First Business Finl Servs (NASDAQ:FBIZ) reported first-quarter financial results on Friday. The transcript from the company’s first-quarter earnings call has been provided below.
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Access the full call at https://events.q4inc.com/attendee/805218265
Summary
First Business Financial Services Inc reported strong financial performance in Q1 2026 with a 9% increase in net income and earnings per share year-over-year.
The company achieved a 15% loan growth, exceeding its annual target, with significant contributions from Madison, Milwaukee, and Kansas City markets, as well as asset-based lending.
Fee income grew by 16% year-over-year, with private wealth business producing record revenues.
The company reported an 18% increase in core deposits from the previous quarter, driven by new client acquisitions and strong treasury management.
Management expects loan and deposit growth to normalize in Q2 but aims to achieve a 10% annual growth by the end of 2026.
The company resolved some non-performing assets and expects further resolution in the second half of the year.
First Business Financial Services Inc maintains a positive outlook for 2026, with strategic plans focusing on high-quality growth, revenue diversification, and talent retention.
Full Transcript
OPERATOR
Good Afternoon. Welcome to the First Business Financial Services Inc. First Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today’s presentation there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press STAR one again. Please note that this event is being recorded. I would now like to turn the conference over to First Business Financial Services Inc. CEO Corey Chambas. Please go ahead.
Corey Chambas (Chief Executive Officer)
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 Seiler and our CFO Brian Spielman. Today we’ll discuss our financial performance followed by a Q and A session. I’d like to direct you to our first quarter Earnings Release and supplemental earnings call slides which are available through our [email protected]. 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 in the forward looking statements are listed in the Earnings Release and the Company’s most recent annual report form 10K and as may be supplemented from time to time in 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. We are very pleased with our strong start to 2026. Our team’s execution was exceptional. We won new relationships in a highly competitive environment, growing loans and deposits at a pace that well exceeded our expectations. We grew fee income by nearly 16% year over year with strong contributions from multiple sources. I’ll highlight our private wealth business which again produced record revenues and provides annuity like support for our revenue growth and diversification goals. Asset quality remains stable in our core performing portfolio and we were pleased to see some swift progress toward resolving our largest non performing asset which was downgraded last quarter. At the bottom line, we grew net income and earnings per share by more than 9% over last year’s first quarter even as our margin returned to a more normalized level and after being elevated in early 2025 which was residual from the period of rapid Fed tightening and perhaps most importantly Our strong earnings and disciplined capital deployment drove 14% year over year growth intangible book value per share. This success reflects our commitment to four key objectives prioritizing high quality relationship based growth, diversifying our revenue streams, maintaining long term positive operating leverage and preserving a culture that attracts and keeps the highest quality talent. We are very pleased with the momentum of our first quarter results which Dave will discuss more now.
Dave Seiler (President and Chief Operating Officer)
Dave thank you Corey. Our outstanding first quarter growth positions us well to achieve our long term goals. As you know, we aim for 10% loan and core deposit growth on an annual basis. In the first quarter we grew loans by 126 million or 15% far outpacing our plan. Growth came from across our markets led by Madison, Milwaukee and Kansas City as well as from asset based lending which is generating some great momentum under the new leader we brought on a year ago. The growth occurred late in the quarter with 90 million or 72% added in March. That had margin implications which Brian will cover and it included some pull forward of growth we had forecasted for the second quarter after an extremely strong first quarter. Our pipelines are lighter going into Q2 and we will have some known payoffs in the second quarter. Therefore, we expect the second quarter to be lighter on growth than Q1 with normalization in the second half of the year placing us on track to achieve our 10% annual growth goal for 2026. Our 10% growth expectations are driven by continued positive trends in our businesses and the banking industry. Our largest markets in Southern Wisconsin continue to benefit from a strong regional economy. Our clients in the manufacturing and distribution space are doing well. Commercial real estate occupancies have remained strong, particularly in multifamily properties. We are also seeing signs that new development is picking up after a slight slowdown in 2024 and 2025. Additionally, we continue to expect the 2026 changes to federal tax policy should be a tailwind for our business clients and C&I portfolio. We continue to see tangible benefits from talent acquisitions as well. We recently hired a new president for our private wealth business. We are also seeing positive results from producers in asset based lending who were hired in the second half of 2025. Obviously we are looking at the same wildcards as everyone else and will continue to monitor for any impact of oil prices and geopolitical uncertainty. So far it’s been business as usual. I also want to highlight our exceptional double digit growth in core deposits this quarter. First quarter balances were up 18% from the linked quarter and up 14% year over year. That’s not an easy feat in this environment. Our focus on hiring the best treasury management talent and maintaining a disciplined approach to business development continues to pay off. We are pleased to see this core deposit growth coming from multiple bank markets and our private wealth group. Our strength is in taking market share as you saw this quarter, so we are confident in our team’s ability to not only maintain existing client relationships, but also to continue bringing in new deposit balances. As with loans, we continue to target 10% growth on an annual basis. Another highlight was our strong non interest income which grew 16% compared to last year’s first quarter. Private wealth produced record revenue of 3.9 million, up 11% year over year. This business consistently generates more than 40% of our total quarterly fee income. Strong deposit growth contributed to service charges increasing more than 26% year over year, displaying our team’s impressive success in adding and expanding full business banking relationships. And our other fee income sources, which tend to be variable from quarter to quarter, posted favorable results for the quarter. Moving to credit, we saw some rapid progress on our largest non performing asset. Recall that we downgraded $20.4 million in CRE loans from a single Southeast Wisconsin based client relationship to non accrual status. Last quarter in Q1, 3.4 million of land development loans in this portfolio were sold at par. You can see the benefit of this to our non performing asset ratio on slide 12 of the earnings supplement, appraisals exceed carrying values on the land and the remaining $17 million of loans with no specific reserves recorded. We expect ongoing resolution, but the timing will be variable based on current activity. We don’t anticipate additional progress to occur before the second half of 2026. The remainder of our portfolio is stable and you can see our favorable Trends on slide 11. Before I hand it off to Brian, I’ll note that this is Cory’s last call before his retirement next week. I want to thank Cory for his leadership and service to First Business Bank. It’s difficult to summarize as many contributions to our company, so I’ll leave you with this. During Corey’s tenure as CEO, First Business bank has produced cumulative shareholder returns of nearly 700%, outperforming bank and regional bank indices by a multiple of more than 3x and the Russell 2000 by more than 200 percentage points. This is no coincidence. Corey is a visionary and we are grateful for his leadership and friendship. We are also very happy that Cory will be continuing to serve on our board. Now I’ll hand it off to Brian.
Brian Spielman (Chief Financial Officer)
Well said Dave, thanks. First quarter net interest margin increased three basis points to 356 and there is some noise in both the first and linked quarters. You can see a breakdown of this on slide 6 of our earnings supplement. First quarter NIM included the 5 basis point impact of fewer accrual days in the quarter. Excluding this impact, first quarter NIM was 361 which would be in line with our internal budget expectations. As a reminder, fourth quarter NIM included 10 basis points of compression from the non-accrual interest reversal on the downgraded CRE MPLE. Excluding this fourth quarter NIM would have measured 363. There was no non-accrual interest reversal activity in Q1. The 2 basis point difference in these adjusted NIM measurements primarily reflects the late quarter timing of loan growth. As Dave mentioned, the bulk of our significant loan growth came late in the quarter. Two thirds of the growth was from our CNI portfolios which are higher yielding than C&I and we expect this to benefit our net interest margin going forward. You can see the historical trend of this Yield differential on slide 5 of the earnings supplement. Looking out at the year, we think the early momentum of C and I loan Growth in Q1 positions us well to operate within or toward the lower to middle portion of our targeted 360 to 365 range for the year. Our outlook assumes a stable to modestly changing interest rate environment. Margin performance is expected to be driven primarily by balance sheet mix and our targeted annual 10% loan and core deposit growth rather than additional rate tailwinds. On the funding side, ongoing core deposit growth has improved our funding mix over time and we continue to manage deposit pricing with discipline in a competitive environment. Where needed, we supplement with wholesale funding to match fund fixed rate loans and maintain NIM stability on non interest income and expense. I’ll remind you that quarterly comparisons are impacted by last quarter’s accounting classification change related to limited partnership investments. Specifically, last quarter we reclassified $904,000 out of our other non interest expense and into other non interest income to net against the related revenue. This expense represented the bank’s share of cost for the first nine months of 2025 related to our latest run of limited partnership investments. Our strong first quarter fee income supports our expectation of 10% growth for the full year compared to 2025 and we view first quarter as a good starting point for quarterly fee income in 2026. Looking at expenses, we saw the typical first quarter increases related to compensation. Compensation expense increased by about $1.4 million in Q4 mainly due to first quarter resets for payroll taxes and and 401k match contributions, along with annual merit increases and higher average FTEs, which were up about 5.7% from a year ago. Looking ahead, payroll taxes will come down throughout the year, but new FTE ads will go up. Professional fees were also higher in Q1, increasing by about $445,000 from Q4. Elevated recruiting costs and seasonal legal fees related to the company’s annual 10K and proxy filings drove the increase. We typically base our full year expense forecast on first quarter actuals, which remain an appropriate run rate for 2026. I’ll reiterate that our primary expense management objective is achieving annual positive operating leverage, that is Annual expense growth at some level modestly below our targeted level of 10% annual revenue growth. The effective tax rate was 15.2% for the first quarter. Our effective tax rate varies modestly quarter to quarter, in part due to the timing of tax benefits received from our investment and limited partnerships and the timing of stock compensation vesting activity. We continue to expect our effective tax rate will be within our expected annual range of 16 to 18% for 2026. Finally, our strong earnings have continued to generate excess capital to facilitate organic growth. We continue to believe reinvestment in the growth of the company provides the best return for our shareholders. We do of course evaluate all capital management tools at our disposal to maximize shareholder returns. And now I’ll hand it back over to Corey.
Corey Chambas (Chief Executive Officer)
Thank you Brian and Dave. Dave was the architect of our current five year strategic plan and you can see our outstanding progress toward achieving the goals of this plan on slide 15. I believe nothing has been more instrumental to achieving this success than our culture. So I’ll take a final opportunity to bang the drum on this. Our culture defines us and it is our secret sauce. It is in the DNA of First Business bank to be passionate about our people and obsessed with our strategic plan and it’s foundational to our mission to be an entrepreneurial partner to our clients, investors and communities. This intense cultural focus has been fundamental in achieving our superior long term shareholder returns. It has been my North Star of sorts and I’m confident Dave’s leadership will bring continued success. We have the right team in place to continue achieving both strong earnings and above industry growth and I’m excited for the future of First Business Bank. Thank you for taking time to join us today. We’re happy to take your questions now.
OPERATOR
Thank you. The floor is now open for questions. If you have dialed in and would like to ask A question, please press star one on your telephone keypad to raise your hand and join the queue. If you’d like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Daniel Tamayo of Raymond James. Your line is open.
Daniel Tamayo (Equity Analyst)
Thank you. Good afternoon, everybody. First, just wanted to say congratulations on your retirement, Corey. It’s been, pleasure working with you over the last few years and obviously good luck to Dave. You know, I guess on the heels of that, I’ll throw out a longer term question here for you, Dave. As you look to the future, you know, looking at, at Slide 15 with, with your goals and progress on it and the 2024 to 2028 to 2028 goals from a profitability perspective, you guys, I obviously have talked about this 10% growth and I think that, you know, certainly holds. But just curious how you think about from a profitability perspective. I guess if it’s efficiency or return on return on tangible common equity, you know, how do you anticipate changing any of these long term goals in progress, you know, the slide or anything like that as you, as you think about your leadership and if not, what’s the plan over the next few years to get these, to get or keep these numbers kind of at these levels?
Dave Seiler (President and Chief Operating Officer)
Yeah, good question. So we are, our strategic plan is a five year strategic plan. We’re a little over two years into it and you know, every quarter or more often we look at all of these metrics and evaluate if they’re still the right metrics for us to be looking at. And I would say right now, you know, you look at our efficiency ratio, for example, that increased up a little bit this quarter for reasons that I think we’ve outlined in some of our comments already. So we expect that to kind of return to where we want it to be over the next, you know, over the balance of the year and in the upcoming quarters. At this point we still think these are good metrics for us to be working on. And you know, we’ve identified five strategies from our strategic plan and we have, you know, teams of leaders working on each of the strategies. And at this point I think we think they’re all, these are the right targets for us.
Daniel Tamayo (Equity Analyst)
All right, good start, Dave.
Dave Seiler (President and Chief Operating Officer)
I’m not official yet, Daniel.
Daniel Tamayo (Equity Analyst)
All right, fair enough. And then, you know, I think, I think I get, I get what you guys are saying on the margin. I’m assuming this is a, this is going to be an annual thing. I mean it’s just the math right. Of the, of the fewer days in the first quarter. But as we think about modeling the, the margin, we should think about modeling that down a bit in the first quarter going forward and then, and then popping back up in the, in the second quarter remaining in that, in that the targeted range. Brian.
Brian Spielman (Chief Financial Officer)
Yeah, that’s a fair statement I would say. You know, we always gonna have the first quarter accrual mechanics issue. Right. But for us specifically for this quarter, to me it was more of a timing difference on when our funding came in versus when we deployed that funding in the quarter. That to me is more the driver on why the NIM was reported outside of our range. You know, if we would have had the loan growth aligned with that, with that funding growth earlier in the quarter, the NIM would have been, would have been within our range. So that’s more of it. But I think your point is valid though in terms of the quarterly first quarter estimates that there’s going to be that, that day basis impact.
Daniel Tamayo (Equity Analyst)
Okay. And as it relates to that dynamic with, with the late in the quarter loan growth like you’re thinking, basically the margin comes back up into the, into the range in the second quarter and then relatively stable from there. Yes. Okay. All right, I will step back. Thanks guys. Appreciate it.
OPERATOR
Your next question comes from line of Jeff Rulis of DA Davidson. Your line is open.
Jeff Rulis (Equity Analyst)
Thanks. Good afternoon. Wanted to check on the expenses. Brian. Got your comments there. I just seemed a little high. I mean maybe I’m just still updating the model on the reclass a little bit. But if I heard that right, that this level, it kind of flatlines for the year. If I guess if I just annualize it and then run it off of across full year 25 something in the high single digits. Is that kind of where we should be thinking?
Brian Spielman (Chief Financial Officer)
Exactly. Yep, spot on.
Jeff Rulis (Equity Analyst)
Okay, well I got you, Brian. On, on the. You have the margin for the month of March. Just to try to a jump off point.
Brian Spielman (Chief Financial Officer)
We don’t have that and it would be influenced by the late growth. That’s kind of the point behind the late growth commentary is that the reported Q1 margin of 359 being impacted. Sorry. By 356 being impacted by that. So it’s going to be pushing us back into our range based on that March activity.
Jeff Rulis (Equity Analyst)
Okay, fair enough. You get. You were pretty clear about the resuming back into that range. So I’ll Stick with that. Just was curious, maybe just the last one on the, on the growth. I, you know Dave, I think you alluded to the geography but maybe the. Do you have a breakout of maybe the mix of that growth? Pretty strong. But was it the mix of existing customers versus new? I think you mentioned maybe that was a 6040 split last quarter or something but just trying to get a sense for market share gains or existing customers. Yeah, well we don’t have a mix between existing clients and new clients. I, you know I think it was as we stated before, it was really across all of our southern Wisconsin bank markets and Kansas City as well as asset based lending. I would say within those groups it really wasn’t concentrated in any particular area. It was, it was spread fairly evenly. And I would say always our, our growth is going to be driven by new, you know we, we do more, you know, more loans to existing clients over time but the driver of our growth is always going to be new client relationships. Well, I think one of the things you can look at that reinforces that is the growth in our service fee income that you know we’ve had very rapid growth in our service fee income and you don’t get that without adding new clients on service charges. Yeah, service charges. Yeah. Okay. Thanks for the color and Corey, thanks for the conversations over the years. All the best. And appreciate what you’ve done. And Dave, look forward to catching up in Nashville in a couple weeks. So thanks.
Dave Seiler (President and Chief Operating Officer)
Thanks Jeff. Thanks Jeff.
OPERATOR
Your next question comes from line of Nathan Race of Piper Sandler. Your line is open.
Nathan Race (Equity Analyst)
Hey guys, good afternoon. Comments earlier. Congratulations. Corey and Dave been great working with wanted to check in on just the fee income outlook. Brian, I think you mentioned kind of a stable outlook. Just curious, kind of what momentum you’re seeing on the SBA front. Obviously wealth management’s showing some nice growth year over year as well. So just curious how you’re thinking about kind of the overall year over year trajectory.
Brian Spielman (Chief Financial Officer)
I can speak to the total broader fee income piece and then maybe Dave has a couple comments on sba. But the total fee income line I think is consistent with the prior messaging around 10% year over year growth expectations with Q1 being a good starting point for that. I know we had some noise in Q4 but really strong performance from those more consistent annuity streams for us private wealth, service charges and other which now includes starting to build more of our Small Business Investment Company (SBIC) investment product there that will start kicking off more returns as well over time. But that’s really the primary drivers of that fee Income, which we again, we believe is a 10% growth in total for us throughout 26.
Dave Seiler (President and Chief Operating Officer)
Yeah, and on the SBA side, we actually expected that to be a little bit higher this quarter after the shutdown late last year.
Nathan Race (Equity Analyst)
But I think as we look at pipelines, you know, we expect it to be relatively flat going forward. Okay, got it. Dave, I think you mentioned earlier, you know, you’re expecting some softer growth in the second quarter just given maybe some pull through and some expected payoffs this quarter. So is it fair to expect, you know, maybe like mid to low single digit growth, growth in the same quarter and then getting back up to that kind of high to low double, high single digit to low double digit trajectory in the back half of the year?
Dave Seiler (President and Chief Operating Officer)
Yeah, I think that’s probably reasonable for Q2, Nate. A little bit depends on payoffs and those aren’t, you know, some of those are in flux right now. So you, we can’t predict them 100%, but I think that’s a reasonable point and we still expect to be at 10% for the year. Okay.
Nathan Race (Equity Analyst)
And then maybe one last one. Any color that you could shed on the charge offs in the quarter and just how you’re budgeting or thinking about charge offs over the balance of this year. It doesn’t sound like there’s been much movement on that ABL credit that we’ve talked about, which, you know, again shouldn’t really result in any loss content. But and within that context it also seems like, you know, the Southeast properties are still slated to sell that part similar to what we saw this quarter. So we’re just hoping to get any color along those lines, please.
Dave Seiler (President and Chief Operating Officer)
So I can talk about the Southeast properties and the asset based lending credit that we have. So you know, on the Southeast properties last, last quarter we talked about how we’re going to work this, work out of this over time and we started
Nathan Race (Equity Analyst)
that with a little over $3 million in payoffs with, with no losses in right now we are pursuing foreclosure on the rest of the properties in that non performing portfolio. And so we shouldn’t really expect any resolution in, in Q2. That’s probably more the back half of the year based on how long those proceedings take in Wisconsin. And again, as it relates to the asset based lending credit, you know, that’s going to be an end of the year, you know, type event most likely. But you know, there, we’ve had no negative news there. It’s just moving through the court system very, very slowly. But we’re being told that’s what we should expect in this case. Okay, that’s helpful. I appreciate the color, Nate.
Brian Spielman (Chief Financial Officer)
On the, on the broader charge off question, I would say, you know, for Q1, nothing kind of unusual to report. Kind of a broad mix of charge offs coming from SBA, you know, CNI. I will say that EF Finance improved from a charge off perspective from Q4 to Q1.
Nathan Race (Equity Analyst)
So that’s a good indication that we’re, you know, improving and working for that portfolio. I think we had about 25 basis points of charge offs in the quarter, a little higher than we would think. We tend to think around 20 basis points on average for the year, so. But nothing that’s alarming to us by any means. Just to add to that, Nate, that
Dave Seiler (President and Chief Operating Officer)
transportation segment of that equipment finance portfolio, which started out at about 61 million, is down to 18.1 million or 18.2 million, something like that. So we’re making nice progress on that.
Nathan Race (Equity Analyst)
Okay, gotcha. Very helpful. I appreciate all the color. Thanks, guys. Hope you have a great weekend.
OPERATOR
And again, if you have a question, please press Star one on your telephone keypad. Your next question comes from the line of Damon Del Monte of kbw. Your line is open.
Damon Del Monte (Equity Analyst)
Hey, good afternoon, guys. First off, Corey, congratulations on the retirement. I think I’ve been covering you guys for probably close to 12 years, so it’s been an enjoyable run. And Dave, look forward to working with you in your new role. So congrats. Thanks, Dave. So with that, I guess most of my questions have been asked and answered, but Brian, I may have missed this, but do you know what? The fees in lieu of interest were included in the margin this quarter. Were about
Brian Spielman (Chief Financial Officer)
2.2 million. So that’s more in line with, with kind of a run rate a little bit higher than, than, than the run rates that’s up from, from the prior quarter. But remember, the prior quarter had the non accrual interest rate reversal in Q in Q4, so.
Damon Del Monte (Equity Analyst)
Right, right, that’s right. Okay, thanks. And then kind of along the lines of credit and trying to figure out provisioning going forward, you know, the reserve, you know, do you expect to kind of maintain this reserve level? And then if you kind of have average net charge offs of 20 basis points, kind of just, you know, back into the provision that way. Is that a good way to think about it?
Brian Spielman (Chief Financial Officer)
Yeah, that’s how I think about it, Damon. I think, you know, the macro piece of this equation, you know, with the. We subscribe to Moody’s. Right. So that’s the wild card with the Geopolitical But I think all else equal, you’re provisioning for growth off this reserve level with the 20 basis points. You know, I think that’s appropriate. And we saw, you know, for example this quarter a million dollars of that reserve of that provision was, was due to loan growth of that 2.9 in the quarter. So you know, that’ll come back down obviously as we talked about with, with Q2 growth coming back down. But, but yeah, with the uncertainty around the macro, to me that’s no change is reasonable place to be.
Damon Del Monte (Equity Analyst)
Got it. Okay. Reserve. Great. Well, great. That that pretty much covered everything else. So thanks for taking my questions and take care.
Brian Spielman (Chief Financial Officer)
All right, thanks, Damon.
OPERATOR
And your next question comes from the line of Brian Martin of Bren. Your line is open.
Brian Martin (Equity Analyst)
Hey, good afternoon guys. Say just maybe one for me on the loan growth front. Can you talk a little bit about where your just the growth this year? So just, you know, kind of big picture, kind of where you’re optimistic. I know this quarter you had, you talked about having, you know, really strong growth on the, on the specialty side, but just wondering, you know, where you’re seeing the growth, you know, by, by components, you know, or just kind of where you’re most optimistic going into the year. And you know, maybe areas that aren’t, aren’t really optimistic about in terms of delivering the, you know, the targeted growth this year.
Dave Seiler (President and Chief Operating Officer)
Sure. Well, I mean, I think if you look for it for the rest, where is it going to come from for the rest of the year? I think we’re going to continue to see nice growth in our ABL from our ABL team, also from our accounts receivable finance team. Kansas City is looking really good and we continue to add talent in Kansas City. And you know, our, our particularly our southern Wisconsin markets, you know, are still strong. We have good teams in both of those markets, so we should continue to see growth there.
Brian Martin (Equity Analyst)
Okay. And in terms of the build out, you know, it sounds like you’re still adding some folks in Kansas City. Is that primarily complete at this point? So you’ve got a full team or there’s just more, you know, more areas you’re adding down there.
Dave Seiler (President and Chief Operating Officer)
I don’t think we’ll have a lot more ads down there, Brian, but we could have another ad. And you know, in order for us to continue to grow at 10%, we have to continue to add folks really across our markets. So I think, I think we will likely have another add in Kansas City this year.
Brian Martin (Equity Analyst)
And then maybe just jumping to the, just the Fee income per section. And I appreciate the call you guys have already given your comments. Brian, just in terms of the lumpiness that kind of, you know, is seems, you know, within this portfolio, do you still expect some lumpiness kind of throughout the year? I know the movie made to reclass and stuff. Just kind of trying to think about the quarterly movement or progression. Is it, do you expect a little bit more consistency? Is it still going to be, you know, a little bit lumpy as we go along?
Brian Spielman (Chief Financial Officer)
I would say yes, is the answer. There’s still going to be lumpiness, but that’s something we’re working on and trying to improve. Right. We talked about the success of our private wealth and our service charges. Those are becoming more and more consistent and annuity like more so than they had before. And I also just really kind of briefly talked about our investments in small business investment company funds. You know, we’re, we’re deploying more capital there, there’s a 5% limit. Right. For regulatory capital. But we’re doing that over time to add a more stable level of fee income to the quarterly run rate. So that’ll take some time. But that’s another part of our process to smooth those earnings out on a quarterly basis. But it’s just the nature of swap fees and SBA gains. It’s just going to be lumpy still. But that’s why we really focus on that 10% year over year growth.
Brian Martin (Equity Analyst)
Yeah. Okay. Okay. That covers my Damon got the credit part. So other than that, I’m good. And just the same comment that both guys have made. Cory, it’s been great working with you over the years. Corey and I wish you the best in retirement. And Dave, it’s been good to getting to know you and continue to work going forward. So congrats on everything and thanks for taking the questions.
Dave Seiler (President and Chief Operating Officer)
Thanks, Brian. Thanks, Brian.
OPERATOR
That concludes our Q and A session. I’ll now turn the conference over back to CEO Corey Chambas for closing remarks.
Corey Chambas (Chief Executive Officer)
Thanks. First, I’d just like to say I appreciate all the relationships I’ve built with all of you over the years. So I will definitely miss that and miss you all overall. I just want to say thanks everybody for your interest in First Business bank joining us today and hope everybody has a great weekend.
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