First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (November 2015)
41 slides from First Business Financial Services's investor presentation, Nov 6, 2015
Slide 1: Investor Presentation Third Quarter 2015
INVESTOR PRESENTATION Third Quarter 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 authorized executive officer, the words or Phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan,” “assume, “intend,” “estimate,” “anticipate,” “project,” “
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 29
Slide 4: Company Overview
COMPANY OVERVIEW YOUR SUCCESS COMES FIRST First _ Business
Slide 5: Company Profile
Company Profile FBIZ BANKING: Billion $1.7 Billic FBIZ TRUST $1.0 Billion Headquarters: * Experienced leadership Madison, WI * Entrepreneurial management style Mission: * — Insider ownership of 99%’ Business-focused model Client relationship focus with high touch service Niche acquisitions complemen
Slide 6: Evolution of Success
Evolution of Success Aligned with Financial Needs of Our Niche Client Base Represents Appleton, Oshkosh and Green By, Wisconsin. 6
Slide 7: Geographic Footprint
Geographic Footprint Appleton, WI Minneapolis, Mt Milwaukee, WI Kenosha, WI Madison, WI Detroit, Ml Chicago,IL Denver, CO St.Louis, MO, Kansas City, Hockessin, DE Charlotte, NC Atlanta, GA San Antonio, TX © Banking Office @ Asset-Based Lending Business Development Office Equipment Finance Business D
Slide 8: Proven Leadership Team
Proven Leadership Team = Experienced leadership team trained at larger, complex institutions and significant time with FBIZ | | Tite vrdgsteanet | reyearswineaz | erapen | peaenar institutions Joining FBIZ, [CoreyChambas _| President & CEO - FBFS x im opel x 5 : ‘& CEO - Alterra Bank x [chuck Batson
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 3Q14 4Q14° 1Q15° 2Q15 3Q15 Source: SEC lings and F812 management. 1
Slide 13: Strengthen In-market Deposit Mix
Strengthen In-market Deposit Mix Focus on Transaction Accounts to Reduce Cost of Funds $1,800 4 71.00% $1,500 | L a a 0.80% $1,200 + a ; 0.60% $900 | ; 0.40% 600 $153M § $300 0.20% $0 - ~ 0.00% Bo08 spin. 3Q14 4Q14 1Q15 2Q15 3Q15 ae HMI Transaction accounts? MM cee HEE “isnion HE Teorsscvon oa count
Slide 14: Generate Consistent, Strong Profitability
Generate Consistent, Strong Profitability Efficient Operating Model Drives Bottom Line Net Interest Margin 1.20% 4.90% 1.00% 4.20% 2 2 3.50% | seweTocs sco Serre B 0.80% g H A < a 2.80% 5 0.60% 5 e E 2.10% 2 2 3 0.40% g 1.40% aso 0.20% 0.00% 0.00% 3Q14 4Q14 1015 2Q15 3015 3Q14 4Q14 1015 2015 3Q15 HH
Slide 15: Deliver EPS Growth
Deliver EPS Growth Drives Shareholder Value 54% CAGR $0.205 2009 I Diuted eps $1.76 2014 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 3014 4Q14 ME Diluted evs 1Q15 2Q15 [RIE Dividends per Share 3Q15
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 All BHCs ¢ Limited branch network © Invest in technology 64% iY) * Products tailored to serve businesses and their owners EFFICIENCY RATIO | | EFFICIENCY RATIO Total Loans Outstanding per FTE Deposits Per Location Thousands s
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'! = 4.26 years — Long-term wholesale deposits more reason
Slide 20: Superior Credit Quality
Superior Credit Quality Helps Safeguard 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 4.00% + 2.00% + a 0.00% T : 2008 2009 2010 2011 2012 2013 2014 2015 m= FBIZ === All BHCs == WI-Based BHCs Source: SNL Financial a
Slide 21: Client-centric Focus with High Touch Service
Client-centric Focus with High Touch Service ©FBIZADVANTAGE FIRST BUSINESS PRESENTS MANUFACTURING FIRST’ = “110° {() Family Business First EXPO & CONFERENCE '\C INITIATIVE of NORTHEAST WISCONSIN A Uy / bw
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 m=) SPECIALTY FINANCE ==> REGISTERED INVESTMENT ADVISORY FIRMS ==} BUSINESS-FOCUSED COMMUNITY BANKS
Slide 27: Increase Percentage of Fee Income
Increase Percentage of Fee Income Additional Fee Income Generating Services + 25% } 20% 2 5 = +15% = 10% 5% L0% 3Q14 4q14* 1Q15 + 2015 3Q15 Gainon ain on service rst THM saleof = Saleof §=— IN Other my $2" Charges on neve SBA Loans Residential Fees Deposits fevenue Mortgages ~ Previous % Goal % of T
Slide 28: SBA Strategy Builds Franchise Value
SBA Strategy Builds Franchise Value CLIENT ACQUISITION STRATEGY BUILD COMPLETE RELATIONSHIP mes + PRIVATE BANKING FOR OWNERS AND KEY EMPLOYEES EXPAND WITH CHANGING CLIENT NEEDS * ADDITIONAL SBA FINANCING + CONVENTIONAL TERM LOANS AND LINES OF CREDIT PRIVATE WEALTH MANAGEMENT OPPORTUNITIES + 401K PLA
Slide 29: Investment Considerations
INVESTMENT CONSIDERATIONS YOUR SUCCESS COMES FIRST First _ Business
Slide 30: Investment Highlights
Investment Highlights Historically strong ROA and ROE Historic organic growth success Strong EPS growth Well positioned for continued growth complemented by niche acquisition with recent acquisition and opportunities drives above market investments in key talent in support growth of strategic initia
Slide 31: Market Deposits by County
Jane County, WI Waukesha County, WI Fox Valley, WI* Alterra Bank Market” (Largest 3 banks 39%) (Largest 3 banks 33%) (Largest 3 banks 50%) (Largest 3 banks 42%) EBIZ: 2% FBIZ: 0.5% FBIZ: 7% FBIZ: 1% $13.2 Billion $10.8 Billi $11.6 Total Market Deposits Total Market Deposits Billi $48.4 Billion Total
Slide 32: FBIZ Valuation - Price Appreciation
FBIZ Valuation - Price Appreciation % Pri i ring (December 3, \ber 30, 2015) 97% -20% Decd2 © Mar-13.—Jun-13_— Sep-13.—Decd3. = Mar-l4.- Just. Sep. Dect. Mar-5.—Jun-35—Sep-t5, —FBIZ-US SNL Micro Cap US. Bank Source: SNL Financial
Slide 33: FBIZ Valuation - P/E Multiple
FBIZ Valuation - P/E Multiple P/E , be 2015) ox Deci2 — Mer-t3.—Jun-13.—Sep-13.Dec13. Mal 14 Junetd—Sep-1d Deed = Mar-5.—Jun-15—Sep-15 —FBIZ-US_- SNL Micro Cap U.S. Bank Source: SN Financial
Slide 34: FBIZ Valuation - Dividends per Share
FBIZ Valuation - Dividends per Share 25% aay $0.42 $0.14 2009 2014 [Total Annual Dividends per Share $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 3Q14 4Q14 1Q15 2Q15 3Q15 Dividends per Share sm Dividend Yield 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
Slide 35: FBIZ Valuation - Dividend Yield
FBIZ Valuation - Dividend Yield Dividend Yield sit a 2015) 0.20% 00% Dec12 Mar-13.Jun-13.—Sep-l3—Dec-13. = Mar-ldJun-ld = Sep-ld Deed = Mar-15 June Sep-t5 —FBIZ-US | —SNL Micro Cap U.S. Bank Source: SNL Financial
Slide 36: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS YOUR SUCCESS COMES FIRST First Business
Slide 37: 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 an amortization of other intangible assets, if any, divide
Slide 38: 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. "Cost of Total In-Market Deposit total interest expense on in-market deposits divided by average total in-market deposits. In-market deposits equal total d
Slide 39: 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 9/30/15 divided by total loans and leases as of 12/31/07. We believe that this measure is important to man
Slide 40: Loan and Lease Composition
Loan and Lease Composition As of September 30, 2015 ‘Commercial and Industrial $450,307 416654 8.1% Commercial Real Estate - Non-Owner Occupied 416421 30% 417,962 (0.4)% Commercial Real Estate - Owner Occupied 0,195 12% 63884 3.9 Construction and Land Development 157,651 11% Multi-family 10,514 7% 1
Slide 41: Your Success Comes First
YOUR SUCCESS COMES FIRST | First Business
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