First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (February 2015)
45 slides from First Business Financial Services's investor presentation, Feb 10, 2015
Slide 1: Investor Presentation February 2015
Investor Presentation February 2015 YOUR SUCCESS COMES FIRST
Slide 2: Forward-Looking Statement
Forward-Looking Statement When used in this presentation, and in any other oral statements made with the approval of an atone executive officer, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume,” “intend,” “estimate,” “anticipate,” “project,” “like
Slide 3: Table of Contents
Table of Contents FBIZ Company Overview ...............6606ccccccceeeeeeee 4 Strategic Objectives 0.00.0... ceceeeeeeees 12 Financial Performance Highlights .................... 23 Investment Considerations ..................00000008 30 AP PENG Missscswrscnseermssranrnaermomnnareenveces 35
Slide 4: FBIZ Company Overview
FBIZ Company Overview = ~y First YOUR SUCCESS COMES FIRST sirst Business
Slide 5: Company Profile
Company Profile FBIZ BANKING? $ 1.6 Billion e IN TOTAL ASSETS FBIZ TRUST $960 Million * Headquarters: Madison, WI ° Experienced leadership © Mission: build long-term valueas °° ial style oie a a ‘ jl ii yog (1) an entrepreneurial financial services provider ¢ Insider ownership of 10% to businesses,
Slide 6: History of First Business
History of First Business First Business Jun 2000 Bank - Milwaukee First Business Bank - Milwaukee Kenosha Region Dec 2001 Sep 2006 First Business First Business Bank Fr ustess Bank Fe isis Capital Corp. Trust & Investments Northeast Region’ —_ 1998 ma Business Equipment Finance Source: F812 Manag p
Slide 7: Alterra Bank Update
Alterra Bank Update’ =|. . Alterra = 2013 2014 %Inc — sets $211M $259M 23% — — _— ; First Gross Loans $178M $197M 11% Business Bank Deposits $180M $214M —:19% Fee Income $2.7M $4.0M 48%, Track Record of Growth Netincome $1.6M $1.9M 19% $220,000 $3,000 © Management team with experience Seo at larger
Slide 8: Office locations map
Appleton, WI Minneapolis, MN, Milwaukee, WI Kenosha, Madison, MI Detroit, Mi Chicago, IL St. Louis, MO, Denver, CO Kansas City, KS Charlotte, NC Atlanta, GA San Antonio, TX @ Banking Office © Asset-Based Lending Business Development Office Equipment Finance Business Development Office @ Factoring Of
Slide 9: Senior Executive Team
Senior Executive Team Corey Chambas Michael Losenegger + President & . + Chief Credit Officer fuses andl Sevecy: ne ‘ . ov experience . + 12 years with First Business lending & cash management = Spee Me Ropell : + 2iyears with First Business wad 5 ap " + Prior to joining First Business, Mr. Chambas
Slide 10: Senior Executive Team
Senior Executive Team fesidet of Fist Binbes Tun Invest Chuck Batson Presid Mickey Noone lent & Business Capital Corp. Northeast Region trust and investment services +13 years with First Business experience ‘9 years with First Business experience + Syears with t Business was the Pi Joh ‘Trust Compan
Slide 11: Operating Model
Operating Model High efficiency “Business Bank” operating model — Limited branch network — Invest in technology to serve our clients — Products tailored to serve businesses and their owners Commitment to expansion — Organic growth from existing business development talent key to sustainable growth —
Slide 12: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST
Slide 13: Strategic Objectives
Strategic Objectives Drive top line revenue growth Continue to capture transaction deposits to strengthen our mix of in-market funding and reduce our cost of funds Maintain strong asset quality Maintain strong ROA Invest in technology and related talent to build scalability and future efficiencies O
Slide 14: Consistent annualized organic revenue growth
Consistent annualized organic revenue growth of : 1 Top Line Revenue sane ts the past 6 years oof @ @ $46.58 $50.55 $34.48 $38.69 vazee $31.36 2 $0 2008 2009 2010 2011 2012 2013 2014 Compound Annual Growth Rate From 2008 — 2014 = 10.2% Source: SEC Filings and F812 Management. 1
Slide 15: Pre-Tax Adjusted Earnings 6-year CAGR of 13.5%
6-year CAGR of 13.5% exceeds top line revenue Pre-Tax Adjusted Ea rnings’ CAGR by 35% due to efficient operating model $20 E® “? @ $21.36 $10 18.50 $16.54 ° Millions $13.23 $5 $10.52 $10.35 2008 2009 2010 2011 2012 2013 2014 Compound Annual Growth Rate From 2008 — 2014 = 13.5% Source: SEC Filings an
Slide 16: Efficiency Ratio & FTEs
Efficiency Ratio’ & FTEs’ 70% 65% 60% 55% 50% 45% 40% 66.4% 8.2% Es a0 60.3% 57.7% 60.1% Reflects strategic initiative to opportunistically invest in talent for future growth Alterra Bank 48 FTEs 220 200 +180 160 140 120 100 2008 2009 2010 2011 2012 2013 Efficiency Ratio === FTE Source: SEC Flings a
Slide 17: Focus on in-market deposits
Focus on in-market deposits, Deposit Composition ea wasctn $1,500 4 4.00% $1,200 4 i ie 2 $900 4 ay | | | 2.00% = s6oo | —as| 1.00% $300 + so + 0.00% 2008 2009 2010 2011 2012 2013 2014 TE Whotesate oeposts I inwaret cos Money Market Hi eansaction Accounts ost of oa Deposits In-Market Deposits") - Co
Slide 18: Funding Strategy
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
Slide 19: Asset Quality Trends
Asset Quality Trends e As of 12/31/14, non- $45 performing assets were $40 approximately $11.5 million, or 0.70% of total assets $35 e Allowance for loan and lease $30 losses provided coverage for 2 995 146% of non-accrual loans 3 and leases at 12/31/14 2 $20 As of 12/31/14, $7.0 million, $15 or 72%
Slide 20: Cumulative Net Charge-Offs as a Percentage of Loans
Cumulative Net Charge-Offs’ as a Percentage of 12/31/07 Loans and Leases 14.00% 4 12.00% + 10.00% + 8.00% 4 6.00% 4 4.00% | 2.50% 2.88% 2.95% 3.05% 2.00% 0.00% 2008 2009 2010 2011 2012 2013 2014 m FBIZ == All BHCs === WI-Based BHCs Source: SL Financial and SEC Flings re consolidated regulatory finan
Slide 21: Return on Average Assets
Return on Average Assets 0.40% + @® “oo 0.00% ~ 2008 2009 2010 2011(1) 2012 2013 2014 Source: SEC flings and F812 Management. Oatais YI. 21
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 2013 2014 Source: SEC flings and FB1Z Management. O3tais YI.
Slide 23: Financial Performance Highlights
Financial Performance Highlights YOUR SUCCESS COMES FIRST
Slide 24: Recent Financial Highlights
Recent Financial Highlights At or for the Year Ended, (se ces exes pe sare gato) 12/31/11 12/31/12 12/31/: 12/31/14 Net income’ $8,425 $8,926 $13,746 $14,139 Diluted EPS* $3.23 $3.29 $3.49 $353 epee eeu) 2,507,826 2,610,872 3,847,610 3,948,372 ROAA’ 0.75% 0.75% 1.10% 1.04% ROAE® 14.03% 12.65% 13.12%
Slide 25: Loan and Lease Composition
Loan and Lease Composition ($000) Total ‘Commercial and Industral 32% $ 293;552 41.9% As of December 31, 2014 ‘Commercial Real Estate - Owner Occupied 13% 164 16.1% cere Eston Oe Ose 33% 341,695 22.3% onstruction and Land Development % 708 76.3% Mult-famity % 15.6% 1-4 Famit *% 175% Direct Financing
Slide 26: Loan Growth & NIM Expansion
Loan Growth & NIM Expansion’ $1,100 7 3.70% 1,050 | . + 3.50% $1,000 4 + 3.30% $950 4 a 5 2 $900 4 + 3.10% = 850 | § + 2.90% $800 4 + 2.70% $750 4 $700 * * 2.50% 2008 2009 2010 2011 2012 2013 2014 @ Average Loans and Leases === Net Interest Margin Source: SEC flings and FB1Z management. 26 1
Slide 27: Trust Assets and Revenue
Trust Assets and Revenue’ $1,200 7 $4.5 $1,000 $800 $600 Millions Millions $400 $200 $0 2008 2009 2010 2011 2012 2013 2014 a 73 a sme Trust Revenue AUM&A Compound Annual Growth Rate From 2008 — 2014 = 17.6% Sour: strings and Fz Moagen at repens peed bates
Slide 28: 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 2008 2009 2010 2011 2012 2013 2014 ™ TBV/Share === TCE Ratio 7 10.00% + 9.00% 7 8.00% ; 7.00% + 6.00% + 5.00% ~ 4.00% TBV/Share - Compound Annual Growth Rate From 12/31/08 — 12/31/14 = 6.8%
Slide 29: Earnings Per Share
Earnings Per Share $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2008 2009 @ Diluted EPS Source: SEC flings and F812 management. 2010 2011 2012 2013 | Dividends per Share === Payout Ratio 2014 , 80.0% - 70.0% 60.0% 50.0% + 40.0% ; 30.0% 20.0% 10.0% ~ 0.0%
Slide 30: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST
Slide 31: Investment Highlights
. . Investment Highlights Historically strong ROA and ROE Historic organic growth success complemented by niche acquisition opportunities drives above market growth Profitable throughout the economic cycle with strong underlying fundamental trends Strong asset quality with low historical charge-off
Slide 32: Significant Deposit Growth Opportunity
Significant Deposit Growth Opportunity Jane County, WI Waukesha County, WI Fox Valley, WI* Alterra Bank Market” (Largest 3 banks 40%) (Largest 3 banks 33%) (Largest 3 banks 48%) (Largest 3 banks 40%) Associated Bank: 8% ——n FBIZ: 1% FBIZ: 1% FBIZ: 0.42% $12.7 Billion $10.5 Billion $11.0 Total Market
Slide 33: FBIZ Valuation
FBIZ Valuation ‘% Pri ince 2012 C Offering (December 3, 2012 - December 31, 2014) 103% 100% 45% 2% 0% + % 4 Dec 2012 ‘Apr 2013 ‘Aug 2013 Dec 2013 ‘Apr 2014 ‘Aug 2014 Dec 2014 — rez SNL Micro Cap US. Bank ‘SNL Small Cap U.S. Bank Source: SNL Financial
Slide 34: FBIZ Valuation
FBIZ Valuation P/E Trend Since 2012 Common Stock Offering (December 3, 2012 - December 31, 2014) 22.00 > 20.00 4 18.00 4 17.4 14.00 4 5 12.00 4.00 Dec 2012 Apr 2013, ‘Aug 2013 Dec 2013, ‘Apr 2014 ‘Aug 2014 Dec 2014 —— ez Source: SNL Financial
Slide 35: Appendix
Appendix Supplemental Data & Non-GAAP Reconciliations YOUR SUCCESS COMES FIRST
Slide 36: Financial Highlights
Financial Highlights (dollars in thousan« he Year Ended December 3, 2011 2012 2008 2008 2013 2014 Net interest income S 26258 $ 28034 $ 31951 $ 35461 $ 37881 S 42,105 § 46,130 Provision for loan and lease losses 4,299 8,225, 7,044 4,250 2 959) 1,236 Non-interest income 5,105 6,128 6,743 7,060 8,699
Slide 37: Yield and Cost Trends
Yield and Cost Trends ‘Commercial realestate and other mortgage loans 3 583.5 43% S 05% «8 82% ynercial and industrial loans 7.29% 6.24% 6.00% Direct financing leas 5.59% 485% 4.65% Consumer and other loans 3.87% 3.86% 3.87% Total loans and ke 5.93% 5.37% 5.18% Total securities 1.80% 1% 1.80% Short-
Slide 38: Asset Quality Data and Ratios
Asset Quality Data and Ratios (dollars in thousan (or-performing loans and leases $ 15855 $ 14ai0 § 19180 $ 15837 § 9,792 Haebind poner ook 333 333 329 106 1,693 ‘Total non-performing as 16,188 14443 14509 15,943 71,485 Performing troubled debt ieee 371 58 602 556 2,003 Total impaired assets 16,559
Slide 39: 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 Company/s primary business activit
Slide 40: 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 41: Tangible Book Value Per Share
Tangible Book Value Per Share ble Book Value Pet * “Tangible book value per share” is a non-GAAP measure representing tangible equity divided by -_ common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing commot stockholders’ equity reduced by intangible assets,
Slide 42: Tangible Common Equity to Tangible Assets
ngible 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 this measu
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. (dollars in
Slide 44: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage Leases mulative Net Charge-Offs to 12/31/07 Lo * “Cumulative Net Charge-off Percentage” is defined as aggregate net charge-offs from 1/1/2008 through 12/31/14 divided by total loans and leases as of 12/31/07. We believe that this measure is important to many inve
Slide 45: First Business
First Business YOUR SUCCESS COMES FIRST
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