10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2012

OR

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-34095

FIRST BUSINESS FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	39-1576570
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

401 Charmany Drive Madison, WI	53719
(Address of Principal Executive Offices)	(Zip Code)

(608) 238-8008

Registrant's telephone number, including area code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data Field required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares outstanding of the registrant’s sole class of common stock, par value $0.01 per share, on October 19, 2012 was 2,656,102 shares.

FIRST BUSINESS FINANCIAL SERVICES, INC.

INDEX — FORM 10-Q

PART I. Financial Information	2
Item 1. Financial Statements	2
Consolidated Balance Sheets	2
Consolidated Statements of Income (Unaudited)	3
Consolidated Statements of Comprehensive Income (Unaudited)	4
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	5
Consolidated Statements of Cash Flows (Unaudited)	6
Notes to Unaudited Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures about Market Risk	52
Item 4. Controls and Procedures	53
PART II. Other Information	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3. Defaults Upon Senior Securities	64
Item 4. Mine Safety Disclosures	64
Item 5. Other Information	64
Item 6. Exhibits	64
Signatures	66
Exhibit 4.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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PART I. Financial Information

Item 1. Financial Statements

First Business Financial Services, Inc.

Consolidated Balance Sheets

		(unaudited)
		September 30, 2012			December 31, 2011
	(In Thousands, Except Share Data)
Assets
Cash and due from banks		$	17,494		$	16,707
Short-term investments		70,348			113,386
Cash and cash equivalents		87,842			130,093
Securities available-for-sale, at fair value		202,805			170,386
Loans and leases receivable, net of allowance for loan and lease losses of $14,706 and $14,155, respectively		863,486			836,687
Leasehold improvements and equipment, net		965			999
Foreclosed properties		2,187			2,236
Cash surrender value of bank-owned life insurance		18,068			17,660
Investment in Federal Home Loan Bank stock, at cost		1,144			2,367
Accrued interest receivable and other assets		15,638			16,737
Total assets		$	1,192,135		$	1,177,165
Liabilities and Stockholders’ Equity
Deposits		$	1,061,258		$	1,051,312
Federal Home Loan Bank and other borrowings		39,482			40,292
Junior subordinated notes		10,315			10,315
Accrued interest payable and other liabilities		10,531			11,032
Total liabilities		1,121,586			1,112,951
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding		—			—
Common stock, $0.01 par value, 25,000,000 shares authorized, 2,745,750 and 2,714,985 shares issued, 2,656,102 and 2,625,569 shares outstanding at September 30, 2012 and December 31, 2011, respectively		27			27
Additional paid-in capital		26,217			25,843
Retained earnings		43,343			37,501
Accumulated other comprehensive income		2,632			2,491
Treasury stock (89,648 and 89,416 shares at September 30, 2012 and December 31, 2011, respectively), at cost		(1,670		)	(1,648		)
Total stockholders’ equity		70,549			64,214
Total liabilities and stockholders’ equity		$	1,192,135		$	1,177,165

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Income (Unaudited)

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012			2011		2012		2011
	(In Thousands, Except Share Data)
Interest income:
Loans and leases	$	13,095		$	13,047	$	38,859	$	39,016
Securities income	890			1,048		2,575		3,272
Short-term investments	47			24		174		76
Total interest income	14,032			14,119		41,608		42,364
Interest expense:
Deposits	3,102			4,107		10,178		13,107
Notes payable and other borrowings	735			628		2,145		1,868
Junior subordinated notes	280			280		835		832
Total interest expense	4,117			5,015		13,158		15,807
Net interest income	9,915			9,104		28,450		26,557
Provision for loan and lease losses	850			435		3,399		3,313
Net interest income after provision for loan and lease losses	9,065			8,669		25,051		23,244
Non-interest income:
Trust and investment services fee income	736			622		2,178		1,918
Service charges on deposits	532			425		1,504		1,215
Loan fees	502			380		1,245		1,079
Increase in cash surrender value of bank-owned life insurance	178			170		524		504
Credit, merchant and debit card fees	50			53		169		163
Other	251			78		383		266
Total non-interest income	2,249			1,728		6,003		5,145
Non-interest expense:
Compensation	4,224			3,840		12,455		11,413
Occupancy	294			351		958		1,050
Professional fees	400			369		1,279		1,141
Data processing	326			311		993		945
Marketing	300			295		845		823
Equipment	141			125		375		344
FDIC insurance	426			571		1,546		1,901
Collateral liquidation costs	264			155		451		574
Net (gain) loss on foreclosed properties	(14		)	29		228		158
Other	890			704		2,085		1,799
Total non-interest expense	7,251			6,750		21,215		20,148
Income before income tax expense	4,063			3,647		9,839		8,241
Income tax expense	1,441			1,468		3,442		2,201
Net income	$	2,622		$	2,179	$	6,397	$	6,040
Earnings per common share:
Basic	$	0.99		$	0.83	$	2.43	$	2.32
Diluted	0.99			0.83		2.43		2.32
Dividends declared per share	0.07			0.07		0.21		0.21

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
	(In Thousands)
Net income	$	2,622		$	2,179		$	6,397		$	6,040
Other comprehensive income, before tax
Unrealized securities gains (losses) arising during the period	419			(280		)	227			893
Income tax (expense) benefit	(160		)	103			(86		)	(355		)
Comprehensive income	$	2,881		$	2,002		$	6,538		$	6,578

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income		Treasury stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2010	$	27	$	25,253	$	29,808		$	1,792	$	(1,545	)	$	55,335
Net income	—		—		6,040			—		—			6,040
Other comprehensive income	—		—		—			538		—			538
Share-based compensation - restricted shares	—		439		—			—		—			439
Share-based compensation - tax benefits	—		—		—			—		—			—
Cash dividends ($0.21 per share)	—		—		(547		)	—		—			(547		)
Treasury stock purchased (3,181 shares)	—		—		—			—		(55		)	(55		)
Balance at September 30, 2011	$	27	$	25,692	$	35,301		$	2,330	$	(1,600	)	$	61,750

	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income		Treasury stock			Total
	(In Thousands, Except Share Data)
Balance at December 31, 2011	$	27	$	25,843		$	37,501		$	2,491	$	(1,648	)	$	64,214
Net income	—		—			6,397			—		—			6,397
Other comprehensive income	—		—			—			141		—			141
Share-based compensation - restricted shares	—		403			—			—		—			403
Share-based compensation - tax benefits	—		48			—			—		—			48
Cash dividends ($0.21 per share)	—		—			(555		)	—		—			(555		)
Treasury stock purchased (4,390 shares)	—		—			—			—		(99		)	(99		)
Treasury stock re-issued (4,158 shares)	—		(77		)	—			—		77			—
Balance at September 30, 2012	$	27	$	26,217		$	43,343		$	2,632	$	(1,670	)	$	70,549

See accompanying Notes to Unaudited Consolidated Financial Statements.

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First Business Financial Services, Inc.

Consolidated Statements of Cash Flows (Unaudited)

	For the Nine Months Ended September 30,
	2012			2011
	(In Thousands)
Operating activities
Net income	$	6,397		$	6,040
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes, net	(257		)	1,124
Provision for loan and lease losses	3,399			3,313
Depreciation, amortization and accretion, net	2,315			1,638
Share-based compensation	403			439
Increase in cash surrender value of bank-owned life insurance	(524		)	(504		)
Origination of loans for sale	(1,548		)	(1,283		)
Sale of loans originated for sale	1,695			1,288
Gain on sale of loans originated for sale	(147		)	(5		)
Net loss on foreclosed properties	228			158
Excess tax benefit from share-based compensation	(48		)	(2		)
Decrease in accrued interest receivable and other assets	793			1,306
Decrease in accrued interest payable and other liabilities	(323		)	(696		)
Net cash provided by operating activities	12,383			12,816
Investing activities
Proceeds from maturities of available-for-sale securities	41,497			31,299
Purchases of available-for-sale securities	(75,742		)	(46,711		)
Proceeds from sale of foreclosed properties	1,486			1,766
Payments to priority lien holders of foreclosed properties	(268		)	—
Net (increase) decrease in loans and leases	(31,595		)	8,741
Investment in Aldine Capital Fund, L.P.	—			(210		)
Distributions from Aldine Capital Fund, L.P.	557			—
Proceeds from sale of FHLB Stock	1,223			—
Purchases of leasehold improvements and equipment, net	(441		)	(274		)
Premium payment on bank owned life insurance policies	—			(8		)
Proceeds from surrender of bank owned life insurance policies	116			—
Net cash used in investing activities	(63,167		)	(5,397		)
Financing activities
Net increase in deposits	9,946			24,830
Repayment of FHLB advances	(10		)	(2,009		)
Net decrease in short-term borrowed funds	(800		)	—
Proceeds from issuance of subordinated notes payable	6,215			—
Repayment of subordinated notes payable	(6,215		)	—
Excess tax benefit from share-based compensation	48			2
Cash dividends paid	(552		)	(545		)
Purchase of treasury stock	(99		)	(55		)
Net cash provided by financing activities	8,533			22,223
Net (decrease) increase in cash and cash equivalents	(42,251		)	29,642
Cash and cash equivalents at the beginning of the period	130,093			50,819
Cash and cash equivalents at the end of the period	$	87,842		$	80,461
Supplementary cash flow information
Interest paid on deposits and borrowings	$	13,149		$	16,137
Income taxes paid	3,874			2,950
Transfer to foreclosed properties	1,397			2,218
Reissuance of treasury stock	77			—

See accompanying Notes to Unaudited Consolidated Financial Statements.

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Notes to Unaudited Consolidated Financial Statements

Note 1 — Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations. First Business Financial Services, Inc. (together with all of its subsidiaries, collectively referred to as “FBFS” or the “Corporation”) is a registered bank holding company incorporated under the laws of the State of Wisconsin and is engaged in the commercial banking business through its wholly owned subsidiaries First Business Bank (“FBB”) and First Business Bank — Milwaukee (“FBB-Milwaukee”). FBB and FBB-Milwaukee are sometimes referred to together as the “Banks.” FBB operates as a commercial banking institution in Dane County and the surrounding areas with loan production offices in Oshkosh, Appleton, and Green Bay, Wisconsin. FBB also offers trust and investment services through First Business Trust & Investments, a division of FBB. FBB — Milwaukee operates as a commercial banking institution in Waukesha County and the surrounding areas. The Banks provide a full range of financial services to businesses, business owners, executives, professionals and high net worth individuals. The Banks are subject to competition from other financial institutions and service providers and are also subject to state and federal regulations. FBB has the following subsidiaries: First Business Capital Corp., First Madison Investment Corp., First Business Equipment Finance, LLC and FBB Real Estate, LLC. First Madison Investment Corp. is located in and was formed under the laws of the state of Nevada. FBB-Milwaukee has one subsidiary, FBB — Milwaukee Real Estate, LLC.

Principles of Consolidation. The unaudited consolidated financial statements include the accounts and results of the Corporation. In accordance with the provisions of Accounting Standards Codification (ASC) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions were eliminated in consolidation.

Basis of Presentation. The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2011 except as described further below in this Note 1.

In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the unaudited consolidated financial statements were included in the unaudited consolidated financial statements. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2012. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events were evaluated through the issuance of the unaudited consolidated financial statements.

Note 2 — 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 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.

For the three month periods ended September 30, 2012 and 2011, average anti-dilutive employee share-based awards totaled 54,000 and 146,979, respectively. For the nine month periods ended September 30, 2012 and 2011, average anti-dilutive employee share-based awards totaled 120,502 and 145,526, respectively.

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	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012		2011
	(Dollars in Thousands, Except Share Data)
Basic earnings per common share
Net income	$	2,622	$	2,179		$	6,397	$	6,040
Less: earnings allocated to participating securities	101		83			239		230
Basic earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Basic earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32
Diluted earnings per common share
Earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Reallocation of undistributed earnings	—		(1		)	—		—
Diluted earnings allocated to common shareholders	$	2,521	$	2,095		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Dilutive effect of share-based awards	4,978		50			1,752		—
Weighted-average diluted common shares outstanding, excluding participating securities	2,544,485		2,511,817			2,535,188		2,502,991
Diluted earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32

Note 3 — Share-Based Compensation

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of FBFS and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (“Stock Options”), restricted stock, restricted stock units, dividend equivalent unit, and any other type of award permitted by the Plan. Shares previously available for grant under the 2006 Equity Incentive Plan (the "2006 Plan") were transferred to the 2012 Equity Incentive Plan. As of September 30, 2012, 214,634 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan. The 2006 Plan was terminated on May 14, 2012.

Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the plans are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options were granted since the Corporation became a reporting company under the Securities Exchange Act of 1934 and no Stock Options were modified, repurchased or cancelled. Therefore, no stock-based compensation related to Stock Options was recognized in the consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. As of September 30, 2012, all Stock Options granted and not previously forfeited have vested.

Stock Option activity for the year ended December 31, 2011 and nine months ended September 30, 2012 was as follows:

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	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2010	138,766		$	22.09	2.75
Granted	—		—
Exercised	—		—
Expired	(13,732	)	19.00
Forfeited	—		—
Outstanding at December 31, 2011	125,034		$	22.43	1.75
Exercisable at December 31, 2011	125,034		$	22.43	1.75
Outstanding as of December 31, 2011	125,034		$	22.43	1.75
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	—		—
Outstanding at September 30, 2012	125,034		$	22.43	1.00
Exercisable at September 30, 2012	125,034		$	22.43	1.00

Restricted Stock

Under the Plan, the Corporation may grant restricted shares to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted shares are subject to forfeiture, the participant may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. The restricted shares granted under the Plan are subject to graded vesting. Compensation expense is recognized over the requisite service period of four years for the entire award on a straight-line basis. Upon vesting of restricted share awards, the benefit of tax deductions in excess of recognized compensation expense is recognized as a financing cash flow activity.

Restricted share activity for the year ended December 31, 2011 and the nine months ended September 30, 2012 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2010	101,182		$	14.93
Granted	34,625		17.05
Vested	(39,939	)	16.24
Forfeited	—		—
Nonvested balance as of December 31, 2011	95,868		15.15
Granted	34,923		23.02
Vested	(19,221	)	16.10
Forfeited	—		—
Nonvested balance as of September 30, 2012	111,570		$	17.45

As of September 30, 2012, $1.7 million of deferred compensation expense was included in additional paid-in capital in the consolidated balance sheet related to unvested restricted shares which the Corporation expects to recognize over approximately 3 years. As of September 30, 2012, all restricted shares that vested were delivered. For the nine months ended September 30, 2012 and 2011, share-based compensation expense included in the consolidated statements of income totaled $403,000 and $439,000, respectively.

Note 4 — Securities

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The amortized cost and estimated fair value of securities available-for-sale were as follows:

	As of September 30, 2012
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	16,177	$	61	$	(1	)	$	16,237
Municipal obligations	9,954		133		(31		)	10,056
Collateralized mortgage obligations - government issued	159,846		4,114		(74		)	163,886
Collateralized mortgage obligations - government-sponsored enterprises	12,563		74		(11		)	12,626
	$	198,540	$	4,382	$	(117	)	$	202,805

	As of December 31, 2011
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Municipal obligations	$	2,736	$	95	$	—		$	2,831
Collateralized mortgage obligations - government issued	161,443		4,022		(64		)	165,401
Collateralized mortgage obligations - government-sponsored enterprises	2,169		—		(15		)	2,154
	$	166,348	$	4,117	$	(79	)	$	170,386

U.S. Government agency obligations - government-sponsored enterprises represent securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA"). Collateralized mortgage obligations - government issued represent securities guaranteed by the Government National Mortgage Association ("GNMA"). Collateralized mortgage obligations — government-sponsored enterprises include securities guaranteed by FHLMC and the FNMA. Municipal obligations include securities issued by various municipalities located primarily within the State of Wisconsin and are tax-exempt general obligation bonds. There were no sales of securities available for sale in the three and nine month periods ended September 30, 2012 and 2011.

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2012 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(In Thousands)
Due in one year or less	$	83	$	83
Due in one year through five years	13,131		13,180
Due in five through ten years	16,474		16,764
Due in over ten years	168,852		172,778
	$	198,540	$	202,805

The table below shows the Corporation’s gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual investments were in a continuous unrealized loss position at September 30, 2012 and December 31, 2011. At September 30, 2012 and December 31, 2011, the Corporation had 32 securities and 9 securities that were in an unrealized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they

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have primarily declined in value due to the current interest rate environment. At September 30, 2012, the Corporation held no securities that had been in a continuous loss position for twelve months or greater.

The Corporation also has not specifically identified securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. It is expected that the Corporation will recover the entire amortized cost basis of each security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the consolidated results of operations for the nine months ended September 30, 2012 and 2011.

A summary of unrealized loss information for available-for-sale securities, categorized by security type follows:

	As of September 30, 2012
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	1,499	$	1	$	—	$	—	$	1,499	$	1
Municipal obligations	3,601		31		—		—		3,601		31
Collateralized mortgage obligations - government issued	15,717		74		—		—		15,717		74
Collateralized mortgage obligations - government-sponsored enterprises	3,652		11		—		—		3,652		11
	$	24,469	$	117	$	—	$	—	$	24,469	$	117

	As of December 31, 2011
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Collateralized mortgage obligations - government issued	$	16,336	$	64	$	—	$	—	$	16,336	$	64
Collateralized mortgage obligations - government-sponsored enterprises	2,076		15		—		—		2,076		15
	$	18,412	$	79	$	—	$	—	$	18,412	$	79

At September 30, 2012 and December 31, 2011, securities with a fair value of $22.9 million and $19.6 million, respectively, were pledged to secure interest rate swap contracts, outstanding Federal Home Loan Bank ("FHLB") advances and client letters of credit. Securities pledged also provide for future availability for additional advances from the FHLB.

11

Note 5 — Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and lease receivables consist of the following:

	September 30, 2012		December 31, 2011
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	153,534	$	150,528
Commercial real estate — non-owner occupied	295,852		304,597
Construction and land development	50,158		38,124
Multi-family	57,565		43,905
1-4 family	33,602		43,513
Total commercial real estate	590,711		580,667
Commercial and industrial	255,202		237,099
Direct financing leases, net	16,462		17,128
Consumer and other
Home equity and second mortgages	4,670		4,970
Other	11,789		11,682
Total consumer and other	16,459		16,652
Total gross loans and leases receivable	878,834		851,546
Less:
Allowance for loan and lease losses	14,706		14,155
Deferred loan fees	642		704
Loans and leases receivable, net	$	863,486	$	836,687

The total principal amount of loans transferred to third parties, which consisted solely of participation interests in originated loans, during the three months ended September 30, 2012 and 2011 was $20.1 million and $10.9 million, respectively. For the nine months ended September 30, 2012 and 2011, $54.8 million and $21.0 million of loans were transferred to third parties, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting and therefore $20.1 million and $54.8 million for the three and nine months ended September 30, 2012 and $10.9 million and $21.0 million for the three and nine months ended September 30, 2011 have been derecognized in the unaudited consolidated financial statements. The Corporation has a continuing involvement in each of the agreements by way of relationship management and servicing the loans; however, there are no further obligations required of the Corporation in the event of default, other than standard representations and warranties related to sold amounts. The loans were transferred at their fair value and no gain or loss was recognized upon the transfer as the participation interest was transferred at or near the date of loan origination. There were no other significant purchases or sales of loan and lease receivables or transfers to loans held for sale during the three and nine months ended September 30, 2012 and 2011.

The total amount of outstanding loans transferred to third parties as loan participations sold at September 30, 2012 and December 31, 2011 was $44.7 million and $49.2 million, respectively, all of which were treated as a sale and derecognized under the applicable accounting guidance in effect at the time of the transfers of the financial assets. The Corporation's continuing involvement with these loans is by way of partial ownership, relationship management and all servicing responsibilities. As of September 30, 2012 and December 31, 2011, the total amount of the Corporation's partial ownership of loans on the Corporation’s balance sheet was $63.9 million and $74.6 million, respectively. As of September 30, 2012 and December 31, 2011, $3.3 million and $3.4 million of the loans in this participation sold portfolio were considered impaired, respectively. Since December 2010, the Corporation recognized a total $2.7 million charge-off associated with specific credits within the retained portion of this portfolio of loans in accordance with the Corporation’s allowance for loan and lease loss measurement process and policies. The Corporation does not share in the participant’s portion of the charge-offs. The total amount of loan participations purchased on the Corporation's balance sheet as of September 30, 2012 and December 31, 2011 was $678,000 and $689,000, respectively.

12

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of September 30, 2012 and December 31, 2011:

	Category
As of September 30, 2012	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	128,661		$	6,778		$	17,166		$	929		$	153,534
Commercial real estate — non-owner occupied	228,493			40,038			26,490			831			295,852
Construction and land development	33,845			1,485			9,089			5,739			50,158
Multi-family	49,875			6,848			793			49			57,565
1-4 family	18,331			4,510			8,074			2,687			33,602
Total commercial real estate	459,205			59,659			61,612			10,235			590,711
Commercial and industrial	231,407			7,866			14,336			1,593			255,202
Direct financing leases, net	11,933			2,862			1,667			—			16,462
Consumer and other:
Home equity and second mortgages	3,531			167			181			791			4,670
Other	10,665			—			—			1,124			11,789
Total consumer and other	14,196			167			181			1,915			16,459
Total gross loans and leases receivable	$	716,741		$	70,554		$	77,796		$	13,743		$	878,834
Category as a % of total portfolio	81.56		%	8.03		%	8.85		%	1.56		%	100.00		%

13

	Category
As of December 31, 2011	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	117,065		$	16,488		$	14,004		$	2,971		$	150,528
Commercial real estate — non-owner occupied	236,868			34,823			30,657			2,249			304,597
Construction and land development	20,660			5,367			4,867			7,230			38,124
Multi-family	34,162			6,930			804			2,009			43,905
1-4 family	23,266			11,637			4,993			3,617			43,513
Total commercial real estate	432,021			75,245			55,325			18,076			580,667
Commercial and industrial	198,018			25,070			12,453			1,558			237,099
Direct financing leases, net	11,398			5,026			686			18			17,128
Consumer and other:
Home equity and second mortgages	3,524			188			256			1,002			4,970
Other	10,459			—			—			1,223			11,682
Total consumer and other	13,983			188			256			2,225			16,652
Total gross loans and leases receivable	$	655,420		$	105,529		$	68,720		$	21,877		$	851,546
Category as a % of total portfolio	76.97		%	12.39		%	8.07		%	2.57		%	100.00		%

Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Business development officers have relatively low individual lending authority limits, and thus a significant portion of the Corporation’s new credit extensions require approval from a loan approval committee regardless of the type of loan or lease, asset quality grade of the credit, amount of the credit, or the related complexities of each proposal. In addition, the Corporation makes every effort to ensure that there is appropriate collateral at the time of origination to protect the Corporation’s interest in the related loan or lease.

Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from our borrowers, or as other circumstances dictate. The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition, but are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. The Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrower’s management team or the industry in which the borrower operates. Loans and leases in this category are not subject to additional monitoring procedures above and beyond what is required at the origination or renewal of the loan or lease. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of our personal relationships with such borrowers and continued review of such borrowers' compliance with the terms of the agreement.

Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends and collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by a subcommittee of the Banks’ loan committees.

14

Category III — Loans and leases in this category are identified by the Corporation’s business development officers and senior management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Banks. Category III loans and leases generally exhibit undesirable characteristics such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all required principal and interest in accordance with the original terms of the contract, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored on a monthly basis by management, loan committees of the Banks, and the Banks’ Boards of Directors.

Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases have been placed on non-accrual as management has determined that it is unlikely that the Banks will receive the required principal and interest in accordance with the contractual terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored on a monthly basis by management, loan committees of the Banks, and the Banks’ Boards of Directors.

Utilizing regulatory terminology, the Corporation identified $24.0 million and $3.9 million of loans and leases as Substandard and Special Mention, respectively, as of September 30, 2012. As of December 31, 2011, $42.6 million of loans were considered Substandard and no loans were considered Special Mention. No loans and leases were identified as Doubtful, or Loss at September 30, 2011 and December 31, 2010. The population of Special Mention and Substandard loans are a subset of Category III and Category IV loans.

15

The delinquency aging of the loan and lease portfolio by class of receivable as of September 30, 2012 and December 31, 2011 were as follows:

As of September 30, 2012	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	152,605		$	152,605
Non-owner occupied	—			—			—			—			295,388			295,388
Construction and land development	4,025			—			—			4,025			40,924			44,949
Multi-family	—			—			—			—			57,516			57,516
1-4 family	—			—			—			—			30,915			30,915
Commercial & industrial	42			—			—			42			253,567			253,609
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,879			3,879
Other	—			—			—			—			10,665			10,665
Total	4,067			—			—			4,067			861,921			865,988
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	812		$	929
Non-owner occupied	—			—			464			464			—			464
Construction and land development	—			—			538			538			4,671			5,209
Multi-family	—			—			—			—			49			49
1-4 family	75			—			618			693			1,994			2,687
Commercial & industrial	—			—			208			208			1,385			1,593
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			128			128			663			791
Other	—			—			1,124			1,124			—			1,124
Total	75			—			3,197			3,272			9,574			12,846
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	153,417		$	153,534
Non-owner occupied	—			—			464			464			295,388			295,852
Construction and land development	4,025			—			538			4,563			45,595			50,158
Multi-family	—			—			—			—			57,565			57,565
1-4 family	75			—			618			693			32,909			33,602
Commercial & industrial	42			—			208			250			254,952			255,202
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			128			128			4,542			4,670
Other	—			—			1,124			1,124			10,665			11,789
Total	$	4,142		$	—		$	3,197		$	7,339		$	871,495		$	878,834
Percent of portfolio	0.47		%	—		%	0.37		%	0.84		%	99.16		%	100.00		%

16

As of December 31, 2011	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	—		$	106		$	147,450		$	147,556
Non-owner occupied	—			131			—			131			302,217			302,348
Construction and land development	3,942			—			—			3,942			26,953			30,895
Multi-family	—			—			—			—			41,896			41,896
1-4 family	—			—			—			—			40,007			40,007
Commercial & industrial	25			—			—			25			235,516			235,541
Direct financing leases, net	—			—			—			—			17,110			17,110
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,968			3,968
Other	—			—			—			—			10,459			10,459
Total	4,073			131			—			4,204			825,576			829,780
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	2,011		$	2,011		$	961		$	2,972
Non-owner occupied	—			155			1,625			1,780			469			2,249
Construction and land development	114			515			704			1,333			5,896			7,229
Multi-family	—			—			2,009			2,009			—			2,009
1-4 family	404			224			495			1,123			2,383			3,506
Commercial & industrial	21			—			298			319			1,239			1,558
Direct financing leases, net	—			—			—			—			18			18
Consumer and other:
Home equity and second mortgages	—			40			315			355			647			1,002
Other	—			—			1,222			1,222			1			1,223
Total	539			934			8,679			10,152			11,614			21,766
Total loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	2,011		$	2,117		$	148,411		$	150,528
Non-owner occupied	—			286			1,625			1,911			302,686			304,597
Construction and land development	4,056			515			704			5,275			32,849			38,124
Multi-family	—			—			2,009			2,009			41,896			43,905
1-4 family	404			224			495			1,123			42,390			43,513
Commercial & industrial	46			—			298			344			236,755			237,099
Direct financing leases, net	—			—			—			—			17,128			17,128
Consumer and other:
Home equity and second mortgages	—			40			315			355			4,615			4,970
Other	—			—			1,222			1,222			10,460			11,682
Total	$	4,612		$	1,065		$	8,679		$	14,356		$	837,190		$	851,546
Percent of portfolio	0.54		%	0.12		%	1.02		%	1.68		%	98.32		%	100.00		%

17

The Corporation’s non-accrual loans and leases consisted of the following at September 30, 2012 and December 31, 2011, respectively.

	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	929	$	2,972
Commercial real estate — non-owner occupied	464		2,249
Construction and land development	5,209		7,229
Multi-family	49		2,009
1-4 family	2,687		3,506
Total non-accrual commercial real estate	9,338		17,965
Commercial and industrial	1,593		1,558
Direct financing leases, net	—		18
Consumer and other:
Home equity and second mortgage	791		1,002
Other	1,124		1,223
Total non-accrual consumer and other loans	1,915		2,225
Total non-accrual loans and leases	12,846		21,766
Foreclosed properties, net	2,187		2,236
Total non-performing assets	$	15,033	$	24,002
Performing troubled debt restructurings	$	897	$	111

	September 30, 2012		December 31, 2011
Total non-accrual loans and leases to gross loans and leases	1.46	%	2.56	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.71		2.81
Total non-performing assets to total assets	1.26		2.04
Allowance for loan and lease losses to gross loans and leases	1.67		1.66
Allowance for loan and lease losses to non-accrual loans and leases	114.48		65.03

As of September 30, 2012 and December 31, 2011, $10.8 million and $13.3 million of the impaired loans were considered troubled debt restructurings, respectively. As of September 30, 2012, there were no unfunded commitments associated with troubled debt restructured loans and leases.

18

	As of September 30, 2012					As of December 31, 2011
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	4	$	338	$	277	5	$	380	$	352
Commercial real estate — non-owner occupied	6	972		831		6	971		902
Construction and land development	3	8,044		4,983		4	8,457		5,692
Multi-family	1	184		49		—	—		—
1-4 family	14	2,951		2,613		15	3,152		3,031
Commercial and industrial	7	2,250		1,048		9	2,394		1,393
Direct financing leases, net	—	—		—		1	32		18
Consumer and other:
Home equity and second mortgage	8	865		770		8	865		813
Other	1	2,076		1,124		1	2,076		1,222
Total	44	$	17,680	$	11,695	49	$	18,327	$	13,423

All loans and leases modified as a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

19

As of September 30, 2012 and December 31, 2011, our troubled debt restructurings grouped by type of concession were as follows:

	As of September 30, 2012			As of December 31, 2011
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	2	$	123	2	$	127
Combination of extension and interest rate concession	26	8,630		28	9,850
Commercial and industrial
Extension of term	3	295		5	406
Combination of extension and interest rate concession	4	753		4	987
Consumer and other
Extension of term	2	1,211		5	1,603
Combination of extension and interest rate concession	7	683		4	432
Direct financing leases, net
Extension of term	—	—		1	18
Total	44	$	11,695	49	$	13,423

The following table provides the number of loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the nine months ended September 30, 2012, as well as the recorded investment in these restructured loans as of September 30, 2012.

	Nine months ended September 30, 2012
	Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate:
Construction and land development	1	$	110
1-4 family	1	223
Commercial and industrial	1	18
Consumer and other:
Home equity and second mortgage	1	20
Total	4	$	371

20

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Nine Months Ended September 30, 2012
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	676		676		—		1,433		174		207		(33		)
Construction and land development	5,209		8,786		—		6,089		190		24		166
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	1,813		1,915		—		2,043		113		—		113
Commercial and industrial	862		1,031		—		1,440		80		25		55
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	668		668		—		782		44		1		43
Other	1,124		1,612		—		1,164		85		1		84
Total	11,330		16,033		—		15,069		868		321		547
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	155		155		155		155		2		—		2
Construction and land development	530		530		190		541		15		—		15
Multi-family	—		—		—		—		—		—		—
1-4 family	874		875		322		892		38		—		38
Commercial and industrial	731		3,361		205		1,856		170		—		170
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	123		123		94		140		7		—		7
Other	—		—		—		—		—		—		—
Total	2,413		5,044		966		3,584		232		—		232
Total:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	831		831		155		1,588		176		207		(31		)
Construction and land development	5,739		9,316		190		6,630		205		24		181
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	2,687		2,790		322		2,935		151		—		151
Commercial and industrial	1,593		4,392		205		3,296		250		25		225
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	791		791		94		922		51		1		50
Other	1,124		1,612		—		1,164		85		1		84
Grand total	$	13,743	$	21,077	$	966	$	18,653	$	1,100	$	321	$	779

(1) Average recorded investment is calculated primarily using daily average balances.

21

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2011
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	2,455	$	3,669	$	—	$	5,177	$	450	$	200	$	250
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	6,383		9,927		—		7,974		350		48		302
Multi-family	2,009		2,246		—		3,075		362		—		362
1-4 family	2,628		3,016		—		3,160		277		108		169
Commercial and industrial	1,139		1,320		—		3,820		384		424		(40		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	803		827		—		884		62		1		61
Other	1,222		1,682		—		1,691		138		6		132
Total	18,888		26,768		—		31,042		2,447		787		1,660
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	517	$	517	$	13	$	358	$	81	$	—	$	81
Non-owner occupied	—		—		—		—		—		—		—
Construction and land development	846		846		130		483		48		—		48
Multi-family	—		—		34		287		—		—		—
1-4 family	989		989		337		1,017		61		—		61
Commercial and industrial	419		419		276		384		24		—		24
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	199		199		79		208		20		—		20
Other	1		1		1		1		—		—		—
Total	2,989		2,989		888		2,751		235		—		235
Total:
Commercial real estate:
Owner occupied	$	2,972	$	4,186	$	13	$	5,535	$	531	$	200	$	331
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	7,229		10,773		130		8,457		398		48		350
Multi-family	2,009		2,246		34		3,362		362		—		362
1-4 family	3,617		4,005		337		4,177		338		108		230
Commercial and industrial	1,558		1,739		276		4,204		408		424		(16		)
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	1,002		1,026		79		1,092		82		1		81
Other	1,223		1,683		1		1,692		138		6		132
Grand total	$	21,877	$	29,757	$	888	$	33,793	$	2,682	$	787	$	1,895

(1) Average recorded investment is calculated primarily using daily average balances.

22

The difference between the loans and leases recorded investment and the unpaid principal balance of $7.3 million and $7.9 million as of September 30, 2012 and December 31, 2011 represents partial charge-offs resulting from confirmed losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $897,000 and $111,000 of loans that were performing troubled debt restructurings, and thus, while not on non-accrual, were reported as impaired, due to the concession in terms. When a loan is placed on non-accrual, interest accruals are discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to principal. Foregone interest represents the interest that was contractually due on the note but not received or recorded. To the extent the amount of principal on a non-accrual note is fully collected and additional cash is received, the Corporation will recognize interest income.

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Nine Months Ended September 30, 2012
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,554		$	3,977		$	384		$	240		$	14,155
Charge-offs	(467		)	(2,668		)	(107		)	—			(3,242		)
Recoveries	291			65			38			—			394
Provision	572			2,764			83			(20		)	3,399
Ending balance	$	9,950		$	4,138		$	398		$	220		$	14,706
Ending balance: individually evaluated for impairment	$	667		$	205		$	94		$	—		$	966
Ending balance: collectively evaluated for impairment	$	9,283		$	3,933		$	304		$	220		$	13,740
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	590,711		$	255,202		$	16,459		$	16,462		$	878,834
Ending balance: individually evaluated for impairment	$	10,235		$	1,593		$	1,915		$	—		$	13,743
Ending balance: collectively evaluated for impairment	$	580,476		$	253,609		$	14,544		$	16,462		$	865,091
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.68		%	1.62		%	2.42		%	1.34		%	1.67		%

23

	As of and for the Nine Months Ended September 30, 2011
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	11,267		$	4,277		$	482		$	245		$	16,271
Charge-offs	(5,444		)	(471		)	(325		)	—			(6,240		)
Recoveries	277			432			69			19			797
Provision	3,488			(338		)	187			(24		)	3,313
Ending balance	$	9,588		$	3,900		$	413		$	240		$	14,141
Ending balance: individually evaluated for impairment	$	757		$	252		$	82		$	25		$	1,116
Ending balance: collectively evaluated for impairment	$	8,831		$	3,648		$	331		$	215		$	13,025
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	602,869		$	224,257		$	18,012		$	16,324		$	861,462
Ending balance: individually evaluated for impairment	$	22,900		$	1,714		$	2,490		$	25		$	27,129
Ending balance: collectively evaluated for impairment	$	579,969		$	222,543		$	15,522		$	16,299		$	834,333
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.59		%	1.74		%	2.29		%	1.47		%	1.64		%

Note 6 — Deposits

Deposits consisted of the following:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	140,831	$	131,761	—	%	$	132,230	$	112,899	—	%
Interest-bearing transaction accounts	38,099		34,263		0.30		23,004		25,389		0.28
Money market accounts	409,823		384,488		0.81		364,082		300,652		0.99
Certificates of deposit	81,777		84,907		1.20		85,331		80,323		1.38
Brokered certificates of deposit	390,728		409,393		2.28		446,665		486,594		2.66
Total deposits	$	1,061,258	$	1,044,812	1.29		$	1,051,312	$	1,005,857	1.70

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Note 7 — FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

The composition of borrowed funds at September 30, 2012 and December 31, 2011 was as follows:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	148	0.81	%	$	—	$	252	0.90	%
FHLB advances	472		2,520		1.32		482		656		5.83
Line of credit	10		2,223		4.04		810		2,236		4.06
Subordinated notes payable	39,000		39,000		6.99		39,000		39,000		6.12
Junior subordinated notes	10,315		10,315		10.79		10,315		10,315		10.78
	$	49,797	$	54,206	7.33		$	50,607	$	52,459	6.94
Short-term borrowings	$	482					$	810
Long-term borrowings	49,315						49,797
	$	49,797					$	50,607

As of September 30, 2012, the Corporation was in compliance with its debt covenants under its senior line of credit. The Corporation pays an unused line fee on its secured senior line of credit. For the nine months ended September 30, 2012 and 2011, the Corporation incurred unused line fee expense of $8,000 and $7,000, respectively. The unused line fee is recorded as a component of interest expense.

During the first quarter of 2012, the Corporation sold and issued approximately $6.2 million in aggregate principal amount of subordinated debentures to certain accredited investors. The debentures have been structured to qualify as Tier 2 capital, mature on January 15, 2022 and bear a fixed interest rate of 7.5% per year for their entire term. The Corporation may, at its option, redeem the debentures, in whole or part, at any time after the fifth anniversary of issuance. The Corporation used the net proceeds from the sale of the debentures to replace a portion of its existing $39.0 million of subordinated notes payable to diversify its sources of debt, obtain a longer term fixed rate instrument and enhance its regulatory capital position.

Note 8 — Fair Value Disclosures

The Corporation determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included with Level 1 that are observable for the asset or liability either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

25

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	10,056	$	—	$	10,056
U.S. Government agency obligations - government-sponsored enterprises	—		16,237		—		16,237
Collateralized mortgage obligations - government issued	—		163,886		—		163,886
Collateralized mortgage obligations - government-sponsored enterprises	—		12,626		—		12,626
Interest rate swaps	—		3,011		—		3,011
Liabilities:
Interest rate swaps	$	—	$	3,011	$	—	$	3,011

	Fair Value Measurements Using
December 31, 2011	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	2,831	$	—	$	2,831
U.S. Government agency obligations - government-sponsored enterprises	—		—		—		—
Collateralized mortgage obligations - government issued	—		165,401		—		165,401
Collateralized mortgage obligations - government-sponsored enterprises	—		2,154		—		2,154
Interest rate swaps	—		3,434		—		3,434
Liabilities:
Interest rate swaps	$	—	$	3,434	$	—	$	3,434

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the nine months ended September 30, 2012 or the year ended December 31, 2011 related to the above measurements.

26

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Nine Months Ended September 30, 2012
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	September 30, 2012		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,813	$	—	$	8,415	$	398	$	—
Foreclosed properties	2,187		252		1,935		—		(176		)

			As of and for the Year Ended December 31, 2011
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2011		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	12,787	$	—	$	12,787	$	—	$	—
Foreclosed properties	2,236		138		1,989		109		(621		)

Impaired loans that are collateral dependent were written down to their fair value less costs to sell of $8.8 million and $12.8 million at September 30, 2012 and December 31, 2011, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data. In cases where such inputs were unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 values range from 13% - 100%.

Certain non-financial assets subject to measurement at fair value on a non-recurring basis included foreclosed properties. Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically an appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property. As of September 30, 2012, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties. During the nine months ended September 30, 2012, $1.4 million of outstanding loans were transferred to foreclosed properties as the Corporation claimed title to the respective assets. During the nine months ended September 30, 2012, the Corporation completed an evaluation of certain of its foreclosed assets. Based upon the evaluation and the results of the impairment calculation, we recognized impairment losses of $176,000 on foreclosed properties. The activity of the Corporation's foreclosed properties is summarized as follows:

	As of and for the Nine Months Ended September 30, 2012			As of and for the Year Ended December 31, 2011
	(In Thousands)
Foreclosed properties at the beginning of the period	$	2,236		$	1,750
Loans transferred to foreclosed properties, at lower of cost or fair value	1,397			3,119
Payments to priority lien holders of foreclosed properties	268			—
Proceeds from sale of foreclosed properties	(1,486		)	(2,213		)
Net (loss) gain on sale of foreclosed properties	(52		)	201
Impairment valuation	(176		)	(621		)
Foreclosed properties at the end of the period	$	2,187		$	2,236

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Fair Value of Financial Instruments

The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	September 30, 2012										December 31, 2011
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	87,842	$	87,842	$	84,342	$	—	$	3,500	$	130,093	$	130,093
Securities available-for-sale	202,805		202,805		—		202,805		—		170,386		170,386
Loans and lease receivables, net	863,486		882,020		—		8,415		873,605		836,687		840,552
Federal Home Loan Bank stock	1,144		1,144		—		—		1,144		2,367		2,367
Cash surrender value of life insurance	18,068		18,068		18,068		—		—		17,660		17,660
Accrued interest receivable	3,506		3,506		3,506		—		—		3,525		3,525
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Financial liabilities:
Deposits	$	1,061,258	$	1,076,019	$	588,753	$	487,266	$	—	$	1,051,312	$	1,068,845
Federal Home Loan Bank and other borrowings	39,482		39,746		—		39,746		—		40,292		40,899
Junior subordinated notes	10,315		7,020		—		—		7,020		10,315		6,917
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Accrued interest payable	2,635		2,635		2,635		—		—		2,625		2,625
Off balance sheet items:
Standby letters of credit	112		112		—		—		112		81		81
Commitments to extend credit	—		*		*		*		*		—		*

*Not meaningful

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of September 30, 2012, the Corporation held $3.5 million of commercial paper. There was no commercial paper outstanding as of December 31, 2011. The fair value of commercial paper is considered a Level 3 input given the underlying potential for credit risks associated with the issuing companies ability to repay the investment at the stated maturity. The inputs to evaluate the credit risk of the commercial paper issuer are based upon unobservable inputs.

28

Securities: The fair value measurements of investment securities are determined by a third party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. In addition, the Corporation reviews the third-party valuation methodology on a periodic basis. Any significant differences in valuation are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit value of a portfolio of loans.

Federal Home Loan Bank Stock: The carrying amount of FHLB stock equals its fair value because the shares may be redeemed by the FHLB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

29

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and were not considered in the estimates.

Note 9 — Derivative Financial Instruments

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked-to-market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considered the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

At September 30, 2012, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was $49.0 million. The Corporation receives fixed rates and pays floating rates based upon LIBOR on the swaps with commercial borrowers. The aggregate amortizing notional value of interest rate swaps with dealer counterparties was also $49.0 million. The Corporation pays fixed rates and receives floating rates based upon LIBOR on the swaps with dealer counterparties. These interest rate swaps mature in February, 2013 through June, 2022. The commercial borrower swaps were reported on the Corporation’s balance sheet as a derivative asset of $3.0 million and were included in accrued interest receivable and other assets. Dealer counterparty swaps were reported on the Corporation’s balance sheet as a net derivative liability of $3.0 million due to master netting and settlement contracts with dealer counterparties and were included in accrued interest payable and other liabilities as of September 30, 2012.

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of September 30, 2012 and December 31, 2011.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
September 30, 2012	Other assets	$	3,011	Other liabilities	$	3,011
December 31, 2011	Other assets	$	3,434	Other liabilities	$	3,434

No derivative instruments held by the Corporation for the nine months ended September 30, 2012 were considered hedging instruments. All changes in the fair value of these instruments are recorded in other non-interest income. Given the mirror-image terms of the outstanding derivative portfolio the change in fair value for the nine months ended September 30, 2012 and 2011 had no net impact to the unaudited consolidated income statement.

30

Note 10 — Regulatory Capital

The Corporation and the Banks are subject to various regulatory capital requirements administered by Federal and State of Wisconsin banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance sheet items as calculated under regulatory practices. The Corporation’s and the Banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Corporation has updated its Capital and Liquidity Action Plan (the “Plan”), which is designed to help ensure appropriate capital adequacy, to plan for future capital needs and to ensure that the Corporation serves as a source of financial strength to the Banks. The Corporation’s and the Banks’ Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their capital position, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

As a bank holding company, the Corporation’s ability to pay dividends is affected by the policies and enforcement powers of the Federal Reserve. Federal Reserve guidance urges companies to strongly consider eliminating, deferring or significantly reducing dividends if: (i) net income available to common shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividend; (ii) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios. Management intends, when appropriate under regulatory guidelines, to consult with the Federal Reserve Bank of Chicago and provide it with information on the Corporation’s then-current and prospective earnings and capital position in advance of declaring any cash dividends.

The Banks are also subject to certain legal, regulatory and other restrictions on their ability to pay dividends to the Corporation. As a bank holding company, the payment of dividends by the Banks to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments. Future dividend decisions by the Banks and the Corporation will continue to be subject to compliance with various legal, regulatory and other restrictions as defined from time to time.

Qualitative measures established by regulation to ensure capital adequacy require the Corporation and the Banks to maintain minimum amounts and ratios of Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Tier 1 capital generally consists of stockholders’ equity plus certain qualifying debentures and other specified items less intangible assets such as goodwill. Risk-based capital requirements presently address credit risk related to both recorded and off-balance-sheet commitments and obligations. Management believes, as of September 30, 2012, that the Corporation and the Banks met all applicable capital adequacy requirements.

As of September 30, 2012, the most recent notification from the Federal Deposit Insurance Corporation and the State of Wisconsin Department of Financial Institutions categorized the Banks as well capitalized under the regulatory framework for prompt corrective action.

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at September 30, 2012 and December 31, 2011, respectively:

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	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of September 30, 2012
Total capital
(to risk-weighted assets)
Consolidated	$	127,871	13.33	%	$	76,746	8.00	%	N/A		N/A
First Business Bank	111,665		13.06		68,417		8.00		$	85,521	10.00	%
First Business Bank — Milwaukee	15,635		15.12		8,273		8.00		10,341		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	77,917	8.12	%	$	38,373	4.00	%	N/A		N/A
First Business Bank	100,944		11.80		34,209		4.00		$	51,313	6.00	%
First Business Bank — Milwaukee	14,339		13.87		4,136		4.00		6,205		6.00
Tier 1 capital
(to average assets)
Consolidated	$	77,917	6.58	%	$	47,374	4.00	%	N/A		N/A
First Business Bank	100,944		10.30		39,197		4.00		$	48,997	5.00	%
First Business Bank — Milwaukee	14,339		6.66		8,612		4.00		10,765		5.00

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	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2011
Total capital
(to risk-weighted assets)
Consolidated	$	118,895	13.11	%	$	72,559	8.00	%	N/A		N/A
First Business Bank	108,860		13.39		65,058		8.00		$	81,322	10.00	%
First Business Bank — Milwaukee	15,074		16.11		7,484		8.00		9,355		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	71,723	7.91		$	36,279	4.00	%	N/A		N/A
First Business Bank	98,666		12.13		32,529		4.00		$	48,793	6.00	%
First Business Bank — Milwaukee	13,898		14.86		3,742		4.00		5,613		6.00
Tier 1 capital
(to average assets)
Consolidated	$	71,723	6.22		$	46,152	4.00	%	N/A		N/A
First Business Bank	98,666		9.98		39,556		4.00		$	49,445	5.00	%
First Business Bank — Milwaukee	13,898		7.95		6,993		4.00		8,741		5.00

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Unless otherwise indicated or unless the context requires otherwise, all references in this Report to “FBFS”, the “Corporation”, “we”, “us”, “our”, or similar references mean First Business Financial Services, Inc. together with our subsidiaries. “FBB” or “FBB — Milwaukee” or the “Banks” are used to refer to our subsidiaries, First Business Bank and First Business Bank — Milwaukee, alone.

Forward-Looking Statements

When used in this report the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume,” “intend,” “estimate,” “anticipate,” “project,” “likely,” or similar expressions are intended to identify “forward-looking statements.” Such statements are subject to risks and uncertainties, including, without limitation, changes in economic conditions in the market areas of FBB or FBB - Milwaukee, changes in policies by regulatory agencies, fluctuation in interest rates, demand for loans in the market areas of FBB or FBB — Milwaukee, borrowers defaulting in the repayment of loans and competition. These risks could cause actual results to differ materially from what FBFS has anticipated or projected. These risk factors and uncertainties should be carefully considered by potential investors. See Item 1A — Risk Factors in Part II of this Form 10-Q for discussion relating to risk factors impacting the Corporation. Investors should not place undue reliance on any such forward-looking statement, which speaks only as of the date on which it was made. The factors described within this Form 10-Q could affect the financial performance of FBFS and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods.

Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, FBFS cautions that, while its management believes such assumptions or bases are reasonable and are made in good faith, assumed facts or bases can vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, an expectation or belief is expressed as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result in, or be achieved or accomplished.

33

FBFS does not intend to, and specifically disclaims any obligation to, update any forward-looking statements.

The following discussion and analysis is intended as a review of significant events and factors affecting the financial condition and results of operations of FBFS for the periods indicated. The discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the Notes thereto presented in this Form 10-Q.

Overview

FBFS is a registered bank holding company incorporated under the laws of the State of Wisconsin and is engaged in the commercial banking business through its wholly-owned banking subsidiaries, FBB and FBB-Milwaukee. All of the operations of FBFS are conducted through the Banks and certain subsidiaries of FBB. The Corporation operates as a business bank focusing on delivering a full line of commercial banking products and services tailored to meet the specific needs of small and medium sized businesses, business owners, executives, professionals and high net worth individuals. The Corporation does not utilize a branch network to attract retail clients. In 2012, our strategic initiatives include improving our asset quality as well as increasing full banking relationships with commercial and industrial clients in order to increase our in-market deposits, enhance our loan and lease portfolio and grow our non-interest income. We intend to add business development officers as appropriate to continue revenue growth and ongoing core earnings improvement. We believe this strategy will create opportunities to capitalize on economic expansion as well as any current disruption to our competitors' businesses in our core Wisconsin area.

Operational Highlights

• Total assets were $1.192 billion as of September 30, 2012 compared to $1.177 billion as of December 31, 2011.

• Net income for the three months ended September 30, 2012 was $2.6 million compared to net income of $2.2 million for the three months ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $6.4 million compared to net income of $6.0 million for the nine months ended September 30, 2011. Net income for the nine months ended September 30, 2011 included a substantial one-time tax benefit resulting from a change in Wisconsin tax law during the second quarter of 2011.

• Diluted earnings per common share for the three months ended September 30, 2012 were $0.99 compared to diluted earnings per common share of $0.83 for the three months ended September 30, 2011. Diluted earnings per common share for the nine months ended September 30, 2012 were $2.43 compared to diluted earnings per common share of $2.32 for the nine months ended September 30, 2011.

• Net interest margin increased by 10 basis points to 3.50% for the three months ended September 30, 2012 compared to 3.40% for the three months ended September 30, 2011. Net interest margin increased by seven basis points to 3.38% for the nine months ended September 30, 2012 compared to 3.31% for the nine months ended September 30, 2011.

• Top line revenue, the sum of net interest income and non-interest income, increased 12.3% to $12.2 million for the three months ended September 30, 2012 compared to $10.8 million for the three months ended September 30, 2011. Top line revenue increased 8.7% to $34.5 million for the nine months ended September 30, 2012 compared to $31.7 million for the nine months ended September 30, 2011.

• Provision for loan and lease losses was $850,000 for the three months ended September 30, 2012 compared to $435,000 for same time period in the prior year. Provision for loan and lease losses was $3.4 million for the nine months ended September 30, 2012 compared to $3.3 million for the comparable period of 2011. Allowance for loan and lease losses as a percentage of gross loans and leases was 1.67% at September 30, 2012 and 1.66% at December 31, 2011.

• The effective tax rate was 35.0% for the nine months ended September 30, 2012 compared to an effective tax rate of 26.7% for the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2011 includes a substantial one-time tax benefit resulting from a change in Wisconsin tax law during the second quarter of 2011.

• Non-performing assets as a percentage of total assets were 1.26% at September 30, 2012 compared to 2.04% at December 31, 2011.

• Non-accrual loans declined by $8.9 million, or 41.0%, to $12.8 million at September 30, 2012 from $21.8 million at December 31, 2011.

• Annualized return on average equity and annualized return on average assets were 15.10% and 0.88%, respectively, for the three month period ended September 30, 2012, compared to 14.02% and 0.78%, respectively, for the same time period in 2011. Annualized return on average equity and annualized return on average assets were 12.57% and 0.72%,

34

respectively for the nine month period ended September 30, 2012, compared to 13.67% and 0.72%, respectively for the nine month period ended September 30, 2011. Annualized return on average equity and annualized return on average assets for the nine months ended September 30, 2011 were positively impacted by a substantial one-time tax benefit resulting from a change in Wisconsin tax law during the second quarter of 2011.

Results of Operations

Top Line Revenue

Top line revenue is comprised of net interest income and non-interest income. This measurement is also commonly referred to as operating revenue. Top line revenue grew 12.3% and 8.7% for the three and nine months ended September 30, 2012, respectively, as compared to the same periods in the prior year. The components of top line revenue were as follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012		2011		Change		2012		2011		Change
	(Dollars in Thousands)
Net interest income	$	9,915	$	9,104	8.9	%	$	28,450	$	26,557	7.1	%
Non-interest income	2,249		1,728		30.2		6,003		5,145		16.7
Total top line revenue	$	12,164	$	10,832	12.3		$	34,453	$	31,702	8.7

Core Earnings

Core earnings is comprised of our pre-tax income adding back our provision for loan and leases losses, other identifiable costs of credit and other discrete items that are unrelated to our core business activities. In our judgment, the presentation of core earnings allows our management team, investors and analysts to better assess the growth of our core business by removing the volatility that is associated with costs of credit and other discrete items that are unrelated to our core business and facilitates a more streamlined comparison of core growth to our benchmark peers. Core earnings is a non-GAAP financial measure that does not represent and should not be considered as an alternative to net income derived in accordance with GAAP. Our core earnings metric has improved by 19.2% and 15.0% when comparing the three and nine months ended September 30, 2012, respectively, to the three and nine months ended September 30, 2011.

	For the Three Months Ended September 30,							For the Nine Months Ended September 30,
	2012			2011		Change		2012		2011		Change
	(Dollars in Thousands)
Income before income tax expense	$	4,063		$	3,647	11.4	%	$	9,839	$	8,241	19.4	%
Add back:
Provision for loan and lease losses	850			435		95.4		3,399		3,313		2.6
Net (gain) loss on foreclosed properties	(14		)	29		*		228		158		44.3
Core earnings	$	4,899		$	4,111	19.2		$	13,466	$	11,712	15.0
*Not Meaningful

Return on Average Assets and Return on Average Equity

Annualized return on average assets ("ROAA") for the three months ended September 30, 2012 was 0.88% compared to 0.78% for the three months ended September 30, 2011. The increase in annualized ROAA for the three months ended September 30, 2012 as compared to the ROAA for the three months ended September 30, 2011 is primarily due to the improvement in net income. ROAA for the nine months ended September 30, 2012 and September 30, 2011 was 0.72%. ROAA remained flat for this period despite improvement in net income due to the recognition of a substantial tax benefit during the second quarter of 2011 as a result of the enactment of a new Wisconsin tax law which was not a recurring benefit. ROAA is a critical metric used by us to measure the profitability of our organization and how efficiently our assets are deployed. ROAA is a measurement that allows us to better benchmark our profitability to our peers without the need to consider different degrees of leverage which can ultimately influence return on equity measures.

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Annualized return on average equity ("ROE") for the three months ended September 30, 2012 was 15.10% compared to 14.02% for the three months ended September 30, 2011. The improvement in ROE for this period was primarily the result of improved net income. Annualized return on average equity for the nine months ended September 30, 2012 was 12.57% compared to 13.67% for the nine months ended September 30, 2011. The annualized return on equity for the nine month period of 2012 decreased as a result of an increase in our average equity which outpaced the increase in our net interest income over the comparable periods. The increase in our average equity is primarily driven by continued quarterly profits between the measurement periods. In addition, we recognized a substantial tax benefit during the second quarter of 2011 caused by the enactment of a new Wisconsin tax law which was not a recurring benefit. We view return on average equity to be an important measure of profitability, and we continue to focus on improving our return to our shareholders by enhancing the overall profitability of our client relationships, controlling our expenses and minimizing our costs of credit.

Net Interest Income

Net interest income depends on the amounts of and yields on interest-earning assets as compared to the amounts of and rates paid on interest-bearing liabilities. Net interest income is sensitive to changes in market rates of interest and the asset/liability management procedures to prepare for and respond to such changes.

The following table provides information with respect to (1) the change in interest income attributable to changes in rate (changes in rate multiplied by prior volume), (2) the change in interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (3) the change in interest income attributable to changes in rate/volume (changes in rate multiplied by changes in volume) for the three and nine months ended September 30, 2012 compared to the same period of 2011.

	Increase (Decrease) for the Three Months Ended September 30,												Increase (Decrease) for the Nine Months Ended September 30,
	2012 Compared to 2011												2012 Compared to 2011
	Rate			Volume			Rate/ Volume			Net			Rate			Volume			Rate/ Volume			Net
	(In Thousands)
Interest-earning assets
Commercial real estate and other mortgage loans	$	(34	)	$	(209	)	$	1		$	(242	)	$	248		$	(1,399	)	$	(14	)	$	(1,165	)
Commercial and industrial loans	(312		)	713			(51		)	350			(409		)	1,626			(53		)	1,164
Direct financing leases	(27		)	(16		)	2			(41		)	(48		)	(59		)	4			(103		)
Consumer and other loans	(5		)	(14		)	—			(19		)	(6		)	(48		)	1			(53		)
Total loans and leases receivable	(378		)	474			(48		)	48			(215		)	120			(62		)	(157		)
Mortgage-related securities	(279		)	51			(14		)	(242		)	(982		)	198			(60		)	(844		)
Other investment securities	—			105			(21		)	84			—			176			(28		)	148
FHLB Stock	1			—			(1		)	—			2			(1		)	—			1
Short-term investments	10			9			4			23			12			73			11			96
Total net change in income on interest-earning assets	(646		)	639			(80		)	(87		)	(1,183		)	566			(139		)	(756		)
Interest-bearing liabilities
Transaction accounts	2			11			2			15			5			16			1			22
Money market	(213		)	260			(79		)	(32		)	(372		)	716			(126		)	218
Certificates of deposit	(32		)	32			(4		)	(4		)	(115		)	51			(7		)	(71		)
Brokered certificates of deposit	(449		)	(625		)	90			(984		)	(1,634		)	(1,746		)	282			(3,098		)
Total deposits	(692		)	(322		)	9			(1,005		)	(2,116		)	(963		)	150			(2,929		)
FHLB advances	(7		)	100			(91		)	2			(24		)	79			(61		)	(6		)
Other borrowings	53			48			4			105			320			(32		)	(5		)	283
Junior subordinated debentures	—			—			—			—			3			—			—			3
Total net change in expense on interest-bearing liabilities	(646		)	(174		)	(78		)	(898		)	(1,817		)	(916		)	84			(2,649		)
Net change in net interest income	$	—		$	813		$	(2	)	$	811		$	634		$	1,482		$	(223	)	$	1,893

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The table below shows our average balances, interest, average rates, net interest margin and the spread between the combined average rates earned on interest-earning assets and average cost of interest-bearing liabilities for the three months ended September 30, 2012 and 2011. The average balances are derived from average daily balances.

	For the Three Months Ended September 30,
	2012							2011
	Average balance			Interest		Average yield/cost		Average balance			Interest		Average yield/cost
	(Dollars in Thousands)
Interest-earning assets
Commercial real estate and other mortgage loans(1)	$	590,709		$	7,986	5.41	%	$	606,124		$	8,228	5.43	%
Commercial and industrial loans(1)	255,775			4,736		7.41		220,004			4,386		7.97
Direct financing leases(1)	15,459			210		5.43		16,497			251		6.09
Consumer and other loans	16,942			163		3.85		18,382			182		3.96
Total loans and leases receivable(1)	878,885			13,095		5.96		861,007			13,047		6.06
Mortgage-related securities(2)	176,369			805		1.83		168,219			1,047		2.49
Other investment securities(3)	24,353			85		1.40		230			1		2.49
Federal Home Loan Bank stock	1,328			1		0.37		2,367			1		0.10
Short-term investments	53,284			46		0.35		38,170			23		0.25
Total interest-earning assets	1,134,219			14,032		4.95		1,069,993			14,119		5.28
Non-interest-earning assets	54,386							52,160
Total assets	$	1,188,605						$	1,122,153
Interest-bearing liabilities
Transaction accounts	$	39,640		32		0.32		$	23,647		17		0.29
Money market	392,131			676		0.69		286,893			708		0.99
Certificates of deposit	85,934			248		1.15		76,337			252		1.32
Brokered certificates of deposit	398,283			2,146		2.16		497,585			3,130		2.52
Total interest-bearing deposits	915,988			3,102		1.35		884,462			4,107		1.86
FHLB advances	6,560			10		0.63		486			8		6.58
Other borrowings	42,034			725		6.90		39,010			620		6.36
Junior subordinated notes	10,315			280		10.86		10,315			280		10.86
Total interest-bearing liabilities	974,897			4,117		1.69		934,273			5,015		2.15
Non-interest-bearing demand deposit accounts	133,479							115,332
Other non-interest-bearing liabilities	10,765							10,382
Total liabilities	1,119,141							1,059,987
Stockholders’ equity	69,463							62,166
Total liabilities and stockholders’ equity	$	1,188,604						$	1,122,153
Net interest income				$	9,915						$	9,104
Interest rate spread						3.26	%						3.13	%
Net interest-earning assets	$	159,322						$	135,720
Net interest margin						3.50	%						3.40	%
Average interest-earning assets to average interest-bearing liabilities	116.34		%					114.53		%
Return on average assets	0.88							0.78
Return on average equity	15.10							14.02
Average equity to average assets	5.84							5.54
Non-interest expense to average assets	2.44							2.41

(1) The average balances of loans and leases include non-performing loans and leases. Interest income related to non-performing loans and leases is recognized when collected.

(2) Includes amortized cost basis of assets available for sale.

(3) Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

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Net interest income increased by $811,000, or 8.9%, during the three months ended September 30, 2012 compared to the same period in 2011. The increase in net interest income is primarily attributable to favorable volume variances associated with an increasing commercial and industrial portfolio and further influenced by declining brokered certificates of deposit balances. Given excess liquidity, we have not replaced a substantial amount of our brokered certificates of deposit upon maturity. Any newly issued brokered deposits were issued at substantially lower rates than the brokered deposit being replaced due to the current low rate environment.

The yield on average earning assets for the three months ended September 30, 2012 was 4.95% compared to 5.28% for the three months ended September 30, 2011. The yield on average earning assets for the three months ended September 30, 2012 was negatively affected by the decline in the overall yield earned on the investment portfolio. We have invested in collateralized mortgage obligations with structured cash flow payments. The cash flows generated from these expected prepayments are primarily reinvested in additional collateralized mortgage obligations and to a lesser extent tax-exempt municipal securities. Given the continued low rate environment, the overall coupon on new collateralized mortgage obligation purchases has typically been lower than the rates on securities that experience prepayments. This has caused the mortgage-related securities yield to decline by approximately 66 basis points to 1.83% for the three months ended September 30, 2012 from 2.49% for the three months ended September 30, 2011. In an effort to redeploy excess on-balance-sheet liquidity, in late 2011 and throughout 2012, the Banks have been investing in tax-exempt municipal obligations and U.S. Government agency obligations. Tax-exempt municipal obligations purchased are of investment grade and are subject to financial criteria established by us based on financial information made available by the issuing municipality. Our average yield on these types of securities for the three months ended September 30, 2012 was 1.40%. Yields for tax-exempt municipal obligations are not presented on a tax equivalent basis. While we view this as an improvement in yield compared to keeping the excess cash on deposit with the Federal Reserve, the continued low rate environment does not present an opportunity for acquiring high yielding securities without also adding credit or duration risk. The Banks remain committed to utilizing the investment portfolio as a source of liquidity.

The total loans and leases receivable yield was 5.96% for the three months ended September 30, 2012 compared to 6.06% for the three months ended September 30, 2011. As we have continued to focus on originating commercial and industrial loans, we have experienced a decline in the average balance of commercial real estate loans as a percentage of total loans. Conversely we have increased our average balance of commercial and industrial loans. Given the competitive marketplace, the spreads earned on the commercial and industrial segment of our loan and lease portfolio have been reduced to 7.41% for the three months ended September 30, 2012 from 7.97% for the same time period in 2011. Generally, we expect our commercial and industrial portfolio to exhibit higher yields than our commercial real estate portfolio. The overall yield on the loan and lease portfolio will continue to be influenced by a change in mix of loan types.

The overall weighted average rate paid on interest-bearing liabilities was 1.69% for the three months ended September 30, 2012, a decrease of 46 basis points from 2.15% for the three months ended September 30, 2011. The decrease in the overall rate on the interest-bearing liabilities was primarily caused by a decreasing rate paid on our interest-bearing deposits. The weighted average rate paid on our interest-bearing deposits was 1.35% for the three months ended September 30, 2012, a decrease of 51 basis points from 1.86% for the three months ended September 30, 2011. We have been successful in attracting in-market deposits, specifically money market deposits, which has provided us the opportunity to reduce our dependency on brokered certificates of deposit. Also, the continued low interest rate environment has allowed us to lower the overall rate paid on our in-market deposits. Average brokered certificates of deposit decreased by $99.3 million to $398.3 million from $497.6 million for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011.

Net interest margin increased10 basis points to 3.50% for the three months ended September 30, 2012 compared to 3.40% for the three months ended September 30, 2011. Collectively, reducing our overall cost of funds by way of changing the mix of our deposit base, exhibiting modest growth in our loan and lease portfolio, and shifting of the mix of the loan and lease portfolio have each positively influenced our net interest margin. However, the continued elevated levels of short-term investments and the effects of expanding our investment portfolio in a low rate environment have offset opportunities to further improve the net interest margin. The overall level of our margin is negatively impacted by the sizable amount of excess liquidity on our balance sheet. As we employ initiatives to reduce our overall short-term cash position, all else being equal, we expect that our margin will improve as we invest the excess liquidity in higher yielding alternatives, such as approved investment securities and loan and lease growth.

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The table below shows our average balances, interest, average rates, net interest margin and the spread between the combined average rates earned on interest-earning assets and average cost of interest-bearing liabilities for the nine months ended September 30, 2012 and 2011. The average balances are derived from average daily balances.

	For the Nine Months Ended September 30,
	2012							2011
	Average balance			Interest		Average yield/cost		Average balance			Interest		Average yield/cost
	(Dollars in Thousands)
Interest-earning assets
Commercial real estate and other mortgage loans(1)	$	578,798		$	23,790	5.48	%	$	613,175		$	24,955	5.43	%
Commercial and industrial loans(1)	241,967			13,884		7.65		214,548			12,720		7.90
Direct financing leases(1)	15,980			685		5.72		17,262			788		6.09
Consumer and other loans	17,301			500		3.85		18,930			553		3.90
Total loans and leases receivable(1)	854,046			38,859		6.07		863,915			39,016		6.02
Mortgage-related securities(2)	170,975			2,426		1.89		161,224			3,270		2.70
Other investment securities(3)	13,599			149		1.46		77			1		2.47
Federal Home Loan Bank stock	1,669			3		0.25		2,367			2		0.10
Short-term investments	81,952			171		0.28		41,599			75		0.24
Total interest-earning assets	1,122,241			41,608		4.94		1,069,182			42,364		5.28
Non-interest-earning assets	55,748							50,153
Total assets	$	1,177,989						$	1,119,335
Interest-bearing liabilities
Transaction accounts	$	34,263		77		0.30		$	26,682		55		0.27
Money market	384,488			2,326		0.81		286,980			2,108		0.98
Certificates of deposit	84,907			764		1.20		80,064			835		1.39
Brokered certificates of deposit	409,393			7,011		2.28		494,894			10,109		2.72
Total interest-bearing deposits	913,051			10,178		1.49		888,620			13,107		1.97
FHLB advances	2,520			25		1.32		709			31		5.83
Other borrowings	41,371			2,120		6.83		42,099			1,837		5.82
Junior subordinated notes	10,315			835		10.79		10,315			832		10.75
Total interest-bearing liabilities	967,257			13,158		1.81		941,743			15,807		2.24
Non-interest-bearing demand deposit accounts	131,761							108,293
Other non-interest-bearing liabilities	11,097							10,391
Total liabilities	1,110,115							1,060,427
Stockholders’ equity	67,874							58,908
Total liabilities and stockholders’ equity	$	1,177,989						$	1,119,335
Net interest income				$	28,450						$	26,557
Interest rate spread						3.13	%						3.04	%
Net interest-earning assets	$	154,984						$	127,439
Net interest margin						3.38	%						3.31	%
Average interest-earning assets to average interest-bearing liabilities	116.02		%					113.53		%
Return on average assets	0.72							0.72
Return on average equity	12.57							13.67
Average equity to average assets	5.76							5.26
Non-interest expense to average assets	2.37							2.40

(1) The average balances of loans and leases include non-performing loans and leases. Interest income related to non-performing loans and leases is recognized when collected.

(2) Includes amortized cost basis of assets available for sale.

(3) Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

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Net interest income increased by $1.9 million, or 7.13%, during the nine months ended September 30, 2012 compared to the same period in 2011. The increase in net interest income during the nine month period is primarily attributable to favorable rate and volume variances from lower cost and lower average balance of brokered certificates of deposit, partially offset by unfavorable rate variances affiliated with mortgage-related securities portfolio.

The yield on average earning assets for the nine months ended September 30, 2012 was 4.94% compared to 5.28% for the nine months ended September 30, 2011. The decline in the yield on average earning assets is related to the overall decline in the yield on the mortgage-related securities portfolio and an elevated amount of short-term investments as a percentage of total earning assets. We have invested in collateralized mortgage obligations with structured cash flow payments. The cash flows generated from these expected prepayments are primarily reinvested in additional collateralized mortgage obligations and to a lesser extent tax-exempt obligations and other agency securities. Given the continued low rate environment, the overall rate on the new purchases has typically been lower than the rates on securities that experience prepayments. The year-to-date average balance of short-term investments increased by approximately $40.4 million while its yield improved only modestly to 0.28% from 0.24% in the 2011 period. The increase in earning assets at this low yield has negatively impacted the overall yield on average earning assets. We continue to evaluate ways to redeploy the excess liquidity at a risk level prudent to the successful management of our balance sheet. In addition, the overall yield on the loan and lease portfolio will be influenced by a change in mix of loan and lease types. As we continue to focus on growing and originating more commercial and industrial loans, we expect that the yield on earning assets will continue to improve in the current low interest rate environment.

The overall weighted average rate paid on interest-bearing liabilities was 1.81% for the nine months ended September 30, 2012, a decrease of 43 basis points from 2.24% for the nine months ended September 30, 2011. The decrease in the overall rate on the interest-bearing liabilities was primarily caused by the replacement of certain maturing certificates of deposit, including brokered certificates of deposit, at lower current market rates and a lower rate paid on our money market accounts. The continued low rate environment coupled with the maturity structure of our brokered certificates of deposit portfolio has provided us the opportunity to be able to manage our liability structure in both terms of composition and rate to assist in providing an enhanced net interest margin.

Net interest margin increased approximately seven basis points to 3.38% for the nine months ended September 30, 2012 compared to 3.31% for the nine months ended September 30, 2011. Reducing our overall cost of funds and shifting the mix of the loan and lease portfolio has positively influenced our net interest margin; however, the significant increase in the average size of our short-term investment portfolio and an increased investment portfolio at lower rates due to the current, ongoing low rate environment has primarily offset any benefit of net interest margin improvement in this period, resulting in a relatively stable net interest margin. The overall level of our margin is negatively impacted by the sizable amount of excess liquidity on our balance sheet. As we employ initiatives to reduce our overall short-term cash position, assuming all other factors remain constant, we expect that our margin will improve as we invest excess liquidity in higher yielding alternatives, such as approved investment securities and loan and lease growth.

Provision for Loan and Lease Losses. The provision for loan and lease losses totaled $850,000 and $435,000 for the three months ended September 30, 2012 and 2011, respectively. The provision for loan and lease losses totaled $3.4 million and $3.3 million for the nine months ended September 30, 2012 and 2011, respectively. We determine our provision for loan and lease losses based upon credit risk and other subjective factors pursuant to our allowance for loan and lease loss methodology, the magnitude of current and historical net charge-offs recorded in the period and the amount of reserves established for impaired loans that present collateral shortfall positions.

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During the three and nine months ended September 30, 2012 and 2011, the factors influencing the provision for loan and lease losses were the following:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
	(In Thousands)
Changes in the provision for loan and lease losses associated with:
Establishment/modification of specific reserves on impaired loans, net	$	55		$	(719	)	$	1,290		$	(230	)
Increase in allowance for loan and lease loss reserve due to subjective factor changes	—			—			—			61
Charge-offs in excess of specific reserves	840			1,181			2,030			4,127
Recoveries	(211		)	(125		)	(394		)	(796		)
Change in inherent risk of the loan and lease portfolio	166			98			473			151
Total provision for loan and lease losses	$	850		$	435		$	3,399		$	3,313

The establishment/modification of specific reserves on impaired loans represents new specific reserves established on impaired loans where, although collateral shortfalls are present, we believe that we will be able to recover our principal and/or it represents the release of previously established reserves that are no longer required. Charge-offs in excess of specific reserves represent an additional provision for loan and lease losses required to maintain the allowance for loan and leases at a level deemed appropriate by management. This amount is net of the release of any specific reserve that may have already been provided. Charge-offs in excess of specific reserves can occur in situations where: (i) a loan has previously been partially written down to its estimated fair value and continues to decline, (ii) rapid deterioration of a credit requires an immediate partial or full charge-off, or (iii) the specific reserve was not adequate to cover the amount of the required charge-off. Change in the inherent risk of the portfolio can be influenced by growth or migration in and out of an impaired loan classification where a specific evaluation of a particular credit may be required rather than the application of a general reserve ratio. Refer to Asset Quality for further information regarding the overall credit quality of our loan and lease portfolio.

Non-interest income. Non-interest income, consisting primarily of fees earned for trust and investment services, service charges on deposits, income from bank-owned life insurance and loan fees increased$521,000, or 30.2%, to $2.2 million for the three months ended September 30, 2012 from $1.7 million for the three months ended September 30, 2011. The increase was primarily due to an increase in trust and investment services fee income, service charges on deposits, loan fees and other non-interest income.

Trust and investment services fee income increased by $114,000, or 18.3%, to $736,000 for the three months ended September 30, 2012 from $622,000 for the three months ended September 30, 2011. Trust and investment services fee income is driven by the amount of assets under management and administration and can be positively or negatively influenced by the timing and magnitude of volatility within the equity markets.

At September 30, 2012, we had $581.8 million of trust assets under management compared to $532.6 million at December 31, 2011 and $458.0 million at September 30, 2011. Assets under administration were $164.3 million at September 30, 2012 compared to $129.7 million at December 31, 2011 and $123.9 million at September 30, 2011. The growth in assets under management is primarily due to establishing new relationships. A significant amount of growth occurred during the fourth quarter of 2011, when a large client utilized our expertise in handling a substantial transaction as part of its business succession plan. During the third quarter of 2012, this client made its final determination to diversify its assets with various asset managers and as a result a substantial portion of these assets are no longer managed by us. In accordance with our operating philosophy, we focus on obtaining and managing larger than average client relationships. Accordingly, our assets under management and administration can be meaningfully influenced by the addition or loss of a client relationship.

Service charges on deposits increased by $107,000, or 25.2%, to $532,000 for the three months ended September 30, 2012 from $425,000 for the three months ended September 30, 2011. The increase of service charges on deposits was primarily related to an increase in deposit relationships associated with commercial and industrial clients, who tend to have higher transaction volumes resulting in the generation of service charge income.

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Loan fees increased by $122,000, or 32.1%, to $502,000 for the three months ended September 30, 2012 from $380,000 for the three months ended September 30, 2011. The increase in loan fees was primarily related to the collection of certain loan administration fees in accordance with loan contracts upon the strategic exit of certain loan relationships.

Other non-interest income increased$173,000, or 221.8%, to $251,000 for the three months ended September 30, 2012 from $78,000 for the three months ended September 30, 2011. The increase in other non-interest income is directly related to a $144,000 one-time gain we recognized on the sale of our credit card portfolio during the third quarter of 2012. Prior to the sale, outstanding credit card balances were approximately $968,000. Subsequent to our deconversion date, we will not have any further on-going involvement with this portfolio.

Non-interest income increased$858,000, or 16.7%, to $6.0 million for the nine months ended September 30, 2012 from $5.1 million for the nine months ended September 30, 2011. The increase was primarily due to an increase in trust and investment services fee income and service charges on deposits.

Trust and investment services fee income increased by $260,000, or 13.6%, to $2.2 million for the nine months ended September 30, 2012 from $1.9 million for the nine months ended September 30, 2011. Consistent with the third quarter activity, trust and investment services fee income is driven by the amount of assets under management and administration and can be positively or negatively influenced by the timing and magnitude of volatility within the equity markets.

Service charges on deposits increased by $289,000, or 23.8%, to $1,504,000 for the nine months ended September 30, 2012 from $1,215,000 for the nine months ended September 30, 2011. Similar to the discussion of results for the three month period, the increase of deposit service charge income in the nine month period of 2012 was primarily related to an increase in deposit relationships associated with commercial and industrial clients, who tend to have higher transaction volumes resulting in the generation of service charge income.

Loan fees increased by $166,000, or 15.4%, to $1.2 million for the nine months ended September 30, 2012 from $1.1 million for the nine months ended September 30, 2011. The increase is due to an increase in letter of credit fees and loan administration fees collected per existing client contracts upon the exit of certain loan relationships.

Other non-interest income increased by $117,000, or 44.0%, to $383,000 for the nine months ended September 30, 2012 from $266,000 for the nine months ended September 30, 2011. The increase is primarily due to the gain on sale of our credit card portfolio during the third quarter of 2012 and increased gains on sales of leased assets due to lease terminations, partially offset by a decrease on rental income as we are no longer subleasing a component of our office space.

Non-interest expense. Non-interest expense increased by $501,000, or 7.4%, to $7.3 million for the three months ended September 30, 2012 from $6.8 million for the comparable period of 2011. The increase in non-interest expense was primarily caused by an increase in compensation expense, collateral liquidation costs and other non-interest expenses, partially offset by a decline in FDIC insurance expense.

Compensation expense increased by $384,000, or 10.0%, to $4.2 million for the three months ended September 30, 2012 from $3.8 million for the three months ended September 30, 2011. The increase was primarily due to new positions filled in support of strategic initiatives coupled with annual merit increases.

Collateral liquidation costs increased by $109,000, or 70.3%, to $264,000 for the three months ended September 30, 2012 from $155,000 for the three months ended September 30, 2011. Collateral liquidation costs are expenses incurred by us to facilitate resolution of certain problem commercial loans. The amount of collateral liquidation costs recorded in any particular period are influenced by the timing and level of effort required for the liquidation of collateral underlying each such individual loan. Our ability to recoup these costs from our clients is uncertain and therefore we have expensed them as incurred through our consolidated results of operations. To the extent we are successful in recouping these expenses from our clients, the recovery of expense is shown as a net reduction to this line item. The collateral liquidation costs incurred during the three months ended September 30, 2012 are primarily attributable to two lending relationships from which we have completed or nearly completed our exit.

FDIC insurance expense decreased by $145,000, or 25.4%, to $426,000 for the three months ended September 30, 2012 from $571,000 for the three months ended September 30, 2011. FDIC Insurance expense is based upon a formula that incorporates a variety of risk elements including but not limited to average total assets, average tangible equity and overall risk profile of the institution. A change in any one of these risk elements during the comparative reporting periods may cause the underlying assessment base rate to fluctuate and therefore influence the total expense accrued.

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Non-interest expense increased by $1.1 million, or 5.3%, to $21.2 million for the nine months ended September 30, 2012 from $20.1 million for the comparable period of 2011. The increase in non-interest expense was primarily caused by an increase in compensation expense and professional fees, and was partially offset by a decline in FDIC insurance and collateral liquidation costs.

Compensation expense increased by $1.0 million, or 9.1%, to $12.5 million for the nine months ended September 30, 2012 from $11.4 million for the nine months ended September 30, 2011. The increase was due to increased salary expense, which was primarily the result of new positions filled in support of strategic initiatives and annual merit increases. Other increased ancillary compensation costs include amounts associated with higher health insurance premiums and larger accruals for individual incentive compensation programs.

Professional fees increased by $138,000, or 12.1%, to $1.3 million for the nine months ended September 30, 2012 from $1.1 million for the nine months ended September 30, 2011. The increase in professional fees was primarily due to increased audit and tax fees associated with new compliance requirements for 2012, fees incurred for regulatory examinations and recruiting expenses incurred to hire new business development officers in support of our strategic initiatives.

FDIC insurance expense decreased by $355,000, or 18.7%, to $1.5 million for the nine months ended September 30, 2012 from $1.9 million for the nine months ended September 30, 2011. Effective April 1, 2011, the FDIC amended the Federal Deposit Insurance Act to implement revisions required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), including, among other changes, modifying the definition of an institution’s deposit insurance assessment base from a deposit-based calculation to an average assets less average tangible equity-based calculation and changing the assessment rate adjustments. This amendment resulted in a reduced FDIC insurance cost for our Banks.

Collateral liquidation costs decreased by $123,000, or 21.4%, to $451,000 for the nine months ended September 30, 2012 from $574,000 for the nine months ended September 30, 2011. We have been successful in reducing our levels of non-performing loans and therefore incurred a lower level of collateral liquidation costs year over year. The amount of collateral liquidation costs recorded in any particular period are influenced by the timing and level of effort required for the liquidation of collateral underlying each such individual loan.

Income Taxes. Income tax expense was $3.4 million for the nine months ended September 30, 2012, with an effective tax rate of 35.0% compared to income tax expense of $2.2 million for the nine months ended September 30, 2011, with an effective tax rate of 26.7%. The effective tax rate differs from the federal statutory corporate tax rate as follows:

	For the Nine Months Ended September 30,
	2012		2011
Statutory federal tax rate	34.0	%	34.0	%
State taxes, net of federal benefit	4.8		10.8
FIN 48 expense, net of federal benefit	0.4		—
Bank owned life insurance	(1.8	)	(2.1	)
Tax-exempt security and loan income, net of TEFRA adjustments	(3.0	)	(2.7	)
Release of valuation allowance	—		(15.2	)
Discrete items	—		1.1
Other	0.6		0.8
	35.0	%	26.7	%

The primary difference between the effective tax rate for the nine months ended September 30, 2012 and 2011 was due to the recognition of two discrete items affecting state income taxes and release of valuation allowance that were recognized in the second quarter of 2011 that had a net positive impact on the effective tax rate. In June 2011, FBB and First Business Capital Corp (FBCC) entered into a confidential net settlement with the Wisconsin Department of Revenue. The net settlement of this matter with the Wisconsin Department of Revenue did not result in a liability materially different than that which had been previously accrued. In addition, on June 26, 2011, the State of Wisconsin 2011-2013 Budget Bill, Assembly Bill 40, was signed into law. The bill provided that, starting with the first taxable year beginning after December 31, 2011, and thereafter for the next 19 years, a combined group member that has pre-2009 net business loss carryforwards can, after first using such net business loss carryforwards to offset its own income for the taxable year and after using shared losses, use up to five percent of the pre-2009 net business loss carryforwards to offset the Wisconsin income of other group members on a proportionate basis to the extent the income is attributable to the group’s unitary business. If the five percent cannot fully be used, the remainder

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can be added to the portion that may offset the Wisconsin income of all other combined group members in a subsequent year, until it is completely used or expired.

Generally, the provision for income taxes is determined by applying an estimated annual effective income tax rate to income before taxes and adjusting for discrete items. Typically, the rate is based on the most recent annualized forecast of pretax income, book versus tax differences and tax credits, if any. If we conclude that a reliable estimated annual effective tax rate cannot be determined, the actual effective tax rate for the year-to-date period may be used. We re-evaluate the income tax rates each quarter. Therefore, the current projected effective tax rate for the entire year may change.

Financial Condition

General. Our total assets remained relatively stable at $1.192 billion as of September 30, 2012 compared to $1.177 billion at December 31, 2011.

Short-term investments. Short-term investments decreased by $43.0 million to $70.3 million at September 30, 2012 from $113.4 million at December 31, 2011. Our short-term investments primarily consist of interest-bearing deposits held at the Federal Reserve Bank. The level of our short-term investments will be influenced by the timing of deposit gathering, scheduled maturities of brokered deposits, funding of loan growth when opportunities are presented, and the level of our available-for-sale securities portfolio. We value the safety and soundness provided by the Federal Reserve Bank and therefore we incorporate short-term investments in our on-balance-sheet liquidity program. Please refer to Liquidity and Capital Resources for further discussion. During the second quarter of 2012, the Banks also began investing in commercial paper. The commercial paper instruments have durations generally between 30-60 days and provide a higher yielding alternative to the rate paid by the Federal Reserve Bank. The overall decline in short-term investments is primarily due to reducing excess liquidity by allowing maturing brokered certificates of deposit to run off, increasing the size of our available-for-sale investment portfolio and supporting the growth in our loan and lease receivables portfolio.

Securities. Securities available-for-sale increased by $32.4 million to $202.8 million at September 30, 2012 compared to $170.4 million at December 31, 2011. During this time period, we reinvested cash flows received from our securities through purchases of additional securities. Our available-for-sale investment portfolio primarily consists of collateralized mortgage obligations and agency obligations and is used to provide a source of liquidity, including the ability to pledge securities for possible future cash advances, while contributing to the earnings potential of the Banks. We purchase investment securities intended to protect our net interest margin while maintaining an acceptable risk profile. In addition, we will purchase investments to utilize our cash position effectively within appropriate policy guidelines and estimates of future cash demands. While collateralized mortgage obligations present prepayment risk and extension risk, we believe the overall credit risk associated with these investments is minimal, as substantially all of the obligations we hold were issued by the GNMA, a U.S. government agency. The estimated prepayment streams associated with this portfolio also allow us to better match our short-term liabilities. The Banks’ investment policies allow for various types of investments, including tax-exempt municipal securities. The addition of tax-exempt municipal securities provides for further opportunity to improve our overall yield on our investment portfolio. We evaluate the credit risk of the municipal obligations prior to purchase and limit our exposure of obligations to general obligation issuances from municipalities primarily in Wisconsin.

As we continue to evaluate the level of on-balance-sheet liquidity, we have started purchasing U.S. Government agency obligations, primarily those obligations issued by FHLMC and FNMA. We have structured these purchases to have bullet maturities within two to four years from the issue date. Certain of the securities contain either quarterly or one-time call features. The maturity structure of our securities portfolio allows us to effectively manage the cash flows of these securities along with the collateralized mortgage obligations to be able to meet loan demand in the near future without the need to immediately borrow funds from our various funding sources and proactively adjust the portfolio should interest rates rise within the next two to four years. Our management deems these investments to be creditworthy and believes that these investments exhibit appropriate market yields for the risks assumed. As additional appropriate investment securities are available in the marketplace, we expect that additional investments will be purchased.

During the nine months ended September 30, 2012, we recognized unrealized holding gains of $227,000 through other comprehensive income. The majority of the securities we hold have active trading markets, and we are not currently experiencing difficulties in pricing our securities. We use a third party pricing service as our primary source of market prices for our investment portfolio. On a quarterly basis, we validate the reasonableness of prices received from this source through independent verification on representative sample of the portfolio, data integrity validation through comparison of current price to prior period prices, and overall analytical expectation of movement in prices based upon the changes in the related yield curves and other market factors. On a periodic basis, we review the third party pricing vendor's pricing methodology for pricing relevant securities and results of internal control assessments. Our portfolio is sensitive to fluctuations in the interest rate environment and has limited sensitivity to credit risk due to the nature of the issuers of our securities as previously

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discussed. If interest rates decline and the credit quality of the securities remains constant or improves, the market value of our debt securities portfolio would likely improve, thereby increasing our total comprehensive income. If interest rates increase or the credit quality of the securities decline, the market value of our debt securities portfolio would likely decline and therefore decrease our total comprehensive income. No securities within our portfolio were deemed to be other-than-temporarily impaired as of September 30, 2012.

Loans and Leases Receivable. Loans and leases receivable, net of allowance for loan and lease losses, increased by $26.8 million, or 3.2%, to $863.5 million at September 30, 2012 from $836.7 million at December 31, 2011. We principally originate commercial business loans and commercial real estate loans. The overall mix of the loan and lease portfolio at September 30, 2012 remained generally consistent with the mix at December 31, 2011, with a continued concentration in commercial real estate mortgage loans at approximately 67% of our total loan and lease portfolio. For the nine months ended September 30, 2012, we have experienced growth over our prior year end balances. We are successfully adding new relationships to our portfolio and are beginning to see signs of increased demand for lending opportunities. The economic environment continues to present challenges and the growth percentage of our loan and lease portfolio is below historical growth levels. We have also experienced greater competition as banks operating in our primary geographic area attempt to deploy excess liquidity. We remain committed to our underwriting standards and will not deviate from those standards for the sole purpose of growing our loan and lease portfolio. Nonetheless, we expect our new loan and lease activity to be more than adequate to replace normal amortization and to continue to grow in future quarters.

The allowance for loan and lease losses as a percentage of gross loans and leases was 1.67% as of September 30, 2012 and 1.66% as of December 31, 2011. Non-accrual loans and leases as a percentage of gross loans and leases decreased to 1.46% at September 30, 2012 compared to 2.56% at December 31, 2011. Non-performing loans decreased $8.9 million, or 41.0%, to $12.8 million at September 30, 2012 compared to $21.8 million at December 31, 2011. As we are experiencing improvements in asset quality trends, our allowance for loan and lease loss reserves are measured more through general characteristics of our portfolio rather than through specific identification. As a result of this measurement and methodology, the allowance for loan loss as a percentage of total loans and leases has remained relatively stable as compared to December 31, 2011. We continue to aggressively work through our problem loans and leases and are experiencing success in certain exit strategies; yet, we continue to identify new loans or leases where we believe the borrowers do not have adequate liquidity to make their payments in accordance with the terms of the contractual arrangements, thus requiring a consistent level of allowance for loan loss reserve.

During the nine months ended September 30, 2012, we recorded net charge-offs on impaired loans and leases of approximately $2.8 million, comprised of $3.2 million of charge-offs and $394,000 of recoveries. During the nine months ended September 30, 2011, we recorded net charge-offs on impaired loans and leases of approximately $5.4 million, comprised of $6.2 million of charge-offs and $797,000 of recoveries. In 2012, the charge-offs recorded were primarily due to losses incurred through liquidation efforts on one commercial and industrial client and to a lesser extent based upon a decline in real estate values in certain of our market areas. In 2011, the charge-offs recorded were primarily due to declining real estate values supporting our loans where the collateral is no longer sufficient to cover the outstanding principal and the borrowers do not have other means to repay the obligation. Given the current economic and credit environment, collateral dependent loans represent increased risk to us. Based upon our internal methodology which actively monitors the asset quality and inherent risks within the loan and loss portfolio, management concluded that a loan and lease loss reserve of $14.7 million, or 1.67% of total loans and leases, is appropriate as of September 30, 2012. Refer to the Asset Quality section for more information.

Deposits. As of September 30, 2012, deposits increased by $9.9 million to $1.061 billion from $1.051 billion at December 31, 2011. Deposits are the primary source of the Banks’ funds for lending and other investment activities. A variety of accounts are designed to attract both short- and long-term deposits. These accounts include non-interest bearing transaction accounts, interest-bearing transaction accounts, money market accounts and time deposits. Deposit terms offered by the Banks vary according to the minimum balance required, the time period the funds must remain on deposit, the rates and products offered by marketplace competition and the interest rates charged on other sources of funds, among other factors. Attracting in-market deposits continues to be a focus of the Banks’ business development efforts. With two separately chartered financial institutions within our Corporation, we have the ability to offer our clients additional FDIC insurance coverage by maintaining separate deposits with each Bank. With the change in the regulations regarding the interest limits on NOW accounts to qualify for unlimited FDIC insurance, we have seen a shift in our balances out of NOW accounts and into non-interest bearing transaction accounts. The ending balances within the various deposit types fluctuate based upon maturity of time deposits, client demands for the use of their cash coupled with servicing and maintaining client relationships. We focus on attracting and servicing deposit relationships, as compared to rate sensitive clients, and therefore we monitor the success of growth of in-market deposits based on the average balances of our deposit accounts. Rate sensitive clients may create an element of volatility to our deposit balances. Refer to Note 6 - Deposits in our Unaudited Consolidated Financial Statements for additional information regarding our deposit composition.

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Our Banks’ in-market deposits are obtained primarily from the South Central, Northeastern and Southeastern regions of Wisconsin. Of our total year-to-date average deposits, approximately $635.4 million, or 60.8%, were considered in-market deposits for the nine months ended September 30, 2012. This compares to in-market deposits of $502.0 million, or 50.4%, for the year-to-date average at September 30, 2011. We continue to remain focused on increasing our in-market deposit base and reducing our overall dependency on brokered certificates of deposit. However, changes in regulation pursuant to the Dodd-Frank Act, and other regulations by the FDIC, make it less likely that clients will maintain their balances solely with one financial institution. As a result, our Banks, our competition and the banking industry as a whole face a challenge to retaining existing deposits but also have new opportunities to develop relationships and attract new deposits.

Asset Quality

Non-performing Assets. Our non-accrual loans and leases consisted of the following at September 30, 2012 and December 31, 2011, respectively:

	September 30, 2012			December 31, 2011
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	929		$	2,972
Commercial real estate — non-owner occupied	464			2,249
Construction and land development	5,209			7,229
Multi-family	49			2,009
1-4 family	2,687			3,506
Total non-accrual commercial real estate	9,338			17,965
Commercial and industrial	1,593			1,558
Direct financing leases, net	—			18
Consumer and other:
Home equity and second mortgages	791			1,002
Other	1,124			1,223
Total non-accrual consumer and other loans	1,915			2,225
Total non-accrual loans and leases	12,846			21,766
Foreclosed properties, net	2,187			2,236
Total non-performing assets	$	15,033		$	24,002
Performing troubled debt restructurings	$	897		$	111
Total non-accrual loans and leases to gross loans and leases	1.46		%	2.56		%
Total non-performing assets to total loans and leases plus other real estate owned	1.71			2.81
Total non-performing assets to total assets	1.26			2.04
Allowance for loan and lease losses to gross loans and leases	1.67			1.66
Allowance for loan and lease losses to non-accrual loans and leases	114.48			65.03

As of September 30, 2012 and December 31, 2011, $10.8 million and $13.3 million of the non-accrual loans are considered troubled debt restructurings.

A summary of our non-accrual loan and lease activity from December 31, 2011 through September 30, 2012 is as follows:

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(In Thousands)
Non-accrual loans and leases as of the beginning of the period	$	21,766
Loans and leases transferred to non-accrual status	4,288
Non-accrual loans and leases returned to accrual status	(1,287		)
Non-accrual loans and leases transferred to foreclosed properties	(1,397		)
Non-accrual loans and leases partially or fully charged-off	(3,235		)
Cash received and applied to principal of non-accrual loans and leases	(7,289		)
Non-accrual loans and leases as of the end of the period	$	12,846

We use a wide variety of available metrics to assess the overall asset quality of the portfolio and no one metric is used independently to make a final conclusion as to the asset quality of the portfolio. As of September 30, 2012, non-performing assets as a percentage of total assets declined to 1.26% from 2.04% at December 31, 2011. The exit strategies undertaken, including but not limited to foreclosure actions, charge-offs, and pay-offs, have outpaced the identification of new impaired loans and therefore we experienced a net reduction in our non-accrual loans and leases. As foreclosure is a viable exit strategy for us to pursue, we are seeing an overall reduction in our non-performing assets to total loans and leases and foreclosed properties. Total non-performing assets to total loans and leases and foreclosed properties as of September 30, 2012 and September 30, 2011 were 1.71% and 2.81%, respectively. We believe this ratio provides insight as to our success in working problem assets through the entire process and eliminating further losses.

We also monitor early stage delinquencies to provide insight into potential future problems. As of September 30, 2012, the payment performance did not point to any new areas of concern, as approximately 99% of the loan and lease portfolio was in a current payment status. This metric can change rapidly however, if factors unknown to us change. We also monitor our asset quality through our established categories as defined inNote 5 of our Unaudited Consolidated Financial Statements. We are seeing a larger portion of our portfolio classified in the categories that would be considered to have adequate credit quality. Although we continue to see signs of asset quality improvement, we will continue to and will always actively monitor the credit quality of our loan and lease portfolios. Through this monitoring effort, we may identify additional loans and leases for which the borrowers or lessees are having difficulties making the required principal and interest payments based upon factors including but not limited to, the inability to sell land, inadequate cash flow from the operations of the underlying businesses, liquidation events, or bankruptcy filings. Therefore, we expect to continue to experience new additions to non-accrual loans. We believe current economic conditions will remain largely the same for the near term. As a result, we expect that we will continue to experience historically elevated levels of impaired loans and leases. We are proactively working with our impaired loan borrowers to find meaningful solutions to difficult situations that are in the best interests of the Banks. As we continue to have these discussions, we expect we will continue to see further reductions in our overall non-accrual portfolio as our clients' financial performance returns to profitable levels, collateral is liquidated to provide sufficient reductions in outstanding principal, or clients establish different banking relationships with other institutions.

Impaired loans and leases exhibit weaknesses that inhibit repayment in compliance with the original terms of the note or lease. However, the measurement of impairment on loans and leases may not always result in a specific reserve included in the allowance for loan and lease losses. As part of the underwriting process, as well as our ongoing monitoring efforts, we try to ensure that we have appropriate collateral to protect our interest in the related loan or lease. As a result of this practice, a significant portion of our outstanding balance of non-performing loans or leases either does not require additional specific reserves or requires only a minimal amount of required specific reserve, as we believe the loans and leases are adequately collateralized as of the measurement period. In addition, management is proactive in recording charge-offs to bring loans to their net realizable value in situations where it is determined with certainty that we will not recover the entire amount of our principal. This practice may lead to a lower allowance for loan and lease loss to non-accrual loans and leases ratio as compared to our peers or industry expectations. As of September 30, 2012 and December 31, 2011, our allowance for loan and lease losses to total non-accrual loans and leases was 114.48% and 65.03%, respectively. As we begin to see improvements in asset quality, resulting in our allowance for loan and lease loss to be measured more through general characteristics of our portfolio rather than through specific identification, we will see this ratio continue to rise. Conversely, if we identify further impaired loans, this ratio could fall if the impaired loan is adequately collateralized and therefore no specific or general reserve need be provided. Given our business practices and evaluation of our existing loan and lease portfolio, we believe this coverage ratio is appropriate for the probable losses inherent in our loan and lease portfolio as of September 30, 2012.

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The following represents additional information regarding our impaired loans and leases:

	As of and for the Nine Months Ended September 30,			As of and for the Nine Months Ended September 30,			As of and for the Year Ended December 31,
	2012			2011			2011
	(In Thousands)
Impaired loans and leases with no impairment reserves required	$	11,330		$	17,743		$	18,888
Impaired loans and leases with impairment reserves required	2,413			9,386			2,989
Total impaired loans and leases	13,743			27,129			21,877
Less:
Impairment reserve (included in allowance for loan and lease losses)	966			1,116			888
Net impaired loans and leases	$	12,777		$	26,013		$	20,989
Average impaired loans and leases	$	18,653		$	36,784		$	33,793
Foregone interest income attributable to impaired loans and leases	$	1,100		$	2,224		$	2,682
Interest income recognized on impaired loans and leases	(321		)	(655		)	(787		)
Net foregone interest income on impaired loans and leases	$	779		$	1,569		$	1,895

Specific reserves are established on impaired loans when evidence of a collateral shortfall exists and we believe that there continues to be potential for us to recover our outstanding principal. When we are certain that we will not recover our principal on a loan or lease, we record a charge-off for the amount to recognize the loan or lease at its net realizable value. We record the charge-off through our allowance for loan and lease losses. For the nine months ended September 30, 2012, we recorded net charge-offs of $2.8 million compared to recording net charge-offs for the nine months ended September 30, 2011 of $5.4 million. We continue to proactively monitor our loan and lease portfolio for further deterioration and apply our prescribed allowance for loan and lease loss reserve methodology. We believe that our allowance for loan and lease loss reserve was recorded at the appropriate level at September 30, 2012. However, given ongoing complexities with current workout situations, the lack of significant improvement in economic conditions and continued declines in collateral values, further charge-offs and increased provisions for loan losses could be recorded if additional facts and circumstances lead us to a different conclusion. In addition, various federal and state regulatory agencies review the allowance for loan and lease losses. These agencies may require that certain loan and lease balances be classified differently or charged off when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examination.

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A summary of the activity in the allowance for loan and lease losses follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2012			2011			2012			2011
	(Dollars in Thousands)
Allowance at beginning of period	$	14,818		$	15,937		$	14,155		$	16,271
Charge-offs:
Commercial real estate
Commercial real estate — owner occupied	—			(235		)	(113		)	(1,250		)
Commercial real estate — non owner occupied	—			(608		)	—			(1,296		)
Construction and land development	—			(512		)	(34		)	(2,082		)
Multi-family	—			(309		)	(130		)	(312		)
1-4 family	(20		)	(243		)	(190		)	(504		)
Commercial and industrial	(1,140		)	(273		)	(2,668		)	(471		)
Direct financing leases	—			—			—			—
Consumer and other
Home equity and second mortgages	(5		)	—			(72		)	(113		)
Other	(8		)	(177		)	(35		)	(212		)
Total charge-offs	(1,173		)	(2,357		)	(3,242		)	(6,240		)
Recoveries:
Commercial real estate
Commercial real estate — owner occupied	2			—			3			—
Commercial real estate — non owner occupied	179			—			179			—
Construction and land development	3			62			101			13
Multi-family	—			—			—			264
1-4 family	2			—			8			—
Commercial and industrial	1			56			65			432
Direct financing leases	—			—			—			19
Consumer and other
Home equity and second mortgages	2			7			9			68
Other	22			1			29			1
Total recoveries	211			126			394			797
Net charge-offs	(962		)	(2,231		)	(2,848		)	(5,443		)
Provision for loan and lease losses	850			435			3,399			3,313
Allowance at end of period	$	14,706		$	14,141		$	14,706		$	14,141
Annualized net charge-offs as a % of average gross loans and leases	0.44		%	1.04		%	0.44		%	0.84		%

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Nonperforming assets also include foreclosed properties. A summary of our current period foreclosed properties activity is as follows:

(In Thousands)
Foreclosed properties as of December 31, 2011	$	2,236
Loans transferred to foreclosed properties	1,397
Payments to priority lien holders of foreclosed properties	268
Proceeds from sale of foreclosed properties	(1,486		)
Net loss on sale of foreclosed properties	(52		)
Impairment valuation	(176		)
Foreclosed properties as of September 30, 2012	$	2,187

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Liquidity and Capital Resources

The Corporation expects to meet its liquidity needs through existing cash on hand, established cash flow sources, its third party senior line of credit, and dividends received from the Banks. While the Banks are subject to certain regulatory limitations regarding their ability to pay dividends to the Corporation, we do not believe that the Corporation will be adversely affected by these dividend limitations. The Corporation’s principal liquidity requirements at September 30, 2012 are the repayment of the outstanding balance on its senior line of credit, interest payments due on subordinated notes and interest payments due on junior subordinated notes. In September 2012, FBB declared and paid a dividend in the amount of $6 million to the Corporation. Prior to this payment, the Banks had not made any dividend payments to the Corporation since 2000. The capital ratios of the Corporation and its subsidiaries continue to meet all applicable regulatory capital adequacy requirements and have either remained stable or have shown signs of improvement from December 31, 2011. The Corporation's and the Banks' respective Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their capital positions, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

The Banks maintain liquidity by obtaining funds from several sources. The Banks’ primary sources of funds are principal and interest repayments on loans receivable and mortgage-related securities, deposits and other borrowings, such as federal funds and FHLB advances. The scheduled payments of loans and mortgage-related securities are generally a predictable source of funds. Deposit flows and loan prepayments, however, are greatly influenced by general interest rates, economic conditions and competition.

We view on-balance-sheet liquidity as a critical element to maintaining adequate liquidity to meet our cash and collateral obligations. We define our on-balance-sheet liquidity as the total of our short-term investments and our unpledged securities available-for-sale. As of September 30, 2012 and December 31, 2011, our immediate on-balance-sheet liquidity was $250.2 million and $260.5 million, respectively. At September 30, 2012 and December 31, 2011, the Banks had $64.2 million and $113.2 million on deposit with the Federal Reserve Bank, respectively. Any excess funds not used for loan funding or satisfying other cash obligations were maintained as part of our on-balance-sheet liquidity in our interest-bearing accounts with the Federal Reserve Bank, as we value the safety and soundness provided by the Federal Reserve Bank. We plan to utilize excess liquidity to fund loan and lease portfolio growth, pay down maturing debt, allow run off of maturing brokered certificates of deposit, or invest in securities to maintain adequate liquidity at an improved margin.

We had $390.7 million of outstanding brokered deposits at September 30, 2012, compared to $446.7 million of brokered deposits as of December 31, 2011, which represented 36.8% and 42.5%, respectively, of ending balance total deposits. We are committed to our continued efforts to raise in-market deposits and reduce our overall dependence on brokered certificates of deposit. However, brokered deposits are an efficient source of funding for the Banks and allow them to gather funds across a larger geographic base at price levels and maturities that are more attractive than single service deposits when required to raise a similar level of deposits within a short time period. Access to such deposits allows us the flexibility to refrain from pursuing single service deposit relationships in markets that have experienced unfavorable pricing levels. In addition, the administrative costs associated with brokered deposits are considerably lower than those that would be incurred to administer a similar level of local deposits with a similar maturity structure. Our in-market relationships remain stable; however, deposit balances associated with those relationships will fluctuate. We expect to establish new client relationships and continue marketing efforts aimed at increasing the balances in existing clients’ deposit accounts. Nonetheless, we will likely continue to use brokered deposits to compensate for shortfalls in deposit gathering in specific maturity periods, typically three to five years, needed to effectively match the interest rate sensitivity measured through our defined asset/liability management process. In order to provide for ongoing liquidity and funding, all of our brokered deposits are certificates of deposit that do not allow for withdrawal at the option of the depositor before the stated maturity. The Banks’ liquidity policies limit the amount of brokered deposits to 75% of total deposits, with a goal of 50% or less of brokered deposits to total deposits. The Banks were in compliance with the policy limits as of September 30, 2012.

The Banks were able to access the brokered certificate of deposit market as needed at rates and terms comparable to market standards during the nine-month period ending 2012. In the event that there is a disruption in the availability of brokered deposits at maturity, the Banks have managed the maturity structure, in compliance with our approved liquidity policy, so at least one year of maturities could be funded through on-balance-sheet liquidity. These potential funding sources include deposits with the Federal Reserve Bank and borrowings with the Federal Home Loan Bank or Federal Reserve Discount Window utilizing currently unencumbered securities as collateral. As of September 30, 2012, the available liquidity is in excess of the stated minimum and is equal to approximately 30 months of maturities. We believe the Banks will also have access to the unused federal funds lines, cash flows from borrower repayments, and cash flows from security maturities. The Banks also have the ability to raise local market deposits by offering attractive rates to generate the level required to fulfill their liquidity needs.

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The Banks are required by federal regulation to maintain sufficient liquidity to ensure safe and sound operations. We believe that the Banks have sufficient liquidity to match the balance of net withdrawable deposits and short-term borrowings in light of present economic conditions and deposit flows.

Contractual Obligations and Off-Balance-Sheet Arrangements

Off-balance Sheet Arrangements

As of September 30, 2012, the Banks had outstanding commitments to originate $250.3 million of loans and commitments to extend funds to or on behalf of clients pursuant to standby letters of credit of $10.0 million. As of September 30, 2012, the Banks had $123.5 million of commitments to extend funds which extend beyond one year. We do not expect any losses as a result of these funding commitments. We have evaluated outstanding commitments associated with loans that were identified as impaired loans and concluded that there are no additional losses associated with these unfunded commitments. We believe that additional commitments will not be granted or additional collateral will be provided to support any additional funds advanced.

Our previously outstanding commitment to provide additional capital to Aldine Capital Fund, LP, which is a private equity mezzanine funding limited partnership expired in June 2012.

Contractual Obligations

The following table summarizes our contractual cash obligations at September 30, 2012:

	Payments Due by Period
	Total		Less than 1 year		1-3 Years		4-5 Years		More than 5 years
	(In Thousands)
Operating lease obligations	$	8,615	$	633	$	1,163	$	1,194	$	5,625
Time deposits	472,505		199,151		210,401		33,911		29,042
Line of credit	10		10		—		—		—
Junior subordinated notes	39,000		—		1,785		—		37,215
Subordinated notes	10,315		—		—		—		10,315
FHLB Advances	472		472		—		—		—
Total contractual obligations	$	530,917	$	200,266	$	213,349	$	35,105	$	82,197

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk, or market risk, arises from exposure of our financial position to changes in interest rates. It is our strategy to reduce the impact of interest rate risk on net interest margin and net interest income by maintaining a favorable match between the maturities and repricing dates of interest-earning assets and interest-bearing liabilities. This strategy is monitored by the Banks’ respective Asset/Liability Management Committees, in accordance with policies approved by the Banks’ respective Boards of Directors. These committees meet regularly to review the sensitivity of each Bank’s assets and liabilities to changes in interest rates, liquidity needs and sources, and pricing and funding strategies.

We use two techniques to measure interest rate risk. The first is simulation of earnings in which the balance sheet is modeled as an ongoing entity whereby future growth, pricing, and funding assumptions are implemented and modeled under different rate scenarios. The second measurement technique used is static gap analysis. Gap analysis involves measurement of the difference in asset and liability repricing on a cumulative basis within a specified time frame. A positive gap indicates that more interest-earning assets than interest-bearing liabilities reprice/mature in a time frame and a negative gap indicates the opposite. In addition to the gap position, other determinants of net interest income are the shape of the yield curve, general rate levels, reinvestment spreads, balance sheet growth and mix and interest rate spreads. We manage the structure of interest-earning assets and interest-bearing liabilities by adjusting their mix, yield, maturity and/or repricing characteristics based on market conditions. Currently, we do not employ any derivatives to assist in managing our interest rate risk exposure; however, management has the authorization and ability to utilize such instruments should they be necessary to manage interest rate exposure.

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The process of asset and liability management requires management to make a number of assumptions as to when an asset or liability will reprice or mature. Management believes that its assumptions approximate actual experience and considers them reasonable, although the actual amortization and repayment of assets and liabilities may vary substantially. Our economic sensitivity to changes in interest rates at September 30, 2012 has not changed materially since December 31, 2011.

Item 4. Controls and Procedures

The Corporation’s management, with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has evaluated the Corporation’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures were effective as of September 30, 2012 .

There was no substantial change in the Corporation’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

From time to time, the Corporation and its subsidiaries are engaged in legal proceedings in the ordinary course of their respective businesses. Management believes that any liability arising from any such proceedings currently existing or threatened will not have a material adverse effect on the Corporation’s financial position, results of operations, or cash flows.

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Item 1A. Risk Factors

The following are revised risk factors that can materially and adversely affect our business, financial condition, and results of operations. These are intended to revise and replace those risk factors set forth in our Form 10-K for the fiscal year ended December 31, 2011 and filed on March 9, 2012.

Risks Related to our Business

If we do not effectively manage our credit risk, we may experience increased levels of nonperforming loans, charge-offs and delinquencies, which would require additional increases in our provision for loan and lease losses.

There are risks inherent in making any loan or lease, including risks inherent in dealing with individual borrowers, risks of nonpayment, risks resulting from uncertainties as to the future value of collateral and cash flows available to service debt and risks resulting from changes in economic and market conditions. We cannot assure you that our credit risk approval and monitoring procedures will reduce these credit risks, and they cannot be expected to completely eliminate our credit risks. If the overall economic climate in the United States, generally, or our market areas, specifically, fails to improve, or even if it does improve, our borrowers may experience difficulties in repaying their loans and leases, and the level of nonperforming loans and leases, charge-offs and delinquencies could rise and require further increases in the provision for loan and lease losses, which would cause our net income and return on equity to decrease.

Our allowance for loan and lease losses may not be adequate to cover actual losses.

We establish our allowance for loan and lease losses and maintain it at a level considered appropriate by management based on an analysis of our portfolio and market environment. The allowance for loan and lease losses represents our estimate of probable losses inherent in the portfolio at each balance sheet date and is based upon relevant information available to us. The allowance contains provisions for probable losses that have been identified relating to specific relationships, as well as probable losses inherent in our loan and lease portfolio and credit undertakings that are not specifically identified. Additions to the allowance for loan and lease losses, which are charged to earnings through the provision for loan and lease losses, are determined based on a variety of factors, including an analysis of our loan and lease portfolio by segment, historical loss experience and an evaluation of current economic conditions in our market areas. The actual amount of loan and lease losses is affected by changes in economic, operating and other conditions within our markets, which may be beyond our control, and such losses may exceed current estimates.

At September 30, 2012, our allowance for loan and lease losses as a percentage of total loans and leases was 1.67% and as a percentage of total nonperforming loans and leases was 114.48%. Although management believes that the allowance for loan and lease losses is appropriate, we may be required to take additional provisions for losses in the future to further supplement the allowance, either due to management's decision to do so or requirements by our banking regulators. In addition, bank regulatory agencies will periodically review our allowance for loan and lease losses and the value attributed to nonaccrual loans or to properties acquired through foreclosure. Such regulatory agencies may require us to adjust our determination of the value for these items. Any significant increases to the allowance for loan and lease losses may materially decrease our net income, which may adversely affect our business, financial condition and results of operations.

A 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, all of which have experienced significant weakness in the past several years.

At September 30, 2012, we had $590.7 million of commercial real estate loans, which represented 67.2% of our total loan portfolio. Because payments on such loans are often dependent on the successful operation or development of the property or business involved, repayment of such loans is often more sensitive than other types of loans to adverse conditions in the real estate market or the general economy, which are outside the borrower's control. In the event that the cash flow from the property is reduced, the borrower's ability to repay the loan could be negatively impacted. The deterioration of one or a few of these loans could cause a material increase in our level of nonperforming loans, which would result in a loss of revenue from these loans and could result in an increase in the provision for loan and lease losses and an increase in charge-offs, all of which could have a material adverse impact on our net income. Additionally, many of these loans have real estate as a primary or secondary component of collateral. The market value of real estate can fluctuate significantly in a short period of time as a result of economic conditions. Adverse developments affecting real estate values in one or more of our markets could impact

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collateral coverage associated with the commercial real estate segment of our portfolio possibly leading to increased specific reserves or charge-offs, which would adversely affect profitability.

A large portion of our loan and lease portfolio is comprised of commercial loans secured by equipment or other collateral, the deterioration in value of which could increase our exposure to future probable losses.

At September 30, 2012, approximately 29.0% of our loan portfolio was comprised of commercial loans to businesses collateralized by general business assets including accounts receivable, inventory, and equipment. Our commercial loans are typically larger in amount than loans to individual consumers and, therefore, have the potential for larger losses on an individual loan basis. Additionally, asset-based borrowers are usually highly leveraged and/or have inconsistent historical earnings. Significant adverse changes in various industries could cause rapid declines in values and collectability associated with those business assets resulting in inadequate collateral coverage that may expose us to future losses. An increase in specific reserves and charge-offs may have a material adverse impact on our results of operations.

Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.

At September 30, 2012, our nonperforming loans totaled $12.8 million, or 1.46% of our loan portfolio, and our nonperforming assets (which include nonperforming loans plus foreclosed properties) totaled $15.0 million, or 1.26% of total assets. In addition, we had $4.1 million in accruing loans that were 30-89 days delinquent as of September 30, 2012.

Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or foreclosed properties, thereby adversely affecting our net income and returns on assets and equity, increasing our loan administration costs and adversely affecting our efficiency ratio. When we take collateral in foreclosure and similar proceedings, we are required to mark the collateral to its then fair market value, less estimated selling costs, which may result in a loss. These nonperforming loans and foreclosed properties also increase our risk profile and the capital our regulators believe is appropriate in light of such risks. The resolution of nonperforming assets requires significant time commitments from management and can be detrimental to the performance of their other responsibilities. If we experience increases in nonperforming loans and nonperforming assets, our net interest income may be negatively impacted and our loan administration costs could increase, each of which could have an adverse effect on our net income and related ratios, such as return on assets and equity.

Real estate construction and land development loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and we may be exposed to significant losses on loans for these projects.

Real estate construction and land development loans comprised approximately 5.7%of our total loan portfolio as of September 30, 2012, and such lending involves additional risks because funds are advanced upon the as-completed value of the project, which is uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets. Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest. If our appraisal of the value of the completed project proves to be overstated or market values or rental rates decline, we may have inadequate security for the repayment of the loan upon completion of construction of the project. If we are forced to foreclose on a project prior to or at completion due to a default, we may not be able to recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and holding costs. In addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while we attempt to dispose of it.

Our business has been and may continue to be adversely affected by conditions in the financial markets and economic conditions generally.

Since late 2007, the U.S. economy has generally experienced challenging economic conditions. Business activity across a range of industries and regions remains reduced from historical levels, and many businesses have experienced difficulty in remaining profitable. Likewise, many local governments have been experiencing lower tax revenues, impacting their ability to cover costs. Unemployment also generally increased during this period and remains at elevated levels. For the

55

past few years, the financial services industry has generally been affected by significant declines in the values of many significant asset classes, reduced levels of liquidity and the lack of opportunities to originate new loans.

As a result of these economic conditions, many lending institutions, including the Banks, have experienced declines in the performance of their loans from historical norms. Moreover, competition among depository institutions for deposits and quality loans has increased significantly. In addition, the values of real estate collateral supporting many loans have declined and may continue to decline. Bank and bank holding company stock prices have generally been negatively affected over this time period, and the ability of banks and bank holding companies to raise capital or borrow in the debt markets has become more difficult than it had been prior to 2007. There have been significant new laws and regulations regarding lending and funding practices and liquidity standards, with a potential for further regulation in the future, and bank regulatory agencies in general have been diligent in responding to concerns and trends identified in examinations, and have increased the issuance of many formal or informal enforcement actions or orders. The impact of new legislation in response to these developments may negatively impact our operations by restricting our business operations, including our ability to originate or sell loans, and adversely impact our financial performance or our stock price.

In addition, if the overall economic climate in the United States, generally, or our market areas, specifically, fails to continue to improve or declines further, this may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-offs and provisions for credit losses. A worsening of these conditions likely would exacerbate the adverse effects of the recent market conditions on us and others in the financial services industry.

Our business is concentrated in and largely dependent upon the continued growth and welfare of the general geographical markets in which we operate.

Our operations are heavily concentrated in the South Central region of Wisconsin and to a lesser extent the Southeastern and Northeastern regions of Wisconsin, and, as a result, our financial condition, results of operations and cash flows are significantly impacted by changes in the economic conditions in those areas. Our success depends to a significant extent upon the business activity, population, income levels, deposits and real estate activity in these markets. Although our customers' business and financial interests may extend well beyond these market areas, adverse economic conditions that affect these market areas could reduce our growth rate, affect the ability of our customers to repay their loans to us, affect the value of collateral underlying loans and generally affect our financial condition and results of operations. Because of our geographic concentration, we are less able than other regional or national financial institutions to diversify our credit risks across multiple markets. Although, in general, the Wisconsin economy and real estate market have not been affected as severely as other areas of the United States in recent years, they are not immune to challenging economic conditions that affect the United States and world economies.

Our financial condition and results of operations could be negatively affected if we fail to effectively execute our strategic plan or manage the growth called for in our strategic plan.

Among other things, our strategic plan currently calls for reducing the amount of our non-performing assets, generating in-market core deposits to improve our net interest margin and increasing fee income. Our ability to increase profitability in accordance with this plan will depend on a variety of factors including the identification of desirable business opportunities, competitive responses from financial institutions in our market areas and our ability to manage liquidity and funding sources. While we believe we have the management resources and internal systems in place to successfully manage our strategic plan, there can be no assurances that opportunities will be available and that the strategic plan will be successful or effectively managed.

Although we do not have any current definitive plans to do so, in implementing our strategic plan we may expand into additional communities or attempt to strengthen our position in our current markets through opportunistic acquisitions of similar or complementary financial services organizations. To the extent that we open new offices or undertake acquisitions, we are likely to experience the effects of higher operating expenses relative to operating income from the new operations, which may have an adverse effect on our levels of reported net income, return on average equity and return on average assets. Other effects of engaging in such growth strategies may include potential diversion of our management's time and attention and general disruption to our business.

To the extent that we grow through additional office openings, we cannot assure you that we will be able to adequately and profitably manage this growth. Acquiring other banks and businesses will involve similar risks to those commonly associated with branching, but may also involve additional risks, including potential exposure to unknown or contingent

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liabilities of banks and businesses we acquire and exposure to potential asset quality issues of the acquired bank or related business.

Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market operations in U.S. government securities, adjustments of the discount rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

We operate in a highly regulated industry and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, may adversely affect us.

We are subject to extensive regulation and supervision that govern almost all aspects of our operations. Intended to protect customers, depositors and deposit insurance funds, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on our business activities, limit the dividend or distributions that we can pay, restrict the ability of institutions to guarantee our debt and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than generally accepted accounting principles. Compliance with laws and regulations can be difficult and costly and changes to laws and regulations often impose additional compliance costs. Further, our failure to comply with these laws and regulations, even if the failure was inadvertent or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could adversely affect our results of operations, capital base and the price of our securities.

Recent legislative and regulatory reforms applicable to the financial services industry may have a significant impact on our business, financial condition and results of operations.

In the wake of the global financial crisis of 2008-2009, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which significantly changed the regulation of financial institutions and the financial services industry. The Dodd-Frank Act, together with the regulations developed and to be developed thereunder, includes provisions affecting large and small financial institutions alike, including several provisions that will affect how community banks, thrifts and small bank and thrift holding companies will be regulated in the future.

Among other things, the Dodd-Frank Act changes deposit insurance coverage and assessments and impacts the products and services offered by financial institutions. It changes the base for FDIC insurance assessments to a bank's average consolidated total assets minus average tangible equity, rather than its deposit base, permanently raises the current standard deposit insurance limit to $250,000, and expands the FDIC's authority to raise insurance premiums. The legislation also calls for the FDIC to raise the ratio of reserves to deposits from 1.15% to 1.35% for deposit insurance purposes by September 30, 2020 and to “offset the effect” of increased assessments on insured depository institutions with assets of less than $10 billion. The Dodd-Frank Act limits interchange fees payable on debit card transactions for larger banks, allows financial institutions to pay interest on business checking accounts, contains provisions on mortgage-related matters (such as steering incentives, determinations as to a borrower's ability to repay and prepayment penalties) and establishes the Bureau of Consumer Financial Protection as an independent entity within the Federal Reserve. This entity will have broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans and credit cards. Moreover, the Dodd-Frank Act includes provisions that affect corporate governance and executive compensation at all publicly traded companies.

In addition, the Dodd-Frank Act, together with initiatives of the Basel Committee on Banking Supervision discussed below, is raising the capital levels required to be held by bank and thrift holding companies and financial institutions and is changing the rules with respect to the kinds of capital instruments that must be held. The Collins Amendment to the Dodd-Frank Act requires bank holding companies to hold capital on the same basis as banks and, because banks may not hold capital in the form of trust preferred securities, eliminates trust preferred securities from Tier 1 capital, except that certain trust

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preferred securities issued prior to May 19, 2010 by bank holding companies with total consolidated assets of $15 billion or less may continue to be includible in Tier 1 capital.

The Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, adopted Basel III in September 2010, which constitutes a strengthened set of capital requirements for banking organizations in the United States and around the world. Basel III is currently the subject of notices of proposed rulemakings released in June of 2012 by the respective U.S. federal banking agencies. The comment period for these notices of proposed rulemakings ended on October 22, 2012. Basel III is intended to be implemented beginning January 1, 2013 and to be fully-phased in on a global basis on January 1, 2019. Basel III would require capital to be held in the form of tangible common equity, generally increase the required capital ratios, phase out certain kinds of intangibles treated as capital and certain types of instruments, like trust preferred securities, and change the risk weightings of assets used to determine required capital ratios.

These provisions, as well as any other aspects of current or proposed regulatory or legislative changes to laws applicable to the financial industry, will impact the profitability of our business activities and may change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. These changes also may require us to invest significant management attention and resources to make any necessary changes to operations in order to comply, and could therefore also materially and adversely affect our business, financial condition and results of operations. Our management is actively reviewing the provisions of the Dodd-Frank Act and Basel III, many of which are to be phased-in over the next several months and years, and assessing the probable impact on our operations. However, the ultimate effect of these changes on the financial services industry in general, and us in particular, is uncertain at this time.

We 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.

Federal and state banking agencies periodically conduct examinations of our business, including compliance with applicable laws and regulations. If, as a result of an examination, a federal banking agency were to determine that the financial condition, capital resources, asset quality, asset concentration, earnings prospects, management, liquidity, sensitivity to market risk or other aspects of any of our operations has become unsatisfactory, or that we or our management is in violation of any law or regulation, it could take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin ''unsafe or unsound'' practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to change the asset composition of our portfolio or balance sheet, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance. If we become subject to such regulatory actions, our business, results of operations and reputation may be negatively impacted.

The recent repeal of federal prohibitions on payment of interest on demand deposits could increase our interest expense.

On July 21, 2011, all federal prohibitions on the ability of financial institutions to pay interest on demand deposit accounts were repealed as part of the Dodd-Frank Act. As a result, some financial institutions have commenced offering interest on these demand deposits to compete for customers. If competitive pressures require us to pay interest on these demand deposits to attract and retain business customers, our interest expense would increase and our net interest margin would decrease. This could have a material adverse effect on our business, financial condition and results of operations. Further, the effect of the repeal of the prohibition could be more significant in a higher interest rate environment as business customers would have a greater incentive to seek interest on demand deposits.

Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations.

Our ability to implement our business strategy will depend on our liquidity and ability to obtain funding for loan originations, working capital and other general purposes. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. Our preferred source of funds consists of customer deposits, which we supplement with other sources such as brokered deposits. Such account and deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, we may increase our utilization of brokered deposits, FHLB advances and other wholesale funding sources necessary to fund desired growth levels. Because these funds generally are more sensitive to interest rate changes than our core deposits, they are more likely to move to the highest rate available. In addition, the use of

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brokered deposits without regulatory approval is limited to banks that are “well capitalized” according to regulation. As of September 30, 2012, 42.8% of FBB's total deposits and 9.4% of FBB-Milwaukee's total deposits were brokered deposits. If the Banks are unable to maintain their capital levels at “well capitalized” minimums, we could lose a significant source of funding, which would force us to utilize additional wholesale funding or potentially sell assets at a time when pricing may be unfavorable, increasing our funding costs and reducing our net interest income and net income.

Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Regional and community banks generally have less access to the capital markets than do national and super-regional banks because of their smaller size and limited analyst coverage. Since mid-2007, the financial services industry and the credit markets generally have been materially and adversely affected by significant declines in asset values and by a lack of liquidity. The liquidity issues have been particularly acute for regional and community banks, as many of the larger financial institutions have significantly curtailed their lending to regional and community banks to reduce their exposure to the risks of other banks. In addition, many of the larger correspondent lenders have reduced or even eliminated federal funds lines for their correspondent customers.

As a result, we rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, pay dividends to our stockholders or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.

The proposed December 31, 2012 expiration of the FDIC's Transaction Account Guarantee Program could negatively impact the Banks' liquidity and cost of funds.

Under the FDIC's Transaction Account Guarantee Program, certain non-interest-bearing transaction accounts, including those of consumers and businesses, are insured by the FDIC over and above the customary $250,000 limit. This program is set to expire on December 31, 2012 and unless extended by the FDIC, the expiration of this program could cause depositors of the Banks to withdraw deposits in excess of FDIC-insured levels. The withdrawal of these deposits could negatively impact the Banks' liquidity. Furthermore, the withdrawal of these deposits could negatively impact the Banks' cost of funds by potentially reducing their levels of core deposits and increasing their need to rely on wholesale funding sources, which typically represent higher cost of funds.

We rely on our management, and the loss of one or more of those managers may harm our business.

Our success has been and will be greatly influenced by our continuing ability to retain the services of our existing senior management and, if we expand, to attract and retain additional qualified senior and middle management. The unexpected loss of key management personnel or the inability to recruit and retain qualified personnel in the future could have an adverse effect on our business and financial results. In addition, our failure to develop and/or maintain an effective succession plan will impede our ability to quickly and effectively react to unexpected loss of key management and in turn may have an adverse effect on our business.

Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations.

Shifts in short-term interest rates may reduce net interest income, which is the principal component of our earnings. Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest paid by us on our interest-bearing liabilities. In certain scenarios, when interest rates rise, the rate of interest we pay on our liabilities may rise more quickly than the rate of interest that we receive on our interest-bearing assets, which could cause our profits to decrease. Currently, because of the continuing period of low interest rates, we have structured our balance sheet so that the interest we receive on our interest-earning assets will increase more quickly than the interest we pay on our interest-bearing liabilities. However, the structure of our balance sheet and resultant sensitivity to interest rates in various scenarios may change in the future.

Additionally, interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default. At the same time, the marketability of underlying collateral may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on certain loans as borrowers refinance at lower rates.

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Changes in interest rates also can affect the value of loans. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any accrued but unpaid interest receivable, which decreases interest income. Subsequently, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income.

Rising interest rates may also result in a decline in value of our fixed-rate debt securities. The unrealized losses resulting from holding these securities would be recognized in other comprehensive income and reduce total stockholders' equity. If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.

If short-term interest rates remain at their historically low levels for a prolonged period, and assuming longer term interest rates fall further, we could experience net interest margin compression if our interest-earning assets reprice downward while our interest-bearing liability rates fail to decline in tandem. This may have a material adverse effect on our net interest income and our results of operations.

We could recognize losses on securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.

As of September 30, 2012, the fair value of our securities portfolio was approximately $202.8 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. For example, fixed-rate securities acquired by us are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual mortgagors with respect to the underlying securities, and continued instability in the credit markets. Any of the foregoing factors could cause an other-than-temporary impairment in future periods and result in realized losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our financial condition and results of operations.

The Company is a bank holding company and its sources of funds necessary to meet its obligations are limited.

The Company is a bank holding company, and its operations are primarily conducted by the Banks, which are subject to significant federal and state regulation. Cash available to pay dividends to our stockholders, pay our obligations and meet our debt service requirements is derived primarily from our existing cash flow sources, our third party line of credit, dividends received from the Banks, or a combination thereof. Future dividend payments by the Banks to us will require generation of future earnings by the Banks and are subject to certain regulatory guidelines. If the Banks are unable to pay dividends to us, we may not have the resources or cash flow to pay or meet all of our obligations.

Competition from other financial institutions could adversely affect our profitability.

We encounter heavy competition in attracting commercial loan, equipment finance and deposit clients as well as trust and investment clients. We believe the principal factors that are used to attract core deposit accounts and that distinguish one financial institution from another include value-added relationships, rates of return, types of accounts, service fees, convenience of office locations and hours and quality of service to the depositors. We believe the primary factors in competing for commercial loans are value-added relationships, interest rates, loan fee charges, loan structure and timeliness and quality of service to the borrower.

Our competition includes banks, savings institutions, mortgage banking companies, credit unions, finance companies, equipment finance companies, mutual funds, insurance companies, brokerage firms and investment banking firms. We also compete with regional and national financial institutions that have a substantial presence in our market areas, many of which have greater liquidity, higher lending limits, greater access to capital, more established market recognition and more resources and collective experience than us. In addition, some larger financial institutions that have not historically competed with us directly have substantial excess liquidity and have sought, and many continue to seek, smaller lending relationships in our target markets. Furthermore, tax-exempt credit unions operate in most of our market areas and aggressively price their

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products and services to a large portion of the market. Our profitability depends, in part, upon our ability to successfully maintain and increase market share.

We may be adversely affected by the soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. Any such losses could have a material adverse effect on our financial condition and results of operations.

Our framework for managing risks may not be effective in mitigating risk and loss to us.

Our risk management framework seeks to mitigate risk and loss to us. We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, legal and compliance risk, and reputational risk, among others. However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. Our ability to successfully identify and manage risks facing us is an important factor that can significantly impact our results. If our risk management framework proves ineffective, we could suffer unexpected losses and could be materially adversely affected.

FBB has recently crossed the threshold for internal control reporting under FDIC regulations and, if it cannot favorably assess the effectiveness of its internal controls over financial reporting or if its independent registered public accounting firm is unable to provide an unqualified attestation report on FBB's internal controls, we may be subject to additional regulatory scrutiny.

As of January 1, 2012, FBB reached total assets of greater than $1.0 billion, and as a result it will be subject to further reporting requirements under the rules of the FDIC as of December 31, 2012. Pursuant to these rules, management will prepare a report that contains an assessment by management of FBB's effectiveness of internal control structure and procedures for financial reporting as of the end of the fiscal year. FBB will also be required to obtain an independent public accountant's attestation report concerning its internal control structure over financial reporting that includes the call report and/or the FR Y-9C report. The rules that must be met for management to assess FBB's internal controls over financial reporting are complex, and require significant documentation, testing and possible remediation. FBB currently is in the process of reviewing, documenting and testing its internal controls over financial reporting. The continuing effort to comply with regulatory requirements relating to internal controls will likely cause us to incur increased expenses and will cause a diversion of management's time and other internal resources. We also may encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of FBB's internal controls over financial reporting. In addition, in connection with the attestation process, FBB may encounter problems or delays in completing the implementation of any requested improvements or receiving a favorable attestation from its independent public accountant. If FBB cannot favorably assess the effectiveness of its internal controls over financial reporting, or if its independent accountant firm is unable to provide an unqualified attestation report on FBB's internal controls, investor confidence and the price of our common stock could be adversely affected and we may be subject to additional regulatory scrutiny.

We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors.

Employee errors and employee and customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.

We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.

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If we are unable to keep pace with technological advances in our industry, our ability to attract and retain clients could be adversely affected.

The banking industry is constantly subject to technological changes with frequent introductions of new technology-driven products and services. In addition to better serving clients, the effective use of technology increases our efficiency and enables us to reduce costs. Our future success will depend in part on our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience as well as create additional efficiencies in our operations. A number of our competitors have substantially greater resources to invest in technological improvements, as well as significant economies of scale. There can be no assurance that we will be able to implement and offer new technology-driven products and services to our clients. If we fail to do so, our ability to attract and retain clients may be adversely affected.

A breach in security of our systems or our third-party service providers' communications and information technologies, including with respect to our internet banking activities, could have a material adverse effect on our business.

We rely heavily on communications and information technology to conduct our business and internet banking activities. Any failure or interruption due to a breach in security, denial of service attack, virus, worm, "phishing" scheme or other disruptive activity by hackers could result in failures or disruptions in our general ledger, deposit, loan, investment management, electronic banking and other systems or those of our internet banking customers. In addition, advance in computer capabilities or other development could result in a breach of our systems designed to protect customer data. We have policies and procedures designed to prevent or limit the effect of such a failure or interruption due to a security breach of our information systems; however, there can be no assurance that any such events will not occur or, if they do, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of our or our internet banking customers' information systems could damage our reputation, result in a loss of clients, subject us to additional regulatory scrutiny, or expose us to litigation and possible financial liability which could have an adverse effect on our operating results and financial condition. Failure in any of these situations subjects us to risks that may vary in size and scope.

In addition, we rely on third-party service providers for a substantial portion of our communications, information, operating and financial control systems technology. While we have selected these third-party vendors carefully, we do not control their actions. If any of these third-party service providers experience financial, operational or technological difficulties, security breaches, or if there is any disruption in our relationships with them, we may be required to locate alternative sources for these services. There can be no assurance that we could negotiate terms as favorable to us or obtain services with similar functionality as we currently have without the expenditure of substantial resources. Any of these circumstances could have a material adverse effect on our business.

Our 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.

We rely heavily on communications and information systems to conduct our business, and our operations are dependent on our ability to protect our systems against damage from fire, power loss or telecommunication failure. The computer systems and network infrastructure we use could be vulnerable to unforeseen problems. These problems may arise in both our internally developed systems and the systems of our third-party service providers. Any failure or interruption of these systems, whether due to severe weather, natural disasters, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, client relationship management and other systems. While we have a business continuity plan and other policies and procedures designed to prevent or limit the effect of a failure, interruption or security breach of our information systems, there can be no assurance that any such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures or interruptions of our information systems could damage our reputation, result in a loss of clients, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our results of operations.

Our trust and investment services operations may be negatively impacted by changes in economic and market conditions.

Our trust and investment services operations may be negatively impacted by changes in general economic conditions and the conditions in the financial and securities markets, including the values of assets held under management. Our management contracts generally provide for fees payable for services based on the market value of assets under administration. Because most of our contracts provide for a fee based on market values of securities, fluctuations in securities prices will have an adverse effect on our results of operations from this business. If the financial and securities markets were to experience a

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significant decline, such as what occurred during the second half of 2008 and the first half of 2009, the values of the assets that we manage generally would decline and result in a corresponding decline in the performance of our customers' portfolios. Market declines and reductions in the value of our customers' trust and investment services accounts could result in us losing trust and investment services customers, including those who are also banking customers.

We are subject to claims and litigation pertaining to our fiduciary responsibilities.

Some of the services we provide, such as trust and investment services, require us to act as fiduciaries for our customers and others. From time to time, third parties make claims and take legal action against us pertaining to the performance of our fiduciary responsibilities. If these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability and/or our reputation could be damaged. Either of these results may adversely impact demand for our products and services or otherwise have a harmful effect on our business and, in turn, on our financial condition and results of operations.

Negative publicity could damage our reputation and adversely impact our business and financial results.

Reputation risk, or the risk to our earnings and capital due to negative publicity, is inherent in our business. Negative publicity can result from our actual or alleged conduct in a number of activities, including lending practices, corporate governance, and actions taken by government regulators and community organizations in response to those activities. Negative publicity can adversely affect our ability to keep and attract customers, and can expose us to the litigation and regulatory action, all of which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Investing in Our Common Stock

Our stock is thinly traded and our stock price can fluctuate.

Low volume of trading activity and volatility in the price of our common stock and the NASDAQ Global Market, where our common stock is listed, may make it difficult for you to resell your common stock when you want and at prices you find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things:

•actual or anticipated variations in our quarterly results of operations;

•recommendations by securities analysts;

•operating and stock price performance of other companies that investors deem comparable to us;

•news reports relating to trends, concerns and other issues in the financial services industry, including the failures of other financial institutions in the current economic downturn;

•perceptions in the market place regarding us or our competitors and other financial services companies;

•new technology used, or services offered, by competitors; and

•changes in government regulations.

General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of our operating results as evidenced by the current volatility and disruption of capital and credit markets.

To 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 could be dilutive to our existing stockholders.

We are required by regulatory authorities to maintain adequate levels of capital to support our operations. In order to ensure our ability to support the operations of the Banks we may need to limit or terminate cash dividends that can be paid to our stockholders. In addition, we may need to raise capital in the future. Our ability to raise capital, if needed, will depend in part on our financial performance and conditions in the capital markets at that time, and accordingly, we cannot provide assurance of our ability to raise capital on terms acceptable to us. In addition, if we decide to raise equity capital in the future, the interest of our stockholders could be diluted. Any issuance of common stock at prices below tangible book value would

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dilute the ownership of our current stockholders. In addition, the market price of our common stock could decrease as a result of the sale of a large number of shares or similar securities, or the perception that such sales could occur. If we cannot raise capital when needed, our ability to serve as a source of strength to the Banks, pay dividends, maintain adequate capital levels and liquidity, or further expand our operations could be materially impaired.

If 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.

The trading market for our common stock could be affected by whether equity research analysts publish research or reports about us and our business and what is included in such research or reports. If equity analysts publish research reports about us containing unfavorable commentary, downgrade our stock or cease publishing reports about our business, the price of our stock could decline   If any analyst electing to cover us downgrades our stock, our stock price would likely decline rapidly. If any analyst electing to cover us ceases coverage of us, we could lose visibility in the market, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

(c) Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
July 1, 2012 - July 31, 2012	1,962	$	22.74	—	$	177,150
August 1, 2012 - August 31, 2012	2,053	$	23.21	—	177,150
September 1, 2012 - September 30, 2012	—	$	—	—	177,150

(1) The shares in this column represent the 4,015 shares that were surrendered to us to satisfy income tax withholding obligations in connection with the vesting of restricted shares during the three months ended September 30, 2012.

(2) On November 20, 2007, the Corporation publicly announced a stock repurchase program whereby the Corporation may repurchase up to $1,000,000 of the Corporation’s outstanding stock. As of September 30, 2012, approximately $177,150 remains available to repurchase the Corporation’s outstanding stock. There currently is no expiration date to this stock repurchase program.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

4.1	Form of Restricted Stock Agreement (incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on S-8 filed on August 13, 2012)
31.1	Certification of the Chief Executive Officer
31.2	Certification of the Chief Financial Officer
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101	The following financial information from First Business Financial Services, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iv) Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2012 and 2011, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (vi) the Notes to Unaudited Consolidated Financial Statements*+

*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.
+	Submitted electronically with this Quarterly Report.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST BUSINESS FINANCIAL SERVICES, INC.
October 26, 2012	/s/ Corey A. Chambas
	Corey A. Chambas
	Chief Executive Officer
October 26, 2012	/s/ James F. Ropella
	James F. Ropella
	Chief Financial Officer

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FIRST BUSINESS FINANCIAL SERVICES, INC.

Exhibit Index to Quarterly Report on Form 10-Q

Exhibit Number

4.1	Form of Restricted Stock Agreement (incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on S-8 filed on August 13, 2012)
31.1	Certification of the Chief Executive Officer
31.2	Certification of the Chief Financial Officer
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101	The following financial information from First Business Financial Services, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011, (iv) Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2012 and 2011, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (vi) the Notes to Unaudited Consolidated Financial Statements*+

*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.
+	Submitted electronically with this Quarterly Report.

67

EX-31.1

Exhibit 31.1

Certifications

I, Corey A. Chambas, Chief Executive Officer of First Business Financial Services, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Corey A. Chambas

Corey A. Chambas

October 26, 2012

EX-31.2

Exhibit 31.2

Certifications

I, James F. Ropella, Chief Financial Officer of First Business Financial Services, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Business Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ James F. Ropella

James F. Ropella

October 26, 2012

EX-32

Exhibit 32

Certification of the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we the undersigned Chief Executive Officer and Chief Financial Officer of First Business Financial Services, Inc., a Wisconsin Corporation (the Corporation), hereby certify, based on our knowledge that the Quarterly Report on Form 10-Q of the Corporation for the quarter ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) of the Securities and Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Corey A. Chambas

Corey A. Chambas

October 26, 2012

/s/ James F. Ropella

James F. Ropella

October 26, 2012

XML

Share-Based Compensation (Narrative Disclosures) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of shares available for grant	214,634		214,634
Stock options graded vesting minimum period			4 years
Stock options graded vesting maximum period			8 years
Stock options contractual term			10 years
Stock-based compensation related to stock options recognized in consolidated financial statements	$ 0	$ 0	$ 0	$ 0
Deferred compensation expense yet to be recognized	1,700,000		1,700,000
Period of time that deferred compensation expense will be recognized			3 years 1 month
Share-based compensation			$ 403,000	$ 439,000

XML

Deposits (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Deposits [Abstract]
Non-interest bearing transaction accounts	$ 140,831	$ 132,230
Interest bearing transaction accounts	38,099	23,004
Money market accounts	409,823	364,082
Certificates of deposit	81,777	85,331
Brokered certificates of deposit	390,728	446,665
Total deposits	1,061,258	1,051,312
Non-interest bearing transaction accounts, weighted average balance	131,761	112,899
Interest-bearing transaction accounts, weighted average balance	34,263	25,389
Money market accounts, weighted average balance	384,488	300,652
Certificates of deposit, weighted average balance	84,907	80,323
Brokered certificates of deposit, weighted average balance	409,393	486,594
Total deposits, weighted average balance	$ 1,044,812	$ 1,005,857
Weighted average rate
Non-interest bearing transaction accounts	0.00%	0.00%
Interest bearing transaction accounts	0.30%	0.28%
Money market accounts	0.81%	0.99%
Certificates of deposit	1.20%	1.38%
Brokered certificates of deposit	2.28%	2.66%
Total deposits	1.29%	1.70%

XML

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012 loans	Dec. 31, 2011 loans
Troubled debt restructurings
Number of Loans	44	49
Pre-Modification Recorded Investment	$ 17,680	$ 18,327
Post-Modification Recorded Investment	11,695	13,423
Commercial real estate - owner occupied
Troubled debt restructurings
Number of Loans	4	5
Pre-Modification Recorded Investment	338	380
Post-Modification Recorded Investment	277	352
Commercial real estate - non-owner occupied
Troubled debt restructurings
Number of Loans	6	6
Pre-Modification Recorded Investment	972	971
Post-Modification Recorded Investment	831	902
Construction and land development
Troubled debt restructurings
Number of Loans	3	4
Pre-Modification Recorded Investment	8,044	8,457
Post-Modification Recorded Investment	4,983	5,692
Multi-family
Troubled debt restructurings
Number of Loans	1	0
Pre-Modification Recorded Investment	184	0
Post-Modification Recorded Investment	49	0
1-4 family
Troubled debt restructurings
Number of Loans	14	15
Pre-Modification Recorded Investment	2,951	3,152
Post-Modification Recorded Investment	2,613	3,031
Commercial and industrial
Troubled debt restructurings
Number of Loans	7	9
Pre-Modification Recorded Investment	2,250	2,394
Post-Modification Recorded Investment	1,048	1,393
Direct financing leases, net
Troubled debt restructurings
Number of Loans	0	1
Pre-Modification Recorded Investment	0	32
Post-Modification Recorded Investment	0	18
Home equity and second mortgages
Troubled debt restructurings
Number of Loans	8	8
Pre-Modification Recorded Investment	865	865
Post-Modification Recorded Investment	770	813
Other
Troubled debt restructurings
Number of Loans	1	1
Pre-Modification Recorded Investment	2,076	2,076
Post-Modification Recorded Investment	$ 1,124	$ 1,222

XML

FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Composition of Borrowed Funds) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Disclosure [Abstract]
Federal funds purchased	$ 0	$ 0
FHLB advances	472	482
Line of credit	10	810
Subordinated notes payable	39,000	39,000
Junior subordinated notes	10,315	10,315
Total borrowed funds	49,797	50,607
Federal funds purchased, weighted average balance	148	252
FHLB advances, weighted average balance	2,520	656
Line of credit, weighted average balance	2,223	2,236
Subordinated notes payable, weighted average balance	39,000	39,000
Junior subordinated notes, weighted average balance	10,315	10,315
Total borrowed funds, weighted average balance	54,206	52,459
Short-term and long-term borrowings:
Short-term borrowings	482	810
Long-term borrowings	49,315	49,797
Total borrowed funds	$ 49,797	$ 50,607
Weighted average rate:
Federal funds purchased	0.81%	0.90%
FHLB advances	1.32%	5.83%
Line of credit	4.04%	4.06%
Subordinated notes payable	6.99%	6.12%
Junior subordinated notes	10.79%	10.78%
Total borrowings	7.33%	6.94%

XML

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Past Due Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	$ 4,142	$ 4,612
60 to 89 days past due	0	1,065
Greater than 90 days past due	3,197	8,679
Total past due	7,339	14,356
Current	871,495	837,190
Non-accrual loans and leases	12,846	21,766
Total gross loans and leases receivable	878,834	851,546	861,462
30 to 59 days past due, percent of total portfolio	0.47%	0.54%
60 to 89 days past due, percent of total portfolio	0.00%	0.12%
Greater than 90 days past due, percent of portfolio	0.37%	1.02%
Past due, percent of total portfolio	0.84%	1.68%
Current, percent of total portfolio	99.16%	98.32%
Gross loans, percent of total portfolio	100.00%	100.00%
Commercial real estate - owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	106
60 to 89 days past due	0	0
Greater than 90 days past due	117	2,011
Total past due	117	2,117
Current	153,417	148,411
Non-accrual loans and leases	929	2,972
Total gross loans and leases receivable	153,534	150,528
Commercial real estate - non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	286
Greater than 90 days past due	464	1,625
Total past due	464	1,911
Current	295,388	302,686
Non-accrual loans and leases	464	2,249
Total gross loans and leases receivable	295,852	304,597
Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	4,025	4,056
60 to 89 days past due	0	515
Greater than 90 days past due	538	704
Total past due	4,563	5,275
Current	45,595	32,849
Non-accrual loans and leases	5,209	7,229
Total gross loans and leases receivable	50,158	38,124
Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	2,009
Total past due	0	2,009
Current	57,565	41,896
Non-accrual loans and leases	49	2,009
Total gross loans and leases receivable	57,565	43,905
1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	75	404
60 to 89 days past due	0	224
Greater than 90 days past due	618	495
Total past due	693	1,123
Current	32,909	42,390
Non-accrual loans and leases	2,687	3,506
Total gross loans and leases receivable	33,602	43,513
Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	42	46
60 to 89 days past due	0	0
Greater than 90 days past due	208	298
Total past due	250	344
Current	254,952	236,755
Non-accrual loans and leases	1,593	1,558
Total gross loans and leases receivable	255,202	237,099
Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	16,462	17,128
Non-accrual loans and leases	0	18
Total gross loans and leases receivable	16,462	17,128
Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	40
Greater than 90 days past due	128	315
Total past due	128	355
Current	4,542	4,615
Non-accrual loans and leases	791	1,002
Total gross loans and leases receivable	4,670	4,970
Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	1,124	1,222
Total past due	1,124	1,222
Current	10,665	10,460
Non-accrual loans and leases	1,124	1,223
Total gross loans and leases receivable	11,789	11,682
Accruing loans and leases
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	4,067	4,073
60 to 89 days past due	0	131
Greater than 90 days past due	0	0
Total past due	4,067	4,204
Current	861,921	825,576
Accrual loans and leases	865,988	829,780
Accruing loans and leases | Commercial real estate - owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	106
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	106
Current	152,605	147,450
Accrual loans and leases	152,605	147,556
Accruing loans and leases | Commercial real estate - non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	131
Greater than 90 days past due	0	0
Total past due	0	131
Current	295,388	302,217
Accrual loans and leases	295,388	302,348
Accruing loans and leases | Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	4,025	3,942
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	4,025	3,942
Current	40,924	26,953
Accrual loans and leases	44,949	30,895
Accruing loans and leases | Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	57,516	41,896
Accrual loans and leases	57,516	41,896
Accruing loans and leases | 1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	30,915	40,007
Accrual loans and leases	30,915	40,007
Accruing loans and leases | Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	42	25
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	42	25
Current	253,567	235,516
Accrual loans and leases	253,609	235,541
Accruing loans and leases | Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	16,462	17,110
Accrual loans and leases	16,462	17,110
Accruing loans and leases | Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	3,879	3,968
Accrual loans and leases	3,879	3,968
Accruing loans and leases | Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	10,665	10,459
Accrual loans and leases	10,665	10,459
Non-accruing loans and leases
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	75	539
60 to 89 days past due	0	934
Greater than 90 days past due	3,197	8,679
Total past due	3,272	10,152
Current	9,574	11,614
Non-accrual loans and leases	12,846	21,766
Non-accruing loans and leases | Commercial real estate - owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	117	2,011
Total past due	117	2,011
Current	812	961
Non-accrual loans and leases	929	2,972
Non-accruing loans and leases | Commercial real estate - non-owner occupied
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	155
Greater than 90 days past due	464	1,625
Total past due	464	1,780
Current	0	469
Non-accrual loans and leases	464	2,249
Non-accruing loans and leases | Construction and land development
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	114
60 to 89 days past due	0	515
Greater than 90 days past due	538	704
Total past due	538	1,333
Current	4,671	5,896
Non-accrual loans and leases	5,209	7,229
Non-accruing loans and leases | Multi-family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	2,009
Total past due	0	2,009
Current	49	0
Non-accrual loans and leases	49	2,009
Non-accruing loans and leases | 1-4 family
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	75	404
60 to 89 days past due	0	224
Greater than 90 days past due	618	495
Total past due	693	1,123
Current	1,994	2,383
Non-accrual loans and leases	2,687	3,506
Non-accruing loans and leases | Commercial and industrial
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	21
60 to 89 days past due	0	0
Greater than 90 days past due	208	298
Total past due	208	319
Current	1,385	1,239
Non-accrual loans and leases	1,593	1,558
Non-accruing loans and leases | Direct financing leases, net
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	0	0
Total past due	0	0
Current	0	18
Non-accrual loans and leases	0	18
Non-accruing loans and leases | Home equity and second mortgages
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	40
Greater than 90 days past due	128	315
Total past due	128	355
Current	663	647
Non-accrual loans and leases	791	1,002
Non-accruing loans and leases | Other
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 59 days past due	0	0
60 to 89 days past due	0	0
Greater than 90 days past due	1,124	1,222
Total past due	1,124	1,222
Current	0	1
Non-accrual loans and leases	$ 1,124	$ 1,223

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of September 30, 2012 and December 31, 2011.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
September 30, 2012	Other assets	$	3,011	Other liabilities	$	3,011
December 31, 2011	Other assets	$	3,434	Other liabilities	$	3,434

XML

Fair Value Disclosures (Measured on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Interest rate swaps
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	$ 3,011	$ 3,434
Interest rate swaps | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	0	0
Interest rate swaps | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	3,011	3,434
Interest rate swaps | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Liabilities measured on a recurring basis, fair value	0	0
Municipal obligations
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	10,056	2,831
Municipal obligations | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Municipal obligations | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	10,056	2,831
Municipal obligations | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
U.S. Government agency obligations - government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	16,237	0
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	16,237	0
U.S. Government agency obligations - government-sponsored enterprises | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government issued
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	163,886	165,401
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	163,886	165,401
Collateralized mortgage obligations - government issued | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	12,626	2,154
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	12,626	2,154
Collateralized mortgage obligations - government-sponsored enterprises | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Interest rate swaps
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	3,011	3,434
Interest rate swaps | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	0	0
Interest rate swaps | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	3,011	3,434
Interest rate swaps | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Recurring Basis
Assets measured on a recurring basis, fair value	$ 0	$ 0

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Derivative Financial Instruments (Policies)

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives, Policy

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked-to-market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considered the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Troubled Debt Restructurings During the Previous 12 Months, Subsequent Defaults) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012 loans
Troubled debt restructurings
Troubled debt restructurings, subsequent default, number of contracts	4
Troubled debt restructurings, subsequent defaults, recorded investment	$ 371
Construction and land development
Troubled debt restructurings
Troubled debt restructurings, subsequent default, number of contracts	1
Troubled debt restructurings, subsequent defaults, recorded investment	110
1-4 family
Troubled debt restructurings
Troubled debt restructurings, subsequent default, number of contracts	1
Troubled debt restructurings, subsequent defaults, recorded investment	223
Commercial and industrial
Troubled debt restructurings
Troubled debt restructurings, subsequent default, number of contracts	1
Troubled debt restructurings, subsequent defaults, recorded investment	18
Home equity and second mortgages
Troubled debt restructurings
Troubled debt restructurings, subsequent default, number of contracts	1
Troubled debt restructurings, subsequent defaults, recorded investment	$ 20

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Securities (Unrealized Losses) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair value
Less than 12 months	$ 24,469	$ 18,412
12 months or longer	0	0
Total	24,469	18,412
Unrealized losses
Less than 12 months	117	79
12 months or longer	0	0
Total	117	79
U.S. Government agency obligations - government-sponsored enterprises
Fair value
Less than 12 months	1,499
12 months or longer	0
Total	1,499
Unrealized losses
Less than 12 months	1
12 months or longer	0
Total	1
Municipal obligations
Fair value
Less than 12 months	3,601
12 months or longer	0
Total	3,601
Unrealized losses
Less than 12 months	31
12 months or longer	0
Total	31
Collateralized mortgage obligations - government issued
Fair value
Less than 12 months	15,717	16,336
12 months or longer	0	0
Total	15,717	16,336
Unrealized losses
Less than 12 months	74	64
12 months or longer	0	0
Total	74	64
Collateralized mortgage obligations - government-sponsored enterprises
Fair value
Less than 12 months	3,652	2,076
12 months or longer	0	0
Total	3,652	2,076
Unrealized losses
Less than 12 months	11	15
12 months or longer	0	0
Total	$ 11	$ 15

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Share-Based Compensation (Stock Option Activity) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Options
Outstanding, beginning balance	125,034	138,766
Granted	0	0
Exercised	0	0
Expired	0	(13,732)
Forfeited	0	0
Outstanding, ending balance	125,034	125,034	138,766
Exercisable	125,034	125,034
Weighted Average Exercise Price
Outstanding, beginning	$ 22.43	$ 22.09
Granted	$ 0.00	$ 0.00
Exercised	$ 0.00	$ 0.00
Expired	$ 0.00	$ 19.00
Forfeited	$ 0.00	$ 0.00
Outstanding, ending	$ 22.43	$ 22.43	$ 22.09
Exercisable	$ 22.43	$ 22.43
Weighted Average Remaining Contractual Life (Years)
Outstanding	1 year 0 months	1 year 9 months	2 years 9 months
Exercisable	1 year 0 months	1 year 9 months

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Allowance for Loan and Lease Losses) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Allowance for credit losses:
Beginning balance	$ 14,155	$ 16,271
Charge-offs	(3,242)	(6,240)
Recoveries	394	797
Provision	3,399	3,313
Ending balance	14,706	14,141
Ending balance: individually evaluated for impairment	966	1,116
Ending balance: collectively evaluated for impairment	13,740	13,025
Ending balance: loans acquired with deteriorated credit quality	0	0
Loans and leases receivable:
Total gross loans and leases receivable	878,834	861,462	851,546
Ending balance: individually evaluated for impairment	13,743	27,129
Ending balance: collectively evaluated for impairment	865,091	834,333
Ending balance: loans acquired with deteriorated credit quality	0	0
Allowance as % of gross loans	1.67%	1.64%	1.66%
Commercial real estate
Allowance for credit losses:
Beginning balance	9,554	11,267
Charge-offs	(467)	(5,444)
Recoveries	291	277
Provision	572	3,488
Ending balance	9,950	9,588
Ending balance: individually evaluated for impairment	667	757
Ending balance: collectively evaluated for impairment	9,283	8,831
Ending balance: loans acquired with deteriorated credit quality	0	0
Loans and leases receivable:
Total gross loans and leases receivable	590,711	602,869
Ending balance: individually evaluated for impairment	10,235	22,900
Ending balance: collectively evaluated for impairment	580,476	579,969
Ending balance: loans acquired with deteriorated credit quality	0	0
Allowance as % of gross loans	1.68%	1.59%
Commercial and industrial
Allowance for credit losses:
Beginning balance	3,977	4,277
Charge-offs	(2,668)	(471)
Recoveries	65	432
Provision	2,764	(338)
Ending balance	4,138	3,900
Ending balance: individually evaluated for impairment	205	252
Ending balance: collectively evaluated for impairment	3,933	3,648
Ending balance: loans acquired with deteriorated credit quality	0	0
Loans and leases receivable:
Total gross loans and leases receivable	255,202	224,257
Ending balance: individually evaluated for impairment	1,593	1,714
Ending balance: collectively evaluated for impairment	253,609	222,543
Ending balance: loans acquired with deteriorated credit quality	0	0
Allowance as % of gross loans	1.62%	1.74%
Consumer and other
Allowance for credit losses:
Beginning balance	384	482
Charge-offs	(107)	(325)
Recoveries	38	69
Provision	83	187
Ending balance	398	413
Ending balance: individually evaluated for impairment	94	82
Ending balance: collectively evaluated for impairment	304	331
Ending balance: loans acquired with deteriorated credit quality	0	0
Loans and leases receivable:
Total gross loans and leases receivable	16,459	18,012
Ending balance: individually evaluated for impairment	1,915	2,490
Ending balance: collectively evaluated for impairment	14,544	15,522
Ending balance: loans acquired with deteriorated credit quality	0	0
Allowance as % of gross loans	2.42%	2.29%
Direct financing leases, net
Allowance for credit losses:
Beginning balance	240	245
Charge-offs	0	0
Recoveries	0	19
Provision	(20)	(24)
Ending balance	220	240
Ending balance: individually evaluated for impairment	0	25
Ending balance: collectively evaluated for impairment	220	215
Ending balance: loans acquired with deteriorated credit quality	0	0
Loans and leases receivable:
Total gross loans and leases receivable	16,462	16,324
Ending balance: individually evaluated for impairment	0	25
Ending balance: collectively evaluated for impairment	16,462	16,299
Ending balance: loans acquired with deteriorated credit quality	$ 0	$ 0
Allowance as % of gross loans	1.34%	1.47%

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Fair Value Disclosures (Narrative Disclosures) (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Fair Value Inputs, Assets, Quantitative Information
Foreclosed Properties - Supported by Level 3 Valuation	$ 0
Transfer to foreclosed properties	1,397,000	2,218,000	3,119,000
Fair value, assets, level 1 to level 2 transfers	0
Fair value, assets, level 2 to level 1 transfers	0
Fair value, assets, transfers into level 3	0
Fair value, assets, transfers out of level 3	0
Fair value, liabilities, level 1 to level 2 transfers	0
Fair value, liabilities, level 2 to level 1 transfers	0
Fair value, liabilities, transfers into level 3	0
Fair value, liabilities, transfers out of level 3	0
Net losses due to impairment valuation	176,000		621,000
Commercial paper	$ 3,500,000		$ 0
Minimum
Fair Value Inputs, Assets, Quantitative Information
Quantification of unobservable inputs for Level 3 values for impaired loans	13.00%
Maximum
Fair Value Inputs, Assets, Quantitative Information
Quantification of unobservable inputs for Level 3 values for impaired loans	100.00%

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Non-accrual Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	$ 12,846	$ 21,766
Foreclosed properties	2,187	2,236		1,750
Total nonperforming assets	15,033	24,002
Performing troubled debt restructurings	897	111
Total non-accrual loans and leases to gross loans and leases	1.46%	2.56%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.71%	2.81%
Total non-performing assets to total assets	1.26%	2.04%
Allowance for loan and lease losses to gross loans and leases	1.67%	1.66%	1.64%
Allowance for loan and lease losses to non-accrual loans and leases	114.48%	65.03%
Commercial real estate - owner occupied
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	929	2,972
Commercial real estate - non-owner occupied
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	464	2,249
Construction and land development
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	5,209	7,229
Multi-family
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	49	2,009
1-4 family
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	2,687	3,506
Total commercial real estate
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	9,338	17,965
Commercial and industrial
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	1,593	1,558
Direct financing leases, net
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	0	18
Home equity and second mortgages
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	791	1,002
Other
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	1,124	1,223
Total consumer and other loans
Financing Receivable, Impaired [Line Items]
Non-accrual loans and leases	$ 1,915	$ 2,225

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Nature of Operations and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations. First Business Financial Services, Inc. (together with all of its subsidiaries, collectively referred to as “FBFS” or the “Corporation”) is a registered bank holding company incorporated under the laws of the State of Wisconsin and is engaged in the commercial banking business through its wholly owned subsidiaries First Business Bank (“FBB”) and First Business Bank — Milwaukee (“FBB-Milwaukee”). FBB and FBB-Milwaukee are sometimes referred to together as the “Banks.” FBB operates as a commercial banking institution in Dane County and the surrounding areas with loan production offices in Oshkosh, Appleton, and Green Bay, Wisconsin. FBB also offers trust and investment services through First Business Trust & Investments, a division of FBB. FBB — Milwaukee operates as a commercial banking institution in Waukesha County and the surrounding areas. The Banks provide a full range of financial services to businesses, business owners, executives, professionals and high net worth individuals. The Banks are subject to competition from other financial institutions and service providers and are also subject to state and federal regulations. FBB has the following subsidiaries: First Business Capital Corp., First Madison Investment Corp., First Business Equipment Finance, LLC and FBB Real Estate, LLC. First Madison Investment Corp. is located in and was formed under the laws of the state of Nevada. FBB-Milwaukee has one subsidiary, FBB — Milwaukee Real Estate, LLC.

Principles of Consolidation. The unaudited consolidated financial statements include the accounts and results of the Corporation. In accordance with the provisions of Accounting Standards Codification (ASC) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions were eliminated in consolidation.

Basis of Presentation. The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2011 except as described further below in this Note 1.

In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the unaudited consolidated financial statements were included in the unaudited consolidated financial statements. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2012. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events were evaluated through the issuance of the unaudited consolidated financial statements.

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Derivative Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Derivatives not designated as hedging instruments, fair value
Interest rate swaps - assets	3,011	3,434
Interest rate swaps - liabilities	3,011	3,434
Other assets
Derivatives not designated as hedging instruments, fair value
Description of Location of Interest Rate Derivative Instruments Not Designated as Hedging Instruments on Balance Sheet	Other assets	Other assets
Other liabilities
Derivatives not designated as hedging instruments, fair value
Description of Location of Interest Rate Derivative Instruments Not Designated as Hedging Instruments on Balance Sheet	Other liabilities	Other liabilities

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Securities (Narrative Disclosures) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 securities	Sep. 30, 2011	Sep. 30, 2012 securities	Sep. 30, 2011	Dec. 31, 2011 securities
Investments, Debt and Equity Securities [Abstract]
Proceeds from sale of available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Securities in unrealized loss positions	32		32		9
Securities in an unrealized loss position, twelve months or greater	0		0
Other than temporary impairment			0	0
Available-for-sale securities pledged as collateral	$ 22,900,000		$ 22,900,000		$ 19,600,000

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Loan Composition Schedule

Loan and lease receivables consist of the following:

	September 30, 2012		December 31, 2011
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	153,534	$	150,528
Commercial real estate — non-owner occupied	295,852		304,597
Construction and land development	50,158		38,124
Multi-family	57,565		43,905
1-4 family	33,602		43,513
Total commercial real estate	590,711		580,667
Commercial and industrial	255,202		237,099
Direct financing leases, net	16,462		17,128
Consumer and other
Home equity and second mortgages	4,670		4,970
Other	11,789		11,682
Total consumer and other	16,459		16,652
Total gross loans and leases receivable	878,834		851,546
Less:
Allowance for loan and lease losses	14,706		14,155
Deferred loan fees	642		704
Loans and leases receivable, net	$	863,486	$	836,687

Financing Receivable by Credit Quality Indicators

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of September 30, 2012 and December 31, 2011:

	Category
As of September 30, 2012	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	128,661		$	6,778		$	17,166		$	929		$	153,534
Commercial real estate — non-owner occupied	228,493			40,038			26,490			831			295,852
Construction and land development	33,845			1,485			9,089			5,739			50,158
Multi-family	49,875			6,848			793			49			57,565
1-4 family	18,331			4,510			8,074			2,687			33,602
Total commercial real estate	459,205			59,659			61,612			10,235			590,711
Commercial and industrial	231,407			7,866			14,336			1,593			255,202
Direct financing leases, net	11,933			2,862			1,667			—			16,462
Consumer and other:
Home equity and second mortgages	3,531			167			181			791			4,670
Other	10,665			—			—			1,124			11,789
Total consumer and other	14,196			167			181			1,915			16,459
Total gross loans and leases receivable	$	716,741		$	70,554		$	77,796		$	13,743		$	878,834
Category as a % of total portfolio	81.56		%	8.03		%	8.85		%	1.56		%	100.00		%

	Category
As of December 31, 2011	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	117,065		$	16,488		$	14,004		$	2,971		$	150,528
Commercial real estate — non-owner occupied	236,868			34,823			30,657			2,249			304,597
Construction and land development	20,660			5,367			4,867			7,230			38,124
Multi-family	34,162			6,930			804			2,009			43,905
1-4 family	23,266			11,637			4,993			3,617			43,513
Total commercial real estate	432,021			75,245			55,325			18,076			580,667
Commercial and industrial	198,018			25,070			12,453			1,558			237,099
Direct financing leases, net	11,398			5,026			686			18			17,128
Consumer and other:
Home equity and second mortgages	3,524			188			256			1,002			4,970
Other	10,459			—			—			1,223			11,682
Total consumer and other	13,983			188			256			2,225			16,652
Total gross loans and leases receivable	$	655,420		$	105,529		$	68,720		$	21,877		$	851,546
Category as a % of total portfolio	76.97		%	12.39		%	8.07		%	2.57		%	100.00		%

Past Due Financing Receivables

The delinquency aging of the loan and lease portfolio by class of receivable as of September 30, 2012 and December 31, 2011 were as follows:

As of September 30, 2012	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	152,605		$	152,605
Non-owner occupied	—			—			—			—			295,388			295,388
Construction and land development	4,025			—			—			4,025			40,924			44,949
Multi-family	—			—			—			—			57,516			57,516
1-4 family	—			—			—			—			30,915			30,915
Commercial & industrial	42			—			—			42			253,567			253,609
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,879			3,879
Other	—			—			—			—			10,665			10,665
Total	4,067			—			—			4,067			861,921			865,988
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	812		$	929
Non-owner occupied	—			—			464			464			—			464
Construction and land development	—			—			538			538			4,671			5,209
Multi-family	—			—			—			—			49			49
1-4 family	75			—			618			693			1,994			2,687
Commercial & industrial	—			—			208			208			1,385			1,593
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			128			128			663			791
Other	—			—			1,124			1,124			—			1,124
Total	75			—			3,197			3,272			9,574			12,846
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	153,417		$	153,534
Non-owner occupied	—			—			464			464			295,388			295,852
Construction and land development	4,025			—			538			4,563			45,595			50,158
Multi-family	—			—			—			—			57,565			57,565
1-4 family	75			—			618			693			32,909			33,602
Commercial & industrial	42			—			208			250			254,952			255,202
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			128			128			4,542			4,670
Other	—			—			1,124			1,124			10,665			11,789
Total	$	4,142		$	—		$	3,197		$	7,339		$	871,495		$	878,834
Percent of portfolio	0.47		%	—		%	0.37		%	0.84		%	99.16		%	100.00		%

As of December 31, 2011	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	—		$	106		$	147,450		$	147,556
Non-owner occupied	—			131			—			131			302,217			302,348
Construction and land development	3,942			—			—			3,942			26,953			30,895
Multi-family	—			—			—			—			41,896			41,896
1-4 family	—			—			—			—			40,007			40,007
Commercial & industrial	25			—			—			25			235,516			235,541
Direct financing leases, net	—			—			—			—			17,110			17,110
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,968			3,968
Other	—			—			—			—			10,459			10,459
Total	4,073			131			—			4,204			825,576			829,780
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	2,011		$	2,011		$	961		$	2,972
Non-owner occupied	—			155			1,625			1,780			469			2,249
Construction and land development	114			515			704			1,333			5,896			7,229
Multi-family	—			—			2,009			2,009			—			2,009
1-4 family	404			224			495			1,123			2,383			3,506
Commercial & industrial	21			—			298			319			1,239			1,558
Direct financing leases, net	—			—			—			—			18			18
Consumer and other:
Home equity and second mortgages	—			40			315			355			647			1,002
Other	—			—			1,222			1,222			1			1,223
Total	539			934			8,679			10,152			11,614			21,766
Total loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	2,011		$	2,117		$	148,411		$	150,528
Non-owner occupied	—			286			1,625			1,911			302,686			304,597
Construction and land development	4,056			515			704			5,275			32,849			38,124
Multi-family	—			—			2,009			2,009			41,896			43,905
1-4 family	404			224			495			1,123			42,390			43,513
Commercial & industrial	46			—			298			344			236,755			237,099
Direct financing leases, net	—			—			—			—			17,128			17,128
Consumer and other:
Home equity and second mortgages	—			40			315			355			4,615			4,970
Other	—			—			1,222			1,222			10,460			11,682
Total	$	4,612		$	1,065		$	8,679		$	14,356		$	837,190		$	851,546
Percent of portfolio	0.54		%	0.12		%	1.02		%	1.68		%	98.32		%	100.00		%

Schedule of Financing Receivables, Non Accrual Status

The Corporation’s non-accrual loans and leases consisted of the following at September 30, 2012 and December 31, 2011, respectively.

	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	929	$	2,972
Commercial real estate — non-owner occupied	464		2,249
Construction and land development	5,209		7,229
Multi-family	49		2,009
1-4 family	2,687		3,506
Total non-accrual commercial real estate	9,338		17,965
Commercial and industrial	1,593		1,558
Direct financing leases, net	—		18
Consumer and other:
Home equity and second mortgage	791		1,002
Other	1,124		1,223
Total non-accrual consumer and other loans	1,915		2,225
Total non-accrual loans and leases	12,846		21,766
Foreclosed properties, net	2,187		2,236
Total non-performing assets	$	15,033	$	24,002
Performing troubled debt restructurings	$	897	$	111

	September 30, 2012		December 31, 2011
Total non-accrual loans and leases to gross loans and leases	1.46	%	2.56	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.71		2.81
Total non-performing assets to total assets	1.26		2.04
Allowance for loan and lease losses to gross loans and leases	1.67		1.66
Allowance for loan and lease losses to non-accrual loans and leases	114.48		65.03

Troubled Debt Restructurings on Financing Receivables

	As of September 30, 2012					As of December 31, 2011
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	4	$	338	$	277	5	$	380	$	352
Commercial real estate — non-owner occupied	6	972		831		6	971		902
Construction and land development	3	8,044		4,983		4	8,457		5,692
Multi-family	1	184		49		—	—		—
1-4 family	14	2,951		2,613		15	3,152		3,031
Commercial and industrial	7	2,250		1,048		9	2,394		1,393
Direct financing leases, net	—	—		—		1	32		18
Consumer and other:
Home equity and second mortgage	8	865		770		8	865		813
Other	1	2,076		1,124		1	2,076		1,222
Total	44	$	17,680	$	11,695	49	$	18,327	$	13,423

Troubled Debt Restructurings by Modification Type

As of September 30, 2012 and December 31, 2011, our troubled debt restructurings grouped by type of concession were as follows:

	As of September 30, 2012			As of December 31, 2011
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	2	$	123	2	$	127
Combination of extension and interest rate concession	26	8,630		28	9,850
Commercial and industrial
Extension of term	3	295		5	406
Combination of extension and interest rate concession	4	753		4	987
Consumer and other
Extension of term	2	1,211		5	1,603
Combination of extension and interest rate concession	7	683		4	432
Direct financing leases, net
Extension of term	—	—		1	18
Total	44	$	11,695	49	$	13,423

Troubled Debt Restructurings, Subsequent Defaults

The following table provides the number of loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the nine months ended September 30, 2012, as well as the recorded investment in these restructured loans as of September 30, 2012.

	Nine months ended September 30, 2012
	Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate:
Construction and land development	1	$	110
1-4 family	1	223
Commercial and industrial	1	18
Consumer and other:
Home equity and second mortgage	1	20
Total	4	$	371

Impaired Financing Receivables

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Nine Months Ended September 30, 2012
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	676		676		—		1,433		174		207		(33		)
Construction and land development	5,209		8,786		—		6,089		190		24		166
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	1,813		1,915		—		2,043		113		—		113
Commercial and industrial	862		1,031		—		1,440		80		25		55
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	668		668		—		782		44		1		43
Other	1,124		1,612		—		1,164		85		1		84
Total	11,330		16,033		—		15,069		868		321		547
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	155		155		155		155		2		—		2
Construction and land development	530		530		190		541		15		—		15
Multi-family	—		—		—		—		—		—		—
1-4 family	874		875		322		892		38		—		38
Commercial and industrial	731		3,361		205		1,856		170		—		170
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	123		123		94		140		7		—		7
Other	—		—		—		—		—		—		—
Total	2,413		5,044		966		3,584		232		—		232
Total:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	831		831		155		1,588		176		207		(31		)
Construction and land development	5,739		9,316		190		6,630		205		24		181
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	2,687		2,790		322		2,935		151		—		151
Commercial and industrial	1,593		4,392		205		3,296		250		25		225
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	791		791		94		922		51		1		50
Other	1,124		1,612		—		1,164		85		1		84
Grand total	$	13,743	$	21,077	$	966	$	18,653	$	1,100	$	321	$	779

(1) Average recorded investment is calculated primarily using daily average balances.

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2011
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	2,455	$	3,669	$	—	$	5,177	$	450	$	200	$	250
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	6,383		9,927		—		7,974		350		48		302
Multi-family	2,009		2,246		—		3,075		362		—		362
1-4 family	2,628		3,016		—		3,160		277		108		169
Commercial and industrial	1,139		1,320		—		3,820		384		424		(40		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	803		827		—		884		62		1		61
Other	1,222		1,682		—		1,691		138		6		132
Total	18,888		26,768		—		31,042		2,447		787		1,660
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	517	$	517	$	13	$	358	$	81	$	—	$	81
Non-owner occupied	—		—		—		—		—		—		—
Construction and land development	846		846		130		483		48		—		48
Multi-family	—		—		34		287		—		—		—
1-4 family	989		989		337		1,017		61		—		61
Commercial and industrial	419		419		276		384		24		—		24
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	199		199		79		208		20		—		20
Other	1		1		1		1		—		—		—
Total	2,989		2,989		888		2,751		235		—		235
Total:
Commercial real estate:
Owner occupied	$	2,972	$	4,186	$	13	$	5,535	$	531	$	200	$	331
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	7,229		10,773		130		8,457		398		48		350
Multi-family	2,009		2,246		34		3,362		362		—		362
1-4 family	3,617		4,005		337		4,177		338		108		230
Commercial and industrial	1,558		1,739		276		4,204		408		424		(16		)
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	1,002		1,026		79		1,092		82		1		81
Other	1,223		1,683		1		1,692		138		6		132
Grand total	$	21,877	$	29,757	$	888	$	33,793	$	2,682	$	787	$	1,895

(1) Average recorded investment is calculated primarily using daily average balances.

Allowance for Credit Losses on Financing Receivables

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Nine Months Ended September 30, 2012
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,554		$	3,977		$	384		$	240		$	14,155
Charge-offs	(467		)	(2,668		)	(107		)	—			(3,242		)
Recoveries	291			65			38			—			394
Provision	572			2,764			83			(20		)	3,399
Ending balance	$	9,950		$	4,138		$	398		$	220		$	14,706
Ending balance: individually evaluated for impairment	$	667		$	205		$	94		$	—		$	966
Ending balance: collectively evaluated for impairment	$	9,283		$	3,933		$	304		$	220		$	13,740
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	590,711		$	255,202		$	16,459		$	16,462		$	878,834
Ending balance: individually evaluated for impairment	$	10,235		$	1,593		$	1,915		$	—		$	13,743
Ending balance: collectively evaluated for impairment	$	580,476		$	253,609		$	14,544		$	16,462		$	865,091
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.68		%	1.62		%	2.42		%	1.34		%	1.67		%

	As of and for the Nine Months Ended September 30, 2011
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	11,267		$	4,277		$	482		$	245		$	16,271
Charge-offs	(5,444		)	(471		)	(325		)	—			(6,240		)
Recoveries	277			432			69			19			797
Provision	3,488			(338		)	187			(24		)	3,313
Ending balance	$	9,588		$	3,900		$	413		$	240		$	14,141
Ending balance: individually evaluated for impairment	$	757		$	252		$	82		$	25		$	1,116
Ending balance: collectively evaluated for impairment	$	8,831		$	3,648		$	331		$	215		$	13,025
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	602,869		$	224,257		$	18,012		$	16,324		$	861,462
Ending balance: individually evaluated for impairment	$	22,900		$	1,714		$	2,490		$	25		$	27,129
Ending balance: collectively evaluated for impairment	$	579,969		$	222,543		$	15,522		$	16,299		$	834,333
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.59		%	1.74		%	2.29		%	1.47		%	1.64		%

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Securities (Tables)

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities

The amortized cost and estimated fair value of securities available-for-sale were as follows:

	As of September 30, 2012
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	16,177	$	61	$	(1	)	$	16,237
Municipal obligations	9,954		133		(31		)	10,056
Collateralized mortgage obligations - government issued	159,846		4,114		(74		)	163,886
Collateralized mortgage obligations - government-sponsored enterprises	12,563		74		(11		)	12,626
	$	198,540	$	4,382	$	(117	)	$	202,805

	As of December 31, 2011
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Municipal obligations	$	2,736	$	95	$	—		$	2,831
Collateralized mortgage obligations - government issued	161,443		4,022		(64		)	165,401
Collateralized mortgage obligations - government-sponsored enterprises	2,169		—		(15		)	2,154
	$	166,348	$	4,117	$	(79	)	$	170,386

Investments Classified by Contractual Maturity

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2012 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(In Thousands)
Due in one year or less	$	83	$	83
Due in one year through five years	13,131		13,180
Due in five through ten years	16,474		16,764
Due in over ten years	168,852		172,778
	$	198,540	$	202,805

Schedule of Unrealized Loss on Investments

A summary of unrealized loss information for available-for-sale securities, categorized by security type follows:

	As of September 30, 2012
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	1,499	$	1	$	—	$	—	$	1,499	$	1
Municipal obligations	3,601		31		—		—		3,601		31
Collateralized mortgage obligations - government issued	15,717		74		—		—		15,717		74
Collateralized mortgage obligations - government-sponsored enterprises	3,652		11		—		—		3,652		11
	$	24,469	$	117	$	—	$	—	$	24,469	$	117

	As of December 31, 2011
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Collateralized mortgage obligations - government issued	$	16,336	$	64	$	—	$	—	$	16,336	$	64
Collateralized mortgage obligations - government-sponsored enterprises	2,076		15		—		—		2,076		15
	$	18,412	$	79	$	—	$	—	$	18,412	$	79

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Narrative Disclosures) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Debt Disclosure [Abstract]
Line of Credit - Unused Line Fee	$ 8	$ 7
Subordinated notes payable	39,000		39,000
Subordinated Borrowing [Line Items]
Proceeds from issuance of subordinated notes payable	6,215	0
Issuance of Debt
Subordinated Borrowing [Line Items]
Proceeds from issuance of subordinated notes payable	$ 6,200
Newly issued subordinated debt, due date	Jan. 15, 2022
Newly issued subordinated debt, interest rate	7.50%

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Loan Composition) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Receivables [Abstract]
Commercial real estate - owner occupied	$ 153,534	$ 150,528
Commercial real estate - non-owner occupied	295,852	304,597
Construction and land development	50,158	38,124
Multi-family	57,565	43,905
1-4 family	33,602	43,513
Total commercial real estate	590,711	580,667
Commercial and industrial	255,202	237,099
Direct financing leases, net	16,462	17,128
Home equity and second mortgages	4,670	4,970
Other	11,789	11,682
Total consumer and other	16,459	16,652
Total gross loans and leases receivable	878,834	851,546	861,462
Allowance for loan and lease losses	14,706	14,155
Deferred loan fees	642	704
Loans and leases receivable, net	$ 863,486	$ 836,687

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Deposits (Tables)

9 Months Ended

Sep. 30, 2012

Deposits [Abstract]

Deposits

Deposits consisted of the following:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	140,831	$	131,761	—	%	$	132,230	$	112,899	—	%
Interest-bearing transaction accounts	38,099		34,263		0.30		23,004		25,389		0.28
Money market accounts	409,823		384,488		0.81		364,082		300,652		0.99
Certificates of deposit	81,777		84,907		1.20		85,331		80,323		1.38
Brokered certificates of deposit	390,728		409,393		2.28		446,665		486,594		2.66
Total deposits	$	1,061,258	$	1,044,812	1.29		$	1,051,312	$	1,005,857	1.70

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Tables)

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Schedule of Debt

The composition of borrowed funds at September 30, 2012 and December 31, 2011 was as follows:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	148	0.81	%	$	—	$	252	0.90	%
FHLB advances	472		2,520		1.32		482		656		5.83
Line of credit	10		2,223		4.04		810		2,236		4.06
Subordinated notes payable	39,000		39,000		6.99		39,000		39,000		6.12
Junior subordinated notes	10,315		10,315		10.79		10,315		10,315		10.78
	$	49,797	$	54,206	7.33		$	50,607	$	52,459	6.94
Short-term borrowings	$	482					$	810
Long-term borrowings	49,315						49,797
	$	49,797					$	50,607

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities
Net income	$ 6,397	$ 6,040
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes, net	(257)	1,124
Provision for loan and lease losses	3,399	3,313
Depreciation, amortization and accretion, net	2,315	1,638
Share-based compensation	403	439
Increase in cash surrender value of bank-owned life insurance	(524)	(504)
Origination of loans for sale	(1,548)	(1,283)
Sale of loans originated for sale	1,695	1,288
Gain on sale of loans originated for sale	(147)	(5)
Net loss on foreclosed properties	228	158
Excess tax benefit from share-based compensation	(48)	(2)
Decrease in accrued interest receivable and other assets	793	1,306
Decrease in accrued interest payable and other liabilities	(323)	(696)
Net cash provided by operating activities	12,383	12,816
Investing activities
Proceeds from maturities of available-for-sale securities	41,497	31,299
Purchases of available-for-sale securities	(75,742)	(46,711)
Proceeds from sale of foreclosed properties	1,486	1,766
Payments to priority lien holders of foreclosed properties	268	0
Net (increase) decrease in loans and leases	(31,595)	8,741
Investment in Aldine Capital Fund, L.P.	0	(210)
Distributions from Aldine Capital Fund, L.P.	557	0
Proceeds from sale of FHLB Stock	1,223	0
Purchases of leasehold improvements and equipment, net	(441)	(274)
Premium payment on bank owned life insurance policies	0	(8)
Proceeds from surrender of bank owned life insurance policies	116	0
Net cash used in investing activities	(63,167)	(5,397)
Financing activities
Net decrease in deposits	9,946	24,830
Repayment of FHLB advances	(10)	(2,009)
Net decrease in short-term borrowed funds	(800)	0
Proceeds from issuance of subordinated notes payable	6,215	0
Repayment of subordinated notes payable	(6,215)	0
Excess tax benefit from share-based compensation	48	2
Cash dividends paid	(552)	(545)
Purchase of treasury stock	(99)	(55)
Net cash provided by financing activities	8,533	22,223
Net (decrease) increase in cash and cash equivalents	(42,251)	29,642
Cash and cash equivalents at the beginning of the period	130,093	50,819
Cash and cash equivalents at the end of the period	87,842	80,461
Supplementary cash flow information
Interest paid on deposits and borrowings	13,149	16,137
Income taxes paid	3,874	2,950
Transfer to foreclosed properties	1,397	2,218
Reissuance of treasury stock	$ 77	$ 0

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Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	10,056	$	—	$	10,056
U.S. Government agency obligations - government-sponsored enterprises	—		16,237		—		16,237
Collateralized mortgage obligations - government issued	—		163,886		—		163,886
Collateralized mortgage obligations - government-sponsored enterprises	—		12,626		—		12,626
Interest rate swaps	—		3,011		—		3,011
Liabilities:
Interest rate swaps	$	—	$	3,011	$	—	$	3,011

	Fair Value Measurements Using
December 31, 2011	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	2,831	$	—	$	2,831
U.S. Government agency obligations - government-sponsored enterprises	—		—		—		—
Collateralized mortgage obligations - government issued	—		165,401		—		165,401
Collateralized mortgage obligations - government-sponsored enterprises	—		2,154		—		2,154
Interest rate swaps	—		3,434		—		3,434
Liabilities:
Interest rate swaps	$	—	$	3,434	$	—	$	3,434

Fair Value Measurements, Nonrecurring Basis

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Nine Months Ended September 30, 2012
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	September 30, 2012		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,813	$	—	$	8,415	$	398	$	—
Foreclosed properties	2,187		252		1,935		—		(176		)

			As of and for the Year Ended December 31, 2011
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2011		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	12,787	$	—	$	12,787	$	—	$	—
Foreclosed properties	2,236		138		1,989		109		(621		)

Foreclosed Properties

The activity of the Corporation's foreclosed properties is summarized as follows:

	As of and for the Nine Months Ended September 30, 2012			As of and for the Year Ended December 31, 2011
	(In Thousands)
Foreclosed properties at the beginning of the period	$	2,236		$	1,750
Loans transferred to foreclosed properties, at lower of cost or fair value	1,397			3,119
Payments to priority lien holders of foreclosed properties	268			—
Proceeds from sale of foreclosed properties	(1,486		)	(2,213		)
Net (loss) gain on sale of foreclosed properties	(52		)	201
Impairment valuation	(176		)	(621		)
Foreclosed properties at the end of the period	$	2,187		$	2,236

Fair Value, by Balance Sheet Grouping

The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	September 30, 2012										December 31, 2011
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	87,842	$	87,842	$	84,342	$	—	$	3,500	$	130,093	$	130,093
Securities available-for-sale	202,805		202,805		—		202,805		—		170,386		170,386
Loans and lease receivables, net	863,486		882,020		—		8,415		873,605		836,687		840,552
Federal Home Loan Bank stock	1,144		1,144		—		—		1,144		2,367		2,367
Cash surrender value of life insurance	18,068		18,068		18,068		—		—		17,660		17,660
Accrued interest receivable	3,506		3,506		3,506		—		—		3,525		3,525
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Financial liabilities:
Deposits	$	1,061,258	$	1,076,019	$	588,753	$	487,266	$	—	$	1,051,312	$	1,068,845
Federal Home Loan Bank and other borrowings	39,482		39,746		—		39,746		—		40,292		40,899
Junior subordinated notes	10,315		7,020		—		—		7,020		10,315		6,917
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Accrued interest payable	2,635		2,635		2,635		—		—		2,625		2,625
Off balance sheet items:
Standby letters of credit	112		112		—		—		112		81		81
Commitments to extend credit	—		*		*		*		*		—		*

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Securities (Available-for-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities
Amortized cost	$ 198,540	$ 166,348
Gross unrealized holding gains	4,382	4,117
Gross unrealized holding losses	(117)	(79)
Estimated fair value	202,805	170,386
U.S. Government agency obligations - government-sponsored enterprises
Schedule of Available-for-sale Securities
Amortized cost	16,177
Gross unrealized holding gains	61
Gross unrealized holding losses	(1)
Estimated fair value	16,237
Municipal obligations
Schedule of Available-for-sale Securities
Amortized cost	9,954	2,736
Gross unrealized holding gains	133	95
Gross unrealized holding losses	(31)	0
Estimated fair value	10,056	2,831
Collateralized mortgage obligations - government issued
Schedule of Available-for-sale Securities
Amortized cost	159,846	161,443
Gross unrealized holding gains	4,114	4,022
Gross unrealized holding losses	(74)	(64)
Estimated fair value	163,886	165,401
Collateralized mortgage obligations - government-sponsored enterprises
Schedule of Available-for-sale Securities
Amortized cost	12,563	2,169
Gross unrealized holding gains	74	0
Gross unrealized holding losses	(11)	(15)
Estimated fair value	$ 12,626	$ 2,154

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Narrative Disclosures) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Receivables [Abstract]
Loans And Leases Transferred To Third Parties Total Principal Amount	$ 20,100,000	$ 10,900,000	$ 54,800,000	$ 21,000,000
Total loans and leases transferred to third parties that qualify for sale accounting	20,100,000	10,900,000	54,800,000	21,000,000
Total amount of outstanding loans transferred to third parties as loan participations	44,700,000		44,700,000		49,200,000
Total amount of loan participations remaining on the Corporation’s balance sheet	63,900,000		63,900,000		74,600,000
Loans in the participation sold portfolio, considered impaired	3,300,000		3,300,000		3,400,000
Charge-offs to specific credits within the retained portion of the participation sold portfolio	2,700,000		2,700,000
Loan participations purchased on the Corporation's balance sheet	678,000		678,000		689,000
Loans and leases identified as Substandard	24,000,000		24,000,000		42,600,000
Loans and leases identified as Special Mention	3,900,000		3,900,000		0
Loans and leases identified as Doubtful	0		0		0
Loans and leases identified as Loss	0		0		0
Impaired troubled debt restructurings	10,800,000		10,800,000		13,300,000
Unfunded commitments, troubled debt restructurings	0		0
Loans and Leases Receivable, Difference between Recorded Investment and Unpaid Principal Balance	7,300,000		7,300,000		7,900,000
Performing troubled debt restructurings	$ 897,000		$ 897,000		$ 111,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 17,494	$ 16,707
Short-term investments	70,348	113,386
Cash and cash equivalents	87,842	130,093
Securities available-for-sale, at fair value	202,805	170,386
Loans and leases receivable, net of allowance for loan and lease losses of $14,706 and $14,155, respectively	863,486	836,687
Leasehold improvements and equipment, net	965	999
Foreclosed properties	2,187	2,236
Cash surrender value of bank-owned life insurance	18,068	17,660
Investment in Federal Home Loan Bank stock, at cost	1,144	2,367
Accrued interest receivable and other assets	15,638	16,737
Total assets	1,192,135	1,177,165
Liabilities and Stockholders' Equity
Deposits	1,061,258	1,051,312
Federal Home Loan Bank and other borrowings	39,482	40,292
Junior subordinated notes	10,315	10,315
Accrued interest payable and other liabilities	10,531	11,032
Total liabilities	1,121,586	1,112,951
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 2,500,000 shares authorized, none issued or outstanding	0	0
Common stock, $0.01 par value, 25,000,000 shares authorized, 2,745,750 and 2,714,985 shares issued, 2,656,352 and 2,625,569 shares outstanding at 2012 and 2011, respectively	27	27
Additional paid-in capital	26,217	25,843
Retained earnings	43,343	37,501
Accumulated other comprehensive income	2,632	2,491
Treasury stock (89,648 and 89,416 shares at 2012 and 2011, respectively), at cost	(1,670)	(1,648)
Total stockholders' equity	70,549	64,214
Total liabilities and stockholders' equity	$ 1,192,135	$ 1,177,165

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Loans by Credit Quality Indicator) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Financing Receivable, Recorded Investment
Commercial real estate - owner occupied	$ 153,534	$ 150,528
Commercial real estate - non-owner occupied	295,852	304,597
Construction and land development	50,158	38,124
Multi-family	57,565	43,905
1-4 family	33,602	43,513
Total commercial real estate	590,711	580,667
Commercial and industrial	255,202	237,099
Direct financing leases, net	16,462	17,128
Home equity and second mortgages	4,670	4,970
Other	11,789	11,682
Total consumer and other	16,459	16,652
Total gross loans and leases receivable	878,834	851,546	861,462
Category as a % of total portfolio	100.00%	100.00%
Category I
Financing Receivable, Recorded Investment
Commercial real estate - owner occupied	128,661	117,065
Commercial real estate - non-owner occupied	228,493	236,868
Construction and land development	33,845	20,660
Multi-family	49,875	34,162
1-4 family	18,331	23,266
Total commercial real estate	459,205	432,021
Commercial and industrial	231,407	198,018
Direct financing leases, net	11,933	11,398
Home equity and second mortgages	3,531	3,524
Other	10,665	10,459
Total consumer and other	14,196	13,983
Total gross loans and leases receivable	716,741	655,420
Category as a % of total portfolio	81.56%	76.97%
Category II
Financing Receivable, Recorded Investment
Commercial real estate - owner occupied	6,778	16,488
Commercial real estate - non-owner occupied	40,038	34,823
Construction and land development	1,485	5,367
Multi-family	6,848	6,930
1-4 family	4,510	11,637
Total commercial real estate	59,659	75,245
Commercial and industrial	7,866	25,070
Direct financing leases, net	2,862	5,026
Home equity and second mortgages	167	188
Other	0	0
Total consumer and other	167	188
Total gross loans and leases receivable	70,554	105,529
Category as a % of total portfolio	8.03%	12.39%
Category III
Financing Receivable, Recorded Investment
Commercial real estate - owner occupied	17,166	14,004
Commercial real estate - non-owner occupied	26,490	30,657
Construction and land development	9,089	4,867
Multi-family	793	804
1-4 family	8,074	4,993
Total commercial real estate	61,612	55,325
Commercial and industrial	14,336	12,453
Direct financing leases, net	1,667	686
Home equity and second mortgages	181	256
Other	0	0
Total consumer and other	181	256
Total gross loans and leases receivable	77,796	68,720
Category as a % of total portfolio	8.85%	8.07%
Category IV
Financing Receivable, Recorded Investment
Commercial real estate - owner occupied	929	2,971
Commercial real estate - non-owner occupied	831	2,249
Construction and land development	5,739	7,230
Multi-family	49	2,009
1-4 family	2,687	3,617
Total commercial real estate	10,235	18,076
Commercial and industrial	1,593	1,558
Direct financing leases, net	0	18
Home equity and second mortgages	791	1,002
Other	1,124	1,223
Total consumer and other	1,915	2,225
Total gross loans and leases receivable	$ 13,743	$ 21,877
Category as a % of total portfolio	1.56%	2.57%

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income	Treasury stock
Beginning balance at Dec. 31, 2010	$ 55,335	$ 27	$ 25,253	$ 29,808	$ 1,792	$ (1,545)
Net income	6,040			6,040
Other comprehensive income	538				538
Share-based compensation - restricted shares	439		439
Cash dividends ($0.21 per share)	(547)			(547)
Treasury stock purchased (4,390 and 3,181 shares for 2012 and 2011, respectively)	(55)					(55)
Ending balance at Sep. 30, 2011	61,750	27	25,692	35,301	2,330	(1,600)
Beginning balance at Dec. 31, 2011	64,214	27	25,843	37,501	2,491	(1,648)
Net income	6,397			6,397
Other comprehensive income	141				141
Share-based compensation - restricted shares	403		403
Share-based compensation - tax benefits	48		48
Cash dividends ($0.21 per share)	(555)			(555)
Treasury stock purchased (4,390 and 3,181 shares for 2012 and 2011, respectively)	(99)					(99)
Treasury stock re-issued (4,158 shares)	0		(77)			77
Ending balance at Sep. 30, 2012	$ 70,549	$ 27	$ 26,217	$ 43,343	$ 2,632	$ (1,670)

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Fair Value Disclosures (Foreclosed Properties) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Fair Value Disclosures [Abstract]
Foreclosed properties, beginning	$ 2,236	$ 1,750	$ 1,750
Loans transferred to foreclosed properties, at lower of cost or fair value	1,397	2,218	3,119
Payments to priority lien holders of foreclosed properties	268	0	0
Proceeds from sale of foreclosed properties	(1,486)	(1,766)	(2,213)
Net (loss) gain on sale of foreclosed properties	(52)		201
Impairment valuation	(176)		(621)
Foreclosed properties, ending	$ 2,187		$ 2,236

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Basic earnings per common share
Net income	$ 2,622	$ 2,179	$ 6,397	$ 6,040
Less: earnings allocated to participating securities	101	83	239	230
Basic earnings allocated to common shareholders	2,521	2,096	6,158	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507	2,511,767	2,533,436	2,502,991
Basic earnings per common share	$ 0.99	$ 0.83	$ 2.43	$ 2.32
Diluted earnings per common share
Earnings allocated to common shareholders	2,521	2,096	6,158	5,810
Reallocation of undistributed earnings	0	(1)	0	0
Diluted earnings allocated to common shareholders	$ 2,521	$ 2,095	$ 6,158	$ 5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507	2,511,767	2,533,436	2,502,991
Dilutive effect of share-based awards	4,978	50	1,752	0
Weighted-average diluted common shares outstanding, excluding participating securities	2,544,485	2,511,817	2,535,188	2,502,991
Diluted earnings per common share	$ 0.99	$ 0.83	$ 2.43	$ 2.32

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Regulatory Capital (Narrative Disclosures) (Details)	9 Months Ended
	Sep. 30, 2012
Regulatory Capital Requirements [Abstract]
Description of Possible Effects of Noncompliance or Less than Adequately Capitalized	Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance sheet items as calculated under regulatory practices.

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Policies)

9 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Loans and Leases Receivable, Allowance for Loan Losses Policy

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

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Earnings Per Common Share (Narrative Disclosures) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share [Abstract]
Average anti-dilutive employee share based awards	54,000	146,979	120,502	145,526

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Fair Value Disclosures (Policies)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments, Policy

The Corporation determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included with Level 1 that are observable for the asset or liability either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Foreclosed Assets Policy

Certain non-financial assets subject to measurement at fair value on a non-recurring basis included foreclosed properties. Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically an appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property. As of September 30, 2012, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties

Fair Value Measurement, Policy

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of September 30, 2012, the Corporation held $3.5 million of commercial paper. There was no commercial paper outstanding as of December 31, 2011. The fair value of commercial paper is considered a Level 3 input given the underlying potential for credit risks associated with the issuing companies ability to repay the investment at the stated maturity. The inputs to evaluate the credit risk of the commercial paper issuer are based upon unobservable inputs.

Securities: The fair value measurements of investment securities are determined by a third party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. In addition, the Corporation reviews the third-party valuation methodology on a periodic basis. Any significant differences in valuation are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit value of a portfolio of loans.

Federal Home Loan Bank Stock: The carrying amount of FHLB stock equals its fair value because the shares may be redeemed by the FHLB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and were not considered in the estimates.

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Common stock, cash dividends, per share, declared	$ 0.21	$ 0.21
Treasury stock shares purchased	4,390	3,181
Treasury stock shares re-issued	4,158
Additional paid-in capital
Treasury stock shares re-issued	4,158
Retained earnings
Common stock, cash dividends, per share, declared	$ 0.21	$ 0.21
Treasury stock
Treasury stock shares purchased	4,390	3,181
Treasury stock shares re-issued	4,158

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Consoildated Balance Sheets - Parenthetical [Abstract]
Allowance for loan and lease losses	$ 14,706	$ 14,155
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,500,000	2,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	2,745,750	2,714,985
Common stock, shares outstanding	2,656,102	2,625,569
Treasury stock, shares	89,648	89,416

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Corporation offers interest rate swap products directly to qualified commercial borrowers. The Corporation economically hedges client derivative transactions by entering into offsetting interest rate swap contracts executed with a third party. Derivative transactions executed as part of this program are not designated as accounting hedge relationships and are marked-to-market through earnings each period. The derivative contracts have mirror-image terms, which results in the positions’ changes in fair value primarily offsetting through earnings each period. The credit risk and risk of non-performance embedded in the fair value calculations is different between the dealer counterparties and the commercial borrowers which may result in a difference in the changes in the fair value of the mirror-image swaps. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the counterparty’s risk in the fair value measurements. When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considered the impact of netting and any applicable credit enhancements such as collateral postings, thresholds and guarantees.

At September 30, 2012, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was $49.0 million. The Corporation receives fixed rates and pays floating rates based upon LIBOR on the swaps with commercial borrowers. The aggregate amortizing notional value of interest rate swaps with dealer counterparties was also $49.0 million. The Corporation pays fixed rates and receives floating rates based upon LIBOR on the swaps with dealer counterparties. These interest rate swaps mature in February, 2013 through June, 2022. The commercial borrower swaps were reported on the Corporation’s balance sheet as a derivative asset of $3.0 million and were included in accrued interest receivable and other assets. Dealer counterparty swaps were reported on the Corporation’s balance sheet as a net derivative liability of $3.0 million due to master netting and settlement contracts with dealer counterparties and were included in accrued interest payable and other liabilities as of September 30, 2012.

The table below provides information about the location and fair value of the Corporation’s derivative instruments as of September 30, 2012 and December 31, 2011.

	Interest Rate Swap Contracts
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(In Thousands)
Derivatives not designated as hedging instruments
September 30, 2012	Other assets	$	3,011	Other liabilities	$	3,011
December 31, 2011	Other assets	$	3,434	Other liabilities	$	3,434

No derivative instruments held by the Corporation for the nine months ended September 30, 2012 were considered hedging instruments. All changes in the fair value of these instruments are recorded in other non-interest income. Given the mirror-image terms of the outstanding derivative portfolio the change in fair value for the nine months ended September 30, 2012 and 2011 had no net impact to the unaudited consolidated income statement.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Oct. 19, 2012	Jun. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	First Business Financial Services, Inc.
Entity Central Index Key	0001521951
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 38.3
Entity Common Stock, Shares Outstanding		2,656,102

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Regulatory Capital

9 Months Ended

Sep. 30, 2012

Regulatory Capital Requirements [Abstract]

Regulatory Capital

Regulatory Capital

The Corporation and the Banks are subject to various regulatory capital requirements administered by Federal and State of Wisconsin banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions on the part of regulators, that if undertaken, could have a direct material effect on the Banks’ assets, liabilities and certain off-balance sheet items as calculated under regulatory practices. The Corporation’s and the Banks’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Corporation has updated its Capital and Liquidity Action Plan (the “Plan”), which is designed to help ensure appropriate capital adequacy, to plan for future capital needs and to ensure that the Corporation serves as a source of financial strength to the Banks. The Corporation’s and the Banks’ Boards of Directors and management teams adhere to the appropriate regulatory guidelines on decisions which affect their capital position, including but not limited to, decisions relating to the payment of dividends and increasing indebtedness.

As a bank holding company, the Corporation’s ability to pay dividends is affected by the policies and enforcement powers of the Federal Reserve. Federal Reserve guidance urges companies to strongly consider eliminating, deferring or significantly reducing dividends if: (i) net income available to common shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividend; (ii) the prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios. Management intends, when appropriate under regulatory guidelines, to consult with the Federal Reserve Bank of Chicago and provide it with information on the Corporation’s then-current and prospective earnings and capital position in advance of declaring any cash dividends.

The Banks are also subject to certain legal, regulatory and other restrictions on their ability to pay dividends to the Corporation. As a bank holding company, the payment of dividends by the Banks to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments. Future dividend decisions by the Banks and the Corporation will continue to be subject to compliance with various legal, regulatory and other restrictions as defined from time to time.

Qualitative measures established by regulation to ensure capital adequacy require the Corporation and the Banks to maintain minimum amounts and ratios of Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Tier 1 capital generally consists of stockholders’ equity plus certain qualifying debentures and other specified items less intangible assets such as goodwill. Risk-based capital requirements presently address credit risk related to both recorded and off-balance-sheet commitments and obligations. Management believes, as of September 30, 2012, that the Corporation and the Banks met all applicable capital adequacy requirements.

As of September 30, 2012, the most recent notification from the Federal Deposit Insurance Corporation and the State of Wisconsin Department of Financial Institutions categorized the Banks as well capitalized under the regulatory framework for prompt corrective action.

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at September 30, 2012 and December 31, 2011, respectively:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of September 30, 2012
Total capital
(to risk-weighted assets)
Consolidated	$	127,871	13.33	%	$	76,746	8.00	%	N/A		N/A
First Business Bank	111,665		13.06		68,417		8.00		$	85,521	10.00	%
First Business Bank — Milwaukee	15,635		15.12		8,273		8.00		10,341		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	77,917	8.12	%	$	38,373	4.00	%	N/A		N/A
First Business Bank	100,944		11.80		34,209		4.00		$	51,313	6.00	%
First Business Bank — Milwaukee	14,339		13.87		4,136		4.00		6,205		6.00
Tier 1 capital
(to average assets)
Consolidated	$	77,917	6.58	%	$	47,374	4.00	%	N/A		N/A
First Business Bank	100,944		10.30		39,197		4.00		$	48,997	5.00	%
First Business Bank — Milwaukee	14,339		6.66		8,612		4.00		10,765		5.00

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2011
Total capital
(to risk-weighted assets)
Consolidated	$	118,895	13.11	%	$	72,559	8.00	%	N/A		N/A
First Business Bank	108,860		13.39		65,058		8.00		$	81,322	10.00	%
First Business Bank — Milwaukee	15,074		16.11		7,484		8.00		9,355		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	71,723	7.91		$	36,279	4.00	%	N/A		N/A
First Business Bank	98,666		12.13		32,529		4.00		$	48,793	6.00	%
First Business Bank — Milwaukee	13,898		14.86		3,742		4.00		5,613		6.00
Tier 1 capital
(to average assets)
Consolidated	$	71,723	6.22		$	46,152	4.00	%	N/A		N/A
First Business Bank	98,666		9.98		39,556		4.00		$	49,445	5.00	%
First Business Bank — Milwaukee	13,898		7.95		6,993		4.00		8,741		5.00

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Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest income:
Loans and leases	$ 13,095	$ 13,047	$ 38,859	$ 39,016
Securities income	890	1,048	2,575	3,272
Short-term investments	47	24	174	76
Total interest income	14,032	14,119	41,608	42,364
Interest expense:
Deposits	3,102	4,107	10,178	13,107
Notes payable and other borrowings	735	628	2,145	1,868
Junior subordinated notes	280	280	835	832
Total interest expense	4,117	5,015	13,158	15,807
Net interest income	9,915	9,104	28,450	26,557
Provision for loan and lease losses	850	435	3,399	3,313
Net interest income after provision for loan and lease losses	9,065	8,669	25,051	23,244
Non-interest income:
Trust and investment services fee income	736	622	2,178	1,918
Service charges on deposits	532	425	1,504	1,215
Loan fees	502	380	1,245	1,079
Increase in cash surrender value of bank-owned life insurance	178	170	524	504
Credit, merchant and debit card fees	50	53	169	163
Other	251	78	383	266
Total non-interest income	2,249	1,728	6,003	5,145
Non-interest expense:
Compensation	4,224	3,840	12,455	11,413
Occupancy	294	351	958	1,050
Professional fees	400	369	1,279	1,141
Data processing	326	311	993	945
Marketing	300	295	845	823
Equipment	141	125	375	344
FDIC insurance	426	571	1,546	1,901
Collateral liquidation costs	264	155	451	574
Net (gain) loss on foreclosed properties	(14)	29	228	158
Other	890	704	2,085	1,799
Total non-interest expense	7,251	6,750	21,215	20,148
Income before income tax expense	4,063	3,647	9,839	8,241
Income tax expense	1,441	1,468	3,442	2,201
Net income	$ 2,622	$ 2,179	$ 6,397	$ 6,040
Earnings per common share:
Basic	$ 0.99	$ 0.83	$ 2.43	$ 2.32
Diluted	$ 0.99	$ 0.83	$ 2.43	$ 2.32
Dividends declared per share	$ 0.07	$ 0.07	$ 0.21	$ 0.21

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Securities

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost and estimated fair value of securities available-for-sale were as follows:

	As of September 30, 2012
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	16,177	$	61	$	(1	)	$	16,237
Municipal obligations	9,954		133		(31		)	10,056
Collateralized mortgage obligations - government issued	159,846		4,114		(74		)	163,886
Collateralized mortgage obligations - government-sponsored enterprises	12,563		74		(11		)	12,626
	$	198,540	$	4,382	$	(117	)	$	202,805

	As of December 31, 2011
	Amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Estimated fair value
	(In Thousands)
Municipal obligations	$	2,736	$	95	$	—		$	2,831
Collateralized mortgage obligations - government issued	161,443		4,022		(64		)	165,401
Collateralized mortgage obligations - government-sponsored enterprises	2,169		—		(15		)	2,154
	$	166,348	$	4,117	$	(79	)	$	170,386

U.S. Government agency obligations - government-sponsored enterprises represent securities issued by the Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA"). Collateralized mortgage obligations - government issued represent securities guaranteed by the Government National Mortgage Association ("GNMA"). Collateralized mortgage obligations — government-sponsored enterprises include securities guaranteed by FHLMC and the FNMA. Municipal obligations include securities issued by various municipalities located primarily within the State of Wisconsin and are tax-exempt general obligation bonds. There were no sales of securities available for sale in the three and nine month periods ended September 30, 2012 and 2011.

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2012 are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations without call or prepayment penalties.

	Amortized Cost		Estimated Fair Value
	(In Thousands)
Due in one year or less	$	83	$	83
Due in one year through five years	13,131		13,180
Due in five through ten years	16,474		16,764
Due in over ten years	168,852		172,778
	$	198,540	$	202,805

The table below shows the Corporation’s gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual investments were in a continuous unrealized loss position at September 30, 2012 and December 31, 2011. At September 30, 2012 and December 31, 2011, the Corporation had 32 securities and 9 securities that were in an unrealized loss position, respectively. Such securities have not experienced credit rating downgrades; however, they have primarily declined in value due to the current interest rate environment. At September 30, 2012, the Corporation held no securities that had been in a continuous loss position for twelve months or greater.

The Corporation also has not specifically identified securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. It is expected that the Corporation will recover the entire amortized cost basis of each security based upon an evaluation of the present value of the expected future cash flows. Accordingly, no other than temporary impairment was recorded in the consolidated results of operations for the nine months ended September 30, 2012 and 2011.

A summary of unrealized loss information for available-for-sale securities, categorized by security type follows:

	As of September 30, 2012
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
U.S. Government agency obligations - government-sponsored enterprises	$	1,499	$	1	$	—	$	—	$	1,499	$	1
Municipal obligations	3,601		31		—		—		3,601		31
Collateralized mortgage obligations - government issued	15,717		74		—		—		15,717		74
Collateralized mortgage obligations - government-sponsored enterprises	3,652		11		—		—		3,652		11
	$	24,469	$	117	$	—	$	—	$	24,469	$	117

	As of December 31, 2011
	Less than 12 months				12 months or longer				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(In Thousands)
Collateralized mortgage obligations - government issued	$	16,336	$	64	$	—	$	—	$	16,336	$	64
Collateralized mortgage obligations - government-sponsored enterprises	2,076		15		—		—		2,076		15
	$	18,412	$	79	$	—	$	—	$	18,412	$	79

At September 30, 2012 and December 31, 2011, securities with a fair value of $22.9 million and $19.6 million, respectively, were pledged to secure interest rate swap contracts, outstanding Federal Home Loan Bank ("FHLB") advances and client letters of credit. Securities pledged also provide for future availability for additional advances from the FHLB.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of FBFS and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (“Stock Options”), restricted stock, restricted stock units, dividend equivalent unit, and any other type of award permitted by the Plan. Shares previously available for grant under the 2006 Equity Incentive Plan (the "2006 Plan") were transferred to the 2012 Equity Incentive Plan. As of September 30, 2012, 214,634 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan. The 2006 Plan was terminated on May 14, 2012.

Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the plans are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options were granted since the Corporation became a reporting company under the Securities Exchange Act of 1934 and no Stock Options were modified, repurchased or cancelled. Therefore, no stock-based compensation related to Stock Options was recognized in the consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. As of September 30, 2012, all Stock Options granted and not previously forfeited have vested.

Stock Option activity for the year ended December 31, 2011 and nine months ended September 30, 2012 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2010	138,766		$	22.09	2.75
Granted	—		—
Exercised	—		—
Expired	(13,732	)	19.00
Forfeited	—		—
Outstanding at December 31, 2011	125,034		$	22.43	1.75
Exercisable at December 31, 2011	125,034		$	22.43	1.75
Outstanding as of December 31, 2011	125,034		$	22.43	1.75
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	—		—
Outstanding at September 30, 2012	125,034		$	22.43	1.00
Exercisable at September 30, 2012	125,034		$	22.43	1.00

Restricted Stock

Under the Plan, the Corporation may grant restricted shares to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted shares are subject to forfeiture, the participant may exercise full voting rights and will receive all dividends and other distributions paid with respect to the restricted shares. The restricted shares granted under the Plan are subject to graded vesting. Compensation expense is recognized over the requisite service period of four years for the entire award on a straight-line basis. Upon vesting of restricted share awards, the benefit of tax deductions in excess of recognized compensation expense is recognized as a financing cash flow activity.

Restricted share activity for the year ended December 31, 2011 and the nine months ended September 30, 2012 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2010	101,182		$	14.93
Granted	34,625		17.05
Vested	(39,939	)	16.24
Forfeited	—		—
Nonvested balance as of December 31, 2011	95,868		15.15
Granted	34,923		23.02
Vested	(19,221	)	16.10
Forfeited	—		—
Nonvested balance as of September 30, 2012	111,570		$	17.45

As of September 30, 2012, $1.7 million of deferred compensation expense was included in additional paid-in capital in the consolidated balance sheet related to unvested restricted shares which the Corporation expects to recognize over approximately 3 years. As of September 30, 2012, all restricted shares that vested were delivered. For the nine months ended September 30, 2012 and 2011, share-based compensation expense included in the consolidated statements of income totaled $403,000 and $439,000, respectively.

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable (Policies)

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Debt Instrument, Covenant Compliance

As of September 30, 2012, the Corporation was in compliance with its debt covenants under its senior line of credit.

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Nature of Operations and Summary of Significant Accounting Policies Nature of Operations and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Principles of Consolidation. The unaudited consolidated financial statements include the accounts and results of the Corporation. In accordance with the provisions of Accounting Standards Codification (ASC) Topic 810, the Corporation’s ownership interest in FBFS Statutory Trust II (“Trust II”) has not been consolidated into the financial statements. All significant intercompany balances and transactions were eliminated in consolidation.

Basis of Presentation

Basis of Presentation. The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Corporation has not changed its significant accounting and reporting policies from those disclosed in the Corporation’s Form 10-K for the year ended December 31, 2011 except as described further below in this Note 1.

In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the unaudited consolidated financial statements were included in the unaudited consolidated financial statements. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2012. Certain amounts in prior periods may have been reclassified to conform to the current presentation. Subsequent events were evaluated through the issuance of the unaudited consolidated financial statements.

Recent Accounting Pronouncements

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FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

FHLB Advances, Other Borrowings and Junior Subordinated Notes Payable

The composition of borrowed funds at September 30, 2012 and December 31, 2011 was as follows:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Federal funds purchased	$	—	$	148	0.81	%	$	—	$	252	0.90	%
FHLB advances	472		2,520		1.32		482		656		5.83
Line of credit	10		2,223		4.04		810		2,236		4.06
Subordinated notes payable	39,000		39,000		6.99		39,000		39,000		6.12
Junior subordinated notes	10,315		10,315		10.79		10,315		10,315		10.78
	$	49,797	$	54,206	7.33		$	50,607	$	52,459	6.94
Short-term borrowings	$	482					$	810
Long-term borrowings	49,315						49,797
	$	49,797					$	50,607

As of September 30, 2012, the Corporation was in compliance with its debt covenants under its senior line of credit. The Corporation pays an unused line fee on its secured senior line of credit. For the nine months ended September 30, 2012 and 2011, the Corporation incurred unused line fee expense of $8,000 and $7,000, respectively. The unused line fee is recorded as a component of interest expense.

During the first quarter of 2012, the Corporation sold and issued approximately $6.2 million in aggregate principal amount of subordinated debentures to certain accredited investors. The debentures have been structured to qualify as Tier 2 capital, mature on January 15, 2022 and bear a fixed interest rate of 7.5% per year for their entire term. The Corporation may, at its option, redeem the debentures, in whole or part, at any time after the fifth anniversary of issuance. The Corporation used the net proceeds from the sale of the debentures to replace a portion of its existing $39.0 million of subordinated notes payable to diversify its sources of debt, obtain a longer term fixed rate instrument and enhance its regulatory capital position.

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Fair Value Disclosures (Fair Value by Balance Sheet Groupings) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Financial assets:
Cash and cash equivalents, carrying amount	$ 87,842	$ 130,093	$ 80,461	$ 50,819
Securities available-for-sale, carrying amount	202,805	170,386
Loans and leases receivable, net amount, carrying amount	863,486	836,687
Federal Home Loan Bank stock, carrying amount	1,144	2,367
Cash surrender value of life insurance, carrying amount	18,068	17,660
Accrued interest receivable, carrying amount	3,506	3,525
Cash and cash equivalents, fair value	87,842	130,093
Securities available-for-sale, fair value	202,805	170,386
Loans and lease receivables, net, fair value	882,020	840,552
Federal Home Loan Bank stock, fair value	1,144	2,367
Cash surrender value of life insurance, fair value	18,068	17,660
Accrued interest receivable, fair value	3,506	3,525
Interest rate swaps - assets	3,011	3,434
Financial liabilities:
Deposits, carrying amount	1,061,258	1,051,312
Federal Home Loan Bank and other borrowings, carrying amount	39,482	40,292
Junior subordinated notes, carrying amount	10,315	10,315
Accrued interest payable, carrying amount	2,635	2,625
Standby letters of credit, carrying amount	112	81
Commitments to extend credit, carrying amount	0	0
Deposits, fair value	1,076,019	1,068,845
Federal Home Loan Bank and other borrowings, fair value	39,746	40,899
Junior subordinated notes, fair value	7,020	6,917
Interest rate swaps - liabilities	3,011	3,434
Accrued interest payable, fair value	2,635	2,625
Standby letters of credit, fair value	112	81
Fair Value Measurements - Level 1 Inputs
Financial assets:
Cash and cash equivalents, fair value	84,342
Securities available-for-sale, fair value	0
Loans and lease receivables, net, fair value	0
Federal Home Loan Bank stock, fair value	0
Cash surrender value of life insurance, fair value	18,068
Accrued interest receivable, fair value	3,506
Interest rate swaps - assets	0
Financial liabilities:
Deposits, fair value	588,753
Federal Home Loan Bank and other borrowings, fair value	0
Junior subordinated notes, fair value	0
Interest rate swaps - liabilities	0
Accrued interest payable, fair value	2,635
Standby letters of credit, fair value	0
Fair Value Measurements - Level 2 Inputs
Financial assets:
Cash and cash equivalents, fair value	0
Securities available-for-sale, fair value	202,805
Loans and lease receivables, net, fair value	8,415
Federal Home Loan Bank stock, fair value	0
Cash surrender value of life insurance, fair value	0
Accrued interest receivable, fair value	0
Interest rate swaps - assets	3,011
Financial liabilities:
Deposits, fair value	487,266
Federal Home Loan Bank and other borrowings, fair value	39,746
Junior subordinated notes, fair value	0
Interest rate swaps - liabilities	3,011
Accrued interest payable, fair value	0
Standby letters of credit, fair value	0
Fair Value Measurements - Level 3 Inputs
Financial assets:
Cash and cash equivalents, fair value	3,500
Securities available-for-sale, fair value	0
Loans and lease receivables, net, fair value	873,605
Federal Home Loan Bank stock, fair value	1,144
Cash surrender value of life insurance, fair value	0
Accrued interest receivable, fair value	0
Interest rate swaps - assets	0
Financial liabilities:
Deposits, fair value	0
Federal Home Loan Bank and other borrowings, fair value	0
Junior subordinated notes, fair value	7,020
Interest rate swaps - liabilities	0
Accrued interest payable, fair value	0
Standby letters of credit, fair value	$ 112

XML

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and lease receivables consist of the following:

	September 30, 2012		December 31, 2011
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	153,534	$	150,528
Commercial real estate — non-owner occupied	295,852		304,597
Construction and land development	50,158		38,124
Multi-family	57,565		43,905
1-4 family	33,602		43,513
Total commercial real estate	590,711		580,667
Commercial and industrial	255,202		237,099
Direct financing leases, net	16,462		17,128
Consumer and other
Home equity and second mortgages	4,670		4,970
Other	11,789		11,682
Total consumer and other	16,459		16,652
Total gross loans and leases receivable	878,834		851,546
Less:
Allowance for loan and lease losses	14,706		14,155
Deferred loan fees	642		704
Loans and leases receivable, net	$	863,486	$	836,687

The total principal amount of loans transferred to third parties, which consisted solely of participation interests in originated loans, during the three months ended September 30, 2012 and 2011 was $20.1 million and $10.9 million, respectively. For the nine months ended September 30, 2012 and 2011, $54.8 million and $21.0 million of loans were transferred to third parties, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting and therefore $20.1 million and $54.8 million for the three and nine months ended September 30, 2012 and $10.9 million and $21.0 million for the three and nine months ended September 30, 2011 have been derecognized in the unaudited consolidated financial statements. The Corporation has a continuing involvement in each of the agreements by way of relationship management and servicing the loans; however, there are no further obligations required of the Corporation in the event of default, other than standard representations and warranties related to sold amounts. The loans were transferred at their fair value and no gain or loss was recognized upon the transfer as the participation interest was transferred at or near the date of loan origination. There were no other significant purchases or sales of loan and lease receivables or transfers to loans held for sale during the three and nine months ended September 30, 2012 and 2011.

The total amount of outstanding loans transferred to third parties as loan participations sold at September 30, 2012 and December 31, 2011 was $44.7 million and $49.2 million, respectively, all of which were treated as a sale and derecognized under the applicable accounting guidance in effect at the time of the transfers of the financial assets. The Corporation's continuing involvement with these loans is by way of partial ownership, relationship management and all servicing responsibilities. As of September 30, 2012 and December 31, 2011, the total amount of the Corporation's partial ownership of loans on the Corporation’s balance sheet was $63.9 million and $74.6 million, respectively. As of September 30, 2012 and December 31, 2011, $3.3 million and $3.4 million of the loans in this participation sold portfolio were considered impaired, respectively. Since December 2010, the Corporation recognized a total $2.7 million charge-off associated with specific credits within the retained portion of this portfolio of loans in accordance with the Corporation’s allowance for loan and lease loss measurement process and policies. The Corporation does not share in the participant’s portion of the charge-offs. The total amount of loan participations purchased on the Corporation's balance sheet as of September 30, 2012 and December 31, 2011 was $678,000 and $689,000, respectively.

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of September 30, 2012 and December 31, 2011:

	Category
As of September 30, 2012	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	128,661		$	6,778		$	17,166		$	929		$	153,534
Commercial real estate — non-owner occupied	228,493			40,038			26,490			831			295,852
Construction and land development	33,845			1,485			9,089			5,739			50,158
Multi-family	49,875			6,848			793			49			57,565
1-4 family	18,331			4,510			8,074			2,687			33,602
Total commercial real estate	459,205			59,659			61,612			10,235			590,711
Commercial and industrial	231,407			7,866			14,336			1,593			255,202
Direct financing leases, net	11,933			2,862			1,667			—			16,462
Consumer and other:
Home equity and second mortgages	3,531			167			181			791			4,670
Other	10,665			—			—			1,124			11,789
Total consumer and other	14,196			167			181			1,915			16,459
Total gross loans and leases receivable	$	716,741		$	70,554		$	77,796		$	13,743		$	878,834
Category as a % of total portfolio	81.56		%	8.03		%	8.85		%	1.56		%	100.00		%

	Category
As of December 31, 2011	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	117,065		$	16,488		$	14,004		$	2,971		$	150,528
Commercial real estate — non-owner occupied	236,868			34,823			30,657			2,249			304,597
Construction and land development	20,660			5,367			4,867			7,230			38,124
Multi-family	34,162			6,930			804			2,009			43,905
1-4 family	23,266			11,637			4,993			3,617			43,513
Total commercial real estate	432,021			75,245			55,325			18,076			580,667
Commercial and industrial	198,018			25,070			12,453			1,558			237,099
Direct financing leases, net	11,398			5,026			686			18			17,128
Consumer and other:
Home equity and second mortgages	3,524			188			256			1,002			4,970
Other	10,459			—			—			1,223			11,682
Total consumer and other	13,983			188			256			2,225			16,652
Total gross loans and leases receivable	$	655,420		$	105,529		$	68,720		$	21,877		$	851,546
Category as a % of total portfolio	76.97		%	12.39		%	8.07		%	2.57		%	100.00		%

Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Business development officers have relatively low individual lending authority limits, and thus a significant portion of the Corporation’s new credit extensions require approval from a loan approval committee regardless of the type of loan or lease, asset quality grade of the credit, amount of the credit, or the related complexities of each proposal. In addition, the Corporation makes every effort to ensure that there is appropriate collateral at the time of origination to protect the Corporation’s interest in the related loan or lease.

Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from our borrowers, or as other circumstances dictate. The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition, but are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. The Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrower’s management team or the industry in which the borrower operates. Loans and leases in this category are not subject to additional monitoring procedures above and beyond what is required at the origination or renewal of the loan or lease. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of our personal relationships with such borrowers and continued review of such borrowers' compliance with the terms of the agreement.

Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends and collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by a subcommittee of the Banks’ loan committees.

Category III — Loans and leases in this category are identified by the Corporation’s business development officers and senior management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Banks. Category III loans and leases generally exhibit undesirable characteristics such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all required principal and interest in accordance with the original terms of the contract, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored on a monthly basis by management, loan committees of the Banks, and the Banks’ Boards of Directors.

Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases have been placed on non-accrual as management has determined that it is unlikely that the Banks will receive the required principal and interest in accordance with the contractual terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored on a monthly basis by management, loan committees of the Banks, and the Banks’ Boards of Directors.

Utilizing regulatory terminology, the Corporation identified $24.0 million and $3.9 million of loans and leases as Substandard and Special Mention, respectively, as of September 30, 2012. As of December 31, 2011, $42.6 million of loans were considered Substandard and no loans were considered Special Mention. No loans and leases were identified as Doubtful, or Loss at September 30, 2011 and December 31, 2010. The population of Special Mention and Substandard loans are a subset of Category III and Category IV loans.

The delinquency aging of the loan and lease portfolio by class of receivable as of September 30, 2012 and December 31, 2011 were as follows:

As of September 30, 2012	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	152,605		$	152,605
Non-owner occupied	—			—			—			—			295,388			295,388
Construction and land development	4,025			—			—			4,025			40,924			44,949
Multi-family	—			—			—			—			57,516			57,516
1-4 family	—			—			—			—			30,915			30,915
Commercial & industrial	42			—			—			42			253,567			253,609
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,879			3,879
Other	—			—			—			—			10,665			10,665
Total	4,067			—			—			4,067			861,921			865,988
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	812		$	929
Non-owner occupied	—			—			464			464			—			464
Construction and land development	—			—			538			538			4,671			5,209
Multi-family	—			—			—			—			49			49
1-4 family	75			—			618			693			1,994			2,687
Commercial & industrial	—			—			208			208			1,385			1,593
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			128			128			663			791
Other	—			—			1,124			1,124			—			1,124
Total	75			—			3,197			3,272			9,574			12,846
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	117		$	117		$	153,417		$	153,534
Non-owner occupied	—			—			464			464			295,388			295,852
Construction and land development	4,025			—			538			4,563			45,595			50,158
Multi-family	—			—			—			—			57,565			57,565
1-4 family	75			—			618			693			32,909			33,602
Commercial & industrial	42			—			208			250			254,952			255,202
Direct financing leases, net	—			—			—			—			16,462			16,462
Consumer and other:
Home equity and second mortgages	—			—			128			128			4,542			4,670
Other	—			—			1,124			1,124			10,665			11,789
Total	$	4,142		$	—		$	3,197		$	7,339		$	871,495		$	878,834
Percent of portfolio	0.47		%	—		%	0.37		%	0.84		%	99.16		%	100.00		%

As of December 31, 2011	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	—		$	106		$	147,450		$	147,556
Non-owner occupied	—			131			—			131			302,217			302,348
Construction and land development	3,942			—			—			3,942			26,953			30,895
Multi-family	—			—			—			—			41,896			41,896
1-4 family	—			—			—			—			40,007			40,007
Commercial & industrial	25			—			—			25			235,516			235,541
Direct financing leases, net	—			—			—			—			17,110			17,110
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,968			3,968
Other	—			—			—			—			10,459			10,459
Total	4,073			131			—			4,204			825,576			829,780
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	2,011		$	2,011		$	961		$	2,972
Non-owner occupied	—			155			1,625			1,780			469			2,249
Construction and land development	114			515			704			1,333			5,896			7,229
Multi-family	—			—			2,009			2,009			—			2,009
1-4 family	404			224			495			1,123			2,383			3,506
Commercial & industrial	21			—			298			319			1,239			1,558
Direct financing leases, net	—			—			—			—			18			18
Consumer and other:
Home equity and second mortgages	—			40			315			355			647			1,002
Other	—			—			1,222			1,222			1			1,223
Total	539			934			8,679			10,152			11,614			21,766
Total loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	2,011		$	2,117		$	148,411		$	150,528
Non-owner occupied	—			286			1,625			1,911			302,686			304,597
Construction and land development	4,056			515			704			5,275			32,849			38,124
Multi-family	—			—			2,009			2,009			41,896			43,905
1-4 family	404			224			495			1,123			42,390			43,513
Commercial & industrial	46			—			298			344			236,755			237,099
Direct financing leases, net	—			—			—			—			17,128			17,128
Consumer and other:
Home equity and second mortgages	—			40			315			355			4,615			4,970
Other	—			—			1,222			1,222			10,460			11,682
Total	$	4,612		$	1,065		$	8,679		$	14,356		$	837,190		$	851,546
Percent of portfolio	0.54		%	0.12		%	1.02		%	1.68		%	98.32		%	100.00		%

The Corporation’s non-accrual loans and leases consisted of the following at September 30, 2012 and December 31, 2011, respectively.

	September 30, 2012		December 31, 2011
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	929	$	2,972
Commercial real estate — non-owner occupied	464		2,249
Construction and land development	5,209		7,229
Multi-family	49		2,009
1-4 family	2,687		3,506
Total non-accrual commercial real estate	9,338		17,965
Commercial and industrial	1,593		1,558
Direct financing leases, net	—		18
Consumer and other:
Home equity and second mortgage	791		1,002
Other	1,124		1,223
Total non-accrual consumer and other loans	1,915		2,225
Total non-accrual loans and leases	12,846		21,766
Foreclosed properties, net	2,187		2,236
Total non-performing assets	$	15,033	$	24,002
Performing troubled debt restructurings	$	897	$	111

	September 30, 2012		December 31, 2011
Total non-accrual loans and leases to gross loans and leases	1.46	%	2.56	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.71		2.81
Total non-performing assets to total assets	1.26		2.04
Allowance for loan and lease losses to gross loans and leases	1.67		1.66
Allowance for loan and lease losses to non-accrual loans and leases	114.48		65.03

As of September 30, 2012 and December 31, 2011, $10.8 million and $13.3 million of the impaired loans were considered troubled debt restructurings, respectively. As of September 30, 2012, there were no unfunded commitments associated with troubled debt restructured loans and leases.

	As of September 30, 2012					As of December 31, 2011
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	4	$	338	$	277	5	$	380	$	352
Commercial real estate — non-owner occupied	6	972		831		6	971		902
Construction and land development	3	8,044		4,983		4	8,457		5,692
Multi-family	1	184		49		—	—		—
1-4 family	14	2,951		2,613		15	3,152		3,031
Commercial and industrial	7	2,250		1,048		9	2,394		1,393
Direct financing leases, net	—	—		—		1	32		18
Consumer and other:
Home equity and second mortgage	8	865		770		8	865		813
Other	1	2,076		1,124		1	2,076		1,222
Total	44	$	17,680	$	11,695	49	$	18,327	$	13,423

All loans and leases modified as a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

As of September 30, 2012 and December 31, 2011, our troubled debt restructurings grouped by type of concession were as follows:

	As of September 30, 2012			As of December 31, 2011
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	2	$	123	2	$	127
Combination of extension and interest rate concession	26	8,630		28	9,850
Commercial and industrial
Extension of term	3	295		5	406
Combination of extension and interest rate concession	4	753		4	987
Consumer and other
Extension of term	2	1,211		5	1,603
Combination of extension and interest rate concession	7	683		4	432
Direct financing leases, net
Extension of term	—	—		1	18
Total	44	$	11,695	49	$	13,423

The following table provides the number of loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the nine months ended September 30, 2012, as well as the recorded investment in these restructured loans as of September 30, 2012.

	Nine months ended September 30, 2012
	Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate:
Construction and land development	1	$	110
1-4 family	1	223
Commercial and industrial	1	18
Consumer and other:
Home equity and second mortgage	1	20
Total	4	$	371

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Nine Months Ended September 30, 2012
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	676		676		—		1,433		174		207		(33		)
Construction and land development	5,209		8,786		—		6,089		190		24		166
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	1,813		1,915		—		2,043		113		—		113
Commercial and industrial	862		1,031		—		1,440		80		25		55
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	668		668		—		782		44		1		43
Other	1,124		1,612		—		1,164		85		1		84
Total	11,330		16,033		—		15,069		868		321		547
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied	155		155		155		155		2		—		2
Construction and land development	530		530		190		541		15		—		15
Multi-family	—		—		—		—		—		—		—
1-4 family	874		875		322		892		38		—		38
Commercial and industrial	731		3,361		205		1,856		170		—		170
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	123		123		94		140		7		—		7
Other	—		—		—		—		—		—		—
Total	2,413		5,044		966		3,584		232		—		232
Total:
Commercial real estate:
Owner occupied	$	929	$	929	$	—	$	1,710	$	124	$	2	$	122
Non-owner occupied	831		831		155		1,588		176		207		(31		)
Construction and land development	5,739		9,316		190		6,630		205		24		181
Multi-family	49		416		—		403		58		60		(2		)
1-4 family	2,687		2,790		322		2,935		151		—		151
Commercial and industrial	1,593		4,392		205		3,296		250		25		225
Direct financing leases, net	—		—		—		5		—		1		(1		)
Consumer and other:
Home equity and second mortgages	791		791		94		922		51		1		50
Other	1,124		1,612		—		1,164		85		1		84
Grand total	$	13,743	$	21,077	$	966	$	18,653	$	1,100	$	321	$	779

(1) Average recorded investment is calculated primarily using daily average balances.

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2011
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	2,455	$	3,669	$	—	$	5,177	$	450	$	200	$	250
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	6,383		9,927		—		7,974		350		48		302
Multi-family	2,009		2,246		—		3,075		362		—		362
1-4 family	2,628		3,016		—		3,160		277		108		169
Commercial and industrial	1,139		1,320		—		3,820		384		424		(40		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	803		827		—		884		62		1		61
Other	1,222		1,682		—		1,691		138		6		132
Total	18,888		26,768		—		31,042		2,447		787		1,660
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	517	$	517	$	13	$	358	$	81	$	—	$	81
Non-owner occupied	—		—		—		—		—		—		—
Construction and land development	846		846		130		483		48		—		48
Multi-family	—		—		34		287		—		—		—
1-4 family	989		989		337		1,017		61		—		61
Commercial and industrial	419		419		276		384		24		—		24
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	199		199		79		208		20		—		20
Other	1		1		1		1		—		—		—
Total	2,989		2,989		888		2,751		235		—		235
Total:
Commercial real estate:
Owner occupied	$	2,972	$	4,186	$	13	$	5,535	$	531	$	200	$	331
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	7,229		10,773		130		8,457		398		48		350
Multi-family	2,009		2,246		34		3,362		362		—		362
1-4 family	3,617		4,005		337		4,177		338		108		230
Commercial and industrial	1,558		1,739		276		4,204		408		424		(16		)
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity and second mortgages	1,002		1,026		79		1,092		82		1		81
Other	1,223		1,683		1		1,692		138		6		132
Grand total	$	21,877	$	29,757	$	888	$	33,793	$	2,682	$	787	$	1,895

(1) Average recorded investment is calculated primarily using daily average balances.

The difference between the loans and leases recorded investment and the unpaid principal balance of $7.3 million and $7.9 million as of September 30, 2012 and December 31, 2011 represents partial charge-offs resulting from confirmed losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $897,000 and $111,000 of loans that were performing troubled debt restructurings, and thus, while not on non-accrual, were reported as impaired, due to the concession in terms. When a loan is placed on non-accrual, interest accruals are discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to principal. Foregone interest represents the interest that was contractually due on the note but not received or recorded. To the extent the amount of principal on a non-accrual note is fully collected and additional cash is received, the Corporation will recognize interest income.

To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Nine Months Ended September 30, 2012
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,554		$	3,977		$	384		$	240		$	14,155
Charge-offs	(467		)	(2,668		)	(107		)	—			(3,242		)
Recoveries	291			65			38			—			394
Provision	572			2,764			83			(20		)	3,399
Ending balance	$	9,950		$	4,138		$	398		$	220		$	14,706
Ending balance: individually evaluated for impairment	$	667		$	205		$	94		$	—		$	966
Ending balance: collectively evaluated for impairment	$	9,283		$	3,933		$	304		$	220		$	13,740
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	590,711		$	255,202		$	16,459		$	16,462		$	878,834
Ending balance: individually evaluated for impairment	$	10,235		$	1,593		$	1,915		$	—		$	13,743
Ending balance: collectively evaluated for impairment	$	580,476		$	253,609		$	14,544		$	16,462		$	865,091
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.68		%	1.62		%	2.42		%	1.34		%	1.67		%

	As of and for the Nine Months Ended September 30, 2011
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	11,267		$	4,277		$	482		$	245		$	16,271
Charge-offs	(5,444		)	(471		)	(325		)	—			(6,240		)
Recoveries	277			432			69			19			797
Provision	3,488			(338		)	187			(24		)	3,313
Ending balance	$	9,588		$	3,900		$	413		$	240		$	14,141
Ending balance: individually evaluated for impairment	$	757		$	252		$	82		$	25		$	1,116
Ending balance: collectively evaluated for impairment	$	8,831		$	3,648		$	331		$	215		$	13,025
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	602,869		$	224,257		$	18,012		$	16,324		$	861,462
Ending balance: individually evaluated for impairment	$	22,900		$	1,714		$	2,490		$	25		$	27,129
Ending balance: collectively evaluated for impairment	$	579,969		$	222,543		$	15,522		$	16,299		$	834,333
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.59		%	1.74		%	2.29		%	1.47		%	1.64		%

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Deposits

9 Months Ended

Sep. 30, 2012

Deposits [Abstract]

Deposits

Deposits

Deposits consisted of the following:

	September 30, 2012						December 31, 2011
	Balance		Weighted average balance		Weighted average rate		Balance		Weighted average balance		Weighted average rate
	(Dollars in Thousands)
Non-interest-bearing transaction accounts	$	140,831	$	131,761	—	%	$	132,230	$	112,899	—	%
Interest-bearing transaction accounts	38,099		34,263		0.30		23,004		25,389		0.28
Money market accounts	409,823		384,488		0.81		364,082		300,652		0.99
Certificates of deposit	81,777		84,907		1.20		85,331		80,323		1.38
Brokered certificates of deposit	390,728		409,393		2.28		446,665		486,594		2.66
Total deposits	$	1,061,258	$	1,044,812	1.29		$	1,051,312	$	1,005,857	1.70

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Fair Value Disclosures

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

The Corporation determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value.

Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included with Level 1 that are observable for the asset or liability either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Level 3 inputs are inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Fair Value Measurements Using
September 30, 2012	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	10,056	$	—	$	10,056
U.S. Government agency obligations - government-sponsored enterprises	—		16,237		—		16,237
Collateralized mortgage obligations - government issued	—		163,886		—		163,886
Collateralized mortgage obligations - government-sponsored enterprises	—		12,626		—		12,626
Interest rate swaps	—		3,011		—		3,011
Liabilities:
Interest rate swaps	$	—	$	3,011	$	—	$	3,011

	Fair Value Measurements Using
December 31, 2011	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
Municipal obligations	$	—	$	2,831	$	—	$	2,831
U.S. Government agency obligations - government-sponsored enterprises	—		—		—		—
Collateralized mortgage obligations - government issued	—		165,401		—		165,401
Collateralized mortgage obligations - government-sponsored enterprises	—		2,154		—		2,154
Interest rate swaps	—		3,434		—		3,434
Liabilities:
Interest rate swaps	$	—	$	3,434	$	—	$	3,434

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the nine months ended September 30, 2012 or the year ended December 31, 2011 related to the above measurements.

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

			As of and for the Nine Months Ended September 30, 2012
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	September 30, 2012		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	8,813	$	—	$	8,415	$	398	$	—
Foreclosed properties	2,187		252		1,935		—		(176		)

			As of and for the Year Ended December 31, 2011
	Balance at		Fair Value Measurements Using						Total Gains (Losses)
	December 31, 2011		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	12,787	$	—	$	12,787	$	—	$	—
Foreclosed properties	2,236		138		1,989		109		(621		)

Impaired loans that are collateral dependent were written down to their fair value less costs to sell of $8.8 million and $12.8 million at September 30, 2012 and December 31, 2011, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data. In cases where such inputs were unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 values range from 13% - 100%.

Certain non-financial assets subject to measurement at fair value on a non-recurring basis included foreclosed properties. Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically an appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property. As of September 30, 2012, there were no foreclosed properties supported by a Level 3 valuation. Subsequent impairments of foreclosed properties are recorded as a loss on foreclosed properties. During the nine months ended September 30, 2012, $1.4 million of outstanding loans were transferred to foreclosed properties as the Corporation claimed title to the respective assets. During the nine months ended September 30, 2012, the Corporation completed an evaluation of certain of its foreclosed assets. Based upon the evaluation and the results of the impairment calculation, we recognized impairment losses of $176,000 on foreclosed properties. The activity of the Corporation's foreclosed properties is summarized as follows:

	As of and for the Nine Months Ended September 30, 2012			As of and for the Year Ended December 31, 2011
	(In Thousands)
Foreclosed properties at the beginning of the period	$	2,236		$	1,750
Loans transferred to foreclosed properties, at lower of cost or fair value	1,397			3,119
Payments to priority lien holders of foreclosed properties	268			—
Proceeds from sale of foreclosed properties	(1,486		)	(2,213		)
Net (loss) gain on sale of foreclosed properties	(52		)	201
Impairment valuation	(176		)	(621		)
Foreclosed properties at the end of the period	$	2,187		$	2,236

Fair Value of Financial Instruments

The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

	September 30, 2012										December 31, 2011
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	87,842	$	87,842	$	84,342	$	—	$	3,500	$	130,093	$	130,093
Securities available-for-sale	202,805		202,805		—		202,805		—		170,386		170,386
Loans and lease receivables, net	863,486		882,020		—		8,415		873,605		836,687		840,552
Federal Home Loan Bank stock	1,144		1,144		—		—		1,144		2,367		2,367
Cash surrender value of life insurance	18,068		18,068		18,068		—		—		17,660		17,660
Accrued interest receivable	3,506		3,506		3,506		—		—		3,525		3,525
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Financial liabilities:
Deposits	$	1,061,258	$	1,076,019	$	588,753	$	487,266	$	—	$	1,051,312	$	1,068,845
Federal Home Loan Bank and other borrowings	39,482		39,746		—		39,746		—		40,292		40,899
Junior subordinated notes	10,315		7,020		—		—		7,020		10,315		6,917
Interest rate swaps	3,011		3,011		—		3,011		—		3,434		3,434
Accrued interest payable	2,635		2,635		2,635		—		—		2,625		2,625
Off balance sheet items:
Standby letters of credit	112		112		—		—		112		81		81
Commitments to extend credit	—		*		*		*		*		—		*

*Not meaningful

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation.

Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of September 30, 2012, the Corporation held $3.5 million of commercial paper. There was no commercial paper outstanding as of December 31, 2011. The fair value of commercial paper is considered a Level 3 input given the underlying potential for credit risks associated with the issuing companies ability to repay the investment at the stated maturity. The inputs to evaluate the credit risk of the commercial paper issuer are based upon unobservable inputs.

Securities: The fair value measurements of investment securities are determined by a third party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. In addition, the Corporation reviews the third-party valuation methodology on a periodic basis. Any significant differences in valuation are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy.

Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit value of a portfolio of loans.

Federal Home Loan Bank Stock: The carrying amount of FHLB stock equals its fair value because the shares may be redeemed by the FHLB at their carrying amount of $100 per share.

Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount.

Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market.

Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products.

Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Limitations: Fair value estimates are made at a discrete point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and were not considered in the estimates.

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Regulatory Capital (Regulatory Capital Ratios) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Compliance with Regulatory Capital Requirements under Banking Regulations
Total Capital	$ 127,871	$ 118,895
Total Capital to Risk-Weighted Assets	13.33%	13.11%
Total Capital, Minimum Required for Capital Adequacy Purposes	76,746	72,559
Total Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Tier 1 Capital	77,917	71,723
Tier 1 Capital to Risk-Weighted Assets	8.12%	7.91%
Tier 1 Capital, Minimum Required for Capital Adequacy Purposes	38,373	36,279
Tier 1 Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 Capital	77,917	71,723
Tier 1 Capital to Average Assets	6.58%	6.22%
Tier 1 Leverage Capital, Minimum Required for Capital Adequacy Purposes	47,374	46,152
Tier 1 Leverage Capital to Average Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
First Business Bank
Compliance with Regulatory Capital Requirements under Banking Regulations
Total Capital	111,665	108,860
Total Capital to Risk-Weighted Assets	13.06%	13.39%
Total Capital, Minimum Required for Capital Adequacy Purposes	68,417	65,058
Total Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Total Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	85,521	81,322
Total Capital to Risk-Weighted Assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10.00%	10.00%
Tier 1 Capital	100,944	98,666
Tier 1 Capital to Risk-Weighted Assets	11.80%	12.13%
Tier 1 Capital, Minimum Required for Capital Adequacy Purposes	34,209	32,529
Tier 1 Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	51,313	48,793
Tier 1 Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	6.00%	6.00%
Tier 1 Capital	100,944	98,666
Tier 1 Capital to Average Assets	10.30%	9.98%
Tier 1 Leverage Capital, Minimum Required for Capital Adequacy Purposes	39,197	39,556
Tier 1 Leverage Capital to Average Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 Leverage Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	48,997	49,445
Tier 1 Leverage Capital to Average Assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	5.00%	5.00%
First Business Bank - Milwaukee
Compliance with Regulatory Capital Requirements under Banking Regulations
Total Capital	15,635	15,074
Total Capital to Risk-Weighted Assets	15.12%	16.11%
Total Capital, Minimum Required for Capital Adequacy Purposes	8,273	7,484
Total Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	8.00%	8.00%
Total Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10,341	9,355
Total Capital to Risk-Weighted Assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	10.00%	10.00%
Tier 1 Capital	14,339	13,898
Tier 1 Capital to Risk-Weighted Assets	13.87%	14.86%
Tier 1 Capital, Minimum Required for Capital Adequacy Purposes	4,136	3,742
Tier 1 Capital to Risk-Weighted Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	6,205	5,613
Tier 1 Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	6.00%	6.00%
Tier 1 Capital	14,339	13,898
Tier 1 Capital to Average Assets	6.66%	7.95%
Tier 1 Leverage Capital, Minimum Required for Capital Adequacy Purposes	8,612	6,993
Tier 1 Leverage Capital to Average Assets, Minimum Required for Capital Adequacy Purposes	4.00%	4.00%
Tier 1 Leverage Capital, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	$ 10,765	$ 8,741
Tier 1 Leverage Capital to Average Assets, Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements	5.00%	5.00%

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Derivative Financial Instruments (Narrative Disclosures) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Interest rate swaps - assets	$ 3,011,000	$ 3,434,000
Interest rate swaps - liabilities	3,011,000	3,434,000
Interest rate derivatives, line item on income statement for gain (loss)	other non-interest income
Minimum
Derivatives
Derivative, Maturity Date	Feb. 15, 2013
Maximum
Derivatives
Derivative, Maturity Date	Jun. 15, 2022
To Commercial Borrowers, Corporation Receives Fixed Rates and Pays Floating Rates
Derivatives
Notional value of interest rate swaps with various commercial borrowers	49,000,000
To Dealer Countparties, Corporation Pays Fixed Rates and Receives Floating Rates
Derivatives
Notional value of interest rate swaps with various commercial borrowers	$ 49,000,000

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Regulatory Capital (Tables)

9 Months Ended

Sep. 30, 2012

Regulatory Capital Requirements [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

The following table summarizes the Corporation’s and Banks’ capital ratios and the ratios required by their federal regulators at September 30, 2012 and December 31, 2011, respectively:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of September 30, 2012
Total capital
(to risk-weighted assets)
Consolidated	$	127,871	13.33	%	$	76,746	8.00	%	N/A		N/A
First Business Bank	111,665		13.06		68,417		8.00		$	85,521	10.00	%
First Business Bank — Milwaukee	15,635		15.12		8,273		8.00		10,341		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	77,917	8.12	%	$	38,373	4.00	%	N/A		N/A
First Business Bank	100,944		11.80		34,209		4.00		$	51,313	6.00	%
First Business Bank — Milwaukee	14,339		13.87		4,136		4.00		6,205		6.00
Tier 1 capital
(to average assets)
Consolidated	$	77,917	6.58	%	$	47,374	4.00	%	N/A		N/A
First Business Bank	100,944		10.30		39,197		4.00		$	48,997	5.00	%
First Business Bank — Milwaukee	14,339		6.66		8,612		4.00		10,765		5.00

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Requirements
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2011
Total capital
(to risk-weighted assets)
Consolidated	$	118,895	13.11	%	$	72,559	8.00	%	N/A		N/A
First Business Bank	108,860		13.39		65,058		8.00		$	81,322	10.00	%
First Business Bank — Milwaukee	15,074		16.11		7,484		8.00		9,355		10.00
Tier 1 capital
(to risk-weighted assets)
Consolidated	$	71,723	7.91		$	36,279	4.00	%	N/A		N/A
First Business Bank	98,666		12.13		32,529		4.00		$	48,793	6.00	%
First Business Bank — Milwaukee	13,898		14.86		3,742		4.00		5,613		6.00
Tier 1 capital
(to average assets)
Consolidated	$	71,723	6.22		$	46,152	4.00	%	N/A		N/A
First Business Bank	98,666		9.98		39,556		4.00		$	49,445	5.00	%
First Business Bank — Milwaukee	13,898		7.95		6,993		4.00		8,741		5.00

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Impaired Loans and Leases) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012		Dec. 31, 2011
Recorded investment
With no impairment reserve recorded	$ 11,330		$ 18,888
With impairment reserve recorded	2,413		2,989
Total	13,743		21,877
Unpaid principal balance
With no impairment reserve recorded	16,033		26,768
With impairment reserve recorded	5,044		2,989
Total	21,077		29,757
Impairment reserve
Impairment reserve	966		888
Average recorded investment
With no impairment reserve recorded	15,069	[1]	31,042	[1]
With impairment reserve recorded	3,584	[1]	2,751	[1]
Total	18,653	[1]	33,793	[1]
Foregone interest income
With no impairment reserve recorded	868		2,447
With impairment reserve recorded	232		235
Total	1,100		2,682
Interest income recognized
With no impairment reserve recorded	321		787
With impairment reserve recorded	0		0
Total	321		787
Net foregone interest income
With no impairment reserve recorded	547		1,660
With impairment reserve recorded	232		235
Total	779		1,895
Commercial real estate - owner occupied
Recorded investment
With no impairment reserve recorded	929		2,455
With impairment reserve recorded	0		517
Total	929		2,972
Unpaid principal balance
With no impairment reserve recorded	929		3,669
With impairment reserve recorded	0		517
Total	929		4,186
Impairment reserve
Impairment reserve	0		13
Average recorded investment
With no impairment reserve recorded	1,710	[1]	5,177	[1]
With impairment reserve recorded	0	[1]	358	[1]
Total	1,710	[1]	5,535	[1]
Foregone interest income
With no impairment reserve recorded	124		450
With impairment reserve recorded	0		81
Total	124		531
Interest income recognized
With no impairment reserve recorded	2		200
With impairment reserve recorded	0		0
Total	2		200
Net foregone interest income
With no impairment reserve recorded	122		250
With impairment reserve recorded	0		81
Total	122		331
Commercial real estate - non-owner occupied
Recorded investment
With no impairment reserve recorded	676		2,249
With impairment reserve recorded	155		0
Total	831		2,249
Unpaid principal balance
With no impairment reserve recorded	676		4,081
With impairment reserve recorded	155		0
Total	831		4,081
Impairment reserve
Impairment reserve	155		0
Average recorded investment
With no impairment reserve recorded	1,433	[1]	5,261	[1]
With impairment reserve recorded	155	[1]	0	[1]
Total	1,588	[1]	5,261	[1]
Foregone interest income
With no impairment reserve recorded	174		424
With impairment reserve recorded	2		0
Total	176		424
Interest income recognized
With no impairment reserve recorded	207		0
With impairment reserve recorded	0		0
Total	207		0
Net foregone interest income
With no impairment reserve recorded	(33)		424
With impairment reserve recorded	2		0
Total	(31)		424
Construction and land development
Recorded investment
With no impairment reserve recorded	5,209		6,383
With impairment reserve recorded	530		846
Total	5,739		7,229
Unpaid principal balance
With no impairment reserve recorded	8,786		9,927
With impairment reserve recorded	530		846
Total	9,316		10,773
Impairment reserve
Impairment reserve	190		130
Average recorded investment
With no impairment reserve recorded	6,089	[1]	7,974	[1]
With impairment reserve recorded	541	[1]	483	[1]
Total	6,630	[1]	8,457	[1]
Foregone interest income
With no impairment reserve recorded	190		350
With impairment reserve recorded	15		48
Total	205		398
Interest income recognized
With no impairment reserve recorded	24		48
With impairment reserve recorded	0		0
Total	24		48
Net foregone interest income
With no impairment reserve recorded	166		302
With impairment reserve recorded	15		48
Total	181		350
Multi-family
Recorded investment
With no impairment reserve recorded	49		2,009
With impairment reserve recorded	0		0
Total	49		2,009
Unpaid principal balance
With no impairment reserve recorded	416		2,246
With impairment reserve recorded	0		0
Total	416		2,246
Impairment reserve
Impairment reserve	0		34
Average recorded investment
With no impairment reserve recorded	403	[1]	3,075	[1]
With impairment reserve recorded	0	[1]	287	[1]
Total	403	[1]	3,362	[1]
Foregone interest income
With no impairment reserve recorded	58		362
With impairment reserve recorded	0		0
Total	58		362
Interest income recognized
With no impairment reserve recorded	60		0
With impairment reserve recorded	0		0
Total	60		0
Net foregone interest income
With no impairment reserve recorded	(2)		362
With impairment reserve recorded	0		0
Total	(2)		362
1-4 family
Recorded investment
With no impairment reserve recorded	1,813		2,628
With impairment reserve recorded	874		989
Total	2,687		3,617
Unpaid principal balance
With no impairment reserve recorded	1,915		3,016
With impairment reserve recorded	875		989
Total	2,790		4,005
Impairment reserve
Impairment reserve	322		337
Average recorded investment
With no impairment reserve recorded	2,043	[1]	3,160	[1]
With impairment reserve recorded	892	[1]	1,017	[1]
Total	2,935	[1]	4,177	[1]
Foregone interest income
With no impairment reserve recorded	113		277
With impairment reserve recorded	38		61
Total	151		338
Interest income recognized
With no impairment reserve recorded	0		108
With impairment reserve recorded	0		0
Total	0		108
Net foregone interest income
With no impairment reserve recorded	113		169
With impairment reserve recorded	38		61
Total	151		230
Commercial and industrial
Recorded investment
With no impairment reserve recorded	862		1,139
With impairment reserve recorded	731		419
Total	1,593		1,558
Unpaid principal balance
With no impairment reserve recorded	1,031		1,320
With impairment reserve recorded	3,361		419
Total	4,392		1,739
Impairment reserve
Impairment reserve	205		276
Average recorded investment
With no impairment reserve recorded	1,440	[1]	3,820	[1]
With impairment reserve recorded	1,856	[1]	384	[1]
Total	3,296	[1]	4,204	[1]
Foregone interest income
With no impairment reserve recorded	80		384
With impairment reserve recorded	170		24
Total	250		408
Interest income recognized
With no impairment reserve recorded	25		424
With impairment reserve recorded	0		0
Total	25		424
Net foregone interest income
With no impairment reserve recorded	55		(40)
With impairment reserve recorded	170		24
Total	225		(16)
Direct financing leases, net
Recorded investment
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		18
Total	0		18
Unpaid principal balance
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		18
Total	0		18
Impairment reserve
Impairment reserve	0		18
Average recorded investment
With no impairment reserve recorded	5	[1]	0	[1]
With impairment reserve recorded	0	[1]	13	[1]
Total	5	[1]	13	[1]
Foregone interest income
With no impairment reserve recorded	0		0
With impairment reserve recorded	0		1
Total	0		1
Interest income recognized
With no impairment reserve recorded	1		0
With impairment reserve recorded	0		0
Total	1		0
Net foregone interest income
With no impairment reserve recorded	(1)		0
With impairment reserve recorded	0		1
Total	(1)		1
Home equity and second mortgages
Recorded investment
With no impairment reserve recorded	668		803
With impairment reserve recorded	123		199
Total	791		1,002
Unpaid principal balance
With no impairment reserve recorded	668		827
With impairment reserve recorded	123		199
Total	791		1,026
Impairment reserve
Impairment reserve	94		79
Average recorded investment
With no impairment reserve recorded	782	[1]	884	[1]
With impairment reserve recorded	140	[1]	208	[1]
Total	922	[1]	1,092	[1]
Foregone interest income
With no impairment reserve recorded	44		62
With impairment reserve recorded	7		20
Total	51		82
Interest income recognized
With no impairment reserve recorded	1		1
With impairment reserve recorded	0		0
Total	1		1
Net foregone interest income
With no impairment reserve recorded	43		61
With impairment reserve recorded	7		20
Total	50		81
Other
Recorded investment
With no impairment reserve recorded	1,124		1,222
With impairment reserve recorded	0		1
Total	1,124		1,223
Unpaid principal balance
With no impairment reserve recorded	1,612		1,682
With impairment reserve recorded	0		1
Total	1,612		1,683
Impairment reserve
Impairment reserve	0		1
Average recorded investment
With no impairment reserve recorded	1,164	[1]	1,691	[1]
With impairment reserve recorded	0	[1]	1	[1]
Total	1,164	[1]	1,692	[1]
Foregone interest income
With no impairment reserve recorded	85		138
With impairment reserve recorded	0		0
Total	85		138
Interest income recognized
With no impairment reserve recorded	1		6
With impairment reserve recorded	0		0
Total	1		6
Net foregone interest income
With no impairment reserve recorded	84		132
With impairment reserve recorded	0		0
Total	$ 84		$ 132

[1] (1)Average recorded investment is calculated primarily using daily average balances.

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Share-Based Compensation (Policies)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation, Option and Incentive Plans Policy

The Corporation adopted the 2012 Equity Incentive Plan (the “Plan”) during the quarter ended June 30, 2012. The Plan is administered by the Compensation Committee of the Board of Directors of FBFS and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (“Stock Options”), restricted stock, restricted stock units, dividend equivalent unit, and any other type of award permitted by the Plan. Shares previously available for grant under the 2006 Equity Incentive Plan (the "2006 Plan") were transferred to the 2012 Equity Incentive Plan. As of September 30, 2012, 214,634 shares were available for future grants under the Plan. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the Plan. The Corporation may issue new shares and shares from treasury for shares delivered under the Plan. The 2006 Plan was terminated on May 14, 2012.

Stock Options

The Corporation may grant Stock Options to senior executives and other employees under the Plan. Stock Options generally have an exercise price that is equal to the fair value of the common shares on the date the option is awarded. Stock Options granted under the plans are subject to graded vesting, generally ranging from 4 years to 8 years, and have a contractual term of 10 years. For any new awards issued, compensation expense is recognized over the requisite service period for the entire award on a straight-line basis. No Stock Options were granted since the Corporation became a reporting company under the Securities Exchange Act of 1934 and no Stock Options were modified, repurchased or cancelled. Therefore, no stock-based compensation related to Stock Options was recognized in the consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. As of September 30, 2012, all Stock Options granted and not previously forfeited have vested.

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012		2011
	(Dollars in Thousands, Except Share Data)
Basic earnings per common share
Net income	$	2,622	$	2,179		$	6,397	$	6,040
Less: earnings allocated to participating securities	101		83			239		230
Basic earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Basic earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32
Diluted earnings per common share
Earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Reallocation of undistributed earnings	—		(1		)	—		—
Diluted earnings allocated to common shareholders	$	2,521	$	2,095		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Dilutive effect of share-based awards	4,978		50			1,752		—
Weighted-average diluted common shares outstanding, excluding participating securities	2,544,485		2,511,817			2,535,188		2,502,991
Diluted earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32

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Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Troubled Debt Restructurings by Modification Type) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012 loans	Dec. 31, 2011 loans
Troubled debt restructurings
Number of Loans	44	49
Recorded Investment	$ 11,695	$ 13,423
Commercial real estate | Extension of term
Troubled debt restructurings
Number of Loans	2	2
Recorded Investment	123	127
Commercial real estate | Combination of extension of term and interest rate concession
Troubled debt restructurings
Number of Loans	26	28
Recorded Investment	8,630	9,850
Commercial and industrial
Troubled debt restructurings
Number of Loans	7	9
Recorded Investment	1,048	1,393
Commercial and industrial | Extension of term
Troubled debt restructurings
Number of Loans	3	5
Recorded Investment	295	406
Commercial and industrial | Combination of extension of term and interest rate concession
Troubled debt restructurings
Number of Loans	4	4
Recorded Investment	753	987
Consumer and other | Extension of term
Troubled debt restructurings
Number of Loans	2	5
Recorded Investment	1,211	1,603
Consumer and other | Combination of extension of term and interest rate concession
Troubled debt restructurings
Number of Loans	7	4
Recorded Investment	683	432
Direct financing leases, net
Troubled debt restructurings
Number of Loans	0	1
Recorded Investment	0	18
Direct financing leases, net | Extension of term
Troubled debt restructurings
Number of Loans	0	1
Recorded Investment	$ 0	$ 18

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Securities (Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized Cost
Due in one year or less	$ 83
Due in one year through five years	13,131
Due in five through ten years	16,474
Due in over ten years	168,852
Amortized cost	198,540
Estimated Fair Value
Due in one year or less	83
Due in one year through five years	13,180
Due in five through ten years	16,764
Due in over ten years	172,778
Estimated fair value	$ 202,805	$ 170,386

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Net income	$ 2,622	$ 2,179	$ 6,397	$ 6,040
Other comprehensive income, before tax
Unrealized securities gains (losses) arising during the period	419	(280)	227	893
Income tax (expense) benefit	(160)	103	(86)	(355)
Comprehensive income	$ 2,881	$ 2,002	$ 6,538	$ 6,578

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Common Share

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 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.

For the three month periods ended September 30, 2012 and 2011, average anti-dilutive employee share-based awards totaled 54,000 and 146,979, respectively. For the nine month periods ended September 30, 2012 and 2011, average anti-dilutive employee share-based awards totaled 120,502 and 145,526, respectively.

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012		2011			2012		2011
	(Dollars in Thousands, Except Share Data)
Basic earnings per common share
Net income	$	2,622	$	2,179		$	6,397	$	6,040
Less: earnings allocated to participating securities	101		83			239		230
Basic earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Basic earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32
Diluted earnings per common share
Earnings allocated to common shareholders	$	2,521	$	2,096		$	6,158	$	5,810
Reallocation of undistributed earnings	—		(1		)	—		—
Diluted earnings allocated to common shareholders	$	2,521	$	2,095		$	6,158	$	5,810
Weighted-average common shares outstanding, excluding participating securities	2,539,507		2,511,767			2,533,436		2,502,991
Dilutive effect of share-based awards	4,978		50			1,752		—
Weighted-average diluted common shares outstanding, excluding participating securities	2,544,485		2,511,817			2,535,188		2,502,991
Diluted earnings per common share	$	0.99	$	0.83		$	2.43	$	2.32

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Fair Value Disclosures (Measured on a Non-Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Total gains (losses) on impaired loans	$ 0	$ 0
Total gains (losses) on foreclosed properties	(176)	(621)
Impaired loans
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	8,813	12,787
Impaired loans | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	0	0
Impaired loans | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	8,415	12,787
Impaired loans | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	398	0
Foreclosed properties
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	2,187	2,236
Foreclosed properties | Fair Value Measurements - Level 1 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	252	138
Foreclosed properties | Fair Value Measurements - Level 2 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	1,935	1,989
Foreclosed properties | Fair Value Measurements - Level 3 Inputs
Fair Value, Assets and Liabilities Measured on a Nonrecurring Basis
Assets measured on a non-recurring basis, fair value	$ 0	$ 109

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

Stock Option activity for the year ended December 31, 2011 and nine months ended September 30, 2012 was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2010	138,766		$	22.09	2.75
Granted	—		—
Exercised	—		—
Expired	(13,732	)	19.00
Forfeited	—		—
Outstanding at December 31, 2011	125,034		$	22.43	1.75
Exercisable at December 31, 2011	125,034		$	22.43	1.75
Outstanding as of December 31, 2011	125,034		$	22.43	1.75
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	—		—
Outstanding at September 30, 2012	125,034		$	22.43	1.00
Exercisable at September 30, 2012	125,034		$	22.43	1.00

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

Restricted share activity for the year ended December 31, 2011 and the nine months ended September 30, 2012 was as follows:

	Number of Restricted Shares		Weighted Average Grant-Date Fair Value
Nonvested balance as of December 31, 2010	101,182		$	14.93
Granted	34,625		17.05
Vested	(39,939	)	16.24
Forfeited	—		—
Nonvested balance as of December 31, 2011	95,868		15.15
Granted	34,923		23.02
Vested	(19,221	)	16.10
Forfeited	—		—
Nonvested balance as of September 30, 2012	111,570		$	17.45

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Share-Based Compensation (Restricted Share Activity) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Number of Restricted Shares
Nonvested balance, beginning	95,868	101,182
Granted	34,923	34,625
Vested	(19,221)	(39,939)
Forfeited	0	0
Nonvested balance, ending	111,570	95,868
Weighted Average Grant-Date Fair Value
Nonvested balance, beginning	$ 15.15	$ 14.93
Granted	$ 23.02	$ 17.05
Vested	$ 16.10	$ 16.24
Forfeited	$ 0.00	$ 0.00
Nonvested balance, ending	$ 17.45	$ 15.15

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Earnings Per Common Share (Policies)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share, Policy

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 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.