The FASB has issued a new accounting standard that will be effective for us beginning on January 1, 2023. This standard, referred to as CECL, requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans and leases and recognize the expected credit losses as allowances for loan and lease losses. This will change the current method of providing allowances for loan and lease losses that are probable, which may require us to increase our allowance for loan and lease losses, and to greatly increase the types of data we will need to collect and review to determine the appropriate level of the allowance for loan and lease losses. Any increase in our allowance for loan and lease losses or expenses incurred to determine the appropriate level of the allowance for loan and lease losses may have a material adverse effect on our financial condition and results of operations. See ~~Note 1– Nature of Operations and Summary of Significant Accounting Policies~~ ~~in the Consolidated Financial Statements for additional information.~~

Liquidity and Interest Rate Risks

Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations.

Our ability to implement our business strategy will depend on our liquidity and ability to obtain funding for loan originations, working capital, and other general purposes. An inability to raise funds through deposits, borrowings, the sale of loans, and other sources could have a substantial negative effect on our liquidity. Our preferred source of ~~funds~~funding consists of client deposits, which we supplement with other sources, such as wholesale deposits made up of brokered deposits and deposits gathered through internet listing services. Such account and deposit balances can decrease when clients perceive alternative investments as providing a better risk/return profile. If clients move money out of bank deposits and into other investments, we may increase our utilization of wholesale deposits, FHLB advances, and other wholesale funding sources necessary to fund

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desired growth levels. ~~Because these funds generally are more sensitive to interest rate changes than our targeted in-market deposits, they are more likely to move to the highest rate available.~~ In addition, the use of brokered deposits without regulatory approval is limited to banks that are “well capitalized” according to regulation. If the Bank is unable to maintain its capital levels at “well capitalized” minimums, we could lose a significant source of funding, which would force us to utilize different wholesale funding or potentially sell assets at a time when pricing may be unfavorable, increasing our funding costs and reducing our net interest income and net income.

Our access to funding sources ~~in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us~~ could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets, credit quality, capital adequacy, or negative views and expectations about the prospects for the financial services industry. Regional and community banks generally have less access to the capital markets than do national and super-regional banks because of their smaller size and limited analyst coverage. During periods of economic turmoil or decline, the financial services industry and the credit markets generally may be materially and adversely affected by declines in asset values and by diminished liquidity. Under such circumstances, the liquidity issues are often particularly acute for regional and community banks, as larger financial institutions may curtail their lending to regional and community banks to reduce their exposure to the risks of other banks. Correspondent lenders may also reduce or even eliminate federal funds lines for their correspondent clients in difficult economic times.

As a result, we rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities to ensure that we have adequate liquidity to fund our operations. Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, pay dividends to our shareholders, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse effect on our business, results of operations, and financial condition.

The Corporation is a bank holding company and its sources of funds necessary to meet its obligations are limited.

The Corporation is a bank holding company and its operations are primarily conducted by the Bank, which is subject to significant federal and state regulation. Cash available to pay dividends to our shareholders, pay our obligations, and meet our debt service requirements is derived primarily from our existing cash flow sources, our third party line of credit, dividends received from the Bank, or a combination thereof. Future dividend payments by the Bank ~~to us~~ will require the generation of future earnings by the Bank and are subject to certain regulatory guidelines. If the Bank is unable to pay dividends, ~~to us,~~ we may not have the resources or cash flow to pay or meet all of our obligations.

Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations.

Shifts in short-term interest rates may reduce net interest income, which is the principal component of our earnings. Net interest income is the difference between the amounts ~~received by us~~we receive on our ~~interest-earning~~interest-bearing assets and the ~~interest paid by us~~amounts we pay on our interest-bearing liabilities. In certain scenarios, when interest rates rise, the rate of interest we pay on our liabilities may rise more quickly than the rate of interest that we receive on our interest-bearing assets, which could cause our profits to decrease. Similarly, when interest rates fall, the rate of interest we pay on our liabilities may not decrease as quickly as the rate of interest we receive on our interest-bearing assets, which could cause our profits to decrease. ~~However, the~~The structure of our balance sheet and resultant sensitivity to interest rates in various scenarios may change in the future.

~~Additionally, interest~~Interest rate increases on variable rate loans often result in larger payment requirements for our borrowers, which increases the potential for default. At the same time, the marketability of underlying collateral may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on certain loans as borrowers refinance at lower rates.

Changes in interest rates also can affect the value of loans. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in ~~nonperforming~~non-performing assets and a reduction of income recognized, which could have ~~a material~~an adverse effect on our results of operations and cash flows. Further, when we place a loan on non-accrual status, we reverse any accrued but unpaid interest receivable, which decreases interest income. Subsequently, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of non-performing assets would have an adverse impact on net interest income.

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Rising interest rates may also result in a decline in value of our fixed-rate debt securities. The unrealized losses resulting from holding these securities would be recognized in other comprehensive income and reduce total stockholders’ equity. If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.

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the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk.

~~The transition to an alternative reference rate could cause instability~~There is growing consensus that the proportion of the deposits that exceeded FDIC insurance limits at Silicon Valley Bank, Signature Bank, and ~~have~~First Republic Bank was a ~~negative effect on financial market conditions.~~

~~The London Interbank Offered Rate (“LIBOR”) represents the interest rate at which banks offer to lend funds to one another~~significant factor in the ~~international interbank market for short-term loans. Beginning~~failure of these institutions in ~~2008, concerns were expressed that some~~the first half of 2023. In response, many large depositors across the ~~member banks surveyed by~~industry withdrew deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions and low-risk securities accounts in an effort to mitigate the ~~British Bankers’ Association (the “BBA”)~~risk of potential further bank failures. While the Bank has not experienced significant withdrawal activity in connection with the ~~calculation~~recent bank failures, if a significant portion of ~~LIBOR rates~~the Bank’s deposits were to be withdrawn within a short period of time in connection with a similar future crisis, additional sources of funding may be required to meet withdrawal demands. The Corporation may be unable to obtain sufficient funding on favorable terms, which may have been under-reporting or otherwise manipulating the interbank lending rates applicable to them. Regulators and law enforcement agencies from a number of governments have conducted investigations relating to the calculation of LIBOR across a range of maturities and currencies. If manipulation of LIBOR or another interbank lending rate occurred, it may have resulted in that rate being artificially lower (or higher) than it otherwise would have been. Responsibility for the calculation of LIBOR was transferred to Intercontinental Exchange Benchmark Administration Limited, as independent LIBOR administrator, effective February 1, 2014.

On July 27, 2017, the United Kingdom Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021 (the “July 27th Announcement”). The July 27th Announcement indicates that the continuation of LIBORan adverse effect on the ~~current basis cannot~~Corporation’s net interest margin. In addition, funding deposit obligations may be more difficult in a high interest rate environment. Because the Corporation’s available-for-sale investment securities may lose value when interest rates rise, proceeds from the sale of such assets may be diminished during periods of elevated interest rates. Under such circumstances, the Corporation may be required to access funding from sources such as the Federal Reserve Discount Window or other alternative liquidity sources in order to manage our liquidity risk.

Uninsured deposits historically have been viewed by the regulators as less stable than insured deposits. According to statements made by the regulators, clients with larger uninsured deposit account balances often are small- and ~~will not be guaranteed after 2021.~~

~~The dissolution~~mid-sized businesses that rely upon deposit funds for payment of the London Interbank Offered Rate (LIBOR) impacts all borrowers and banks that use LIBOR as a base rate. LIBOR will continue to be published until June 30, 2023, however, banks are no longer allowed to issue new LIBOR-based products after December 31, 2021. FBB selected the Secured Overnight Financing Rate (“SOFR”) as a replacement rate. Beginning on July 1, 2023, FBB will no longer be able to rely on LIBOR as a benchmark in any contract,operational expenses and, as a result, are more likely to closely monitor the ~~Bank~~financial condition and ~~its customers will need~~performance of their depository institutions. As a result, in the event of financial distress, uninsured depositors historically have been more likely to ~~replace all references~~withdraw their deposits. To that end, the federal banking agencies issued an interagency policy statement in July 2023 to ~~LIBOR in existing contracts that go past that date.~~

~~The Corporation has developed a LIBOR transition team to complete~~underscore the transition away from LIBOR to an alternative reference rate such as SOFR or Prime. In addition to SOFR or Prime, First Business Bank may also offer other benchmark rates as substitutions for LIBOR, including BSBY and Ameribor. The transition team has added language to new loan agreements regarding the useimportance of ~~alternative reference rates and the Corporation has evaluated existing loan agreements linked to LIBOR and will work with those parties to modify the agreements.~~

The manner and impact of the transition from LIBOR to an alternative reference rate, as well as the effect of these developments on our compliance costs, funding costs, loan and security portfolios, derivatives, asset-liabilityrobust liquidity risk management and ~~business,~~contingency funding planning. In the policy statement, the regulators noted that banks should maintain actionable contingency funding plans that take into account a range of possible stress scenarios, assess the stability of their funding and maintain a broad range of funding sources, ensure that collateral is ~~uncertain.~~available for borrowing, and review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change.

Operational Risks

Information security risks for financial institutions like us continue to increase in part because of new technologies, the increased use of the internet and telecommunications technologies (including mobile devices and cloud computing) to conduct financial and other business transactions, political activism, and the increased sophistication and activities of organized crime, terrorist, hackers, and perpetrators of fraud. A successful cyber-attack or other breach of our information systems could adversely affect the Corporation’s business, financial condition or results of operations and damage its reputation.

~~In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers have engaged in attacks against our businesses and consumers. Because the~~The methods of cyber-attacks change frequently or, in some cases, are not recognized until launch, we are not able to anticipate or implement effective preventive measures against all possible security breaches and the probability of a successful attack cannot be predicted. Although we employ detection and response mechanisms designed to detect and mitigate security incidents, early detection may be thwarted by persistent sophisticated attacks and malware designed to avoid detection. We ~~also~~ train employees and our business and consumer clients on fraud ~~risks.~~risks and mitigation strategies. We ~~also~~ face risks related to cyber-attacks and other security breaches that typically involve the transmission of sensitive information regarding our clients and monetary transactions through various third parties. Some of these parties have in the past been the target of security breaches and ~~cyber-attacks, and because~~cyber-attacks. Because the transactions involve third parties and environments that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in some cases, we may ~~have exposure and~~ suffer losses for breaches or attacks relating to them. We also rely on numerous other third-party service providers to conduct other aspects of our business operations and face similar risks relating to them. While we conduct security assessments on our ~~higher~~high risk third party service providers, we cannot be sure that their information security protocols are sufficient to withstand a cyber-attack or other security breach.

The Corporation regularly evaluates its systems and controls and implements upgrades as necessary. The additional cost to the Corporation of our cyber security monitoring and protection systems and controls includes the cost of hardware and software, third party technology providers, consulting and forensic testing firms, and insurance premium costs, in addition to the incremental cost of our personnel who focus a substantial portion of their responsibilities on fraud and cyber security.

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Any successful cyber-attack or other security breach involving the misappropriation, loss or other unauthorized disclosure of confidential ~~customer~~client information or funds or that compromises our ability to function could erode confidence in the security of our systems, products and services, result in monetary losses, potentially subject us to regulatory investigation with fines and penalties, expose us to litigation and liability, disrupt our operations and have a material adverse effect on our business, financial condition or results of operations and damage our reputation.

We are dependent upon third parties for certain information systems, data management and processing services, and key components of our business infrastructure, which are subject to operational, security, and other risks.

As with many other companies, we outsource certain information systems, data management, and processing functions to third-party providers, including key components of our business infrastructure like internet and network access, and core application processing. While we have selected these third-party vendors carefully, we do not control their actions, nor is any vendor due diligence perfect. These third-party service providers are sources of operational and informational security risk to us, including risks associated with operational errors, information system interruptions or outages, unauthorized access or disclosure of sensitive or confidential information. If our third-party service providers encounter any of these issues, or if we have difficulty exchanging information with or receiving services from them, we could be exposed to disruption of operations, an inability to provide products and services to our clients, a loss of service or connectivity, reputational damage, and litigation risk that could have a material adverse effect on our business, results of operations, and financial condition.

Our business continuity plans could prove to be inadequate, resulting in a material interruption in or disruption to our business and a negative impact on our results of operations.

We rely heavily on communications and information systems to conduct our business and our operations are dependent on our ability to protect our systems against damage from fire, power loss, telecommunication failure, or other emergencies. The computer systems and network infrastructure we use could be vulnerable to unforeseen problems. These problems may arise in both our internally developed systems and the systems of our third-party service providers. Any failure or interruption of these systems could result in failures or disruptions in general ledger, core bank processing systems, client relationship management, and other systems. While we have a business continuity plan and other policies and procedures designed to prevent or limit the ~~effect~~impact of a failure, interruption or security breach of our information systems, there can be no assurance that any of those events will not occur or, if they do occur, that they will be adequately remediated. The occurrence of any failure, interruption, or security breach of our information systems could damage our reputation, result in a loss of clients, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, results of operations, and financial condition.

New lines of business, products, and services are essential to our ability to compete but may subject us to additional risks.

Periodically, we implement new lines of business and/or offer new products and services within existing lines of business. There can be substantial risks and uncertainties associated with these efforts, particularly in instances where the markets for such services are still developing or due diligence is not fully vetted. In developing and marketing new lines of business and/or new products or services, we invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. New technologies needed to support the new line of business or product may result in incremental operating costs and system defects. Compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. In instances of new lines of businesses offering credit services, weaknesses relating to underwriting and operations may impact credit and capital. Delinquency may negatively affect non-performing assets and increase the provision for ~~loan and lease~~credit losses.

Any new line of business and/or new product or service could also have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations, and financial condition.

Our framework for managing risks may not be effective in mitigating risk and loss to us.

Our risk management framework seeks to mitigate risk and loss to us. We have established processes and procedures intended to identify, measure, monitor, control, and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, information and cyber security risk, compensation risk, legal and compliance risk, and reputational risk, among others. ~~However, as~~As with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. Our ability to successfully identify and manage risks facing us is an important factor that can significantly impact our results. If our risk management framework proves ineffective, we could suffer unexpected losses which could adversely affect our business, results of operations, and financial condition.

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We are subject to changes in accounting principles, policies, or guidelines.

Our financial performance is impacted by accounting principles, policies, and guidelines. Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Some of our accounting policies are critical because they require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

From time to time, the FASB and SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. These changes are beyond our control, can be difficult to predict, and could materially impact how we report our financial condition and results of operations. Changes in these standards are continuously occurring and more ~~drastic~~ changes may occur in the future. The implementation of such changes could have a material adverse effect on our business, results of operations, and financial condition.

Our internal controls may be ineffective.

Management regularly reviews and updates its internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the controls are met. In addition, as we continue to grow the Corporation, our controls need to be updated to keep up with such growth. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could cause us to report a material weakness in internal control over financial reporting and conclude that our controls and procedures are not effective, which could have a material adverse effect on our business, results of operations, and financial condition.

Strategic and External Risks

The ~~COVID-19 pandemic could materially adversely affect the~~ Corporation’s business and financial results could be materially and ~~the extent of any such effects is dependent upon uncertain and unpredictable future~~adversely affected by widespread public health events.

The COVID-19 pandemic ~~has~~ negatively impacted the global economy, ~~disrupting~~disrupted global supply chains and equity markets and ~~creating~~created significant volatility and disruption in financial and labor markets. In addition, the pandemic resulted in temporary closures of many businesses and the institution of social distancing and stay-at-home requirements in many states and communities, including Wisconsin, Kansas, and Missouri. The COVID-19 pandemic, including, in part, supply chain disruption and the effects of the extensive pandemic-related government stimulus, played a significant role in recent inflationary pressure in the U.S. economy.

Future widespread public health epidemics could result in the continued and increased recognition of credit losses in the Corporation’s loan portfolio and increases in the Corporation’s ~~allowance for credit losses,~~ACL, particularly ifto the extent that there is a significant negative impact on the global ~~economy worsens. The COVID-19 pandemic, including, in part, supply chain disruption and the effects of the extensive pandemic-related government stimulus, has caused inflationary pressure in the U.S.~~ economy. ~~We expect to be impacted by elevated levels of inflation and the corresponding upward pressure on interest rates.~~ Because of changing economic and market conditions affecting issuers, the Corporation may be required to recognize impairments on the securities it holds. Furthermore, the demand for the Corporation’s products and services may be impacted, which ~~would~~could materially adversely affect the Corporation’s revenue.

We cannot predict how further outbreaks, new variants, or the efficacy of vaccines or future widespread public health epidemics, should they occur, might impact our financial condition and results of operation. The extent to which ~~the COVID-19~~any future pandemic impacts the Corporation’s business, results of operations, and financial condition, as well as the Corporation’s regulatory capital, liquidity ratios, and stock price, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and any responsive actions taken by governmental authorities and other third ~~parties in response to the pandemic.~~ parties.

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Our business may be adversely affected by conditions in the financial markets and economic conditions generally.

Our operations and profitability are impacted by general business and economic conditions in the U.S. and, to some extent, abroad. These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity markets, broad trends in industry and finance, the strength of the U.S. economy and uncertainty in financial markets globally, all of which are beyond our control. A deterioration in economic conditions could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values, and a decrease in demand for our products and services, among other things, any of which could have a material adverse effect on our business, results of operations, and financial condition.

Our business is concentrated in and largely dependent upon the continued growth and welfare of the general geographical markets in which we operate.

Our operations are heavily concentrated in ~~South Central~~southern Wisconsin and, to a lesser extent, the ~~Southeast and~~ Northeast regions of Wisconsin and the greater Kansas City Metro and, as a result, our financial condition, results of operations, and cash flows are significantly impacted by changes in the economic conditions in those areas. Our success depends to a significant extent upon the business activity, population, income levels, deposits, and real estate activity in these markets. Although our clients’ business and financial interests may extend well beyond these markets, adverse economic conditions that affect these markets, including, without limitation, ~~adverse conditions resulting from the COVID-19 pandemic,~~ could reduce our growth rate, affect the ability of our clients to repay their loans to us, affect the value of collateral underlying loans, and generally affect our financial condition and results of operations. Because of our geographic concentration, we are less able than other regional or national financial institutions to diversify our credit risks across multiple markets.

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Our financial condition and results of operations could be negatively affected if we fail to effectively execute our strategic plan or manage the growth called for in our strategic plan.

~~Our strategic plan calls for above average performance by focusing on four key strategies – talent, efficiency, deposits, and optimizing business line performance.~~ While we believe we have the management resources and internal systems in place to successfully execute our strategic plan, we cannot guarantee that opportunities will be available and that the strategic plan will be successful or effectively executed.

Although we do not have any current definitive plans to do so, ~~in implementing our strategic plan~~ we may expand into additional communities or attempt to strengthen our position in our current markets through opportunistic acquisitions of similar or complementary financial services organizations. To the extent that we do so, we may experience higher operating expenses relative to operating income from the new operations or certain one-time expenses associated with the closure of offices, all of which may have an adverse effect on our business, results of operations, and financial condition. Other effects of engaging in such strategies may include potential diversion of our management’s time and attention and general disruption to our business. To the extent that we grow through new locations, we cannot ensure that we will be able to adequately and profitably manage this growth. Acquiring other banks and businesses ~~will~~would involve similar risks to those commonly associated with branching, but may also involve additional risks, including potential exposure to unknown or contingent liabilities of banks and businesses we acquire and exposure to potential asset quality issues of the acquired bank or related business.

We could recognize impairment losses on securities held in our securities portfolio, goodwill, or other long-lived assets.

As of December 31, ~~2021,~~2023, the fair value of our securities portfolio was approximately ~~$226.0~~$305.3 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. For example, fixed-rate securities acquired by us are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual mortgagors with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could cause ~~other-than-temporary impairment in future periods~~credit losses and result in ~~realized~~a provision for credit losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our business, results of operations, and financial condition.

As of December 31, ~~2021,~~2023, the Corporation had goodwill of $10.7 million. Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. A decline in our stock price, decline in the performance of our acquired operations, or the occurrence of another triggering event could, under certain circumstances, result in an impairment charge being recorded. During ~~2021,~~2023, our annual impairment test conducted ~~August~~July 1, ~~2021~~2023 indicated that the estimated fair value of the reporting unit exceeded the carrying value (including goodwill). Depending on market conditions, economic forecasts, results of operations, additional adverse circumstances or other factors, the goodwill

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impairment analysis may require additional review of assumptions and outcomes prior to our next annual impairment testing date of ~~August~~July 1, ~~2022.~~2024. In the event that we conclude that all or a portion of our goodwill may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital.

We could be required to establish a deferred tax asset valuation allowance and a corresponding charge against earnings if we experience a decrease in earnings.

Deferred tax assets are reported as assets on our balance sheet and represent the decrease in taxes expected to be paid in the future in connection with our ~~allowance for loan and lease losses~~ACL and other matters. If it becomes more likely than not that some portion or the entire deferred tax asset will not be realized, a valuation allowance must be recognized. As a result of a Wisconsin state tax law change in 2023, the Corporation has recorded a valuation allowance of $2.8 million against related state deferred tax assets. The Corporation believes it will fully realize its Federal and non-Wisconsin deferred tax ~~asset, and therefore, no valuation allowance was necessary as of December 31, 2021. This determination was~~assets. These determinations were based on the evaluation of several factors, including relevant tax law changes, our recent earnings history, expected future taxable earnings, and appropriate tax planning strategies. A decrease in taxable earnings could adversely impact our ability to fully utilize our remaining deferred tax assets. If we determine that it is more likely than not that some portion or all of the remaining deferred tax assets will not be realized, a valuation allowance will need to be recognized and this would result in a corresponding charge against our earnings.

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Competition from other financial ~~institutions~~services providers could adversely affect our profitability.

We encounter heavy competition in attracting commercial loan, specialty finance, deposit, and private wealth management clients. We believe the principal factors that are used to attract quality clients and distinguish one financial institution from another include value-added relationships, interest rates and rates of return, types of accounts and product offerings, service fees, and quality of service.

Our competition includes banks, savings institutions, mortgage banking companies, credit unions, finance companies, equipment finance companies, mutual funds, insurance companies, brokerage firms, investment banking firms, and financial technology (“FinTech”) companies. We ~~also~~ compete with regional and national financial institutions that have a substantial presence in our market areas, many of which have greater liquidity, higher lending limits, greater access to capital, more established market recognition, and more resources and collective experience than we do. ~~In addition, some~~Some larger financial institutions that have not historically competed with us directly have substantial excess liquidity and have sought, and may continue to seek, smaller lending relationships in our primary markets. Furthermore, tax-exempt credit unions operate in our market areas and aggressively price their products and services to a large portion of the market. Finally, technology has also lowered the barriers to entry and made it possible for non-bank financial service providers to offer products and services we have traditionally offered, such as automatic funds transfer and automatic payment systems. Our profitability depends, in part, upon our ability to successfully maintain and increase market share.

Consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations.

Technology and other changes are allowing consumers and businesses to complete financial transactions that historically have involved financial institutions through alternative methods. The wide acceptance of Internet-based and person-to-person commerce has resulted in a number of alternative payment processing systems and lending platforms in which banks play only minor roles. Businesses and consumers can now maintain funds in social payment applications, prepaid debit cards or digital currencies, and pay bills and transfer funds directly without the direct assistance of financial institutions. The diminishing role of financial institutions as financial intermediaries has resulted, and could continue to result, in the loss of fee income, as well as the loss of client deposits and the related income generated from those deposits. The loss of these revenue streams and the potential loss of lower cost deposits as a source of funds could have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to keep pace with technological advances in our industry, our ability to attract and retain clients could be adversely affected.

The banking industry is constantly subject to technological changes with frequent introductions of new technology-driven products and services. In addition to better serving clients, the effective use of technology increases our efficiency and enables us to reduce costs. Our future success will depend in part on our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience as well as create additional efficiencies in our operations. A number of our competitors have substantially greater resources to invest in technological improvements, as well as significant economies of scale. There can be no assurance that we will be able to implement and offer new technology-driven products and services to our clients. If we fail to do so, our ability to attract and retain clients may be adversely affected.

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Our private wealth management results of operations may be negatively impacted by changes in economic and market conditions.

Our private wealth management results of operations may be negatively impacted by changes in general economic conditions and the conditions in the financial and securities markets, including the values of assets held under ~~management.~~management, which are beyond our control. Our management contracts generally provide for fees payable for services based on the market value of assets under management; therefore, declines in securities prices will generally have an adverse effect on our results of operations from this business. Market declines and reductions in the value of our clients’ private wealth management services accounts could result in us losing private wealth management services clients, including those who are also banking clients, and negatively affect our earnings.

Potential acquisitions may disrupt our business and dilute shareholder value.

While we remain committed to organic growth, we also may consider additional acquisition opportunities involving complementary financial service organizations if the right situation were to arise. Various risks commonly associated with acquisitions include, among other things:

•Potential exposure to unknown or contingent liabilities of the target company.

•Exposure to potential asset quality issues of the target company.

•Potential diversion of our management’s time and attention.

•Possible loss of key employees and clients of the target company.

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•Difficulty in estimating the value of the target company.

•Potential changes in banking or tax laws or regulations that may affect the target company.

•Difficulty in integrating operations, personnel, technologies, services, and products of acquired companies.

Acquisitions may involve the payment of a premium over book and market values, and, therefore, some dilution of our tangible book value and net income per common share may occur in connection with any future transaction. Furthermore, failure to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could have a material adverse effect on our business, financial condition, and results of operations.

The investments we make in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on the Corporation’s financial results.

We invest in certain tax-advantaged projects promoting community development. Investments in these projects are designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods. The Corporation is subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, will fail to meet certain government compliance requirements and will not be able to be realized. The possible inability to realize these tax credit and other tax benefits could have a negative impact on the Corporation’s financial results. The risk of not being able to realize the tax credits and other tax benefits depends on many factors outside of the Corporation’s control, including changes in the applicable tax code and the ability of the projects to be completed.

A prolonged U.S. government shutdown or default by the U.S. on government obligations would harm our results of operations.

Our results of operations, including revenue, non-interest income, expenses and net interest income, would be adversely affected in the event of widespread financial and business disruption due to a default by the United States on U.S. government obligations or a prolonged failure to maintain significant U.S. government operations. Of particular impact to the Corporation are the operations regulated by the ~~SBA or the FDIC.~~SBA. Any failure to maintain such U.S. government operations, and the after-effects of such shutdown, could impede our ability to originate SBA loans and sell such loans in the secondary market, and would materially adversely affect our business, results of operations, and financial condition.

In addition, many of our investment securities are issued by, and some of our loans are made to, the U.S. government and government agencies and sponsored entities. Uncertain domestic political conditions, including prior federal government shutdowns and potential future federal government shutdowns or other unresolved political issues, may pose credit default and liquidity risks with respect to investments in financial instruments issued or guaranteed by the federal government and loans to the federal government. Any further downgrade in the sovereign credit rating of the United States, as well as sovereign debt issues facing the governments of other countries, could have a material adverse impact on financial markets and economic conditions in the United States and worldwide. Any such adverse impact could have a material adverse effect on our liquidity, financial condition, and results of operations.

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Regulatory, Compliance, Legal and Reputational Risks

We operate in multiple states and in a highly regulated industry and the federal and state laws and regulations that govern our operations, corporate governance, executive compensation, and accounting ~~principles, or changes~~principles. Changes in them or our failure to comply with them, may adversely affect us.

We are subject to extensive regulation and supervision that govern almost all aspects of our operations. These laws and regulations, among other matters, prescribe minimum capital requirements, expose us to legal penalties, financial forfeiture and material loss if we fail to act in accordance with bank laws and regulations, impose limitations on our business activities and compensation practices, limit the dividends or distributions that we can pay, restrict the ability to guarantee our debt, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than generally accepted accounting principles. These regulations affect our lending practices, employment practices, ~~privacy policies,~~compliance management system, operational controls, tax structure, and growth, among other things. Changes to federal and state laws, income and property tax regulations, or regulatory guidance, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, tax filing requirements, employment practices, and limit the types of financial services and products we may offer, among other things. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional ~~compliance~~ costs. Further, our failure to comply with these laws and regulations, even if the failure was inadvertent or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, and other penalties, any of which could adversely affect our business, results of operations, and financial condition.

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The financial services industry, as well as the broader economy, may be subject to new legislation, regulation, and government policy.

From time to time, federal and state governments and bank regulatory agencies modify the laws and regulations that govern financial institutions and the financial system generally. These modifications often, but not always, occur in response to crises or significant events, such as the several bank failures in early 2023, the COVID-19 pandemic, or political transitions. Such laws and regulations can affect our operating environment in substantial and unpredictable ways. Among other effects, such laws and regulations can increase or decrease the cost of doing business, limit or expand the scope of permissible activities, or affect the competitive balance among banks and other financial institutions. In addition, any changes in monetary policy, fiscal policy, tax laws, and other policies can affect the broader economic environment, interest rates, and patterns of trade. Any of these changes could affect our company and the banking industry as a whole in ways that are difficult to predict, and could adversely impact our business, financial condition, or results of operations.

We face a risk of noncompliance and enforcement action with the Bank Secrecy Act (“BSA”) and other anti-money laundering (“AML”) statutes and regulations.

AML laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network (“FinCEN”), established by Treasury to administer the BSA, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and IRS. There is also increased scrutiny of compliance with the rules enforced by the FinCEN, Federal, and State regulators. Federal and state bank regulators also focus on compliance with AML laws.

If our policies, procedures, and systems are deemed deficient or the policies, procedures, and systems of the financial institutions that we may acquire in the future are deficient, we would be subject to liability, including fines and regulatory actions, such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan which would adversely affect our business, results of operations, and financial condition. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

We are periodically subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us.

Federal and state banking agencies periodically conduct examinations of our business, including compliance with applicable laws and regulations. If, as a result of an examination, a federal banking agency was to determine that the financial condition, capital resources, asset quality, asset concentration, earnings prospects, management, liquidity, sensitivity to market risk, or other aspects of any of our operations has become unsatisfactory, or that we or our management is in violation of any law or regulation, it could take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to change the asset composition of our portfolio or balance sheet, to assess civil monetary penalties against our officers

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or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance. If we become subject to such regulatory actions, our business, results of operations, and financial condition may be adversely affected.

We are subject to claims and litigation pertaining to our fiduciary responsibilities.

Some of the services we provide, such as private wealth management services, require us to act as fiduciaries for our clients and others. From time to time, third parties could make claims and take legal action against us pertaining to the performance of our fiduciary responsibilities. If fiduciary investment decisions are not appropriately documented to justify action taken or trades are placed incorrectly, among other possible claims, and if these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability and/or our reputation could be damaged. These results may adversely impact demand for our products and services or otherwise have an adverse effect on our business, results of operations, and financial condition.

Risks Related to Investing in Our Common Stock

Our stock is thinly traded and our stock price can fluctuate.

Although our common stock is listed for trading on the Nasdaq Global Select Market, low volume of trading activity and volatility in the price of our common stock may make it difficult for our shareholders to sell common stock when desired and at prices they find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things:

•actual or anticipated variations in our quarterly results of operations;

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•recommendations by securities analysts;

•operating and stock price performance of other companies that investors deem comparable to us;

•news reports relating to trends, concerns, and other issues in the financial services industry;

•perceptions in the marketplace regarding us or our competitors and other financial services companies;

•new technology used, or services offered, by competitors; and

•changes in government regulations.

General market fluctuations, industry factors, and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes, or credit loss trends, could also cause our stock price to decrease regardless of our operating results.

To maintain adequate capital levels, we may be required to raise additional capital in the future, but that capital may not be available when it is needed and/or could be dilutive to our existing shareholders.

We are required by regulatory authorities to maintain adequate levels of capital to support our operations. In order to ensure our ability to support the operations of the Bank, we may need to limit or terminate cash dividends that can be paid to our shareholders. In addition, we may need to raise capital in the future. Our ability to raise capital, if needed, will depend in part on our financial performance and conditions in the capital markets at that time, and accordingly, we cannot guarantee our ability to raise capital on terms acceptable to us. ~~In addition, if~~If we decide to raise equity capital in the future, the interests of our shareholders could be diluted. Any issuance of common stock would dilute the ownership percentage of our current shareholders and any issuance of common stock at prices below tangible book value would dilute the tangible book value of each existing share of our common stock held by our current shareholders. The market price of our common stock could also decrease as a result of the sale of a large number of shares or similar securities, or the perception that such sales could occur. If we cannot raise capital when needed, our ability to serve as a source of strength to the Bank, pay dividends, maintain adequate capital levels and liquidity, or further expand our operations could be materially impaired.

If equity research analysts publish research or reports about our business with unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline.

The trading market for our common stock could be affected by whether equity research analysts publish research or reports about us and our business and what is included in such research or reports. If equity analysts publish research reports about us containing unfavorable commentary, downgrade our stock, or cease publishing reports about our business, the price of our stock could decline. If any analyst electing to cover us downgrades our stock, our stock price could decline rapidly. If any analyst electing to cover us ceases coverage of us, we could lose visibility in the market, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.

~~General Risk Factors~~

~~Negative publicity could damage our reputation and adversely~~Volatility or events impacting a subset of the banking industry, such as larger banks or institutions that serve to specific markets, can impact ~~our business and financial results.~~

~~Reputation risk, or~~ the ~~risk to our earnings and capital due to negative publicity, is inherent in our business. Negative publicity can result from our actual or alleged conduct in a number of activities,~~entire sector, including lending practices, fraud, information security, management actions, corporate governance, and actions taken by government regulators and community organizations in response to those activities. Negative publicity can adversely affect our ability to keep and attract clients, employees, and shareholders and can expose us to litigation and regulatory action, all ofthe Corporation, which could ~~have~~affect the confidence of our clients and investors and result in a material adverse effect on our ~~business,~~performance and a decline in our stock price for reasons outside of our control.

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The industry in which we compete is diverse, with participants ranging from community-based banks to global financial ~~condition,~~institutions with assets in the trillions of dollars. In addition, some financial institutions have exposure of an extremely broad range of risks, or outsized exposure to specific industries such as startup and ~~results~~early-stage, pharmaceutical, or oil & gas companies. When volatility, market events or similar issues affect a subset of ~~operations.~~

~~Our internal controls may be ineffective.~~

~~Management regularly reviews~~financial institutions, or when there are news reports or high-profile incidents relating to trends, concerns, and ~~updates its internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based~~other issues in ~~part on certain assumptions and~~the banking industry, the ramifications can ~~provide only reasonable, not absolute, assurances that~~affect the ~~objectives~~sector as a whole, regardless of the ~~controls are met. In addition, as we continue to grow~~effect, or lack thereof, on any specific institution. For example, the ~~Corporation, our controls need to be updated to keep up with such growth. Any failure or circumvention~~recent failures of ~~our controls~~Silicon Valley Bank, Signature Bank and ~~procedures or failure to comply with regulations related to controls~~First Republic Bank, which were caused by specific risk management and ~~procedures~~industry issues, negatively impacted customer, investor and media perception of the entire sector, resulting in declines in depositor confidence and stock prices throughout the industry. Future events of this nature could ~~cause us to report a material weakness~~result in ~~internal control over financial reporting and conclude that our controls and procedures are not effective, which could have~~ a material adverse effect on our ~~business, results~~performance and a decline in our stock priced for reasons that would not otherwise affect the Bank or which are outside of ~~operations,~~our control.

General Risk Factors

Our ability to attract and ~~financial condition.~~retain talented employees is critical to our success.

Our success depends on our ability to continue to recruit and retain talented employees. Competition for such employees is intense, which has led to an increase in compensation throughout the labor market, and accordingly, an increase in payroll costs for employers. Prospective employees are also placing an emphasis on flexible, including remote, work arrangements and other considerations, and such arrangements can provide employees with more employment options and mobility, making them more difficult to retain. If we are unable to meet the expectations of employees and prospective employees, and thus, retain or attract employees, it could have a substantial adverse effect on our business.

We rely on our management and the loss of one or more of those managers may harm our business.

Our success has been and will be greatly influenced by our continuing ability to retain the services of our existing senior management and to attract and retain additional qualified senior and middle management. The unexpected loss of key management personnel or the inability to recruit and retain qualified personnel in the future could have an adverse effect on our business and financial results. In addition, our failure to develop and/or maintain an effective succession plan will impede our ability to quickly and effectively react to unexpected loss of key management, and in turn, may have an adverse effect on our business, results of operations, and financial condition.

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Negative publicity could damage our reputation and adversely impact our business and financial results.

~~Our ability to attract and retain talented employees is critical~~ Reputation risk, or the risk to our ~~success.~~

~~Our success depends on~~earnings and capital due to negative publicity, is inherent in our business. Negative publicity can result from our actual or alleged conduct in a number of activities, including lending practices, fraud, information security, management actions, corporate governance, and actions taken by government regulators and community organizations in response to those activities. Negative publicity can adversely affect our ability to ~~continue to recruit~~keep and retain talented employees. Competition for such employees is intense, particularly as a result of labor market issues caused by the ongoing COVID-19 pandemic, which has led to an increase in compensation throughout the labor market, and accordingly, an increase in payroll costs for employers. Prospective employees are also placing an emphasis on flexible, including remote, work arrangements and other considerations, and such arrangements can provide employees with more employment options and mobility, making them more difficult to retain. If we are unable to meet the expectations ofattract clients, employees, and ~~prospective employees,~~shareholders and ~~thus, retain or attract employees, it~~can expose us to litigation and regulatory action, all of which could have a ~~substantial~~material adverse effect on our ~~business.~~business, financial condition, and results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Cybersecurity is an important component of our overall approach to Enterprise Risk Management (“ERM”). Our cybersecurity policies, standards, processes and practices are fully integrated in our ERM program which are based on recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and other applicable industry standards. We seek to address cybersecurity risks through a comprehensive approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.

Our cybersecurity program is focused on the following key areas:

Governance: The Board of Director’s (the “Board”) oversight of cybersecurity risk management is delegated to the Operational Risk Committee of the Board (the "ORC"), which regularly interacts with our ERM function, the Chief Information Officer ("CIO"), other members of management and relevant management committees. The ORC chair regularly reports material developments on cybersecurity to the Board.

Collaborative Approach: We have implemented a comprehensive approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of

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certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.

Technical Safeguards: We deploy technical safeguards that are designed to continuously protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls. These safeguards are evaluated and improved through vulnerability assessments, penetration testing, and cybersecurity threat intelligence.

Incident Response and Recovery Planning: We have established and maintain a comprehensive incident response and recovery plan that fully addresses our response to a potential cybersecurity incident, and such plans are tested and evaluated on a regular basis.

Third-Party Risk Management: We maintain a comprehensive, risk-based approach to identifying and monitoring cybersecurity risks presented by third parties, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. Our third-party risk management program includes robust upfront and ongoing risk assessments for all critical and high-risk vendors.

Education and Awareness: We provide regular, mandatory training for personnel regarding cybersecurity threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices. The Board receives periodic education and on a regular basis is informed about industry trends and how the Bank is responding to evolving threats.

We engage an independent third party to conduct periodic testing and assessment of our policies, standards, processes, controls and practices that are designed to address cybersecurity threats and incidents. These efforts include audits, assessments, vulnerability and penetration testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures. We also engage independent third parties to complete periodic testing and assessments of our cybersecurity measures. The results of such assessments are reported to the ORC and the Board and we adjust our policies and practices as necessary based on the information provided by these assessments.

The Board and the ORC oversee our ERM process, including regular presentations and reports. The Board and the ORC also receive prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds. The Board and the ORC coordinate the approach to cybersecurity management with the Chief Risk Officer and the Chief Information Officer, as well as our CFO and CEO.

Our Chief Risk and Chief Information Officers have 30 and 24 years of experience, respectively. Their background is summarized in Item 1, Executive Officers of the Registrant.

To date, we have not been materially affected by cybersecurity threats, including our business strategy, results of operations or financial condition. Please refer to Risk Factors in Item 1A for discussion of possible impacts from future cybersecurity events.

Item 2. Properties

The following table provides certain summary information with respect to the principal properties in which we conduct our operations, all of which were leased, as of December 31, ~~2021:~~2023:

Location

Function

Expiration
Date

401 Charmany Drive, Madison, WI

Full-service banking location of FBB - ~~Madison~~South Central Region and office of FBFS

2028

~~18500 W. Corporate Drive,~~17335 Golf Parkway, Brookfield, WI

Full-service banking location of FBB - Southeast Region

~~2022~~2032

~~11300 Tomahawk Creek Pkwy,~~11141 Overbrook Road, Leawood, KS

Full-service banking location of FBB - Kansas City Region

~~2023~~2033

3913 West Prospect Avenue, Appleton, WI

Full-service banking location of FBB - Northeast Region

2025

For the purpose of generating business development opportunities in our specialized lending and consulting businesses, as of December 31, ~~2021,~~2023, office space was also leased in several states nationwide under shorter-term lease agreements, which generally have terms of one year or less.

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Item 3. Legal Proceedings

We believe ~~that~~ no litigation is threatened or pending in which we face potential loss or exposure which could materially affect our consolidated financial position, consolidated results of operations, or consolidated cash flows. Since our subsidiaries act as depositories of funds, lenders, and fiduciaries, they are occasionally named as defendants in lawsuits involving a variety of claims. This and other litigation is ordinary, routine litigation incidental to our business.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II.

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Holders

The common stock of the Corporation is traded on the Nasdaq Global Select Market under the symbol “FBIZ.” As of February ~~16, 2022,~~15, 2024, there were ~~377~~361 registered shareholders of record of the Corporation’s common stock.

Dividend Policy

It has been our practice to pay a dividend to common shareholders. Dividends historically have been declared in the month following the end of each calendar quarter. However, the timing and amount of future dividends are at the discretion of the Board of Directors of the Corporation (the “Board”) and will depend upon the consolidated earnings, financial condition, liquidity, and capital requirements of the Corporation and the Bank, the amount of cash dividends paid to the Corporation by the Bank, applicable government regulations and policies, supervisory actions, and other factors considered relevant by the Board. Refer to Item 1 - Business - Supervision and Regulation - Regulation and Supervision of the Bank - Dividend Payments for additional discussion regarding the limitations on dividends and other capital contributions by the Bank to the Corporation. The Board anticipates it will continue to declare dividends as appropriate based on the above factors.

Stock Performance Graph

The chart shown below depicts total return to shareholders during the period beginning December 31, 2018 and ending December 31, 2023. The total return includes appreciation or depreciation in market value of the Corporation’s common stock as well as actual cash and stock dividends paid to common stockholders. Indices shown below, for comparison purposes only, are the Total Return Index for the Nasdaq Composite, which is a broad nationally recognized index of stock performance by publicly traded companies, and the SNL Bank Nasdaq, which is an index that contains securities of Nasdaq-listed companies classified according to the Industry Classification Benchmark as banks. The chart assumes that the value of the investment in FBIZ common stock and each of the three indices was $100 on December 31, 2018 and that all dividends were reinvested in FBIZ common stock.

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	As of December 31,
Index	2018		2019		2020		2021		2022		2023
First Business Financial Services, Inc.	$	100.00	$	138.56	$	100.53	$	163.69	$	209.82	$	236.96
NASDAQ Composite Index	100.00		136.69		198.10		242.03		163.28		236.17
KBW NASDAQ Bank Index	100.00		136.13		122.09		168.88		132.75		131.57

Issuer Purchases of Securities

OnAs previously announced, effective January ~~28, 2021,~~27, 2023, the Corporation’s Board of Directors ~~of the Corporation approved a new share repurchase program. The program~~ authorized the repurchase by the Corporation of ~~up to $5 million~~shares of its ~~total outstanding shares of~~ common stock ~~over~~with a ~~period~~maximum aggregate purchase price of ~~approximately twelve months, ending~~$5.0 million, effective January 31, ~~2022. The~~2023 through January 31, 2024. As of December 31, 2023, the Corporation ~~completed the $5 million repurchase program in October 2021, repurchasing~~had repurchased a total of ~~182,151~~65,112 shares ~~during the year~~for approximately $2.0 million at ~~a weighted~~an average ~~price~~cost of ~~$27.40~~$30.72 per share. ~~The~~At this time, the Corporation ~~did~~does not ~~have an active share repurchase~~expect to adopt a new plan ~~as of December 31, 2021.~~upon its expiration to replace the recently expired plan due to strong balance sheet growth.

Under the recently expired share repurchase program, the Corporation was authorized to repurchase shares from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. In connection with the share repurchase program, the Corporation implemented a 10b5-1 trading plan. The trading plan allowed the Corporation to repurchase shares of its common stock at times when it otherwise might have been prevented from doing so under insider trading laws by requiring that an agent selected by the Corporation repurchase shares of common stock on the Corporation’s behalf on pre-determined terms.

The following table sets forth information about the Corporation's purchases of its common stock during the three months ended December 31, ~~2021.~~2023.

Period
Total Number of Shares Purchased(1)
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Total Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2021 - October 31, 2021 24,631 $ 29.05 24,631
November 1, 2021 - November 30, 2021 1,519 30.65 —
December 1, 2021 - December 31, 2021 — — —
Total 26,150 24,631 —


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Total Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2023 - October 31, 2023	—	$	—	—
November 1, 2023 - November 30, 2023	458	34.30		—
December 1, 2023 - December 31, 2023	—	—		—
Total	458			—	74,813

(1)During the fourth quarter of ~~2021,~~2023, the Corporation repurchased an aggregate ~~26,150~~458 shares of the Corporation’s common stock in open-market transactions, of which ~~24,631~~no shares were purchased pursuant to the repurchase program publicly announced on January ~~28, 2021,~~27, 2023, and of which ~~1,519~~458 shares were surrendered to us to satisfy income tax withholding obligations in connection with the vesting of restricted awards. The Corporation did not repurchase any shares pursuant to the publicly announced program described above during the quarter.

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Item 6. ~~Selected Financial Data~~ [Reserved]

~~Not applicable.~~

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

When used in this report the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume,” “intend,” “estimate,” “anticipate,” “project,” “likely,” or similar expressions are intended to identify “forward-looking statements.” Such statements are subject to risks and uncertainties, including among other things:

•Adverse changes in the economy or business conditions, either nationally or in our markets, including, without limitation, inflation, supply chain issues, economic downturn, labor shortages, wage pressures, and the adverse effects of ~~the COVID-19 pandemic~~public health events on the global, national, and local ~~economy, which may effect the Corporation’s credit quality, revenue, and business operations.~~economy.

•Competitive pressures among depository and other financial institutions nationally and in our markets.

•Increases in defaults by borrowers and other delinquencies.

•Our ability to manage growth effectively, including the successful expansion of our client support, administrative infrastructure, and internal management systems.

•Fluctuations in interest rates and market prices.

•~~The consequences of continued bank acquisitions and mergers in our markets, resulting in fewer but much larger and financially stronger competitors.~~

•Changes in legislative or regulatory requirements applicable to us and our subsidiaries.

•Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.

•Fraud, including client and system failure or breaches of our network security, including our internet banking activities.

•Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portions of SBA loans.

These risks, together with the risks identified in Item 1A — Risk Factors, could cause actual results to differ materially from what we have anticipated or projected. These risk factors and uncertainties should be carefully considered by our ~~shareholders~~stockholders and potential investors. Investors should not place undue reliance on any such forward-looking statements, which speak only as of the date made.

Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while our management believes such assumptions or bases are reasonable and are made in good faith, assumed facts or bases can vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, an expectation or belief is expressed as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

We do not intend to, and specifically disclaim any obligation to, update any forward-looking statements.

The following discussion and analysis is intended as a review of significant events and factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto.

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Overview

We are a registered bank holding company incorporated under the laws of the State of Wisconsin and are engaged in the commercial banking business through our wholly-owned banking subsidiary, FBB. All of our operations are conducted through FBB and First Business Specialty Finance, LLC (“FBSF”), a wholly-owned subsidiary of FBB. ~~We operate~~FBB operates as a business bank, ~~focusing on~~ delivering a full line of commercial banking products and services tailored to meet the specific needs of small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals. Our products and services ~~include those for~~are focused on business banking, private wealth, and bank consulting. Within business banking, we offer commercial lending, asset-based lending, accounts receivable financing, equipment financing, floorplan financing, vendor financing, ~~SBA~~Small Business Administration (“SBA”) lending and servicing, treasury management ~~services,~~solutions, and company retirement ~~plans.~~services. Our private wealth management services ~~for executives and individuals~~ include trust and estate administration, financial planning, investment management, ~~consumer lending,~~ and private ~~banking. For other financial institutions,~~banking for executives and owners of our business banking clients and others. Our bank consulting experts provide investment portfolio administrative services, asset liability management services, and asset liability management process ~~validation.~~validation for other financial institutions. We do not utilize a branch network to attract retail clients. Our operating ~~philosophy~~model is predicated on deep client relationships, ~~within our commercial bank markets~~financial expertise, and ~~extensive expertise within our nationwide specialized lending business lines, combined with the efficiency of~~an efficient, centralized ~~administrative functions, such as information technology, loan and deposit operations, finance and accounting, credit~~ administration ~~compliance, marketing, and human resources.~~function delivering best in class client satisfaction. Our focused model allows experienced staff to provide the level of financial expertise needed to develop and maintain long-term relationships with our clients.

Long-Term Strategic Plan

In early 2019, management finalized the development of its five year strategic plan and began the implementation of strategies and initiatives that ~~will~~ drive successful execution. Management’s objective over this five year period iswas to excel by building an expert team with diverse experiences who work together to impact client success more than any other financial partner. To meet this objective, we identified four key strategies which are linked to corporate financial goals, all business lines, and centralized administration functions to ensure communication and execution are consistent at all levels of the Corporation.

These four strategies are described below:

•We will identify, attract, develop, and retain a diverse, high performing team to positively impact the overall performance and efficiency of the Corporation.

•We will increase internal efficiencies, deliver a differentiated client experience, and drive client experience utilizing technology where possible.

•We will diversify and grow our deposit base.

•We will optimize our business lines for diversification and performance.

The ~~following~~ table below shows the Corporation’s performance for the years ended December 31, ~~2021, 2020,~~2023, 2022, and ~~2019~~2021 in comparison to the key performance indicators included in the Corporation’s 2019 strategic plan.


	As of December 31,
Key Performance Indicators	2021	2022	2023	Strategic Plan
Return on average equity (“ROAE”)	16.21%	16.79%	13.79%	13.50%
Return on average assets (“ROAA”)	1.37%	1.46%	1.13%	1.15%
Top line revenue growth	8.4%	13.4%	12.6%	≥ 10% per year
In-market deposits to total bank funding	82.9%	76.1%	76.0%	≥ 75%
Employee engagement (1)	87%	87%	90%	≥ 80%
Client satisfaction (1)	93%	95%	93%	≥ 90%

(1) Anonymous surveys conducted annually

Throughout 2023, the last year of the existing plan, management undertook an extensive process to reassess its key strategies and performance indicators to create a new long-term strategic plan.

As of and for the Year Ended December 31,
Key Performance Indicators 2019 2020 2021 2023 Goal
Return on average equity (“ROAE”) 12.55% 8.64% 16.21% 13.50%
Return on average assets (“ROAA”) 1.14% 0.70% 1.37% 1.15%
Top line revenue growth 9.1% 11.5% 8.4% ≥ 10% per year
In-market deposits to total bank funding 75.5% 74.8% 82.9% ≥ 75%
Employee engagement (1)
82% 91% 87% ≥ 80%
Client satisfaction (1)
93% 96% 93% ≥ 90%
(1) Anonymous surveys conducted annually

The Corporation intends to disclose information about the key terms of the new strategic plan later in 2024 after it is finalized.

3135

Table of Contents

Financial Performance Summary

Results as of and for the year ended December 31, ~~2021~~2023 include:

•Net income available to common shareholders for the year ended December 31, ~~2021~~2023 was ~~$35.8~~$36.2 million, ~~increasing 110.6%~~decreasing 10.0% compared to ~~$17.0~~$40.2 million for the year ended December 31, ~~2020.~~2022.

•Diluted earnings per common share were ~~$4.17~~$4.33 for the year ended December 31, ~~2021, increasing 111.4%~~2023, decreasing 8.8% compared to ~~$1.97~~$4.75 in the prior year.

•Return on average assets ~~and return on average equity~~(“ROAA”) for the year ended December 31, ~~2021 were 1.37% and 16.21% respectively,~~2023 was 1.13%, compared to ~~0.70% and 8.64%~~1.46% for 2022.

•Return on average common equity (“ROACE”), ~~respectively,~~which is defined as net income available to common shareholders divided by average equity reduced by average preferred stock, if any. ROACE was 13.79% for ~~2020.~~the year ended December 31, 2023, compared to 16.79% for the year ended December 31, 2022.

•Pre-tax, pre-provision (“PTPP”) adjusted earnings, which excludes certain one-time and discrete items, and PTPP ROAA were $56.2 million and 1.75%, respectively, for the year ended December 31, ~~2021 was $41.2~~2023, increasing $8.3 million, ~~increasing 7.2% compared to $38.4 million for the~~or 17.3%, and 1 bp, from year ended December 31, ~~2020. Pre-tax, pre-provision adjusted return on average assets for the year ended December 31, 2021 was 1.58%, compared to 1.59% for the year ended December 31, 2020.~~

•Net interest margin was 3.44% for the year ended December 31, 2021, increasing 4 basis points from 3.40% for the year ended December 31, 2020. Adjusted net interest margin, which excludes certain one-time and discrete items, was 3.21% for the year ended December 31, 2021, decreasing seven basis points from 3.28% for the year ended December 31, 2020.2022.

•Fees in lieu of interest, defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization, totaled ~~$11.2~~$3.2 million for the year ended December 31, ~~2021, increasing 19.8%~~2023, decreasing 38.6% compared to ~~$9.3~~$5.3 million for the year ended December 31, ~~2020. Loan fee amortization~~2022.

•Net interest margin was 3.78% for the year ended December 31, ~~2021~~2023, declining 4 bps from 3.82% for the year ended December 31, 2022. Adjusted net interest margin, which excludes certain one-time and discrete items, was 3.63% for the year ended December 31, 2023 and December 31, ~~2020 includes PPP processing fee income of $7.3 million and $5.3 million, respectively.~~2022.

•Top line revenue, ~~which consists of~~defined as net interest income ~~and~~plus non-interest income, grew ~~8.4%~~12.6% to ~~$112.8~~$143.9 million for the year ended December 31, ~~2021,~~2023, compared to ~~$104.0~~$127.9 million for the year ended December 31, ~~2020.~~2022.

•Effective tax rate was 21.45% for the year ended December 31, 2023 compared to 21.79% for the year ended December 31, 2022.

•Provision for ~~loan and lease~~credit losses was ~~a net benefit of $5.8~~$8.2 million for the year ended December 31, ~~2021,~~2023, compared to a net provision ~~expense~~benefit of ~~$16.8~~$3.9 million for the year ended December 31, ~~2020.~~2022. Net ~~recoveries~~charge-offs as a percentage of average loans and leases were ~~0.07%~~0.05% for the year ended December 31, ~~2021,~~2023, compared to net ~~charge-offs~~recoveries of ~~0.39%~~0.16% for the year ended December 31, ~~2020.~~2022.

•Total assets at December 31, ~~2021~~2023 increased ~~$85.1~~$531.2 million, or ~~3.3%~~17.8%, to ~~$2.653~~$3.508 billion from ~~$2.568~~$2.977 billion at December 31, ~~2020.~~2022.

•Period-end gross loans and leases receivable at December 31, ~~2021~~2023 increased ~~$93.4~~$407.2 million, or ~~4.4%~~16.7%, to ~~$2.239~~$2.850 billion from ~~$2.146~~$2.443 billion as of December 31, ~~2020.~~2022. Average gross loans and leases of ~~$2.179~~$2.648 billion increased ~~$167.8~~$342.9 million, or ~~8.3%~~14.9% for the year ended December 31, ~~2021,~~2023, compared to ~~$2.011~~$2.305 billion for the same period in ~~2020.~~

•Period-end gross loans and leases receivable, excluding net PPP loans, at December 31, 2021 increased $291.5 million, or 15.18%, to $2.212 billion from $1.921 billion as of December 31, 2020. Average gross loans and leases, excluding net PPP loans, of $2.027 billion increased $230.6 million, or 12.8% for the year ended December 31, 2021, compared to $1.796 billion for the same period in 2020.

•PPP loans and PPP deferred processing fees were $27.9 million and $557,000, respectively, at December 31, 2021. Average PPP loans, net of deferred processing fees, were $152.3 million for the year ended December 31, 2021.2022.

•Non-performing assets ~~were $6.5~~increased to $20.8 million ~~or 0.25% of total assets~~ as of December 31, ~~2021,~~2023, compared to ~~$26.7~~$3.8 million ~~or 1.04% of total assets~~ as of December 31, ~~2020.~~2022. Non-performing assets to total assets ~~excluding net PPP loans were 0.25%~~increased to 0.59% as of December 31, ~~2021, compared to 1.14%~~2023, from 0.13% as of December 31, ~~2020.~~2022.

•The allowance for ~~loan and lease~~credit losses as of December 31, ~~2021 decreased $4.2~~2023 increased $7.0 million, or ~~14.7%~~29.1%, to ~~$24.3~~$31.3 million, compared to ~~$28.5~~$24.2 million as of December 31, ~~2020.~~2022. The allowance for ~~loan and lease~~credit losses was ~~1.09%~~1.16% of total loans as of December 31, ~~2021,~~2023, compared to ~~1.33%~~0.99% as of December 31, ~~2020. Excluding net PPP loans, the allowance for loan and lease losses decreased to 1.10% of total loans as of December 31, 2021, compared to 1.48% as of December 31, 2020.~~2022.

•Period-end in-market deposits at December 31, ~~2021~~2023 increased ~~$245.3~~$373.1 million, or ~~14.6%~~19.0%, to ~~$1.928~~$2.339 billion from ~~$1.683~~$1.966 billion as of December 31, ~~2020.~~2022. Average in-market deposits of ~~$1.784~~$2.098 billion increased ~~$215.8~~$169.3 million, or ~~13.8%~~8.8%, for the year ended December 31, ~~2021,~~2023, compared to ~~$1.569~~$1.929 billion for the same period in ~~2020.~~2022.

•~~Trust~~Private wealth and trust assets under management and administration increased by ~~$671.7~~$461.5 million, or ~~29.9%~~17.3%, to ~~$2.921~~$3.122 billion at December 31, ~~2021,~~2023, compared to ~~$2.249~~$2.660 billion at December 31, ~~2020.~~2022. Private wealth management service fees increased $544,000, or 5.00%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.

The detailed financial discussion that follows focuses on 2023 results compared to 2022. Information pertaining to 2022 in comparison to 2021 was included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 on page 33 under Part II, Item 7, “Management’s Discussion and Analysis of Financial and Results of Operations,” which was filed with the SEC on February 22, 2023.

3236

Table of Contents

Results of Operations

Top Line Revenue

Top line revenue, comprised of net interest income and non-interest income, increased ~~8.4%~~12.6% for the year ended December 31, ~~2021~~2023 compared to the year ended December 31, ~~2020~~2022 primarily due to a ~~$7.6~~$14.2 million, or ~~9.8%~~14.4%, increase in net interest income and a ~~$1.2~~$1.9 million, or ~~4.3%~~6.4%, increase in non-interest income. The increase in net interest income was driven by an increase in ~~PPP loan processing fees, a decrease in interest expense, and an increase in~~ average loans and leases outstanding and related interest income, partially offset by net interest margin compression and a ~~reduction~~decrease in ~~asset-based loan~~ fees in lieu of interest. The increase in non-interest income was primarily due to a ~~$2.2 million increase in trust and investment fee income, $2.2~~$1.8 million increase in other fee income, ~~$1.1~~a $1.2 million increase in swap fee income, a $544,000 increase in trust fee income, and a $353,000 increase in loan fee income. These favorable variances were partially offset by a $733,000 decrease in bank owned life insurance income, a $718,000 decrease in service charge income on deposits, and a $482,000 decrease in gains on the sale of SBA loans ~~and $680,000 increase in loan fee income. These favorable variances in top line revenue were partially offset by a reduction in swap fee income, which decreased $5.5 million compared to~~during the year ended December 31, ~~2020.~~2023.

The components of top line revenue were as follows:


		For the Year Ended December 31,				Change From Prior Year					For the Year Ended December 31,					Change From Prior Year
		2021		2020		$ Change		% Change					2023			2022				2021					$ Change 2023					% Change 2023						$ Change 2022				% Change 2022
		(Dollars in Thousands)								(Dollars in Thousands)
Net interest income	Net interest income	$	84,662	$	77,071	$	7,591	9.8	%			Net interest income	$	112,588	$	$	98,422	$		$	84,662		$		$	14,166		14.4			14.4	%					$	13,760	16.3		16.3	%
Non-interest income	Non-interest income	28,100		26,940		1,160		4.3				Non-interest income	31,308		29,428		29,428		28,100			28,100		1,880			1,880		6.4				6.4		1,328				1,328	4.7			4.7	%
Top line revenue	Top line revenue	$	112,762	$	104,011	$	8,751	8.4				Top line revenue	$	143,896	$	$	127,850	$		$	112,762		$		$	16,046		12.6			12.6			$			$	15,088	13.4		13.4	%


☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, ~~2021~~2023
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to


Wisconsin						39-1576570
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

401 Charmany Drive, Madison, WI						53719
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FBIZ	The Nasdaq Stock Market LLC


PART I			1
Item 1. Business			1
Item 1A. Risk Factors			1617
Item 1B. Unresolved Staff Comments			2829
I tem 1C. Cyber security			29
Item 2. Properties			2830
Item 3. Legal Proceedings			2831
Item 4. Mine Safety Disclosures			2831
PART II			2932
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities			2932
Item 6. ~~Selected Financial Data~~[Reserved]			3034
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3034
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			5862
Item 8. Financial Statements and Supplementary Data			5963
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			~~114~~126
Item 9A. Controls and Procedures			~~114~~126
Item 9B. Other Information			~~115~~127
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			~~115~~127
PART III			~~115~~127
Item 10. Directors, Executive Officers and Corporate Governance			~~115~~127
Item 11. Executive Compensation			~~115~~127
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters			~~115~~127
Item 13. Certain Relationships and Related Transactions, and Director Independence			~~116~~128
Item 14. Principal Accountant Fees and Services			~~116~~128
PART IV			~~117~~129
Item 15. Exhibits and Financial Statements Schedules			~~117~~129
Item 16. Form 10-K Summary			~~118~~130
Signatures			~~119~~131


	For the Year Ended December 31,						Change From Prior Year
	2021			2020			$ Change		% Change
	(Dollars in Thousands)
Total non-interest expense	$	71,535		$	68,898		$	2,637	3.8	%
Less:
Net loss on foreclosed properties	15			383			(368)		(96.1)
Amortization of other intangible assets	25			35			(10)		(28.6)
SBA recourse benefit	(76)			(278)			202		(72.7)
Impairment of tax credit investments	—			2,395			(2,395)		NM
Loss on early extinguishment of debt	—			744			(744)		NM
Total operating expense (a)	$	71,571		$	65,619		$	5,952	9.1
Net interest income	$	84,662		$	77,071		$	7,591	9.8
Total non-interest income	28,100			26,940			1,160		4.3
Less:
Net gain (loss) on sale of securities	29			(4)			33		NM
Adjusted non-interest income	28,071			26,944			1,127		4.2
Total operating revenue (b)	$	112,733		$	104,015		$	8,718	8.4
Efficiency ratio	63.49		%	63.09		%

Pre-tax, pre-provision adjusted earnings (b-a)	$	41,162		$	38,396		$	2,766	7.2
Average total assets	2,605,008			2,419,616			185,392		7.7
Pre-tax, pre-provision adjusted return on average assets	1.58		%	1.59		%


		Increase (Decrease) for the Year Ended December 31,						Increase (Decrease) for the Year Ended December 31,
		2021 Compared to 2020							2023 Compared to 2022		2022 Compared to 2021
		Rate		Volume		Net				Rate	Volume	Net	Rate	Volume	Net
		(In Thousands)						(In Thousands)
Interest-earning assets	Interest-earning assets
Commercial real estate and other mortgage loans(1)	Commercial real estate and other mortgage loans(1)	$	(4,784)	$	5,526	$	742
Commercial real estate and other mortgage loans(1)
Commercial real estate and other mortgage loans(1)
Commercial and industrial loans(1)	Commercial and industrial loans(1)	621		1,362		1,983
Direct financing leases(1)		130		(297)		(167)
Consumer and other loans(1)	Consumer and other loans(1)	(117)		243		126
Total loans and leases receivable(1)	Total loans and leases receivable(1)	(4,150)		6,834		2,684
Mortgage-related securities(2)	Mortgage-related securities(2)	(647)		(268)		(915)
Other investment securities	Other investment securities	(96)		234		138
FHLB Stock	FHLB Stock	(100)		80		(20)
Short-term investments	Short-term investments	(147)		76		(71)
Total net change in income on interest-earning assets	Total net change in income on interest-earning assets	(5,140)		6,956		1,816
Interest-bearing liabilities	Interest-bearing liabilities
Transaction accounts	Transaction accounts	(805)		345		(460)
Transaction accounts
Transaction accounts
Money market	Money market	(1,832)		173		(1,659)
Certificates of deposit	Certificates of deposit	(895)		(907)		(1,802)
Wholesale deposits	Wholesale deposits	(1,107)		(341)		(1,448)
Total deposits	Total deposits	(4,639)		(730)		(5,369)
FHLB advances	FHLB advances	(554)		(45)		(599)
Federal reserve PPPLF		—		(54)		(54)
Other borrowings	Other borrowings	(174)		424		250
Junior subordinated notes	Junior subordinated notes	(5)		2		(3)
Total net change in expense on interest-bearing liabilities	Total net change in expense on interest-bearing liabilities	(5,372)		(403)		(5,775)
Net change in net interest income	Net change in net interest income	$	232	$	7,359	$	7,591


	Less than One Year				One to Five Years				Five to Ten Years				Over Ten Years
	Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Total
	(Dollars in Thousands)
Available-for-sale:
U.S. treasuries	$	—	—	%	$	4,914	1.00	%	$	—	—	%	$	—	—	%	$	4,914
U.S. government agency securities - government-sponsored enterprises	—		—		978		0.56		4,726		0.93		14,231		0.80		19,935
Municipal securities	496		0.30		2,951		1.33		11,839		1.41		15,671		1.85		30,957
Residential mortgage-backed securities - government issued	—		—		—		—		2,273		2.94		17,388		1.89		19,661
Residential mortgage-backed securities - government-sponsored enterprises	—		—		1,216		2.34		13,271		2.09		71,218		1.72		85,705
Commercial mortgage-backed securities - government issued	—		—		—		—		1,658		3.10		4,113		1.60		5,771
Commercial mortgage-backed securities - government-sponsored enterprises	—		—		1,878		2.41		24,703		1.63		9,950		1.53		36,531
Other securities	2,228		2.38		—		—		—		—		—		—		2,228
	$	2,724			$	11,937			$	58,470			$	132,571			$	205,702


	Real Estate	Wholesale and Manufacturing	Retail and Hospitality	Transportation and Warehousing	Other	Total
Commercial real estate — owner occupied	4%	27%	18%	17%	34%	100%
Commercial real estate — non-owner occupied	75% (1)	1%	10%	2%	12%	100%
Commercial and industrial	4%	26%	21%	12%	37%	100%


			Amounts Due								Interest Terms On Amounts Due after One Year
		Amounts Due																Amounts Due				Interest Terms On Amounts Due after One Year
			In One Year or Less		After One Year through Five Years		After Five Years		Total		Fixed Rate		Variable Rate		In One Year or Less	After One Year through Five Years	After Five Years		Total	Fixed Rate	Variable Rate
			(In Thousands)												(In Thousands)
Commercial real estate:	Commercial real estate:
Owner-occupied	Owner-occupied		$	14,481	$	112,813	$	108,295	$	235,589	$	164,074	$	57,034
Owner-occupied
Owner-occupied
Non-owner occupied	Non-owner occupied		83,881		294,650		282,892		661,423		310,930		266,612
Land development			17,074		23,964		1,754		42,792		8,432		17,286
Construction	Construction		34,103		30,941		114,797		179,841		56,351		89,387
Multi-family	Multi-family		23,216		98,516		198,340		320,072		99,619		197,237
1-4 family	1-4 family		3,013		7,587		4,311		14,911		11,755		143
Commercial and industrial	Commercial and industrial		235,189		418,358		77,272		730,819		304,426		191,204
Direct financing leases			1,239		13,992		512		15,743		14,504		—
Consumer and other	Consumer and other		4,367		34,418		956		39,741		30,055		5,319
			$	416,563	$	1,035,239	$	789,129	$	2,240,931	$	1,000,146	$	824,222
		$


	Year Ended December 31,
	2023			2022
	(Dollars in Thousands)
Allowance at beginning of period	$	24,230		$	24,336
Impact of adoption of ASC 326	1,818			—
Charge-offs:
Commercial real estate
Commercial real estate — owner occupied	—			—
Commercial real estate — non-owner occupied	—			—
Construction	—			—
Multi-family	—			—
1-4 family	—			—
Commercial and industrial	(1,781)			(909)
Consumer and other	—			(70)
Total charge-offs	(1,781)			(979)
Recoveries:
Commercial real estate
Commercial real estate — owner occupied	8			4,260
Commercial real estate — non-owner occupied	1			2
Construction	—			—
Multi-family	—			—
1-4 family	40			—
Commercial and industrial	479			437
Consumer and other	20			42
Total recoveries	548			4,741
Net charge-offs	(1,233)			3,762
Provision for credit losses	8,182			(3,868)
Allowance at end of period	$	32,997		$	24,230
Net charge-offs as a percent of average gross loans and leases	0.05		%	(0.16)		%


Interest Rate	Interest Rate		Three Months and Less		Over Three Months Through Six Months		Over Six Months Through Twelve Months		Over Twelve Months		Total		Interest Rate	Three Months and Less	Over Three Months Through Six Months	Over Six Months Through Twelve Months	Over Twelve Months		Total
			(In Thousands)
		(In Thousands)																(In Thousands)
0.00% to 0.99%	0.00% to 0.99%		$	36,821	$	6,797	$	4,343	$	4,897	$	52,858
1.00% to 1.99%	1.00% to 1.99%		370		—		300		403		1,073
2.00% to 2.99%	2.00% to 2.99%		—		—		—		112		112
3.00% to 3.99%	3.00% to 3.99%		9,389		—		10,000		297		19,686

			$	46,580	$	6,797	$	14,643	$	5,709	$	73,729
4.00% to 4.99%
5.00% and greater
		$


		December 31, 2021						December 31, 2020
		Balance		Weighted Average Balance		Weighted Average Rate		Balance		Weighted Average Balance		Weighted Average Rate
		(Dollars in Thousands)
		Balance
		Balance
		Balance


														(Dollars in Thousands)
Federal funds purchased	Federal funds purchased	$	—	$	—	—	%	$	—	$	71	0.69	%
Federal Reserve PPPLF		—		—		—		—		15,207		0.35
FHLB advances
FHLB advances
FHLB advances	FHLB advances	368,800		376,781		1.30		394,500		379,891		1.45
Line of credit	Line of credit	500		78		2.90		—		—		—
Line of credit
Line of credit
Other borrowings
Other borrowings
Other borrowings	Other borrowings	10,363		8,090		4.11		920		676		12.60
Subordinated notes payable	Subordinated notes payable	23,788		23,766		5.94		23,747		23,725		5.95
Junior subordinated notes		10,076		10,068		11.05		10,062		10,054		11.09
Subordinated notes payable
Subordinated notes payable
Junior subordinated notes(1)
Junior subordinated notes(1)
Junior subordinated notes(1)
		$	413,527	$	418,783	1.86		$	429,229	$	429,624	1.91


(In Thousands)
Maturities during the year ended December 31,
2022	$	173,500
2023	37,300
2024	35,500
2025	23,363
2026	—
Thereafter	143,864
	$	413,527


Change in interest rate in basis points	Down 50		No Change		Up 100		Up 200		Up 300
Impact on net interest income	(2.48)	%	—	%	0.77	%	5.64	%	10.67	%


	Impact on Net Interest Income as of December 31,
Instantaneous Rate Change in Basis Points	2023		2022
Down 300	(0.20)	%	(9.90)	%
Down 200	1.54		(0.88)
Down 100	1.92		0.79
No Change	—		—
Up 100	2.11		2.26
Up 200	2.24		4.48
Up 300	2.36		6.65


		For the Year Ended December 31,												For the Year Ended December 31,
		2021						2020							2023					2022									2021
		Average Balance		Interest		Average Yield/ Rate		Average Balance		Interest		Average Yield/ Rate					Average Balance			Interest			Average Yield/ Rate			Average Balance					Interest				Average Yield/ Rate				Average Balance				Interest			Average Yield/ Rate
		(Dollars in Thousands)												(Dollars in Thousands)
Interest-earning assets	Interest-earning assets
Commercial real estate and other mortgage loans(1)	Commercial real estate and other mortgage loans(1)	$	1,387,434	$	51,930	3.74	%	$	1,245,886	$	51,188	4.11	%
Commercial real estate and other mortgage loans(1)
Commercial real estate and other mortgage loans(1)																	$	1,586,967		$	98,370		6.20	%		$	1,484,239				$	66,917			4.51	%			$	1,387,434			$	51,930		3.74	%
Commercial and industrial loans(1)	Commercial and industrial loans(1)	727,923		37,470		5.15	%	701,328		35,487		5.06	%			Commercial and industrial loans(1)	1,013,866		81,963		81,963	8.08		8.08	%			771,056		46,575			46,575	6.04			6.04	%			747,514	38,342			38,342	5.13		5.13	%
Direct financing leases(1)		19,591		872		4.45	%	26,564		1,039		3.91	%
Consumer and other loans(1)	Consumer and other loans(1)	44,206		1,572		3.56	%	37,544		1,446		3.85	%			Consumer and other loans(1)	47,018		2,316		2,316	4.93		4.93	%			49,695		1,876			1,876	3.78			3.78	%			44,206	1,572			1,572	3.56		3.56	%
Total loans and leases receivable(1)	Total loans and leases receivable(1)	2,179,154		91,844		4.21	%	2,011,322		89,160		4.43	%			Total loans and leases receivable(1)	2,647,851		182,649		182,649	6.90		6.90	%			2,304,990		115,368			115,368	5.01			5.01	%			2,179,154	91,844			91,844	4.21		4.21	%
Mortgage-related securities(2)	Mortgage-related securities(2)	159,242		2,633		1.65	%	173,084		3,548		2.05	%			Mortgage-related securities(2)	200,383		6,433		6,433	3.21		3.21	%			173,495		3,486			3,486	2.01			2.01	%			159,242	2,633			2,633	1.65		1.65	%
Other investment securities(3)	Other investment securities(3)	44,739		777		1.74	%	31,809		639		2.01	%			Other investment securities(3)	62,921		1,770		1,770	2.81		2.81	%			51,700		986			986	1.91			1.91	%			44,739	777			777	1.74		1.74	%
FHLB stock	FHLB stock	13,066		651		4.98	%	11,576		671		5.80	%			FHLB stock	15,162		1,231		1,231	8.12		8.12	%			16,462		989			989	6.01			6.01	%			13,066	651			651	4.98		4.98	%
Short-term investments	Short-term investments	64,308		90		0.14	%	37,314		161		0.43	%			Short-term investments	54,311		2,845		2,845	5.24		5.24	%			30,845		542			542	1.76			1.76	%			64,308	90			90	0.14		0.14	%
Total interest-earning assets	Total interest-earning assets	2,460,509		95,995		3.90	%	2,265,105		94,179		4.16	%			Total interest-earning assets	2,980,628		194,928		194,928	6.54		6.54	%			2,577,492		121,371			121,371	4.71			4.71	%			2,460,509	95,995			95,995	3.90		3.90	%
Non-interest-earning assets	Non-interest-earning assets	144,499						154,511
Total assets	Total assets	$	2,605,008					$	2,419,616
Total assets
Total assets
Interest-bearing liabilities
Interest-bearing liabilities
Interest-bearing liabilities	Interest-bearing liabilities
Transaction accounts	Transaction accounts	$	506,693	988		0.19	%	$	392,577	1,448		0.37	%
Money market		693,608		1,183		0.17	%	651,402		2,842		0.44	%
Transaction accounts
Transaction accounts																	$	689,500		23,727			3.44	%		$	503,668				3,963				0.79	%			$	506,693			988			0.19	%
Money market accounts																Money market accounts	681,336			22,129			3.25	%		761,469					6,241				0.82	%			693,608				1,183			0.17	%
Certificates of deposit	Certificates of deposit	47,020		396		0.84	%	111,698		2,198		1.97	%			Certificates of deposit	273,387		11,209		11,209	4.10		4.10	%			97,448		1,358			1,358	1.39			1.39	%			47,020	396			396	0.84		0.84	%
Wholesale deposits	Wholesale deposits	119,831		986		0.82	%	142,591		2,434		1.71	%			Wholesale deposits	346,285		14,353		14,353	4.14		4.14	%			48,825		1,616			1,616	3.31			3.31	%			119,831	986			986	0.82		0.82	%
Total interest-bearing deposits	Total interest-bearing deposits	1,367,152		3,553		0.26	%	1,298,268		8,922		0.69	%			Total interest-bearing deposits	1,990,508		71,418		71,418	3.59		3.59	%			1,411,410		13,178			13,178	0.93			0.93	%			1,367,152	3,553			3,553	0.26		0.26	%
FHLB advances	FHLB advances	376,781		4,908		1.30	%	379,891		5,507		1.45	%			FHLB advances	351,990		8,881		8,881	2.52		2.52	%			414,191		7,024			7,024	1.70			1.70	%			376,781	4,908			4,908	1.30		1.30	%
Federal reserve PPPLF		—		—		—	%	15,207		54		0.36	%
Other borrowings	Other borrowings	31,935		1,759		5.51	%	24,472		1,509		6.17	%			Other borrowings	38,891		2,041		2,041	5.25		5.25	%			43,818		2,243			2,243	5.12			5.12	%			31,935	1,759			1,759	5.51		5.51	%
Junior subordinated notes		10,068		1,113		11.05	%	10,054		1,116		11.10	%
Junior subordinated notes (4)																Junior subordinated notes (4)	—			—			—	%		2,429					504				20.75	%			10,068				1,113			11.05	%
Total interest-bearing liabilities	Total interest-bearing liabilities	1,785,936		11,333		0.63	%	1,727,892		17,108		0.99	%			Total interest-bearing liabilities	2,381,389		82,340		82,340	3.46		3.46	%			1,871,848		22,949			22,949	1.23			1.23	%			1,785,936	11,333			11,333	0.63		0.63	%
Non-interest-bearing demand deposit accounts	Non-interest-bearing demand deposit accounts	536,981						412,825								Non-interest-bearing demand deposit accounts	453,930											566,230													536,981


	For the Year Ended December 31,
	2023		2022		2021		2023 Compared to 2022		2022 Compared to 2021
	Average Yield/Rate (3)						Increase (Decrease)
Total loans and leases receivable (a)	6.90	%	5.01	%	4.21	%	1.89	%	0.80	%
Total interest-earning assets(b)	6.54	%	4.71	%	3.90	%	1.83	%	0.81	%
Adjusted total loans and leases receivable (1)(c)	6.78	%	4.78	%	3.91	%	2.00	%	0.87	%
Adjusted total interest-earning assets (1)(d)	6.43	%	4.50	%	3.61	%	1.93	%	0.89	%
Total in-market deposits(e)	2.72	%	0.60	%	0.14	%	2.12	%	0.46	%
Total bank funding(f)	2.87	%	0.84	%	0.37	%	2.03	%	0.47	%
Net interest margin(g)	3.78	%	3.82	%	3.44	%	(0.04)	%	0.38	%
Adjusted net interest margin(h)	3.63	%	3.63	%	3.21	%	—	%	0.42	%

Effective fed funds rate (2)(i)	5.02	%	1.69	%	0.08	%	3.33	%	1.61	%

Beta Calculations:
Total loans and leases receivable(a)/(i)							56.76	%	49.69	%
Total interest-earning assets(b)/(i)							54.98	%	50.31	%
Adjusted total loans and leases receivable (1)(c)/(i)							60.06	%	54.04	%
Adjusted total interest-earning assets (1)(d)/(i)							57.87	%	55.28	%
Total in-market deposits(e)/(i)							63.66	%	28.57	%
Total bank funding(f)/(i)							60.96	%	29.19	%
Net interest margin(g)/(i)							(1.20)	%	23.60	%
Adjusted net interest margin(h)/(i)							—	%	26.09	%



Consolidated Financial Statements						Page No.

Consolidated Balance Sheets as of December 31, ~~2021~~202 3 and ~~2020~~20 2 2						6064

Consolidated Statements of Income for the Years Ended December 31, ~~2021~~202 3 , 202 2 , and ~~2020~~202 1						6165

Consolidated Statements of Comprehensive Income for the Years Ended December 31, ~~2021~~202 3 , 202 2 , and ~~2020~~20 21						6266

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, ~~2021~~202 3 , 202 2 , and ~~2020~~202 1						6367

Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2021~~202 3 , 20 22 , and ~~2020~~202 1						6468

Notes to Consolidated Financial Statements						6670

Report of Independent Registered Public Accounting Firm (PCAOB ID 173)						~~111~~123


				December 31, 2021		December 31, 2020
			December 31, 2023							December 31, 2023	December 31, 2022
		(In Thousands, Except Share Data)							(In Thousands, Except Share Data)
Assets	Assets							Assets
Cash and due from banks	Cash and due from banks			$	9,697	$	29,538
Short-term investments	Short-term investments			47,413		27,371
Cash and cash equivalents	Cash and cash equivalents			57,110		56,909
Securities available-for-sale, at fair value	Securities available-for-sale, at fair value			205,702		183,925
Securities held-to-maturity, at amortized cost	Securities held-to-maturity, at amortized cost			19,746		26,374
Loans held for sale	Loans held for sale			3,570		8,695
Loans and leases receivable, net of allowance for loan and lease losses of $24,336 and $28,521, respectively				2,215,072		2,117,449
Loans and leases receivable, net of allowance for credit losses of $31,275 and $24,230, respectively
Premises and equipment, net	Premises and equipment, net			1,694		1,998
Foreclosed properties				164		34
Repossessed assets
Right-of-use assets, net	Right-of-use assets, net			4,910		5,814
Bank-owned life insurance	Bank-owned life insurance			53,600		52,188
Federal Home Loan Bank stock, at cost	Federal Home Loan Bank stock, at cost			13,336		13,578
Goodwill and other intangible assets	Goodwill and other intangible assets			12,268		12,018
Derivatives	Derivatives			26,343		49,377
Accrued interest receivable and other assets	Accrued interest receivable and other assets			39,390		39,478
Total assets	Total assets			$	2,652,905	$	2,567,837
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Deposits	Deposits			$	1,957,923	$	1,855,516
Federal Home Loan Bank advances and other borrowings	Federal Home Loan Bank advances and other borrowings			403,451		419,167
Junior subordinated notes				10,076		10,062
Lease liabilities	Lease liabilities			5,406		6,386
Derivatives	Derivatives			28,283		54,927
Accrued interest payable and other liabilities	Accrued interest payable and other liabilities			15,344		15,617
Total liabilities	Total liabilities			2,420,483		2,361,675

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding				—		—
Common stock, $0.01 par value, 25,000,000 shares authorized, 9,326,361 and 9,234,460 shares issued, 8,457,564 and 8,566,960 shares outstanding at December 31, 2021 and 2020, respectively				93		92
Preferred stock, $0.01 par value, 2,500,000 shares authorized, 12,500 shares of 7% non-cumulative perpetual preferred stock, Series A, outstanding at December 31, 2023 and 2022, respectively
Common stock, $0.01 par value, 25,000,000 shares authorized, 9,418,463 and 9,371,078 shares issued, 8,314,778 and 8,362,085 shares outstanding at December 31, 2023 and 2022, respectively
Additional paid-in capital	Additional paid-in capital			85,797		83,125
Retained earnings	Retained earnings			170,020		140,431
Accumulated other comprehensive loss	Accumulated other comprehensive loss			(1,457)		(933)
Treasury stock, 868,797 and 667,500 shares at December 31, 2021 and 2020, respectively, at cost				(22,031)		(16,553)
Treasury stock, 1,103,685 and 1,008,993 shares at December 31, 2023 and 2022, respectively, at cost
Total stockholders’ equity	Total stockholders’ equity			232,422		206,162
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity			$	2,652,905	$	2,567,837


		Common Shares Outstanding															Common Shares Outstanding	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Total
																(In Thousands, Except Share Data)
Balance at January 1, 2021
Net income
Other comprehensive loss

			Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
			(In Thousands, Except Share Data)
Balance at January 1, 2020			8,566,044	$	92	$	81,188	$	129,105	$	(1,348)	$	(14,881)	$	194,156

Share-based compensation - restricted shares and employee stock purchase plan

Share-based compensation - restricted shares and employee stock purchase plan

Share-based compensation - restricted shares and employee stock purchase plan
Issuance of common stock under the employee stock purchase plan

Cash dividends ($0.72 per share)

Cash dividends ($0.72 per share)

Cash dividends ($0.72 per share)
Treasury stock purchased
Balance at December 31, 2021
Net income
Other comprehensive loss
Issuance of preferred stock, net of issuance costs

Share-based compensation - restricted shares and employee stock purchase plan

Share-based compensation - restricted shares and employee stock purchase plan

Share-based compensation - restricted shares and employee stock purchase plan
Issuance of common stock under the employee stock purchase plan
Treasury stock re-issued
Preferred stock dividends
Cash dividends ($0.79 per share)
Treasury stock purchased
Balance at December 31, 2022
Cumulative change in accounting principle
Balance at January 1, 2023
Net income	Net income		—	—		—		16,978		—		—		16,978
Other comprehensive income	Other comprehensive income		—	—		—		—		415		—		415

Share-based compensation - restricted shares and employee stock purchase plan	Share-based compensation - restricted shares and employee stock purchase plan		67,773	—		1,871		—		—		—		1,871
Issuance of common stock under the employee stock purchase plan			3,967	—		66		—		—		—		66
Cash dividends ($0.66 per share)			—	—		—		(5,652)		—		—		(5,652)
Treasury stock purchased			(70,824)	—		—		—		—		(1,672)		(1,672)

Balance at December 31, 2020			8,566,960	92		83,125		140,431		(933)		(16,553)		206,162

Net income			—	—		—		35,755		—		—		35,755
Other comprehensive loss			—	—		—		—		(524)		—		(524)

Share-based compensation - restricted shares and employee stock purchase plan

Share-based compensation - restricted shares and employee stock purchase plan	Share-based compensation - restricted shares and employee stock purchase plan		85,370	1		2,512		—		—		—		2,513
Issuance of common stock under the employee stock purchase plan	Issuance of common stock under the employee stock purchase plan		6,531	—		160		—		—		—		160
Cash dividends ($0.72 per share)			—	—		—		(6,166)		—		—		(6,166)

Preferred stock dividends
Preferred stock dividends
Preferred stock dividends
Cash dividends ($0.91 per share)
Treasury stock purchased	Treasury stock purchased		(201,297)	—		—		—		—		(5,478)		(5,478)

Balance at December 31, 2021			8,457,564	$	93	$	85,797	$	170,020	$	(1,457)	$	(22,031)	$	232,422
Balance at December 31, 2023


			As of December 31, 2021								As of December 31, 2023
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		Amortized Cost										Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
			(In Thousands)								(In Thousands)
Available-for-sale:	Available-for-sale:
U.S. treasuries
U.S. treasuries
U.S. treasuries	U.S. treasuries		$	4,971	$	—	$	(57)	$	4,914
U.S. government agency securities - government-sponsored enterprises	U.S. government agency securities - government-sponsored enterprises		19,797		248		(110)		19,935
Municipal securities	Municipal securities		30,828		473		(344)		30,957

Residential mortgage-backed securities - government issued	Residential mortgage-backed securities - government issued		19,563		238		(140)		19,661
Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government-sponsored enterprises	Residential mortgage-backed securities - government-sponsored enterprises		85,748		741		(784)		85,705
Commercial mortgage-backed securities - government issued	Commercial mortgage-backed securities - government issued		5,801		36		(66)		5,771
Commercial mortgage-backed securities - government-sponsored enterprises	Commercial mortgage-backed securities - government-sponsored enterprises		36,786		313		(568)		36,531
Other securities			2,205		23		—		2,228
			$	205,699	$	2,072	$	(2,069)	$	205,702


	As of December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available-for-sale:
U.S. government agency securities - government-sponsored enterprises	$	22,699	$	9	$	(79)	$	22,629
Municipal securities	24,067		716		(4)		24,779

Residential mortgage-backed securities - government issued	9,894		509		—		10,403
Residential mortgage-backed securities - government-sponsored enterprises	102,843		2,212		(49)		105,006
Commercial mortgage-backed securities - government issued	5,289		175		—		5,464
Commercial mortgage-backed securities - government-sponsored enterprises	12,584		781		—		13,365
Other securities	2,205		74		—		2,279
	$	179,581	$	4,476	$	(132)	$	183,925


	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available-for-sale:
U.S. treasuries	$	4,977	$	—	$	(532)	$	4,445
U.S. government agency securities - government-sponsored enterprises	13,666		70		(531)		13,205
Municipal securities	45,088		90		(5,867)		39,311

Residential mortgage-backed securities - government issued	21,790		—		(2,359)		19,431
Residential mortgage-backed securities - government-sponsored enterprises	119,265		—		(12,942)		106,323
Commercial mortgage-backed securities - government issued	3,450		—		(518)		2,932
Commercial mortgage-backed securities - government-sponsored enterprises	31,515		—		(5,138)		26,377

	$	239,751	$	160	$	(27,887)	$	212,024


			Available-for-Sale				Held-to-Maturity
			Amortized Cost		Fair Value		Amortized Cost		Fair Value
		Available-for-Sale											Available-for-Sale			Held-to-Maturity
		Amortized Cost										Amortized Cost		Fair Value	Amortized Cost		Fair Value
			(In Thousands)								(In Thousands)
Due in one year or less	Due in one year or less		$	2,701	$	2,724	$	3,793	$	3,808
Due in one year through five years	Due in one year through five years		11,887		11,937		7,289		7,391
Due in five through ten years	Due in five through ten years		58,270		58,470		7,223		7,576
Due in over ten years	Due in over ten years		132,841		132,571		1,441		1,501
			$	205,699	$	205,702	$	19,746	$	20,276
Residential mortgage-backed securities
Commercial mortgage-backed securities
		$


			December 31, 2021												December 31, 2023
			Less than 12 Months				12 Months or Longer				Total				Less than 12 Months		12 Months or Longer			Total
			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		Fair Value														Fair Value		Unrealized Losses	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses
			(In Thousands)												(In Thousands)
Available-for-sale:	Available-for-sale:
U.S. treasuries
U.S. treasuries
U.S. treasuries	U.S. treasuries		$	4,914	$	57	$	—	$	—	$	4,914	$	57
U.S. government agency securities - government-sponsored enterprises	U.S. government agency securities - government-sponsored enterprises		978		22		2,412		88		3,390		110
Municipal securities	Municipal securities		12,568		344		—		—		12,568		344

Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government issued	Residential mortgage-backed securities - government issued		12,745		140		—		—		12,745		140
Residential mortgage-backed securities - government-sponsored enterprises	Residential mortgage-backed securities - government-sponsored enterprises		41,276		629		4,250		155		45,526		784
Commercial mortgage-backed securities - government issued	Commercial mortgage-backed securities - government issued		2,193		66		—		—		2,193		66
Commercial mortgage-backed securities - government-sponsored enterprises	Commercial mortgage-backed securities - government-sponsored enterprises		25,906		568		—		—		25,906		568

			$	100,580	$	1,826	$	6,662	$	243	$	107,242	$	2,069


														December 31, 2022
														Less than 12 Months		12 Months or Longer			Total
	Fair Value														Fair Value		Unrealized Losses	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses
														(In Thousands)
Available-for-sale:
U.S. treasuries
U.S. treasuries
U.S. treasuries
U.S. government agency obligations - government-sponsored enterprises
Municipal securities

Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government issued
Residential mortgage-backed securities - government-sponsored enterprises
Commercial mortgage-backed securities - government issued
Commercial mortgage-backed securities - government-sponsored enterprises

		December 31, 2020
		Less than 12 Months				12 Months or Longer				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		(In Thousands)
Available-for-sale:
U.S. government agency obligations - government-sponsored enterprises		$	11,602	$	45	$	4,031	$	34	$	15,633	$	79
Municipal securities		2,863		4		—		—		2,863		4

Residential mortgage-backed securities - government-sponsored enterprises		19,078		49		—		—		19,078		49

		$	33,543	$	98	$	4,031	$	34	$	37,574	$	132


December 31, 2023	Owner Occupied		Non-Owner Occupied		Construction		Multi-Family		1-4 Family		Commercial and Industrial		Consumer and Other		Total
	(In Thousands)
Sales	$	17,390	$	—	$	75,532	$	11,382	$	—	$	39,290	$	—	$	143,594


(In Thousands)
Maturities during year ended December 31,
2024	$	3,268
2025	2,425
2026	1,788
2027	1,301
2028	626
Thereafter	252
	$	9,660


	December 31, 2021
	Category
	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	192,849		$	31,611		$	10,781		$	348		$	235,589
Commercial real estate — non-owner occupied	540,572			88,880			31,971			—			661,423
Land development	41,745			1,047			—			—			42,792
Construction	130,285			18,973			30,583			—			179,841
Multi-family	280,183			28,623			11,266			—			320,072
1-4 family	12,057			2,113			402			339			14,911
Total commercial real estate	1,197,691			171,247			85,003			687			1,454,628
Commercial and industrial	594,388			97,678			32,964			5,789			730,819
Direct financing leases, net	10,829			168			4,647			99			15,743
Consumer and other:
Home equity and second mortgages	2,473			1,683			67			—			4,223
Other	35,249			269			—			—			35,518
Total consumer and other	37,722			1,952			67			—			39,741
Total gross loans and leases receivable	$	1,840,630		$	271,045		$	122,681		$	6,575		$	2,240,931
Category as a % of total portfolio	82.14		%	12.10		%	5.47		%	0.29		%	100.00		%


December 31, 2023	Term Loans Amortized Cost Basis by Origination Year
(In Thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial real estate — owner occupied
Category
I	$	31,637	$	43,156	$	38,803	$	44,704	$	22,078	$	72,774	$	451	$	253,603
II	—		—		—		260		—		—		—		260
III	—		—		—		—		—		2,616		—		2,616
IV	—		—		—		—		—		—		—		—
Total	$	31,637	$	43,156	$	38,803	$	44,964	$	22,078	$	75,390	$	451	$	256,479

Commercial real estate — non-owner occupied
Category
I	$	71,857	$	76,689	$	72,660	$	78,212	$	66,262	$	314,970	$	32,478	$	713,128
II	—		—		2,302		2,252		19,838		16,274		—		40,666
III	—		—		—		—		—		19,700		—		19,700
IV	—		—		—		—		—		—		—		—
Total	$	71,857	$	76,689	$	74,962	$	80,464	$	86,100	$	350,944	$	32,478	$	773,494

Construction
Category
I	$	63,660	$	83,161	$	8,542	$	744	$	433	$	6,528	$	15,011	$	178,079
II	—		—		9,289		5,712		—		—		—		15,001
III	—		—		—		—		—		—		—		—
IV	—		—		—		—		—		—		—		—
Total	$	63,660	$	83,161	$	17,831	$	6,456	$	433	$	6,528	$	15,011	$	193,080


	December 31, 2023
	30-59 Days Past Due			60-89 Days Past Due			Greater Than 90 Days Past Due			Total Past Due			Current			Total Loans and Leases
	(Dollars in Thousands)
Performing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	256,479		$	256,479
Non-owner occupied	—			—			—			—			773,494			773,494
Construction	—			—			—			—			193,080			193,080
Multi-family	—			—			—			—			450,529			450,529
1-4 family	—			—			—			—			26,267			26,267
Commercial and industrial	3,026			491			—			3,517			1,081,743			1,085,260
Consumer and other	—			—			—			—			44,312			44,312
Total	3,026			491			—			3,517			2,825,904			2,829,421
Non-performing loans and leases
Commercial real estate:
Owner occupied	—			—			—			—			—			—
Non-owner occupied	—			—			—			—			—			—
Construction	—			—			—			—			—			—
Multi-family	—			—			—			—			—			—
1-4 family	—			—			—			—			22			22
Commercial and industrial	404			550			18,347			19,301			1,274			20,575
Consumer and other	—			—			—			—			—			—
Total	404			550			18,347			19,301			1,296			20,597
Total loans and leases
Commercial real estate:
Owner occupied	—			—			—			—			256,479			256,479
Non-owner occupied	—			—			—			—			773,494			773,494
Construction	—			—			—			—			193,080			193,080
Multi-family	—			—			—			—			450,529			450,529
1-4 family	—			—			—			—			26,289			26,289
Commercial and industrial	3,430			1,041			18,347			22,818			1,083,017			1,105,835
Consumer and other	—			—			—			—			44,312			44,312
Total	$	3,430		$	1,041		$	18,347		$	22,818		$	2,827,200		$	2,850,018
Percent of portfolio	0.12		%	0.04		%	0.64		%	0.80		%	99.20		%	100.00		%


	December 31, 2021		December 31, 2020
Total non-accrual loans and leases to gross loans and leases	0.28	%	1.24	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	0.29		1.24
Total non-performing assets to total assets	0.25		1.04
Allowance for loan and lease losses to gross loans and leases	1.09		1.33
Allowance for loan and lease losses to non-accrual loans and leases	382.76		107.15


	December 31, 2023		December 31, 2022
Total non-performing loans and leases to gross loans and leases	0.72	%	0.15	%
Total non-performing assets to total gross loans and leases plus repossessed assets, net	0.73		0.15
Total non-performing assets to total assets	0.59		0.13
Allowance for credit losses to gross loans and leases	1.16		0.99
Allowance for credit losses to non-performing loans and leases	160.21		662.20


		As of and for the Year Ended December 31, 2023																					As of and for the Year Ended December 31, 2023
		Amortized Cost(1)																	Amortized Cost(1)	Unpaid Principal Balance	Individual Reserve	Average Recorded Investment(2)	Foregone Interest Income	Interest Income Recognized	Net Foregone Interest Income
			As of and for the Year Ended December 31, 2021															(In Thousands)
			Recorded Investment(1)		Unpaid Principal Balance		Impairment Reserve		Average Recorded Investment(2)		Foregone Interest Income		Interest Income Recognized		Net Foregone Interest Income
			(In Thousands)
With no impairment reserve recorded:
With no individual reserve recorded:																	With no individual reserve recorded:
Commercial real estate:	Commercial real estate:																Commercial real estate:
Owner occupied	Owner occupied		$	348	$	386	$	—	$	2,217	$	145	$	218	$	(73)
Non-owner occupied	Non-owner occupied		—		—		—		2,281		233		16		217
Land development			—		—		—		7		—		—		—
Construction	Construction		—		—		—		—		—		—		—
Multi-family	Multi-family		—		—		—		—		—		—		—
1-4 family	1-4 family		339		344		—		285		60		24		36
Commercial and industrial	Commercial and industrial		3,717		3,819		—		7,914		522		179		343
Direct financing leases, net			15		15		—		2		1		—		1
Consumer and other:
Home equity and second mortgages			—		—		—		40		7		9		(2)
Other			—		—		—		8		23		—		23
Consumer and other
Total	Total		4,419		4,564		—		12,754		991		446		545
With impairment reserve recorded:
With individual reserve recorded:																	With individual reserve recorded:
Commercial real estate:	Commercial real estate:																Commercial real estate:
Owner occupied	Owner occupied		—		—		—		—		—		—		—
Non-owner occupied	Non-owner occupied		—		—		—		—		—		—		—
Land development			—		—		—		—		—		—		—
Construction	Construction		—		—		—		—		—		—		—
Multi-family	Multi-family		—		—		—		—		—		—		—
1-4 family	1-4 family		—		—		—		—		—		—		—
Commercial and industrial	Commercial and industrial		2,072		2,072		1,439		1,456		109		8		101
Direct financing leases, net			84		84		66		50		4		—		4
Consumer and other:
Home equity and second mortgages			—		—		—		—		—		—		—
Other			—		—		—		—		—		—		—
Consumer and other
Total	Total		2,156		2,156		1,505		1,506		113		8		105
Total:	Total:																Total:
Commercial real estate:	Commercial real estate:																Commercial real estate:
Owner occupied	Owner occupied		348		386		—		2,217		145		218		(73)
Non-owner occupied	Non-owner occupied		—		—		—		2,281		233		16		217
Land development			—		—		—		7		—		—		—
Construction	Construction		—		—		—		—		—		—		—
Multi-family	Multi-family		—		—		—		—		—		—		—
1-4 family	1-4 family		339		344		—		285		60		24		36
Commercial and industrial	Commercial and industrial		5,789		5,891		1,439		9,370		631		187		444
Direct financing leases, net			99		99		66		52		5		—		5
Consumer and other:
Home equity and second mortgages			—		—		—		40		7		9		(2)
Other			—		—		—		8		23		—		23
Consumer and other
Grand total	Grand total		$	6,575	$	6,720	$	1,505	$	14,260	$	1,104	$	454	$	650


			As of and for the Year Ended December 31, 2021								As of and for the Year Ended December 31, 2023
			Commercial Real Estate		Commercial and Industrial		Consumer and Other		Total
		Owner Occupied										Owner Occupied	Non-Owner Occupied	Construction	Multi-Family	1-4 Family	Commercial and Industrial	Consumer and Other	Total
			(In Thousands)								(In Thousands)
Beginning balance	Beginning balance		$	17,157	$	10,593	$	771	$	28,521
Impact of adopting ASC 326
Charge-offs	Charge-offs		(256)		(3,227)		(25)		(3,508)
Recoveries	Recoveries		3,935		1,168		23		5,126
Net recoveries (charge-offs)	Net recoveries (charge-offs)		3,679		(2,059)		(2)		1,618
Provision for loan and lease losses			(5,726)		(121)		44		(5,803)

Provision for credit losses
Ending balance	Ending balance		$	15,110	$	8,413	$	813	$	24,336
Components:
Allowance for loan losses
Allowance for loan losses
Allowance for loan losses
Allowance for unfunded credit commitments
Total ACL


	RSA		Weighted Average Grant Price		PRSU		Weighted Average Grant Price		RSU		Weighted Average Grant Price		Total		Weighted Average Grant Price
Nonvested balance as of January 1, 2021	143,246		$	23.04	39,570		$	28.85	4,988		$	24.08	187,804		$	24.29
Granted (1)	67,515		22.39		23,550		27.12		2,065		21.68		93,130		23.57
Vested	(61,384)		22.26		—		—		(2,001)		22.91		(63,385)		22.28
Forfeited	(7,760)		23.24		—		—		—		—		(7,760)		23.24
Nonvested balance as of December 31, 2021	141,617		23.06		63,120		28.20		5,052		23.56		209,789		24.62
Granted (1)	62,560		34.04		37,335		24.71		3,115		27.95		103,010		30.47
Vested	(62,353)		23.21		(43,020)		18.91		(2,062)		23.20		(107,435)		21.49
Forfeited	(8,507)		26.15		—		—		—		—		(8,507)		26.15
Nonvested balance as of December 31, 2022	133,317		27.95		57,435		32.89		6,105		25.92		196,857		29.32
Granted (1)	—		—		34,840		35.79		54,955		34.43		89,795		34.96
Vested	(56,931)		27.03		(36,120)		31.31		(3,253)		26.06		(96,304)		28.60
Forfeited	(4,435)		30.20		—		—		(820)		36.42		(5,255)		31.17
Nonvested balance as of December 31, 2023	71,951		$	28.53	56,155		$	35.70	56,987		$	33.97	185,093		$	32.38
Unrecognized compensation cost (in thousands)	$	1,229			$	879			$	1,393			$	3,501
Weighted average remaining recognition period (in years)	1.80				1.64				2.79				2.15


	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
December 31, 2021	Derivatives	$	26,343	Derivatives	$	26,343
December 31, 2020	Derivatives	$	49,377	Derivatives	$	49,377
Derivatives designated as hedging instruments
December 31, 2021	Accumulated other comprehensive income (1)	$	1,940	Derivatives	$	1,940
December 31, 2020	Accumulated other comprehensive income (1)	$	5,550	Derivatives	$	5,550