First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Investor Presentation (July 2013)
39 slides from First Business Financial Services's investor presentation, Jul 26, 2013
Slide 1: Management Presentation
Management Presentation July 2013 YOUR SUCCESS COMES FIRST
Slide 2: Forward-Looking Statements
Forward-Looking Statements When used inthis presentation, and in any other oral statements made with the approval of an authorized executive offs, the words or phrases “may,” “could,” “should,” “hope,” “might,” “believe,” “expect,” “plan, roje se ris factors and investors. See, Item 1A “RISK FACTORS
Slide 3: FBIZ Company Overview
FBIZ Company Overview YOUR SUCCESS COMES FIRST
Slide 4: Corporate Profile
Corporate Profile ¢ Headquarters: Madison, WI ¢ Business-focused model ¢ Total assets at June 30,2013: e¢ Client relationship focus with $1.3 Billion high touch service e Experienced leadership ¢ 100% organic growth e Entrepreneurial management — Protects culture style — Protects credit standards In
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 Fact
Slide 6: Appleton, WI
Appleton, WI Minneapolis, MN Milwaukee, WI Detroit, MI Madison, WI Chicago, IL Cleveland, OH Denver, CO St. Louis, MO sas City, KS @ Banking Office © Asset-Based Lending Business Development Office © Equipment ance Business Development Office @ Factoring Of Source: F512 Management.
Slide 7: Senior Executive Team
Senior Executive Team Corey Chambas Jim Ropella President & Chief Executive Officer of First Business * Chief Financial Officer Financial Services, I * Over 30 years of experience in finance and accounting Over 25 years of commercial banking experience primarily in the banking industry specializing
Slide 8: Senior Executive Team
Senior Executive Team ‘* General Counsel and Corporate Secretary . si Doser UNE oh Wisconsin Law School, mene jember of the State Bar of Wisconsi . over oars ee 5 years with First Business President & Chief Executive Officer of First Business Bank — Over 30 years of banking experience 6 years with F
Slide 9: Senior Executive Team
Senior Executive Team Randy Shumate President of First Business Equipment Finance ~ National . Division 25 years of equipment finance and leasing experience * year with First Business + Prior to joining First Business, Mr. Shumate was the President of Midland Capital Partners, LLC, a middle market e
Slide 10: Corporate Strategy
Corporate Strategy High efficiency “Business Bank” Efficiency Ratio vs. WI Peers operating model oie — Limited branch network — Invest in technology to serve our "°° business clients qo — Products tailored to serve small =<" _— businesses and their owners 65.0% Capitalize on market disruption 60.0%
Slide 11: Recent Expansion Opportunities
Recent Expansion Opportunities ¢ Kansas City office for First Business Equipment Finance — Joined in April 2012 — “Lift out” of 5 individuals that have worked together for more than 20 years — Expansion of existing equipment finance business line e First Business Factors — Established in November 20
Slide 12: Strategic Objectives
Strategic Objectives YOUR SUCCESS COMES FIRST First Business
Slide 13: Strategic Objectives
Strategic Objectives Continue organic revenue growth Achieve additional improvement in pre-tax adjusted earnings Continue to capture in-market deposits from clients to strengthen our mix of core funding and reduce our cost of funds Continue asset quality improvement Maintain strong profitability/ROA
Slide 14: Top Line Revenue
Top Line Revenue? Compound Annual Revenue Growth Rate From 12/31/08 — 12/31/12 = 10.4% $3.1M $40 M 10.0% 1s $2.3M 10.1% Millions $0 $31.36 $34.48 $38.69 $42.52 $46.58 2008 2009 2010 2011 2012 YTD YTD 6/30/12 6/30/13 Source: SEC lings and FBI2 Management. Percentages represent year over year change.
Slide 15: Pre-Tax Adjusted Earnings
Pre-Tax Adjusted Earnings Compound Annual Growth Rate From 12/31/08 — 12/31/12 = 15.2% $2.0M §20 _ = ED 11.8% $2.9M $15 27.8% 32.1% 1.6% 15.9% Millions 50 $10.52 $10.35 $13.23 $16.54 $18.50 2008 2009 2010 2011 2012 YTD YTD 6/30/12 6/30/13
Slide 16: Efficiency Ratio & FTEs
Efficiency Ratio & FTEs 80% @®> 150 70% 120 5% 110 60% ° 100 55% - 90 50% - L_ 80 2008 2009 2010 2011 2012 6/30/13 Efficiency Ratio —=FTE lings and FZ Management.
Slide 17: Deposit Composition
Deposit Composition Local Deposits - Compound Annual Growth Rate From 12/31/08 - 12/31/12 = 18.7% $1,200 4.00% = $900 a PY — — 3.00% = $600 2.00% —J = $300 1.00% $o 0.00% 2008 2009 2010 2011 2012 6/30/13 mm Brokered Deposits mmm Local CDs Money Market mm Int. Bearing Transaction Accounts NIB Transac
Slide 18: Funding Strategy
Funding Strategy ¢ Continue to leverage commercial relationships to attract local deposits Maintain brokered deposits within Board-monitored limits — Match-funding fixed rate term loans with brokered deposits locks in interest rate spread Long-term brokered funding more reasonably priced than some i
Slide 19: Asset Quality Trends
Asset Quality Trends * Continue to make significant $60 60% improvement in NPA levels ¢ As of 6/30/13, non-performing $50 50% assets were approximately $11.8 million, or 0.93% of total $40 | 40% assets ¢ Allowance for loan and lease 30%, losses provided coverage for 135% of non-accrual loans and $20
Slide 20: Cumulative Net Charge-Offs as a Percentage of Loans and Leases
Cumulative Net Charge-Offs as a Percentage of 12/31/07 Loans and Leases 14.00% 12.00% 10.00% 8.00% 6.00% 8.00% * 2.88% 2.92% 2.00% eS 00%. — 2008 2009 2010 2011 2012 2013 YTD mmFBIZ —All BHCs —WI-Based BHCs ‘reporting consolidated regulatory financial data as of 3/31/13, All BHC and WI 8 erating i ‘
Slide 21: Return on Average Assets
Return on Average Assets 1.20% 1.00% 0.80% @® & 0.60% 0.40% Coz ) 0.20% ~ cox a i mm —— + — 2008 2009 2010 2011 (1) 2012 YTD 6/30/12 ‘Source: SEC lings and F812 Management. YO data is annualized 1 6/30/13
Slide 22: Financial Performance Highlights
Financial Performance Highlights YOUR SUCCESS COMES FIRST First Business
Slide 23: Recent Financial Highlights
Recent Financial Highlights At or ou oe “ Moi Year over year financial highlights ($in 000s, except ‘At or for the Year Ended, ; include per share data) 12/31/11 12/31/12 emp Gh oe Net income increased to a record $6.4 million Net Income $8,425 $8,926 $3,775, $6,377 * Top line revenue increased 10.1
Slide 24: Loan and Lease Composition
Loan and Lease Composition id i ra Leases All Other Loans esidential ution = ag Commercial and Industrial 29% Construction & Development ($000) Commercial and industrial $ Commercial RE - 00 Commercial RE - Non-00 Construction & Development Multifami 1-4 Family Residential RE Hee Loans an eases Comm
Slide 25: Tangible Book Value per Share
Tangible Book Value per Share Compound Annual Revenue Growth Rate From 12/31/08 — 12/31/12 = 6.5% $28.00 $26.00 - oe Fe $24.00 @ $22.00 $20.00 - & ad $18.00 | $16.00 - $14.00 T t 2008 2009 2010 2011 2012 6/30/13
Slide 26: Dividends Declared Per Common Share
Dividends Declared Per Common Share $0.60 $0.50 $0.40 BS @ @\Oo @ $0.20 J $0.10 $- 2008 2009 2010 2011 mm Dividends Declared per Common Share Source: SEC lings and F812 management 1. 6/30/2013 dividends per share are annualized. 2012 —Payout Ratio 6/30/2013 80% 70% 60% 50% 40% 30% 20% 10%
Slide 27: Investment Considerations
Investment Considerations YOUR SUCCESS COMES FIRST First Business
Slide 28: Investment Highlights
Investment Highlights Market opportunities available for locally based institutions with strong balance sheets Profitable through recent recession with strong underlying fundamental trends Manageable legacy asset quality situation with low historical charge-off levels Strengthening mix of in-market
Slide 29: Appendix: Supplemental Data & non-GAAP Reconciliations
Appendix Supplemental Data & non-GAAP Reconciliations YOUR SUCCESS COMES FIRST First Business
Slide 30: Financial Highlights
Financial Highlights (dollars in tho ‘At or for the Year Ended ‘At or for the 6 Months Ended 2008 2009 2010 2011 2012 6/30/2012 6/30/2013 Income Statement Net interest income. $ 26,258 $ 28,034 $ 31,951 $ 35,461 $ 37,881 $ 18,535 $ 20,422 Provision for loan and lease losses 4,299 8,225 7,044 4,250 4
Slide 31: Yield and Cost Trends
Yield and Cost Trends 6/30/2012 6/30/2013 on ‘average Average — Average «Average Average i 12/31/20: ‘Average Average Balanc viel Yield Cera ta aT 3 598,068 sas% = 503598 72% Commercial and industrial loan: 221,323 245,706 Direct financing lease 23,429 6.42% 15873 Consumer and other loans. 16914 3.9
Slide 32: Asset Quality Data and Ratios
Asset Quality Data and Ratios ousands) As of 3/31/2012 6/30/2012 9/30/2012 _ 12/31/2012 _ 3/31/2013 6/30/2013 ‘Non-performinglloans and leases Foreclosed properties, net Total non-performing assets Performing troubled debt restructurings i 41 $ 536 $ = 897 $ s $1076 Criticized Assets * Special Menti
Slide 33: Pre-Tax Adjusted Earnings
Pre-Tax Adjusted Earnings Pre-Tax Adjusted Earnings “Pre-Tax Adjusted Earnings” is defined as pre-tax income plus provision for loan and leases losses, other identifiable costs of credit and other discrete items that are unrelated to our primary business activities. In our judgment, the presentation
Slide 34: Efficiency Ratio
Efficiency Ratio Efficiency Ratio “Efficiency Ratio” is defined as non-interest expense less loss on foreclosed properties, FDIC special assessments, goodwill impairment and amortization of other intangible assets divided by our operating revenue, which is equal to net interest income plus non-inter
Slide 35: Tangible Book Value Per Share
Tangible Book Value Per Share ingible Book Value Pet e “Tangible Book Value per Share” is defined as tangible common stockholders’ equity divided by total common shares outstanding. We believe that this measure is important to many investors in the marketplace who are interested in changes from peri
Slide 36: Deposit Cost
Deposit Cost « “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. (dollars in thousands) Forthe Year
Slide 37: 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- performin
Slide 38: Cumulative Net Charge-off Percentage
Cumulative Net Charge-off Percentage mulative Net ‘ge-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 6/30/2013 divided by total loans and leases as of 12/31/2007. We believe that this measure is important to many
Slide 39: Your Success Comes First
-— YOUR SUCCESS COMES FIRST | First Business
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