First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Q3 2021 Earnings Presentation
42 slides from First Business Financial Services's earnings presentation, Nov 10, 2021
Slide 1: Investor Presentation Third Quarter 2021
INVESTOR PRESENTATION Third Quarter 2021 Nasdaq: FBIZ Exhibit 99.1
Slide 2: 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,” “likely,” or similar expre
Slide 3: Table of Contents
Table of Contents Company Overview ....................................................................... 4 Quarterly Update .......................................................................... 8 Why FBIZ? ......................................................................................
Slide 4: Company Overview
COMPANY OVERVIEW
Slide 5: Company Profile
Company Profile • Experienced leadership • Entrepreneurial management style • Business-focused model • Efficient and highly scalable banking model with limited branch network • Client relationship focus with high touch service Headquarters: Madison, WI Mission: Build long-term shareholder value as a
Slide 6: Evolution of Success Aligned with the Financial Needs of Our Niche Client Base
Evolution of Success Aligned with the Financial Needs of Our Niche Client Base 6
Slide 7: Superior Client Satisfaction Rating
Superior Client Satisfaction Rating Net promoter score results speak for themselves 7 *NPS benchmarks reported by Qualtrics in November 2020. **First Business Bank annual client survey conducted by Dr. Moses Altsech in May and June 2021. Note: Net promoter score assesses likelihood to recommend on a
Slide 8: Quarterly Update
QUARTERLY UPDATE
Slide 9: Profitability & Growth
Profitability & Growth • Sustained Strong Revenue Growth - Net interest margin stability in addition to the strength and diversity of our fee income sources resulted in top line revenue growth of 8.5% over the prior year quarter. • Exceptional Loan Growth - Loans, excluding PPP loans, grew 7% annual
Slide 10: Third Quarter 2021 Summary: Where Did the Loan Growth Come from?
Third Quarter 2021 Summary Where Did the Loan Growth Come from? 10 Th ou sa nd s Net Loan Growth Over Q2 2021 $35,302 $(5,670) $1,514 $(8,535) $2,567 $6,744 $679 Commercial Lending Private Wealth Asset- Based Lending Accounts Receivable Financing SBA Lending Vendor Finance Floorplan Financing $— $5,
Slide 11: Why FBIZ?
WHY FBIZ?
Slide 12: Growth Stock at a Value Price
Growth Stock at a Value Price 1. Growth represents Q2 2021 annualized growth compared to Q1 2021. 2. Data is annualized for the three months ended June 30, 2021. 3. FBIZ deposits defined as total deposits less wholesale deposits and significant, temporary deposit from the sale of a client's business
Slide 13: Drivers of Growth and Profitability
Drivers of Growth and Profitability Improved Profitability Through Growth in Higher Yielding Business Lines 1. Additional financial information on commercial business lines can be found in the appendix. 2. AUA = Assets Under Advisement 3. NFE = Net Funds Employed 13 Business Life Cycles Early Stage
Slide 14: Deposit-Centric Strategy
14 Deposit-Centric Strategy Ability to Generate Double-Digit Loan Growth Supported by History of Strong Deposit Growth Loan vs. Deposit Growth (1) FBIZ Loan Growth FBIZ Deposit Growth '19 '20 '21(2) 0% 5% 10% 15% 20% 25% 1. Deposits defined as total deposits less wholesale deposits and significant,
Slide 15: Key Operating Trends: Operating Fundamentals Demonstrate Earnings Power
M ill io ns $26.6 $28.1 $32.5 $39.1 FYE 2017 FYE 2018 FYE 2019 FYE 2020 $0.0 $15.0 $30.0 $45.0 $60.0 $75.0 $90.0 $105.0 Key Operating Trends Operating Fundamentals Demonstrate Earnings Power 15 Note: Net interest income is the sum of "Pure Net Interest Income" and "Fees in Lieu of Interest". Non-int
Slide 16: Asset Quality
Asset Quality Non-Performing Assets/Total Assets Decline as SBA Legacy Portfolio(1) Runs Off 16 M ill io ns NPA FBIZ NPA/TA Peer NPA/TA 3Q20 4Q20 1Q21 2Q21 3Q21 $0.0 $6.0 $12.0 $18.0 $24.0 $30.0 $36.0 $42.0 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1. Defined as SBA 7(a) and Express on-balance
Slide 17: Profitability
0.68% 1.41% 8.58% 16.39% ROAA (1) ROAE (1) Q3 2020 Q3 2021 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 18.00% 17 Profitability Strong Performance Driven by Loan Growth, Diversification of Fee Income, and Provision Benefit 1. Calculations are annualized. M illions$
Slide 18: Compounding Tangible Book Value Growth
Compounding Tangible Book Value Growth History of Steady, Consistent TBV and Dividend Growth with Active Share Repurchase Program 1. 2021 TBV/Share represents data as of S 30, 2021. 2021 Dividends/Share represents annualized data for September 30, 2021. TBV 14YR CAGR = 7.2% Div/Share 14YR CAGR = 7.5
Slide 19: Total Shareholder Return Above Peer Group Median
Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. Total Shareholder Return Above Peer Group Median 19
Slide 20: Trading at Discount to Peer Group Price / LTM EPS
Trading at Discount to Peer Group Price / LTM EPS Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. 20
Slide 21: Trading at Discount to Peer Group Price / TBV
Trading at Discount to Peer Group Price / TBV Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. 21
Slide 22: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS
Slide 23: Appendix: Strategic Plan
APPENDIX Strategic Plan
Slide 24: FBIZ Strategic Plan 2019-2023 Strategies
FBIZ Strategic Plan 2019-2023 4 Strategies Designed to Navigate the Company over a 5-Year Time Horizon 24
Slide 25: FBIZ Strategic Plan 2019-2023 Goals
FBIZ Strategic Plan 2019-2023 Goals Set to Deliver Above Average Shareholder Return 25 Goal Actual 2018 Actual 2019 Actual 2020 Actual 2021 Goal 2023 Return on average equity (1) 9.41% 12.55% 8.64% 16.63% 13.50% Return on average assets (1) 0.86% 1.14% 0.70% 1.39% 1.15% Top line revenue growth 10.70
Slide 26: Appendix: Commercial Banking Products & Services
APPENDIX Commercial Banking Products & Services
Slide 27: Commercial Lending
Product Profile • Target small- to medium-sized companies in our Wisconsin, Kansas, and Missouri markets • Lines of credit and term loans focused on businesses with annual sales of up to $75.0 million Technology Initiatives • Developing a client lending portal to avoid collaborating on documents ove
Slide 28: Treasury Management
Product Profile • Target small- to medium-sized companies in our Wisconsin, Kansas, and Missouri markets • Comprehensive services for commercial clients to manage their cash and liquidity, including lockbox, accounts receivable collection services, electronic payment solutions, fraud protection, inf
Slide 29: Private Wealth
Product Profile • Fiduciary and investment manager for individual and corporate clients, creating, and executing asset allocation strategies tailored to each client’s unique situation • Full fiduciary powers and offers trust, estate, financial planning, and investment services, acting in a trustee o
Slide 30: Asset-Based Lending
Product Profile • Target medium-sized companies nationwide • Primarily provide revolving lines of credit and term loans for leveraged buyouts, capital expenditures, working capital, bank debt refinancing, debt restructuring, corporate turnaround strategies and debtor-in-possession financing in the c
Slide 31: Accounts Receivable Financing
Product Profile • Target small- to medium-sized companies nationwide • Primarily provide funding to clients by purchasing accounts receivable on a full recourse basis • Positioned to provide competitive rates to clients starting up, seeking growth, and needing cash flow support, or who are experienc
Slide 32: SBA Lending
Product Profile • Primarily originate variable rate term loans through the 7(a) program which typically provides a guaranty of 75% of principal and interest • Product offering is designed to generate new business opportunities by meeting the needs of clients whose borrowing needs cannot be met with
Slide 33: Vendor Finance
Product Profile • Includes broad range of equipment finance products to address the financing needs of commercial clients in a variety of industries • Focus includes manufacturing equipment, industrial assets, construction, and transportation equipment, and a wide variety of other commercial equipme
Slide 34: Floorplan Financing
Product Profile • Offers floorplan financing for independent car dealerships nationwide • Allows car dealers the flexibility to finance their acquisition of used cars, preserving cash flow, and allowing dealers to purchase inventory • Offer floorplan programs from $500,000 to $10 million for larger,
Slide 35: Bank Consulting
Product Profile • Expertise to assist institutions with balance sheet management • Services offered include investment portfolio management and administration, asset liability management, and asset liability process validation services Technology Initiative • Currently focusing on improved use of da
Slide 36: Appendix: PPP & COVID-19 Update
APPENDIX PPP & COVID-19 Update
Slide 37: PPP Update
PPP Update Active Participation Propelled by SBA Expertise & Proactive Investments in Technology Leveraged a proprietary client portal to create an efficient and user friendly PPP portal within days of the plan’s announcement 37 M ill io ns SBA PPP Loan Forgiveness $22.8 $33.8 $329.1 $75.0 In Proces
Slide 38: COVID-19 Update
($ in m ill io ns ) Loan Modifications Balance Outstanding 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 $0 $50 $100 $150 $200 $250 $300 $350 COVID-19 Update Modest Overall Exposure to Industries Most Impacted by COVID-19 and No Retail Consumer Portfolio 38 • As of September 30, 2021, the Company
Slide 39: Appendix: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations
Slide 40: Pure Net Interest Income reconciliation
"Pure Net Interest Income" is defined as net interest income less fees in lieu of interest. "Fees in Lieu of Interest" is defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. We believe that this measure is important to many investors in the marketplace
Slide 41: Net Operating Income reconciliation
"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-time and other discrete items. In compliance w
Slide 42: First Business Bank
First Business Bank.
First Business Financial Services — Q3 2021 Earnings Presentation on 6ix