Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Merger or Acquisition (October 2016)
18 slides from Enterprise Financial Services's merger presentation, Oct 11, 2016
Slide 1: Acquisition of Jefferson County Bancshares, Inc.
ACQUISITION OF JEFFERSON COUNTY BANCSHARES, INC. OCTOBER 11, 2016 ENTERPRISE FINANCIAL SERVICES CORP NASDAQ: EFSC
Slide 2: Safe Harbor Statement
1 SAFE HARBOR STATEMENT FORWARD-LOOKING STATEMENTS CERTAIN STATEMENTS CONTAINED IN THIS PRESENTATION MAY BE CONSIDERED FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS MAY INCLUDE: STATEMENTS REGARDING THE MERGER, THE RANGE OF CONSIDERATION OF THE MERGER AND THE ABILITY OF THE PARTIES TO
Slide 3: Strategic, in-market acquisition of Jefferson
2 SOURCE: SNL FINANCIAL EFSC (16 BRANCHES TOTAL, 6 BRANCHES IN ST. LOUIS MSA) JEFFERSON (18 BRANCHES TOTAL, 17 BRANCHES IN ST. LOUIS MSA) ST. LOUIS MSA STRATEGIC, IN-MARKET ACQUISITION OF JEFFERSON COUNTY BANCSHARES, INC. (“JEFFERSON”) BY ENTERPRISE FINANCIAL SERVICES CORP (“EFSC”) CONSISTENT WITH
Slide 4: Transaction Snapshot
3 TRANSACTION SNAPSHOT (1) TRANSACTION VALUE (1) (1) BASED ON JEFFERSON’S 1,472,853 COMMON SHARES OUTSTANDING, 108,295 OPTIONS OUTSTANDING WITH A WAEP OF $54.72 AND EFSC’S 15-DAY VWAP OF $31.52 AS OF OCTOBER 10, 2016; ASSUMES ALL STOCK OPTIONS ARE CASHED OUT AT CLOSING (2) ACCRETION AS COMPARED TO E
Slide 5: Overview of Jefferson
4 OVERVIEW OF JEFFERSON JEFFERSON COUNTY BANCSHARES, INC. ESTABLISHED IN 1911; ONE OF THE OLDEST COMMUNITY BANKS IN THE REGION WELL RUN, TRADITIONAL COMMUNITY BANK 17 BRANCH LOCATIONS THROUGHOUT THE ST. LOUIS MSA AND 1 BRANCH IN PERRYVILLE, MO (1) AVG. DEPOSITS PER BRANCH OF ~$63 MILLION (
Slide 6: Transaction Rationale
5 TRANSACTION RATIONALE MATERIALLY ACCRETIVE TO EPS IN 2017 AND FORWARD YEAR EARNINGS MODEST TBVPS DILUTION; EARNED BACK IN SLIGHTLY OVER THREE YEARS STRONG PRO FORMA CAPITAL RATIOS SUPPORT FUTURE GROWTH AND EXPANSION INTERNAL RATE OF RETURN OF 19.7%, CONSISTENT WITH MANAGEMENT OBJECTIVES
Slide 7: Strengthens EFSC's significant St. Louis footprint
6 (1) COMMUNITY BANKS DEFINED AS INSTITUTIONS HAVING LESS THAN $10 BILLION IN DEPOSITS SOURCE: SNL FINANCIAL, FDIC; DEPOSIT DATA AS OF JUNE 30, 2016 STRENGTHENS EFSC’S ALREADY SIGNIFICANT ST. LOUIS FOOTPRINT PRO FORMA DEPOSITS IN EXCESS OF $2.9 BILLION CREATES THE LARGEST COMMUNITY BANK BY DEP
Slide 8: Similarly attractive deposit make-up and cost
7 SIMILARLY ATTRACTIVE DEPOSIT MAKE-UP AND COST (1) (1) BANK LEVEL DATA AS OF JUNE 30, 2016 (2) SIMPLE SUMMATION OF JUNE 30, 2016 DEPOSIT DATA; EXCLUDES PURCHASE ACCOUNTING ADJUSTMENTS SOURCE: SNL FINANCIAL JEFFERSON’S DESIRABLE DEPOSIT MIX ENHANCES COMBINED CORE FUNDING CAPABILITIES EXPANDED BR
Slide 9: Diversified loan portfolio, with strength in C&I and CRE
8 Loans ($000) Construction & Land 272,437 1-4 Family 367,724 Multifamily 89,220 CRE - Income Producing 638,913 CRE - Owner Occupied 438,927 C&I 1,591,582 Consumer & Other 221,228 3,620,031 12.1% Loans ($000) Construction & Land 95,136 1-4 Family 131,853 Multifamily 36,305 CRE - Income Producing 205
Slide 10: Fee income opportunities
9 JEFFERSON’S EXPANDED COMMERCIAL AND RETAIL CUSTOMER BASES ARE COMPLEMENTARY TO EFSC’S EXISTING PRODUCT SETS POTENTIAL FINANCIAL BENEFITS OF FUTURE FEE INCOME OPPORTUNITIES ARE NOT INCLUDED IN TRANSACTION MODELING FEE INCOME OPPORTUNITIES (1) (1) REPRESENT ILLUSTRATIVE AREAS OF POTENTIAL FEE IN
Slide 11: Transaction Structure and Value
10 TRANSACTION STRUCTURE AND VALUE (1) $130.6 MILLION BLENDED PRICE PER SHARE OF $86.44 PRICE / Q2’16 TANGIBLE BOOK VALUE: 140.7% PRICE / LTM JUNE 2016 EPS: 19.8X PRICE / LTM JUNE 2016 EPS INCLUDING FULLY-PHASED IN COST SAVINGS: 10.9X TRANSACTION VALUE (1) (1) BASED ON JEFFERSON’S 1,472,85
Slide 12: Key Transaction Assumptions
11 NO REVENUE SYNERGIES ASSUMED REVENUE SYNERGIES PURCHASE ACCOUNTING ADJUSTMENTS (4.0)% CREDIT MARK TO LOAN PORTFOLIO EQUATING TO $27.9 MILLION (6.8)% MARK ON FIXED ASSETS EQUATING TO $1.5 MILLION CORE DEPOSIT INTANGIBLE OF $10.3 MILLION AMORTIZED SYD OVER 10 YEARS COST SAVINGS 29.9% COST
Slide 13: Estimated Financial Impact
12 ~ 3.5% ACCRETIVE IN PARTIAL YEAR 2017 ~ 7.4% ACCRETIVE IN 2018 EPS IMPACT (1) TANGIBLE BOOK VALUE PER SHARE IMPACT ~ 3.6% DILUTION TO TANGIBLE BOOK VALUE PER SHARE AT CLOSE TBVPS DILUTION EARN-BACK PERIOD LESS THAN 3.25 YEARS (2) PRO FORMA CONSOLIDATED CAPITAL RATIOS (3) ~ 8.5% TANGIBLE
Slide 14: Appendix
13 APPENDIX
Slide 15: Purchase Price Reconciliation
14 (1) EFSC STOCK VALUED AT ITS TRAILING 15-DAY VWAP AS OF OCTOBER 10, 2016 (2) $26.6 MILLION OF CASH CONSIDERATION SUBJECT TO POSSIBLE ADJUSTMENT DUE TO STOCK OPTION EXERCISES, WITH AGGREGATE CASH CONSIDERATION PAID TO JEFFERSON COMMON SHAREHOLDERS INCREASED DOLLAR FOR DOLLAR FOR THE AMOUNT OF ANY
Slide 16: Overview of Jefferson: balance sheet
15 NOTE: FINANCIAL DATA AS OF JUNE 30, 2016; BANK LEVEL DATA; DOLLARS IN THOUSANDS SOURCE: SNL FINANCIAL OVERVIEW OF JEFFERSON 79.5% 83.4% 83.9% 84.8% 84.9% 87.4% 0.0% 25.0% 50.0% 75.0% 100.0% 2012 2013 2014 2015 2016Q1 2016Q2 Total Assets Gross Loans Total Deposits Gross Loans / Total Deposits $884
Slide 17: Overview of Jefferson: profitability
16 (1) PROFITABILITY MEASURES AS OF THE TWELVE MOTHS ENDED JUNE 30, 2016 NOTE: BANK LEVEL DATA; DOLLARS IN THOUSANDS SOURCE: SNL FINANCIAL OVERVIEW OF JEFFERSON 0.57% 0.77% 0.86% 0.85% 0.84% 0.85% 0.00% 1.00% 2012 2013 2014 2015 2016L1 2016L2 5.49% 7.70% 8.21% 7.77% 7.63% 7.67% 0.00% 2.00% 4.00% 6.0
Slide 18: Overview of Jefferson: capital and asset quality
17 NOTE: FINANCIAL DATA AS OF JUNE 30, 2016; BANK LEVEL DATA SOURCE: SNL FINANCIAL OVERVIEW OF JEFFERSON TCE / TA Tier 1 Leverage Ratio NPAs / Assets NCOs / Average Loans 9.62% 9.47% 10.35% 10.53% 10.54% 10.51% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2012 2013 2014 2015 2016Q1 2016Q2 9.45% 9.72%
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