, for the three and six months ended June 30, 2023, compared to the same period in 2022. The increase in operating expense was primarily due to an increase in compensation, FDIC insurance, other non-interest expense, data processing, and marketing expenses.    
The components of non-interest expense were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2023 2022 $ Change % Change 2023 2022 $ Change % Change
(Dollars in Thousands)
Compensation
 $ 15,129  $ 14,020  $ 1,109  7.9  % $ 31,037  $ 27,658  $ 3,379  12.2  %
Occupancy 603  568  35  6.2  1,234  1,123  111  9.9 
Professional fees
 1,240  1,298  (58) (4.5) 2,583  2,468  115  4.7 
Data processing 1,061  892  169  18.9  1,936  1,673  263  15.7 
Marketing 779  670  109  16.3  1,407  1,170  237  20.3 
Equipment
 355  235  120  51.1  650  479  171  35.7 
Computer software 1,197  1,117  80  7.2  2,379  2,199  180  8.2 
FDIC insurance 580  296  284  95.9  974  610  364  59.7 
Other non-interest expense
 1,087  360  727  201.9  1,598  900  698  77.6 
Total non-interest expense $ 22,031  $ 19,456  $ 2,575  13.2  $ 43,798  $ 38,280  $ 5,518  14.4 
Total operating expense(1)
 $ 21,692  $ 19,685  $ 2,007  10.2  $ 43,471  $ 38,573  $ 4,898  12.7 
Full-time equivalent employees
 343  333  343  333 

(1)Total operating expense represents total non-interest expense, adjusted to exclude the impact of discrete items as previously defined in the non-GAAP efficiency ratio calculation, above.    
    Compensation expense for the three and six months ended June 30, 2023 increased $1.1 million, or 7.9%, and $3.4 million, or 12.2%, respectively, compared to the three and six months ended June 30, 2022. The increase for the three months ended June 30, 2023 reflects annual merit and market increases, to remain competitive in a wage inflation environment, an expanded workforce, and an increase in incentive compensation due to outstanding production. In addition, the increase for the six months ended June 30, 2023 was also driven by payment of, and payroll taxes paid on, a record annual cash bonus earned in 2022 but paid in 2023. Successful hiring efforts to secure talent resulted in average full-time equivalent employees for the three months ended June 30, 2023 increasing to 341, up 6.2%, compared to 321 for the three months ended June 30, 2022.
Other non-interest expense for the three and six months ended June 30, 2023 increased $727,000, or 201.9%, and $698,000, or 77.6%, respectively, compared to the three and six months ended June 30, 2022. The increase was primarily due to an increase in SBA recourse provision and a tax credit investment impairment recovery in the second quarter of 2022.
FDIC insurance for the three and six months ended June 30, 2023 increased $284,000, or 95.9%, and $364,000, or 59.7%, respectively, compared to the three and six months ended June 30, 2022. The increase was primarily due to an increase in the assessment rate and the assessable base.
Marketing expense increased $109,000, or 16.3%, and $237,000, or 20.3%, for the three and six months ended June 30, 2023, respectively, compared to the three and six months ended June 30, 2022. The increase during the three and six months ended June 30, 2023 was primarily due to an increase in business development efforts and advertising projects related to our expanded sales force and national footprint.


50
Table of Contents
Income Taxes
    Income tax expense totaled $5.3 million for the six months ended June 30, 2023 compared to $5.8 million for the six months ended June 30, 2022. Income tax expense included a $300,000 net benefit from a tax credit investment, no tax credits were recognized in the prior year. The effective tax rate for the six months ended June 30, 2023 was 24.3% compared to 23.7% for the same period in 2022. For 2023, the Corporation expects to report an effective tax rate between 21% and 22%, as the Bank continues to receive the benefit from its tax credit investments.
Generally, the provision for income taxes is determined by applying an estimated annual effective income tax rate to income before taxes and adjusting for discrete items. The rate is based on the most recent annualized forecast of pre-tax income, book versus tax differences and tax credits, if any. If we conclude that a reliable estimated annual effective tax rate cannot be determined, the actual effective tax rate for the year-to-date period may be used. We re-evaluate the income tax rates each quarter. Therefore, the current projected effective tax rate for the entire year may change.

Financial Condition
General
    Total assets increased by $289.1 million, or 9.7%, to $3.266 billion as of June 30, 2023 compared to $2.977 billion at December 31, 2022. The increase in total assets was primarily driven by an increase in cash, loans and leases receivable, and available-for-sale securities. Total liabilities increased by $277.1 million, or 10.2%, to $2.993 billion at June 30, 2023 compared to $2.716 billion at December 31, 2022. The increase in total liabilities was principally due to an increase in deposits. Total stockholders’ equity increased by $12.0 million, or 4.6%, to $272.6 million at June 30, 2023 compared to $260.6 million at December 31, 2022. The increase in total stockholders’ equity was due to retention of earnings and unrealized gains on available-for-sale securities, partially offset by dividends paid to common stockholders, stock repurchased, and cumulative change in accounting principal for ASC 326.
Cash and Cash Equivalents
    Cash and cash equivalents include short-term investments and cash and due from banks. Cash and due from banks increased $6.5 million to $32.3 million at June 30, 2023. Short-term investments increased by $3.6 million to $80.5 million at June 30, 2023 from $76.9 million at December 31, 2022. Our short-term investments primarily consist of interest-bearing deposits held at the FRB. We value the safety and soundness provided by the FRB, and therefore, we incorporate short-term investments in our readily accessible liquidity program. As of June 30, 2023 and December 31, 2022, interest-bearing deposits held at the FRB were $80.2 million and $76.5 million, respectively.
Securities
    Total securities, including available-for-sale and held-to-maturity, increased by $38.8 million, or 17.3%, to $263.5 million, or 8.1% of total assets at June 30, 2023 compared to $224.7 million, or 7.5% of total assets at December 31, 2022. During the six months ended June 30, 2023 the Corporation recognized unrealized losses of $252,000 before income taxes through other comprehensive income, compared to unrealized losses of $19.7 million for the same period in 2022. The unrealized losses in the prior year period were solely driven by the increase in interest rates. As of June 30, 2023 and December 31, 2022, our overall securities portfolio, including available-for-sale securities and held-to-maturity securities, had an estimated weighted-average expected maturity of 5.5 years and 6.3 years, respectively. Our investment philosophy remains as stated in our most recent Annual Report on Form 10-K.
    We use a third-party pricing service as our primary source of market prices for our securities portfolio. On a quarterly basis, we validate the reasonableness of prices received from this source through independent verification, data integrity validation primarily through comparison of current price to an expectation-based analysis of movement in prices based upon the changes in the related yield curves, and other market factors. We did not recognize any credit losses in the securities portfolio as of June 30, 2023.
51
Table of Contents
Loans and Leases Receivable    
    Period-end loans and leases receivable, net of allowance for credit losses, increased by $227.6 million, or 18.8% annualized to $2.646 billion at June 30, 2023 from $2.419 billion at December 31, 2022 driven by commercial loan growth. Due to the adoption of ASC 326, the current year included a change to our portfolio segmentation. The balances as of June 30, 2023 reflect reclassifications of $43 million to commercial and industrial from commercial real estate and $7 million from consumer and other to commercial real estate. Management does not believe this level of loan growth is sustainable and expects growth to moderate in subsequent quarters. Additionally, management expects to evaluate loan sale strategies as a means of adding to and further diversifying fee income.
Including the reclassification impact of adopting ASC 326 in the prior period of comparison, C&I loans increased $139.7 million, or 31.2% annualized, to $1.037 billion. The increase was due to growth across the majority of the Bank’s C&I products and geographies. Management does not believe this level of C&I loan growth is sustainable and expects growth to moderate to lower double-digit levels in subsequent quarters.
Including the reclassification impact of adopting ASC 326 in the prior period of comparison, total commercial real estate (“CRE”) loans increased $85.1 million, or 11.3% annualized, to $1.592 billion. The increase was due to growth across the majority of the Bank’s CRE products and geographies.
Including the reclassification impact of adopting ASC 326 in the prior period of comparison, CRE loans represented 59.5% and 61.7% of our total loans as of June 30, 2023 and December 31, 2022, respectively. The decline in CRE concentration in the period of comparison is the result of management’s success in expanding the Bank’s various C&I products across both its local and national footprints. As of June 30, 2023, 15.3% of the CRE loans were owner-occupied CRE, compared to 15.2% as of December 31, 2022. We consider owner-occupied CRE more characteristic of the Corporation’s C&I portfolio as, in general, the client’s primary source of repayment is the cash flow from the operating entity occupying the commercial real estate property.
We continue to actively pursue C&I loans across the Corporation as this segment of our loan and lease portfolio provides an attractive yield commensurate with an appropriate level of credit risk and creates opportunities for in-market deposit, treasury management, and private wealth management relationships which generate additional fee revenue. Additionally, management expects to evaluate loan sales strategies as a means of adding to and further diversifying fee income.
    Underwriting of new credit is primarily through approval from a serial sign-off or committee process and is a key component of our operating philosophy. Business development officers have no individual lending authority. To monitor the ongoing credit quality of our loans and leases, each credit is evaluated for proper risk rating using a nine grade risk rating system at the time of origination, subsequent renewal, evaluation of updated financial information from our borrowers, or as other circumstances dictate.
    While we continue to experience competition from banks operating in our primary geographic areas, we remain committed to our underwriting standards and will not deviate from those standards for the sole purpose of growing our loan and lease portfolio. We continue to expect our new loan and lease activity to be adequate to replace normal amortization, allowing us to continue growing in future years. The types of loans and leases we originate and the various risks associated with these originations remain consistent with information previously outlined in our most recent Annual Report on Form 10-K.
52
Table of Contents
Deposits
Deposit composition
As of
(in thousands) June 30,
2023		 March 31,
2023		 December 31,
2022		 September 30,
2022		 June 30,
2022
Non-interest-bearing transaction accounts
 $ 419,294  $ 471,904  $ 537,107  $ 564,141  $ 544,507 
Interest-bearing transaction accounts
 719,198  612,500  576,601  461,883  466,785 
Money market accounts 641,969  662,157  698,505  742,545  731,718 
Certificates of deposit 293,283  308,191  153,757  160,655  114,000 
Wholesale deposits 455,108  422,088  202,236  158,321  12,321 
Total deposits $ 2,528,852  $ 2,476,840  $ 2,168,206  $ 2,087,545  $ 1,869,331 
Uninsured deposits $ 867,397  $ 974,242  $ 967,465  $ 1,007,935  $ 935,101 
Less: uninsured deposits collateralized by pledged assets 37,670  32,468  14,326  34,264  34,199 
Total uninsured, net collateralized deposits $ 829,727  $ 941,774  $ 953,139  $ 973,671  $ 900,902 
% of total deposits 32.8  % 38.0  % 44.0  % 46.6  % 48.2  %
    As of June 30, 2023, total period-end deposits increased by $360.6 million to $2.529 billion from $2.168 billion at December 31, 2022, primarily due to a $252.9 million, $142.6 million, and $139.5 million increase in wholesale deposits, interest bearing transaction accounts, and certificate of deposit accounts, partially offset by a decrease in non-interest-bearing transaction accounts and money market accounts of $117.8 million and $56.5 million. The large increase in wholesale deposits is primarily driven by a shift from FHLB advances to wholesale deposits to manage interest rate risk and increase excess liquidity.
As of June 30, 2023, total period-end in-market deposits increased $107.8 million, or 11.0% annualized, to $2.074 billion, compared to $1.966 billion at December 31, 2022. Growth in interest-bearing transaction accounts and certificates of deposits, driven by client movement into extended insurance products, was partially offset by a decrease in non-interest-bearing transaction accounts and money market accounts. Management believes the Bank’s deposit-centric sales strategy, led by treasury management sales, will contribute to a net increase in deposits annually; however, period-end deposit balances associated with in-market relationships will fluctuate based upon maturity of time deposits, client demands for the use of their cash, and our ability to maintain existing and new client relationships.
    Our strategic efforts remain focused on adding in-market deposit relationships. We measure the success of in-market deposit gathering efforts based on the number and average balances of our deposit accounts as compared to ending balances due to the variability of some of our larger relationships. The Bank’s average in-market deposits, consisting of all transaction accounts, money market accounts, and certificates of deposit, increased $101.7 million, or 5.3%, to $2.018 billion for the six months ended June 30, 2023 compared to $1.917 billion for the six months ended June 30, 2022.
FHLB Advances and Other Borrowings
    As of June 30, 2023, FHLB advances and other borrowings decreased by $86.7 million, or 19.0%, to $370.1 million from $456.8 million at December 31, 2022. As deposit balances have increased, we have been able to reduce our usage of FHLB advances. We have strategically reduced our usage of FHLB advances in favor of wholesale deposits to increase the Bank’s readily available liquidity. We will continue to utilize FHLB advances and wholesale deposits to manage interest rate risk, liquidity, and contingency funding.
As of June 30, 2023, the Corporation had no other borrowings. As of December 31, 2022, the Corporation had other borrowings of $6.1 million which consisted of sold loans which were accounted for as a secured borrowing because they did not qualify for true sale accounting.
53
Table of Contents
    Consistent with our funding philosophy to manage interest rate risk, we will use the most efficient and cost effective source of wholesale funds. We will utilize FHLB advances to the extent we maintain an adequate level of excess borrowing capacity for liquidity and contingency funding purposes and pricing remains favorable in comparison to the wholesale deposit alternative. We will use FHLB advances and/or brokered certificates of deposit in specific maturity periods needed, typically three to five years, to match-fund fixed rate loans and effectively mitigate the interest rate risk measured through our asset/liability management process and to support asset growth initiatives while taking into consideration our operating goals and desired level of usage of wholesale funds. Please refer to the section entitled Liquidity and Capital Resources, below, for further information regarding our use and monitoring of wholesale funds.
Preferred Stock
The Corporation has 12,500 shares, or $12.5 million in aggregate liquidation preference, of 7.0% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”) outstanding as of June 30, 2023 and December 31, 2022.
The Corporation expects to pay dividends on the Series A Preferred Stock when and if declared by its Board, at a fixed rate of 7.0% per annum, payable quarterly, in arrears, on March 15, June 15, September 15 and December 15 of each year up to, but excluding, March 15, 2027. For each dividend period from and including March 15, 2027, dividends will be paid at a floating rate of Three-Month Term SOFR plus a spread of 539 basis points per annum. During the three and six months ended June 30, 2023, the Corporation paid $219,000 and $438,000, respectively, in preferred cash dividends with respect to the Series A Preferred Stock. The Series A Preferred Stock is perpetual and has no stated maturity. The Corporation may redeem the Series A Preferred Stock at its option at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), subject to regulatory approval, on or after March 15, 2027 or within 90 days following a regulatory capital treatment event, in accordance with the terms of the Series A Preferred Stock.
54
Table of Contents
Derivatives
The Board approved Bank policies allow the Bank to participate in hedging strategies or to use financial futures, options, forward commitments, or interest rate swaps. The Bank utilizes, from time to time, derivative instruments in the course of its asset/liability management. The Corporation’s derivative financial instruments, under which the Corporation is required to either receive cash from or pay cash to counterparties depending on changes in interest rates applied to notional amounts, are carried at fair value on the consolidated balance sheets.
As of June 30, 2023, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was approximately $838.5 million, compared to $744.2 million as of December 31, 2022. We receive fixed rates and pay floating rates based upon designated benchmark interest rates on the swaps with commercial borrowers. These swaps mature between May 2024 and March 2040. Commercial borrower swaps are completed independently with each borrower and are not subject to master netting arrangements. As of June 30, 2023, the commercial borrower swaps were reported on the Consolidated Balance Sheet as a derivative asset of $1.8 million and liability of $61.1 million compared to a derivative asset of $1.0 million and liability of $61.4 million as of December 31, 2022. On the offsetting swap contracts with dealer counterparties, we pay fixed rates and receive floating rates based upon designated benchmark interest rates. These interest rate swaps also have maturity dates between May 2024 and March 2040. Dealer counterparty swaps are subject to master netting agreements among the contracts within our Bank and were reported on the Consolidated Balance Sheet as a net derivative asset of $59.4 million as of June 30, 2023, compared to a net derivative liability of $60.4 million as of December 31, 2022. The gross amount of dealer counterparty swaps as of June 30, 2023, without regard to the enforceable master netting agreement, was a gross derivative asset of $61.1 million, compared to a gross derivative liability of $1.0 million and gross derivative asset of $61.4 million as of December 31, 2022.
The Corporation also enters into interest rate swaps to manage interest rate risk and reduce the cost of match-funding certain long-term fixed rate loans. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for the Corporation making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value. The instruments are designated as cash flow hedges as the receipt of floating rate interest from the counterparty is used to manage interest rate risk associated with forecasted issuances of short-term FHLB advances. The change in the fair value of these hedging instruments is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transactions affect earnings. As of June 30, 2023, the aggregate notional value of interest rate swaps designated as cash flow hedges was $312.7 million. These interest rate swaps mature between December 2023 and March 2034. A pre-tax unrealized gain of $3.6 million and $2.2 million was recognized in other comprehensive income for the three and six months ended June 30, 2023, respectively, and there was no ineffective portion of these hedges.
The Corporation also enters into interest rate swaps to mitigate market value volatility on certain long-term fixed securities. The objective of the hedge is to protect the Corporation against changes in fair value due to changes in benchmark interest rates. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the hedged item attributable to changes in the SOFR swap rate, the designated benchmark interest rate. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for the Corporation making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value. The change in the fair value of these hedging instruments is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transactions affect earnings. As of June 30, 2023, the aggregate notional value of interest rate swaps designated as fair value hedges was $12.5 million. These interest rate swaps mature between February 2031 and October 2034. A pre-tax unrealized gain of $107,000 and loss of $68,000 was recognized in other comprehensive income for the three and six months ended June 30, 2023, respectively, and there was no ineffective portion of these hedges.
For further information and discussion of our derivatives, see Note 13 — Derivative Financial Instruments of the Consolidated Financial Statements.

55
Table of Contents
Asset Quality
Non-performing Assets
    Total non-performing assets consisted of the following at June 30, 2023 and December 31, 2022, respectively:
June 30,
2023		 December 31,
2022
  (Dollars in Thousands)
Non-performing loans and leases    
Commercial real estate:    
Commercial real estate - owner occupied $ —  $ — 
Commercial real estate - non-owner occupied —  — 
Construction —  — 
Multi-family —  — 
1-4 family 26  30 
Total non-performing commercial real estate 26  30 
Commercial and industrial 15,695  3,629 
Consumer and other —  — 
Total non-performing loans and leases 15,721  3,659 
Repossessed assets, net 65  95 
Total non-performing assets 15,786  3,754 
Total non-performing loans and leases to gross loans and leases 0.59  % 0.15  %
Total non-performing assets to gross loans and leases plus repossessed assets, net 0.59  0.15 
Total non-performing assets to total assets 0.48  0.13 
Allowance for credit losses to gross loans and leases 1.11  0.99 
Allowance for credit losses to non-performing loans and leases 188.90  662.20 
Non-performing loans increased $12.1 million, or 329.7%, to $15.7 million at June 30, 2023, compared to $3.7 million at December 31, 2022. The Corporation’s non-performing loans as a percentage of total gross loans and leases measured 0.59% and 0.15% at June 30, 2023 and December 31, 2022, respectively. The increase in non-performing loans was the result of one $10.9 million default that occurred in the Corporation’s Asset-Based Lending (“ABL”) portfolio. The loan is fully collateralized and management does not believe it to be reflective of further portfolio or industry stress. Excluding this credit, non-performing loans totaled $4.8 million, or 0.18% of total gross loans and leases. The Corporation’s ABL loans are rigorously underwritten and fully collateralized, historically resulting in no losses in the event of a default.
    We use a wide variety of available metrics to assess the overall asset quality of the portfolio and no one metric is used independently to make a final conclusion as to the asset quality of the portfolio. Non-performing assets as a percentage of total assets was 0.48% and 0.13% at June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, the payment performance of our loans and leases did not point to any new areas of concern, as approximately 99.41% and 99.85%, respectively, of the total portfolio at the end of each period was in a current payment status. We also monitor asset quality through our established categories as defined in Note 5 – Loans and Allowance for Credit Losses of the Consolidated Financial Statements. As we continue to actively monitor the credit quality of our loan and lease portfolios, we may identify additional loans and leases for which the borrowers or lessees are having difficulties making the required principal and interest payments based upon factors including, but not limited to, the inability to sell the underlying collateral, inadequate cash flow from the operations of the underlying businesses, liquidation events, or bankruptcy filings. We are proactively working with our loan borrowers experiencing financial difficulty to find meaningful solutions to difficult situations that are in the best interests of the Bank.
    As of June 30, 2023, as well as in all previous reporting periods, there were no loans over 90 days past due and still accruing interest. Loans and leases greater than 90 days past due are placed on non-accrual status and individually evaluated for reserve requirement. Cash received while a loan or a lease is on non-accrual status is generally applied solely against the outstanding principal. If collectability of the contractual principal and interest is not in doubt, payments received may be applied to both interest due on a cash basis and principal.
56
Table of Contents
    The following represents additional information regarding our non-performing loans and leases:
As of and for the Six Months Ended June 30, As of and for the
Year Ended December 31,
  2023 2022 2022
  (In Thousands)
Individually evaluated loans and leases with no specific reserves required $ 11,290  $ 4,144  $ 1,067 
Individually evaluated loans and leases with specific reserves required 4,431  1,629  2,592 
Total individually evaluated loans and leases 15,721  5,773  3,659 
Less: Specific reserves (included in allowance for credit losses) 2,715  1,254  1,650 
Net non-performing loans and leases $ 13,006  $ 4,519  $ 2,009 
Average non-performing loans and leases $ 3,659  $ 6,009  $ 4,899 
Foregone interest income attributable to non-performing loans and leases $ 190  $ 206  $ 400 
Less: Interest income recognized on non-performing loans and leases 73  813  1,436 
Net foregone interest income on non-performing loans and leases $ 117  $ (607) $ (1,036)
Allowance for Credit Losses
    The allowance for credit losses, including unfunded commitment reserves, increased $5.5 million, or 22.6%, to $29.7 million as of June 30, 2023 from $24.2 million as of December 31, 2022. The allowance for credit losses as a percentage of gross loans and leases increased to 1.11% as of June 30, 2023 from 0.99% as of December 31, 2022 under the incurred loss model. During the first quarter of 2023, the Corporation adopted ASU 2016-13, including the CECL methodology for estimating the ACL. This standard was adopted using a modified retrospective approach on January 1, 2023, resulting in a $484,000 increase to the ACL and a $1.3 million increase to the unfunded credit commitments reserve. In addition to the adoption of ASU 2016-13, the increase in allowance for credit losses as a percent of gross loans and leases was principally due to a $1.1 million increase in specific reserves on individually evaluated loans related to the equipment finance and SBA loan portfolios.
    During the six months ended June 30, 2023, we recorded net charge-offs on individually evaluated loans and leases of $144,000, comprised of $495,000 of charge-offs and $351,000 of recoveries. We will continue to experience some level of periodic charge-offs in the future as exit strategies are considered and executed. Loans and leases with previously established specific reserves, may ultimately result in a charge-off under a variety of scenarios.
    As of June 30, 2023 and December 31, 2022, our ratio of allowance for credit losses to total non-performing loans and leases was 188.90% and 662.20%, respectively. This ratio decreased because the $10.9 million ABL loan downgraded to non-performing as of June 30, 2023 was fully collateralized and required no specific reserve. Non-performing loans and leases exhibit weaknesses that inhibit repayment in compliance with the original terms of the note or lease; however, the evaluation of non-performing loans and leases may not always result in a specific reserve included in the allowance for credit losses. As part of the underwriting process, as well as our ongoing monitoring efforts, we try to ensure that we have sufficient collateral to protect our interest in the related loan or lease. As a result of this practice, a significant portion of our outstanding balance of non-performing loans or leases may not require additional specific reserves or require only a minimal amount of required specific reserve. Management is proactive in recording charge-offs to bring loans to their net realizable value in situations where it is determined with certainty that we will not recover the entire amount of our principal. This practice may lead to a lower allowance for credit loss to non-performing loans and leases ratio as compared to our peers or industry expectations. As asset quality strengthens, our allowance for credit losses is measured more through collective characteristics of our portfolio rather than through specific identification and we would therefore expect this ratio to rise. Conversely, if we identify further impaired loans, this ratio could fall if the impaired loans are adequately collateralized and therefore require no specific or general reserve. Given our business practices and evaluation of our existing loan and lease portfolio, we believe this coverage ratio is appropriate for the probable losses inherent in our loan and lease portfolio as of June 30, 2023.
To determine the level and composition of the allowance for credit losses, we break out the portfolio by segments with similar risk characteristics. First, we evaluate loans and leases for non-performing classification. We analyze each loan and lease identified as non-performing on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows.
57
Table of Contents
All loans not evaluated individually are evaluated collectively as part of a portfolio segment or portfolio segment and class. These collective evaluations utilized a reasonable and supportable forecast which includes projections of credit losses based on one of two established methods: discounted cash flow or weighted average remaining maturity. Each model includes a set of assumptions which are evaluated not less than annually by management. Further, the methodology also focuses on evaluation of several qualitative factors for each portfolio segment or portfolio segment and class, including but not limited to: product growth rates, management’s ongoing review and grading of the loan and lease portfolios, consideration of delinquency experience, changes in the size of the loan and lease portfolios, level of loans and leases subject to more frequent review by management, changes in underlying collateral, concentrations in specific industries, and other qualitative factors that could affect credit losses.
    When it is determined that we will not receive our entire contractual principal or the loss is confirmed, we record a charge against the allowance for credit loss reserve to bring the loan or lease to its net realizable value. Many of the impaired loans as of June 30, 2023 are collateral dependent. It is typically part of our process to obtain appraisals on impaired loans and leases that are primarily secured by real estate or equipment at least annually, or more frequently as circumstances warrant. As we have completed new appraisals and/or market evaluations, in specific situations current fair values collateralizing certain impaired loans were inadequate to support the entire amount of the outstanding debt. Foreclosure actions may have been initiated on certain of these commercial real estate and other mortgage loans.
    As a result of our review process, we have concluded an appropriate allowance for credit losses for the existing loan and lease portfolio was $29.7 million, or 1.11% of gross loans and leases, at June 30, 2023. However, given ongoing complexities with current workout situations and the uncertainty surrounding future economic conditions, further charge-offs, and increased provisions for credit losses may be recorded if additional facts and circumstances lead us to a different conclusion. In addition, various federal and state regulatory agencies review the allowance for credit losses. These agencies could require certain loan and lease balances to be classified differently or charged off when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examination.

58
Table of Contents
    A summary of the activity in the allowance for credit losses follows:
As of and for the Three Months Ended June 30, As of and for the Six Months Ended June 30,
  2023 2022 2023 2022
  (Dollars in Thousands)
Allowance at beginning of period $ 27,550  $ 23,669  $ 24,230  $ 24,336 
Impact of adoption of ASC 326 —  —  1,818  — 
Charge-offs:      
Commercial real estate:      
Commercial real estate — owner occupied —  —  —  — 
Commercial real estate — non-owner occupied
 —  —  —  — 
Construction —  —  —  — 
Multi-family —  —  —  — 
1-4 family —  —  —  — 
Commercial and industrial (329) (85) (495) (107)
Consumer and other —  —  —  — 
Total charge-offs (329) (85) (495) (107)
Recoveries:      
Commercial real estate:      
Commercial real estate — owner occupied 2  4,121  2  4,236 
Commercial real estate — non-owner occupied
 —  —  1  1 
Construction —  —  —  — 
Multi-family —  —  —  — 
1-4 family 21  —  21  — 
Commercial and industrial 220  117  314  201 
Consumer and other 2  9  13  19 
Total recoveries 245  4,247  351  4,457 
Net recoveries (84) 4,162  (144) 4,350 
Provision for credit losses 2,231  (3,727) 3,793  (4,582)
Allowance at end of period $ 29,697  $ 24,104  $ 29,697  $ 24,104 
Components:
Allowance for loan losses $ 28,115  $ 24,104  $ 28,115  $ 24,104 
Allowance for unfunded credit commitments 1,582  —  1,582  — 
Total ACL $ 29,697  $ 24,104  $ 29,697  $ 24,104 
Annualized net recoveries as a percent of average gross loans and leases 0.01  % (0.73) % 0.01  % (0.39) %


59
Table of Contents
Liquidity and Capital Resources
    The Corporation expects to meet its liquidity needs through existing cash on hand, established cash flow sources, its third-party senior line of credit, and dividends received from the Bank. While the Bank is subject to certain generally applicable regulatory limitations regarding its ability to pay dividends to the Corporation, we do not believe that the Corporation will be adversely affected by these dividend limitations. The Corporation’s principal liquidity requirements at June 30, 2023 were the interest payments due on subordinated notes and cash dividends payable to both common and preferred stockholders. The capital ratios of the Bank met all applicable regulatory capital adequacy requirements in effect on June 30, 2023, and continue to meet the heightened requirements imposed by Basel III, including the capital conservation buffer. The Corporation’s Board and management teams adhere to the appropriate regulatory guidelines on decisions which affect their capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.
The Bank maintains liquidity by obtaining funds from several sources. The Bank’s primary sources of funds are principal and interest payments on loans receivable and mortgage-related securities, deposits, and other borrowings, such as federal funds, and FHLB advances. The scheduled payments of loans and mortgage-related securities are generally a predictable source of funds. Deposit flows and loan prepayments, however, are greatly influenced by general interest rates, economic and industry conditions, and competition.
Sources of liquidity
As of
(in thousands) June 30,
2023		 March 31,
2023		 December 31,
2022		 September 30,
2022		 June 30,
2022
Short-term investments $ 80,510  $ 159,859  $ 76,871  $ 86,707  $ 56,233 
Collateral value of unencumbered pledged loans 265,884  296,393  184,415  289,513  174,315 
Market value of unencumbered securities 217,074  200,332  188,353  173,013  182,429 
Readily available liquidity 563,468  656,584  449,639  549,233  412,977 
Fed fund lines 45,000  45,000  45,000  45,000  45,000 
Excess brokered CD capacity1
 1,017,590  1,027,869  1,162,241  1,100,369  1,112,386 
Total liquidity $ 1,626,058  $ 1,729,453  $ 1,656,880  $ 1,694,602  $ 1,570,363 
Total uninsured, net collateralized deposits 829,727  941,774  953,139  973,671  900,902 
(1)Bank internal policy limits brokered CDs to 50% of total bank funding when combined with FHLB advances.
We view readily accessible liquidity as a critical element to meet our cash and collateral obligations. We define our readily accessible liquidity as the total of our short-term investments, our unencumbered securities available-for-sale, and our unencumbered pledged loans. Our readily accessible liquidity increased quarter over quarter. At June 30, 2023 and December 31, 2022, the Bank had $80.2 million and $76.5 million on deposit with the FRB recorded in short-term investments, respectively. Any excess funds not used for loan funding or satisfying other cash obligations were maintained as part of our readily accessible liquidity in our interest-bearing accounts with the FRB, as we value the safety and soundness provided by the FRB. We plan to utilize excess liquidity to fund loan and lease portfolio growth, pay down maturing debt, allow run off of maturing wholesale certificates of deposit or invest in securities to maintain adequate liquidity at an improved margin.
    We had $790.8 million of outstanding wholesale funds at June 30, 2023, compared to $618.6 million of wholesale funds as of December 31, 2022, which represented 27.6% and 23.9%, respectively, of ending balance total bank funding. Wholesale funds include FHLB advances, brokered certificates of deposit, and deposits gathered from internet listing services. Total bank funding is defined as total deposits plus FHLB advances. We are committed to raising in-market deposits while utilizing wholesale funds to mitigate interest rate risk. Wholesale funds continue to be an efficient and cost effective source of funding for the Bank and allows it to gather funds across a larger geographic base at price levels and maturities that are more attractive than local time deposits when required to raise a similar level of in-market deposits within a short time period. Access to such deposits and borrowings allows us the flexibility to refrain from pursuing single service deposit relationships in markets that have experienced unfavorable pricing levels. In addition, the administrative costs associated with wholesale funds are considerably lower than those that would be incurred to administer a similar level of local deposits with a similar maturity structure. Wholesale funds are also stable as each issuance has a structured maturity date and may only be redeemed in certain limited circumstances. During the time frames necessary to accumulate wholesale funds in an orderly manner, we will use short-term FHLB advances to meet our temporary funding needs. The short-term FHLB advances will typically have terms of one week to one month to cover the overall expected funding demands.

60
Table of Contents
     Period-end in-market deposits increased as of June 30, 2023, compared to December 31, 2022. There was a shift of in-market deposit mix to term deposits at higher interest rates, which was partially offset by deposit movement from transaction accounts to alternative investment options and clients funding their normal course of business activities. The decline in transaction and money market accounts was not the result of the loss of any significant client relationships, and we expect to continue to establish new client relationships and increase transaction account balances with existing clients’ accounts. Nonetheless, we will continue to use wholesale funds in specific maturity periods, typically three to five years, needed to effectively mitigate the interest rate risk measured through our asset/liability management process or in shorter time periods if in-market deposit balances decline. In order to provide for ongoing liquidity and funding, none of our wholesale certificates of deposit allow for withdrawal at the option of the depositor before the stated maturity (with the exception of deposits accumulated through the internet listing service which have the same early withdrawal privileges and fees as do our other in-market deposits) and FHLB advances with contractual maturity terms. The Bank limits the percentage of wholesale funds to total bank funds in accordance with liquidity policies approved by its Board. The Bank was in compliance with its policy limits as of June 30, 2023.
    The Bank was able to access the wholesale funding market as needed at rates and terms comparable to market standards during the quarter ended June 30, 2023. In the event that there is a disruption in the availability of wholesale funds at maturity, the Bank has managed the maturity structure, in compliance with our approved liquidity policy, so at least one year of maturities could be funded through readily accessible liquidity. These potential funding sources include deposits maintained at the FRB or Federal Reserve Discount Window utilizing currently unencumbered securities and acceptable loans as collateral. As of June 30, 2023, the available liquidity was in excess of the stated policy minimum. We believe the Bank will also have access to the unused federal funds lines, cash flows from borrower repayments, and cash flows from security maturities. The Bank also has the ability to raise local market deposits by offering attractive rates to generate the level required to fulfill its liquidity needs.
The Corporation has a shelf registration statement on file with the Securities and Exchange Commission that would allow the Corporation to offer and sell, from time to time and in one or more offerings, up to $75.0 million in aggregate initial offering price of common and preferred stock, debt securities, warrants, subscription rights, units, or depository shares, or any combination thereof.
    During the six months ended June 30, 2023, operating activities resulted in a net cash inflow of $22.5 million, which included net income of $17.3 million. Net cash used by investing activities for the six months ended June 30, 2023 was $279.2 million primarily due to net loan disbursements, investments made in securities available for sale, and additional investments in federal home loan bank stock and federal reserve bank stock. Net cash provided by financing activities was $266.8 million for the six months ended June 30, 2023 primarily due to a net increase in deposits, partially offset by the repayment of FHLB advances. Please refer to the Consolidated Statements of Cash Flows included in PART I., Item 1 for further details regarding significant sources of cash flow for the Corporation.

Contractual Obligations and Off-Balance Sheet Arrangements
    As of June 30, 2023, there were no material changes to our contractual obligations and off-balance sheet arrangements disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022. We continue to believe that we have adequate capital and liquidity available from various sources to fund projected contractual obligations and commitments.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
    Our primary market risk is interest rate risk, which arises from exposure of our financial position to changes in interest rates. It is our strategy to reduce the impact of interest rate risk on net interest margin by maintaining a largely match-funded position between the maturities and repricing dates of interest-earning assets and interest-bearing liabilities. This strategy is monitored by the Bank’s Asset/Liability Management Committee, in accordance with policies approved by the Bank’s Board. The committee meets regularly to review the sensitivity of the Bank’s assets and liabilities to changes in interest rates, liquidity needs and sources, and pricing and funding strategies.
61
Table of Contents
The primary technique we use to measure interest rate risk is simulation of earnings. In this measurement technique the balance sheet is modeled as an ongoing entity whereby future growth, pricing, and funding assumptions are utilized. These assumptions are modeled under different rate scenarios that include a simultaneous, instant and sustained change in interest rates. During the second quarter of 2023, the Corporation’s interest rate risk exposure model incorporated updated assumptions regarding the level of interest rate, including indeterminable maturity deposits (non-interest bearing deposits, interest bearing transaction accounts and money market accounts). In the current environment of changing short-term rates, deposit pricing can vary by product and client. These assumptions have been developed through a combination of historical analysis and projection of future expected pricing behavior. This modeling indicated interest rate sensitivity as follows:
Impact on Net Interest Income as of
Instantaneous Rate Change in Basis Points June 30, 2023
Down 300 (0.99) %
Down 200 1.64 
Down 100 2.82 
No Change — 
Up 100 3.78 
Up 200 4.38 
Up 300 4.98 
The simulations used to manage market risk are based on numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and client behavior. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely predict the impact of higher or lower interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions, client behavior and management strategies, among other factors.
We manage the structure of interest-earning assets and interest-bearing liabilities by adjusting their mix, yield, maturity and/or repricing characteristics based on market conditions. FHLB advances and wholesale deposits are a significant source of funds. We use a variety of maturities to augment our management of interest rate exposure. Management has the authorization, as permitted within applicable approved policies, and ability to utilize derivatives should they be appropriate to manage interest rate exposure.

Item 4. Controls and Procedures

Disclosure Controls and Procedures
    The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has evaluated the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures were effective as of June 30, 2023.
Changes in Internal Control over Financial Reporting
    There was no change in the Corporation’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.


PART II. Other Information
62
Table of Contents
Item 1. Legal Proceedings
    From time to time, the Corporation and its subsidiaries are engaged in legal proceedings in the ordinary course of their respective businesses. Management believes that any liability arising from any such proceedings currently existing or threatened will not have a material adverse effect on the Corporation’s financial position, results of operations, or cash flows.

Item 1A. Risk Factors

    In addition to the risk factors previously disclosed in Item 1A. to Part I of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, the Corporation also identified the following risk factors:

Recent volatility in the banking sector may result in new legislation, regulations or policy changes that could subject the Corporation and the Bank to increased government regulation and supervision.

The recent failures of Silicon Valley Bank and Signature Bank prompted responses by the FDIC, the Federal Reserve and the U.S. Treasury Secretary to protect the depositors of these institutions. Congress and the federal banking agencies have begun to evaluate the events leading to the failures and have posited varying theories, such as inadequate regulation and supervision, and a failure by the institutions to effectively manage interest rate and liquidity risks. Continued evaluation of these recent developments may lead to governmental initiatives intended to prevent future bank failures under similar circumstances, including modifications to the risk-based capital regulations. The federal banking agencies may also re-evaluate applicable liquidity risk management standards. Although we cannot predict with certainty which initiatives may be pursued by legislators and regulatory agencies, or the terms and scope of any such initiatives, any of the potential changes referenced above could, among other things, subject us to additional costs, limit the types of financial services and products that the Bank may offer, and limit the future growth of the Corporation and the Bank, any of which could materially and adversely affect the business, results of operations or financial condition of the Corporation.

The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.

There is growing consensus that the proportion of the deposits that exceeded FDIC insurance limits at Silicon Valley Bank and Signature Bank was a significant factor in the recent failure of these institutions. In response to these, many large depositors across the industry withdrew deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions and low-risk securities accounts in an effort to mitigate the risk of potential further bank failures. While the Bank has not experienced significant withdrawal activity in connection with the recent bank failures, if a significant portion of the Bank’s deposits were to be withdrawn within a short period of time in connection with a similar future crisis, additional sources of funding may be required to meet withdrawal demands. The Corporation may be unable to obtain sufficient funding on favorable terms, which may have an adverse effect on the Corporation’s net interest margin. In addition, funding deposit obligations may be more difficult in a high interest rate environment. Because the Corporation’s available-for-sale investment securities may lose value when interest rates rise, proceeds from the sale of such assets may be diminished during periods of elevated interest rates. Under such circumstances, the Corporation may be required to access funding from sources such as the Federal Reserve Discount Window, the recently established Bank Term Funding Program or other alternative liquidity sources in order to manage our liquidity risk.

The Corporation may be subject to increases in FDIC insurance assessments as a result of the recent bank failures.

The significant losses incurred by the FDIC’s Deposit Insurance Fund in connection with the resolution of the recent bank failures are required by law to be recovered through one or more special assessments on depository institutions and, potentially, their holding companies. The FDIC is required to consider a variety of factors in determining the terms and applicability of any such special assessment, including, without limitation, the types of entities that benefit from the action taken by the agencies, economic conditions, and anticipated industry impacts. It is also possible that the FDIC will alter the assessment rate schedule or calculation methodology relating to regular deposit insurance assessments in response to the recent bank failures. Although the Corporation cannot predict the specific timing and terms of any special assessment relating to the recent bank failures, or any other potential increase in deposit insurance assessment rates, any significant increase in the Bank’s assessment fees could have a materially adverse effect on the Corporation’s results of operations and financial condition.


63
Table of Contents
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Securities
    As previously announced, effective January 27, 2023, the Corporation’s Board of Directors authorized the repurchase by the Corporation of shares of its common stock with a maximum aggregate purchase price of $5.0 million, effective January 31, 2023 through January 31, 2024. As of June 30, 2023, the Company had repurchased a total of 65,112 shares for approximately $2.0 million at an average cost of $30.72 per share.
    Under the share repurchase program, the Corporation is authorized to repurchase shares from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. In connection with the share repurchase program, the Corporation implemented a 10b5-1 trading plan. The trading plan allows the Corporation to repurchase shares of its common stock at times when it otherwise might be prevented from doing so under insider trading laws by requiring that an agent selected by the Corporation repurchase shares of common stock on the Corporation’s behalf on pre-determined terms.
    The following table sets forth information about the Corporation's purchases of its common stock during the three months ended June 30, 2023.
Period
Total Number of Shares Purchased(1)
 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Total Number of Shares that May Yet Be Purchased Under the Plans or Programs(2)
April 1, 2023 - April 30, 2023 31,071  $ 29.22  18,456  — 
May 1, 2023 - May 31, 2023 5,130  27.32  5,130  — 
June 1, 2023 - June 30, 2023 928  25.51  —  — 
Total 37,129  28.86  23,586  101,729 
 
(1)During the second quarter of 2023, the Corporation repurchased an aggregate 37,129 shares of the Corporation’s common stock in open-market transactions, of which 23,586 shares were purchased pursuant to the repurchase program publicly announced on January 27, 2023, and of which 13,543 shares were surrendered to us to satisfy income tax withholding obligations in connection with the vesting of restricted awards.
(2)Number of shares available to be purchased under the January 27, 2023 share repurchase program was calculated by dividing the closing stock price on June 30, 2023 of $29.49 by the $3.0 million remaining capacity.

Item 5. Other Information
During the three months ended June 30, 2023, no director or officer of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.


Item 6. Exhibits
31.1 
31.2 
32 
101  The following financial information from First Business Financial Services, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, and (vi) the Notes to Unaudited Consolidated Financial Statements
104 
The cover page from First Business Financial Services, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 has been formatted in Inline XBRL and contained in Exhibit 101.




64
Table of Contents


Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
FIRST BUSINESS FINANCIAL SERVICES, INC.
 
July 28, 2023 /s/ Corey A. Chambas
  Corey A. Chambas 
  Chief Executive Officer
   
July 28, 2023 /s/ Brian D. Spielmann
  Brian D. Spielmann
  Chief Financial Officer
(principal financial officer)

65
EX-31.1 2 fbiz20230630exhibit311.htm EX-31.1 Document

Exhibit 31.1
Certifications
I, Corey A. Chambas, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.Any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


  /s/ Corey A. Chambas
  Corey A. Chambas
Chief Executive Officer
July 28, 2023

EX-31.2 3 fbiz20230630exhibit312.htm EX-31.2 Document

Exhibit 31.2
Certifications
I, Brian D. Spielmann, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.Any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


  /s/ Brian D. Spielmann
  Brian D. Spielmann
Chief Financial Officer
July 28, 2023

EX-32 4 fbiz20230630exhibit32.htm EX-32 Document

Exhibit 32

Certification of the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer, of First Business Financial Services, Inc., a Wisconsin Corporation (the “Corporation”), hereby certify, based on our knowledge that the Quarterly Report on Form 10-Q of the Corporation for the quarter ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

  /s/ Corey A. Chambas
  Corey A. Chambas
Chief Executive Officer
July 28, 2023
   
  /s/ Brian D. Spielmann
  Brian D. Spielmann
Chief Financial Officer
July 28, 2023