First Business Financial Services (FBIZ) risk factors, FY2024 10-K

Risks Related to Investing in Our Common Stock

1. 01If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, non-accrual loans, and charge-offs, which would require increases in our provision for credit losses
2. 02Our allowance for credit losses may not be adequate to cover actual losses
3. 03A significant portion of our loan and lease portfolio is comprised of commercial real estate loans, which involve risks specific to real estate values and the real estate markets in general
4. 04Real estate construction and land development loans are based upon estimates of costs and values associated with the completed project. These estimates may be inaccurate and we may be exposed to significant losses on loans for these projects
5. 05A large portion of our loan and lease portfolio is comprised of commercial loans secured by various business assets, the deterioration in value of which could increase our exposure to future probable losses
6. 06SBA loans consisting of both commercial real estate and commercial loans, comprised approximately $58.1 million, or 1.87%, of our gross loan and lease portfolio as of December 31, 2024
7. 07Non-performing assets take time to resolve, adversely affect our results of operations and financial condition, and could result in losses
8. 08Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations
9. 09The Corporation is a bank holding company and its sources of funds necessary to meet its obligations are limited
10. 10Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations
11. 11The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk
12. 39Our stock is thinly traded and our stock price can fluctuate
13. 40To 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
14. 41If 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
15. 42Volatility or events impacting a subset of the banking industry can impact the entire sector, including the Corporation, which could affect the confidence of our clients and investors and result in a material adverse effect on our performance and a decline in our stock price for reasons outside of our control
16. 43Our ability to attract and retain talented employees is critical to our success
17. 44We rely on our management and the loss of one or more of those managers may harm our business
18. 45Negative publicity could damage our reputation and adversely impact our business and financial results

Operational Risks

1. 12We are dependent upon third party service providers 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
2. 13The nature of our operations is such that we are exposed to risks associated with potential fraudulent activities, errors, breaches and the like
3. 14Our 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
4. 15New lines of business, products, and services are essential to our ability to compete but may subject us to additional risks
5. 16Our framework for managing risks may not be effective in mitigating risk and loss to us
6. 17We are subject to changes in accounting principles, policies, or guidelines
7. 18uncertain 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
8. 19Our internal controls may be ineffective

Strategic and External Risks

1. 20Our business may be adversely affected by conditions in the financial markets and economic conditions generally
2. 21Changes in U.S. trade policies, including the imposition of tariffs, may adversely affect our business, results of operations and financial condition
3. 22The Corporation’s business and financial results could be materially and adversely affected by widespread public health events
4. 23Our business is concentrated in and largely dependent upon the continued growth and welfare of the general geographical markets in which we operate
5. 24While 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
6. 25We could recognize impairment losses on securities held in our securities portfolio, goodwill, or other long-lived assets
7. 26The failure or perceived weakness of any of our significant counterparties could expose us to loss
8. 27We could be required to establish a deferred tax asset valuation allowance and a corresponding charge against earnings if we experience a decrease in earnings
9. 28Competition from other financial services providers could adversely affect our profitability
10. 29Consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations
11. 30If we are unable to keep pace with technological advances in our industry, our ability to attract and retain clients could be adversely affected
12. 31Our Private Wealth management results of operations may be negatively impacted by changes in economic and market conditions
13. 32Potential acquisitions may disrupt our business and dilute shareholder value
14. 33Difficulty in integrating operations, personnel, technologies, services, and products of acquired companies
15. 34The 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

Regulatory, Compliance, Legal and Reputational Risks

1. 35We 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. Changes in applicable laws or regulations, or our failure to comply with them, may adversely affect us
2. 36We face a risk of noncompliance and enforcement action with various statutes and regulations
3. 37We 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
4. 38We are subject to claims and litigation pertaining to our fiduciary responsibilities