Our analysis is based on comparing First Business Financial Services, Inc. with the following peers – PSB Holdings, Inc., PrivateBancorp, Inc., CVB Financial Corp., Wintrust Financial Corporation, Associated Banc-Corp, PacWest Bancorp, TCF Financial Corporation, 1st Source Corporation, Wells Fargo & Company and Fifth Third Bancorp (PSBQ-US, PVTB-US, CVBF-US, WTFC-US, ASB-US, PACW-US, TCB-US, SRCE-US, WFC-US and FITB-US).
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2016), FBIZ-US paid a low quality dividend, which represents a yield of 1.99% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 1 was high quality, 2 were medium quality and 2 were low quality.
- The ending cash balance, with a dividend coverage of 13.00x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2016), FBIZ-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 5.79x), investing cash flow (coverage of -23.08x), issuance cash flow (coverage of 5.10x) and twelve-month prior cash (coverage of 4.19x), for a total dividend coverage of 14.00x.
FBIZ-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -1.42x) and net share buybacks (coverage of -0.12x). Thus, the total coverage including share buybacks is 14.12x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||1.68||0.82||1.67||1.63||1.75||2.04|
|Dividend Payout (%)||8.67||8.51||16.05||23.93||23.16||27.49|
A complete list of metrics and analysis is available on the company page.
First Business Financial Services, Inc. operates as a bank holding company, which engages in the commercial banking business through its wholly-owned banking subsidiaries: First Business Bank and First Business Bank-Milwaukee, which operate as business banks focusing on delivering a full line of commercial banking products, including commercial loans and commercial real estate loans, and services tailored to meet the specific needs of small and medium sized businesses, business owners, executives, professionals and high net worth individuals. The company was founded in 1986 and is headquartered in Madison, WI.
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