FIRST BUSINESS FINANCIAL SERVICES, INC. Earnings Per Share Disclosure
Note 13 — Earnings per Common Share
Earnings per common share are computed using the two-class method. Basic earnings per common share are computed by dividing net income allocated to common shares by the weighted-average number of shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include unvested restricted shares. Unvested restricted shares are considered participating securities because holders of these securities receive non-forfeitable dividends, or dividend equivalents, at the same rate as holders of the Corporation’s common stock. Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of
shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.
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For the Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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(Dollars in Thousands, Except Share Data) |
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Basic earnings per common share |
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Net income |
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$ |
50,319 |
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$ |
44,245 |
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$ |
37,027 |
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Less: preferred stock dividends |
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875 |
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875 |
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875 |
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Less: earnings allocated to participating securities |
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953 |
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1,033 |
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|
938 |
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Basic earnings allocated to common shareholders |
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$ |
48,491 |
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$ |
42,337 |
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$ |
35,214 |
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Weighted-average common shares outstanding, |
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8,158,208 |
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8,148,259 |
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8,131,251 |
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Basic earnings per common share |
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$ |
5.94 |
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$ |
5.20 |
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$ |
4.33 |
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Diluted earnings per common share |
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Earnings allocated to common shareholders, diluted |
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$ |
48,491 |
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$ |
42,337 |
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$ |
35,214 |
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Weighted-average diluted common shares outstanding, |
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8,158,208 |
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|
8,148,259 |
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8,131,251 |
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Diluted earnings per common share |
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$ |
5.94 |
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$ |
5.20 |
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$ |
4.33 |
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.