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| First Bus Finl |(FBIZ-NASDAQ) |

|Current Recommendation |Neutral |

|Prior Recommendation |Outperform |

|Date of Last Change |07/12/2013 |

| | |

|Current Price (07/12/13) |$31.98 |

|Six- Month Target Price | |

OUTLOOK

|Analyst must write |

SUMMARY DATA

|52-Week High |$31.98 |

|52-Week Low |$21.80 |

|One-Year Return (%) |41.52 |

|Beta |-0.03 |

|Average Daily Volume (sh) |5,651 |

| | |

|Shares Outstanding (mil) |4 |

|Market Capitalization ($mil) |$120 |

|Short Interest Ratio (days) |1.23 |

|Institutional Ownership (%) |38 |

|Insider Ownership (%) |10 |

| | |

|Annual Cash Dividend |$0.56 |

|Dividend Yield (%) |1.75 |

| | |

|5-Yr. Historical Growth Rates | |

| Sales (%) |-0.6 |

| Earnings Per Share (%) |40.4 |

| Dividend (%) |7.8 |

| | |

|P/E using TTM EPS |9.8 |

|P/E using 2013 Estimate |9.7 |

|P/E using 2014 Estimate |9.1 |

| | |

|Zacks Rank |1 |

| | |

|Risk Level |Low, |

|Type of Stock |Small-Value |

|Industry |Banks-Midwest |

|Zacks Rank in Industry |2 of 36 |

KEY POINTS

➢ Analyst must write

OVERVIEW

Analyst must write

INDUSTRY OUTLOOK

INDUSTRY OUTLOOK - NEUTRAL

Our outlook for the regional banks and thrifts remains neutral. Interest rates will continue to move up, but the pace of future increases from the Federal Reserve is a matter of debate as economic indicators remain mixed. Long-term rates are not moving up in tandem, so increases in the short end will likely create more flattening of the curve as well. Though an increasing rate environment as a rule is not the best scenario for bank stocks, this increase from recent historic lows is most likely favorable (though offset by the flatter curve). A slow, measured increase from here would provide the optimal atmosphere for increasing interest margins and spread revenues.

The changing environment implies a changing mix of business for the banks and thrifts. Consumer lending, the bread-and-butter of many regional and local institutions, will face significant headwinds to revenue growth, as the mortgage business has seen record production. Home equity lending may provide some offset, though, as consumers seek to continue drawing value from their residences. Deposit fees are also expected to struggle, as the strong deposit growth of recent periods is likely to slow as depositors seek higher returns in a rising-rate environment. Commercial and industrial lending (C&I) seems to have bottomed, and increasing demand is on the way.

The small- and mid-cap banks will be more challenged to show earnings growth in this environment. C&I improvement will only partially offset slowing consumer demand for many, as mortgage business has been a significant portion of their business during the boom. Most have less exposure to market-sensitive businesses, such as capital markets and asset management, and generally less exposure to C&I lending than the average large-cap bank. Credit quality has generally improved, and reduced provisioning has provided a boost for some, though this will be less of a factor going forward. Even those with improving fundamentals will face investor sentiment issues, as rising rates sometimes coincide with falling bank stock prices. The strongest institutions might see share prices rise from here, along with the weakest (more likely take-out candidates), but the majority will struggle.

INDUSTRY POSITION

Analyst must write

RECENT NEWS

Analyst must write

VALUATION

Analyst must write

RISKS

➢ Analyst must write.

INSIDER TRADING AND OWNERSHIP

Analyst must write.

PROJECTED INCOME STATEMENT & BALANCE SHEET

HISTORICAL ZACKS RECOMMENDATIONS

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DISCLOSURES

The following disclosures relate to relationships between Zacks Investment Research (“ZIR”), Zacks & Company (ZCO”) and Zacks Small-Cap Research (“Zacks SCR”) and the issuers covered by the Zacks SCR analysts in the Small-Cap Universe.

ZIR or Zacks SCR Analysts do not hold or trade securities in the issuers which they cover. Each analyst has full discretion on the rating and price target based on their own due diligence. Analysts are paid in part based on the overall profitability of Zacks SCR.  Such profitability is derived from a variety of sources and includes payments received from issuers of securities covered by Zacks SCR for non-investment banking services. No part of analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in any report or blog.

ZIR and Zacks SCR do not make a market in any security nor do they act as dealers in securities.  Zacks SCR has never received compensation for investment banking services on the small-cap universe. Zacks SCR does not expect received compensation for investment banking services on the small-cap universe. Zacks SCR has received compensation for non-investment banking services on the small-cap universe, and expects to receive additional compensation for non-investment banking services on the small-cap universe, paid by issuers of securities covered by Zacks SCR.  Non-investment banking services include investor relations services and software, financial database analysis, advertising services, brokerage services, advisory services, investment research, and investment management.

Additional information is available upon request. Zacks SCR reports are based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed by Zacks SCR Analysts are subject to change. Reports are not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. 

ZCO and Zacks SCR are separate legal entities. ZCO is U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments through ZCO.

Zacks SCR uses the following rating system for the securities it covers. Buy/Outperform: The analyst expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold/Neutral: The analyst expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell/Underperform: The analyst expects the company will underperform the broader U.S. Equity market over the next one to two quarters.

The current distribution of Zacks Ratings is as follows on the 1013 companies covered: Buy/Outperform- 14.5%, Hold/Neutral- 78.9%, Sell/Underperform – 5.8%. Data is as of midnight on the business day immediately prior to this publication.

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Month Day, Year

[pic]Small-Cap Research Ann H. Heffron, CFA

312-265-xxxx

email@

scr. 111 North Canal Street, Chicago, IL 60606

ZACKS ESTIMATES

Revenue

(in millions of $)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Mar) |(Jun) |(Sep) |(Dec) |(Dec) |

|2011 |16 A |16 A |16 A |16 A |63 A |

|2012 |15 A |16 A |16 A |16 A |63 A |

|2013 |15 A |13 E |13 E |13 E |54 E |

|2014 |13 E |13 E | | |54 E |

Earnings per Share

(EPS is operating earnings before non recurring items)

| |Q1 |Q2 |Q3 |Q4 |Year |

| |(Mar) |(Jun) |(Sep) |(Dec) |(Dec) |

|2011 |$0.52 A |$0.98 A |$0.83 A |$0.90 A |$3.23 A |

|2012 |$0.84 A |$0.60 A |$0.99 A |$0.86 A |$3.29 A |

|2013 |$0.83 A |$0.80 E |$0.83 E |$0.84 E |$3.30 E |

|2014 |$0.80 E | | | |$3.50 E |

|Zacks Projected EPS Growth Rate - Next 5 Years % |5 |

| | |

| Top 5 Public Companies in the industry |

| | | | |

|Ticker |Company |Market Share |Zacks |

|  |  | |Rec |

|HBAN |Huntington Banc |18.70468 |Neutral |

|TCB |Tcf Finl Corp |8.49365 |Neutral |

|CBSH |Commerce Bancsh |6.65632 |Neutral |

|ASBC |Assoc Banc Corp |6.37202 |Neutral |

|WTFC |Wintrust Finl |5.26967 |Neutral |

| First Bus Finl |  |

|Income Statement and Balance Sheet |  |

|(Dollars in millions, except EPS data) |  |

|  | | | | | | | | |

| |12/08 |12/09 |12/10 |12/11 |12/12 |12/13E |

|Sales | |65 |63 |63 |63 |63 |54 |

|  |Cost of Goods Sold |29 |24 |21 |17 |13 |11 |

|  |SG&A |26 |33 |33 |31 |33 |28 |

|  |Other operating expenses |0 |0 |3 |0 |0 |0 |

|  |Interest and other |6 |5 |6 |7 |9 |7 |

|Zacks Adjusted Income before NRI |3 |1 |4 |8 |9 |12 |

|Net Income |3 |1 |1 |8 |9 |12 |

|Diluted EPS before NRI |1.24 |0.41 |1.43 |3.23 |3.29 |3.30 |

|Reported EPS |1.24 |0.41 |0.37 |3.23 |3.29 |3.30 |

|  | | | | | | |

|Cash & Marketable Securities |24 |113 |51 |130 |86 |86 |

|Current Assets |876 |971 |932 |984 |1,000 |1,000 |

|Current Liabilities |853 |995 |1,000 |1,062 |1,104 |1,104 |

|Long Term Debt |105 |68 |52 |51 |23 |23 |

|Shareholder's Equity |53 |54 |55 |64 |100 |112 |

Industry Comparables

| |Pr Chg |P/E CurrFY |EPS Gr |Price/ |Price/ |Price/ |

| |YTD | |5Yr Est |Book |Sales |CF |

|FIRST BUS FINL |38.8 |9.6 |5.0 |1.2 |1.9 |10.4 |

| | | | | | | |

|Industry Mean |66.3 |13.7 |5.8 |1.4 |1.9 |14.8 |

|Industry Median |23.1 |13.7 |6.0 |1.1 |2.0 |9.4 |

|S&P 500 |17.4 |15.5 | |4.4 |2.7 |12.8 |

| | | | | | | |

|MERCANTILE BANK |16.4 |12.4 | |1.1 |2.5 |12.1 |

|MACATAWA BANK |82.7 |16.0 |4.0 |1.4 |2.0 |7.3 |

|MBT FINL CORP |57.4 | | |0.8 |1.1 |5.2 |

|FIRST CITZNS BC |34.6 |9.4 |3.0 |0.7 |1.0 |5.4 |

| | | | | | | |

FBIZ: Zacks Company Report - NEUTRAL

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