First Business Financial Services, Inc. Price & Performance (FBIZ)

Good afternoon, everyone, and thank you for joining us. We appreciate your time and your interest in First Business Bank. Joining me today is our President and Chief Operating Officer, Dave Siler, and our CFO, Brian Spielman. Today, we'll discuss our financial performance along with some operational highlights. Followed by a Q and A session. I'd like to direct you to our first quarter earnings release and supplemental earnings call slides are available through our website at ir.firstbusiness.bank. We encourage you to review these along with our other investor materials. Before we begin, please note this call may include forward looking statements and the company's actual results may differ materially from those indicated in any forward looking statements. Important factors that could cause actual results to differ materially from those indicated the forward looking statements are listed in the earnings release, and the company's most recent annual report on Form 10 ks, and is maybe supplemented from time to time the company's other filings with the SEC. All of which are expressly incorporated herein. By reference. There you can also find information related to any non GAAP financial measures we discuss on today's call including reconciliations of such measures. Are pleased to report another outstanding quarter.

Our model is built to produce 10% annual growth and the first quarter is one more example of our strategic plan at work. Our team has a clear directive to drive relationship based deposit growth. And this quarter we produced double digit core deposit growth that outpaced our robust expansion of loans We also maintained a strong net interest margin and stable asset quality. All the elements required to consistently grow shareholder returns showed strength during the quarter. Loans grew across our markets and portfolios. Private wealth management assets and fees grew. Operating revenue showed continued strength and operating expenses were contained and in line with growth in our workforce. Non performing assets declined These successes drove pre tax pre provision adjusted earnings up 23% over last year's first quarter and earnings per share of $1.32 up 27% from a year ago. Most importantly, tangible book value per share grew 14%. Dave will walk through some of the business activity that drove strong first quarter results. Dave? Thanks, Corey. It's worth repeating that our balance sheet growth was very strong this quarter, that's by design. You can see the quarterly highlights on Slide three of the earnings call supplemental slides.

Loan balances grew about $275,000,000 over the same period last year. That's up almost 10%, which is our long term organic growth goal. Total deposits grew $488,000,000 or 18% from last year's first quarter. That includes our continued use of wholesale deposits to execute our match funding strategy, maintain adequate liquidity and support our loan growth goals. We saw exceptional growth in the first quarter with core deposits growing $66,000,000 or over 11%. You can see our quarterly deposit and loan growth trends on Slide four. On the lending side, we continue to deliver on our growth targets in the first quarter. C and I led the growth with balances expanding 77,000,000 or 27% annualized. A few successes in particular merit attention. SBA lending sustained its momentum under the recently expanded team, expect this trajectory will be variable. But with strong loan sale premiums for the past two quarters, we expect SBA to be a meaningful driver of revenue in 2025. Additionally, activity levels in our asset based lending group are exceeding what we've seen in the last one point five to two years. Attribute this to market dynamics and with our new ABL leader now in place alongside our exceptional team, we're positioned to capture growth opportunities in this space.

Our floor plan financing team also continues to show nice demand extremely high client satisfaction results and is off to a great start in 2025. This is a good time to highlight two of our lending businesses in light of the current uncertainty around the economic outlook. Our asset based lending and accounts receivable financing businesses are typically countercyclical. Yields on these loans typically carry a significant premium over conventional C and I yields and they are generally 100% secured. We would expect growth in these portfolios in a softening economy. Moving briefly to revenue. Our first quarter revenue grew by nearly 13% compared to the first quarter of twenty four. This sustained strength reflects the diversified nature of our revenue streams and supports our continued goal of achieving 10% or greater annual revenue growth over the long term. The diversification we've built into our revenue profile provides a buffer against reliance on any one source. You can see our revenue growth trajectory on Slide seven of the earnings deck. On to asset quality. We continue to be pleased with how our portfolio is performing and have no areas of particular concern. NPAs declined by $4,300,000 from the linked quarter due to net charge offs against specific reserves on credits in the transportation sector of the equipment finance portfolio and the SBA portfolio.

While these net charge offs reduce the overall allowance for credit losses, This was partially offset by increased general reserves due to loan growth and modest deterioration in the economic outlook in our model forecast. Together, these factors drove the increase in the allowance coverage of NPLs compared to December 31. We are always looking closely at migration in the portfolio. Our weighted average risk rating has barely moved. Continue to wait out the bankruptcy proceeding process and related litigation for the $6,200,000 ABL credit mentioned in previous quarters. Expect full repayment on this credit, but unfortunately it continues to inflate our otherwise healthy level of NPAs. Lastly, I want to comment on the current environment and what we're hearing from our clients. We are in very healthy markets and our clients are generally healthy and thriving. We do have ongoing dialogue with clients, and there is a rising level of uncertainty related to changes in U. S. Trade policy along with the potential for any unfavorable changes to lead the economy into recession. Although we are built to grow at a double digit pace in most conditions, our growth will be impacted if conditions weaken. We can't put a number on that today, but we would expect to continue outperforming our peers as we have done in recent periods of economic weakness.

Now I'll hand it off to Brian.

Thanks, Dave.

I'll cover first quarter financials in a little more detail. As a reminder, when looking at our first quarter results, in comparison to the linked quarter, our fourth quarter had some unusual items which boosted earnings by about $0.28 Our ability to produce a net interest margin that is strong and stable compared to peers contributed to our solid performance. First quarter margin of 3.69% reflects our continued strong balance sheet management. You can see a breakdown of this on Slide five of our earnings supplement. Our margin includes fees earned in lieu of interest. Which declined by $307,000 from the linked quarter. Compared to the first quarter of twenty twenty four, fees in the loop interest grew by $1,200,000 Season move interest refers to the significant and recurring but variable amount of interest income we earn from items like prepayment fees, and asset based loan fees. Recent levels were elevated and contributed 23 basis points to reported margin for the first quarter, and 27 basis points in the fourth quarter. Compared to 10 basis points in the first quarter of twenty twenty four. Excluding these fees, adjusted NIM was $3.46 for the quarter compared to $3.48 in the linked quarter, and $3.43 for the prior year quarter.

Margin remained strong and consistent due to pricing discipline and continued execution of our long standing match funding philosophy. Dave covered fee income and the strength we continue see there. Just a few additional notes. Ongoing variability in swap fees and returns on SBIC funds are expected. Our swap fee income will continue to vary quarterly based on CRE activity, the rate environment, and client preference. We saw a decrease of $475,000 there in the first quarter. SBIC fee income is driven by interest income in the portfolio and unrealized and realized gains. We saw an uptick of $318,000 in Q1, and expect realized gains should show strength throughout 2025 as the existing funds mature though timing may contribute to ongoing variability. One administrative item is that we reclassified certain types of C and I loan fees from non interest income to fees in lieu of interest in our net interest income line. For the first quarter, this reclassification was approximately 500,000 The reclassification does not change our outlook or target range of 3.6% to 3.65% for net interest margin. But would expect to land on the higher end of that range. All else equal. Quarterly variability reinforces the importance of our fee income diversification we've worked hard to grow.

We continue to expect overall annual fee income to grow in our long term target range of 10% going forward. Our expenses were well contained this quarter and showed expected workforce related and seasonal growth. Total expenses were up $1,600,000 compared to the fourth quarter. Dollars 1,200,000.0 of that growth came from compensation expense due to larger workforce merit increases and higher seasonal payroll taxes. We think about expenses, our primary objective is achieving annual positive operating leverage. Expense growth at some level below our targeted level of 10% revenue growth. We will continue to manage expenses towards this goal the event that economic conditions impact revenue growth. Next taxes. The first quarter returned to a more normalized effective tax rate of 17% in line with our target range of 16% to 18% for 2025. Recall that in the fourth quarter we saw a significant change in estimated state tax taxes which brought our effective tax rate down to 5.8%. Finally, we continue to feel good about our capital levels and our strong earnings are generating more than enough capital facilitate our expected organic growth. And now I'll hand it back over to Corey. Thanks, Brian. I'd like to draw your attention to our Slide 11 our earnings deck.

This shows our five year strategic plan and our progress toward achieving our long term goals You'll see that above all, our goal is to deliver shareholder returns that exceed our peers. We expect we can do this in any environment. The metrics we track to achieve this are laid out on this slide. Today, we continue to do what we've always done. And that's focused on controlling the controllable. This is the value of a well thought out strategic plan that is understood by all employees. It guides us in both stable and volatile times. We continue to be optimistic about 2025 and believe focus on our strategic initiatives will serve us well in the future. I want to thank you for taking time to join us today We're happy to take your questions now.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the pooling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Danielle Tamayo from Raymond James. Please go ahead.

Thanks. Good afternoon, guys. Hey, David. Hi, David. Maybe we start on the margin, kind of the underlying some of the underlying components there. Just curious what new loan yields were in the first quarter and where roll off yields were and then just any commentary you have on if you've seen tightening of spreads at all?

Right. I would say new loan yields are pretty consistent.

With prior quarter We're seeing for the very competitive credits, those those spreads are narrowing a little bit, not much change. So I would say nothing really to note there in first quarter. Okay. Not not much change on new do you have the like, a a rough number of where where they were? [indiscernible] No, we don't. We typically will see pricing in the $25 to $275 range depending on the type of credit. And the type of product it is, so over SOFR, sorry.

On the bank side. On the bank side. And then I would see the finance or initial commercial lending area with ABL and ARF and other areas. We get wider spreads there.

So where that mix comes into play in the margin. And Danny, we for a while, we were providing that breakdown of what the the loans for the quarter, the new loans came on at. And then we thought that was going to be helpful, but we realized it gets skewed because of it depends where it comes from for the quarter. So as Brian said, if we had a of asset based deals or factoring deals happen in that quarter, it's going to really skew it up.

But it was more confusing than it was informative. So we stopped generating that information on a specific quarter go forward basis.

But I would I would say yeah. I I would say it's pretty stable both on the loan and deposit side. Right now. We've finally kind of gotten to an equilibrium state, I would say, on both sides of the balance sheet. I agree.

That's kinda where I was going with this. I I you know, the the core margin has been pretty stable, you know, trended slightly down over the last few quarters. But but relatively stable here as you guys have talked about that. The expectation for that to be the case. You've got the [indiscernible] call it five basis points of incremental [indiscernible] interest in there now. So [indiscernible] appreciate your guidance on the upper end of three sixty to three sixty five. But so I guess what you're saying is that you're not seeing loan yields they're relatively stable in the quarter, you wouldn't expect those to be trending down at all from current levels if we didn't get any rate cuts. Probably the same answer on funding costs. Is that fair? Yeah. That's that's spot on. Yeah. Okay. And then you know, you talked about it a little bit in your prepared comments. About the tariffs and maybe creating some uncertainty and probably hard to quantify at this point. But just curious as you look through your your borrower base, where it might be most exposed to these tariffs, where you're watching most closely you know, as we as we go through these next few months and knows what's gonna actually come out of Washington, but at least to give you a starting point.

Dave, why don't you start with that? Yeah. Well, I mean, I think to start, Danny, I mean, we try to communicate a lot with our clients, and we've ramped that up over the last sixty days for sure, just trying to figure out what they're thinking and where they might be impacted. Right now, we're not hearing a lot of noise from them. I mean, they have concerns, they have uncertainty. But I don't believe they've been significantly impacted at this point.

So know, we're focusing on particularly on clients that have foreign or international clients, international vendors. We're focusing on contractors. And so far, we haven't seen a huge impact.

Jim, anything different to add there? No. Lots of conversation and uncertainty, but no impact as of yet. And I would say a little bit of a good news, bad news in that, Danny, is we don't have a lot of clients that do international that sell internationally. We've we've often tried to to push on international products because it's a good product for banks. Letters of credit, hedging foreign currency exposure, etcetera. And we just don't have much usage on that from our client base. Which right now today is probably good news.

Got it. Okay. I appreciate all that color. Last one, just a small question. I apologize. I'm not sure if you addressed this the comments. I know you did in the release a little bit. Just on pull forward of equipment finance losses that drove the increase in net charge offs. That would be expected to mean, that's essentially like a one quarter phenomenon. Is that the way to think about that? Yeah. Let's have Brad Quatty, our Chief Credit Officer, Hey, Danny. That yeah. They yeah. That is a a one quarter anomaly that we're going see at that level. While we do expect some continued credit costs in the equipment finance portfolio in Q2, and beyond. We look at that size of the charge offs there as being as being unique and and and kind of accelerating at quarter's worth of charge offs plus Okay.

Alright. Great. And I'll just I'll sign off with glad to see the packers finally decided to take a receiver night, a draft bill. Yeah. Lot of excitement and on Brian. Alright. Thanks, guys.

Next question is from Jeff Rose from D. A. Davidson. Please go ahead.

Thanks. Good afternoon.

Maybe a quick follow on in the same vein. Expectation on the provision [indiscernible] loan growth is where it's at, a step down there is some correlation, I guess, I'm asking on the provision to the increased charge offs. Is that correct?

Yes, in the current quarter. There's correlation with the increased provision due to the pull forward on the EF charge offs. So I think all else equal, we have a growth factor in provision, and then we'll continue to work through the EF portfolio with some additional net net new with the charge offs in the quarter. And then again, the the CECL model factors, the quantitative piece, right, will will will will kinda present itself as it will in the with the rest of the industry. So Yeah. But most of what we pulled forward because essentially, I think you could think of it as two quarters' worth of charge offs from that equipment finance portfolio, which is where there was the transportation noise. But because of all that was done on timing, those were essentially reserved for already.

So I don't think it had the same impact on the provision for the quarter. It just pulled [indiscernible] pulled those charge offs out of the specific reserves that were already in place for them.

Got it. Okay. So it came out of the reserve, but the provision line is is less impacted and that's more of a function of kind of go forward growth and Cecil, gymnastics, I suppose. Right? So So a provision level in the range that you've seen in the last few quarters is is reasonable assumption?

Yes. Okay. Yep. So jumping ship a little bit, your cash and securities balances as a percent of earning assets has kind of a two year high. I guess, is that an intentional strategy, somewhat temporary Just trying to check-in on those levels relative to overall earning assets. Yeah. I'll say intentional but temporary. Intentional in the fact that we're looking to the balance sheet for 10% of total assets for liquidity at quarter end and you try to land the plan as best you can around that and we had some nice core deposit inflows near really the last business day of the quarter, which then left us with some additional deposits there and inflated the balance sheet We've already put that to work, So Got it. Okay.

Appreciate it.

And then, you mentioned the fee income, expectations overall. I just want to clarify in that loan fee income line, the re class, is that that permanent that the run rate on loan fees remains kind of at this run rate safe to say?

Yes. I would say in the quarter, right, we had 7,500,000.0 or so So you add that request back, we're closer to 8. That's with some of those components that we talk about, right? SBA was stronger. But private wealth, SBIC fund investments, different areas that we still think we can grow fee income. Swabs. Swap fee income that comes and goes as a client preferences in the rate environment. So [indiscernible] we believe we can make up that reclass throughout the course of the year. In fee income based on the various lever or based on the various engines and cylinders we have in that fee income growth Okay. I may follow-up with you on that. But thanks. I'll step back.

Thank you.

Your next question comes from Damon DelMonte from KBW. Please go ahead.

Hey. Good afternoon, Hope you're all doing well today.

Quick question. Just to kind of follow-up on that the last comment on the the loan income reclassification. So I think, Brian, you said that was about five basis points impact to the margin.

Is that correct?

Yeah.

Yeah. About Okay. So, I think total fees in lieu of interest was around 23 basis points this quarter. And I think historically, it's been a little bit lower. Maybe, like, 15 basis points. So should we kind of of model 20 basis points now if you look at the the pickup from the other five basis points on the reclass.

Yeah. I think that's that's fair on average.

Right? It's been around 15 to 20 And so similar to our margin comments around that three sixty to three sixty five, all else equal, we'd probably be on the higher end of that range, right? So the $15 to $20 probably on the higher end is probably a fair a fair assumption.

Alright. That makes sense. And then with regards to, you know, opportunity to reprice fixed rate loans, or CDs that are coming due, can you just talk a little bit about what the schedule for those look like?

Our our CD, portfolio is is smaller, but we still do have opportunity there. We kind of noted that in our press in our earnings release around 100 plus coming off at a four handle and 100,000,000 plus coming on renewed or new at a sub four there's still some benefit there. It's just not a large portfolio really at all. And then on the loan side, just given where we are in the and and when those loans are put on, I think there still is an opportunity not only on the loan side but on the bond portfolio too. Diminishing there, though.

Given where we are in the rate cycle now from where we put those assets on. So Got it. Okay.

Okay. That's probably all that I had. Everything else had already been asked. So thank you very much.

Thanks, Damon.

Your next question comes from Nathan Race from Piper Sandler. Please go ahead.

Hey, guys. Good afternoon. Thanks for taking the questions.

You bet. Bigger picture, on the SBA front, obviously, there's been a lot of headlines recently in terms of some changes in terms of underwriting and kinda just how that may impact, you know, deal volumes and so forth. So just curious how you guys are kind of thinking about it. Are ramping ramifications. Some of the changes in the SBA arena may impact your revenue line going forward?

Mean, I don't think we, at this point, see a huge difference. I think it's our the biggest factor driving volume for us right now is our is our sales team there. So at this point, I don't think we have huge concerns about changes in volume Okay. Gotcha.

And then, you know, obviously, you guys are still sticking to your, you know, double digit or high single digit balance sheet growth outlook. But just curious all the macro volatility of late, have you seen any kind of slowdown in activity levels when it comes to you're seeing in loan committee or otherwise? Yep. We really haven't.

There's been a lot of conversation and they're dealing with it on a case by case basis, but we haven't seen it pull through on the pipeline yet. Okay. Great. And [indiscernible] Nate, the only real time data that we have, you know, because loan deals that we have come through the bank, those are things that have been in process for a while. So we tried to look at that see if we had any real time data and thought about our equipment finance business. Why don't you speak to that, Dave? Right. So that's a higher volume, smaller ticket type products. So what we've seen there is actually an increase in volume an increase in applications over the past thirty to to forty five days. So we don't know if that's people accelerating their purchases, to avoid tariffs or just baseline economic activity.

And we I guess we won't know until sometime in the future, but at least it's an indicator that real time it hasn't slowed down yet.

Okay. Gotcha. And then question for Brad. You know, just curious what you saw in terms of kind of criticized classified migration in the quarter. And, you know, just kind of just any general thoughts on that front?

Yeah. Yeah. From a credit standpoint, I mean, nothing nothing exceptional. I say the trend lines are benign. We have very little way of change quarter over quarter. We continue to work through a couple of the challenged credits that are on there, but the overall portfolio and even those that headed into the quarter with some signs of distress had general stability quarter over quarter. So really too early to pick up any real trend lines of deterioration from broader economic concerns.

Okay. Got it.

Then maybe one last one for Brian. You know, just curious how you're thinking about, you know, remaining deposit cost leverage. Just based on kind of where your pricing is today. And maybe what you have in CDs rolling off based on kind of where your pricing is today on some of those products as long as the Fed remains on pause?

I would say it's going to be nominal Right? We we've talked about the CD portfolio and the opportunity we have there. Again, a very small CD portfolio. Then just new client acquisition is expensive. It's near the alternative cost of funds. For us, we think about the broker's CE Mark as alternative cost of funds. And so the good thing for us is we've always been kind of competing in that environment. And so we think the asset yields to support that three sixty to 35% long term still you throw in the mix of the in addition to the mix of the higher yielding niche C and I buckets.

So [indiscernible] answer to a shorter question. Sorry.

No.

That helps a lot. Thank you. Just lastly, could you guys remind us kinda what your loan deposit ratio target is? Obviously, came down nicely in the quarter, but just curious how where you'd like that land, you know, over time?

Well, I I think, you know, we might have said this, Nate, is, you know, we don't think about it that much. We don't care about it. That much. We just think about our funding and liquidity, etcetera. But we know there are some you know, kinda older school bank investors who look at loan to deposit and think that's an indicator of risk. They could see the Silicon Valley Bank experience and realize maybe that's not the case. But we also, because of those optics, we're trying to get it down a little bit. That's why we favor brokered CDs over home loan bank advances when we want to match fund our balance sheet. So ideally, if that was if that was 99.99, instead of a hundred some you know, o one.

We think it could be better just because it had some screening that people do. So that's our first test this quarter. We'll see. We're below a hundred this quarter. Yeah. But we're at 98, I'd maybe this quarter. And so I think that would be a big there's a lot of success in the core deposit side, but also just transitioning away from home loan advances to broker cities for our mesh funding brought us down. So we think we have opportunity to keep pushing that down given the core deposit objectives and goals, but to Corey's point, we're really more focused on that 75% core funded to total bank funding and that gets a little higher, that's great. But we're always going have that element of wholesale funding to mitigate the interest rate risk. As long as that's in that 70% to 80% range, of our core funding, That's a good place for us to be to be able to appropriately match fund the fixed rate. Portion of our loan portfolio that's on balance sheet. So a good range for us to be in. As Brian said, the transition from home loan to brokered, which has been over the last couple of years in terms of what we've we've used for that match funding.

That's brought that loan to deposit ratio down. Hopefully, we look more attractive and get a few more screens and people come and listen to the story and and discover what we're doing here. Find it attractive.

Yep. Agreed.

Sounds good. I appreciate all the color. Thanks, guys. [indiscernible] [indiscernible] transcribed from [indiscernible] Please ahead.

Hey. Good afternoon, guys.

Hey, Brian.

Hi. [indiscernible] I guess, is it just being conservative to not bump the the target range in the margin [indiscernible] adding five to that into that bucket, if you will, kind of when you split out the, you know, kind of core margin versus core with the know, fees in lieu or however you wanna, you know, call it. But is that is some conservatism on your part? Or I guess, is something more you know, I guess, if we think about that, Yeah.

We have a range stated range of $3.60 to $3.05, and we think all else equally end up now on the higher end of that range. Why we kind of say it that way and continue to say it that way is because it's so it is a volatile element with the seasonal interest, right? So that can be on average 15 to 20. It can be 23 like it is this quarter. It can be less than percent like it has been in other quarters. And so that's why we kind of stuck with our guns there on our disclosed ranges. Although again, pushing towards that higher end given the [indiscernible] Gotcha. Okay. And just stick with a higher range of what we we've put in for the fees in lieu, right now. Okay. And then, Brian, just any big comments on I get the NIM stability and just kind of mass funded. Just any near term kind of push or pulls on directionally how the margin plays out here over the next couple of quarters given kind of the environment we're in right now or just you know, not much movement one one way or the other really, I guess, is how your now listening to your comment about the competitive pressures on the deposit side, certainly funding loan growth, but anything else that you know, merits, you know, mentioning on your part just in terms of near term?

I I would kinda echo off of what Corey said earlier around stability. Right now, at least on both sides of the balance sheet relative to pricing. And while it's very competitive on the deposit side, we also have some comments, maybe in Dave's comments around little pick up in some of our niche C and I areas too, right? So there is some more activity there and the more activity we have there, the more opportunity we have at those higher yielding loans. And we get those on the books, and we have opportunities that more feasible of interest So we think that combination the mix of new business on both sides of the balance sheet gives us the opportunity to maintain our long term margin targets.

Got you. Okay. No, that's helpful. And in terms of the just just a credit picture, you know, if if we do get into a little bit different environment or weaker environment here, I think he had talked about or maybe, some continued normalization of the, know, the conventional portfolio. But just as you kind of either risk here over the next you know, six to twelve months, we do, you know, economically get a little bit weaker, you know, where any new areas that we should be watching? I know you talked about the equipment finance, just is it more of the conventional side or is it yeah, guess we just point to where you're, you know, kinda paying a little bit more attention to today?

Rev, don't you take that? Yeah. Yeah. The, I I think that while while obviously impossible to estimate with great accuracy what's going on in the economy, I think our portfolio because of the focus on real estate and heavily toward Wisconsin and area of real estate continues to be very, very strong. And showing high occupancy, good cash flows. And across the entire portfolio, a great deal of still customer liquidity. So I would say in general, we feel very good about portfolio being able to withstand softness in the economy. I think the obvious areas that as we look to portfolio, we'll still be equipment finance driven, it will be already existing weakness within the transportation sector. If we were to hit a recession, they're the ones who have already been in recession for the last couple of years and would I think, be the the ones to feel it most significantly. But we've we've already factored in a great deal of softness in that segment of the portfolio today. So I guess that's a five big guidance I could give you based on what we see right now.

Yeah. No. That's helpful. I appreciate it. And I don't know if you guys talked about maybe if I missed in your opening comments, but just about the kind of the level of expenses today. This is kind of a good run rate to think about anything unusual there. In terms of, you know, just kind of your outlook or just what what you might have to say about that.

Nothing unusual. I'd say consistent with how we've operated for a long time now, investing in people. We'll continue to do that in twenty five. Opportunistically. And then and if there are revenue headwinds from anything out of our control, macro base, then we can adjust that run rate really driving towards that positive operating leverage on an annual basis.

Yeah.

Okay. So good good run rate to start, and we'll see how things play out.

Yes.

Okay. That's that's it. My other questions are answered. So thanks for thanks for the time, guys.

Yep. Alright.

Thanks, Brian. Thanks, Brian. Reminder, if you to ask question, please There are no further questions at this time. I will now turn the call over to CEO, Corey Chambas. Please continue.

Thank you for joining us today, everyone.

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

Have a great rest of your day and a great weekend.

Thanks.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.