First company BankComplete$32.5 millions of capital Raise and Annonyounces $5.0 million buyback program
MADISON, Wis. – March 4, 2022 — First Business Financial Services, Inc. (the “Company”, the “Bank” or “First Business Bank”) (Nasdaq: FBIZ) announced a successful private placement to institutional investors from 32, $5 million of new capital consisting of $20.0 million of subordinated notes and $12.5 million of preferred stock (both described in more detail below) and the redemption of $19.4 million of dollars of higher cost trust preferred securities and subordinated notes.
The Company has issued 7.00% Fixed to Floating Rate Non-Cumulative Series A Perpetual Preferred Shares, with a par value of $0.01 (the “Series A Preferred Shares”) with an offering price total of $12.5 million. The Series A Preferred Shares 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 (which is expected to be the three-month guaranteed overnight rate (SOFR) plus 539 basis points. In addition, the Company has issued 3.50% fixed-floating rate subordinated notes (the “Subordinated Notes”) in the principal amount of $20.0 million. The Notes will initially bear interest at the rate of 3.50% per annum for five years. Thereafter, until maturity on March 15, 2032, the interest rate will reset quarterly to a floating rate equal to the reference rate (which should be SOFR) plus 189 basis points.
The Company intends to use a portion of the net proceeds of these offerings to repurchase its $10.3 million of 10.50% fixed rate trust preferred securities due September 2038 and its subordinated notes of $9.1 million bearing a fixed-floating interest rate of 6.00% and maturing April 2027.
The remaining net proceeds from the sale of the Series A Preferred Shares and Subordinated Notes are expected to be used for general corporate purposes, including supporting the Bank’s growth strategy.
“We believe First Business Bank’s performance and proven ability to execute the company’s growth strategy are key factors in successfully securing capital at attractive prices,” said Chairman and Chief Executive Officer Corey Chambas. . “With our strengthened capital position, we are focused on improving shareholder returns through the redemption of higher cost trust preferred securities and subordinated notes, while continuing to support our strategy to achieve annual growth. double-digit loans in 2022.”
The Series A Preferred Shares and Subordinated Notes qualify as Tier I and Tier II capital, respectively, for risk-based regulatory capital purposes.
Keefe, Bruyette & Woods, A Stifel company, served as the exclusive placement agent for the Series A Preferred Shares and Subordinated Notes. Godfrey & Kahn, SC acted as legal counsel to the Company. Squire Patton Boggs (US) LLP acted as legal counsel to the placement agent.
New redemption authorization and shelf registration
Effective March 4, 2022, the Company’s Board of Directors authorized the Company’s repurchase of common stock with a maximum aggregate purchase price of $5.0 million, in quantities, at price and on such other terms and conditions as the Company Chief Executive Officer or Chief Financial Officer determines, in their discretion, to be in the best interests of the Company and its shareholders, at any time from the date of effective until March 4, 2023.
In addition, the Company recently filed a shelf registration statement on Form S-3. The purpose of the pre-registration statement was to renew the previously filed pre-registration, which expired in November 2020. The pre-registration was not used in connection with the sale of the Series A Preferred Shares and subordinate 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 corporate banking services, including commercial banking and specialty lending, private wealth management and banking advisory services, and through its refined focus, offers expertise, accessibility and unparalleled responsiveness. Specialty lending solutions are provided by First Business Bank’s wholly-owned subsidiary, First Business Specialty Finance, LLC. For more information, visit firstbusiness.bank.
This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect the current views of First Business Bank regarding future events and financial performance. Forward-looking statements are not based on historical information, but rather relate to future operations, strategies, financial results or other developments. Forward-looking statements are based on management’s expectations and on certain assumptions and estimates made by management and information available to it at the time the statements are made. These statements are based on general assumptions and are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from the opinions, beliefs and projections expressed in these statements. These statements are subject to risks and uncertainties, including: (i) adverse changes in economic or business conditions, nationally or in our markets, including, without limitation, inflation, supply chain issues, labor shortages and adverse effects the effects of the COVID-19 pandemic on the global, national and local economy, which may affect the Companythe credit quality, earnings and business operations of; (ii) competitive pressures between depository institutions and other financial institutions nationally and in our markets; (iii) increase in borrower defaults and other arrears; (iv) management’s ability to effectively manage growth, including the successful expansion of our customer 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 changes in tax rates, new tax laws and revised interpretations of tax laws; (viii) fraud, including customer and system failure or breaches of our network security, including the Company’s online banking activities, or (ix) failure to comply with applicable SBA regulations in order to maintain eligibility for the secured portion of SBA loans. For additional information on 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.
Edward G. Sloane, Jr.
First Business Financial Services, Inc.