First Business Bank-Milwaukee parent reports lower profit on credit issues

Asset quality falls for First Business Financial Services

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Madison-based First Business Financial Services Inc., parent company of First Business Bank-Milwaukee, today reported second quarter net income of $3.7 million, or 43 cents per share, down from $3.9 million, or 45 cents per share, in the second quarter of 2015.

Quarterly net interest income was $15.7 million, up from $14.2 million in the same period a year ago. Total non-interest income was $5.8 million, up from $4.1 million in the second quarter of 2015.

Total operating revenue was $21.6 million, up 18 percent from $18.3 million in the year-ago quarter.

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The company, which also owns First Business Bank and Alterra Bank, had total assets of $1.8 billion as of June 30, up from $1.7 billion at the end of last year’s second quarter.

Non-performing assets were $24.2 million at the end of the second quarter, up 42.1 percent from $17.1 million at the end of the second quarter of 2015. The company said it saw deterioration in certain credits during the quarter, which it is working to address by raising its lending standards.

“We are pleased that First Business’s strong fundamentals, diversified revenue streams and positive operating leverage enabled us to grow capital, non-interest income, net interest income and loans to record levels,” said Corey Chambas, president and chief executive officer. “Despite the quarter’s uncharacteristic credit challenges, we firmly believe in the credit process that has served us well over the past 25 years. The new credit issues this quarter, which we believe are not systemic, are situations which we have thoroughly reviewed and we have made changes to processes which should prevent similar issues on a go forward basis.”

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