First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (May 2015)
38 slides from First Business Financial Services's investor presentation, May 12, 2015
Slide 1: Investor Presentation May 2015
INVESTOR PRESENTATION May 2015 YOUR SUCCESS COMES FIRST
Slide 2: Forward-Looking Statement
Forward-Looking Statement When used in this presentation, and in any oi oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “exp “assume,” “intend,” “estimate,” “anticipate,” “project,” ‘tikely,” or sim
Slide 3: Table of Contents
Table of Contents Company Overview 4 Pillars of Success 9 = Strong Record of Execution ... 10 = Competitive Advant 16 WStVStEBIC ODjECtIVES ciseccsssnoeaessetan oxen 22 Investment Considerations ........0.0.0.ccceteee 28
Slide 4: Company Overview
COMPANY OVERVIEW YOUR SUCCESS COMES FIRST First _ Business
Slide 5: Company Profile
Company Profile Headquarters: Madison, WI Mission: Build long-term shareholder value as an entrepreneurial financial services provider to businesses, executives and high net worth individuals 4. Data as of Maren 18,2018. 2 FBIZ BANKING? Billion $1.7 Billic FBIZ TRUST $1.0 Billion Experienced leaders
Slide 6: Evolution of Success
Evolution of Success Aligned with Financial Needs of Our Niche Client Base ERATING ENTITIE! First First Business Business. Bank Capital Corp. Cry Commercial Asset Based Equipment BUSINESS LINES Source: F81z Management 1 Represents Appleton, Oshkosh and Green Bay, Wisconsin, 6
Slide 7: Geographic Footprint
Geographic Footprint Appleton, WI ilwaukee, WI Kenosha, WI Detroit, MI Minneapolis, MN, Madison, WI Chicago, IL +— Hockessin, DE St. Louis, MO, Kansas City, KS Charlotte, NC Denver, CO Atlanta, GA San Antonio, TX @ Banking Office @ Asset-Based Lending Business Development Office Equipment Finance Bu
Slide 8: Proven Leadership Team
Proven Leadership Team * Experienced leadership team trained at much larger institutions and significant time with FBIZ LC = eee | ymenree [AM | Ragusa institutions Joining FBIZ [CoreyChambas __| President & CEO - FBFS x Jim Ropella Ce x ‘oa eocanvan et Credit Officer - FBFS x ney ate Secretary x IR
Slide 9: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE STRONG RECORD OF EXECUTION COMPETITIVE STRATEGIC ADVANTAGE OBJECTIVES
Slide 10: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE STRONG RECORD OF EXECUTION COMPETITIVE STRATEGIC ADVANTAGE OBJECTIVES
Slide 11: Strong Record of Execution
Strong Record of Execution Key Objectives a DRIVE TOP LINE REVENUE GROWTH GB INCREASE FEE INCOME pa | STRENGTHEN IN-MARKET DEPOSIT MIX a STRONG PROFITABILITY DELIVER ¢ +1% ROA ¢ +12% ROE ¢ ABOVE MARKET GROWTH
Slide 12: Organic Growth Drives Top Line Revenue
Organic Growth Drives Top Line Revenue’ Complemented by Niche Acquisitions $20.0 4 CAGR JESaaN) $18.0 | $17.0 + $34 $16.0 | Millions $15.0 4 $14.0 + $13.0 4 $12.0 ~ 2009 2014 1Q14 2Q14 3Q14 4Q14 1Q15 Source: SEC Filings and F812 Management. 1 2 1, 2014
Slide 13: Increase Fee Income
Increase Fee Income Sources of Fee Income Expand Total Fee Income $5.0 asm Ae $4.0 CAGR nox $10M vw $300 5 3 15% $6M 5 20 | 10% $1.0 $0.0 ~ x 2009 2014 1Q14 2014 3014 4014 1015 a ar Service we a eT ne 1 boxee) % of Total Source: SEC Filings and F812 Management. 1 1, 2004
Slide 14: Strengthen In-market Deposit Mix
Strengthen In-market Deposit Mix Focus on Transaction Accounts to Reduce Cost of Funds $1,500 1.00% $1,200 + 0.80% $308m wz $900 + 0.60% 3s = $600 + 0.40% $153M $300 + 0.20% $o ~ 0.00% 2009 2014 1Q14 2Q14 3Q14 4Q14 1Q15 _ Non- Nie HE Transaction Accounts IB Transaction Cost of Total TERE Teansaction
Slide 15: Strong Profitability
Strong Profitability Efficient Operating Model Drives Bottom Line Non-GAAP Pre-Tax Adjusted Earnings 1.10% - 14.00% sae 1.00% + + 13.00% g 2009 2014 4 5 0.90% + + 12.00% £ 3 g 0.80% | |-11.00% 0.70% - - - - — 10.00% 1Q14 2014 3014 4Q14 1Q15 [my FOA ROE ROAGoal === ROE Goal Source: SEC Filings nd F81
Slide 16: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE STRONG RECORD OF EXECUTION COMPETITIVE: STRATEGIC ADVANTAGE OBJECTIVES
Slide 17: Competitive Advantage
Competitive Advantage Key Themes a EFFICIENT OPERATING MODEL SUCCESSFUL EFFICIENT FUNDING STRATEGY NICHE COMMUNITY SUPERIOR CREDIT QUALITY BUSINESS BANK CLIENT-CENTRIC FOCUS WITH HIGH TOUCH SERVICE
Slide 18: Efficient Operating Model
Efficient Operating Model HIGH EFFICIENCY "BUSINESS BANK" OPERATING MODEL WI BHCs ¢ Limited branch network © Invest in technology 60% iY) * Products tailored to serve businesses and their owners EFFICIENCY RATIO | | EFFICIENCY RATIO Total Loans Outstanding per FTE Deposits Per Location Thousands & 1
Slide 19: Efficient Funding Strategy
Continue to leverage commercial relationships to attract in-market deposits, specifically transaction accounts Maintain wholesale deposits within Board-monitored limits — Match-funding fixed-rate term loans with wholesale deposits locks in interest rate spread — Long-term wholesale deposits more rea
Slide 20: Superior Credit Quality Safeguards Shareholder Investment
Superior Credit Quality Safeguards Shareholder Investment Cumulative Net Charge-Offs as a % of 12/31/07 Loans and Leases 14.00% 7 12.00% + 10.00% + 8.00% + 6.00% +4 4 4 ee 2.50% 2.88% 2.95% 3.05% 3.09% 2.00% + 0.00% ~ 2008 2009 2010 2011 2012 2013 2014 2015 m@ FBIZ == All BHCs == WI-Based BHCs Sourc
Slide 21: Client-centric Focus with High Touch Service
Client-centric Focus with High Touch Service FIRST BUSINESS PRESENTS ie FOFIsins MANUFACTURING FIRST 45, Enterprising =) ol EXPO & CONFERENCE “ ’ i ) First Aw ards = a — CORPORATE NOT FOR FOOD AND PROFIT BEVERAGE COMMERCIAL REAL ESTATE FINANCE MANUFACTURING — EMERGING TECHNOLOGY
Slide 22: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE STRONG RECORD OF EXECUTION COMPETITIVE STRATEGIC ADVANTAGE OBJECTIVES
Slide 23: Strategic Objectives
Strategic Objectives GB THE BEST TEAM WINS OPPORTUNISTICALLY INVEST TO SUPPORT ORGANIC GROWTH LONG-TERM FUTURE COMPLEMENT ORGANIC GROWTH WITH SUCCESS NICHE ACQUISITIONS INCREASE FEE INCOME GENERATING SERVICES
Slide 24: The Best Team Wins
The Best Team Wins Engaged Employees = Happy Clients HIRING PROCESS MENTOR PROGRAM SATISFACTION 95% SURVEYS AND FEEDBACK
Slide 25: Opportunistically Invest to Support Organic Growth
Opportunistically Invest to Support Organic Growth HIRED CIO TO CHAMPION INVESTMENTS IN TECHNOLOGY FOR OPERATING AND SALES EFFICIENCY CONVERSION TO SALESFORCE IN 2015 DATA WAREHOUSE/BUSINESS INELLIGENCE IMPLEMENTATION IN 2015 HIRED VP OF TALENT DEVELOPMENT OPPORTUNISTICALLY ADD NEW LOCAL BDOs AND EV
Slide 26: Complement Organic Growth with Niche Acquisitions
Complement Organic Growth with Niche Acquisitions ¢ ORGANIC GROWTH REMAINS THE FOUNDATION FOR THE FUTURE ¢ HOWEVER, OUR SUCCESS CREATES OPPORTUNITIES FOR ACQUISITIONS memmep = SPECIALITY FINANCE meme =REGISTERED INVESTMENT ADVISORY FIRMS meme §~=BUSINESS-FOCUSED COMMUNITY BANKS
Slide 27: Expand Efforts to Increase Fee Income Generating Services
Expand Efforts to Increase Fee Income Generating Services a SBA LENDING GB PRIVATE WEALTH MANAGEMENT >20% OF TOTAL pa | EXPAND EXISTING TRUST SERVICES REVENUE EXPAND EXISTING TREASURY MANAGEMENT SERVICES
Slide 28: Investment Considerations
INVESTMENT CONSIDERATIONS YOUR SUCCESS COMES FIRST First _ Business
Slide 29: Investment Highlights
Investment Highlights Historically strong ROA and ROE Historic organic growth success complemented by niche acquisition opportunities drives above market growth Profitable and grew TBV/share through the Great Recession Strong asset quality with low historical charge-off levels Focus on enhancing mix
Slide 30: Market deposits by county and bank share
Waukesha County, WI Fo x Valley, WI? Alte (Largest 3 banks 33%) (Largest 3 banks 48%) ane County, WI (Largest 3 banks 40%) rra Bank Market” (Largest 3 banks 40%) Associated Bank: 8% FBIZ: 2% FBIZ: 7% maize FBIZ: 0.42% 2.7 Billion $10.5 Billion $11.0 Billi $46.6 Billion Total Market Deposits Total Ma
Slide 31: FBIZ Valuation
FBIZ Valuation P/E i it 3, 2012 - March 31, 2015) 25 20x 1x 15x 15x 12x 10x 5x ox Dec12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun Sep-14 Dec-14 Mar-15 —FBIZ-US_ SNL Micro Cap U.S. Bank | —SNL Small Cap U.S. Bank 31 Source: SNL Financial
Slide 32: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS YOUR SUCCESS COMES FIRST First Business
Slide 33: Non-GAAP Pre-Tax Adjusted Earnings
Non-GAAP Pre-Tax Adjusted Earnings Jjon-GAAP pre-tax adjusted earnings is comprised of our pre-tax income adding back (1) our provision for loan and leases losses, (2) other identifiable costs of credit and (3) other discrete items that are unrelated to our primary business activities. Even though t
Slide 34: Efficiency Ratio
Efficiency Ratio Efficiency Ratio “Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of losses or gains on foreclosed properties, other discrete items unrelated to our primary business activities amortization of other intangible assets, if any, divided b
Slide 35: Deposit Cost
Deposit Cost Cost of Total Deposits © “Cost of Total Deposits” is defined as total interest expense on deposits divided by average total deposits. We believe that this measure is important to many investors in the marketplace who are interested in the trends in our deposit funding costs. (dollars in
Slide 36: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage mulative Net Charge-Offs to 12/31/07 Loans and Leases “Cumulative Net Charge-off Percentage” is defined as aggregate net charge-offs from 1/1/2008 through 3/31/15 divided by total loans and leases as of 12/31/07. We believe that this measure is important to many
Slide 37: Loan and Lease Composition
Loan and Lease Composition As of March 31, 2015 (5000) Commercial Real Estate - Owner Occupied Commercial Real Estate - Non-Owner Occupied Construction and Land Development. Multi-family 1:4 Family Direct Financing Leases 28 ‘Total Gross Loans and Leases All Other Loans Direet Financing Leases 1-4 F
Slide 38: Your Success Comes First
YOUR SUCCESS COMES FIRST | First Business
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