Why First Business Financial Services (FBIZ) Is a Bank Stock to Buy Now

In a banking sector still navigating post-pandemic volatility, First Business Financial Services (FBIZ) stands out as a rare gem. With a 212% five-year total shareholder return (TSR), superior earnings growth, and strategic moves to bolster security and client trust, this regional bank is positioned to outperform peers in 2025 and beyond. Here's why investors should act now.

A Growth Engine Fueled by Niche Lending and Operational Excellence

First Business's recent Q1 2025 results underscore its robust fundamentals. Earnings per share (EPS) surged 27% year-over-year to $1.32, easily beating estimates and reflecting its focus on high-margin niche lending. SBA loans, asset-based lending (ABL), and accounts receivable financing drove $275 million in loan growth (up 10% YoY), while deposit growth hit 18%, fueling a 23% rise in pre-tax pre-provision earnings.

This operational discipline is reflected in its efficiency ratio, which dipped to 60.3%—a rare feat in an industry grappling with rising costs. Meanwhile, its net interest margin (NIM) of 3.69% remains resilient, supported by disciplined pricing and a matched-funding strategy. These metrics, combined with a 14% annualized growth in tangible book value per share, paint a picture of a bank mastering cost control while expanding its core business.

The TSR Story: Outperforming Peers and the Market

FBIZ's 212% five-year TSR blows past the Russell 2000's 25% and its peer group's 62%, thanks to a blend of dividend reinvestment and share price appreciation. Even in 2025, its one-year TSR of 47% highlights momentum. What's driving this?

• Niche lending dominance: SBA and ABL portfolios offer countercyclical stability.
• Asset quality: Net charge-offs of just 0.4% (annualized) signal prudent risk management.
• Dividend discipline: A 2.3% dividend yield with a history of growth adds to total returns.

The .BANK Domain: A Strategic Move to Build Trust and Security

In 2021, First Business transitioned to the .BANK domain, a move that isn't just branding—it's a cybersecurity masterstroke. Unlike generic .com sites, .BANK domains are exclusive to verified financial institutions, reducing phishing risks by up to 90%. This shift:
- Simplifies client interactions via a unified digital platform (firstbusiness.bank).
- Enhances trust by ensuring users access legitimate services.
- Future-proofs security against evolving threats like AI-driven deepfake attacks.

The domain's integration into all operations—from mobile apps to card designs—reinforces First Business's commitment to client-centric innovation, a critical edge in an era of digital-first banking.

Risks? Yes. But the Upside Outweighs Them

Critics might point to macroeconomic risks—trade policy shifts or a softening economy. However, First Business's diversified lending (SBA, ABL) and low exposure to troubled sectors (e.g., transportation) mitigate these concerns. Its $3.6 billion in deposits and 8.9x P/LTM EPS (vs. peers at 12.38x) also suggest undervaluation, creating a margin of safety.

Why Buy Now?

• Valuation: Trading at a discount to peers, FBIZ offers a high return on tangible equity (ROATCE) of 14%, with room to grow.
• Catalysts: Continued loan growth, rising deposit volumes, and a Zacks Rank #2 (Buy).

Historically, this strategy has delivered compelling returns. When First Business's EPS beat estimates by 20% or more, buying on the earnings announcement date and holding for 20 trading days generated an average 20% total return between 2020 and 2025. While the broader market benchmark returned 99.02% over the same period, the strategy's 3.48% CAGR and moderate volatility (13.15%) highlight its potential as a short-term catalyst. Though it carried a 25.09% maximum drawdown, the results underscore the reward potential of timing entries during strong earnings surprises.

• Safety: The .BANK domain and strong asset quality reduce downside risk.

Final Call: A Bank Stock Built for the Next Five Years

First Business Financial Services is more than a regional bank—it's a high-growth, low-risk play in an industry desperate for stability. With 212% five-year TSR, a fortress balance sheet, and strategic moves like the .BANK domain, FBIZ is primed to capitalize on niche opportunities while shielding investors from broader market turbulence.

For investors seeking bank exposure with solid fundamentals, the time to act is now. Don't let this under-the-radar outperformer slip away.

The data speaks: FBIZ is a buy.