First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (October 2013)
46 slides from First Business Financial Services's investor presentation, Oct 31, 2013
Slide 1: Management Presentation October 2013
Management Presentation October 2013 Management Presentation October 2013
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 offs, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan, roje se ris factors and investors. See, Item 1A “RISK FACTORS
Slide 3: FBIZ Company Overview
FBIZ Company Overview YOUR SUCCESS COMES FIRST
Slide 4: Company Profile
Company Profile Mission: build long-term shareholder value as an entrepreneurial financial services provider to businesses, executives, and high net worth individuals Headquarters: Madison, WI Total assets at September 30, 2013: $1.3 Billion Experienced leadership Entrepreneurial management style In
Slide 5: History of First Business
History of First Business Jun 2000 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 Fact
Slide 6: Office locations map
Appleton, WI Minneapolis, MN Milwaukee, WI Detroit, MI Madison, WI Chicago, IL Cleveland, OH Denver, CO St. Louis, MO sas City, KS @ Banking Office © Asset-Based Lending Business Development Office © Equipment ance Business Development Office @ Factoring Of Source: F512 Management.
Slide 7: Senior Executive Team
Senior Executive Team Corey Chambas Jim Ropella President & Chief Executive Officer of First Business * Chief Financial Officer Financial Services, I * Over 30 years of experience in finance and accounting Over 25 years of commercial banking experience primarily in the banking industry specializing
Slide 8: Senior Executive Team
Senior Executive Team Barbara Conley Dave Vetta + General Counsel and Corporate Secretary . President & Chief Executive Officer of First Business Bank — Juris Doctor, a of Wisconsin Law School, magna Milwaukee jember of the State Bar of Wisconsii + Over 30 years of commercial banking experience 5 ye
Slide 9: Senior Executive Team
Senior Executive Team Randy Shumate President of First Business Equipment Finance ~ National . Division Over 25 years of equipment finance and leasing experience 1 year with First Business + Prior to joining First Business, Mr. Shumate was the President of Midland Capital Partners, LLC, a middle mar
Slide 10: Corporate Strategy
Corporate Strategy ¢ High efficiency “Business Bank” Efficiency Ratio vs. WI Peers operating model 80.0% — Limited branch network . 75.0% — Invest in technology to serve our clients 70.0% — Products tailored to serve small —m ~ ; A 65.0% businesses and their owners een ¢ Capitalize on growth opportu
Slide 11: Expansion Initiatives Since Early 2012
Expansion Initiatives Since Early 2012
Slide 12: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST First Business
Slide 13: Strategic Objectives
Strategic Objectives Continue organic revenue growth Achieve additional improvement in pre-tax adjusted earnings Continue to capture in-market deposits from clients to strengthen our mix of core funding and reduce our cost of funds Continue asset quality improvement Maintain strong profitability/ROA
Slide 14: Consistent annualized organic revenue growth
Consistent annualized organic revenue growth Top Line Revenue? sas omen a Millions $31.36 $34.48 $38.69 $42.52 $46.58 2008 2009 2010 2011 2012 YTI 9/30/12 9/30/13 Compound Annual Growth Rate From 12/31/08 — 12/31/12 = 10.4% Source: SEC Filings and FBIZ Management prior year period. Percentages repre
Slide 15: Pre-Tax Adjusted Earnings
CAGR exceeds top Pre-Tax Adjusted Earnings? 9 “wetericien operating model $2.9M 27.8% $2.6M 0.2M 32.1% -1.6% $10.52 $10.35 $13.23 $16.54 $18.50 2008 2009 2010 2011 2012 YTD YTD 9/30/12 9/30/13 Compound Annual Growth Rate From 12/31/08 — 12/31/12 = 15.2%
Slide 16: Efficiency Ratio & FTEs
Efficiency Ratio & FTEs 80% 150 75% 2 @ 140 70% @ es Reflects 2012 strategic a initiative to invest in new business 120 65% development officers 110 60% 100 55% e 50% 2008 2009 2010 2011 2012 YTD 9/30/13 Efficiency Ratio «==FTE Source: SEC Fllngs and FBIZ Management. ficiency Ratio”
Slide 17: Deposit Composition
Focus on in-market H itl deposits, specifically De posit Com position transaction accounts $1,200 4.00% _ a lo 6 | i | Seow 0 — 2 2 $600 : 2.00% 5 — ] $300 1.00% $o 0.00% 2008 2009 2010 2011 2012 9/30/13 @mBrokered Deposits maliln-Market CDs Money Market Ml Transaction Accounts —=Cost of Total Depos
Slide 18: Funding Strategy
Funding Strategy * Continue to leverage commercial 100% relationships to attract in-market 90% deposits 80% ¢ Maintain brokered deposits within 70% Board-monitored limits 60% Match-funding fixed rate term loans with brokered deposits locks in interest 50% rate spread Long-term brokered funding more
Slide 19: Asset Quality Trends
Asset Quality Trends Continue to make significant improvement in NPA levels As of 9/30/13, non-performing assets were approximately $10.3 million, or 0.82% of total assets Allowance for loan and lease losses provided coverage for 156% of non-accrual loans and leases at 9/30/13 As of 9/30/13, $7.1 mi
Slide 20: 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 21: Return on Average Assets
Return on Average Assets* 0.00% — i a a a 2008 2009 2010 2011 (1) 2012 YTD D 9/30/12 9/30/13 Average Total Assets - Compound Annual Growth Rate From 12/31/08 — 12/31/12 = 5.1% T Source: SEC lings and F812 Management. TO data is annualized. 2 - 20
Slide 22: 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% 2008 2009 2010 2011 (1) 2012 YTD 9/30/12 9/30/13 Source: SEC lings and F812 Management. TO data is annualized. 1
Slide 23: Financial Performance Highlights
Financial Performance Highlights
Slide 24: Recent Financial Highlights
Recent Financial Highlights
Slide 25: Loan and Lease Composition
Loan and Lease Composition Commercial & Industrial $ 276094 29% $ 256,458 8% Commercial RE - Owner Occupied 139312 15% 144,988 (4%) i 335,756 35% 323,660 4% Development Construction & Land Development 73,799 8% 64,966 14% 8% Multifamily 61741 6% 58,454 6% 114 Family Residential RE 30,741 3% 31,943 (
Slide 26: Loan and Lease Growth
Loan and Lease Growth $940 $920 $900 $880 $860 ions $840 Mill $820 $800 $780 $760 2008 2009 2010 2011 2012 YTD 9/30/13 @imAverage Loans and Leases +—Net Interest Margin Source: SEC lings and F812 management 3.70% 3.50% 3.30% 3.10% 2.90% 2.70% 2.50%
Slide 27: Tangible Common Equity
Tangible Common Equity 2008 2009 2010 2011 2012 9/30/13 M@TBV/Share ——TCE Ratio TBV/Share - Compound Annual Growth Rate From 12/31/08 — 12/31/12 = 6.5% and “TCE Ratio”
Slide 28: Earnings Per Share
Earnings Per Share 2008 2009 2010 2011 2012 YTD 9/30/13 M™EDiluted EPS mmm Dividends per Share ——Payout Ratio Source: SEC lings and F8IZ management.
Slide 29: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST First Business
Slide 30: Investment Highlights
. Investment Highlights Market opportunities available for locally based institutions with strong balance sheets Profitable throughout recent economic crisis with strong underlying fundamental trends Manageable legacy asset quality situation with low historical charge-off levels Focus on strengtheni
Slide 31: Loan and Lease Growth Opportunity
Loan and Lease Growth Opportunity
Slide 32: Significant Deposit Growth Opportunity
Significant Deposit Growth Opportunity
Slide 33: FBIZ Valuation
FBIZ Valuation % Price Increase Since 4Q ‘10 (December 31, 2010 - September 30, 2013) 143% f 120% 100% fy, - iid ws ad 20% + 31% VW Dec-10 Apr-11 ‘Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 ‘Aug-13 —FBIZ-US ~=—SNL Micro Cap U.S. Bank ~=——SNL Small Cap U.S. Bank ‘Source: SNL Financial 32
Slide 34: FBIZ Valuation
FBIZ Valuation P/E Trend Since 4Q '10 (December 31, 2010 - September 30, 2013) 18.00 Abi A, 16x 16.00 “yr 1400 | sila 12.00 Whee 10x a >| A 8:00; Wanye [ rp 6.00 [ pe aed 400 Iyer, 2.00 0.00 Dee-10 Apr Aug-11 Dec-i1 Apr-a2 Aug-12 Dec-12 Apr-13 Aug-13 —FBIZ-US_ = —=SNL Micro Cap U.S. Bank ~=©——SNL Sm
Slide 35: Appendix Supplemental Data and non-GAAP Reconciliations
Appendix Supplemental Data and non-GAAP Reconciliations
Slide 36: Financial Highlights
Financial Highlights ‘At or for the Year Ended 9 pee tere 9 Months Ended 2008 re 2012 ear 9/30/2013 Income Statement Net interest income $ 26,258 § 28,034 $ 31,951 $ 35,461 $ 37,881 $ 28450 $ 31,121 Provision for loan and lease losses 4,299 8,225 7,044 4,25 4,243 3,399 243, lon-interest incom 5,105
Slide 37: Yield and Cost Trends
Yield and Cost Trends For the 9 Months Ended. 9/30/2012 9/30/2013 Interest-Earning Assets ‘Average ee Average | Average Average Yield/Cost Balance _Yield/Cost__Balance _Yield/Cost 5.60% 3% ‘Commercial real estate and other mortgage loans $ 608655 545% § 583590 5.4 Cran oie 783% 2% 285,706 ect financ
Slide 38: Asset Quality Data and Ratios
Asset Quality Data and Ratios
Slide 39: Pre-Tax Adjusted Earnings
Pre-Tax Adjusted Earnings Pre-Tax Adjusted Earnings “Pre-Tax Adjusted Earnings” is defined as pre-tax income plus provision for loan and leases losses, other identifiable costs of credit and other discrete items that are unrelated to our primary business activities. In our judgment, the presentation
Slide 40: Efficiency Ratio
Efficiency Ratio Efficiency Ratio “Efficiency Ratio” is defined as non-interest expense less loss on foreclosed properties, FDIC special assessments, goodwill impairment and amortization of other intangible assets divided by our operating revenue, which is equal to net interest income plus non-inter
Slide 41: Tangible Book Value Per Share
Tangible Book Value Per Share
Slide 42: TCE Ratio
TCE Ratio TCE Ratio “TCE Ratio” is defined as the ratio of common equity reduced by goodwill and other intangible assets divided by total assets reduced by goodwill and other intangible assets. We believe that this measure is important to many investors in the marketplace who are interested in the r
Slide 43: 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. (dollarsin
Slide 44: Texas Ratio
Texas Ratio “Texas Ratio” is defined as non-performing assets divided by the sum of the allowance for loan and lease losses and tangible total 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 non- performin
Slide 45: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage
Slide 46: YOUR SUCCESS COMES FIRST
-— YOUR SUCCESS COMES FIRST | First Business
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