First Business Financial Services (FBIZ) risk factors, FY2025 10-K

Other

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 losses67% rewritten
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 general65% rewritten
4. 04coverage associated with the commercial real estate segment of our portfolio, possibly leading to increased specific reserves or charge-offs, which may adversely affect our business, results of operations, and financial conditionNew
5. 05Real 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 projects33% rewritten
6. 06SBA loans consisting of both commercial real estate and commercial loans, comprised approximately $65.4 million, or 1.94%, of our gross loan and lease portfolio as of December 31, 202577% rewritten
7. 07guaranty provided by the federal government on SBA loans or changes to the level of funds appropriated by the federal government to the various SBA programs, may also have an adverse effect on our business, results of operations, and financial conditionNew
8. 08Non-performing assets take time to resolve, adversely affect our results of operations and financial condition, and could result in losses
9. 09Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations
10. 10The Corporation is a bank holding company and its sources of funds necessary to meet its obligations are limited
11. 11Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations20% rewritten
12. 12The proportion of the Corporation’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk80% rewritten

Operational Risks

1. 13We 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. 14The nature of our operations is such that we are exposed to risks associated with potential fraudulent activities, errors, breaches and the like22% rewritten
3. 15The adoption of artificial intelligence tools by us and our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment, or fraudulent behavior by our employees, clients, or counterparties, or other third partiesNew
4. 16Our 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
5. 17New lines of business, products, and services are essential to our ability to compete but may subject us to additional risks
6. 18Our framework for managing risks may not be effective in mitigating risk and loss to us
7. 19We are subject to changes in accounting principles, policies, or guidelines70% rewritten
8. 20Our internal controls may be ineffective

Strategic and External Risks

1. 21Our business may be adversely affected by conditions in the financial markets and economic conditions generally29% rewritten
2. 22Changes in U.S. trade policies, including the imposition of tariffs, may adversely affect our business, results of operations and financial condition50% rewritten
3. 23The Corporation’s business and financial results could be materially and adversely affected by widespread public health events
4. 24Our business is concentrated in, and largely dependent upon, the continued growth and welfare of the general geographical markets in which we operate
5. 25While 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. 26We could recognize impairment losses on securities held in our securities portfolio, goodwill, or other long-lived assets
7. 27The failure or perceived weakness of any of our significant counterparties could expose us to loss
8. 28We 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. 29Competition from other financial services providers could adversely affect our profitability39% rewritten
10. 30Consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations
11. 31If we are unable to keep pace with technological advances in our industry, our ability to attract and retain clients could be adversely affected
12. 32Our Private Wealth management results of operations may be negatively impacted by changes in economic and market conditions
13. 33Potential acquisitions may disrupt our business and dilute shareholder value
14. 34Difficulty in integrating operations, personnel, technologies, services, and products of acquired companies
15. 35The 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. 36We 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 us43% rewritten
2. 37We face a risk of noncompliance and enforcement action with various statutes and regulations
3. 38We 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. 39We are subject to claims and litigation pertaining to our fiduciary responsibilities

Risks Related to Investing in Our Common Stock

1. 40Our stock is thinly traded and our stock price can fluctuate
2. 41To 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
3. 42If 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
4. 43Volatility 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
5. 44Our ability to attract and retain talented employees is critical to our success
6. 45We rely on our management and the loss of one or more of those managers may harm our business
7. 46Negative publicity could damage our reputation and adversely impact our business and financial results