First Business Financial Services, Inc. (the “Company”, the
“Bank”, or “First Business Bank”) (Nasdaq: FBIZ) announced the
successful private placement to institutional investors of $32.5
million in new capital consisting of $20.0 million of subordinated
notes and $12.5 million of preferred stock (both more fully
described below) and the redemption of $19.4 million of higher cost
trust preferred securities and subordinated notes.
The Company issued 7.00% Fixed-to-Floating Rate Series A
Non-Cumulative Perpetual, Preferred Stock, par value $0.01 (the
“Series A Preferred Stock”) with an aggregate offering price of
$12.5 million. The Series A Preferred Stock will pay quarterly
dividends, if declared, at an initial annual rate of 7.00% for five
years. Thereafter, the annual dividend rate, if declared, will
reset quarterly to a floating rate equal to the benchmark rate
(expected to be the three-month Secured Overnight Financing Rate
(SOFR)) plus 539 basis points. In addition, the Company issued
3.50% Fixed-to-Floating Rate Subordinated Notes (the “Subordinated
Notes”) with a principal amount of $20.0 million. The Notes will
initially bear interest at a rate of 3.50% per annum for five
years. Thereafter through maturity on March 15, 2032, the interest
rate will reset quarterly to a floating rate equal to the benchmark
rate (expected to be SOFR) plus 189 basis points.
The Company intends to use a portion of the net proceeds from
these offerings to redeem its $10.3 million 10.50% Fixed Rate Trust
Preferred Securities maturing September 2038, and its $9.1 million
Subordinated Notes bearing a Fixed-to-Floating interest rate of
6.00% and maturing April 2027.
Remaining net proceeds from the sale of the Series A Preferred
Stock and the Subordinated Notes are expected to be used for
general corporate purposes, including support of the Bank’s growth
strategy.
“We believe First Business Bank’s record of performance and
proven ability to execute the Company’s growth strategy are key
factors in successfully securing attractively priced capital,”
President and Chief Executive Officer Corey Chambas said. “With our
strengthened capital position, we’re focused on enhancing
shareholder returns through the redemption of higher cost trust
preferred securities and subordinated notes, while continuing to
support our strategy for achieving double-digit annual loan growth
in 2022.”
The Series A Preferred Stock and the Subordinated Notes qualify
as Tier I and Tier II capital, respectively, for regulatory
risk-based capital purposes.
Keefe, Bruyette & Woods, A Stifel Company, served as
exclusive placement agent for the Series A Preferred Stock and the
Subordinated Notes. Godfrey & Kahn, S.C. served as legal
counsel to the Company. Squire Patton Boggs (US) LLP served as
legal counsel to the placement agent.
New Repurchase Authorization & Shelf Registration
Effective March 4, 2022, the Company’s Board of Directors
authorized the repurchase by the Company of shares of its common
stock with a maximum aggregate purchase price of $5.0 million, in
such quantities, at such prices and on such other terms and
conditions as the Company’s Chief Executive Officer or Chief
Financial Officer determine in their discretion to be in the best
interests of the Company and its shareholders, any time from the
effective date through March 4, 2023.
Additionally, the Company recently filed a shelf registration
statement on Form S-3. The purpose of the shelf registration
statement was to renew the previously filed shelf registration,
which expired in November 2020. The shelf registration was not used
in connection with the sale of the Series A Preferred Stock and the
Subordinated Notes.
About First Business Financial Services, Inc.
First Business Financial Services, Inc., (Nasdaq: FBIZ) is the
parent company of First Business Bank. First Business Bank
specializes in Business Banking, including Commercial Banking and
Specialized Lending, Private Wealth, and Bank Consulting services,
and through its refined focus, delivers unmatched expertise,
accessibility, and responsiveness. Specialized Lending solutions
are delivered through First Business Bank’s wholly owned subsidiary
First Business Specialty Finance, LLC. For additional information,
visit firstbusiness.bank.
This press release may include forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995,
which reflect First Business Bank’s current views with respect to
future events and financial performance. Forward-looking statements
are not based on historical information, but rather are related to
future operations, strategies, financial results, or other
developments. Forward-looking statements are based on management’s
expectations as well as certain assumptions and estimates made by,
and information available to, management at the time the statements
are made. Those statements are based on general assumptions and are
subject to various risks, uncertainties, and other factors that may
cause actual results to differ materially from the views, beliefs,
and projections expressed in such statements. Such statements are
subject to risks and uncertainties, including among other things:
(i) adverse changes in the economy or business conditions, either
nationally or in our markets, including, without limitation,
inflation, supply chain issues, labor shortages, and the adverse
effects of the COVID-19 pandemic on the global, national, and local
economy, which may affect the Company’s credit quality, revenue,
and business operations; (ii) competitive pressures among
depository and other financial institutions nationally and in our
markets; (iii) increases in defaults by borrowers and other
delinquencies; (iv) management’s ability to manage growth
effectively, including the successful expansion of our client
service, administrative infrastructure, and internal management
systems; (v) fluctuations in interest rates and market prices; (vi)
changes in legislative or regulatory requirements applicable to the
Company and its subsidiaries; (vii) changes in tax requirements,
including tax rate changes, new tax laws, and revised tax law
interpretations; (viii) fraud, including client and system failure
or breaches of our network security, including the Company’s
internet banking activities, or (ix) failure to comply with the
applicable SBA regulations in order to maintain the eligibility of
the guaranteed portion of SBA loans. For further information about
the factors that could affect the Company’s future results, please
see the Company’s annual report on Form 10-K for the year ended
December 31, 2021 and other filings with the Securities and
Exchange Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20220304005356/en/
Investor Contact Edward G.
Sloane, Jr. Chief Financial Officer First Business Financial
Services, Inc. 608-232-5970 esloane@firstbusiness.bank
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