Good afternoon, everyone, and thank you for joining us. We appreciate your time and your interest in First Business Bank.

Joining me today is our President and Chief Operating Officer, Dave Seiler, and our CFO, Brian Spielmann. Today, we'll discuss our financial performance, followed by a Q&A session.

I'd like to direct you to our fourth quarter earnings release and supplemental earnings call slides, which are available through our website at ir.firstbusiness.bank. We encourage you to review these along with our other investor materials.

Before we begin, please note this call may include forward-looking statements, and the company's actual results may differ materially from those indicated in any forward-looking statements. Important factors that could cause actual results to differ materially from those indicated in the forward-looking statements are listed in the earnings release and the company's most recent annual report, Form 10-K, and as may be supplemented from time to time in the company's other filings with the SEC, all of which are expressly incorporated herein by reference.

There, you can also find information related to any non-GAAP financial measures we discuss on today's call, including reconciliations of such measures. 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. 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 '05, our 20-year compound average 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 multi-family 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 nonperforming loans are collateralized by tracts of land zoned for multi-family 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 nonaccrual 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 consist of four stabilized multi-family 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 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 declined 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 multi-family 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 C&I 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 asset quality, outside of the new and isolated nonaccrual 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 3.53%, reflecting 10 basis points of compression from the nonaccrual interest reversal on the downgraded CRE nonperforming loan.

Excluding this, net interest margin would have measured 3.63%. Even with the increase in nonperforming loans, our NIM target range remains 3.60% to 3.65%.

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 3.66% in 2024 to 3.64% 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, 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 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 in 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 in 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 related 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 $771,000 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 BOLI 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 401(k) 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 in 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 boosts 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. Now, I'll hand it back over to Corey.

Thank you, Brian. Our 2025 performance toward our long-term strategic plan goals was excellent and can be seen on slide 15.

These outcomes demonstrate the value of consistency and execution. We continue to achieve our above-industry growth by investing in talent, prioritizing profitable long-term client relationships, investing in technology to build out efficient scalable systems, and never losing sight of the criticality of prudent underwriting.

We are very optimistic about the future and believe our focus, discipline, and consistency will continue to serve First Business Bank and our shareholders well. I want to thank you for taking time to join us today.

We're happy to take your questions now.

Thank you. Good afternoon Corey, Dave, Brian.

Good afternoon, Danny.

Maybe just starting on the CRE relationship that drove the increase in the NPAs. Appreciate the details that you gave in the prepared remarks, but maybe just digging a little deeper there.

The timing of the appraisal that you referenced, just curious when that was done. Then if you have the current LTV and debt service coverage on the relationship as a whole?

Okay. A couple questions in there.

Let me see how much of that I can get at for you, Danny. Most of the appraisals, we just got several in just now at the end of the year.

A couple other ones are a little bit older. It's mainly land for development, as Dave said, and those are the ones where we have fresher appraisals, particularly any of significance in terms of size.

This goes across seven properties. The large properties, we've got fresh appraisals on.

The other question that you asked was the loan-to-value. The properties are all cross-collateralized, overall loan-to-value across those seven properties is 72% on the LTV.

I don't have a cash flow, again, because the biggest part of this is land. Approximately three-fourths or three-quarters of it is land because there's a couple properties that are already developed, mainly four multi-family, I think as we mentioned, in terms of for development, and then there's a couple multi-family properties in there as well.

That's great. Then as it relates to credit expectations in the coming year, you guys have had a pretty good run here.

There was obviously some charge-offs related to this loan in the fourth quarter. How should we think about what needs to flow through now, and then in terms of charge-offs and how that might move the NPLs as we work through the year?

Sure. Just to clarify, the charge-offs that we had for the quarter were not related to this.

Based on those appraisals, we didn't have to take even any reserves on this. No specific reserves, no charge-offs.

The charge-offs that we had really for the quarter and for the year were pretty much almost all related to the equipment finance, small ticket equipment finance where we had that transportation portfolio that we've been grinding through. A lot of those were already reserved for.

Methodology there, just kind of going back in time, is time-based on delinquency on that small ticket portfolio. Things that are going to be charged off in that portfolio get reserved in advance as they go past due.

Then as time expires on the clock, to speak, then we charge those off. That's where all the charge-offs came through for the quarter.

On this one, no credit costs at this point. We think we're in pretty good shape here based on the appraisals that we have.

It's real estate, so that takes some time to work through, but it's a pretty straightforward process. We're still working with the borrower on multiple options of what we can do on this one.

Ultimately, if things don't work out on real estate, as there is a foreclosure process that's pretty straightforward. Does take some time to go through, but is pretty straightforward.

That's great. Thanks for that color.

Then maybe just one on the fee income side. Just a clarification on your guidance, Brian.

The 10% growth for overall fees, we're pulling out the $537,000 reclass and then the $234,000 BOLI claim, and then growing off of kind of that number I guess the best way to think about annualize it, or just go fourth quarter to fourth quarter? That's the way we should be thinking about it?

When you're excluding those two items, you're talking about full year, right? Full year '25 exclude those two items and then grow off of that.

Yep, and full year 10% expectations there.

Okay. That includes a rebound in SBA gains, I'm assuming, off of the fourth quarter level to something much more meaningful?

Correct.

All right. I will step back.

Thanks for all the color, guys.

Yep. Thank you.

Thank you.

Thanks. Maybe just to clarify on the last one.

A $33 million base, is that fair on fee income?

For '26?

The base to grow off of 10%.

Sorry. For '25, yes.

Yep, sure. That's a good starting point.

Yep.

Okay. Got it.

Thanks. Back to the larger problem loan.

Sounds like the question is the timeline of resolution. It sounds like it might be a bit.

Maybe just checking in on your expectations over the balance of this year or beyond.

It does take some time if you kind of go all the way to the end of a foreclosure, getting the property, sheriff's sale, all that process that you know of. We do think because there are multiple pieces of real estate here that there can be shorter-term progress potentially with some pieces of this, even in the very near term.

Kind of chipping away at it through the year and potentially if everything went well, it could be sooner than later, but likely toward the end of the year for full resolution on everything would be best guess, and really is a guess, because there's just a lot of variables on timing and what might happen.

That's good detail. We could see some smaller wins.

It's not a full all-in kind of recover or not. You could see sales and things that minimize the NPAs in short.

Over the course of the year, we could see that come in.

Correct. Over the course of the quarters, I wouldn't be surprised if there was something happening every quarter over the course of the year in terms of making progress on the different pieces.

Got it.

Thank you. Another quick one on that equipment finance.

Could you just remind us of the balance there, what that maybe is at the year-end and what that was the prior year, and expectations for do you keep that stable, you keep shrinking it?

Right, so that's the transportation segment of that equipment finance portfolio. I believe we're at $21 million at the end of the quarter.

I think that went down about $20 million over the course of the year. Going back when we initially started having issues with that, it was $61 million.

We're down to 20. Remember, these are five-year deals generally, five-year loans.

I believe we're getting to the point that the people who have made it through the really tough transportation economy this far are much more likely to make it going forward.

Gotcha. Thank you.

One last one if I could, Corey. Looking at slide 15, a pretty remarkable progress on those goals, if not achieved them.

You've had some wind at your back, but I guess just strategically, do you revisit those a couple years early? Every bank I guess would hope to just maintain that, but any thoughts on how you look at those goals, or it takes a lot of work just to stay there?

Thanks.

Yeah. Good point.

We have made tremendous progress because a few of these things were at all times. Particularly things like the employee engagement score, our Net Promoter Score.

Those were forever and always. A few of these were the end of the plan in 2028 to hit the ROE goal on that, to hit the efficiency ratio goal.

As you alluded to, we hit that ROE goal of over 15% in '24 and '25. We're below 60 on the efficiency ratio in '25.

Now what are you going to do? For us, I would say I don't think we'll recast those, but given that we hit that ROE goal, we'd like to stay there.

That's pretty dang good. If we're in the ballpark of that over these next three years, we would consider that good.

Efficiency ratio is one where it's kind of like your golf handicap, you want to just keep bringing that thing down. Also like a golf handicap, the lower you go, the harder it is to keep improving.

We would expect to continue to improve on that. We won't recast our goal to be different than to get below something lower than 60 by 2028.

At this point, I would say our goal will be to try to make improvement on that every single year going forward. We've talked a lot, it's a little different than standard bankspeak where everything's looking at efficiency ratio.

We really look at operating leverage. We had really big positive operating leverage this year with expenses growing significantly less than the growth rate in revenues.

We'll expect to continue to have positive operating leverage every year. That's kind of how we set our budgets every year.

It's a key measure that we look at overall and for our different business units and lines and things like that. We would expect to continue to make progress on that efficiency ratio.

That's great. Thanks, Corey.

Hey, guys. Good afternoon.

Thanks for taking the questions.

Yep. Hey, Nate.

Brian, I was hoping you could maybe just help us with the starting point for the margin in the first quarter. I know that tends to depend on the production that's coming through the pipeline in terms of mix, would be curious if you could just comment on kind of what type of loans you're seeing in the pipeline these days, which sounds like it's pretty strong, and maybe how that could translate into the margin starting point for the first quarter.

I'll actually have Dave maybe start on the mix of pipeline, and then I can talk about the margin.

The pipeline in Q4, I think, going into Q1. Yeah.

We're really seeing right now our pipelines across our business lines are strong. It's a mix of commercial real estate and C&I.

I don't really have a great flavor for you on the mix, but I can tell you that our asset-based lending pipeline is particularly good, and those are higher-margin deals.

I would just add to that with the comment on ABL, with our expectation of SBA picking up, and just the success we've continued to have in other of those C&I areas. When you adjust for the nonaccrual interest in Q4, that resets us at 3.63%.

With that mix that we're seeing in the pipelines, we feel like that's a great place to be and within our range of 3.60% to 3.65%. We're going to continue to compete on both sides of the balance sheet, but we feel like we have the ability to maintain that.

Great. Really helpful.

Then would be curious just in terms of what you're seeing from deposit pricing competition, now that we've had some additional rate cuts in the back half of last year. Just curious if you're seeing kind of rational deposit pricing competition, particularly as some of the larger competitors in Wisconsin are expanding via M&A into other geographies.

Right. As particularly 6 to 12 months ago, it was extremely competitive for new deposits.

It's still very competitive. Our sense is it's eased just maybe a little bit, but still competitive.

Great. Maybe one last one for me for Corey.

Obviously, M&A optimism is continuing to build across the space. I know you guys have a very kind of narrow strike zone in terms of the type of acquisition opportunities that would fit your model.

Just curious if you're seeing any opportunities out there that could align or maybe kind of augment the franchise that you guys have today.

If I had to give you a one-word answer, I'd say no. I'll give you more than that.

We're so unique as you know with our model that there's just not many things that look like us. We don't value branch networks, basically everybody else has branches.

That's problematic. Additionally, we think as we've looked at things, I know it's counter to the industry what's happening with M&A, but we believe that the best way to drive value for your existing shareholders is through organic growth.

You're not diluting them by issuing shares to somebody else for their franchise, which it sort of makes sense that you think that franchise is less valuable than your franchise if you're the one buying them, but you're still giving their shareholders your valuable shares. We're just big believers in organic growth as the best way to generate value for existing shareholders.

Understood. That's really helpful.

I appreciate the extra color, Corey. Thank you.

Yep.

Hey, good afternoon, guys. Hope everybody is doing well today.

First question, Brian, clarify on the comments on the margin. I think you had said because of the strong ABL pipeline and SBA picking back up, that the margin would reset in the 3.63% range.

Is that implying that the delta between the 3.53% and 3.63% is that you'll benefit from next quarter? Is that how we should think about it?

No, I would start by saying that the delta between the 3.53% and the 3.63% is the 10 basis points of nonaccrual interest reversal that happened in the quarter from the real estate nonaccrual loan. That alone, that was about eight months of interest that we reversed.

From that resetting, you're going to have a higher run rate closer to 3.63% right away in Q1. Then from there, the strong pipelines, predominantly in C&I, mentioned asset-based lending and others, that gives us the ability to maintain our spreads, and hopefully increase our spreads while paying for those expensive deposits, and then staying within our guide of 3.60% to 3.65% on net interest margin.

Got it. Okay.

That's helpful. Thank you.

Then with regards to expenses, I think you had said comp's going to grow a little bit more than we saw this year, and I think this year was around 7.5% or so percent. How about for the rest of the expense base?

What are you expecting for growth there?

I would say modest increase. We're expecting to grow 10% revenue as we continue to talk about, and we want that positive operating leverage.

If compensation is going to increase a little bit more than 7.5% this year, there's not much left for the rest of the expenses, and that's consistent with our approach to generating annual positive operating leverage.

Got it. Great.

Then just lastly, if you look back over the last eight quarters, I think six of them, you guys came in, call it 7% to 9% growth, linked quarter annualized loan growth. I guess, what gives you confidence that you can get back to a consistent double-digit type of growth rate in loan growth for '26?

Damon, as we look at it, remember, our goal is 10% over the course of the year, right, over 12 months. We're saying that based on pipelines that we're seeing, and we're also looking at potential for some rate cuts, although that seems to be maybe that probability is decreasing a little bit, but also the potential benefits from the new tax policy is something that we think could spur some investment by our client base and create some loan opportunities, particularly in areas like equipment finance.

I would add to that, Damon, I think if you look back at our CAGR for '20 through '25 on loans and lease growth, it's 10%. We've done it.

There's been a little bit of softness as of late. I can't remember when it was, but there was a time when I actually remember sort of making an excuse about slowness in our loan growth, and this is maybe 10 years ago or something like that.

I was starting to kind of imagine economic things that were going on that were causing this. In reality, as I saw over time, it was just some of our teams weren't that strong right at that time.

I believe for us, it's about our people and our teams. If we have the right teams in place, we're going to get our 10%.

I'm just very confident. Right now, we feel really good about it.

We mentioned ABL. We've really rebuilt that.

We have a new leader there who's brought in a business development team which is twice the size of the team that we had before, for example. In our Northeast and Kansas City markets, we had really good growth in the fourth quarter.

Those are our two smallest bank markets, and that was the best growth we've ever had out of those two markets. Our Madison bank's kind of a machine that rolls along, and our Milwaukee area bank is somewhat the same.

If we have Kansas City and Northeast, and we've had new leaders there maybe 18 months ago or something like that, I think. The two people that are running those two bank locations came into place, they've worked on rebuilding teams.

Again, we're in the people business, best team wins, and we think we've got the best team we've ever had. That's what gives me the confidence we can keep rolling at that 10%

pace. I'd just add one more thing, Damon, that it really isn't a new business volume issue for us.

It was really higher than I'd say normalized payoff levels for us particularly in the second half of the year that impacted that growth number that you're referencing.

Got it. That's great color.

I appreciate that. That's all that I had, guys.

Thanks a lot. Have a great weekend.

You, too. Thanks, Damon.

Hey, good afternoon, guys.

Brian.

Hey, Brian.

Hey, I think it was Corey that said that last. I couldn't hear.

Sorry. Or maybe it was Dave, sorry.

The payoffs versus the production this quarter, I guess, just in general, I guess it sounded like from your last comment that it was more about the payoffs. I guess, can you give us some context over the course of '25 what the payoffs and production looked like, and then just how do you feel about the subsiding, if you will, of the payoffs as you enter '26?

It sounded like that was more of the issue. I get they're sporadic, but just any context you can help provide on that would be helpful.

Sure. Just starting from the payoff point of view, right?

The payoffs, we think were about $70 million higher than, I'd say, our average payoff level if we look back on a quarterly basis our last eight-plus quarters. So 60 of those payoffs were in the last two quarters of the year.

If we add that $60 to $70 million back in, we end up at a annualized growth rate of between 10% and 11%. That's much closer to our target.

The payoffs, I think a number of those payoffs were multi-family properties going into the secondary market. Those tend to be larger and lumpy.

Piggybacking on that, Brian, on Dave's comment on that with the secondary market, it seems like there's a little bit of ballooning right now on commercial real estate. Think of deals that were done five years ago on a five-year note.

Because if we're going to get paid out on those commercial real estate loans by probably going to the secondary market, it's going to be at the end of term, because we have prepayment features in there, swaps or something that's going to cause them to wait till the end of that term. The other side of that coin is other banks have commercial real estate loans that they did five years ago that are now ballooning, and we're getting looks at things.

That's part of that pipeline that Dave was referencing before. The beauty of those deals on the CRE side is they're fully funding.

It's not like doing a construction loan. We love doing construction loans, but they take 18 months or two years to get fully funded.

We think there's going to be some opportunities kind of to have a little bit of offsetting penalties. It just depends which quarter you get the payoffs in and which quarter you get the new deals that you can get out there and win.

Gotcha. The payoffs, the $60 to $70 million, was that annually it was that high, much higher?

Is that right?

Right, it was. We think we had an extra $60 to $70 million of payoffs above what we'd consider normal payoff levels in the year.

Yep, on an annual. Okay.

Then just the production was pretty consistent this year with what, if you look at those last eight quarters, pretty consistent year to year?

Yeah. It was really at the rate we looked for.

Understood. Okay.

Then maybe just a little bit of comment about the specialty businesses, just kind of where on the C&I side, how did growth throughout the year in '25, how much did that contribute to growth? Then just your outlook, I know you talked about ABL, but just in terms of moving up that percentage, just remind us where it's at today and just kind of how you're thinking over time you see that trending.

We're pretty flat in that over '24 in terms of some of those niche areas relative to the total balance sheet. We would expect that to lift because that's down.

Our current level is down from where it had been at some points. We had good growth in other segments that weren't in there over the last couple years, and that's been a little slower because in the last, say, two years, ABL has been slow, accounts receivable finance has had some payoffs and been down a little bit.

That hasn't grown at the pace of the average balance sheet, and we would expect that to be picking up. Our floor plan finance business has grown steadily, so that's been a good performer there and we think will continue to be.

Where the lift is going to come from, we think it's happening already in ABL, good activity, good pipelines, booking deals, BDOs in place. Then we would think the accounts receivable finance business would grow more as we move forward.

Again, just a reminder, those two business lines are countercyclical. We never know what's going to happen in the economy, those could get a lift there.

Those, along with SBA, we would hope to contribute more. We would like to see that percentage move up.

It's been as high as 25% of the total book, and ideally, we'd like to move it back there.

I would just say our equipment finance business leveled off a bit in '25, but we think there might be some good opportunities there in part due to the new tax law that could drive some activity there.

Gotcha. Just remind me kind of where you're at percentage-wise versus kind of where you think it trends, I guess I don't know if it's a multi-year kind of scale up, kind of where do you see it moving to over time?

On the specialty niches, at year-end, we were about 23%. Like I had mentioned, 25% had been kind of the goal we were shooting for.

We got to that and a little bit over that a couple years ago, and so we want to get back there. We'd like to get back there kind of in short order.

It all helps margin. All helps strengthen margin.

We'd like to see that continue to grow, and if we could get that up to 30% over time, that would be really nice for us.

Gotcha. Okay.

Then just one on the fee income side. You talked about several areas there in terms of contributions.

Where do you see potential lift in fee income? Then I don't know if you gave more details on the SBIC revenues, but just in terms of annually, if we think about that, what they were in '25 versus how we think about the potential growth in that business in '26, would be helpful.

Thanks.

I'd say the two areas that we'd probably look at first are private wealth, right? That's a business that we shoot for 10 10-ish-plus percent growth in.

That would be our goal there. Then the other area that we'd expect more pickup is in SBA gain on sale.

As we look at that, I think last year, if you look at the four quarters, we averaged right around $500,000-ish in terms of gain on sale per quarter. We'd expect that to grow some this year.

I also think we would see overall for that whole fee income category, we're looking for 10% growth. I think we would expect greater than 10% growth in the SBIC piece just because we've been investing.

There's a J-curve on those funds as they ramp up. We've been in the downside of the J-curve on that a little bit, and we would expect more of that to be above the line in terms of the J-curve and contributing more as we build that portfolio internally.

Gotcha. Okay.

Then just one last one. You talked about the credit quality earlier, in particular, the one credit this quarter.

The other credit that's been out there that's taking a little bit of time to work through the process, can you just remind us where that's standing? I guess in terms of the potential to come down, it sounds like you could see some wins on the one that came on this quarter, just given the sizing of the pieces there.

In terms of the other one that's out there, could we see some resolution on that in the near term or is that still a little bit is out?

Right, that's the asset-based lending credit we have that's been there since '23, I believe. That one, it's all in the court system.

Things can happen at any time, but right now the court date is set for later in the year, later in '26. That could be with us for a little while.

It's not, from what we're being told, it's not really unusual in that state's court system. Unfortunately, it just takes way too long.

Yeah. Okay.

Perfect. I appreciate the update.

Thanks for everything, guys.

Yeah. Thanks, Brian.

All right. Thank you all for joining us today.

We appreciate your time and your interest in First Business Bank, and we look forward to sharing our progress again next quarter. Have a great weekend.