FBIZ: Fourth Quarter Preview - Outperform - Analyst Blog
27 Januar 2012 - 4:32PM
Zacks
FBIZ: Fourth Quarter Preview - Outperform
Ann Heffron, CFA
First Business Financial Services, Inc.
(FBIZ) is expected to report fourth
quarter and full-year results in mid-March, as it typically does.
We are maintaining our revised diluted EPS estimates of $2.90 for
2011 and $3.40 for 2012. In addition, we are continuing our
Outperform recommendation on FBIZ, with our twelve-month target
price at $19.00, which compares to the Company’s current stock
price of $15.88.
Relative to our prior estimates, our revised projections
incorporate a higher net interest margin, partially offset by
reduced loan growth, a significant reduction in the loan loss
provision, and a slight increase in the effective tax rate.
We note that FBIZ had an exceptional third quarter, beating our
estimate by $0.26 and posting diluted EPS of $0.83. This was more
than double the prior-year quarter’s $0.38 and well above our $0.57
EPS estimate.
Third quarter results were boosted by a gain in net interest income
from a higher net interest margin, strong growth in trust and
investment services income and loan fees, a significantly reduced
loan loss provision, and lower FDIC premium expense and collateral
liquidation costs, partially offset by increased compensation from
bonus accruals, higher marketing costs, and an increased effective
tax rate.
The Company made excellent progress in reducing problem assets and
believes indications are that it has turned the corner regarding
asset quality. Nonaccrual loans fell $7.6 million, or 22%,
sequentially to $27.0 million, while foreclosed assets jumped $0.6
million, or 46%, to $2.0 million. As a percentage of total loans
and OREO, nonperforming assets fell 81 basis points sequentially to
3.37% from 4.18% at the end of the second quarter and 140 basis
points from the 4.77% at the end of the first quarter.
In other news, FBIZ declared its regular quarterly $0.07 cash
dividend, paid on January 15, 2012 to shareholders of record at the
close of business on January 1, 2012.
In addition, Gerald L. Kilcoyne replaced Leland C. Bruce on the
Board of Directors in early November, following his retirement. Mr.
Kilcoyne, a private equity investor in businesses and an owner of
commercial real estate in the Madison area, has been involved in
mergers and acquisitions throughout the United States, Canada, and
Europe since 1980. Mr. Kilcoyne is currently Chair of the Board of
First Business Bank, a subsidiary of First Business Financial
Services, Inc. and the Managing Partner at Pinnacle Enterprises,
LLC.
First Business Financial Services, Inc. is a bank holding company
headquartered in Madison, Wisconsin, with $1.1 billion in total
assets at September 30, 2011. FBIZ specializes in business lending
for small-medium-sized companies with sales ranging from $2-50
million. As an adjunct to these services, FBIZ also offers banking
services to business owners, executives, professionals, and high
net worth individuals, though this is a less significant part of
its business.
To view a free copy of our most recent research report on FBIZ or
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http://scr.zacks.com/.
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