First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (July 2024)
47 slides from First Business Financial Services's investor presentation, Jul 25, 2024
Slide 1: Investor Presentation Second Quarter 2024
Investor Presentation Second Quarter 2024
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 Snapshot 4 Why FBIZ? 5 Strategic Plan 13 Drivers of Growth & Profitability 17 Appendix 28
Slide 4: Company Snapshot
Serving unique needs of business executives, entrepreneurs, and high net worth individuals through Business Banking, Private Wealth, and Bank Consulting Within Business Banking, our commercial banking offerings are focused on our stable and attractive Midwest markets while Specialty Finance products
Slide 5: Why FBIZ?
WHY FBIZ?
Slide 6: Growing Profitability, Differentiated Loan Growth, Strong Deposit Franchise
Growing Profitability FBIZ’s Historic and Ongoing Growth Supports Earnings Power Differentiated Loan Growth Capabilities History of consistent double-digit growth Growth is C&I focused and diversified Solid credit quality due to deep client relationships, strong underwriting, and niche business expe
Slide 7: Balanced and Steady Growth
Balanced and Steady Growth Operating Fundamentals Drive Earnings Power Note: Net interest income is the sum of "Pure Net Interest Income" and "Fees in Lieu of Interest". Non-interest income is the sum of "Private Wealth Management Service Fees", "Other Fee Income", "Service Charges", "SBA Gains", an
Slide 8: Operating Leverage Outperforms Peers
Operating Leverage Outperforms Peers History of Growing Revenues Faster than Expenses Note: Peer group defined as publicly traded bank with total assets between $1.75 billion and $7 billion. 1Q24 and 2Q24 represents data for the trailing 12 months. Peer data not yet available for 2Q24. Operating lev
Slide 9: Growth and Profitability Exceeds Peers
Growth and Profitability Exceeds Peers Top Line Revenue Growth and Efficient Capital Management Drives Strong Profitability Note: Peer Group defined as publicly-traded banks with total assets between $1.75 billion and $7.0 billion. Source S&P Global Peer data not yet available for 2Q24. 1. 1Q24 and
Slide 10: Shareholder Value Creation
Shareholder Value Creation History of Steady, Consistent TBV and Dividend Growth Through Economic and Interest Rate Cycles TBV 3YR CAGR = 10% Div/Share 3YR CAGR = 10% Q2 2024 dividends per share calculation is annualized. CAGR = 11%
Slide 11: Consistent Performance Across Rate Cycles
Consistent Performance Across Rate Cycles TBV/share increased more than peers in the current rate cycle Note: Peer Group defined as publicly-traded banks with total assets between $1.75 billion and $7 billion. Peer data not yet available for 2Q24. Differentiated Approach Aids TBV Preservation FBIZ h
Slide 12: Total Shareholder Return Above Peer Group Median
Note: Peer Group defined as publicly traded banks with total assets between $1.75 billion and $7.0 billion. Peer data not yet available for 1Q24. 1-Year, 3-Year, and 5-Year TSR is through 6/30/2024. Data as of 3/31/2024. Total Shareholder Return Above Peer Group Median Despite recent outperformance,
Slide 13: Strategic Plan
Strategic Plan
Slide 14: 2024-2028 Strategies
2024-2028 Strategies Protect & Strengthen Our Culture Thrive In The Workplace (§ pics First Of The Future Bares Grow Our Core 2024-2028 Deposits Strategies Achieve Operational Excellence Achieve Sustainable Profitability & Growth First Business Bank. FirstBusiness.Bank
Slide 15: Strategic Plan Overview
Strategic 5 Year Plan Overview 5 Year Goals Strategies ROATCE TBV Growth Top Line Revenue Growth Efficiency Ratio Core Deposits to Total Funding Employee Engagement & Participation Net Promoter Score Culture Add Goal Protect and strengthen our unique culture with a growing and geographically dispers
Slide 16: FBIZ Strategic Plan 2024-2028 Targets
FBIZ Strategic Plan 2024-2028 Newly approved targets Net promoter score assesses likelihood to recommend on an 11-point scale, where detractors (scores 0-6) are subtracted from promoters (scores 9-10), while passives (scores 7-8) are not considered. See appendix for additional information on the sou
Slide 17: Drivers of Growth & Profitability
Drivers of Growth & Profitability
Slide 18: Second quarter profitability and growth highlights
Strong bottom line profitability reflects success of efforts to grow balance sheet at a double-digit pace, bolstering revenue growth and bringing relative strength to net interest margin, alongside solid asset quality Continued expansion across loan products and geographies Loans grew 10.3% annualiz
Slide 19: Relationship Banking Key to Success
Relationship Banking Key to Success Solid Core Deposit Growth Despite Banking Industry Trends Long-term client relationships drive core deposit growth, aided by clients’ comfort with utilizing the Bank’s longstanding extended deposit insurance products Successful execution of client deposit initiati
Slide 20: Core Deposit Strength
Core Deposit Strength FBIZ Continues to Grow Core Deposits as Industry and Peers Decline Source: S&P Capital IQ. Core Deposits defined as deposits in U.S. offices excluding time deposits over $250,000 and brokered deposits of $250,000 or less. Core Deposit2 Growth: 2Q22 through 1Q23 FBIZ 3.8% Proxy
Slide 21: Deposit-Centric Strategy Key to Growth
Deposit-Centric Strategy Key to Growth Double Digit Core Deposit Growth Supports Double Digit Loan Growth Core deposits defined as total deposits less wholesale deposits. Period end balances are presented. * Represents a $80.2MM deposit that typically recurs on the last day of the month but was dela
Slide 22: Diversified Lending Growth
Diversified Lending Growth Continuing to Grow Higher Yielding C&I Lending Mix Period end balances excluding PPP loans are presented. On January 1, 2023, the Bank adopted ASU 2016-03 Financial Instruments - Credit losses (“ASC 326”). The Bank adopted ASC 326 using the modified retrospective method wh
Slide 23: Margin Strength Through Rate Cycle
Margin Strength Through Rate Cycle Match-Funding Strategy Positions Balance Sheet Well for Rate Changes Peer Group defined as publicly-traded banks with total assets between $1.75 billion and $7.0 billion. Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rate [DFF]. Ret
Slide 24: Robust Profitability Metrics
Robust Profitability Metrics Strong Balance Sheet Growth and Resilient Net Interest Margin Support Robust PTPP Adjusted ROAA Note: Peer group defined as publicly-traded bank with total assets between $1.75 billion and $7 billion. Peer data not yet available for 2Q24. "Core Net Interest Margin" is a
Slide 25: Net Interest Margin Components
Net Interest Margin Components Wholesale funding defined as brokered CDs and non-reciprocal interest-bearing transaction accounts plus FHLB advances. 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 advanc
Slide 26: Solid Asset Quality
Solid Asset Quality Non-Performing Assets/Total Assets Remain Well Managed Note: Peer group defined as publicly-traded bank with total assets between $1.75 billion and $7.0 billion. Peer data not yet available for 1Q24. Represents a fully collateralized ABL credit, for which the Company expects full
Slide 27: Equipment Finance Portfolio by Industry
Maturing Over Time Equipment Finance Portfolio by Industry For more detailed definitions on credit quality categories see the Bank's 10-Q filed with the SEC on April 26, 2024. Category IV represents non-performing loans. Equipment Finance Portfolio Analysis Strong and diversified portfolio; Transpor
Slide 28: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS
Slide 29: Offerings Designed Exclusively for Business and Wealth Management
Offerings Designed Exclusively for Business and Wealth Management Services that meet the evolving needs of our growing client base
Slide 30: Superior Client Satisfaction Rating
Superior Client Satisfaction Rating Excellent Employee Satisfaction Drives Superior Client Satisfaction 1. Moses & Associates, 2023, 2. J.D. Power, 2022, 3. Qualtrics XM Institute, 2022, 4. Statista, 2023 Note: Net promoter score assesses likelihood to recommend on an 11-point scale, where detractor
Slide 31: ESG Framework
ESG Framework Environmental, social, and governance practices are integrated into our core business strategy Branch-lite model with only one location in each of the banking markets we serve Support hybrid and remote work options to reduce carbon emissions related to commuting (even prior to COVID) R
Slide 32: Robust Liquidity and Capital Base
Robust Liquidity and Capital Base Stable Core Deposit Base Substantial Liquidity Strong Capital Ratios (%) Source 3/31/2024 Short-term Investments $54,680 Collateral value of unencumbered pledged loans 401,602 Market value of unencumbered securities 289,104 Readily accessible liquidity 745,386 Fed f
Slide 33: Capital Strength
Capital Strength 6/30/24 3/31/24 12/31/23 9/30/23 6/30/23 Total Regulatory Capital $392,359 $384,083 $375,440 $365,058 $340,045 Total Risk-Weighted Assets $3,425,925 $3,381,059 $3,356,247 $3,259,956 $3,178,855 Leverage Ratio 8.51% 8.45% 8.43% 8.65% 8.80% Common Equity Tier 1 Capital Ratio 8.64% 8.51
Slide 34: Balanced Deposit Portfolio
Balanced Deposit Portfolio Diversified Product Base with Long-Tenured, Deep Client Relationships Longstanding deposit insurance options available through IntraFi and Reich & Tang to provide further security for our large clients Funding is augmented by non-callable wholesale deposits rather than non
Slide 35: Diversified Lending Products
Diversified Lending Products Double digit loan growth driven by stellar performance across all areas of the bank Note: Period end balances as of 6/30/2024 presented.
Slide 36: Commercial Real Estate Lending
Product Profile Target small to medium-sized companies Lines of credit and term loans focused on businesses with annual sales of up to $75.0 million Technology Initiatives Deploying client portal that enables easy and secure communications and document exchanges Note: Loan balances represent quarter
Slide 37: CRE Office Portfolio Analysis
Office loans focused in our bank markets and concentrated in Wisconsin Exceptional asset quality with no non-performing office loans in the portfolio Almost 90% of all office loans have recourse Office loans consist of 66% Class A space Office represents 8% of total loans as of 6/30/24 Majority of o
Slide 38: Multi-Family Portfolio Analysis
Loans focused in our bank markets and concentrated in Wisconsin Exceptional asset quality with no non-performing loans in the portfolio Represents 16% of total loans 90% of all multi-family loans have recourse All multi-family loans with 2031+ maturities are conventional fixed rate or fixed to the c
Slide 39: C&I Lending
Product Profile Target small and medium companies in a variety of industries Financings range from $250,000 to $10 million Technology Initiatives Deploying client portal that enables easy and secure communications and document exchanges Note: Loan balances represent quarterly average data. C&I Lendi
Slide 40: Treasury Management and Deposits
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, informat
Slide 41: Private Wealth Management
Product Profile Fiduciary and investment manager for individual and corporate clients, creating and executing asset allocation strategies tailored to each client’s unique situation Holds full fiduciary powers and offers trust, estate, financial planning, and investment services, acting in a trustee
Slide 42: Core Net Interest Margin reconciliation
“Core 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 other recurring, but volatile, components of average inte
Slide 43: 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 44: 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 45: Adjusted PTPP ROAA reconciliation
“Pre-tax, pre-provision adjusted return on average assets” is defined as operating revenue less operating expense divided by average total assets. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better
Slide 46: Cost of Funds reconciliation
‘‘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 trends in our bank funding costs. The
Slide 47: Blea:
Blea: Business Bank FirstBusiness.Bank
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