First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (November 2014)
45 slides from First Business Financial Services's investor presentation, Nov 14, 2014
Slide 1: Investor Presentation November 2014
Investor Presentation November 2014 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 Mission: build long-term shareholder value as an entrepreneurial financial services provider to businesses, executives and high net worth individuals Headquarters: Madison, WI Effective November 1, 2014, combined assets exceeding $1.6 billion, loans of $1.2 billion and deposits total
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: Successful Whole-Bank Acquisition
Successful Whole-Bank Acquisition’ Alterra Bank Overview ets $238M Gross Loans $188M Deposits $206M © Single branch model headquartered in Leawood, KS fits FBIZ's legacy focus ona branchless philosophy Management team has significant long-term commercial relationships in Kansas City metropolitan are
Slide 8: Office locations map
Minneapolis, MN Denver, CO St. Louis, MO, Atlanta, GA © Banking Office @ Asset-Based Lending Business Development Office Equipment Finance Business Development Office @ Factoring Office Source: Faiz Management
Slide 9: Senior Executive Team
Senior Executive Team Corey Chambas Michael Losenegger + President & . Senior Vice * Chief Credit Officer Business Financial Services, Inc. . 5 . experience Genoa specializing in commercial banking industry + L1years with First Business lending & cash manager : : + 21 years with First Business . Mir
Slide 10: Senior Executive Team
Senior Executive Team Chuck Batson Mickey Noone fesidet of Fist Binbes Tun © President & . Invest Business Capital Corp. Northeast Region trust and investment services experience experience +13 years with First Business ‘+ Byears with First Business + Syears with First Business Burk Bat . Mr. Ne was
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: Top Line Revenue growth
Consistent annualized organic revenue growth of : 1 Top Line Revenue crniatl 1% ove he past 5 years §6.58 $50.55 $38.69 $42.52 $3136 934.48 so , r r r 7 7 2008 2009 2010 2011 2012 2013 YTD YTD 9/30/13 9/30/14 Compound Annual Growth Rate From 2008 — 2013 = 10% Source: SEC Filings and F812 Management.
Slide 15: Pre-Tax Adjusted Earnings 5-year CAGR of 15.2%
5-year CAGR of 15.2% exceeds top line revenue Pre-Tax Adjusted Ea rnings’ CAGR by 50% due to efficient operating model $25 4 $20 4 Millions wn un e nA S a + $10.52 $10.35 na a 2008 2009 2010 2011 2012 2013 YTD YTD 9/30/13 9/30/14 Compound Annual Growth Rate From 2008 — 2013 = 15.2% Source: SEC Filin
Slide 16: Efficiency Ratio and FTEs
Reflects strategic initiative to Efficiency Ratio” & FTEs- opportunistically invest in talent for future growth 80% 7170 ; 160 75% + 150 70% 140 +130 65% ,120 60% + 110 100 55% +90 50% ~80 2008 2009 2010 2011 2012 2013 9/30/14 = Efficiency Ratio = FTE Source: SEC Filings and F812 Management. 1. “Efc
Slide 17: Deposit Composition
‘ocus on in-market deposits, specifically transaction Deposit Composition aie $1,500 4 4.00% $1,200 4 | + 3.00% seco | aa = | + 2.00% $600 | al | 1.00% $300 + so + ~ 0.00% 2008 2009 2010 2011 2012 2013 YTD 9/30/14 HE brokered Deposits HE in-tarket cos ‘Money Market HE Transaction Accounts Cost of To
Slide 18: Funding Strategy
Funding Strategy 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 fun
Slide 19: Asset Quality Trends
Asset Quality Trends Maintain strong asset quality $55 4 As of 9/30/14, non- performing assets were approximately $15.9 million,” or 1.12% of total assets Allowance for loan and lease losses provided coverage for 88% of non-accrual loans and leases at 9/30/14 As of 9/30/14, $8.1 million, or 51% of n
Slide 20: Cumulative Net Charge-Offs as a Percentage of Loans and Leases
Cumulative Net Charge-Offs’ as a Percentage of 12/31/07 Loans and Leases 14.00% 4 12.00% + 10.00% + 8.00% + 6.00% + 4.00% + 2.95% 2.88% 2.95% 2.00% + 0.00% ~ 2008 2009 2010 2011 2012 2013 2014 m FBIZ === All BHCs === WI-Based BHCs Source: SNL Finan and SEC Fngs. re consolidated regulator nancial dat
Slide 21: Return on Average Assets
Return on Average Assets 1.40% 9 1.20% 4 ®D @® 1.00% + 0.80% 4 @® @® 0.60% | 0.40% + (032%) 020% | ce) 0.00% ~ 2008 2009 2010 2011(1) 2012 2013 YTD YTD 9/30/13 9/30/14 Source: SEC flings and F812 Management. YTD datas annualized 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% i 0.00% 2008 2009 2010 2011(1) 2012 2013 YTD YTD 9/30/13 9/30/14 Source: SEC flings and FB12 Management. YTD datas annualized
Slide 23: Financial Performance Highlights
Financial Performance Highlights YOUR SUCCESS COMES FIRST
Slide 24: Recent Financial Highlights
Recent Financial Highlights Antanas) t or for the Year Ended, At or for the Nine Months Ended, 12/31/11 12/31/12 12/31/13 9/30/13 9/30/14 Net Income? $8,425 $8,926 $13,746 $9,986 $10,395 Diluted EPS* $3.23 $3.29 $3.49 $2.54 $2.62 Diluted Shares 2,507,826 2,610,872 3,847,610 3,839,871 3,884,593 ROAA’
Slide 25: Loan and Lease Composition
Loan and Lease Composition ($000) Total ‘Commercial and Industrial $336,746 32% $ 293552 14.7% As of September 30, 2014 Commercial Real Estate - Owner Occupied ; 136420 ‘Commercial Real Estate - Non- —— 328,730 32% 341,695 (3.8)% onstruction and Land Development 6, % 708 25.4% Multi-family 70483 7%
Slide 26: Loan Growth & NIM Expansion
Loan Growth & NIM Expansion’ $1,100 4 3.70% $0800 |-3.50% $1,000 + + 3.30% $950 4 = $900 | + 3.10% 2 $850 4 + 2.90% $800 4 + 2.70% $750 4 $700 ~ * 2.50% 2008 2009 2010 2011 2012 2013 9/30/14 ™ 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’ 2008 2009 2010 2011 2012 2013 9/30/13 9/30/14 a sgement istration "= Trust Revenue AUM&A Compound Annual Growth Rate From 2008 — 2013 = 21.5% Source: EC Flings nd F912 Management. 1. 9/30/13 and 9/30/ a7
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 @ TBV/Share === TCE Ratio 2013 9/30/14 r 10.00% + 9.00% ; 8.00% } 7.00% ; 6.00% ; 5.00% ~ 4.00% TBV/Share - Compound Annual Growth Rate From 12/31/08 — 12/31/13 = 7.0%
Slide 29: Earnings Per Share
Earnings Per Share $4.00 7 $3.50 4 $3.00 4 $2.50 4 $2.00 4 $1.50 4 $1.00 4 $0.50 4 $0.00 2008 2009 2010 @ Diluted EPS Source: SEC flings and F812 management 1. 8/30/13 and 9/30/24 Payout Ratios forthe year-to-date period 24.1% 16.5% 2011 2012 2013 9/30/13 9/30/14 ™ Dividends per Share === Payout Rat
Slide 30: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST
Slide 31: Investment Highlights
. e ° Investment Highlights ROA exceeding 1.0% for seven consecutive quarters ROE exceeding 12.0% for nine consecutive quarters Professional sales organization with proven growth capabilities across our chosen business lines Profitable throughout the economic cycle with strong underlying fundamental
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 31%) Associated Bank: 8% FBIZ: 2% FBIZ: 1% FBIZ: 1% FBIZ: 1% $12.7 Billion $10.5 Billion $11.0 Billi $16.
Slide 33: FBIZ Valuation
FBIZ Valuation % Price Increase Since 2012 Common Stock Offering (December 3, 2012 - September 30, 2014) 120% 4 100% 80% 86% 60% + 40% 4 36% 3% 20% 4 0% + 20% | Dec 2012 ‘Apr 2013, ‘Aug 2013, Dec 2013, May 2014 Sep 2014 — Fez —— SNL Micro Cap U.S. 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 - September 30, 2014) 4.00 4 Dec 2012 ‘Apr 2013, ‘Aug 2013, Dec 2013 May 2014 Sep 2014 — Fez 34 Source: SNL Financial
Slide 35: Appendix
Appendix Supplemental Data & Non-GAAP Reconciliations YOUR SUCCESS COMES FIRST
Slide 36: Financial Highlights
Financial Highlights (dolla Me) {As of and for the Year Ended December 31, {As of and for the Nine Months Ended, 2008 2008 2010 2013 9/30/33, 9 Income Statement Net interest income $ 26258 $ 28034 $ 31951 § 35461 $ 37,881 S 42,105 § Baal S$ 32,535 Provision for loan and lease losses 4,299 8,225, 7,0
Slide 37: Yield and Cost Trends
Yield and Cost Trends (dollars in thousand: For the Year Ended December 31, 2 Interest Earning Assets Snare vel Cest viegjeost — Bolante Commercial real estate and other mortgage —~§ 608,665 5.45% 543% mercial and industrial 77% Direct financing leases 6.12% sumer and other loans 3.99% Total loans a
Slide 38: Asset Quality Data and Ratios
Asset Quality Data and Ratios 'Non-performing loans and leases Foreclosed properties, net Total non-performing assets Performing troubled debt restructurings Total impaired assets 1.02% 1.61% 143% 141% 152% 1.08% 1.65% 1.46% 1.44% 1.53% Non-performing assets to total assets 0.82% 1.28% 1.13% 1.11% 1
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, if
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’ management believes that this measure
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. For the Yea
Slide 44: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage mulative Net C ‘ge-Offs to 12/31/07 Lo: Leases * “Cumulative Net Charge-off Percentage” is defined as aggregate net charge-offs from 1/1/2008 through 9/30/14 divided by total loans and leases as of 12/31/07. We believe that this measure is important to many inves
Slide 45: First Business
First Business YOUR SUCCESS COMES FIRST
First Business Financial Services — Investor Presentation (November 2014) on 6ix