First Business Financial Services Delivers Exceptional Q2 Performance, Driving Record Earnings and Strategic Momentum
First Business Financial Services (FBFS) has reported an outstanding second quarter of 2026, delivering record earnings per share (EPS) of $1.84 and strong contributions across the bank. The company's exceptional performance was driven by the team's outstanding execution, with CEO Dave Seiler highlighting the key highlights during a recent conference call.
In a notable one-time event, FBFS released the remaining $1.5 million of a deferred tax valuation allowance related to changes in Wisconsin state law enacted in 2023. This resulted in an $0.18 benefit to second quarter earnings per share and about a nine percentage point decrease in the effective tax rate for the quarter.
However, the company also reported one-time SBA-related severance costs of $405,000, which offset the tax-related EPS benefit by $0.04. CEO Seiler explained that FBFS had invested heavily in expanding its SBA talent and capacity on a national basis over the past 10 years but ultimately struggled to achieve the volume and profitability required to meet internal targets for economic returns.
The company determined that building the national SBA volume at scale would require a level of underwriting flexibility inconsistent with their standards for credit quality. Despite having built a robust SBA loan closing and compliance operation, processing costs drove up, making this decision immediately net positive to earnings expectations.
From a strategic perspective, CEO Seiler highlighted significant opportunity to take share and grow relationships across existing bank markets, particularly in Milwaukee and Kansas City. The company also continues to prioritize hiring the best talent to accelerate growth in its higher-yielding niche C&I lending businesses and private wealth management business.
The second quarter performance rounded out an outstanding first half of the year for FBFS, positioning the company to achieve its full-year 10% growth goals. Revenue grew 11% over the first half of 2025, exceeding the company's 10% annual goal, even with the elimination of SBA gains on loan sales.
The first half efficiency ratio measured 59.31%, achieving FBFS's sub-60% long-term target. Tangible book value grew 15.2% over the prior year, surpassing the company's 10% growth goal. With this momentum, FBFS is well-positioned to drive continued growth and success in the remainder of 2026.
