Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2021 Earnings Presentation
41 slides from Enterprise Financial Services's earnings presentation, Nov 19, 2021
Slide 1: Third Quarter 2021 Investor Presentation
Enterprise Financial Services Corp Third Quarter 2021 Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation may be considered “forward-looking statements” within the meaning of and intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding Enterprise Financial Services C
Slide 3: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 53, President & Chief Executive Officer, EFSC Enterprise Tenure – 18 years KEENE S. TURNER 42, EVP, Chief Financial Officer, EFSC Enterprise Tenure – 8 years SCOTT R. GOODMAN 57, President, Enterprise Bank & Trust Enterprise Tenure – 18 years DOUGLAS N. BAUCH
Slide 4: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $12.9 Billion Market Cap FOCUSED BUSINESS MODEL: Operates in St. LouisKansas City Phoenix $1.7 Billion • Attract Top Talent in Markets • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Banking ◦ Trust & Wealth Management ◦ Treasury
Slide 5: ESG Highlights
■ There were no layoffs or pay reductions as a result of the pandemic and on-site essential employees received premium wages for a period of time. ■ 70% of employees worked remotely during the pandemic. ■ In 2020 we invested over $1.5 billion in programs designed to promote small business and commun
Slide 6: Differentiated Business Model: Built for Quality Earnings Growth
Differentiated Business Model: Built for Quality Earnings Growth Focused and Well-Defined Strategy Aimed at Business Owners, Executives and Professionals. Targeted Array of Banking and Wealth Management Services to Meet our Client’s Needs Experienced Bankers and Advisors Targeted Audience Focused an
Slide 7: Customer Focus
Customer Focus Source: Coalition Greenwich 71 NPS NET PROMOTER SCORE A measure of client satisfaction INDUSTRY AVERAGE: 54 7
Slide 8: First Choice Overview - Closed July 21, 2021
▪ Total Assets: $2.4 Billion ▪ Gross Loans: $2.0 Billion, including PPP of $296 Million ▪ Deposits: $1.9 Billion ▪ ROAA: 1.71% ytd June 2021, excluding merger costs ▪ ROATCE: 19.7% ytd June 2021, excluding merger costs ▪ Efficiency Ratio1: 44.8% ytd June 2021 ▪ NIM: 4.2% ytd June 2021 ▪ Attractive c
Slide 9: Regional and National Markets
Regional and National Markets Kansas City Phoenix New Mexico California1 St. Louis Specialty Lending & Deposits Loans 2 $766MM $527MM $573MM $1.8B $2.1B $2.6B Deposits $1.0B $384MM $1.3B $2.0B $4.2B $1.9B Branches 7 2 6 13 19 LPO and DPO offices throughout the country Deposit Market Share 3, 4, 5 14
Slide 10: Focused Loan Growth Strategies
Focused Loan Growth Strategies Total Loans Specialty market segments represent 29% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $462 million in loans outstanding related to Federal, Historic, and Missouri Affordable Housing
Slide 11: Total Loan Trends
Total Loan Trends In Millions 49% Total Loan Growth PPP $819 PPP* $613 PPP $738 *Excludes Seacoast PPP loans of $86 million included in acquisition total. **Excludes First Choice PPP loans of $206 million included in acquisition total. Seacoast $1,224 PPP $397 First Choice $1,944 PPP** $233 11
Slide 12: Drivers of Loan Growth - Year over Year
Portfolio Balance Pe rc en ta ge G ro w th $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B (25)% 0% 25% 50% 75% Drivers of Loan Growth - Year over Year 39% 42% 50% 13% 91% 4% 3% 2% 7% -13% 3Q20 - 3Q21 Increase of $3.0 Billion 3% 12
Slide 13: Loan Portfolio
Loan Portfolio Total $9.1 Billion CRE 34.0% Construction 7.1% Residential 5.7% Other 2.8% Sponsor Finance 5.0% LIPF 6.3% Tax Credit 5.1% SBA 13.2% PPP 4.8% C&I 16.0% Loans by Product Type Real Estate/ Rental/Leasing 27.6% Finance and Insurance 13.7% Accommodation/Food Service 9.1%Manufacturing 7.0%
Slide 14: Loan Details - QTR
Loan Details - QTR 3Q21 2Q21 QTR Change First Choice2 Net Organic Change C&I $ 1,458 $ 1,116 $ 342 $ 243 $ 99 CRE, Investor Owned 1,935 1,467 468 553 (85) CRE, Owner Occupied 1,163 789 374 302 72 SBA loans*1 1,200 1,011 189 161 28 Sponsor Finance* 455 464 (9) — (9) Life Insurance Premium Financing*
Slide 15: Loan Details - LTM
Loan Details - LTM 3Q21 3Q20 LTM Change First Choice Seacoast Net Organic Change C&I $ 1,458 $ 1,075 $ 383 $ 243 $ — $ 140 CRE, Investor Owned 1,935 1,282 653 553 24 76 CRE, Owner Occupied 1,163 767 396 302 68 26 SBA loans*1 1,200 16 1,184 161 983 40 Sponsor Finance* 455 367 88 — — 88 Life Insurance
Slide 16: Total Loans By Business Unit
Total Loans By Business Unit In Millions Note: Excludes PPP and Other loans **Acquisition of Seacoast closed on November 12, 2020. Acquisition of First Choice closed on July 21, 2021. *2Q21 includes acquired Seacoast SBA loans 3Q21 includes acquired First Choice SBA loans 16
Slide 17: PPP Loans
• 1% coupon, 4.9% ytd average yield • 16% 2 year maturity; 84% 5 year maturity • No PPP loans or servicing have been sold • Forgiveness process started October 29, 2020 • $941.8 million has been forgiven/repaid as of September 30, 2021 • Total PPP fees $39.0 million, $7.4 million unearned Total $439
Slide 18: Attractive Deposit Mix
40% 33% 6% 21% Attractive Deposit Mix CD Interest-Bearing Transaction Accounts DDA MMA & Savings • Significant DDA Composition • Stable, Low Cost Deposit Portfolio • Improving Core Funding 62% Deposit Growth 3Q20 – 3Q21 In Millions Total Deposits $10.8 Billion 28.9% 34.0% 34.2% 36.0% 40.0% Seacoast
Slide 19: Specialty Deposits
Specialty Deposits Community Associations $585 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $430 million in deposits. Specializing in the compliance on Property Management Trust Accounts. Third-Party Escrow $263 million in deposi
Slide 20: Core Funding Mix
59%21% 10% 7% 34% 24% 21% 10% 4% 32% 23% 21% 16% 4% 47% 18% 33% Core Funding Mix Commercial Business Banking Consumer 3Q21 Brokered deposits: $680 3Q20 Brokered deposits: $553 In Millions $2,982 29% $2,460 40% $1,226 12% $1,002 16% $4,029 40% $2,661 44% Cost of Funds1 Commercial Business Banking Con
Slide 21: Earnings Per Share Trend - 3Q21
Earnings Per Share Trend - 3Q21 Change in EPS 21
Slide 22: Net Interest Income Trend
Net Interest Income Trend In Millions 53% NII Growth PPP Income $10.3 PPP Income $5.2 PPP Income $8.5 PPP Income $7.9 *Seacoast acquisition completed 11/12/20. ** First Choice acquisition completed 7/21/21. PPP Income $6.0 22
Slide 23: Net Interest Margin
Net Interest Margin Components of Interest-bearing LiabilitiesComponents of Interest-earning Assets 2Q21 3.46 % 4Q20 3.56 % Cash/Liquidity (0.10) % Cash/Liquidity (0.28) % Loans (0.08) % Investments (0.05) % Cost of Funds 0.01 % Loans 0.09 % First Choice 0.11 % Deposits 0.12 % Cost of Funds 0.01 % 3
Slide 24: Credit Trends for Loans
Credit Trends for Loans 3Q21 2Q21 3Q20 NPAs/Assets 0.35% 0.44% 0.53% NPLs/Loans 0.46% 0.58% 0.65% ALLL/NPLs 366.0% 303.4% 311.1% ALLL/Loans** 1.94% 2.09% 2.32% Annualized Net Charge-offs (Recoveries) to Average Loans In Millions bps bps bps bps bps In Millions Loan Growth and Line of Credit Utilizat
Slide 25: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans In Thousands • New loans and changes in composition of existing loans • Changes in risk ratings, past due status and reserves on individually evaluated loans • Changes in macroeconomic and qualitative factors 3Q21 In Thousands ACL Loans ACL as a % of Loans Comme
Slide 26: Noninterest Income Trend
Noninterest Income Trend Other Fee Income DetailFee Income In Millions 16.6% 19.3% 12.5% 16.5% 15.3% 26
Slide 27: Operating Expenses Trend
Operating Expenses Trend * A Non-GAAP Measure, Refer to Appendix for Reconciliation In Millions 27
Slide 28: Capital
Capital *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Excludes PPP loans. 8.0% 11.4% 11.6% 12.1% 12.3% EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate – Strong earnings profile – Sustainable dividend profile Supporting Robust Asset Growth – Organic loan and
Slide 29: Five-Year Financial Highlights
Five-Year Financial Highlights Noninterest Income Net Income Earnings Per Share (diluted) Return on Average Tangible Common Equity(1) Return on Average Assets Total Assets Net Interest Income $38 $89 $3.83 19.83% 1.64% $5,646 $192 2018 $49 $93 $3.55 16.08% 1.35% $7,334 $239 2019 $55 $74 $2.76 11.23%
Slide 30: Balance Sheet Positioned for Growth
Modest Asset Sensitivity (200 BPS Rate Shock Increases NII By 13.8%) 63% Floating Rate Loans High-quality, Cash-flowing Securities Portfolio with Six-Year Average Duration 40.4% Non- Interest Bearing DDA to Total Deposits 8.71% Tangible Common Equity/Tangible Assets* Balance Sheet Positioned for Gro
Slide 31: Appendix
Appendix Third Quarter 2021 EFSC Investor Presentation
Slide 32: Financial Highlights - 3Q21
Financial Highlights - 3Q21 Capital • Tangible Common Equity/Tangible Assets* 8.40%; Adjusted for PPP* 8.71% • Quarterly dividend of $0.19 per share, increased 5% to $0.20 in fourth quarter 2021 • Repurchased 470,412 shares at an average price of $45.15 per share • Redeem $50.0 million subordinated
Slide 33: Sponsor Finance Loans
Total $455 Million • Internally reviewed 100% of the portfolio to identify businesses most at risk for impacts from COVID-19. • 30% of the portfolio is secured by working capital assets properly margined and monitored by borrowing base. • 60%+ of the portfolio companies have received PPP funding • 9
Slide 34: Hospitality Loans
Hospitality Loans Size Number of Loans Balance Average Balance > $10 Million 9 $124.4 $13.8 $5-10 Million 27 189.8 7.0 $2-5 Million 66 226.0 3.4 < $2 Million 596 275.7 0.5 Total 698 $815.9 $1.2 Hospitality Loans by Size $ In Millions Total $816 Million • Weighted average LTV approximately 60-63% • L
Slide 35: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common e
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter ended ($ in thousands, except per share data) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 CORE PERFORMANCE MEASURES Net interest income $ 97,273 $ 81,738 $ 79,123 $ 77,446 $ 63,354 Less: Incremental accretion income —
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter Ended For the Year Ended (in thousands) September 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Total shareholders' equity $ 1,439,636 $ 1,078,975 $ 867,185 $ 603,804 $ 548,573 Less: Goodwill 365,415 260
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter Ended (in thousands) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 Total shareholders' equity $ 1,439,635 $ 1,118,301 $ 1,092,497 $ 1,078,975 $ 882,267 Less: Goodwill 365,415 260,567 260,567 260,567 210,344
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Three Months Ended For the Nine Months Ended For the Year Ended (in thousands) September 30, 2021 September 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net interest income $ 97,273 $ 258,134 $ 270,001 $ 238,71
Slide 40: Reconciliation of Non-GAAP Financial Measures
For the Three Months Ended For the Nine Months Ended For the Year Ended (in thousands, except per share data) September 30, 2021 September 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net income - GAAP $ 13,913 $ 82,244 $ 74,384 $ 92,739 $ 89,217 $ 48,190 Branch c
Slide 41: Q&A Third Quarter 2021
Q&A Third Quarter 2021 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q3 2021 Earnings Presentation on 6ix