First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (May 2014)
44 slides from First Business Financial Services's investor presentation, May 6, 2014
Slide 1: Investor Presentation May 2014
Investor Presentation May 2014
Slide 2: Forward-Looking Statements
1 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 exp
Slide 3: Company Profile
2 Company Profile • Headquarters: Madison, WI • Total assets at March 31, 2014: $1.3 Billion • Experienced leadership • Entrepreneurial management style • Insider ownership of 10%(1) • Business-focused model • Client relationship focus with high touch service • 100% organic growth 1. As of March 19,
Slide 4: History of First Business
3 1990 1991 – 1994 1995 1996 – 1997 1998 1999 2000 2001 2002 – 2005 2006 2007 – 2011 2012 Jun 2000 First Business Bank - Milwaukee History of First Business Mar 1990 First Business Bank - Madison May 1995 First Business Capital Corp. Oct 1998 First Business Equipment Finance Dec 2001 First Business
Slide 5: Footprint
4 Footprint Source: FBIZ Management.
Slide 6: Senior Executive Team
5 Senior Executive Team • President & Chief Executive Officer of First Business Financial Services, Inc. • Over 25 years of commercial banking experience specializing in commercial lending & cash management • 20 years with First Business • Prior to joining First Business, Mr. Chambas held various se
Slide 7: Senior Executive Team
6 Senior Executive Team Joan Burke • President of First Business Trust & Investments • Over 30 years of experience in providing trust and investment services • 12 years with First Business • Prior to joining First Business, Ms. Burke was the President, Chief Executive Officer and Chairperson of the
Slide 8: Corporate Strategy
7 Corporate Strategy • High efficiency “Business Bank” operating model – Limited branch network – Invest in technology to serve our clients – Products tailored to serve small businesses and their owners • Commitment to expansion – Organic growth from existing business development talent key to susta
Slide 9: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST
Slide 10: Strategic Objectives
9 • 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 • Maintain strong asset qua
Slide 11: Top Line Revenue
10 $31.36 $34.48 $38.69 $42.52 $46.58 $50.55 $12.18 $13.12 $0 $10 $20 $30 $40 $50 $60 2008 2009 2010 2011 2012 2013 YTD 3/31/13 YTD 3/31/14 Mil lio n s Top Line Revenue1 Compound Annual Growth Rate From 12/31/08 – 12/31/13 = 10.0% 12.2% 13.7% 10.0% 9.9% Source: SEC Filings and FBIZ Management. 1. To
Slide 12: Pre-Tax Adjusted Earnings
11 $10.52 $10.35 $13.23 $16.54 $18.50 $21.36 $4.97 $5.27 $0 $5 $10 $15 $20 $25 2008 2009 2010 2011 2012 2013 YTD 3/31/13 YTD 3/31/14 Mil lio n s Pre-Tax Adjusted Earnings1 Compound Annual Growth Rate From 12/31/08 – 12/31/13 = 15.2% 27.8% 32.1% -1.6% 25.1% Source: SEC Filings and FBIZ Management. 1.
Slide 13: Efficiency Ratio & FTEs
12 66.4% 68.2% 65.8% 61.0% 60.3% 57.7% 59.8% 80 90 100 110 120 130 140 150 160 50% 55% 60% 65% 70% 75% 80% 2008 2009 2010 2011 2012 2013 YTD 3/31/14 Efficiency Ratio FTE Efficiency Ratio & FTEs Source: SEC Filings and FBIZ Management. “Efficiency Ratio” is a non-GAAP measure. See Appendix for non-GA
Slide 14: Deposit Composition
13 0.00% 1.00% 2.00% 3.00% 4.00% $0 $300 $600 $900 $1,200 2008 2009 2010 2011 2012 2013 YTD 3/31/14 Mil lio n s Brokered Deposits In-Market CDs Money Market Transaction Accounts Cost of Total Deposits Deposit Composition Source: SEC filings. Deposit mix represents period end data. “Cost of Total Dep
Slide 15: Funding Strategy
14 • Continue to leverage commercial relationships to attract in-market deposits, specifically transaction accounts • Maintain brokered deposits within Board-monitored limits – Match-funding fixed rate term loans with brokered deposits locks in interest rate spread – Long-term brokered funding more
Slide 16: Asset Quality Trends
15 $16.3 $27.8 $38.4 $21.8 $14.1 $15.9 $14.1 $3.0 $1.7 $1.8 $2.2 $1.6 $0.3 $0.3 0% 10% 20% 30% 40% 50% 60% $- $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 2008 2009 2010 2011 2012 2013 3/31/14 Mil lio n s Non-accruals OREO Texas Ratio • Maintain strong asset quality • As of 3/31/14, non- performing as
Slide 17: Cumulative Net Charge-Offs as a Percentage of Loans and Leases
16 0.30% 1.06% 1.68% 2.50% 2.88% 2.95% 2.95% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2008 2009 2010 2011 2012 2013 2014 FBIZ All BHCs WI-Based BHCs Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases Source: SNL Financial and SEC Filings. “Cumulative Net Charge-off Per
Slide 18: Return on Average Assets
17 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2008 2009 2010 2011 (1) 2012 2013 YTD 3/31/13 YTD 3/31/14 1.06% Return on Average Assets1 Source: SEC filings and FBIZ Management. YTD data is annualized 1. Blue bar represents the incremental ROAA resulting from an effective tax rate during the period of
Slide 19: Return on Average Equity
18 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2008 2009 2010 2011 (1) 2012 2013 YTD 3/31/13 YTD 3/31/14 Return on Average Equity1 Source: SEC filings and FBIZ Management. YTD data is annualized. 1. Blue bar represents the incremental ROAE resulting from an effective tax rate during th
Slide 20: Financial Performance Highlights
Financial Performance Highlights
Slide 21: Recent Financial Highlights
20 Source: SEC filings and FBIZ Management. 1. 3/31/13 and 3/31/14 data is annualized. 2. Includes one-time tax benefit during second quarter of 2011. Recent Financial Highlights ($ in 000s, except per share data) At or for the Year Ended, At or for the Three Months Ended, 12/31/11 12/31/12 12/31/13
Slide 22: Loan and Lease Composition
21 Loan and Lease Composition Source: SEC filings. ($000) Mar 31, 2014 % of Total Dec 31, 2013 % Inc (Dec) Commercial & Industrial 303,630$ 31% 293,552$ 3.4% Commercial RE - Owner Occupied 137,648 14% 141,164 (2.5%) Commercial RE - Non-Owner Occupied 336,806 34% 341,695 (1.4%) Construction & Land De
Slide 23: Loan Growth & NIM Expansion
22 2.50% 2.70% 2.90% 3.10% 3.30% 3.50% 3.70% $700 $750 $800 $850 $900 $950 $1,000 2008 2009 2010 2011 2012 2013 YTD 3/31/14 Mil lio n s Average Loans and Leases Net Interest Margin Loan Growth & NIM Expansion1 Source: SEC filings and FBIZ management. 1. Loan and lease balances represent YTD averages
Slide 24: Trust Assets and Revenue
23 Trust Assets and Revenue Source: SEC filings and FBIZ management. AUM&A Compound Annual Growth Rate From 12/31/08 – 12/31/13 = 21.5% $255 $323 $399 $533 $614 $764 $661 $788 $107 $124 $128 $130 $171 $195 $182 $182 $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $- $200 $400 $600 $800 $1,000 $1,200 2008
Slide 25: Tangible Common Equity
24 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 2008 2009 2010 2011 2012 2013 3/31/14 TBV/Share TCE Ratio Tangible Common Equity Source: SEC filings and FBIZ management. Represents period end data. “Tangible Book Value per Share” and “TCE
Slide 26: Earnings Per Share
25 Earnings Per Share Source: SEC filings and FBIZ management. Maintained consistent dividend throughout the economic crisis with sustainable payout ratio going forward 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 2008 2009 2010 2011 2012 20
Slide 27: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST
Slide 28: Investment Highlights
27 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-mar
Slide 29: Loan and Lease Growth Opportunity
28 Loan and Lease Growth Opportunity Source: SEC filings and FBIZ management. Data as of March 31, 2014. 1. Represents loan and lease balances based on geographic location responsible for origination. 2. Fox Valley represents loans originated in Brown, Outagamie and Winnebago county. Composition Geo
Slide 30: Significant Deposit Growth Opportunity
29 Significant Deposit Growth Opportunity Dane County (Largest 3 banks 36%) Waukesha County (Largest 3 banks 33%) Fox Valley1 (Largest 3 banks 50%) $13.5 billion Total Market Deposits $10.1 billion Total Market Deposits $10.8 billion Total Market Deposits Source: FDIC.gov and FBIZ management. Data a
Slide 31: FBIZ Valuation
30 FBIZ Valuation Source: SNL Financial 100% 33% 40% -20% 0% 20% 40% 60% 80% 100% 120% Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 % Price Increase Since 2012 Common Stock Offering (December 3, 2012 - March 31, 2014) FBIZ-US SNL Micro Cap U.S. Bank SNL Small Cap U.S. Bank
Slide 32: FBIZ Valuation
31 FBIZ Valuation Source: SNL Financial 12x 16x 19x 0.00 5.00 10.00 15.00 20.00 25.00 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 P/E Trend Since 2012 Common Stock Offering (December 3, 2012 - March 31, 2014) FBIZ-US SNL Micro Cap U.S. Bank SNL Small Cap U.S. Bank
Slide 33: Appendix Supplemental Data & Non-GAAP Reconciliations
Appendix Supplemental Data & Non-GAAP Reconciliations
Slide 34: Financial Highlights
33 Source: SEC filings and FBIZ Management. 1. “Efficiency Ratio” is a non-GAAP measure. See non-GAAP reconciliation schedules. Financial Highlights (dollars in thousands) As of and for the Year Ended December 31, As of and for the Three Months Ended, 2008 2009 2010 2011 2012 2013 3/31/13 3/31/14 In
Slide 35: Yield and Cost Trends
34 Source: SEC filings and FBIZ Management. Yield and Cost Trends (dollars in thousands) For the Year Ended December 31, For the Three Months Ended March 31, 2011 2012 2013 2013 2014 Interest-Earning Assets Average Balance Average Yield/Cost Average Balance Average Yield/Cost Average Balance Average
Slide 36: Asset Quality Data and Ratios
35 Asset Quality Data and Ratios Source: SEC filings and FBIZ Management. 1. Criticized assets represent loans and leases identified by management that would be considered special mention, substandard or doubtful when utilizing regulatory terminology. (dollars in thousands) 3/31/13 6/30/13 9/30/13 1
Slide 37: Pre-Tax Adjusted Earnings
36 Pre-Tax Adjusted Earnings Pre-Tax Adjusted Earnings • “Pre-tax adjusted earnings” is a non-GAAP measure representing pre-tax income excluding the effects of (1) provision for loan and lease losses, (2) other identifiable costs of credit and (3) other discrete items that are unrelated to the Compa
Slide 38: Efficiency Ratio
37 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,
Slide 39: Tangible Book Value Per Share
38 Tangible Book Value Per Share Tangible Book Value Per Share • “Tangible book value per share” is a non-GAAP measure representing tangible equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by in
Slide 40: Tangible Common Equity to Tangible Assets
39 Tangible Common Equity to Tangible Assets TCE Ratio • ‘‘Tangible common equity to tangible assets’’ is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. The Company’s management believes that thi
Slide 41: Deposit Cost
40 Deposit Cost Source: SEC filings and FBIZ Management. 1. Average non-interest-bearing deposits for 2008 is equal to the average of the period end balances for each of the four calendar quarters in 2008. Cost of Total Deposits • ‘‘Cost of Total Deposits’’ is defined as total interest expense on de
Slide 42: Texas Ratio
41 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 common equity. We believe that this ratio is important to many investors in the marketplace who are interested in evaluating the level of a comp
Slide 43: Cumulative Net Charge-off Percentage
42 Cumulative Net Charge-off Percentage Cumulative 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 3/31/14 divided by total loans and leases as of 12/31/07. We believe that this measure is important
Slide 44: First Business
YOUR SUCCESS COMES FIRST First Business
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