First Business Bank Announces 10% Increase in Quarterly Common Stock Dividend

Rhea-AI Summary

First Business Financial Services, Inc. (Nasdaq: FBIZ) announced a 10% increase in its quarterly cash dividend on common stock to $0.25 per share, reflecting a dividend yield of 2.53% based on Friday's market close price of $39.56. The dividend payout ratio is 22% based on fourth quarter 2023 earnings per share. The company also declared a dividend on its 7% Series A Preferred Stock of $17.50 per share. CEO Corey Chambas expressed confidence in the business strategy and strong financial performance, aiming to deliver value to shareholders.

Positive

• 10% increase in quarterly cash dividend on common stock
• Dividend yield of 2.53%
• Dividend payout ratio of 22%
• CEO's confidence in business strategy and financial performance

Negative

• None.

Insights

Financial Analyst

The announcement of First Business Financial Services, Inc.'s increased quarterly cash dividend is a significant indicator of the company's financial health and management's confidence in its profitability. The 10% increase in dividend payout is a substantial move, particularly in the current economic environment where many companies are conservative with cash distributions to maintain liquidity. This action suggests that First Business Bank is not only generating sufficient cash flow to cover its operations but is also able to return a portion of its earnings to shareholders, which can be an attractive proposition for income-focused investors.

Moreover, a dividend yield of 2.53% is competitive within the financial sector, potentially positioning the stock as a more attractive investment compared to its peers, especially in a low-interest-rate environment. However, investors should also consider the sustainability of such dividend payments in the long term, as an excessively high payout ratio could jeopardize future growth or lead to dividend cuts if earnings decline.

With a payout ratio of 22%, First Business Bank maintains a conservative approach, retaining a majority of its earnings for reinvestment. This balance between rewarding shareholders and funding future growth opportunities is critical for maintaining a healthy capital structure and ensuring long-term value creation.

Market Research Analyst

First Business Bank's decision to increase its dividend may also reflect a strategic positioning within the market. In a competitive banking landscape, such actions can serve as a signal to the market of the bank's strong performance and optimistic outlook. This may enhance the bank's reputation among investors and analysts, potentially leading to a more favorable stock valuation.

It is noteworthy that the increase follows a consistent pattern of profitability and may be part of a broader trend of financial institutions attempting to attract and retain shareholders in a volatile market. Investors often view regular and increasing dividends as a sign of a company's resilience and a commitment to shareholder returns, which can be particularly appealing during times of economic uncertainty.

However, it is essential for investors to conduct due diligence and assess the broader economic context, including interest rate trends, regulatory changes and competitive dynamics, which could all impact the bank's future performance and its ability to maintain or increase dividends.

MADISON, Wis.--(BUSINESS WIRE)-- First Business Financial Services, Inc. (the “Company” or “First Business Bank”) (Nasdaq: FBIZ) announced its board of directors has declared a quarterly cash dividend on its common stock of $0.25 per share which is equivalent to a dividend yield of 2.53% based on Friday's market close price of $39.56. The quarterly dividend represents a 10% increase over the quarterly dividend declared in October 2023, and, based on fourth quarter 2023 earnings per share, represents a dividend payout ratio of 22%. This regular cash dividend is payable on February 21, 2024, to shareholders of record at the close of business on February 8, 2024.

“First Business Bank is committed to delivering value to our shareholders through consistent and profitable growth," said Chief Executive Officer Corey Chambas. “The 10% increase in our common dividend reflects our confidence in our business strategy and our strong financial performance. We are proud to share our success with our shareholders while we continue to invest in our future growth opportunities."

The board of directors also declared a dividend on the Company’s 7% Series A Preferred Stock of $17.50 per share, payable on March 15, 2024, to shareholders of record on February 29, 2024.

About First Business Bank

First Business Bank specializes in Business Banking, including Commercial Banking and Specialty Finance, Private Wealth, and Bank Consulting Services, and through its refined focus delivers unmatched expertise, accessibility, and responsiveness. Specialty Finance solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. First Business Bank is a wholly owned subsidiary of First Business Financial Services, Inc. (Nasdaq: FBIZ). For additional information, visit firstbusiness.bank.

This press release includes “forward-looking” statements related to First Business Financial Services, Inc. that can generally be identified as describing the Company’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company’s future results, please see the Company’s 2022 annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240129249918/en/

Brian D. Spielmann

Chief Financial Officer

First Business Financial Services, Inc.

608-232-5970

bspielmann@firstbusiness.bank

Source: First Business Financial Services, Inc.

FAQ

What is the quarterly cash dividend on First Business Financial Services, Inc. common stock?

The quarterly cash dividend on common stock is $0.25 per share.

What is the dividend yield based on Friday's market close price?

The dividend yield is 2.53% based on a market close price of $39.56.

What is the dividend payout ratio based on fourth quarter 2023 earnings per share?

The dividend payout ratio is 22% based on fourth quarter 2023 earnings per share.

What is the dividend on the Company’s 7% Series A Preferred Stock?

The dividend on the 7% Series A Preferred Stock is $17.50 per share.

When is the quarterly cash dividend payable?

The quarterly cash dividend is payable on February 21, 2024.

When is the dividend on the 7% Series A Preferred Stock payable?

The dividend on the 7% Series A Preferred Stock is payable on March 15, 2024.