FBIZ: First Quarter Beats Our Estimate
Ann Heffron, CFA
First Business Financial Services, Inc. (
posted first quarter diluted EPS of $0.84, up 62% from the $0.52
EPS reported last year, and $0.08 above our $0.76 estimate.
Relative to our estimate, this largely reflected
better-than-expected growth in both net interest income and
noninterest income, aided by a larger decline in the loan loss
provision than we had anticipated.
Compared to the year-ago quarter, first quarter results were
boosted by a gain in net interest income from 5% growth in
interest-earning assets, sharp increases in service charges on
deposits and loan fees, a significantly reduced loan loss
provision, and strong control over operating costs, partly offset
by a higher effective rate.
The Company continued to reduce problem assets, and it appears that
FBIZ has turned the corner regarding asset quality. Nonaccrual
loans fell $1.2 million, or 7%, sequentially to $20.2 million,
while foreclosed assets rose $0.4 million, or 16%, to $2.6 million.
As a percentage of total loans and OREO, nonperforming assets fell
8 basis points sequentially to 2.73% from 2.81% at the end of the
fourth quarter and 204 basis points year over year from the 4.77%
cycle peak at the end of 2011's March quarter.
We are raising our 2012 diluted EPS estimate to $3.35 from $3.25,
principally to reflect the Company's better-than-expected
performance in the first quarter. Our $3.35 estimate in 2012
represents a 14% gain over 2011's $2.94, which excludes a $0.7
million, or $0.29 per diluted share, one-time tax benefit related
to a change in regulation for net operating loss carryforwards by
the state of Wisconsin. Our initial diluted EPS estimate for 2013
is $3.70, a 10% gain over our 2012 estimate.
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 March 31, 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.
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