First Business Financial Services, Inc. · NASDAQ:FBIZ
First Business Financial Services — Q1 2021 Earnings Presentation
40 slides from First Business Financial Services's earnings presentation, May 5, 2021
Slide 1: Investor Presentation First Quarter 2021
INVESTOR PRESENTATION FIRST 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 Credit.......
Slide 4: Company Overview
COMPANY OVERVIEW
Slide 5: Company Profile
Company Profile • Experienced leadership • Entrepreneurial management style • Insider ownership of 5.4%2 • 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 lon
Slide 6: Evolution of Success
Evolution of Success Aligned with the Financial Needs of Our Niche Client Base 6
Slide 7: Quarterly Update
QUARTERLY UPDATE
Slide 8: Quarterly Update highlights
Profitability & Growth • Record Earnings - Loan growth, strong fee income, and provision benefit led to record net income of $9.7 million. • Fee Income - Diversified revenue sources led by Private Wealth resulted in fee income growth of 23% annualized for the quarter, once again exceeding our goal o
Slide 9: Profitability & Growth
Profitability & Growth
Slide 10: Profitability: Record Performance
0.62% 0.93% 1.51% 7.14% 11.92% 18.48% ROAA (2) ROAE (2) Q1 2020 Q4 2020 Q1 2021 0.00% 0.30% 0.60% 0.90% 1.20% 1.50% 1.80% 0.00% 4.00% 8.00% 12.00% 16.00% 20.00% 24.00% 10 Profitability Loan Growth, Strong Top Line Revenue, and Provision Benefit Drive Record Performance 1. Decrease in top line revenu
Slide 11: Growth: Above Average Organic Growth
Revenue Growth FBIZ Peer Group (1) '18 '19 '20 '21 (3) 0% 5% 10% 15% 20% 25% Loan Growth FBIZ Peer Group (1) '18 '19 '20 '21 (2) 0% 5% 10% 15% 20% 25% 30% Growth Deliver Above Average Organic Growth Through Expert Business Banking and Specialty Finance Teams 1. Peer Group defined as U.S. Commercial
Slide 12: Key Operating Trends
$ (M ill io n s) $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 12 Note: Net interest income is the sum of "Pure Net Interest Income" and "Fees in Lieu of Interest". No
Slide 13: Future Growth and Profitability Potential
Future Growth and Profitability Potential Higher Profitability Through Growth in Higher Yielding Business Lines 1. Additional financial information on adolescent and mature commercial business lines can be found in the appendix. 2. AUA = Assets Under Advisement 3. AUM&A = Assets Under Management & A
Slide 14: Credit
CREDIT
Slide 15: Asset Quality: Low Net Charge-Offs
Asset Quality History of Low Net Charge-Offs Through Credit Cycles as a Result of Industry Expertise, Premier Clients, & Consistent Underwriting 15 1. Peer Group defined as U.S. Commercial Banks with total assets between $1 billion and $3 billion. Net Charge-Offs / Average Loans FBIZ Peer Group (1)
Slide 16: Asset Quality: Non-Performing Assets Decline
Asset Quality Non-Performing Assets/Total Assets Decline as SBA Legacy Portfolio Runs Off 16 Non-Performing Assets NPA/TA (1) 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 0 6,000 12,000 18,000 24,000 30,000 36,000 42,000 0.75% 0.90% 1.05% 1.20% 1.35% 1.50% 1.65% 1.80% FBIZ TSR 4/30/2020 - 4/29/2021
Slide 17: COVID-19 Update
COVID-19 UPDATE
Slide 18: Paycheck Protection Program Participation
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 $340 M
Slide 19: PPP Update and COVID-19 Industry Exposure
($ in m ill io n s) Loan Modifications Balance Outstanding 3/31/20 4/30/20 6/30/20 9/30/20 12/31/20 3/31/21 $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 March 31, 2021, the Company had no m
Slide 20: Valuation
VALUATION
Slide 21: Tangible Book Value & Dividend Growth
Tangible Book Value & Dividend Growth History of steady, consistent growth 1. 2021 TBV/Share represents data as of March 31, 2021. 2021 Dividends/Share represents annualized data for March 31, 2021. Great Recession & Pandemic Recession TBV/Share Div/Share '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Slide 22: Trading at Discount to Peer Group
Trading at Discount to Peer Group Price / Tangible Book Value 1. Uses 5/3/2021 closing stock price of $27.24/share. Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $4 billion. 22 Consensus 2021 P/E(1) = 7.5x Consensus 2022 P/E(1) = 8.8x Current Price1 to TB
Slide 23: Dividend Yield Above Peer Group Median
Note: Peer Group defined as publicly-traded banks with total assets between $1 billion and $4 billion. Dividend Yield Above Peer Group Median 23 On January 29th, 2021, FBIZ announced a 9% increase in its quarterly dividend rate. This represents the 9th consecutive annual dividend increase.
Slide 24: Scalable Franchise Positioned for Sustainable Growth
•Organic growth remains the foundation for the future • Scale Private Wealth Management business in current markets outside of Madison • Significant commercial loan growth opportunity augmented by niche specialty finance lending programs •Demonstrated ability to grow in-market deposits commensurate
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% 18.48% 13.50% Return on average assets (1) 0.86% 1.14% 0.70% 1.51% 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 M ill io n s Portfolio Analysis CRE NOO Other C&I CRE OO Average Yield 1Q20 2Q20 3Q20 4Q20 1Q21 $0
Slide 31: Commercial Banking Cash 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: Trust / 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 • 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: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 38: 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 39: 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 40: First Business Bank
First Business Bank.
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