First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Q2 2021 Earnings Presentation
42 slides from First Business Financial Services's earnings presentation, Aug 4, 2021
Slide 1: Investor Presentation Second Quarter 2021
INVESTOR PRESENTATION SECOND QUARTER 2021 Nasdaq: FBIZ Exhibit 99.1
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 Overview.......................................................................... 4 Quarterly Update............................................................................. 7 Profitability & Growth..................................................................... 9
Slide 4: Company Overview
COMPANY OVERVIEW
Slide 5: Company Profile
Company Profile • Experienced leadership • Entrepreneurial management style • Business-focused model • Efficient and highly scalable banking model with limited branch network • Client relationship focus with high touch service Headquarters: Madison, WI Mission: Build long-term shareholder value as a
Slide 6: Evolution of Success Aligned with the Financial Needs of Our Niche Client Base
Evolution of Success Aligned with the Financial Needs of Our Niche Client Base 6
Slide 7: Quarterly Update
QUARTERLY UPDATE
Slide 8: Profitability & Growth
Profitability & Growth • Robust Core Earnings and Top Line Revenue - Improved asset quality metrics, net interest margin stability, organic loan growth, and fee income generation produced strong net income of $8.2 million in the second quarter, up 148% from the same period in 2020. • Diversified Fee
Slide 9: Profitability & Growth
Profitability & Growth
Slide 10: Profitability
0.55% 1.26% 6.70% 15.09% ROAA (1) ROAE (1) Q2 2020 Q2 2021 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 18.00% 10 Profitability Strong Performance Driven by Loan Growth, Diversification of Fee Income, and Provision Benefit 1. Calculations are annualized. M illions
Slide 11: Key Operating Trends
$ (M ill io ns ) $26.6 $28.1 $32.5 $39.1 FYE 2017 FYE 2018 FYE 2019 FYE 2020 $0.0 $15.0 $30.0 $45.0 $60.0 $75.0 $90.0 $105.0 Key Operating Trends Operating Fundamentals Demonstrate Earnings Power 11 Note: Net interest income is the sum of "Pure Net Interest Income" and "Fees in Lieu of Interest". No
Slide 12: Tangible Book Value & Dividend Growth
Tangible Book Value & Dividend Growth History of Steady, Consistent Growth with Active Share Repurchase Program 1. 2021 TBV/Share represents data as of June 30, 2021. 2021 Dividends/Share represents annualized data for June 30, 2021. Great Recession & Pandemic Recession TBV/Share Div/Share '06 '07 '
Slide 13: Dividend Yield Above Peer Group Median
Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. Dividend Yield Above Peer Group Median 13 On January 29th, 2021, FBIZ announced a 9% increase in its quarterly dividend rate. This represents the 9th consecutive annual dividend increase.
Slide 14: Future Growth and Profitability Potential
Future Growth and Profitability Potential Improved Profitability Through Growth in Higher Yielding Business Lines 1. Additional financial information on commercial business lines can be found in the appendix. 2. AUA = Assets Under Advisement 3. AUM&A = Assets Under Management & Administration 4. NFE
Slide 15: Credit
CREDIT
Slide 16: Asset Quality
Asset Quality Non-Performing Assets/Total Assets Decline as SBA Legacy Portfolio Runs Off 16 M ill io ns Non Performing Assets NPA/TA (1) 06/30/20 09/30/20 12/31/20 03/31/21 06/30/21 $0.0 $6.0 $12.0 $18.0 $24.0 $30.0 $36.0 $42.0 —% 0.40% 0.80% 1.20% 1.60% 2.00% 2.40% 2.80% FBIZ TSR 4/30/2020 - 4/29/
Slide 17: COVID-19 Update
COVID-19 UPDATE
Slide 18: Paycheck Protection Program (PPP)
Paycheck Protection Program ("PPP") Active Participation Propelled by SBA Expertise & Proactive Investments in Technology Leveraged a proprietary client portal to create an efficient and user friendly PPP portal within days of the plan’s announcement CARES Act • 736 applications processed and $340 M
Slide 19: Modest Overall Exposure to Industries Most Impacted by COVID-19
($ in m ill io ns ) Loan Modifications Balance Outstanding 4/30/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 $0 $50 $100 $150 $200 $250 $300 $350 PPP Update Modest Overall Exposure to Industries Most Impacted by COVID-19 and No Retail Consumer Portfolio 19 • As of June 30, 2021, the Company had no me
Slide 20: Valuation
VALUATION
Slide 21: Growth Stock at a Value Price
Revenue Growth FBIZ Peer Group (1) '18 '19 '20 0% 3% 5% 8% 10% 13% Loan Growth FBIZ Peer Group (1) '18 '19 '20 '21 (2) 0% 5% 10% 15% 20% 25% 30% Growth Stock at a Value Price 1. Loan growth represents Q1 2021 annualized growth compared to Q4 2020. 2. Data is year-to-date March 31, 2021. Note: Peer g
Slide 22: Trading at Discount to Peer Group Price / LTM EPS
Trading at Discount to Peer Group Price / LTM EPS Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. 22
Slide 23: Total Shareholder Return Above Peer Group Median
Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $5 billion. Total Shareholder Return Above Peer Group Median 23
Slide 24: Scalable Franchise Positioned for Sustainable Growth
•Organic growth remains the foundation for the future •Opportunity to scale Private Wealth Management business in current markets outside of Madison • Significant commercial loan growth opportunity augmented by niche specialized lending programs •Demonstrated ability to grow in-market deposits comme
Slide 25: Strategic Plan
STRATEGIC PLAN
Slide 26: FBIZ Strategic Plan 2019-2023 Strategies
FBIZ Strategic Plan 2019-2023 4 Strategies Designed to Navigate the Company over a 5-Year Time Horizon 26
Slide 27: FBIZ Strategic Plan 2019-2023 Goals
FBIZ Strategic Plan 2019-2023 Goals Set to Deliver Above Average Shareholder Return 27 Goal Actual 2018 Actual 2019 Actual 2020 Actual 2021 Goal 2023 Return on average equity (1) 9.41% 12.55% 8.64% 16.75% 13.50% Return on average assets (1) 0.86% 1.14% 0.70% 1.38% 1.15% Top line revenue growth 10.70
Slide 28: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS
Slide 29: Appendix: Commercial Banking Products & Services
APPENDIX Commercial Banking Products & Services
Slide 30: Commercial Lending
Product Profile • Target small- to medium-sized companies in our Wisconsin, Kansas, and Missouri markets • Lines of credit and term loans focused on businesses with annual sales of up to $75.0 million Efficiency Initiatives • Developing a client lending portal to avoid collaborating on documents ove
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, inf
Slide 32: Private Wealth Management
Product Profile • Fiduciary and investment manager for individual and corporate clients, creating, and executing asset allocation strategies tailored to each client’s unique situation • Full fiduciary powers and offers trust, estate, financial planning, and investment services, acting in a trustee o
Slide 33: Asset-Based Lending
Product Profile • Target medium-sized companies nationwide • Primarily provide revolving lines of credit and term loans for leveraged buyouts, capital expenditures, working capital, bank debt refinancing, debt restructuring, corporate turnaround strategies and debtor-in-possession financing in the c
Slide 34: Accounts Receivable Financing
Product Profile • Target small- to medium-sized companies nationwide • Primarily provide funding to clients by purchasing accounts receivable on a full recourse basis • Positioned to provide competitive rates to clients starting up, seeking growth, and needing cash flow support, or who are experienc
Slide 35: SBA Lending
Product Profile • Primarily originate variable rate term loans through the 7(a) program which typically provides a guaranty of 75% of principal and interest • Product offering is designed to generate new business opportunities by meeting the needs of clients whose borrowing needs cannot be met with
Slide 36: Vendor Finance
Product Profile • Includes broad range of equipment finance products to address the financing needs of commercial clients in a variety of industries • Focus includes manufacturing equipment, industrial assets, construction, and transportation equipment, and a wide variety of other commercial equipme
Slide 37: Floorplan Financing
Product Profile • Offers floorplan financing for independent car dealerships nationwide • Allows car dealers the flexibility to finance their acquisition of used cars, preserving cash flow, and allowing dealers to purchase inventory • Offer floorplanning programs from $500,000 to $10 million for lar
Slide 38: Bank Consulting
Product Profile • Expertise to assist institutions with balance sheet management • Services offered include investment portfolio management and administration, asset liability management, and asset liability process validation services Efficiency Initiative • Currently focusing on improved use of da
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 40: Pure Net Interest Income 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 41: 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 42: First Business Bank
First Business Bank.
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