First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (July 2015)
40 slides from First Business Financial Services's investor presentation, Jul 27, 2015
Slide 1: Investor Presentation July 2015
INVESTOR PRESENTATION July 2015 YOUR SUCCESS COMES FIRST
Slide 2: Forward-Looking Statement
Forward-Looking Statement When used in this presentation, and in any oi oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “exp “assume,” ”” “anticipate,” “project,” ‘tikely,” or similar expressions ar
Slide 3: Table of Contents
Table of Contents Company Overview 4 Pillars of Success 9 = Record of Strong Execution ... 10 = Unique Competitive Advantages .. 16 = Focused Strategic Objectives... 23 Investment Considerations ........0.0.0.ccceteee 28
Slide 4: Company Overview
COMPANY OVERVIEW YOUR SUCCESS COMES FIRST First _ Business
Slide 5: Company Profile
Company Profile Headquarters: Madison, WI Mission: Build long-term shareholder value as an entrepreneurial financial services provider to businesses, executives and high net worth individuals 4. Data as of Maren 18,2018. 2 FBIZ BANKING? Billion $1.7 Billic FBIZ TRUST $1.0 Billion Experienced leaders
Slide 6: Evolution of Success
Evolution of Success Aligned with Financial Needs of Our Niche Client Base ms Appleton Oshkosh and Green Bay, Wisconsin 6
Slide 7: Geographic Footprint
Geographic Footprint Appleton, WI ilwaukee, WI Kenosha, WI Detroit, MI Minneapolis, MN, Madison, WI Chicago, IL +— Hockessin, DE St. Louis, MO, Kansas City, KS Charlotte, NC Denver, CO Atlanta, GA San Antonio, TX @ Banking Office @ Asset-Based Lending Business Development Office Equipment Finance Bu
Slide 8: Proven Leadership Team
Proven Leadership Team * Experienced leadership team trained at much larger institutions and significant time with FBIZ LC = eee | ymenree [AM | Ragusa institutions Joining FBIZ [CoreyChambas __| President & CEO - FBFS x Jim Ropella Ce x ‘oa eocanvan et Credit Officer - FBFS x ney ate Secretary x IR
Slide 9: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE RECORD OF UNIQUE FOCUSED STRONG COMPETITIVE STRATEGIC EXECUTION ADVANTAGES. OBJECTIVES
Slide 10: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE RECORD OF UNIQUE FOCUSED STRONG COMPETITIVE STRATEGIC EXECUTION ADVANTAGES, OBJECTIVES
Slide 11: Record of Strong Execution
Record of Strong Execution Key Objectives a DRIVE TOP LINE REVENUE GROWTH GB STRENGTHEN IN-MARKET DEPOSIT MIX GENERATE CONSISTENT, STRONG PROFITABILITY a DELIVER EPS GROWTH ACHIEVE ¢ +1% ROA ¢ +12% ROE ¢ ABOVE MARKET GROWTH
Slide 12: Organic Growth Drives Top Line Revenue
Organic Growth Drives Top Line Revenue’ Complemented by Niche Acquisitions $20.0 5 we $19.0 | CAGR $56M $18.0 $17.0 $34 $16.0 Millions $15.0 $14.0 $13.0 $12.0 2009 2014 2Q14 3Q14 4q14* 1015° 2Q15 Source: SEC Filings and F812 Management. 1 2 1, 2014
Slide 13: Strengthen In-market Deposit Mix
Strengthen In-market Deposit Mix Focus on Transaction Accounts to Reduce Cost of Funds $153M 2009 2014 I Transaction Accounts? $1,500 1.00% $1,200 | a u +0.80% $900 4 + 0.60% $600 + 0.40% $300 4 +0.20% $0 - ~ 0.00% 2Q14 3Q14 4Q14 1Q15 2Q15 Non- mag 02S Transact Deposits count Cost of Total Deposits*
Slide 14: Generate Consistent, Strong Profitability
Generate Consistent, Strong Profitability Efficient Operating Model Drives Bottom Line Net Interest Margin 1.20% 4.00% mkageeiiecaces see , 0:90% . 2 z 3.00% H 2 E 5 0.60% § e e 2.00% £ £ a a 2 2 Lew 0.30% 0.00% 0.00% 2Q14 3014 4Q14 1015 2015 2Q14 3Q14 4014 1015 2015 HMI Net interest Margin === Goal
Slide 15: Deliver EPS Growth
Deliver EPS Growth Drives Shareholder Value $1.20 4 54% CAGR $1.00 4 $3.51 $0.80 | $0.60 | $0.40 | $0.41 $0.20 | $0.00 ~ 2009 2014 2Q14 3Q14 4Q14 1Q15 2Q15 HB Diluted evs HE ited EPs oividends per share Source: SEC Filings and F812 Management. 15
Slide 16: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE RECORD OF UNIQUE FOCUSED STRONG COMPETITIVE} STRATEGIC EXECUTION ADVANTAGES| OBJECTIVES
Slide 17: Unique Competitive Advantages
Unique Competitive Advantages Key Themes EFFICIENT OPERATING MODEL EFFICIENT FUNDING STRATEGY SUPERIOR CREDIT QUALITY CLIENT-CENTRIC FOCUS WITH HIGH TOUCH SERVICE SUPERIOR TALENT WITH BUSINESS EXPERTISE SUCCESSFUL NICHE COMMUNITY BUSINESS BANK
Slide 18: Efficient Operating Model
Efficient Operating Model HIGH EFFICIENCY "BUSINESS BANK" OPERATING MODEL WI BHCs ¢ Limited branch network Ami Cl ‘Wi 4% 739 * Invest in technolo, © Products tailored to serve businesses and their owners EFFICIENCY RATIO | | EFFICIENCY RATIO Total Loans Outstanding per FTE Deposits Per Location Thou
Slide 19: Efficient Funding Strategy
Continue to leverage commercial relationships to attract in-market transaction deposits Maintain wholesale deposits within Board-monitored limits — Match-funding fixed-rate term loans with wholesale deposits locks in interest rate spread —WAOM' = 4.32 years ~ Long-term wholesale deposits more reason
Slide 20: Superior Credit Quality
Superior Credit Quality Safeguards Shareholder Investment Cumulative Net Charge-Offs as a % of 12/31/07 Loans and Leases’ 14.00% 7 12.00% + 10.00% + 8.00% + 6.00% + 4.00% + aso% 2.88% © 2.95% «3.05% © 3.10% 2.00% + 0.00% ~ 2008 2009 2010 2011 2012 2013 2014 2015 m@ FBIZ == All BHCs == WI-Based BHCs
Slide 21: Client-centric Focus with High Touch Service
Client-centric Focus with High Touch Service ©FBIZADVANTAGE Family FIRST BUSINESS PRESENTS sk >) MANUFACTURING FIRST «AQ </2°S"10 “(ihe ; oe Or NORTHEAST YSEONS - wus” fe a" eS Ss COMMERCIAL NOT FOR FOOD AND PROFIT BEVERAGE MANUFACTURING EMERGING TECHNOLOGY REAL ESTATE
Slide 22: Superior Talent with Business Expertise
Superior Talent with Business Expertise Engaged Employees = Happy Clients RIGOROUS HIRING PROCESS FORMAL MENTOR PROGRAM SATISFACTION REGULAR SURVEYS AND FEEDBACK
Slide 23: Pillars of Success
Pillars of Success Foundation for the Future SHAREHOLDER VALUE RECORD OF UNIQUE FOCUSED STRONG COMPETITIVE STRATEGIC EXECUTION ADVANTAGES: OBJECTIVES
Slide 24: Focused Strategic Objectives
Focused Strategic Objectives OPPORTUNISTICALLY INVEST TO SUPPORT ORGANIC GROWTH COMPLEMENT ORGANIC GROWTH WITH ea URe NICHE ACQUISITIONS SUCCESS INCREASE FEE INCOME GENERATING SERVICES
Slide 25: Opportunistically Invest to Support Organic Growth
Opportunistically Invest to Support Organic Growth Investing for the Future HIRED CIO TO CHAMPION INVESTMENTS IN TECHNOLOGY FOR OPERATING AND SALES EFFICIENCY CONVERSION TO SALESFORCE IN 2015 DATA WAREHOUSE/BUSINESS INTELLIGENCE IMPLEMENTATION IN 2015 HIRED VP OF TALENT DEVELOPMENT OPPORTUNISTICALLY
Slide 26: Complement Organic Growth with Niche Acquisitions
Complement Organic Growth with Niche Acquisitions ¢ ORGANIC GROWTH REMAINS THE FOUNDATION FOR THE FUTURE ¢ HOWEVER, OUR SUCCESS CREATES OPPORTUNITIES FOR ACQUISITIONS meme = SPECIALTY FINANCE meme =REGISTERED INVESTMENT ADVISORY FIRMS meme §~=BUSINESS-FOCUSED COMMUNITY BANKS
Slide 27: Increase Percentage of Fee Income
Increase Percentage of Fee Income Additional Fee Income Generating Services Total Fee Income $5.0 7 25% ae $4.0 | CAGR Loon S10M a $3.0 4 5 = + 15% sem = $2.0 | + 10% $1.0 4 $0.0 - | 50% 2009 2014 aoa Boia dois” dous' Baus essa sare ss ce: am ME sstcr Meer Ml caneso sate , 20% Goal Me ot Tonal Sourc
Slide 28: Investment Considerations
INVESTMENT CONSIDERATIONS YOUR SUCCESS COMES FIRST First _ Business
Slide 29: Investment Highlights
Investment Highlights 54% EPS CAGR 2009-2014 Positioned well for continued growth Historically strong ROA and ROE Historic organic growth success complemented by niche acquisition with recent acquisition and opportunities drives above market investments in key talent in support growth of strategic i
Slide 30: Market deposits by county
Waukesha County, WI Fo x Valley, WI? Alte (Largest 3 banks 33%) (Largest 3 banks 48%) ane County, WI (Largest 3 banks 40%) rra Bank Market” (Largest 3 banks 40%) Associated Bank: 8% FBIZ: 2% FBIZ: 7% maize FBIZ: 0.42% 2.7 Billion $10.5 Billion $11.0 Billi $46.6 Billion Total Market Deposits Total Ma
Slide 31: FBIZ Valuation - Price Appreciation
FBIZ Valuation - Price Appreciation , 2012 - June 30, 2015) 120% 100% Artin My 1 ot V Dect2 = Mard3.—Jun-13 Sep-13 © -Decl3.— Mar-14dun-14 Sep14 Decl Mar-tS—Jun-15 —FBIZ-US. ——SNL Micro Cap U.S. Bank 31 Source: SNL Financial
Slide 32: FBIZ Valuation - P/E Multiple
FBIZ Valuation - P/E Multiple P/E 3, 2012- June 30, 2015) ox - : : : : Dect2 — Mar-3—Jun-13. Sep-13 Decl. Mar-14 Junedd Sep-14 Decld —Mar-15 Jun-a5 —FBIZ-US—SNL Micro Cep U.S. Bank 32 Source: SNL Financial
Slide 33: FBIZ Valuation - Dividends per Share
FBIZ Valuation - Dividends per Share 25% CAGR $0.28 2009 Source: SEC Flings and F812 Management. $0.84 2014 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2Q14 3Q14 4Q14 1Q15 2Q15 Dividends per Share sm Dividend Yield 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
Slide 34: FBIZ Valuation - Dividend Yield
FBIZ Valuation - Dividend Yield Dividend i iT ber 3, 2012 - June 30, 2015) emai ca Vet N tn ayo 1.80% 177% cox me Pan POON, Meret pO 1.40% 0.00% . Deci2 = Marl3.—Jun-13, Sep-13Decd3. = Mar-lé—Jun-ld_ Sep-l@Decld | MarlS- dunt —FBIZ-US_- —SNL Micro Cap U.S. Bank Source: SNL Financial
Slide 35: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS YOUR SUCCESS COMES FIRST First Business
Slide 36: 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 a amortization of other intangible assets, if any, divided
Slide 37: Deposit Cost
Deposit Cost “Cost of Total Deposits” is defined as total interest expense on deposits divided by average total deposits. "Cost of Total In-Market Deposits" is defined as total interest expense on in-market deposits divided by average total in-market deposits. In-market deposits equal total deposits
Slide 38: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage mulative 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 6/30/15 divided by total loans and leases as of 12/31/07. We believe that this measure is important to man
Slide 39: Loan and Lease Composition
Loan and Lease Composition As of June 30, 2015 ‘Commercial and Industrial Commercial Real Estate - Owner Occupied Construct and Develop: Multi-family 14 Famil Direct Financing Leases All Other Lo: ‘otal Loans and Leases Deferred Loan Fé Total Gross Loans and Leases $ All Other Loans Jing Leases 1-4
Slide 40: Your Success Comes First
YOUR SUCCESS COMES FIRST | First Business
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