Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q2 2016 Earnings Presentation
30 slides from Enterprise Financial Services's earnings presentation, Aug 1, 2016
Slide 1: Enterprise Financial Services Corp Second Quarter 2016 Investor Presentation
ENTERPRISE FINANCIAL SERVICES CORP SECOND QUARTER 2016 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
1 Some of the information in this report contains “forward-looking statements” within the meaning of and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified with use of terms such as “ma
Slide 3: Company Snapshot
2 COMPANY SNAPSHOT FDIC Data ENTERPRISE BANK $3.8 Billion IN TOTAL ASSETS ENTERPRISE TRUST Billion IN ASSETS UNDER ADMINISTRATION CONCENTRATED ON PRIVATE BUSINESSES AND OWNER FAMILIES RELATIONSHIP DRIVEN ATTRACT TOP TALENT IN MARKETS PRODUCT BREADTH • BANKING • TRUST & WEALTH MANAGEMENT • TREASURY M
Slide 4: Differentiated Business Model: Built for Quality Earnings Growth
3 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 CLIENTS’ NEEDS EXPERIENCED BANKERS AND ADVISORS Enterprise Bank Financial &
Slide 5: Enterprise University: A Key Brand Differentiator
4 EU is a Continuing Series of More than 30 High-Impact Workshops for Business Owners DESIGNED TO HELP MANAGEMENT TEAMS GROW THEIR BUSINESSES EU IS OFFERED SEMI-ANNUALLY TO ENTERPRISE CLIENTS AND PROSPECTS ALIKE ENTERPRISE UNIVERSITY: A KEY BRAND DIFFERENTIATOR EU is Unique and Highly Valued; A Clea
Slide 6: Strong Track Record of Success in St. Louis
5 6th RANKED IN DEPOSIT SHARE1, LARGEST PUBLICLY HELD BANK BASED IN ST. LOUIS2 STRONG TRACK RECORD OF SUCCESS IN ST. LOUIS 1 6/30/15 FDIC data 2 Excludes Bank Unit of Stifel Nicolaus 3 Excludes specialized lending products $1.5 BILLION WEALTH MANAGEMENT BUSINESS $1.4 3 BILLION IN LOANS $1.5 BILLION
Slide 7: Kansas City: Additional Growth Opportunities
6 ENTERED MARKET IN 2000 $549 Million IN LOANS $649 Million IN DEPOSITS ADDITIONAL GROWTH OPPORTUNITIES STRONG FOOTPRINT IN DESIRABLE Johnson County SIMILARITY TO ST. LOUIS’ Stable and Diverse Economic Profile ENABLES SIMILAR MARKET STRATEGIES Kansas City
Slide 8: Phoenix: Additional Growth Opportunities
7 ADDITIONAL GROWTH OPPORTUNITIES Source: 6/30/15 FDIC data, SNL Financial ESTABLISHED PRESENCE IN 2009 $190 Million IN LOANS $101 Million IN DEPOSITS Phoenix-Mesa-Scottsdale, AZ REBOUNDING ECONOMY WITH Strong Growth POTENTIAL. Twelfth Largest Metro AREA IN THE NATION HIGHLY CONCENTRATED BANKING MAR
Slide 9: Cross-Selling and Business Banking Initiatives Complement Primary Commercial Strategy
8 CROSS-SELLING AND BUSINESS BANKING INITIATIVES COMPLEMENT PRIMARY COMMERCIAL STRATEGY HIGH Client Satisfaction PAVES WAY FOR ADD-ON PRODUCT SALES Cross-sells accounted for 33% OF TREASURY MANAGEMENT PRODUCT IMPLEMENTATIONS IN THE FIRST HALF OF 2016 Business Banking Initiative TARGETING $1-10 MILLI
Slide 10: History of Strong C&I Growth
9 HISTORY OF STRONG C&I GROWTH $763 $963 $1,042 $1,264 $1,484 $1,541 2011 2012 2013 2014 2015 6/30/2016 In millions
Slide 11: Focused Loan Growth Strategies
10 Tax Credit Programs. $153 MILLION IN LOANS OUTSTANDING RELATED TO FEDERAL NEW MARKETS, HISTORIC AND MISSOURI AFFORDABLE HOUSING TAX CREDITS. $183 MILLION IN FEDERAL & STATE NEW MARKETS TAX CREDITS AWARDED TO DATE. Enterprise Value Lending. $354 MILLION IN M&A RELATED LOANS OUTSTANDING, PARTNERING
Slide 12: Drivers of Loan Growth
11 DRIVERS OF LOAN GROWTH Enterprise Value Lending 24.0% Life Insurance Premium Finance 16.5% General Commercial & Industrial 15.3% Commercial/ Construction RE 18.0% Residential RE 7.5% Consumer & Other 12.7% Tax Credits 6.0% ENTERPRISE VALUE LENDING LIFE INSURANCE PREMIUM FINANCE GENERAL COMMERCIAL
Slide 13: Portfolio Loan Trends
12 PORTFOLIO LOAN TRENDS $2,543 $2,602 $2,751 $2,833 $2,884 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 In Millions
Slide 14: Attractive Deposit Mix
13 25% 37% 17% 21% ATTRACTIVE DEPOSIT MIX CD Interest Bearing Transaction Accts DDA MMA & Savings JUN 30, 2016 $3,028MM Significant DDA COMPOSITION Declining COST OF DEPOSITS IMPROVING Core Funding 80% OF Core Deposits ARE COMMERCIAL CUSTOMERS $2,692 $2,814 $2,785 $2,932 $3,028 24.5% 24.6% 25.8% 24.
Slide 15: Reported vs. Core EPS
14 EARNINGS PER SHARE $0.61 <$0.14> $0.02 $0.49 EPS Non-Core Acquired Assets Other Non-Core Expenses Core EPS In Millions * A Non GAAP Measure, Refer to Appendix for Reconciliation REPORTED VS. CORE EPS* Q2 2016
Slide 16: Financial Scorecard
15 CONTINUED GROWTH IN CORE EPS DRIVE NET INTEREST INCOME GROWTH IN DOLLARS WITH FAVORABLE LOAN GROWTH TRENDS DEFEND NET INTEREST MARGIN MAINTAIN HIGH QUALITY CREDIT PROFILE ACHIEVE FURTHER IMPROVEMENT IN OPERATING LEVERAGE ENHANCE DEPOSIT LEVELS TO SUPPORT GROWTH FINANCIAL SCORECARD 29% 15% 6
Slide 17: Positive Momentum in Core Earnings Per Share
16 POSITIVE MOMENTUM IN CORE* EARNINGS PER SHARE $0.28 $0.31 $0.37 $0.33 $0.35 $0.38 $0.44 $0.49 $0.47 $0.49 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 29% Core EPS Growth from Q2 2015 to Q2 2016
Slide 18: Earnings Per Share Trend
17 EARNINGS PER SHARE TREND $0.47 $0.02 $0.49 Q1 '16 Net Interest Income Q2 '16 In Millions CHANGES IN CORE EPS* Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation
Slide 19: Net Interest Income Driving Core Revenue Growth
18 NET INTEREST INCOME DRIVING CORE REVENUE GROWTH* In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $26.3 $27.1 $28.7 $29.6 $30.2 3.46% 3.41% 3.50% 3.54% 3.52% $18.0 $19.0 $20.0 $21.0 $22.0 $23.0 $24.0 $25.0 $26.0 $27.0 $28.0 $29.0 $30.0 $31.0 $32.0 Q2 '15 Q3 '15 Q4 '15
Slide 20: Credit Trends for Portfolio Loans
19 CREDIT TRENDS FOR PORTFOLIO LOANS 11 bps 2 bps -10 bps -1 bps -6 bps Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Net Charge-offs (1) (1) Portfolio loans only, excludes PCI (Purchased Credit Impaired) loans Q2 2016 EFSC PEER(2) NPA’S/ASSETS = 0.47% 0.76% NPL’S/LOANS = 0.44% 0.94% ALLL/NPL’S = 277% 116% ALL
Slide 21: Managed Operating Expenses Improving Efficiency
20 MANAGED OPERATING EXPENSES* IMPROVING EFFICIENCY In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $6.1 $6.2 $6.5 $6.1 $6.5 $1.6 $1.6 $1.7 $1.7 $1.6 $11.3 $11.5 $11.8 $12.6 $12.3 57.6% 58.6% 56.1% 57.4% 56.3% 0 5 10 15 20 25 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Other Occu
Slide 22: Operating Expense Look-Back
21 OPERATING EXPENSE* LOOK-BACK In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $5.9 $6.5 $1.7 $1.6 $11.9 $12.3 64.5% 56.3% Q2 '14 Q2 '16 Other Occupancy Employee compensation and benefits Core Efficiency Ratio* $19.5 $20.4
Slide 23: Third Quarter 2016 Dividend Increased 10%
22 THIRD QUARTER 2016 DIVIDEND INCREASED 10% TO $0.11 PER COMMON SHARE 6TH CONSECUTIVE INCREASE 2,000,000 SHARE COMMON STOCK REPURCHASE PLAN INSTITUTED ~ 10% OF EFSC OUTSTANDING SHARES NO SPECIFIED END DATE DISCIPLINED, PATIENT APPROACH BASED ON MARKET CONDITIONS SUFFICIENT CAPITAL TO SUPPOR
Slide 24: Highly Focused, Proven Business Model
23 HIGHLY FOCUSED, Proven BUSINESS MODEL STRONG TRACK RECORD OF Commercial Loan Growth DIFFERENTIATED COMPETITIVE Lending Expertise Replicating ST. LOUIS MODEL IN Kansas City AND Phoenix DEMONSTRATED PROGRESS TOWARD INCREASED RETURNS AND Enhancing Shareholder Value 109% 90% EFSC Index 5-Year Total S
Slide 25: Appendix 2Q 2016
24 APPENDIX 2Q 2016 INVESTOR PRESENTATION
Slide 26: Balance Sheet Positioned for Growth
25 BALANCE SHEET POSITIONED FOR GROWTH Modest Asset Sensitivity (200 BPS RATE SHOCK INCREASES NII BY 5.7%) 64% FLOATING RATE LOANS, WITH THREE-YEAR AVERAGE DURATION High-quality, Cash-flowing SECURITIES PORTFOLIO WITH THREE YEAR AVERAGE DURATION 25% DDA TO TOTAL DEPOSITS 9.1% Tangible Common Equity/
Slide 27: Significant Earnings Contribution (Pre-Tax)
26 SIGNIFICANT EARNINGS CONTRIBUTION (PRE-TAX) Significant CONTRIBUTION TO FUTURE EARNINGS WITH ESTIMATED FUTURE ACCRETABLE YIELD OF $18 Million SUCCESSFUL FDIC-ASSISTED ACQUISITION STRATEGY SUCCESSFULLY ENTERED INTO AGREEMENT TO TERMINATE ALL EXISTING LOSS SHARE AGREEMENTS WITH THE FDIC IN DECEMBER
Slide 28: Use of Non-GAAP Financial Measures
27 USE OF NON-GAAP FINANCIAL MEASURES The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as Core net inter
Slide 29: Reconciliation of Non-GAAP Financial Measures
28 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (in thousands) 2016 2016 2015 2015 2015 2016 2015 CORE PERFORMANCE MEASURES Net interest income 33,783$ 32,428$ 32,079$ 30,006$ 29,280$ 66,211$ 58,325$ Less: Incremental accretion income 3,571 2,
Slide 30: Q&A 2Q 2016
29 Q&A 2Q 2016 INVESTOR PRESENTATION
Enterprise Financial Services — Q2 2016 Earnings Presentation on 6ix