First Business Financial Services reported record quarterly earnings, 10% annualized loan growth, and 14% annualized core deposit growth. With the stock up 2.2%—a roughly flat reaction—the result was positive but not an unambiguous beat; management noted that loan pipelines had moderated and some of the deposit increase may be temporary.
- EPS rose 6% from the second quarter and 15% year over year; pre-tax, pre-provision earnings increased 13% year over year.
- Loans grew 10% annualized quarter over quarter, with commercial real estate the main driver, up about $77 million, or 14% annualized.
- Core deposits increased $101 million, or 14% annualized; non-interest-bearing deposits rose $57 million, though management said some balances may be temporary.
- The efficiency ratio was 55.12% in the quarter, helped in part by favorable expense timing and net interest margin; management expects it to tick up in the short term as it invests for growth.
- Loan pipelines moderated heading into the fourth quarter, but management maintained its target of approximately 10% annual loan growth for 2026 and 2027.
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