Common Stock Offering
By Ann Heffron, CFA
First Business Financial Services, Inc.
recently completed a 1.1 million common share offering at $23.00
per share, raising gross proceeds of $25.3 million and net
proceeds of $23.5 million, which are being used to pay off a like
amount of subordinated debt.
As a result, we are reducing our diluted EPS estimates and our
target price to $25.50 from $28.00. For 2012, we have lowered our
EPS estimate for the year to $3.30 from $3.40 and for 2013 to
$3.00 from $3.75 previously.
To download a free copy of the FBIZ report, please click here:
Because of the increased number of shares outstanding in 2013,
our 2013 EPS estimate represents a 9% decline from our 2012
estimate. However, 2013 estimated net earnings are actually
growing 25% year over year, largely the result of increased
net interest income stemming from a higher net interest
In addition to the income statement impact, the sale of common
stock has strengthened the balance sheet. Double leverage at the
holding company has been significantly reduced and the Company's
capital ratios have shown substantial improvement and meet Basel
Negatively, the return on equity has been reduced to an
estimated 11% in 2013 from 12.5% estimated for 2012 and 12.8%
actual in 2011, though ROE will remain well above the
single-digit level of the 2006-2010 period.
We note that the ABA Banking Journal ranked FBIZ 15
among all publicly traded banks with $1-10 billion in total
assets (of which there are about 250 companies in the US), based
upon ROE in 2011, which was 12.8% for FBIZ. It is the first time
FBIZ has made this list, and speaks to the tremendous improvement
in operating performance the Company has made over the last few
First Business Financial Services, Inc. (FBIZ or the Company)
is a bank holding company headquartered in Madison, Wisconsin,
with $1.2 billion in total assets at September 30, 2012. 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.
For additional research on small-cap stocks, please visit
FIRST BUS FINL (FBIZ): Free Stock Analysis
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