FBIZ: Debt Issue and Board Changes
Ann Heffron, CFA
First Business Financial Services, Inc. (
made several announcements On January 31, 2012 concerning changes
to its Board of Directors and the issuance on a new subordinated
On January 30, 2012, FBIZ increased the size of its Board of
Directors from a fixed nine members to a range of seven to eleven
members. The following day, the Board was increased to ten members
to accommodate the addition of Mr. John J. Harris to the Board. Mr.
Harris, a senior financial services executive with over 25 years of
experience providing financial advisory services to publicly traded
companies, has extensive experience with mergers and acquisitions
and the execution of public capital raises. While Mr. Harris's
expertise regarding public companies expands the Company's
knowledge base, it does not signal a change in strategy. FBIZ
intends to focus on organic growth and does not expect to issue any
new equity over the intermediate term.
At the same time, FBIZ announced the retirement of Mr. Gary
Zimmerman on May 14, 2012 when he reaches the mandatory retirement
age of 70, in accordance with the Company's director retirement
policy. At that time, it is expected that the Board of Directors
will decline to nine members, within the newly established range of
seven to eleven members.
On January 26, 2012, FBIZ sold $3.06 million of 7.50% 10-year
subordinated debentures, maturing on January 15, 2022, to certain
accredited investors and may sell additional debentures upon the
same terms and conditions prior to February 29, 2012. The
debentures, which have been structured to qualify as Tier 2
capital, repaid a portion of FBIZ's existing $39.0 million of
subordinated debt that matures in five years. Though the interest
rate on the new debt is a bit higher (7.50% interest rate on the
new debt versus 7.00% on the old debt), FBIZ extended the maturity
structure of is debt obligations.
We do not expect this change to have any impact on our diluted EPS
estimates, which remain at $2.90 for 2011 and $3.40 for 2012,
representing year-over-year gains of 104% in 2011 and 17% in 2012.
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
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