First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Q4 2022 Earnings Presentation
37 slides from First Business Financial Services's earnings presentation, Feb 1, 2023
Slide 1: Investor Presentation Fourth Quarter 2022
Investor Presentation Fourth Quarter 2022 Nasdaq: FBIZ
Slide 2: Forward-looking statements
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,” “likely,” or similar expre
Slide 3: Table of Contents
Table of Contents Company Snapshot ........................................................................ 4 Why FBIZ? ...................................................................................... 5 Drivers of Growth & Profitability .................................................. 10 Str
Slide 4: Company Snapshot
• Serving unique needs of business executives, entrepreneurs, and high net worth individuals through Business Banking, Private Wealth, and Bank Consulting • Within Business Banking, our commercial banking offerings are focused on our attractive Midwest markets while Specialty Finance products and se
Slide 5: Why FBIZ?
WHY FBIZ?
Slide 6: Tangible Book Value Growth
Tangible Book Value Growth History of Steady, Consistent TBV and Dividend Growth Through Economic Cycles TBV 3YR CAGR = 10% Div/Share 3YR CAGR = 10% 2022 TBV Growth = 9% 6 TBV/Share Div/Share Great Recession & Pandemic Recession '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 $5
Slide 7: Rate Cycle Consistency
Rate Cycle Consistency TBV above peer in current rate cycle Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. 7 Tangible Book Value Change During Current Rate Cycle FBIZ Peer Group Median 09/30/21 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 10 15
Slide 8: Total Shareholder Return Above Peer Group Median
Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. 1. Data as of 12/31/2022. Total Shareholder Return Above Peer Group Median Despite recent outperformance, Price/LTM EPS remains below peers 8 Total Shareholder Return FBIZ Peer Group Median S&P 500
Slide 9: ROAE Above Peer Group Median
ROAE Above Peer Group Median Top Line Revenue Growth and Superior Asset Quality Drives Historically Strong Profitability 9Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion 1. Peer group data for 2022 represents ROAE for the nine months ended Septem
Slide 10: Drivers of Growth & Profitability
Drivers of Growth & Profitability
Slide 11: Fourth quarter highlights
• Robust Loan Growth. Loans, excluding net Paycheck Protection Program (“PPP”) loans, grew $114.2 million, or 19.6% annualized, from the third quarter of 2022 and $230.4 million, or 10.4%, from the fourth quarter of 2021, reflecting balanced growth across the Company’s commercial and industrial (“C&
Slide 12: Robust Profitability Metrics
Robust Profitability Metrics Net Interest Margin Expansion and Loan Growth Lead to Robust PTPP Adjusted ROAA Net Interest Margin 3.39% 4.01% 4.15% 3.23% 3.89% 3.94% 0.16% 0.12% 0.21% Base net interest margin (1) Recurring, variable components (2) Q4 2021 Q3 2022 Q4 2022 12 1. "Base Net Interest Marg
Slide 13: Margin Expands on Positive Beta Differential
Margin Expands on Positive Beta Differential and Match-Funded Balance Sheet Cumulative Earning Asset Beta Exceeds Funding Beta 13 NIM, Yields, and Costs 5.55% 3.95% 4.51% 3.73% 3.14% 3.69% 2.40% 1.99% 1.76% 1.42% 0.54% 0.45% Average Loan Yield Net Interest Margin Securities Yield Cost of Funds (5) Q
Slide 14: Deposit-Centric Strategy Key to Growth
14 Deposit-Centric Strategy Key to Growth Ability to Generate Double-Digit Loan Growth Supported by History of Strong Deposit Growth 1. Deposits defined as total deposits less wholesale deposits. Period end balances are presented. M ill io ns Deposit Growth History (1) DDA IB DDA MMA CD '18 '19 '20
Slide 15: Diversified Lending Growth
Diversified Lending Growth Continuing to grow higher yielding C&I lending mix 15 Th ou sa nd s Net Loan Growth Q4 2021 $82,268 $1,739 $20,236 $18,844 $11,304 $10,884 $6,167 $1,819 Commercial Lending Private Wealth Asset- Based Lending Accounts Receivable Financing SBA Lending Equipment Finance Floor
Slide 16: Exceptional Asset Quality
Exceptional Asset Quality Non-Performing Assets/Total Assets at Lowest Levels In 20 Years 16 M ill io ns NPA FBIZ NPA/TA Peer NPA/TA 4Q21 1Q22 2Q22 3Q22 4Q22 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45% Note: Peer group defined as publicly-traded bank with
Slide 17: Balanced and Steady Growth
M ill io ns $32.5 $39.1 $41.2 $48.2 FYE 2019 FYE 2020 FYE 2021 FYE 2022 $0.0 $15.0 $30.0 $45.0 $60.0 $75.0 $90.0 $105.0 $120.0 $135.0 Balanced and Steady Growth Operating Fundamentals Demonstrate Earnings Power 17 Note: Net interest income is the sum of "Pure Net Interest Income" and "Fees in Lieu o
Slide 18: Positive Operating Leverage
18 Positive Operating Leverage Ability to grow revenues faster than expenses outpaces peer group Loan vs. Deposit Growth FBIZ Loan Growth(1) FBIZ Deposit Growth(2) '19 '20 '21 0% 5% 10% 15% 20% 25% Note: Peer group defined as publicly-traded bank with total assets between $1 billion and $5 billion.
Slide 19: Strategic Plan
STRATEGIC PLAN
Slide 20: FBIZ Strategic Plan 2019-2023
FBIZ Strategic Plan 2019-2023 4 Strategies Designed to Navigate the Company over a 5-Year Time Horizon 20
Slide 21: Proven execution of strategic objectives
FBIZ Strategic Plan 2019-2023 Proven execution of strategic objectives 21 Goal Actual 2019 Actual 2020 Actual 2021 Actual 2022 Strategic Plan Return on average common equity 12.55% 8.64% 16.21% 16.79% 13.50% Return on average assets 1.14% 0.70% 1.37% 1.46% 1.15% Top line revenue growth 9.10% 11.50%
Slide 22: Appendix Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS
Slide 23: Company Overview
COMPANY OVERVIEW
Slide 24: Offerings Designed Exclusively for Business and Wealth Management
24 Offerings Designed Exclusively for Business and Wealth Management Services that meet the evolving needs of our growing client base
Slide 25: Superior Client Satisfaction Rating
Superior Client Satisfaction Rating Excellent Employee Satisfaction Drives Superior Client Satisfaction 25 *NPS benchmarks reported in “The State of B2B Account Experience: B2B NPS & CX Benchmarking Report,” CustomerGauge, 2021 NPS benchmarks reported in “The State of B2B Account Experience: B2B NPS
Slide 26: ESG Framework
26 ESG Framework Environmental, social, and governance practices are integrated into our core business strategy • • • • Branch-lite model with only one location in each of the banking markets we serve • Support hybrid and remote work options to reduce carbon emissions related to commuting (even prio
Slide 27: Products & Services
APPENDIX Products & Services
Slide 28: Commercial Real Estate Lending
Product Profile • Target small to medium-sized companies • Lines of credit and term loans focused on businesses with annual sales of up to $75.0 million Technology Initiatives • Deploying client portal that enables easy and secure communications and document exchanges M ill io ns Portfolio Analysis
Slide 29: C&I Lending
Product Profile • Target small and medium companies in a variety of industries • Financings range from $250,000 to $10 million Technology Initiatives • Deploying client portal that enables easy and secure communications and document exchanges M ill io ns Portfolio Analysis All Other C&I Lending Asse
Slide 30: Diversified Lending Products
Diversified Lending Products Double digit loan growth driven by stellar performance across all areas of the bank 30 Th ou sa nd s Net Loan Growth Q4 2021 $82,268 $1,739 $20,236 $18,844 $11,304 $10,884 $6,167 $1,819 Commercial Lending Private Wealth Asset- Based Lending Accounts Receivable Financing
Slide 31: Treasury Management
Product Profile • Target small to medium-sized companies in our Wisconsin, Kansas, and Missouri markets • Comprehensive services for commercial clients to manage their cash and liquidity, including lockbox, accounts receivable collection services, electronic payment solutions, fraud protection, info
Slide 32: Private Wealth
Product Profile • Fiduciary and investment manager for individual and corporate clients, creating, and executing asset allocation strategies tailored to each client’s unique situation • Holds full fiduciary powers and offers trust, estate, financial planning, and investment services, acting in a tru
Slide 33: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations
Slide 34: Base Net Interest Margin reconciliation
“Base Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less average net PPP loans, if any, and other recurring, but volati
Slide 35: Pure Net Interest Income Non-GAAP Reconciliation
"Pure Net Interest Income" is defined as net interest income less fees in lieu of interest. "Fees in Lieu of Interest" is defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. We believe that this measure is important to many investors in the marketplace
Slide 36: Net Operating Income reconciliation
"Net Operating Income" is a non-GAAP financial measure. We believe net operating income allows investors to better assess the Company’s operating expenses in relation to its top line revenue by removing the volatility that is associated with certain one-time and other discrete items. In compliance w
Slide 37: First Business Bank
First Business Bank.
First Business Financial Services — Q4 2022 Earnings Presentation on 6ix