First Business Financial Services, Inc.

First Business Bank finished 2025 with another outstanding quarter. Our team continued to produce high quality growth, particularly on the deposit side. Core net interest margin remained resilient and our revenue streams were diversified and strong. Notably, our private wealth business continued to expand, delivering record and significant annuity-like fee income. And our focus on positive operating leverage again drove improved efficiency. These highlights contributed to strong profitability for the quarter and year as pre-tax, pre-provision earnings grew nearly 15% over 2024, return on average tangible common equity was over 15% for the year, and most importantly for shareholders, tangible book value per share grew 14% from a year ago. I'd also like to draw your attention to earnings per share, which you can see on slide four of our earnings supplement. EPS growth is perhaps the most universal metric across industries, and our track record is outstanding. First Business Bank's 2025 EPS grew 14% over 2024, exceeding our long-term annual goal of 10% earnings growth. Over the past 10 years, we've grown earnings per share at 12% compound annual rate. Going back to the year of our IPO in 2005, our 20-year compound average growth annual EPS growth is 10%, a very long period of outstanding performance. We know how to execute to achieve our double-digit growth mandate, and we aim to continue doing so in 2026 and beyond. On the strength of these results and expectations for continued financial success, our board of directors approved a 17% increase to our quarterly cash dividend. We are very pleased with the positive momentum of fourth quarter results, which Dave will discuss more now.

Dave? Thank you, Corey. In the fourth quarter, we again delivered growth, producing strong bottom line results that reflect consistent performance. We believe this is a differentiating strength of First Business Bank, and it is a direct outcome of our deep commitment to relationships and diversification. I would like to take a moment to address an isolated credit situation. During the quarter, we downgraded $20.4 million of CRE loans related to a single Wisconsin-based borrower with total loans outstanding of $29.7 million. You can see the impact of this on our asset quality ratios on slide 12 of the earnings supplement. Obviously, this is disappointing. The strength of our underwriting, our markets, and our deep relationships are notable here, however. This is a long-standing client. Over several years, they acquired a series of parcels for multifamily development. They were unable to advance these parcels to development phase, resulting in high carrying costs that exhausted their free cash flow. This client's stress is isolated and reflects internal management challenges. The majority of the non-performing loans are collateralized by tracts of land zoned for multifamily and located in southeastern Wisconsin, mainly in the corridor between Milwaukee and Chicago. These are very healthy markets and land value appraisals exceed the carrying value of the loans. As such, a specific reserve was not recorded, which reflects our general philosophy of having two or more ways out of a loan. We did record a non accrual interest reversal totaling $892,000 and this compressed our net interest income and lowered our margin by 10 basis points in the fourth quarter. You can see this on slide seven of the supplement. The performing loans in this relationship consists of four stabilized multifamily projects, all of which are located in Wisconsin. On a full year basis, net interest income grew 10%, meeting our double digit growth goal. We attribute this strength to our robust loan and deposit growth that continued to outpace the industry, along with disciplined pricing and management of funding sources and costs. Fourth quarter non-interest income displayed similar resilience. Private wealth generated a record $3.8 million of fee income, up 11% year over year, as we had added new relationships and expanded existing relationships. Service charges were up nearly 20% year over year, demonstrating real success in adding full banking relationships, which is a litmus test that illustrates growth of our business banking relationships. These trends bolstered revenues and moderated the impact of business-driven variability in other line items. These include lower SBA gains, which resulted from the government shutdown, and lower swap and loan fees, which can be highly variable and decline from the third quarter. As a reminder, swap fees were unusually high in the linked quarter. We also recorded lower income from partnership investments in our other income line. This reflects a variable income stream from quarter to quarter, and this item was additionally affected by an accounting classification update during the fourth quarter, which Brian will cover. Our income diversification is by design, supporting our long-term double-digit revenue growth goals in a variety of market conditions. For full year 2025, this drove 10% operating revenue growth, which achieved our annual double-digit goal. Paired with operating expense growth of about 6.5% for 2025, we achieved positive operating leverage for the fourth consecutive year and by a wider margin than we would expect in future periods. This is also partially a function of the accounting classification update that Brian will explain. Moving to balance sheet growth, you can see the highlights on slide three of the earnings call slides and our quarterly loan and deposit growth trends on slide five. Loan balances grew about $39 million or 5% annualized during the quarter and $261 million or 8% over the same period last year. On an average basis, loans grew 8% annualized compared to the linked quarter. We experienced elevated CRE payoff activity during Q4, contributing to our more moderate pace of loan growth compared to recent periods. I'll note that total payoffs in 2025 exceeded 2024 levels by almost 70 million. If we normalize for the 70 million, adjusted full year 2025 total loan growth would be about 11%. We continue to see solid loan demand in our bank markets and pipelines look strong for the first quarter. We would expect to see growth rebound to our typical double digit pace in 2026. Our loan growth expectations are driven by continued positive trends in our business and the banking industry. Our largest markets in southern Wisconsin benefit from a strong regional economy. Our clients in the manufacturing and distribution space are doing well. Commercial real estate occupancies have remained strong and steady, particularly in multifamily properties. We are also seeing signs that new development is picking up after a slight slowdown in 2024 and 2025. We are seeing tangible benefits from talent acquisition. Our Kansas City market, Northeast Wisconsin market, and asset-based lending group each have new presidents in place who joined over the past 18 months. Their sales and hiring efforts led to growth in Q4 and their pipelines continue to expand. We are also seeing some nice refinance opportunities in commercial real estate that we haven't seen in a while. Lower interest rates tend to create more activity and demand, and we are seeing that bear out. Additionally, we expect 2026 changes to federal tax policy should be a tailwind for our business clients and CNI portfolio. I'll note that we are seeing secondary market activity pick up in CRE, so that may drive some ongoing payoff activity. We also expect double digit growth in core deposits will continue in 2026. Fourth quarter core deposit balances were up 12% from both the linked and prior year quarters. The majority of growth came from core interest bearing and money market client accounts and it more than offset runoff of higher cost CDs and wholesale deposits, bringing support to our net interest margin. On the asset quality. Outside of the new and isolated non-accrual relationship, the balance of our portfolio continues to perform as expected, and we have no areas of particular concern. The transportation loans in our small ticket equipment finance portfolio continue to shrink, and our CRE markets remain strong. You can see our performing portfolio on slide 11 of the earnings supplement. Net charge-offs totaled $2.5 million and were primarily from previously reserved equipment finance loans. Now I'll hand it off to Brian.

Thanks, Dave. Fourth quarter net interest margin declined by 15 basis points to 353, reflecting 10 basis points of compression from the non-accrual interest reversal on the downgraded CRE non-performing loan. Excluding this, net interest margin would have measured 363. Even with the increase in non-performing loans, our NIM target range remains 360 to 365. You can see a breakdown of this on slide seven of our earnings supplement. On a full year basis, net interest margin remained relatively stable, declining two basis points from 366 in 2024 to 364 in 2025. We are pleased with our ability to maintain a strong and stable margin, and this again shows the value of our risk mitigating match funding strategy. Looking ahead, our target range for net interest margin is unchanged. Our current outlook supports this in tandem with double-digit annual loan, deposit, and revenue growth. Our balance sheet is essentially interest rate neutral, so the timing of any potential rate changes is not as consequential to our margin as it may be for others. Thus, our continued 10% targeted growth in net interest income is not predicated on additional interest rate cuts or hikes. While deposit pricing pressure has eased modestly since the Fed began cutting, the cost of acquiring a new deposit client remains extremely competitive. but we do not believe this is unique to First Business Bank. On the asset side, we continue to shift our loan mix toward higher yielding C&I relationships, which also typically come with lower cost deposits. See slide six of the earnings supplement. Our conventional and specialty lending teams are seeing strong pipeline activity. As C&I loans make up a larger share of our portfolio, we expect average loan spreads to improve, helping offset continued pressure on the deposit pricing. On non-interest income and expense, we had an accounting classification change of note during the quarter. We have historically recorded revenue earned from our equity partnership investments and other non-interest income, while any expenses related to these investments were recorded in other expense. In the fourth quarter, we reclassified the expenses related to these investments to net against the related revenue and other fee income. This now presents the net benefit of all of our partnership investments, and we will continue this method on a go-forward basis. Specifically, during the fourth quarter, we reclassified $904,000 out of non-interest expense and into other non-interest income to net against the relative revenue. This expense represents the bank's share of costs for the first nine months of 2025 related to the latest round of limited partnership investments. Excluding this reclassification, income from partnership investments decreased $383,000 to $477,000 during the fourth quarter. I'll also note that when we exclude the $904,000 reclass from other non-interest income for Q4, the adjusted non-interest income number approximates a good starting point for quarterly fee income in 2026, with the expectation of 10% growth for the full year. Recall also that our third quarter results included $770,000 in non-recurring fee income items. These included a $537,000 fee related to an exit of an accounts receivable finance credit and $234,000 in bullway insurance proceeds during that quarter. Moving to expenses, which were well contained in Q4. Compensation expense decreased by about $291,000, mainly due to a decrease in annual cash bonus and 401k accruals. Looking ahead, we continue to have a higher level of open positions we are actively working to fill, and we are always looking for opportunistic hires. Compounded with increase in benefit costs, we expect 2026 compensation levels to grow a bit more than in 2025. I'll reiterate that our primary expense management objective is achieving annual positive operating leverage. That is annual expense growth at some level modestly below our targeted level of 10% annual revenue growth. Our effective tax rate varies modestly quarter to quarter in part due to the timing of tax benefits received from our investment and limited partnerships. Our 2025 effective tax rate of 16.8% was within our expected annual range of 16 to 18%, and we continue to believe this range is appropriate looking forward. Finally, our strong earnings have continued to generate excess capital to facilitate organic growth. Our increased dividend boost shareholder returns and we continue to believe reinvestment in the growth of the company typically provides the best return for our shareholders. We do, of course, evaluate all capital management tools at our disposal to maximize shareholder returns. And now I'll hand it back over to Corey.