First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Shareholder Meeting (May 2016)
46 slides from First Business Financial Services's shareholder meeting presentation, May 19, 2016
Slide 1: Annual Shareholder Meeting
“ANNUAL _ SHAREHOLDER MEETING NASDAQ” |s T= 5| FBIZ First Business
Slide 2: Forward-Looking Statements
Forward-Looking Statements 2 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
Slide 3: Financial Results
FINANCIAL RESULTS
Slide 4: Balance Sheet Full Year 2015
Balance Sheet Full Year 2015 As of December 31, 2015 2014 $ Change % Change (Dollars in thousands) Assets Cash and cash equivalents $ 113,564 $ 103,237 $ 10,327 10.0 % Investment securities 177,830 186,261 (8,431) (4.5)% Loans held for sale 2,702 1,340 1,362 101.6 % Loans and leases receivable, net
Slide 5: Income Statement Full Year 2015
Income Statement Full Year 2015 For the Year Ended December 31,2015 2014 $ Change % Change (Dollars in thousands, except per share amounts) Net Interest Income: Net interest income $ 58,640 $ 46,130 $ 12,510 27.1% Provision for loan & lease losses 3,386 1,236 2,150 173.9% Net interest income after p
Slide 6: Balance Sheet First Quarter 2016
Balance Sheet First Quarter 2016 As of March 31, 2016 2015 $ Change % Change (Dollars in thousands) Assets Cash and cash equivalents $ 104,854 $ 141,887 $ (37,033) (26.1)% Investment securities 177,308 183,550 (6,242) (3.4)% Loans held for sale 1,697 2,396 (699) (29.2)% Loans and leases receivable,
Slide 7: Income Statement First Quarter 2016
Income Statement First Quarter 2016 For the Three Months Ended March 31,2016 2015 $ Change % Change (Dollars in thousands, except per share amounts) Net Interest Income: Net interest income $ 15,539 $ 14,930 $ 609 4.1 % Provision for loan & lease losses 525 684 (159) (23.2)% Net interest income afte
Slide 8: ANNUAL MEETING PRESENTATION May 2016
ANNUAL MEETING PRESENTATION May 2016
Slide 9: Company Overview
COMPANY OVERVIEW
Slide 10: Company Profile
• Experienced leadership • Entrepreneurial management style • Insider ownership of 8%2 • Business-focused model • Client relationship focus with high touch service • Niche acquisitions complement core strategic focus on organic growth Headquarters: Madison, WI Mission: Build long-term shareholder va
Slide 11: Evolution of Success
Source: FBIZ management 1. Represents Appleton, Oshkosh and Green Bay, Wisconsin. Evolution of Success Aligned with Financial Needs of Our Niche Client Base Aligned with Financial Needs of Our Niche Client Base 11
Slide 12: Geographic Footprint
Source: FBIZ management Geographic Footprint 12
Slide 13: Record of Strong Execution
RECORD OF STRONG EXECUTION
Slide 14: Record of Strong Execution: Key Objectives
Record of Strong Execution Key Objectives ACHIEVE • +1% ROA • +12% ROE • ABOVE MARKET GROWTH 14 DRIVE TOP LINE REVENUE GROWTH STRENGTHEN IN-MARKET DEPOSIT MIX GENERATE CONSISTENT, STRONG PROFITABILITY DELIVER EPS GROWTH
Slide 15: Organic Growth Drives Top Line Revenue
Organic Growth Drives Top Line Revenue1 Complemented by Niche Acquisitions $20.5 $20.0 $19.5 $19.0 $18.5 $18.0 M ill io ns 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings and FBIZ management. 1. Top line revenue calculated as net interest income + total non-interest income (including realized gains on
Slide 16: Strengthen In-market Deposit Mix
2010 2015 $133M $397M Strengthen In-market Deposit Mix Focus on Transaction Accounts to Reduce Cost of Funds $1,800 $1,500 $1,200 $900 $600 $300 $0 M ill io ns 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings. Deposit mix represents quarterly average balance data. CAG
Slide 17: Generate Consistent, Strong Profitability
Return on Assets Generate Consistent, Strong Profitability Efficient Operating Model Drives Bottom Line 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Re tu rn on As se ts 18.00% 15.00% 12.00% 9.00% 6.00% 3.00% 0.00% Re tu rn on Eq ui ty 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings and FBIZ management. R
Slide 18: Deliver EPS Growth Drives Shareholder Value
Deliver EPS Growth Drives Shareholder Value $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings and FBIZ management. 2010 2015 $0.185 $1.90 59% CAGR Diluted EPS Dividends per Share Diluted EPS 18
Slide 19: Unique Competitive Advantages
UNIQUE COMPETITIVE ADVANTAGES
Slide 20: Unique Competitive Advantages
Unique Competitive Advantages Key Themes SUCCESSFUL NICHE COMMUNITY BUSINESS BANK 20 Efficient Operating Model Efficient Funding Strategy Superior Talent with Business Expertise Superior Credit Quality Client-Centric Focus with High Touch Service
Slide 21: Efficient Operating Model
FBIZ Efficient Operating Model 62% EFFICIENCY RATIO HIGH EFFICIENCY "BUSINESS BANK" OPERATING MODEL • Limited branch network • Invest in technology • Products tailored to serve businesses and their owners FBIZ All BHCs Total Loans Outstanding per FTE $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000
Slide 22: Efficient Funding Strategy Mitigates Interest Rate Risk
Efficient Funding Strategy Mitigates Interest Rate Risk In-Market Deposits Wholesale Deposits Targeted Operating Range 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings. Represents quarterly average data. 1. Weighted average original maturity of wholesale depos
Slide 23: Superior Credit Quality
Superior Credit Quality Credit Culture Helps Safeguard Shareholder Investment 23 FBIZ All BHCs NPAs/Total Assets 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 FBIZ All BHCs Loans 30-89 Days Past Due/Total Loans 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 FBIZ Al
Slide 24: Client-Centric Focus with High Touch Service
Client-Centric Focus with High Touch Service 24
Slide 25: Superior Talent with Business Expertise
Source: 2015 client satisfaction survey results compiled by Moses Altsech, Ph.D. - Executive Training & Consulting 25 Superior Talent with Business Expertise Engaged Employees = Happy Clients
Slide 26: Focused Strategic Objectives
FOCUSED STRATEGIC OBJECTIVES
Slide 27: Focused Strategic Objectives
Focused Strategic Objectives LONG-TERM FUTURE SUCCESS 27 Opportunistically Invest to Support Organic Growth Complement Organic Growth with Niche Acquisitions Diversify Revenue Streams Increase Fee Income Generating Services
Slide 28: Opportunistically Invest to Support Organic Growth
Opportunistically Invest to Support Organic Growth Investing for the Future FOUNDATION FOR SCALABLE FRANCHISE 28 Investments in Technology Investments in Talent Conversion to industry leading CRM in 2015 Leverage BI suite in 2016 to enhance budget/forecast process and create additional operational e
Slide 29: Complement Organic Growth with Niche Acquisitions
Complement Organic Growth with Niche Acquisitions ORGANIC GROWTH REMAINS THE FOUNDATION FOR THE FUTURE HOWEVER, OUR SUCCESS CREATES OPPORTUNITIES FOR ACQUISITIONS SPECIALTY FINANCE REGISTERED INVESTMENT ADVISORY FIRMS BUSINESS-FOCUSED COMMUNITY BANKS 29
Slide 30: Diversify Revenue Streams: Fee Income as % of Revenue
Diversify Revenue Streams Fee Income as a % of Total Revenue 1997-2015 30 1997 94% 6% 2015 77% 23% Source: SNL Financial "Regulated Depositories" database and FBIZ management.
Slide 31: Diversify Revenue Streams: Fee Income Generating Services
Diversify Revenue Streams Additional Fee Income Generating Services 1997-2015 31 Service Charges on Deposits Loan fees & other Trust Revenue Gain on Sale of Loans & Leases 25,000 20,000 15,000 10,000 5,000 0 $ (M ill io ns ) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 32: SBA Platform Expands Across FBIZ Footprint
Diversify Revenue Streams SBA Platform Expands Across FBIZ Footprint CLIENT ACQUISITION STRATEGY • EARNING ASSET GROWTH • IN-MARKET DEPOSIT GROWTH • FEE INCOME • BUILD COMPLETE RELATIONSHIP • EXPAND WITH CHANGING CLIENT NEEDS • PRIVATE WEALTH MANAGEMENT OPPORTUNITIES COMPLETE SBA CLIENT RELATIONSHIP
Slide 33: Loan and Lease Ending Balance Composition
Commercial Real Estate - Non-Owner Occupied Commercial and Industrial Commercial Real Estate - Owner Occupied Asset-Based Lending Construction Multi-family Land Development 1-4 Family SBA Direct Financing Leases All Other Loans Factoring Diversify Revenue Streams Loan and Lease Ending Balance Compos
Slide 34: Investment Performance
INVESTMENT PERFORMANCE
Slide 35: FBIZ Valuation - Price Appreciation
FBIZ Valuation - Price Appreciation Source: SNL Financial 35
Slide 36: FBIZ Valuation - Dividends per Share
FBIZ Valuation - Dividends per Share Dividends per Share Dividend Yield $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Source: SEC filings and FBIZ management. Total Annual Dividends per Share 2010 2015 $0.14 $0.4426% CAGR 36
Slide 37: FBIZ Valuation - Original Shareholder Return
37 FBIZ Valuation - Original Shareholder Return
Slide 38: FBIZ Valuation - Original Shareholder Return
38 FBIZ Valuation - Original Shareholder Return Source: FBIZ management. $22.00 investment in 1990 for 1 share of FBIZ stock
Slide 39: FBIZ Valuation - Original Shareholder Return
39 FBIZ Valuation - Original Shareholder Return Source: FBIZ management. $22.00 investment in 1990 for 1 share of FBIZ stock $23.35 in cash dividends received life-to-date
Slide 40: FBIZ Valuation - Original Shareholder Return
40 FBIZ Valuation - Original Shareholder Return Source: FBIZ management. $22.00 investment in 1990 for 1 share of FBIZ stock Stock dividends in '97, '99, '01 and '15 = 1 share is now 9.24 shares $23.35 in cash dividends received life-to-date
Slide 41: FBIZ Valuation - Original Shareholder Return
41 FBIZ Valuation - Original Shareholder Return $22.00 investment in 1990 for 1 share of FBIZ stock Stock dividends in '97, '99, '01 and '15 = 1 share is now 9.24 shares $23.35 in cash dividends received life-to-date 9.24 shares x $23.931 = $221.11 Source: FBIZ management. 1. Represents stock price
Slide 42: Questions?
QUESTIONS? First Business YOUR SUCCESS COMES FIRST.
Slide 43: Appendix: Supplemental Data & Non-GAAP Reconciliations
APPENDIX SUPPLEMENTAL DATA & NON-GAAP RECONCILIATIONS
Slide 44: Efficiency Ratio
Source: SEC filings and FBIZ management. 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 intang
Slide 45: Cost of Total Deposits
Source: SEC filings and FBIZ management. Cost of Total Deposits • ‘‘Cost of Total Deposits’’ is defined as total interest expense on deposits divided by total average deposits. "Cost of Total In-Market Deposits" is defined as total interest expense on in-market deposits divided by total average in-m
Slide 46: First Business - Your Success Comes First
First Business YOUR SUCCESS COMES FIRST.
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