3/8/25
First Business Financial Services, Inc. (FBIZ) isn’t a big name in the financial world, but for those who appreciate steady dividends and strong financials, this small-cap bank deserves a closer look. The company specializes in serving businesses, executives, and high-net-worth individuals with a range of banking services.
With a stock price of $48.96 and a market cap of just over $406 million, it operates in a niche space, but what stands out is its earnings growth, strong return on equity, and commitment to paying dividends. While it’s not a high-yield stock, it has a track record of responsible and sustainable dividend increases, which makes it appealing for income-focused investors.
Key Dividend Metrics
💰 Dividend Yield: 2.37% (Forward)
📈 5-Year Average Dividend Yield: 2.70%
💵 Annual Dividend Payout: $1.16 per share (Forward)
🎯 Payout Ratio: 19.23% (Plenty of room for increases)
📆 Last Dividend Date: February 28, 2025
🚀 Dividend Growth Trend: Positive over time
Dividend Overview
FBIZ’s current dividend yield of 2.37% is slightly lower than its five-year average of 2.70%, which suggests that the stock price has appreciated faster than dividend hikes. That’s not necessarily a bad thing—it means investors have seen capital appreciation alongside their dividend income.
The real story here is the payout ratio. At just 19.23%, the company is paying out a very small portion of its earnings in dividends. This indicates that management has plenty of flexibility to keep growing the payout over time. For dividend investors who prioritize safety and long-term sustainability, this is a strong positive.
Dividend Growth and Safety
Dividend reliability is a key factor for long-term investors, and FBIZ checks many of the right boxes. The company has consistently increased its dividend over time, and with its low payout ratio, there’s ample room for future hikes.
Why the dividend looks secure
✅ Low payout ratio leaves room for future growth
✅ Strong earnings growth of 47.5% year-over-year means more cash for dividends
✅ Consistent history of dividend payments without interruptions
The company’s return on equity stands at 14.32%, meaning it generates strong profits relative to shareholder investments. A profit margin of over 30% further supports the idea that FBIZ is running a highly efficient operation. These factors all contribute to making the dividend both reliable and well-supported.
One thing to watch is that the dividend yield is currently below its historical average. This suggests the stock has appreciated, which can be a good sign for investors looking for growth alongside dividends.
Chart Analysis
Price Movement and Trend
The chart shows a clear uptrend in FBIZ over the past several months, with the stock climbing from below $35 to a recent high above $55 before pulling back. The price has remained above both the 50-day and 200-day moving averages, confirming the broader bullish trend. The recent pullback has brought it closer to the 50-day moving average, which may act as support.
The stock opened at $48.92, hit a high of $49.61, and closed at $48.96. This suggests some intra-day selling pressure but not enough to cause a significant breakdown.
Moving Averages
The 50-day moving average is above the 200-day moving average, which is a classic signal of an ongoing uptrend. The stock has been using the 50-day line as a rough guide, bouncing off it multiple times in the past few months. However, the current decline suggests a test of this level, and if it doesn’t hold, the next key support could be near the 200-day moving average.
Volume Analysis
Volume spikes have occurred during major price movements, particularly during sharp increases in November and December. However, recent trading volumes appear lower, indicating less conviction in either direction. This suggests that traders are waiting for confirmation before making their next move.
A lack of high volume during the current pullback could mean that selling pressure isn’t aggressive yet, but if it increases, the stock may slide further before finding a strong base.
Relative Strength Index (RSI)
The RSI shows that the stock was in overbought territory for a while before rolling over. It has been declining steadily, indicating that momentum is cooling off. Right now, RSI is approaching more neutral levels but isn’t yet in oversold territory. This suggests that the stock could still have some room to fall before bouncing.
If RSI dips further and approaches the 30 level, it could signal that the stock is oversold and due for a reversal. However, if RSI stays weak and trends downward, it could be a sign that momentum is still favoring the downside.
Analyst Ratings
💹 Upgrades:
Several analysts have raised their expectations for FBIZ, citing strong earnings performance and solid financial management.
- 📈 Piper Sandler increased its price target from $58 to $63, maintaining an “overweight” rating.
- 🚀 Keefe, Bruyette & Woods raised their target price from $58 to $60, giving the stock an “outperform” rating.
- 📊 Raymond James boosted its price target from $52 to $62, also assigning an “outperform” rating.
These upgrades reflect confidence in FBIZ’s ability to continue generating strong returns, backed by solid fundamentals and an improving financial outlook.
📉 Downgrades:
Not all analysts share the same level of optimism. Some have taken a more cautious approach, citing factors such as market uncertainty, economic headwinds, and the potential for increased regulatory pressure on the financial sector.
While no major firm has issued a sell rating, a few have tempered their outlooks, opting for a neutral stance rather than an outright bullish position. The caution reflects concerns that the stock’s recent rally may limit near-term upside unless earnings growth continues at a strong pace.
💰 Consensus Price Target:
Despite mixed sentiment, the overall analyst consensus leans positive, with an average price target of $61.25. This suggests potential upside from current levels, though the stock may face some near-term volatility as it tests support and resistance levels.
The balance between upgrades and cautious holds suggests that while FBIZ is fundamentally strong, external market conditions will play a role in determining how much further the stock can run in the short term.
Earnings Report Summary
First Business Financial Services, Inc. (FBIZ) wrapped up the fourth quarter of 2024 with solid financial results, reinforcing its ability to deliver steady profitability. The company posted a net income of 10.31 million, which is a strong indicator that its operations are running efficiently.
Earnings per share came in at 1.24, up from 1.17 in the same quarter last year. That may not be a dramatic jump, but it signals consistent growth and a company that knows how to manage its bottom line. Investors tend to appreciate stability, and that’s exactly what FBIZ is showing.
One area that raised some eyebrows was revenue, which dropped 35.9 percent year-over-year to 38.07 million. While that might seem concerning on the surface, the company has still been able to maintain profitability. A decline in revenue doesn’t always mean trouble—it depends on cost management and overall strategy.
Despite the revenue dip, the stock itself has held up well. FBIZ shares slipped 1.7 percent during the quarter, but on a year-to-date basis, they’ve climbed 11.8 percent. That suggests that while some short-term pressure exists, long-term investors are still confident in the stock’s potential.
Analysts are taking note of the company’s steady performance. Over the past three months, earnings estimates have inched up 0.6 percent, a sign that experts see room for further growth. Currently, all analysts covering FBIZ rate it as a buy, with no hold or sell recommendations. The median price target sits at 53.00, pointing to potential upside from current levels.
Overall, FBIZ delivered a strong earnings report with rising profits, stable earnings growth, and a stock that has performed well over the past year. While the revenue decline is something to watch, the company’s ability to generate earnings and maintain investor confidence remains intact.
Financial Health and Stability
For any dividend stock, a solid financial foundation is essential. FBIZ has a well-managed balance sheet with enough cash and assets to comfortably support its dividend and future growth.
💰 Cash Reserves: The company has $95.66 million in cash, providing a strong financial cushion.
📊 Book Value Per Share: $38.17, meaning the stock is trading at a reasonable valuation.
💳 Debt Load: FBIZ carries $385.04 million in debt, but given its strong earnings, this isn’t a major concern.
The company has also shown strong revenue growth, increasing 12.9% year-over-year. This, combined with a 41.94% operating margin, suggests that FBIZ is running an efficient and profitable business.
Valuation and Stock Performance
With a trailing price-to-earnings ratio of 9.42 and a forward P/E of 8.96, FBIZ is trading at a reasonable valuation for a financial stock. While it’s not dirt cheap, it isn’t overpriced either.
📊 52-Week Price Range: $32.56 – $56.46
📉 Current Price: $48.96, near the midpoint of its range
📈 50-Day Moving Average: $49.49, indicating recent stability
📉 200-Day Moving Average: $44.28, showing an upward trend
Looking at its valuation relative to book value, FBIZ trades at a price-to-book ratio of 1.28, which is reasonable for a well-performing regional bank. Investors who prefer to buy stocks at a discount may want to wait for a better entry point, but overall, it remains fairly priced given its earnings power.
Risks and Considerations
Like any investment, FBIZ comes with risks. While the company is financially sound, there are a few factors to keep in mind.
🔻 Sensitivity to Economic Cycles: As a bank, FBIZ is impacted by interest rate movements and overall economic conditions. A downturn in the economy or a significant drop in interest rates could affect profits.
🔻 Dividend Yield Below Historical Levels: The current yield is slightly below its five-year average. This isn’t necessarily bad, but investors seeking higher immediate income may look elsewhere.
🔻 Low Liquidity: With a market cap of just over $400 million, FBIZ is a small-cap stock. This means it’s not as widely traded as larger banks, which could result in more price volatility.
🔻 Loan Portfolio Risks: Any bank faces potential issues with bad loans. While FBIZ has managed risk well, any unexpected rise in loan defaults could impact earnings and dividends.
Final Thoughts
For investors looking for a solid dividend stock with a history of responsible growth, FBIZ presents an interesting opportunity.
✅ Low payout ratio means dividends are well-covered and have room to grow
✅ Strong earnings growth and profitability support long-term stability
✅ Valuation remains attractive compared to other financial stocks
The yield may not be the highest in the sector, but the company’s ability to consistently raise dividends while maintaining strong financials makes it an appealing choice for income-focused investors. Those who prioritize safety, growth potential, and a well-run business will likely find FBIZ to be a strong candidate for a long-term dividend portfolio.
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