First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (February 2014)
47 slides from First Business Financial Services's investor presentation, Feb 4, 2014
Slide 1: Investor Presentation February 2014
Investor Presentation February 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements
Slide 3: FBIZ Company Overview
FBIZ Company Overview YOUR SUCCESS COMES FIRST
Slide 4: Company Profile
Company Profile Headquarters: Madison, WI Total assets at December 31, 2013: $1.3 Billion Experienced leadership Entrepreneurial management style Insider ownership of 10.1%) Business-focused model Client relationship focus with high © Mission: build long-term shareholder value as an touch service 10
Slide 5: History of First Business
History of First Business Jun 2000 First Business Bank - Milwaukee Mar 1990 May 1995 Dec 2001 Sep 2006 First Business First Business First Business First Business Bank - Madison Capital Corp. Trust & Investments Bank - Northeast Oct 1998 Nov 2012 First Business First Business Equipment Finance Facto
Slide 6: Office locations
Appleton, WI Minneapolis, MN Milwaukee, WI Detroit, MI Madison, WI Chicago, IL Denver, CO St. Louis, MO Kansas City, KS @ Banking Office @ Asset-Based Lendi nt Office @ Equipment Finance Business Development nt Office ing Business Developm @ Factoring Offi Source: F512 Management, Cleveland, OH
Slide 7: Senior Executive Team
Senior Executive Team Corey Chambas Jim Ropella Michael Losenegger Mark Meloy
Slide 8: Senior Executive Team
Senior Executive Team Barbara Conley Dave Vetta Chuck Batson Joan Burke
Slide 9: Senior Executive Team
Senior Executive Team Randy Shumate Jodi Chandler Mickey Noone
Slide 10: Corporate Strategy
Corporate Strategy High efficiency “Business Bank” Efficiency Ratio vs. WI Peers operating model — Limited branch network 80.0% — Invest in technology to serve our 75.0% clients 70.0% — Products tailored to serve small ——_——— businesses and their owners coon Capitalize on growth opportunities 60.0%
Slide 11: Commitment to Expansion
Commitment to Expansion ¢ Organic growth remains key to sustainable expansion © Over the last three years we have hired 17 additional business development officers - 3 trust and investment advisors - 10 lenders - 3 treasury management officers - 1private wealth management officer
Slide 12: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST First Business
Slide 13: Strategic Objectives
Strategic Objectives Drive top line revenue growth Achieve additional improvement in pre-tax adjusted earnings Continue to leverage operating model to maintain efficiency Continue to capture in-market deposits from clients to strengthen our mix of core funding and reduce our cost of funds Maintain s
Slide 14: Top Line Revenue
Top Line Revenue? Fa & $30 = $20 $10 $0 $31.36 $34.48 $38.69 2008 2009 2010 $42.52 2011 Consistent annualized organic revenue growth of approximately 10% over the past 5 years $46.58 2012 2013 Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 10.0% Source: SEC Filings and FBIZ Management prior
Slide 15: Pre-Tax Adjusted Earnings
CAGR exceeds top Pre-Tax Adjusted Earnings? 9 “wetceticien operating model Millions Dn 2 S $5 $10.52 $10.35 $13.23 $16.54 $18.50 2008 2009 2010 2011 2012 2013 Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 15.2%
Slide 16: Efficiency Ratio & FTEs
Efficiency Ratio & FTEs Reflects 2012 strategic initiative to invest in new business development officers 60% 100 55% 90 50% = 80 2008 2009 2010 2011 2012 2013 Efficiency Ratio «==FTE Source: SEC Fllgs and FBIZ Management. ficiency Ratio”
Slide 17: Deposit Composition
Focus on in-market H itl deposits, specifically De posit Com position transaction accounts $1,200 4.00% $900 Y | Yi | | || | | 3.00% o iz i 2 2.00% 2 $600 al = $300 1.00% $o 0.00% 2008 2009 2010 2011 2012 2013 mm Brokered Deposits maliIn-Market CDs Cost of Total Deposits Money Market Ml Transaction
Slide 18: Funding Strategy
Funding Strategy Continue to leverage commercial 100% ama relationships to attract in-market 90% deposits, specifically transaction accounts 50% Maintain brokered deposits within 70% Board-monitored limits 60% Match-funding fixed rate term loans ° 1 with brokered deposits locks in interest 50% rate
Slide 19: Asset Quality Trends
Asset Quality Trends Maintain strong asset quality As of 12/31/13, non- performing assets were approximately $16.2 million, or 1.28% of total assets Allowance for loan and lease losses provided coverage for 88% of non-accrual loans and leases at 12/31/13 As of 12/31/13, $11.0 million, or 69% of non-
Slide 20: Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases
Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases
Slide 21: Return on Average Assets
Return on Average Assets? 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 2008 2009 2010 2011 (1) 2012 2013 Average Total Assets - Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 5.2% Source: SEC lings and F812 Management. 2 is 20
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 Source: SEC lings and F812 Management. 1
Slide 23: Financial Performance Highlights
Financial Performance Highlights
Slide 24: Recent Financial Highlights
Recent Financial Highlights
Slide 25: Loan and Lease Composition
Loan and Lease Composition Construction & Multi-family 62,758 6% 58,454 1-4 Family Residential RE 30,786 3% 31,943 (4%) Leases 26,065 3% 15,926 64% All Other Loans 1244 2% 16313 6% Total Loans and Leases 981,972 100% 912,708 8% Deferred Loan Fees 4,021 748. 980,951 311,960 ‘otal Gross Loans and Leas
Slide 26: Loan Growth & NIM Expansion
Loan Growth & NIM Expansion $960 3.70% $940 $920 3.50% $900 3:30 $880 S = $860 3.10% = $840 $820 2.90% $800 2.70% $780 $760 T 2.50% 2008 2009 2010 2011 2012 2013 mm Average Loans and Leases + —Net Interest Margin Source: SEC lings and F81Z management.
Slide 27: Trust Asset Growth
Trust Asset Growth $1,200 $1,000 $800 Ye" -¥ $171 $600 $30 $400 siza $107 Millions 323 $255 e 2008 2009 2010 2011 2012 2013 mm Trust Assets Under Management mam Trust Assets Under Administration s==Trust Revenue AUM&A Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 21.5% Source: SEC lings and
Slide 28: Tangible Common Equity
Tangible Common Equity 2008 2009 2010 2011 2012 2013 mmTBV/Share ——TCE Ratio TBV/Share - Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 7.0% ‘and “TCE Ratio”
Slide 29: Earnings and Dividends per Share
Maintained consistent dividend 101 H throughout the economic crisis with E a ida) I ngs Pe r S h a re sustainable payout ratio going forward 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 2008 2009 2010 2011 2012 2013 M™EDiluted EPS mmm Dividends per Share .——Payout Ratio Source: SEC lings and F8IZ
Slide 30: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST
Slide 31: Investment Highlights
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-market core fu
Slide 32: Loan and Lease Growth Opportunity
Loan and Lease Growth Opportunity
Slide 33: Significant Deposit Growth Opportunity
Significant Deposit Growth Opportunity
Slide 34: FBIZ Valuation - Price Increase
FBIZ Valuation - Price Increase
Slide 35: FBIZ Valuation
FBIZ Valuation P/E Trend Since 4Q '10 (December 31, 2010 - January 31, 2014) 6.00 f — 4.00 Vu, 2.00 0.00 Dec-10 Apr Aug-11 Dec-11 Apr-2 ‘Aug-12 Dec-12 Apr-13 ‘Aug-13 Dec-13 —FBIZ-US SNL Micro Cap U.S. Bank SNL Small Cap U.S. Bank Source: SNL Financial
Slide 36: Appendix
Appendix Supplemental Data & non-GAAP Reconciliations YOUR SUCCESS COMES FIRST First Business
Slide 37: Appendix - Financial Highlights Table
Appendix - Financial Highlights Table
Slide 38: Appendix - Yield and Cost Trends
Appendix - Yield and Cost Trends
Slide 39: Appendix - Asset Quality Data and Ratios
Appendix - Asset Quality Data and Ratios
Slide 40: Appendix - Pre-Tax Adjusted Earnings
Appendix - Pre-Tax Adjusted Earnings
Slide 41: 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 that are unrelated to our primary business activities and amortization of other intangible assets, if a
Slide 42: Appendix - Tangible Book Value Per Share
Appendix - Tangible Book Value Per Share
Slide 43: Appendix - Tangible Common Equity to Tangible Assets
Appendix - Tangible Common Equity to Tangible Assets
Slide 44: 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. For the Year
Slide 45: 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 total equity. We believe that this ratio is important to many investors in the marketplace who are interested in evaluating the level of a company’s non-performi
Slide 46: Appendix - Cumulative Net Charge-off Percentage
Appendix - Cumulative Net Charge-off Percentage
Slide 47: Your Success Comes First | First Business
= YOUR SUCCESS COMES FIRST | First Business
First Business Financial Services — Investor Presentation (February 2014) on 6ix