First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Q1 2025 Earnings Presentation
42 slides from First Business Financial Services's earnings presentation, Apr 25, 2025
Slide 1: Investor Presentation First Quarter 2025
Investor Slide Title Presentation Date First Quarter 2025 NASDAQ: FBIZ 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements When used in this presentation, and in any other oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume,” “intend,” “estimate,” “anticipate,” “project,”
Slide 3: Table of Contents
Page Q1 2025 Results 4 Company Snapshot 5 Strategic Plan Table of Contents 6 Why FBIZ? 10 Drivers of Growth & Profitability 18 Appendix 23
Slide 4: Highlights Q1 2025
Highlights Q1 2025 Loans Core Deposits NIM +9% +11% 3.69% Core deposits grew 11.1% annualized from the Match funding strategy and pricing discipline Consistent loan growth across the Company. linked quarter and 7.2% from Q1 2024. produced a strong net interest margin of 3.69%, Loans grew 9.2% annual
Slide 5: Company Snapshot
MISSION Build long‐term shareholder value as an entrepreneurial banking partner that drives success for businesses, investors, NASDAQ: FBIZ and our communities. $414 Million HEADQUARTERS Madison, WI MARKET CAP 1 FBIZ BUSINESS BANKING 2 We serve business executives, entrepreneurs, and high net $3.9 B
Slide 6: Five Year Strategic Plan
FIVE YEAR Strategic Plan 6
Slide 7: Five Year Strategic Plan 2024-2028
2024-2028 Five Year Strategic Plan FUTURE READY TALENT EFFICIENCY Thrive in the workplace of Achieve operational the future excellence 01 03 05 02 04 CULTURE DEPOSITS PROFITABILITY Protect and strengthen our Grow our core deposits Achieve sustainable culture profitability and growth First Business B
Slide 8: Goals & Progress
Goals & Progress STRATEGIC PLAN 2024-2028 Deliver above-average total shareholder return compared to peer median Goals 2024‐2028 2024 1Q’25 ROATCE1 ≥15% by 2028 19.2% 14.1% TBV Growth1 ≥10% per year 15.0% 14.0% Revenue Growth2 ≥10% per year 6.6% 12.6% Efficiency Ratio <60% by 2028 60.61% 60.28% Core
Slide 9: Total Shareholder Return Above Peer Group Median
Total Shareholder Return Above Peer Group Median DESPITE RECENT OUTPERFORMANCE, PRICE/LTM EPS REMAINS BELOW PEERS Total Shareholder Return1 Price / LTM EPS2 300% 12.0 250% 11.0 200% 10.0 150% 100% 9.0 50% 8.0 0% 1-Year TSR 3-Year TSR 5-Year TSR 7.0 -50% 6.0 P/LTM EPS FBIZ Peer Group Median S&P 500 B
Slide 10: Why FBIZ?
Why FBIZ? 10
Slide 11: Our Historic & Ongoing Growth Supports Earnings Power
GROWING PROFITABILITY Our Historic & Ongoing Growth Supports Earnings Power 13% 12% 12% 5-year 5-year 5-year Loan Core Deposit TBV/Share CAGR CAGR CAGR 2019-2024 2019-2024 2019-2024 Differentiated Loan Strong & Stable Growing Growth Capabilities Deposit Franchise Profitability Profile • History of c
Slide 12: Balanced and Steady Growth
Balanced and Steady Growth OPERATING FUNDAMENTALS DRIVE EARNINGS POWER Operating Income $180 Highlights $160 • Continued strong revenue supported by: $140 • Robust loan and deposit growth $120 • Strong and stable net interest margin $100 • Diverse sources of non‐ interest Millions income, including
Slide 13: Margin Strength Through Rate Cycles
Margin Strength Through Rate Cycles MATCH FUNDING STRATEGY BETTER POSITIONS BALANCE SHEET FOR RATE CHANGES 3.90% Net Interest Margin 3.70% 3.50% 3.30% 3.10% 2.90% 2.70% 2.50% 2018 2019 2020 2021 2022 2023 2024 FBIZ Net Interest Margin Peer Median Net Interest Margin(1) Linear (FBIZ Net Interest Marg
Slide 14: Disciplined Interest Rate Risk Management
WHY FBIZ? Disciplined Interest Rate Risk Management • Generally individually match‐fund loans with maturities over 5 years and amounts greater than $5MM METHODICAL • Portfolio match‐funding in various terms against the fixed‐rate loan APPROACH portfolio with maturities under 5 years and amounts less
Slide 15: Operating Leverage Outperforms Peers
Operating Leverage Outperforms Peers HISTORY OF GROWING REVENUES FASTER THAN EXPENSES • We aim to achieve 10% revenue growth on an annual basis, with Operating Leverage positive operating leverage1 12% • Despite headwinds related to outsized NIM in 2023, we achieved 10% FBIZ Avg2 = 3.3% positive ope
Slide 16: Growth And Profitability Exceeds Peers
Growth And Profitability Exceeds Peers TLR GROWTH AND EFFICIENT CAPITAL MANAGEMENT DRIVES STRONG PROFITABILITY Top Line Revenue Growth Return on Average Tangible Common Equity 20% 16% 18% 14% 16% 12% 14% 10% 12% 8% 10% 6% 8% 4% 6% 2% 4% 0% 2% -2% 0% -4% 2021 2022 2023 2024 Q1 2025 2021 2022 2023 202
Slide 17: Shareholder Value Creation
Shareholder Value Creation A HISTORY OF STEADY, CONSISTENT TBV AND DIVIDEND GROWTH THROUGH ECONOMIC AND INTEREST RATE CYCLES $45 $40 TBV 5YR CAGR = 12% $35 Div/Share 5YR CAGR = 11% $30 $25 $20 $15 $10 $5 $0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 Q1 25 (1) TBV/Sha
Slide 18: Drivers of Growth & Profitability
Drivers of Growth & Profitability 18
Slide 19: Relationship Banking Key to Success
Relationship Banking Key to Success CORE DEPOSIT GROWTH SUPPORTS LOAN GROWTH • Deposit‐centric sales strategy Core Deposit Growth Loan Growth led by treasury management sales teams located in all bank $3.0 +11% LQA $3.5 +9% LQA markets with direct production +7% YOY +9% YOY and outside calling goals
Slide 20: Diversified Lending Growth
Diversified Lending Growth CONTINUING TO GROW HIGHER YIELDING C&I LENDING MIX Loan Growth History1 Growth in Higher-Yielding C&I Lending2 $3.5 40% 9% 39% $3.0 8% 38% $2.5 37% 7% 36% Loan Mix % $2.0 billions Yield 35% 6% $1.5 34% 5% $1.0 33% 32% $0.5 4% 31% $0.0 30% 3% '20 '21 '22 '23 '24 Q1 25 1Q23
Slide 21: Net Interest Margin Components
Net Interest Margin Components STRONG BALANCE SHEET SUPPORTS RESILIENT NIM NIM Components Net Interest Margin 3.85% 0.27% 4.0% 3.80% 3.77% 3.77% 0.03% 3.65% 3.69% 3.64% 3.58% 3.75% -0.03% 0.29% 0.23% -0.04% 3.5% 0.19% 0.14% 3.70% 0.00% 3.69% 0.15% -0.12% 3.65% 3.26% 3.60% 3.19% 3.0% 3.14% 3.09% 3.55
Slide 22: Solid Asset Quality
Solid Asset Quality NON-PERFORMING ASSETS/TOTAL ASSETS REMAIN WELL MANAGED NPAs / Total Assets Reserves and NPL Coverage Credit Quality Indicators As of 3/31/25, 94% of the loan portfolio was classified 1.6% 1.6X in category I(1) and 99% of loans were current 1.5X Allowance for Credit Losses as a %
Slide 23: Appendix
Appendix SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS 23
Slide 24: Offerings Designed Exclusively For Business And Wealth Management
SERVICES THAT MEET THE EVOLVING NEEDS OF OUR GROWING CLIENT BASE Offerings Designed Exclusively For Business And Wealth Management 24
Slide 25: Superior Client Satisfaction Rating
Superior Client Satisfaction Rating EXCELLENT EMPLOYEE SATISFACTION DRIVES SUPERIOR CLIENT SATISFACTION 25
Slide 26: ESG Practices Integrated Into Core Business Strategy
ESG FRAMEWORK Environmental, Social, and Governance Practices Are Integrated Into Our Core Business Strategy Environment Social Governance • Branch‐lite model with only one location • Named to the national list of Top • Corporate Governance and Nominating in each of the banking markets we serve Work
Slide 27: Robust Liquidity with Stable Deposit Base
Robust Liquidity with Stable Deposit Base Stable Core Deposit Base Substantial Liquidity As of 3/31/25 $3,243,043 Source 3/31/2025 3/31/2024 Uninsured Deposits Short-term investments $136,033 $46,984 $1,055,347 Collateral value of unencumbered pledged loans 501,268 340,639 Approx. 68% $9,344 Collate
Slide 28: Robust Capital Base
Robust Capital Base STRONG EARNINGS GENERATE CAPITAL FOR GROWTH Tangible Book Value per Share1 Strong Capital Ratios (%) $38 $37.58 12.20% +9% LQ $36.74 10.50% $37 +14% YOY 9.26% 9.60% $36 8.77% 8.50% 7.00% $35 $34.74 $33.92 $34 4.00% $32.97 $33 $32 $31 Tier 1 Common Tier 1 Capital Total Capital $30
Slide 29: Capital Strength
Capital Strength 3/31/25 12/31/24 9/30/24 6/30/24 3/31/24 • Regulatory capital ratios remain solid including a Total Regulatory Capital $429,351 $421,639 $407,421 $392,359 $384,083 Total Capital Ratio of 12.20% Total Risk-Weighted Assets $3,519,769 $3,491,626 $3,477,734 $3,425,925 $3,381,059 and a T
Slide 30: Diversified Lending Products
Diversified Lending Products Double digit loan growth driven by stellar performance across all areas of the bank Total Loan Breakdown Commercial Real Estate Breakdown C&I Breakdown by Product 1% 3% 3% 13% 13% 29% 11% 40% 39% 6% 60% 44% 11% 27% All other C&I lending Equipment Finance CRE C&I Other CR
Slide 31: Commercial Real Estate Lending
Commercial Real Estate Lending Superior Talent with Business Expertise Building Relationships in Midwest Geographic Footprint Product Profile • Target small to medium-sized Portfolio Analysis Gross Revenue companies $1,950 7.00% $40 • Lines of credit and term loans $1,900 focused on businesses with
Slide 32: CRE Office Portfolio Analysis
CRE Office Portfolio Analysis Exceptional credit quality on office loans throughout the Midwest • Office loans focused in our bank markets and Commercial Real Estate Breakdown Midwest Locations - Office >$3mm concentrated in Wisconsin Land 1-4 Family Development 3% 3% Misc. Other, 7% Suburban Milwau
Slide 33: Multi-Family Portfolio Analysis
Multi-Family Portfolio Analysis Exceptional credit quality on Multi-Family loans throughout the Midwest Midwest Locations • Loans focused in our bank Multi-Family Breakdown Senior Housing Student All Other markets and 1% Housing 7% 8% Suburban Milwaukee, 17% concentrated in Rent Restricted Wisconsin
Slide 34: C&I Lending
C&I Lending Diversified commercial product offerings target companies nationwide Product Profile Portfolio Analysis Gross Revenue • Target small and medium $1,400 10.00% $27 companies in a variety of $1,200 $26 industries $1,000 8.00% $25 • Financings range from $800 $250,000 to $10 million Millions
Slide 35: Equipment Finance Portfolio Analysis
Equipment Finance Portfolio Analysis STRONG AND DIVERSIFIED PORTFOLIO; TRANSPORTATION SUB-CATEGORY SHOWING SECTOR-SPECIFIC WEAKNESS Portfolio by Industry Maturing Over Time • Equipment Finance (EF) loans $100 MM diversified across industries Truck Transportation 11% Construction of Buildings ◦ EF co
Slide 36: Treasury Management
Treasury Management Superior Talent with Business Expertise Building Relationships in Midwest Geographic Footprint Product Profile • Target small to medium-sized companies in our Wisconsin, Kansas, and Missouri markets Funding Mix Fee Revenue and Analyzed Charges • Comprehensive services for $3,600
Slide 37: Private Wealth Management
Private Wealth Management Wealth Management Services for Businesses, Executives, and High Net Worth Individuals Product Profile • Fiduciary and investment manager for individual and corporate clients, Assets Under Management & Fee Revenue creating and executing asset Administration allocation strate
Slide 38: Adjusted Net Interest Margin
Non-GAAP Reconciliation Adjusted Net Interest Margin “Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets excluding
Slide 39: Adjusted Net Interest Income
Non-GAAP Reconciliation Adjusted Net Interest Income "Adjusted Net Interest Income" is defined as net interest income less fees in lieu of interest and other recurring, but volatile components of net interest income . "Fees in Lieu of Interest" is defined as prepayment fees, asset-based loan fees, n
Slide 40: Net Operating Income
Non-GAAP Reconciliation Net Operating Income "Net Operating Income" is a non-GAAP financial measure. We believe net operating income allows investors to better assess the Company’s operating expenses in relation to its top line revenue by removing the volatility that is associated with certain one-t
Slide 41: Cost of Funds
Non-GAAP Reconciliation Cost of Funds ‘‘Cost of Funds’’ is defined as total interest expense on deposits and FHLB advances, divided by the sum of total average deposits and average FHLB advances. We believe that this measure is important to many investors in the marketplace who are interested in the
Slide 42: Investor Presentation First Quarter 2025
Investor Presentation First Quarter 2025 NASDAQ: FBIZ 42
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