Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Investor Presentation (August 2023)
46 slides from Enterprise Financial Services's investor presentation, Aug 29, 2023
Slide 1: Enterprise Financial Services Corp 2023 Second Quarter Investor Presentation
Enterprise Financial Services Corp 2023 Second Quarter Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information in this report may contain “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. Such forward-looking statements may include projections b
Slide 3: Company Highlights
Enterprise Financial Services Corp Guiding People to a Lifetime of Financial Success Company Highlights Vision To be a company where our associates are proud to work, that delivers ease of navigation to our customers and value to our investors, while helping our communities flourish. Target Market P
Slide 4: Performance versus Peer Banks $10-50B
Peer Banks $10-50B Median Top Quartile 2Q23 YTD FY2022 Return on average assets 1.58 % 1.52 % 1.15 % 1.32 % Return on average tangible common 18.18 % 19.10 % 15.58 % 17.87 % Net interest margin 4.60 % 3.89 % 3.29 % 3.46 % Efficiency ratio(2) 52.25 % 49.77 % 53.49 % 48.98 % Tangible common equity/tan
Slide 5: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 55, President & Chief Executive Officer, EFSC Enterprise Tenure – 19 years KEENE S. TURNER 43, SEVP, Chief Financial Officer, EFSC Enterprise Tenure – 9 years SCOTT R. GOODMAN 59, SEVP, President, Enterprise Bank & Trust Enterprise Tenure – 20 years DOUGLAS N
Slide 6: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $13.9 Billion Market Cap* Operates in St. Louis Kansas City Phoenix $1.5 Billion • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Commercial and Specialty Lending ◦ SBA ◦ Specialty Deposits ◦ Card Services ◦ Treasury Management • R
Slide 7: Differentiated Business Model
Differentiated Business Model Focused and Well-Defined Strategy Aimed at Business Owners, Executives and Professionals. Experienced Bankers and Advisors Community Banking • Business banking model • C&I focus • Treasury management services • CRE lending • Consumer loans/ deposits offerings • 42 branc
Slide 8: Best-In-Class Technology Partnerships
Best-In-Class Technology Partnerships Client journey supported by a competitive digital product set. Customer surveys Salesforce integrated with core for 360 client view Client Portal Online Banking integrated with treasury products Integrations for APIs for HOA/PM Positive Pay (Check & ACH) TARGET
Slide 9: Diversified Revenue
Diversified Revenue (2022 financial data) Treasury Management $1.9B in Assets Under Management Card Services Tax Credit Services Mortgage Banking Community Development Other Services Midwest Southwest West Specialty Lending Net Interest Income Noninterest Income Midwest 35.8% Southwest 16.3% West 15
Slide 10: Regional and National Markets
Regional and National Markets 1 Source: 6/30/22 data for market rank and market share; S&P Global Market Intelligence. 2 Opened in February 2023; included in specialty region $3.7 $3.3 $1.4 $1.7 $2.9 $5.6 $1.8 $1.3 Loans* Deposits Specialty Midwest Southwest West $— $2.5 $5.0 MSA Branches Deposit Ma
Slide 11: Focused Loan Growth Strategies
5.8% 8.4% 8.7% 12.6% Focused Loan Growth Strategies Total Loans Specialty market segments represent 35% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $609 million in loans outstanding related to Federal, Historic, and Afforda
Slide 12: Total Loan Trends
Total Loan Trends $4,350 $5,314 $7,225 $9,018 $9,737 $10,513 94.8% 92.1% 90.5% 79.5% 89.9% 90.5% Loans PPP Loans/Deposits 2018 2019 2020 2021 2022 2Q23 In Millions PPP $272 PPP $699 12
Slide 13: Drivers of Loan Growth - Year over Year
Portfolio Balance Pe rc en ta ge G ro w th $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B $4.5B (50)% (25)% 0% 25% 50% 75% 100% Drivers of Loan Growth - Year over Year 31% Commercial/Construction RE C&I PPP Life Insurance Premium Finance Sponsor Finance Residential RE Tax Credits SBA Other 30
Slide 14: Loan Portfolio
Loan Portfolio Total $10.5 Billion CRE 33.3% Construction 5.7% Residential 3.4% Other 2.8% Sponsor Finance 8.4% LIPF 8.7% Tax Credit 5.8% SBA 12.6% C&I 19.3% Loans by Product Type Real Estate/ Rental/Leasing 25.8% Finance and Insurance 17.0% Accommodation/ Food Service 8.8% Manufacturing 7.1% Constr
Slide 15: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Total $528.0 Million Midwest 54.5% Southwest 27.5% West 13.4% Specialty 4.6% Office CRE Loans by Location Real Estate/ Rental/Leasing 86.9% Information 1.7% Health Care and Social Assistance 3.1% Professional Services 1.5% Wholesale Trade 1.7% Finance and Insurance 1.
Slide 16: Loan Details - LTM
Loan Details - LTM 2Q23 2Q22 LTM Change C&I $ 2,029 $ 1,642 $ 387 CRE Investor Owned 2,291 1,978 313 CRE Owner Occupied 1,209 1,119 90 SBA loans* 1,328 1,284 44 Sponsor Finance* 880 647 233 Life Insurance Premium Finance* 912 748 164 Tax Credits* 609 551 58 Residential Real Estate 355 392 (37) Const
Slide 17: Loan Details - QTR
Loan Details - QTR 2Q23 1Q23 QTR Change C&I $ 2,029 $ 2,006 $ 23 CRE, Investor Owned 2,291 2,240 $ 51 CRE, Owner Occupied 1,209 1,174 $ 35 SBA loans* 1,328 1,316 $ 12 Sponsor Finance* 879 678 $ 202 Life Insurance Premium Finance* 912 860 $ 52 Tax Credits* 547 548 $ 62 Residential Real Estate 355 349
Slide 18: Loans By Region
Loans By Region Specialty Lending $3,193 $3,503 $3,734 2Q22 1Q23 2Q23 In Millions Midwest $3,031 $3,267 $3,320 2Q22 1Q23 2Q23 Southwest $1,146 $1,327 $1,415 2Q22 1Q23 2Q23 Note: Excludes PPP and Other loans; Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX), Wes
Slide 19: Deposit Details - LTM
Deposit Details - LTM 2Q23 2Q22 LTM Change Noninterest-bearing demand accounts $ 3,881 $ 4,747 $ (866) Interest-bearing demand accounts 2,629 2,198 431 Money market accounts 2,913 2,726 187 Savings accounts 665 837 (172) Certificates of deposit: Brokered 894 129 765 Other 638 456 182 Total deposits
Slide 20: Deposit Details - QTR
Deposit Details - QTR 2Q23 1Q23 QTR Change Noninterest-bearing demand accounts $ 3,881 $ 4,192 $ (311) Interest-bearing demand accounts 2,629 2,396 233 Money market accounts 2,913 2,960 (47) Savings accounts 665 713 (48) Certificates of deposit: Brokered 894 370 524 Other 638 524 114 Total Deposits
Slide 21: Deposits By Region
Deposits By Region Specialty Deposits $2,403 $2,831 $2,861 2Q22 1Q23 2Q23 In Millions Midwest* $5,328 $5,072 $5,640 2Q22 1Q23 2Q23 Southwest $1,819 $1,835 $1,811 2Q22 1Q23 2Q23 West $1,542 $1,417 $1,308 2Q22 1Q23 2Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las
Slide 22: Deposit Mix
24.0% 23.0% 34.0% 40.4% 42.9% 33.4% 33% 31%13% 23% $4,588 $5,771 $7,985 $11,344 $10,829 $11,620 0.79% 0.92% 0.32% 0.11% 0.27% 1.19% Deposits Cost of deposits Noninterest bearing % 2018 2019 2020 2021 2022 2Q23 YTD Deposit Mix CD Interest-Bearing Demand Accounts DDA MMA & Savings In Millions Total De
Slide 23: Specialty Deposits
Specialty Deposits 39.7% 26.5% 17.2% 16.6% Community Associations $1.1 billion in deposit accounts specifically designed to serve the needs of community associations. Property Management $759 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party Escro
Slide 24: Core Funding Mix
40% 31% 28% 50% 33% 12% 4% 8% 32% 19% 21% 18% 2% Core Funding Mix Commercial Business Banking Consumer In Millions $2,828$1,265$3,553 Cost of Funds1 Commercial Business Banking Consumer Specialty Brokered Total 1.33% 0.41% 0.84% 1.03% 3.24% 1At June 30, 2023 2Excludes insured accounts, collateralize
Slide 25: Earnings Per Share Trend - 2Q23
Earnings Per Share Trend - 2Q23 $1.46 $(0.02) $(0.05) $(0.10) $1.29 1Q23 Operating Revenue Provision for Credit Losses Noninterest Expense 2Q23 Change in EPS 25
Slide 26: Net Interest Income Trend
Net Interest Income Trend In Millions $191.9 $238.7 $270.0 $360.2 $473.9 $280.2 3.82% 3.80% 3.56% 3.41% 3.89% 4.60% 1.83% 2.16% 0.36% 0.08% 1.68% 4.76% Net Interest Income Net Interest Margin Avg Federal Funds Rate 2018 2019 2020 2021 2022 2Q23 YTD 26
Slide 27: Credit Trends for Loans
Credit Trends for Loans 2018 2019 2020 2021 2022 2Q23 YTD NPLs/Loans 0.38% 0.50% 0.53% 0.31% 0.10% 0.15% NPAs/Assets 0.30% 0.45% 0.45% 0.23% 0.08% 0.12% ACL/NPLs 259.6% 163.8% 354.9% 517.6% 1371.9% 877.1% ACL/Loans* 1.00% 0.81% 2.31% 1.84% 1.56% 1.48% Provision expense (benefit) $6.6 $6.4 $65.4 $13.
Slide 28: Allowance for Credit Losses for Loans
$138.3 $6.0 $(3.0) $141.3 ACL 1Q23 Portfolio Changes Net Recoveries ACL 2Q23 Allowance for Credit Losses for Loans • 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 qualitati
Slide 29: Noninterest Income Trend
Noninterest Income Trend In Millions $38.3 $49.2 $54.5 $67.7 $59.2 $31.2 $8.2 $9.9 $9.7 $10.3 $10.0 $5.0 $11.7 $12.8 $11.7 $15.4 $18.3 $8.0 $6.7 $9.2 $9.5 $11.9 $11.6 $4.8 $8.9 $11.9 $17.0 $22.1 $16.7 $11.2 $2.8 $5.4 $6.6 $8.0 $2.6 $2.2 16.7% 17.1% 16.8% 15.8% 11.1% 10.0% Wealth Management Deposit S
Slide 30: Noninterest Expense Trend
Noninterest Expense Trend In Millions $119.0 $165.5 $167.2 $245.9 $274.2 $166.9 $42.2 $53.7 $57.2 $65.0 $78.5 $45.1 $14.2 $31.1 $29.7 $9.5 $12.5 $13.5 $16.3 $17.6 $8.0$66.0 $81.3 $92.3 $124.9 $147.0 $84.1 $18.0 $4.2 $22.1 $3.4 50.7% 50.1% 48.7% 49.7% 49.8% 52.3% Other Deposit Costs Occupancy Employe
Slide 31: EFSC Borrowing Capacity
EFSC Borrowing Capacity $3.7 $4.1 $4.2 $0.8 $0.8 $0.8 $1.4 $2.7 $2.6$0.1 $0.1 $0.1 $1.4 $0.5 $0.7 34% 37% 36% FHLB borrowing capacity FRB borrowing capacity Fed Funds lines Unpledged securities Borrowing capacity/Deposits 4Q22 1Q23 2Q23 In Billions End of Period and Average Loans to Deposits 84% 85%
Slide 32: Investment Portfolio Breakout
Investment Portfolio Breakout AFS & HTM Securities Obligations of U.S. Government- sponsored enterprises 12% Obligations of states and political subdivisions 43% Agency mortgage- backed securities, 31% Corporate debt securities 6% U.S. Treasury bills 8% TOTAL $2.3 Billion • Effective duration of 5.3
Slide 33: Capital Strategy
Capital Strategy EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate Supports Robust Asset Growth Maintain High Quality Capital Stack Maintain 8-9% TCE • Strong earnings profile • Sustainable dividend profile • Organic loan and deposit growth • High quality M&A to enhance c
Slide 34: Capital TBV and Dividends per Share
Capital TBV and Dividends per Share $20.95 $23.76 $25.48 $28.28 $28.67 $31.23 $0.47 $0.62 $0.72 $0.75 $0.90 $0.50 TBV/Share Dividends per Share 2018 2019 2020 2021 2022 2Q23 YTD Return of Capital $30.2 $32.1 $35.1 $86.8 $66.5 $18.7 $10.8 $16.6 $19.8 $26.2 $33.6$19.4 $15.5 $15.3 $60.6 $32.9 Common di
Slide 35: Regulatory Capital
Regulatory Capital 10.0% 14.0% 13.0% 12.9% 14.9% 14.7% 14.2% 14.1% 6.5% 10.0% 9.8% 9.9% 10.9% 11.3% 11.1% 11.1% 9.6% 9.3% 9.5% CET1 Tier 1 Total Risk Based Capital CET1 excluding unrealized losses* Minimum "Well Capitalized" Ratio Optimal Capital Levels 2018 2019 2020 2021 2022 2Q23 8.0% 12.5%12.6%
Slide 36: Balance Sheet Positioned for Growth
62% Adjustable Rate Loans High-quality, Cash- flowing Securities Portfolio with 5.3 Year Average Duration 33.4% Non-Interest Bearing DDA to Total Deposits 8.65% TCE/TA1 8.25% adjusted2 11.1% CET1 9.5% adjusted3 Balance Sheet Positioned for Growth 1Tangible Common Equity/Tangible Assets is a non-GAAP
Slide 37: Appendix
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Slide 38: Financial Highlights - 2Q23
Financial Highlights - 2Q23* Capital • Tangible Common Equity/Tangible Assets** 8.65%, compared to 8.81% • Tangible Book Value Per Common Share $31.23, compared to $30.55 • CET1 Ratio 11.1%, compared to 11.2% • Quarterly common stock dividend of $0.25 per share in second quarter 2023 • Quarterly pre
Slide 39: Financial Highlights, continued - 2Q23
Financial Highlights, continued - 2Q23* *Comparisons noted below are to the linked quarter unless otherwise noted. ** Excludes insured accounts, collateralized accounts, accounts that qualify for pass-through insurance, reciprocal accounts, and affiliated accounts. Loans & Deposits • Loans $10.5 bil
Slide 40: ESG Highlights
■ Selected by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury to receive $243 million of New Markets Tax Credits allocations since 2011. ■ In 2022 we invested over $1.8 billion in programs designed to promote small business and community devel
Slide 41: 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 42: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Period end (in thousands, except per share data) June 30, 2023 March 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 Shareholders' equity (GAAP) $ 1,618,233 $ 1,592,820 $ 1,522,263 $ 1,529,116 $ 1,078,97
Slide 43: Reconciliation of Non-GAAP Financial Measures
Quarter ended Year ended ($ in thousands) June 30, 2023 March 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Average shareholder’s equity (GAAP) $ 1,621,337 $ 1,568,451 $ 1,498,759 $ 1,277,153 $ 902,875 Less average preferred stock 71,988 71,988 71,988 8,903 — Less average goodwill 3
Slide 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended ($ in thousands) June 30, 2023 March 31, 2023 December 31, 2022 Net interest income $ 140,692 $ 139,529 $ 473,903 Noninterest income 14,290 16,898 59,162 Less gain on sale of investment securities — 381 — Less gain (loss) on sale
Slide 45: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year-to-date Year ended ($ in thousands) June 30, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 Net interest income (GAAP) $ 280,221 $ 473,903 $ 360,194 $ 270,001 $ 238,717 $ 191,905 Tax-equivalent adjustm
Slide 46: Enterprise Financial Services Corp
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Enterprise Financial Services — Investor Presentation (August 2023) on 6ix