First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (July 2014)
44 slides from First Business Financial Services's investor presentation, Jul 29, 2014
Slide 1: Investor Presentation July 2014
Investor Presentation July 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements When used inthis 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,” “ex; Seas * ip m carefully considered by potential investors. See, Item 1A
Slide 3: Company Profile
Company Profile Headquarters: Madison, WI Total assets at June 30, 2014: $1.3 Billion Experienced leadership Entrepreneurial management style Insider ownership of 10%!) Business-focused model Client relationship focus with high Mission: build long-term shareholder value as an touch service 100% orga
Slide 4: History of First Business
History of First Business First Business Bank - Milwaukee Mar 1990 May 1995 Dec 2001 Sep 2006 First Business First Business First Business First Business Bank - Madison Capital Corp. Trust & Investments Bank - Northeast" Oct 1998 Nov 2012 First Business First Business Equipment Finance Factors sourc
Slide 5: Source: FIZ Management
Source: FIZ Management
Slide 6: Senior Executive Team
Senior Executive Team Jim Ropella Michael Losenegge! Chief Credit Officer Business Financial Services, Inc. . . . y experience 7 * 11years with First Business lending & cash management = Pri ir Mr. Ropell = Prior * 20years with First Business was i I. 28 8 Prior to joining First Business, Mr. Chamba
Slide 7: Senior Executive Team
Senior Executive Team Joan Burke Mickey Noone Randy Shumate * President f Fret Business Trust & . . Investmer Region Finance - National Division + Over + over trust and investment services experienc: y leasing experience 12 years with First Business 8 years with First Business + 2years with First Bu
Slide 8: Corporate Strategy
Corporate Strategy ° High efficiency “Business Bank” operating model — Limited branch network — Invest in technology to serve our clients 75.0% Products tailored to serve small businesses and their owners 70.0% ¢ Commitment to expansion — Organic growth from existing 85.0% business development talen
Slide 9: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST
Slide 10: Strategic Objectives
Strategic Objectives: • Drive top line revenue growth • Achieve additional improvement in pre-tax adjusted earnings • Continue to leverage operating model to maintain efficiency • Continue to capture transaction deposits to strengthen our mix of in-market funding and reduce our cost of funds • Maint
Slide 11: Consistent annualized organic revenue growth
Consistent annualized organic revenue growth Top Line Revenue? of approximately 10% over the past 5 years so @ & $20 Millions $10 | Seise $3448 $3869 ©4252 86 Stes $50.55 2008 2009 2010 2011 2012 2013 YTD 6/30/13 6/30/14 Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 10.0% Source: SEC Fillgs
Slide 12: Pre-Tax Adjusted Earnings CAGR exceeds top line revenue CAGR
CAGR of 15.2% exceeds top line revenue CAGR Pre-Tax Adjusted Earnings! — “ceroericien operating model $20 11.8% $5 $10.52 $1035 $13.23 $1654 $1850 $21.36 2008 2009 2010 2011 2012 2013 YTD YT! 6/30/13 6/30/14 Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 15.2% Source: EC Fillgs and FBIZ Mana
Slide 13: Efficiency Ratio & FTEs
Reflects strategic initiative Efficiency Ratio? & FTEs? intaentiortuure grown 80% @® 160 75% @Q = : 65% 120 am 60% ° 100 55% + 90 66.4% 68.2% 65.8% 61.0% 60.3% 57.7% 59.4% 50% T 80 2008 2009 2010 2011 2012 2013 YTD 6/30/14 Efficiency Ratio <=FTE Source: SEC lings and FBI2 Management. 1. “Efficiency
Slide 14: Focus on in-market deposits: Deposit Composition
Focus on in-market Deposit Composition econ snails $1,500 $1,200 $0 2008 2009 2010 2011 2012 2013 YTD 6/30/14 4.00% 3.00% 2.00% 1.00% 0.00% mmm Brokered Deposits mm In-Market CDs Money Market sm Transaction Accounts Cost of Total Deposits Source: sings Pas a Depastal = Compound Annual Growth Rate Fr
Slide 15: Funding Strategy
Funding Strategy Continue to leverage commercial 100% relationships to attract in-market deposits, specifically transaction accounts 80% 90% ° Maintain brokered deposits within —_ 799, Board-monitored limits — Match-funding fixed rate term loans with brokered deposits locks in interest rate spread L
Slide 16: Asset Quality Trends
Asset Quality Trends Maintain strong asset quality As of 6/30/14, non- 790 performing assets were $45 approximately $14.5 million, $40 or 1.11% of total assets $35 Allowance for loan and lease $30 losses provided coverage for é 99% of non-accrual loans and = 925 leases at 6/30/14 2 $20 As of 6/30/14
Slide 17: Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases
Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases
Slide 18: Return on Average Assets
Return on Average Assets! 1.20% 1.00% + 0.80% 0.60% 0.40% 0.20% 0.00% 2008 2009 2010 2011 (1) 2012 2013 YTD YTD 6/30/13 6/30/14 Source: SEC lings and F812 Management. YTD datas annualized, 17 L 7
Slide 19: Return on Average Equity
Return on Average Equity! 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% i— 2008 2009 2010 2011 (1) 2012 2013 YTD D 6/30/13 6/30/14 Source: SEC lings and F812 Management. YTD datas annualized, 1
Slide 20: Financial Performance Highlights
Financial Performance Highlights YOUR SUCCESS COMES FIRST
Slide 21: Recent Financial Highlights
Recent Financial Highlights
Slide 22: Loan and Lease Composition
Loan and Lease Composition Construction & ($000) Jun Development Commercial & Industrial $ ymmercial RE - Owner Occupiet Multi-family ire Commercial RE Non-Owner Occupied Construction & Land Development 1-4 Family multi-family Residential RE 1.4 Family Residential RE 3% Leases Leases _AlllOther Loan
Slide 23: Loan Growth & NIM Expansion
Loan Growth & NIM Expansion? $1,050 3.70% $1,000 - 3.50% $950 + 3.30% @ $900 2 3.10% = $850 2.90% $800 $750 2.70% $700 2.50% 2008 2009 2010 2011 2012 2013 YTD 6/30/14 mm Average Loans andLeases ==Net Interest Margin Source: SEC lings and FBI2 management. 3D 1
Slide 24: Trust Assets and Revenue
Trust Assets and Revenue $1,200 $4.0 3.5 $1,000 : $3.0 800 $ $2.5 $600 $2.0 1.5 $400 ? $1.0 200 : $0.5 $764 2008 2009 2010 2011 2012 2013 = 6/30/13 6/30/14 mm Trust Assets Under Management Trust Assets Under Administration <-Trust Revenue AUM&A Compound Annual Growth Rate From 12/31/08 — 12/31/13 =
Slide 25: Tangible Common Equity
Tangible Common Equity $32.00 $30.00 $28.00 $26.00 - $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 - 10.00% + 9.00% i> 8.00% 7.00% 6.00% ~ 5.00% 2008 2009 2010 2011 2012 2013 6/30/14 mm TBV/Share ==TCE Ratio TBV/Share - Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 7.0% "and “TCE Ratio”
Slide 26: Earnings Per Share
Earnings Per Share $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 2008 Source: SEC lings and F8IZ management, 2009 2010 mm Diluted EPS 2011 2012 mmm Dividends per Share 2013 YTD YTD 6/30/13 6/30/14 Payout Ratio 80.0% 70.0% - 60.0% ; 50.0% + 40.0% 30.0% 20.0% - 10.0% 0.0%
Slide 27: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST
Slide 28: Investment Highlights
Investment Highlights Market opportunities available for locally based institutions with strong balance sheets Profitable throughout the economic cycle with strong underlying fundamental trends Strong asset quality with low historical charge-off levels Focus on strengthening mix of in-market core fu
Slide 29: Loan and Lease Growth Opportunity
Loan and Lease Growth Opportunity
Slide 30: Significant Deposit Growth Opportunity
Significant Deposit Growth Opportunity
Slide 31: FBIZ Valuation: Price Increase Since 2012 Common Stock Offering
FBIZ Valuation: Price Increase Since 2012 Common Stock Offering
Slide 32: FBIZ Valuation: P/E Trend Since 2012 Common Stock Offering
FBIZ Valuation: P/E Trend Since 2012 Common Stock Offering
Slide 33: Appendix: Supplemental Data & Non-GAAP Reconciliations
Appendix Supplemental Data & Non-GAAP Reconciliations YOUR SUCCESS COMES FIRST
Slide 34: Appendix: Financial Highlights
Appendix: Financial Highlights
Slide 35: Appendix: Yield and Cost Trends
Appendix: Yield and Cost Trends
Slide 36: Appendix: Asset Quality Data and Ratios
Appendix: Asset Quality Data and Ratios
Slide 37: Appendix: Pre-Tax Adjusted Earnings
Appendix: Pre-Tax Adjusted Earnings
Slide 38: 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 and amortization of other intangible assets, if any, divid
Slide 39: Appendix: Tangible Book Value Per Share
Appendix: Tangible Book Value Per Share
Slide 40: Appendix: Tangible Common Equity to Tangible Assets
Appendix: Tangible Common Equity to Tangible Assets
Slide 41: Appendix: Cost of Total Deposits
Appendix: Cost of Total Deposits
Slide 42: Texas Ratio
Texas Ratio exas Ratio * “Texas Ratio” is defined as non-performing assets divided by the sum of the allowance for loan and lease losses and tangible common equity. We believe that this ratio is important to many investors in the marketplace who are interested in evaluating the level of a company’s
Slide 43: Appendix: Cumulative Net Charge-Off Percentage
Appendix: Cumulative Net Charge-Off Percentage
Slide 44: Your Success Comes First - First Business
YOUR SUCCESS COMES FIRST First Business
First Business Financial Services — Investor Presentation (July 2014) on 6ix