Q1 2026 First Business Financial Services Inc Earnings Call

Operator: Please don't mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please note that this event is being recorded. I would now like to turn the conference over to First Business Financial Services, Inc. CEO, Corey Chambas. Please go ahead.

Speaker #1: On mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press * followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, simply press * 1 again. Please note that this event is being recorded. I would now like to turn the conference over to FIRST BUSINESS FINANCIAL SERVICES, INC. CEO, Corey Chambas.

Speaker #1: Please go ahead.

Speaker #2: 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.

Corey Chambas: Good afternoon, everyone, 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 Q1 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.

Speaker #2: Today we'll discuss our financial performance followed by a Q&A session. I'd like to direct you to our first quarter earnings release and supplemental earnings call slides, which are available through our website at ir.firstbusiness.bank.

Speaker #2: 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.

Corey Chambas: 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. We are very pleased with our strong start to 2026. Our team's execution was exceptional. We won new relationships in a highly competitive environment, growing loans and deposits at a pace that well exceeded our expectations. We grew fee income by nearly 16% year-over-year, with strong contributions from multiple sources.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: There you can also find information related to any non-GAAP financial measures we discuss on today's call, including reconciliations of such measures. We are very pleased with our strong start to 2026.

Speaker #2: Our team's execution was exceptional. We won new relationships in a highly competitive environment, growing loans and deposits at a pace that well exceeded our expectations.

Speaker #2: We grew fee income by nearly 16% year over year, with strong contributions from multiple sources. I'll highlight our private wealth business, which again produced record revenues and provides annuity-like support for our revenue growth and diversification goals.

Corey Chambas: I'll highlight our private wealth business, which again produced record revenues and provides annuity-like support for our revenue growth and diversification goals. Asset quality remained stable in our core performing portfolio, and we were pleased to see some swift progress toward resolving our largest non-performing asset, which was downgraded last quarter. At the bottom line, we grew net income and earnings per share by more than 9% over last year's Q1, even as our margin returned to a more normalized level after being elevated in early 2025, which was residual from the period of rapid Fed tightening. Perhaps most importantly, our strong earnings and disciplined capital deployment drove 14% year-over-year growth and tangible book value per share.

Speaker #2: Asset quality remained stable in our core performing portfolio, and we were pleased to see some swift progress toward resolving our largest non-performing asset, which was downgraded last quarter.

Speaker #2: At the bottom line, we grew net income and earnings per share by more than 9% over last year's first quarter, even as our margin returned to a more normalized level after being elevated in early 2025, which was residual from the period of rapid Fed tightening.

Speaker #2: And perhaps most importantly, our strong earnings and disciplined capital deployment drove 14% year over year growth in tangible book value per share. This success reflects our commitment to four key objectives: prioritizing high-quality relationship-based growth, diversifying our revenue streams, maintaining long-term positive operating leverage, and preserving a culture that attracts and keeps the highest quality talent.

Corey Chambas: This success reflects our commitment to four key objectives: prioritizing high quality relationship-based growth, diversifying our revenue streams, maintaining long-term positive operating leverage, and preserving a culture that attracts and keeps the highest quality talent. We are very pleased with the momentum of our Q1 results, which Dave will discuss more now. Dave?

Speaker #2: We are very pleased with the momentum of our first quarter results, which Dave will discuss more now. Dave?

Speaker #3: Thank you, Corey. Our outstanding first quarter growth positions us well to achieve our long-term goals. As you know, we aim for 10% loan and core deposit growth on an annual basis.

Dave Seiler: Thank you, Corey. Our outstanding Q1 growth positions us well to achieve our long-term goals. As you know, we aim for 10% loan and core deposit growth on an annual basis. In Q1, we grew loans by $126 million or 15%, far outpacing our plan. Growth came from across our markets, led by Madison, Milwaukee, and Kansas City, as well as from asset-based lending, which is generating some great momentum under the new leader we brought on a year ago. The growth occurred late in the quarter with $90 million or 72% on in March. That had margin implications, which Brian will cover, and it included some pull forward of growth we had forecasted for Q2.

Speaker #3: In the first quarter, we grew loans by 126 million or 15%, far outpacing our plan. Growth came from across our markets, led by Madison, Milwaukee, and Kansas City, as well as from asset-based lending, which has generating some great momentum under the new leader we brought on a year ago.

Speaker #3: The growth occurred late in the quarter with 90 million or 72% in March. That had margin implications which Brian will cover, and it included some pull forward of growth we had forecasted for the second quarter.

Speaker #3: After an extremely strong first quarter, our pipelines are lighter going into Q2, and we will have some known payoffs in the second quarter. Therefore, we expect the second quarter to be lighter on growth than Q1, with normalization in the second half of the year, placing us on track to achieve our 10% annual growth goal for 2026.

Dave Seiler: After an extremely strong Q1, our pipelines are lighter going into Q2, and we will have some known payoffs in the Q2. Therefore, we expect the Q2 to be lighter on growth than Q1 with normalization in the H2 of the year, placing us on track to achieve our 10% annual growth goal for 2026. Our 10% growth expectations are driven by continued positive trends in our businesses and the banking industry. Our largest markets in Southern Wisconsin continue to benefit from a strong regional economy. Our clients in the manufacturing and distribution space are doing well. Commercial real estate occupancies have remained strong, particularly in multifamily properties. We are also seeing signs that new development is picking up after a slight slowdown in 2024 and 2025.

Speaker #3: Our 10% growth expectations are driven by continued positive trends in our businesses and the banking industry. Our largest markets in Southern Wisconsin continue to benefit from a strong regional economy.

Speaker #3: Our clients in the manufacturing and distribution space are doing well, commercial real estate occupancies have remained strong, particularly in multifamily properties. We are also seeing signs that new development is picking up after a slight slowdown in 2024 and 2025.

Speaker #3: Additionally, we continue to expect the 2026 changes to federal tax policy should be a tailwind for our business clients and CNI portfolio. We continue to see tangible benefits from talent acquisitions as well.

Dave Seiler: Additionally, we continue to expect the 2026 changes to federal tax policy should be a tailwind for our business clients and C&I portfolio. We continue to see tangible benefits from talent acquisitions as well. We recently hired a new president for our private wealth business. We are also seeing positive results from producers in asset-based lending who were hired in H2 of 2025. Obviously, we are looking at the same wild cards as everyone else and will continue to monitor for any impact of oil prices and geopolitical uncertainty. So far, it's been business as usual. I also want to highlight our exceptional double-digit growth in core deposits this quarter. Q1 balances were up 18% from the linked quarter and up 14% year over year. That's not an easy feat in this environment.

Speaker #3: We recently hired a new president for our private wealth business. We are also seeing positive results from producers and asset-based lending who were hired in the second half of 2025.

Speaker #3: Obviously, we are looking at the same wild cards as everyone else and will continue to monitor for any impact of oil prices and geopolitical uncertainty so far.

Speaker #3: It's been business as usual. I also want to highlight our exceptional double-digit growth in core deposits this quarter. First quarter balances were up 18% from the linked quarter and up 14% year over year.

Speaker #3: That's not an easy feat in this environment. Our focus on hiring the best treasury management talent and maintaining a disciplined approach to business development continues to pay off.

Dave Seiler: Our focus on hiring the best treasury management talent and maintaining a disciplined approach to business development continues to pay off. We are pleased to see this core deposit growth coming from multiple bank markets and our private wealth group. Our strength is in taking market share, as you saw this quarter. We are confident in our team's ability to not only maintain existing client relationships. Also to continue bringing in new deposit balances. As with loans, we continue to target 10% growth on an annual basis. Another highlight was our strong non-interest income, which grew 16% compared to last year's Q1. private wealth produced record revenue of $3.9 million, up 11% year over year. This business consistently generates more than 40% of our total quarterly fee income.

Speaker #3: We are pleased to see this core deposit growth coming from multiple bank markets and our private wealth group. Our strength is in taking market share as you saw this quarter, so we are confident in our team's ability to not only maintain existing client relationships but also to continue bringing in new deposit balances.

Speaker #3: As with loans, we continue to target 10% growth on an annual basis. Another highlight was our strong non-interest income, which grew 16% compared to last year's first quarter.

Speaker #3: Private wealth produced record revenue of $3.9 million, up 11% year over year. This business consistently generates more than 40% of our total quarterly fee income.

Speaker #3: Strong deposit growth contributed to service charges increasing more than 26% year over year, displaying our team's impressive success in adding and expanding full business banking relationships.

Dave Seiler: Strong deposit growth contributed to service charges increasing more than 26% year over year, displaying our team's impressive success in adding and expanding full business banking relationships. Our other fee income sources, which tend to be variable from quarter to quarter, posted favorable results for the quarter. Moving to credit. We saw some rapid progress on our largest non-performing asset. Recall that we downgraded $20.4 million in CRE loans from a single Southeast Wisconsin-based client relationship to non-accrual status last quarter. In Q1, $3.4 million of land development loans in this portfolio were sold at par. You can see the benefit of this to our non-performing asset ratio on slide 12 of the earnings supplement. Appraisals exceed carrying values on the land in the remaining $17 million of loans, with no specific reserves recorded. We expect ongoing resolution, though the timing will be variable.

Speaker #3: And our other fee income sources, which tend to be variable from quarter to quarter, hosted favorable results for the quarter. Moving to credit. We saw some rapid progress on our largest non-performing asset.

Speaker #3: Recall that we downgraded 20.4 million in CRE loans from a single Southeast Wisconsin-based client relationship to non-accrual status last quarter. In Q1, $3.4 million of land development loans in this portfolio were sold at par.

Speaker #3: You can see the benefit of this to our non-performing asset ratio on slide 12 of the earnings supplement. Appraisals exceed carrying values on the land in the remaining 17 million of loans, with no specific reserves recorded.

Speaker #3: We expect ongoing resolution, though the timing will be variable. Based on current activity, we don't anticipate additional progress to occur before the second half of 2026.

Dave Seiler: Based on current activity, we don't anticipate additional progress to occur before the H2 2026. The remainder of our portfolio is stable, and you can see our favorable trends on slide 11. Before I hand it off to Brian, I'll note that this is Corey's last call before his retirement next week. I want to thank Corey for his leadership and service to First Business Bank. It's difficult to summarize his many contributions to our company, so I'll leave you with this. During Corey's tenure as CEO, First Business Bank has produced cumulative shareholder returns of nearly 700%, outperforming bank and regional bank indices by a multiple of more than 3x and the Russell 2000 by more than 200 percentage points. This is no coincidence. Corey is a visionary, and we are grateful for his leadership and friendship.

Speaker #3: The remainder of our portfolio is stable, and you can see our favorable trends on slide 11. Before I hand it off to Brian, I'll note that this is Corey's last call before his retirement next week.

Speaker #3: I want to thank Corey for his leadership and service to First Business Bank, its difficult-to-summarize-his-many-contributions-to-our-company. So I'll leave you with this. During Corey's tenure as CEO, First Business Bank has produced cumulative shareholder returns of nearly 700%, outperforming bank and regional bank indices by a multiple of more than 3X, and the Russell 2000 by more than 200 percentage points.

Speaker #3: This is no coincidence. Corey's a visionary, and we are grateful for his leadership and friendship. We are also very happy that Corey will be continuing to serve on our board.

Dave Seiler: We are also very happy that Corey will be continuing to serve on our board. Now I'll hand it off to Brian.

Speaker #3: Now I'll hand it off to Brian.

Speaker #2: Well said, Dave. Thanks. First quarter net interest margin increased 3 basis points to 3.56, and there are some noise in both the first and linked quarters.

Brian Spielmann: Well said, Dave. Thanks. Q1 net interest margin increased 3 basis points to 3.56, there was some noise in both the Q1 and linked quarters. You can see a breakdown of this on slide 6 of our earnings supplement. Q1 NIM included the 5 basis point impact of fewer accrual days in the quarter. Excluding this impact, Q1 NIM was 3.61, which would be in line with our internal budget expectations. As a reminder, Q4 NIM included 10 basis points of compression from the non-accrual interest reversal on the downgraded CRE NPL. Excluding this, Q4 NIM would have measured 3.63. There was no non-accrual interest reversal activity in Q1. The 2 basis point difference in these adjusted NIM measurements primarily reflects the late quarter timing of loan growth.

Speaker #2: You can see a breakdown of this on slide 6 of our earnings supplement. First quarter NIM included the 5 basis point impact of fewer accrual days in the quarter.

Speaker #2: Excluding this impact, first quarter NIM was 3.61, which would be in line with our internal budget expectations. As a reminder, fourth quarter NIM included 10 basis points of compression from the non-accrual interest reversal on the downgraded CRE MPL.

Speaker #2: Excluding this, fourth quarter NIM would have measured 3.63. There was no non-accrual interest reversal activity in Q1. The 2 basis point difference in these adjusted NIM measurements primarily reflects the late quarter timing of loan growth.

Speaker #2: As Dave mentioned, the bulk of our significant loan growth came late in the quarter. Two-thirds of the growth was from our CNI portfolios, which are higher yielding than CRE, and we expect this to benefit our net interest margin going forward.

Brian Spielmann: As Dave mentioned, the bulk of our significant loan growth came late in the quarter. 2/3 of the growth was from our C&I portfolios, which are higher yielding than CRE, and we expect this to benefit our net interest margin going forward. You can see the historical trend of this yield differential on slide 5 of the earnings supplement. Looking out at the year, we think the early momentum of C&I loan growth in Q1 positions us well to operate within or toward the lower to middle portion of our target of 3.60 to 3.65 range for the year. Our outlook assumes a stable to modestly changing interest rate environment. Margin performance is expected to be driven primarily by balance sheet mix and our targeted annual 10% loan and core deposit growth rather than additional rate tailwinds.

Speaker #2: You can see the historical trend of this yield differential on slides 5 of the earnings supplement. Looking out at the year, we think the early momentum of CNI loan growth in Q1 positions us well to operate within or toward the lower to middle portion of our targeted 3.60 to 3.65 range for the year.

Speaker #2: Our outlook assumes a stable to modestly changing interest rate environment. Margin performance is expected to be driven primarily by balance sheet mix and our targeted annual 10% loan and core deposit growth rather than additional rate tailwinds.

Speaker #2: On the funding side, ongoing core deposit growth has improved our funding mix over time. And we continue to manage deposit pricing with discipline in a competitive environment.

Brian Spielmann: On the funding side, ongoing core deposit growth has improved our funding mix over time, and we continue to manage deposit pricing with discipline in a competitive environment. Where needed, we supplement with wholesale funding to match fund fixed-rate loans and maintain NIM stability. On non-interest income and expense, I'll remind you that quarterly comparisons are impacted by last quarter's accounting classification change related to limited partnership investments. Specifically, last quarter we reclassified $904 thousand out of our other non-interest expense and into other non-interest income to net against the related revenue. This expense represented the bank's share of costs for the first 9 months of 2025 related to our latest round of limited partnership investments.

Speaker #2: Where needed, we supplement with wholesale funding to match fund fixed-rate loans and maintain NIM stability. On non-interest income and expense, I'll remind you that quarterly comparisons are impacted by last quarter's accounting classification change, related to limited partnership investments.

Speaker #2: Specifically, last quarter we reclassified $904,000 out of our other non-interest expense and into other non-interest income to net against the related revenue. This expense represented the bank's share of cost for the first nine months of 2025 related to our latest run of limited partnership investments.

Speaker #2: Our strong first quarter fee income supports our expectation of 10% growth for the full year compared to 2025, and we view first quarter as a good starting point for quarterly fee income in 2026.

Brian Spielmann: Our strong Q1 fee income supports our expectation of 10% growth for the full year compared to 2025, and we view Q1 as a good starting point for quarterly fee income in 2026. Looking at expenses, we saw the typical Q1 increases related to compensation. Compensation expense increased by about $1.4 million from Q4, mainly due to Q1 resets for payroll taxes and 401(k) match contributions, along with annual merit increases and higher average FTEs, which were up about 5.7% from a year ago. Looking ahead, payroll taxes will come down throughout the year, but new FTE adds will go up. Professional fees were also higher in Q1, increasing by about $445,000 from Q4.

Speaker #2: Looking at expenses, we saw the typical first quarter increases related to compensation. Compensation expense increased by about 1.4 million from Q4. Mainly due to first quarter resets for payroll taxes and 401(k) match contributions.

Speaker #2: Along with annual merit increases and higher average FTEs, which were up about 5.7% from a year ago. Looking ahead, payroll taxes will come down throughout the year, but new FTE ads will go up.

Speaker #2: Professional fees were also higher in Q1, increasing by about 445,000. From Q4. Elevated recruiting costs and seasonal legal fees related to the company's annual 10(k) and proxy filings drove the increase.

Brian Spielmann: Elevated recruiting costs and seasonal legal fees related to the company's annual 10-K and proxy filings drove the increase. We typically base our full year expense forecast on Q1 actuals, which remain an appropriate run rate for 2026. 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. The effective tax rate was 15.2% for Q1. 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 and the timing of stock compensation vesting activity. We continue to expect our effective tax rate will be within our expected annual range of 16% to 18% for 2026.

Speaker #2: We typically base our full-year expense forecast on first quarter actuals, which remain an appropriate run rate for 2026. I'll reiterate that our primary expense management objective is achieving annual positive operating leverage.

Speaker #2: That is, annual expense growth at some level modestly below our targeted level of 10% annual revenue growth. The effective tax rate was 15.2% for the first quarter.

Speaker #2: 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, and the timing of stock compensation vesting activity.

Speaker #2: We continue to expect our effective tax rate will be within our expected annual range of 16 to 18 percent for 2026. Finally, our strong earnings have continued to generate excess capital to facilitate organic growth.

Brian Spielmann: Finally, our strong earnings have continued to generate excess capital to facilitate organic growth. We continue to believe reinvestment in the growth of the company 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.

Speaker #2: We continue to believe reinvestment in the growth of the company provides the best return for our shareholders. We do, of course, evaluate all capital management tools at our disposal to maximize shareholder returns.

Speaker #2: And now I'll hand it back over to Corey.

Speaker #3: Thank you, Brian and Dave. Dave was the architect of our current five-year strategic plan, and you can see our outstanding progress toward achieving the goals of this plan on slide 15.

Corey Chambas: Thank you, Brian and Dave. Dave was the architect of our current five-year strategic plan. You can see our outstanding progress toward achieving the goals of this plan on slide 15. I believe nothing has been more instrumental to achieving this success than our culture. I'll take a final opportunity to bang the drum on this. Our culture defines us and is our secret sauce. It is in the DNA of First Business Bank to be passionate about our people and obsessed with our strategic plan. It's foundational to our mission to be an entrepreneurial partner to our clients, investors, and communities. This intense cultural focus has been fundamental in achieving our superior long-term shareholder returns. It has been my North Star of sorts. I'm confident Dave's leadership will bring continued success.

Speaker #3: I believe nothing has been more instrumental to achieving this success than our culture. So I'll take a final opportunity to bang the drum on this.

Speaker #3: Our culture defines us, and it is our secret sauce. It is in the DNA of First Business Bank to be passionate about our people and obsessed with our strategic plan.

Speaker #3: And its foundational to our mission to be an entrepreneurial partner to our clients' investors and communities. This intense cultural focus has been fundamental in achieving our superior long-term shareholder returns.

Speaker #3: It has been my North Star of sorts, and I'm confident Dave's leadership will bring continued success. We have the right team in place to continue achieving both strong earnings and above industry growth, and I'm excited for the future of First Business Bank.

Corey Chambas: We have the right team in place to continue achieving both strong earnings and above-industry growth, and I'm excited for the future of First Business Bank. Thank you for taking time to join us today. We're happy to take your questions now.

Speaker #3: Thank you for taking time to join us today; we're happy to take your questions now.

Speaker #2: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Daniel Tamayo of Raymond James. Your line is open.

Speaker #2: If you would like to withdraw your question, simply press *1 again. If you are called upon to ask a question and are listening via loudspeaker, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker #2: Your first question comes from a line of Daniel Tamayo of Raymond James. Your line is open.

Speaker #4: Thank you. Good afternoon, everybody. First, just wanted to say congratulations on your retirement, Corey. It's been a pleasure working with you over the last few years.

Daniel Tamayo: Thank you. Good afternoon, everybody. First, just wanted to say, congratulations on your retirement, Corey. It's been a pleasure working with you over the last few years. And obviously good luck to Dave. You know, I guess on the heels of that, I'll throw out a longer-term question here for you, Dave, as you look to the future. You know, looking at slide 15 with your goals and progress on it, and the 2024 to 2028 goals, from a profitability perspective, you guys, obviously, have talked about this 10% growth, and I think that, you know, certainly holds.

Speaker #4: And obviously, good luck to Dave. I guess on the heels of that, I'll throw out a longer-term question here for you, Dave, as you look to the future.

Speaker #4: Looking at slide 15 with your goals and progress on it, and 24 to 2024 to 2028 goals, from a profitability perspective, you guys, obviously, have talked about this 10% growth, and I think that certainly holds.

Speaker #4: But just curious how you think about, from a profitability perspective, I guess if it's efficiency or return on tangible common equity, do you anticipate changing any of these long-term goals and progress?

Daniel Tamayo: Just curious how you think about, from a profitability perspective, I guess if it's efficiency or return on tangible common equity, you know, do you anticipate changing any of these long-term goals in progress, you know, the slide or anything like that as you, as you think about your leadership? If not, what's the plan over the next few years to get or keep these numbers kind of at these levels?

Speaker #4: The slide or anything like that, as you think about your leadership, and if not, what's the plan of the next few years to get these to get or keep these numbers kind of at these levels?

Dave Seiler: Yeah, good question. Our strategic plan is a five-year strategic plan. We're a little over two years into it. You know, every quarter or more often, we look at all of these metrics and evaluate if they're still the right metrics for us to be looking at. I would say right now, you know, you look at our efficiency ratio, for example, that blipped up a little bit this quarter for reasons that I think we've outlined in some of our comments already. We expect that to kind of return to where we want it to be over the next, you know, over the balance of the year and in the upcoming quarters. At this point, we still think these are good metrics for us to be working on.

Speaker #5: Yeah, good question. So we are our strategic plan is a five-year strategic plan. We're a little over two years into it. And every quarter or more often, we look at all of these metrics and evaluate if they're still the right metrics for us to be looking at.

Speaker #5: And I would say right now, you look at our efficiency ratio, for example, that blipped up a little bit this quarter for reasons that I think we've outlined in some of our comments already.

Speaker #5: So we expect that to kind of return to where we want it to be over the next over the balance of the year and the upcoming quarters.

Speaker #5: At this point, we still think these are good metrics for us to be working on. And we've identified five strategies from our strategic plan, and we have teams of leaders working on each of the strategies.

Dave Seiler: You know, we've identified five strategies, from our strategic plan, and we have, you know, teams of leaders working on each of the strategies. At this point, I think we think they're all, these are the right targets for us.

Speaker #5: And at this point, I think we think they're all these are the right targets for us.

Speaker #4: All right. Good start, Dave.

Daniel Tamayo: All right. Good start, Dave.

Speaker #5: I'm not official yet, Danny.

Dave Seiler: I'm not official yet, Danny.

Speaker #4: All right. Fair enough. And then I think I get what you guys are saying on the margin. I'm assuming this is going to be an annual thing.

Daniel Tamayo: All right. Fair enough. You know, I think I get what you guys are saying on the margin. I'm assuming this is going to be an annual thing. I mean, it is just the math, right? Of the fewer days in Q1. As we think about modeling the margin, we should think about modeling that down a bit in Q1 going forward and then popping back up in Q2 remaining in that targeted range. Brian?

Speaker #4: I mean, it's just the math, right, of the fewer days in the first quarter. But as we think about modeling the margin, we should think about modeling that down a bit in the first quarter going forward and then popping back up in the second quarter remaining in that the targeted range.

Speaker #4: Brian?

Speaker #6: Yeah, that's a fair statement. I would say we always want to have the first quarter accrual mechanics issue, right? But for us specifically for this quarter, to me, it was more of a timing difference on when our funding came in versus when we deployed that funding in the quarter.

Brian Spielmann: Yeah. That's a fair statement. I would say, you know, we're always going to have the Q1 accrual mechanics issue, right? For us, specifically for this quarter, to me, it was more of a timing difference on when our funding came in versus when we deployed that funding in the quarter. That to me is more of the driver on why the NIM was reported outside of our range. You know, if we would have had the loan growth align with that funding growth earlier in the quarter.

Speaker #6: That, to me, is more of the driver on why the NIM was reported outside of our range. If we would have had the loan growth align with that funding growth earlier in the quarter, the NIM would have been within our range.

Brian Spielmann: The NIM would have been within our range. That's more of it. I think your point is valid though, in terms of the first quarter estimates that there's going to be that day basis impact.

Speaker #6: So that's more of it. But I think your point is valid, though, in terms of the quarterly first quarter estimates that there's going to be that day basis impact, so.

Speaker #4: Okay. And as it relates to that dynamic with the late-in-the-quarter loan growth, you're thinking basically the margin comes back up into the range in the second quarter and then relatively stable from there.

Daniel Tamayo: Okay. As it relates to that dynamic with the late in the quarter loan growth, like you're thinking basically the margin comes back up into the range in Q2 and then relatively stable from there.

Speaker #6: Yes.

Brian Spielmann: Yes.

Speaker #4: Okay. All right. I will step back. Thanks, guys. Appreciate it.

Daniel Tamayo: Okay. All right, I will step back. Thanks, guys. Appreciate it.

Speaker #5: Thanks, Danny.

Brian Spielmann: Thanks, Danny.

Speaker #7: Thanks, Danny.

Speaker #2: Your next question comes from a line of Jeff Rulis of DA Davidson. Your line is open.

Operator: Your next question comes from line of Jeffrey Rulis of D.A. Davidson. Your line is open.

Speaker #7: Thanks. Good afternoon. Wanted to check on the expenses Brian got your comments there. I just seemed a little high. I mean, maybe I'm just still updating the model on the reclass a little bit.

Jeffrey Rulis: Thanks. Good afternoon. Wanted to check on the expenses. Brian Spielmann, got your comments there. Seemed a little high. I mean, maybe I am just still updating the model on the reclass a little bit. If I heard that right, that this level, you kind of flatline for the year. If I guess if I just annualize it and then run it off across full year 2025, something in the high single digits. Is that kind of where we should be thinking?

Speaker #7: But if I heard that right, that this level you kind of flatlines for the year. I guess if I just annualize it and then run it off of across full year '25, something in the high single digits, is that kind of where we should be thinking?

Speaker #5: Exactly. Yep. Spot on.

Brian Spielmann: Exactly. Yep. Spot on.

Speaker #7: Okay. Well, while I got you, Brian, on the do you have the margin for the month of March just to try to jump-off point?

Jeffrey Rulis: Okay. Well, while I got you, Brian, on the margin for the month of March just to try to a jump off point?

Brian Spielmann: We don't have that. It would be influenced by the loan growth. That's kind of the point behind the loan growth commentary.

Speaker #5: We don't have that. And it would be influenced by the late growth. That's kind of the point behind the late growth commentary. Is that the reported Q1 margin of 359 being impacted—sorry, by 356—being impacted by that.

Brian Spielmann: is that the reported Q1 margin of 3.59, sorry, by 3.56 being impacted by that. It's going to be pushing us back into our range, based on that March activity.

Speaker #5: So it's going to be pushing us back into our range based on that March activity.

Speaker #7: Okay. Fair enough. You were pretty clear about the resuming back into that range. So I'll stick with that. This was curious. Maybe just the last one on the growth.

Jeffrey Rulis: Okay. Fair enough. You were pretty clear about the resuming back into that range, so I'll stick with that. Just was curious. maybe just a last one on the growth. you know, Dave, I think you alluded to the geography, but maybe the do you have a breakout of maybe the mix of that growth pretty strong, but was it the mix of existing customers versus new? I think you mentioned maybe that was a 60/40 split last quarter or something, but just trying to get a sense for market share gains or existing customers.

Speaker #7: Dave, I think you alluded to the geography, but maybe the do you have a breakout of maybe the mix of that growth pretty strong, but was it the mix of existing customers versus new?

Speaker #7: I think you mentioned maybe that was a 60/40 split. Last quarter or something, but just trying to get a sense for market share gains or existing customers.

Brian Spielmann: Yeah. Well, we don't have a mix between existing clients and new clients. I, you know, I think it was, as we stated before, it was really across all of our Southern Wisconsin bank markets and Kansas City, as well as asset-based lending. I would say within those groups, it really wasn't concentrated in any particular area. It was spread fairly evenly.

Speaker #6: Yeah. Well, we don't have a mix between existing clients and new clients. I think it was, as we stated before, it was really across all of our Southern Wisconsin bank markets and Kansas City as well as asset-based lending.

Speaker #6: I would say within those groups, it really wasn't concentrated in any particular area. It was spread fairly evenly.

Speaker #5: And I would say always our growth is going to be driven by new. We do more loans to existing clients over time, but the driver of our growth has always going to be new client relationships.

Corey Chambas: I would say always our growth is going to be driven by new. You know, we do more, you know, more loans to existing clients over time, but the driver of our growth is always going to be new client relationships.

Speaker #7: Well, I think one of the things you can look at that reinforces that is the growth in our service fee income. That we've had very rapid growth in our service fee income, and you don't get that without adding new clients.

Brian Spielmann: Well, I think one of the things you can look at that reinforces that is the growth in our service fee income that, you know, we've had very rapid growth in our service fee income, and you don't get that without adding new clients.

Speaker #5: On service charges?

Jeffrey Rulis: Service charges?

Speaker #7: Yeah, service charges.

Brian Spielmann: Yeah, service charge.

Speaker #5: Yeah.

Jeffrey Rulis: Yeah. Okay. Thanks for the color. Corey, thanks for the conversations over the years. All the best and appreciate what you've done. Dave, look forward to catching up in Nashville in a couple of weeks. Thanks.

Speaker #7: Okay. Thanks for the color. And Corey, thanks for the conversations over the years. All the best and appreciate what you've done and Dave look forward to catching up in Asheville in a couple of weeks.

Speaker #7: So thanks.

Speaker #5: Thanks, Jeff.

Operator: Thanks, Jeff.

Speaker #6: Thanks, Jeff.

Operator: Thanks, Jeff. Your next question comes from line of Nathan Race of Piper Sandler. Your line is open.

Speaker #2: Your next question comes from a line of Nathan Race of Piper Sandler. Your line is open.

Speaker #8: Hey, guys. Good afternoon. Comments earlier. Congratulations, Corey and Dave. It's been great working with you, Corey.

Nathan Race: Hey, guys.

Brian Spielmann: Good afternoon.

Nathan Race: Comments earlier. Congratulations, Corey and Dave. It's been great working with you.

Brian Spielmann: Thank you. Thanks.

Speaker #7: Thank you, guys.

Nathan Race: Wanted to check in on just the fee income outlook. Brian, I think you mentioned kind of a stable outlook. Just curious kind of what momentum you're seeing on the SBA front. Obviously, you know, wealth management is showing some nice growth year over year as well. Just curious how you're thinking about kind of the overall year over year trajectory.

Speaker #8: I wanted to check in on just the fee income outlook. Brian, I think you mentioned kind of a stable outlook. Just curious kind of what momentum you're seeing on the SPA front.

Speaker #8: Obviously, wealth management's showing some nice growth year over year as well. So just curious how you're thinking about kind of the overall year-over-year trajectory.

Speaker #5: I can speak to the total broader fee income piece, and then maybe Dave has a couple of comments on SPA. But the total fee income line I think is consistent with the prior messaging around 10% year-over-year growth expectations with Q1 being a good starting point for that.

Brian Spielmann: I can speak to the total broader fee income piece, then maybe Dave has a couple comments on SBA. The total fee income line, I think is consistent with the prior messaging around 10% year-over-year growth expectations with Q1 being a good starting point for that. I know we had some noise in Q4, but really strong performance from those more consistent annuity streams for us, private wealth, service charges, and other, which now includes starting to build more of our SBIC investment product there that'll start kicking off more returns as well over time. That's really the primary drivers of that fee income, which we, again, we believe is a 10% growth in total for us throughout 2026. Dave?

Speaker #5: I know we had some noise in Q4, but really strong performance from those more consistent annuity streams for us, private wealth, service charges, and other which now includes starting to build more of our SBIC investment product there that will start kicking off more returns as well over time.

Speaker #5: But that's really the primary drivers of that fee income which, again, we believe is a 10% growth in '26. Dave, yeah, and on the SBA side, we actually expected that to be a little bit higher this quarter after the shutdown late last year.

Corey Chambas: Yeah, on the SBA side, we actually expected that to be a little bit higher this quarter after the shutdown late last year. I think if we look at pipelines that, you know, we expect it to be relatively flat going forward.

Speaker #5: But I think as we look at pipelines, we expect it to be relatively flat going forward.

Speaker #8: Okay. Got it. And Dave, I think you mentioned earlier you're expecting some softer growth in the same quarter just given maybe some pull-through and some expected payoffs this quarter.

Nathan Race: Okay. Got it. Dave, I think you mentioned earlier, you know, you're expecting some softer growth in Q2, just given maybe some pull-through and some expected payoffs Q1. Is it fair to expect, you know, maybe like mid to low single digit growth in Q2 and then getting back up to that kind of high single digit to low double digit trajectory in H2?

Speaker #8: So is it fair to expect maybe mid to low single-digit growth in the same quarter and then getting back up to that kind of high to low single-digit to low double-digit trajectory in the back half of the year?

Speaker #5: Yeah. I think that's probably reasonable for Q2, Nate. A little bit depends on payoffs and those aren't some of those are in flux right now.

Dave Seiler: Yeah, I think that's probably reasonable for Q2, Nate. A little bit depends on payoffs, and those aren't, you know, some of those are in flux right now, so we can't predict them 100%. I think that's a reasonable point. We still expect to be at 10% for the year.

Speaker #5: So we can't predict them 100%. But I think that's a reasonable point. And we still expect to be at 10% for the year.

Speaker #8: Okay. And then maybe one last one. Any color that you could shed on the charge-offs in the quarter and just how you're budgeting or thinking about charge-offs over the balance of this year?

Nathan Race: Okay. Any color that you could shed on the charge-offs in the quarter and just how you're budgeting or thinking about charge-offs over the balance of this year. It doesn't sound like there's been much movement on that ABL credit that we've talked about, which, you know, again, shouldn't really result in any loss content. Within that context, it also seems like, you know, the Southeast properties are still slated to sell that part, similar to what we saw this quarter. We're just hoping to get any color along those lines, please.

Speaker #8: It doesn't sound like there's been much movement on the ABL credit that we've talked about, which, again, shouldn't really result in any loss content.

Speaker #8: But within that context, it also seems like the Southeast properties are still slated to sell that part, similar to what we saw this quarter, so which is hoping to get any color along those lines, please.

Speaker #5: So I can talk about the Southeast property and the asset-based lending credit that we have. So on the Southeast properties last quarter, we talked about how we're going to work this work out of this over time.

Dave Seiler: I can talk about the Southeast properties and the asset-based lending credit that we have. You know, on the Southeast properties last quarter, we talked about how we're gonna work out of this over time. We started that with a little over $3 million in payoffs with no losses in the past quarter. Right now we are pursuing foreclosure on the rest of the properties in that non-performing portfolio. We shouldn't really expect any resolution in Q2. That's probably more the back half of the year based on how long those proceedings take in Wisconsin.

Speaker #5: And we started that with a little over $3 million in payoffs with no losses in the past quarter. Right now, we are pursuing foreclosure on the rest of the properties in that non-performing portfolio.

Speaker #5: And so we shouldn't really expect any resolution in Q2. That's probably more the back half of the year based on how long the proceedings take in Wisconsin.

Dave Seiler: Again, as it relates to the asset-based lending credit, you know, that's going to be an end of the year, you know, type event most likely. You know, we've had no negative news there. It's just moving through the court system, very, very slowly. We're being told that's what we should expect in this case.

Speaker #5: And again, as it relates to the asset-based lending credit, that's going to be an end-of-the-year type event, most likely. But we've had no negative news there.

Speaker #5: It's just moving through the court system very, very slowly. But we're being told that's what we should expect in this case.

Speaker #8: Okay. That's helpful. I appreciate the color.

Nathan Race: Okay. That's helpful. I appreciate the color.

Speaker #5: Nate, on the broader charge-off question, I would say quarter Q1, nothing kind of unusual to report. Kind of a broad mix of charge-offs coming from SBA, CNI, I will say that EF finance improved from a charge-off perspective from Q4 to Q1.

Brian Spielmann: Nate, on the broader charge-off question, I would say, you know, for Q1, nothing kind of unusual to report. kind of a broad mix of charge-offs coming from SBA, coming, you know, C&I. I will say that EF finance improved from a charge-off perspective from Q4 to Q1, so that's a good indication that we're, you know, improving on working through that portfolio. I think we had about 25 basis points of charge-offs in the quarter. A little higher than we would think. We tend to think around 20 basis points on average for the year. But nothing that's alarming to us by any means.

Speaker #5: So that's a good indication that we're improving and working through that portfolio. I think we had about 25 basis points of charge-offs in the quarter.

Speaker #5: A little higher than we would think. We tend to think around 20 basis points on average for the year. But nothing that's alarming to us by any means.

Speaker #8: Just to add to that, Nate, that transportation segment of that equipment finance portfolio, which started out at about 61 million, is down to 18.1 million or 18.2 million, something like that.

Dave Seiler: Just to add to that, Nathan Race, that transportation segment of that equipment finance portfolio, which started out at about $61 million, is down to $18.1 million or $18.2 million, something like that. We're making nice progress on that.

Speaker #8: So we're making nice progress on that. Okay. Gotcha. Very helpful. I appreciate all the color. Thanks, guys. Hope you have a great weekend.

Nathan Race: Okay. Gotcha. Very helpful. I appreciate all the color. Thanks, guys. Hope you have a great weekend.

Speaker #5: Thanks.

Speaker #7: Thanks. You too.

Brian Spielmann: Thanks, Nate.

Dave Seiler: Thanks, Nate.

Brian Spielmann: Yeah, you too.

Speaker #2: And again, if you have a question, please press star one on your telephone keypad. Your next question comes from the line of Damon DelMonte of KBW.

Operator: Again, if you have a question, please press star one on your telephone keypad. Your next question comes from the line of Damon DelMonte of KBW. Your line is open.

Speaker #2: Your line is open.

Speaker #9: Hey, good afternoon, guys. First off, Corey, congratulations on the retirement. I think I've been covering you guys for probably close to 12 years. So it's been an enjoyable run.

Damon DelMonte: Hey, good afternoon, guys. First off, Corey, congratulations on the retirement. I think I've been covering you guys for probably close to 12 years, so it's been an enjoyable run. Dave, look forward to working with you in your new role. Congrats.

Speaker #9: And Dave, look forward to working with you and your new role. So congrats.

Speaker #5: Thanks, Dave.

Dave Seiler: Thanks, Damon.

Brian Spielmann: Thanks, Damon.

Speaker #9: Sure. So with that, I guess, most of my questions have been asked and answered. But Brian, I may have missed this, but do you know what the fees in lieu of interest were included in the margin this quarter?

Damon DelMonte: Sure. With that, I guess, most of my questions have been asked and answered. Brian, I may have missed this, do you know what the fees in lieu of interest were included in the margin this quarter?

Brian Spielmann: Were about $2.2 million. That's more in line with kind of a run rate, a little bit higher than the run rates. That's up from the prior quarter. Remember the prior quarter had the non-accrual interest reversal in Q4.

Speaker #5: About 2.2 million. So that's more in line with kind of a run rate, a little bit higher than the run rates that's up from the prior quarter.

Speaker #5: But remember, the prior quarter had the non-accrual interest rate reversal. In Q4. So right.

Damon DelMonte: Right. Right. That's right. Okay. Thanks. Kind of along the lines of credit and trying to figure out provisioning going forward, you know, the reserve, you know, do you expect to kind of maintain this reserve level? If you kind of have average net charge-offs of 20 basis points, kind of just, you know, back into the provision that way? Is that a good way to think about it?

Speaker #9: Right. That's right. Okay. Thanks. And then kind of along the lines of credit and trying to figure out provisioning going forward, the reserve do you expect to kind of maintain this reserve level?

Speaker #9: And then if you kind of have average net charge-offs of 20 basis points, kind of just back into the provision that way? Is that a good way to think about it?

Speaker #5: Yeah. That's all I think about it. Dane, I think the macro piece of this equation with the we subscribe to Moody's, right? So that's the wild card with the geopolitical.

Brian Spielmann: Yeah. That's how I think about it, Damon. I think, the macro piece of this equation, we subscribe to Moody's, right? That's the wild card with the geopolitical. I think all else equal, you're provisioning for growth off this reserve level with the 20 basis points. I think that's appropriate. We saw, for example, this quarter, $1 million of that provision was due to loan growth of that 2.9 in the quarter. That'll come back down. Obviously, as we talked about with Q2 growth coming back down. Yeah, with the uncertainty around the macro, to me, that's no change is a reasonable place to be.

Speaker #5: But I think all else equal, your provisioning for growth off this reserve level with the 20 basis points, I think that's appropriate. And we saw, for example, this quarter, a million dollars of that provision was due to loan growth of that 2.9 in the quarter.

Speaker #5: So that'll come back down. Obviously, as we talked about with Q2 growth coming back down. But yeah, with the uncertainty around the macro, to me, that's no change is a reasonable place to be.

Damon DelMonte: Got it. Okay.

Speaker #5: On reserve.

Brian Spielmann: On reserve.

Speaker #9: Great. Great. That pretty much covered everything else. So thanks for taking my questions. And take care.

Damon DelMonte: Great. Well, great. That pretty much covered everything else. Thanks for taking my questions and take care.

Speaker #8: All right. Thanks, Damon.

Brian Spielmann: All right. Thanks, Damon.

Speaker #2: And your next question comes from the line of Brian Martin of Brenn. Your line is open.

Operator: Thanks, Damon.

Operator: Your next question comes from the line of Brian Martin of Brean Capital. Your line is open.

Speaker #10: Hey, guys.

Brian Martin: Hey, good afternoon, guys.

Speaker #5: Good afternoon.

Brian Spielmann: Good afternoon.

Speaker #10: Hey, just maybe one for me on the loan growth front. Can you talk a little bit about where your just the growth this year?

Dave Seiler: Good afternoon.

Brian Martin: Say just, maybe one for me on the loan growth front. Can you talk a little bit about the growth this year. Just, you know, kind of big picture, kind of where you, where you're optimistic. I know this quarter you talked about having, you know, really strong growth on the specialty side. Just wondering, you know, where are you seeing the growth, you know, by component, you know, or just kind of where you're most optimistic going into the year and, you know, maybe areas that aren't really as optimistic about in terms of delivering the, you know, the targeted growth this year.

Speaker #10: So just kind of big picture, kind of where you're optimistic? I know this quarter you had you talked about having really strong growth on the specialty side.

Speaker #10: But just wondering, where are you seeing the growth by component? Or just kind of where you're most optimistic going into the year? And maybe areas that aren't really as optimistic about in terms of delivering the targeted growth this year.

Dave Seiler: Sure. Well, I mean, I think if you look for it where it's going to come from for the rest of the year.

Speaker #5: Sure. Well, I mean, I think if you look for the where it's going to come from for the rest of the year, I think we're going to continue to see nice growth in our ABL from our ABL team.

Brian Martin: Yeah.

Dave Seiler: I think we're gonna continue to see nice growth in our ABL, from our ABL team, also from our accounts receivable finance team. Kansas City is looking really good, we continue to add talent in Kansas City. You know, our particularly our southern Wisconsin markets, you know, are still strong. We have good teams in both of those markets, we should continue to see growth there.

Speaker #5: Also, from our accounts receivable finance team. Kansas City is looking really good. We continue to add talent in Kansas City. And our particularly, our Southern Wisconsin markets are still strong.

Speaker #5: We have good teams in both of those markets. So we should continue to see growth there.

Speaker #10: Okay. And in terms of the build-out, it sounds like you're still adding some folks in Kansas City. Is that primarily complete at this point?

Brian Martin: Okay. In terms of the build-out, you know, it sounds like you're still adding some folks in Kansas City. Is that primarily complete at this point? You've got a full team, or there's just more, you know, more areas you're adding down there?

Speaker #10: So you've got a full team, or are there just more areas you're adding down there?

Speaker #5: I don't think we'll have a lot more adds down there, Brian. But we could have another add, and in order for us to continue to grow at 10%, we have to continue to add folks really across our markets.

Dave Seiler: I don't think we'll have a lot more adds down there, Brian, but we could have another add. You know, in order for us to continue to grow at 10%, we have to continue to add folks really across our markets. I think we will likely have another add in Kansas City this year.

Speaker #5: So I think we will likely have another add in Kansas City this year.

Speaker #9: Gotcha. Okay.

Brian Martin: Gotcha. Okay. Okay. Then maybe just jumping to the fee income per section. I appreciate the color you guys have already given in your comments, Brian. Just in terms of the lumpiness that kind of, you know, seems, you know, within this portfolio, do you still expect some lumpiness kind of throughout the year? I know the move major reclass and stuff. Just kinda trying to think about the quarterly movement or progression. Do you expect a little bit more consistency? Is it still gonna be, you know, a little bit lumpy as we go along?

Speaker #10: Okay. And then maybe just jumping to the just a fee income for a section. And I appreciate the call. You guys have already given your comments, Brian.

Speaker #10: Just in terms of the lumpiness, the kind of seems within this portfolio, do you still expect some lumpiness kind of throughout the year? I know the move you made to reclass and stuff.

Speaker #10: Just kind of trying to think about the quarterly movement or progression. Do you expect a little bit more consistency? Is it still going to be a little bit lumpy as we go along?

Speaker #5: I would say yes is the answer. There's still going to be lumpiness. But that's something we're working on and trying to improve, right? We talked about the success of our private wealth and our service charges.

Dave Seiler: I would say yes is the answer. That's something we're working on and trying to improve, right? We talked about the success of our private wealth and our service charges. Those are becoming more and more consistent and annuity-like, more so than they had before. I also just really kind of briefly talked about our investments in Small Business Investment Company funds. You know, we're deploying more capital there. There's a 5% limit, right, for regulatory capital, we're doing that over time to add a more stable level of fee income to the quarterly run rate. That'll take some time, but that's another part of our process to smooth those earnings out on a quarterly basis.

Speaker #5: Those are becoming more and more consistent and an annuity-like, more so than they had before. And then I also just really kind of briefly talked about our investments in small business investment company funds.

Speaker #5: We're deploying more capital there. There's a 5% limit, right, for regulatory capital. But we're doing that over time to add a more stable level of fee income to the quarterly run rate.

Speaker #5: So that'll take some time. But that's another part of our process to smooth those earnings out on a quarterly basis. But it's just the nature of swap fees and SBA gains is just going to be lumpy still.

Dave Seiler: It's just the nature of swap fees and SBA gains. It's just gonna be lumpy still, but that's why we're really focused on that 10% year-over-year growth.

Speaker #5: But that's why we're really focused on that 10% year-over-year growth.

Speaker #10: Yeah. Okay. Okay. That covers my Damon got the credit part. So other than that, I'm good. And just the same comment that both guys have made.

Brian Martin: Yeah. Okay. Okay. That covers my Damon got the credit part. Other than that, I'm good. Just the same comment that both guys have made. Corey, it's been great working with you over the years, Corey, I wish you the best in retirement. Dave, it's been good getting to know you and continue to work going forward. Congrats on everything and thanks for taking the questions.

Speaker #10: Corey, it's been great working with you over the years, Corey. And I wish you the best in retirement. And Dave, it's been good getting to know you.

Speaker #10: And continue to work going forward. So congrats on everything. And thanks for taking the questions.

Speaker #5: Thanks, Brian.

Dave Seiler: Thanks, Brian.

Speaker #8: Thanks, Brian.

Corey Chambas: Thanks, Brian.

Speaker #2: That concludes our Q&A session. I will now turn the conference over back to CEO Corey Chambas for closing remarks.

Operator: That concludes our Q&A session. I'll now turn the conference over back to CEO Corey Chambas for closing remarks.

Speaker #5: Thanks. First, I'd just like to say I appreciate all the relationships I've built with all of you over the years. So I will definitely miss that and miss you all.

Corey Chambas: Thanks. First, I'd just like to say, I appreciate all the relationships I've built with all of you over the years. I will definitely miss that and miss you all. Overall, I just wanna say thanks everybody for your interest in First Business Bank joining us today, and hope everybody has a great weekend.

Speaker #5: Overall, I just want to say thanks, everybody, for your interest in FIRST Business Bank, joining us today, and hope everybody has a great weekend.

Operator: This concludes today's conference call. You may now disconnect.