Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q2 2023 Earnings Presentation
31 slides from Enterprise Financial Services's earnings presentation, Jul 25, 2023
Slide 1: 2023 Second Quarter Earnings Webcast
Exhibit 99.2 Enterprise Financial Services Corp 2023 Second Quarter Earnings Webcast
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: Financial Highlights - 2Q23
Financial Highlights - 2Q23* • Net Income $49.1 million, down $6.6 million; EPS $1.29 • Net Interest Income $140.7 million, up $1.2 million; NIM 4.49% Earnings • PPNR** $68.9 million, down $6.0 million • ROAA 1.44%, compared to 1.72%; PPNR ROAA** 2.02%, compared to 2.32% • ROATCE** 16.53%, compared
Slide 4: Financial Highlights, continued - 2Q23
Financial Highlights, continued - 2Q23* • Loans $10.5 billion, up $500.7 million • Loan/Deposit Ratio 90% Loans & • Deposits $11.6 billion, up $465.2 million Deposits • Estimated uninsured deposits of $3.3 billion,** or 28% of total deposits • Noninterest-bearing Deposits/Total Deposits 33% • Nonper
Slide 5: Areas of Focus
Areas of Focus Organic Loan and Deposit Growth • Fund Second-Half Loan Growth Predominantly with Customer Deposits • Build Franchise Value by Expanding Existing and Acquiring New Relationships Disciplined Loan and Deposit Pricing • Moderate Loan Growth through Elevated Spreads and Pricing Discipline
Slide 6: Loan Trends
Loan Trends In Millions wth 13% Total Loan Gro $10,513 $10,012 $9,737 $9,269 $9,355 2Q22 3Q22 4Q22 1Q23 2Q23 6
Slide 7: Loan Details - LTM
Loan Details - LTM In Millions LTM 2Q23 2Q22 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 Financing* 912 748 164 Tax Credits* 609 551 58 Residential Real Estate 355
Slide 8: Loan Details - QTR
Loan Details - QTR In Millions QTR 2Q23 1Q23 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* 880 678 202 Life Insurance Premium Financing* 912 860 52 Tax Credits* 609 547 62 Residential Real Estate 355 349
Slide 9: Loans By Region
Loans By Region In Millions Specialty Lending Midwest $3,734 $3,503 $3,320 $3,193 $3,267 $3,031 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Southwest West $1,663 $1,743 $1,617 $1,327 $1,415 $1,146 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Note: Excludes PPP and Other loans; Region Components: Midwest (St. Louis & Kansas City
Slide 10: Deposit Details - LTM
Deposit Details - LTM In Millions LTM 2Q23 2Q22 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 Tot
Slide 11: Deposit Details - QTR
Deposit Details - QTR In Millions QTR 2Q23 1Q23 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 Tot
Slide 12: Deposits By Region
Deposits By Region In Millions Specialty Deposits Midwest* $5,328 $5,640 $5,072 $2,831 $2,861 $2,403 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Southwest West $1,819 $1,835 $1,811 $1,542 $1,417 $1,308 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las
Slide 13: Specialty Deposits
Specialty Deposits Specialty deposits of $2.9 billion represent 25% of total deposits. 17.2% 16.6% Includes high composition of noninterest- bearing deposits with a low cost of funds. In Millions $1,000 2Q22 3Q22 $500 26.5% 4Q22 1Q23 2Q23 39.7% $— Community Property Third-Party Other Assoc Mgmt Escr
Slide 14: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer Specialty In Millions $3,553 $1,265 $2,828 $2,861 4% 8% 12% 2% 28% 18% 2Q23 40% 50% 32% 36% 21% 56% 33% 31% 19% 7% Net New/Closed Deposit Accounts Overview BUSINESS COMMERCIAL CONSUMER SPECIALTY BANKING • Estimated uninsured deposits of $3.3 bill
Slide 15: Earnings Per Share Trend - 2Q23
Earnings Per Share Trend - 2Q23 Change in EPS $(0.02) $(0.05) $(0.10) $1.46 $1.29 1Q23 Operating Provision for Credit Noninterest 2Q23 Revenue Losses Expense 15
Slide 16: Net Interest Income Trend
Net Interest Income Trend Gr owth In Millions 28% NII $138.8 $139.5 $140.7 $124.3 $109.6 4.99% 4.66% 4.71% 4.10% 3.65% 4.52% 4.49% 3.55% 2.20% 0.76% 2Q22 3Q22 4Q22 1Q23 2Q23 Net Interest Income Net Interest Margin Avg Fed Funds Rate 16
Slide 17: Net Interest Margin
Net Interest Margin Margin Bridge 0.22% 0.01% 0.05% (0.17)% (0.33)% 4.71% 4.49% 1Q23 Loans Securities Other Earning Asset Funding Mix Cost of Funds 2Q23 Mix Components of Interest-earning Assets Components of Interest-bearing Liabilities 2.40% 6.64% 6.33% 5.87% 1.72% 2.26% 5.10% 5.97% 1.56% 4.51% 5.
Slide 18: Credit Trends
Credit Trends Annualized Net Charge-offs (Recoveries) to Average Loans Loan Growth and Average Line of Credit Utilization 43.9% 42.5% 41.0% 42.4% 44.6% In Millions $501 12 bps $382 9 bps $275 2 bps $213 (1) bps (1) bps $86 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Organic Loans Avg Line Draw
Slide 19: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans Key Assumptions: 2Q23 ACL as a % of • Reasonable and supportable forecast Loans ACL In Millions Loans period is one year with a one year reversion period. Commercial and industrial $ 4,361 $ 60 1.38 % • Forecast considers a weighted average Commercial real estat
Slide 20: Noninterest Income Trend
Noninterest Income Trend In Millions Noninterest Income Other Noninterest Income Detail 11.5% 10.8% 10.8% 9.2% $6.1 7.1% $0.5 $5.3 $5.1 $0.4 $16.9 $16.9 $0.4 $1.7 $14.2 $2.4 $2.5 $14.3 $9.5 $2.5 $2.3 $2.3 $2.5 $0.6 $2.1 $2.4 $2.8 $4.5 $4.1 $2.4 $3.0 $0.3 $3.5 $2.7 $0.2 $3.9 $0.2 $0.8 $0.2 $4.8 $5.0
Slide 21: Noninterest Expense Trend
Noninterest Expense Trend In Millions Noninterest Expense Other Noninterest Expense Detail 51.0% 49.8% 48.1% 50.5% 54.0% $23.4 $21.7 $1.1 $86.0 $21.4 $81.0 $1.2 $1.9 $19.6 $1.3 $77.1 $19.2 $0.9 $1.9 $1.3 $2.6 $1.3 $1.6 $68.8 $1.8 $65.4 $2.6 $1.6 $2.5 $2.8 $41.6 $2.0 $1.6 $42.5 $1.6 $3.7 $38.2 $1.6 $
Slide 22: Capital
Capital Tangible Common Equity/Tangible Assets* TBV and Dividends per Share $0.22 $0.23 $0.24 $0.25 $0.25 8.81% $31.23 8.65% $28.67 $30.55 8.43% $26.63 $26.62 7.80% 7.86% 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Tangible Common Equity/Tangible Assets TBV/Share Dividends per Share Regulatory
Slide 23: Appendix
Appendix
Slide 24: Investment Portfolio
Investment Portfolio Investment Portfolio Breakout AFS & HTM Securities In Millions Obligations of U.S. $1,800 $120 Government- sponsored enterprises Obligations of $1,200 $— 12% states and political TOTAL subdivisions U.S. Treasury $2.3 Billion 43% $600 $(120) bills 8% $— $(240) Corporate debt Agen
Slide 25: Liquidity
Liquidity Strong Liquidity Profile EFSC Borrowing Capacity In Billions • $764 million available FHLB capacity 34% 37% 36% • $2.6 billion available FRB capacity $4.2 $4.1 • $140 million in seven federal funds lines $3.7 $0.5 $0.7 $0.1 $0.1 • $647 million unpledged investment securities $1.4 • $322 mi
Slide 26: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Total $528.0 Million Office CRE Loans by Location Office CRE Loans by Industry Type Southwest Real Estate/ Midwest 27.5% Rental/Leasing 54.5% 86.9% West Information 13.4% Other 1.7% 4.0% Health Care and Specialty Social Assistance 4.6% Finance and Insurance 1.1% 3.1%
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common e
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, ($ in thousands) 2023 2023 2022 2022 2022 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 1,618,233 $ 1,592,820 $ 1,522,263 $ 1,446,218 $ 1,44
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, ($ in thousands) 2023 2023 2022 2022 2022 RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE) Average shareholder’s equity $ 1,621,337 $ 1,568,451 $ 1,490,592 $ 1,494,504 $ 1,474,267 Less average prefer
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, ($ in thousands) 2023 2023 2022 2022 2022 CORE EFFICIENCY RATIO Net interest income (GAAP) $ 140,692 $ 139,529 $ 138,835 $ 124,290 $ 109,613 Tax-equivalent adjustment 2,062 2,041 1,983 1,854 1,699 Net
Slide 31: Enterprise Financial Services Corp
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Enterprise Financial Services — Q2 2023 Earnings Presentation on 6ix