Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q1 2023 Earnings Presentation
46 slides from Enterprise Financial Services's earnings presentation, May 15, 2023
Slide 1: First Quarter 2023 Investor Presentation
Enterprise Financial Services Corp First Quarter 2023 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: Key Metrics
Key Metrics Credit Profitability Balance Sheet Peer Banks $10-50B Median Top Quartile 1Q23 YTD FY2022 Return on average assets 1.72 % 1.52 % 1.15 % 1.32 % Return on average tangible common equity(1) 19.93 % 19.10 % 15.58 % 17.87 % Net interest margin 4.71 % 3.89 % 3.29 % 3.46 % Efficiency ratio(2) 5
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, EVP, Chief Financial Officer, EFSC Enterprise Tenure – 9 years SCOTT R. GOODMAN 59, President, Enterprise Bank & Trust Enterprise Tenure – 20 years DOUGLAS N. BAUCH
Slide 6: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $13.3 Billion Market Cap* Operates in St. Louis Kansas City Phoenix $1.4 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: Provides Multiple Channels to Drive Growth and Earnings 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 Commun
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 $3.5 $3.3 $1.3 $1.7 $2.8 $5.1 $1.8 $1.4 Loans* Deposits Specialty Midwest Southwest West $— $2.5 $5.0 MSA Branches Deposit Ma
Slide 11: Focused Loan Growth Strategies
Focused Loan Growth Strategies Total Loans Specialty market segments represent 34% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $547 million in loans outstanding related to Federal, Historic, and Affordable Housing tax credi
Slide 12: Total Loan Trends
Total Loan Trends Loans PPP Loans/Deposits 2018 2019 2020 2021 2022 1Q23 $ in Millions PPP $272 PPP $699 12
Slide 13: Drivers of Loan Growth - Year over Year
$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 28% Commercial/Construction RE C&I PPP Life Insurance Premium Finance Sponsor Finance Residential RE Tax Credits SBA Other 59% 1Q22 - 1Q23 Increase of $956 Million 1% (
Slide 14: Loan Portfolio
Loan Portfolio Total $10.0 Billion Loans by Product Type Loans by Industry Type Loans by Rate Type • Loans of $3.7 billion have a floor • 99.6% of loans with a floor have rates at or above the floor 14
Slide 15: Office CRE (Investor-Owned)
Office CRE (Investor-0wned) Total $483.6 Million Office CRE Loans by Location Office CRE Loans by Industry Type Size Average Risk Rating Number of Loans Balance Average Balance > $10 Million 5.20 10 $ 149.0 $ 14.9 $5-10 Million 4.92 12 79.6 6.6 $2-5 Million 5.11 45 131.3 2.9 < $2 Million 5.19 221 12
Slide 16: Loan Details - LTM
Loan Details - LTM 1Q23 1Q22 LTM Change C&I $ 2,006 $ 1,438 $ 568 CRE Investor Owned 2,240 1,983 257 CRE Owner Occupied 1,174 1,138 36 SBA loans* 1,316 1,250 66 Sponsor Finance* 678 641 37 Life Insurance Premium Finance* 860 696 164 Tax Credits* 547 518 29 Residential Real Estate 349 410 (61) Constr
Slide 17: Loan Details - QTR
Loan Details - QTR 1Q23 4Q22 QTR Change C&I $ 2,006 $ 1,905 $ 101 CRE, Investor Owned 2,240 2,176 64 CRE, Owner Occupied 1,174 1,174 — SBA loans* 1,316 1,312 4 Sponsor Finance* 678 635 43 Life Insurance Premium Finance* 860 817 43 Tax Credits* 547 560 (13) Residential Real Estate 349 380 (31) Constr
Slide 18: Total Loans By Region
Total Loans By Region 1Q22 4Q22 1Q23 $ in Millions 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Note: Excludes PPP and Other loans; Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX), West (Southern California) 1Q22 4Q22 1Q23 18
Slide 19: Deposit Details - LTM
Deposit Details - LTM 1Q23 1Q22 LTM Change Noninterest-bearing demand accounts $ 4,192 $ 4,881 $ (689) Interest-bearing demand accounts 2,396 2,547 (151) Money market accounts 2,960 2,795 165 Savings accounts 713 884 (171) Certificates of deposit: Brokered 370 129 241 Other 524 468 56 Total Deposits
Slide 20: Deposit Details - QTR
Deposit Details - QTR 1Q23 4Q22 QTR Change Noninterest-bearing demand accounts $ 4,192 $ 4,643 $ (451) Interest-bearing demand accounts 2,396 2,256 140 Money market accounts 2,960 2,655 305 Savings accounts 713 744 (31) Certificates of deposit: Brokered 370 119 251 Other 524 412 112 Total Deposits $
Slide 21: Total Deposits By Region
Total Deposits By Region 1Q22 4Q22 1Q23 $ in Millions 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX), West (Southern California) *Includes brokered balances 21
Slide 22: Deposit Mix
38% 33% 8% 21% Deposits Cost of deposits Noninterest bearing % 2018 2019 2020 2021 2022 1Q23 Deposit Mix CD Interest-Bearing Demand Accounts DDA MMA & Savings $ in Millions Total Deposits $11.2 Billion 1Q23 22
Slide 23: Specialty Deposits
Specialty Deposits Community Associations $1.1 billion in deposit accounts specifically designed to serve the needs of community associations. Property Management $673 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party Escrow $545 million in deposi
Slide 24: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer $ in Millions $2,849$1,343$3,528 1At March 31, 2023 2Excludes insured accounts, collateralized accounts, accounts that qualify for pass-through insurance, reciprocal accounts, and affiliated accounts. Note: Brokered deposits: 1Q23 $604 million; 3
Slide 25: Earnings Per Share Trend - 1Q23
Earnings Per Share Trend - 1Q23 4Q22 Operating Revenue Provision for Credit Losses Noninterest Expense 1Q23 Change in EPS 25
Slide 26: Net Interest Income Trend
Net Interest Income Trend $ in Millions Net Interest Income Net Interest Margin Avg Federal Funds Rate 2018 2019 2020 2021 2022 1Q23 26
Slide 27: Credit Trends for Loans
Credit Trends for Loans 2018 2019 2020 2021 2022 1Q23 NPLs/Loans 0.38% 0.50% 0.53% 0.31% 0.10% 0.12% NPAs/Assets 0.30% 0.45% 0.45% 0.23% 0.08% 0.09% ACL/NPLs 259.6% 163.8% 354.9% 517.6% 1371.9% 1155.2% ACL/Loans* 1.00% 0.81% 2.31% 1.84% 1.56% 1.53% Provision expense (benefit) $6.6 $6.4 $65.4 $13.4 $
Slide 28: Allowance for Credit Losses for Loans
ACL 4Q22 Portfolio Changes Net Recoveries ACL 1Q23 Allowance for Credit Losses for Loans $ in Millions • 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 1
Slide 29: Noninterest Income Trend
Noninterest Income Trend $ in Millions Wealth Management Deposit Services Charge Card Services Other Tax Credit Income Fee income/Total income 2018 2019 2020 2021 2022 1Q23 29
Slide 30: Operating Expenses Trend
Operating Expenses Trend $ in Millions Other Occupancy Employee compensation and benefits Merger-related expenses Branch-closure expenses Core efficiency ratio* 2018 2019 2020 2021 2022 1Q23 30
Slide 31: Liquidity
Liquidity EFSC Borrowing Capacity $3.7 $3.7 $4.1 $0.8 $0.8 $0.8 $1.4 $1.4 $2.7$0.1 $0.1 $0.1 $1.4 $1.4 $0.5 34% 34% 37% FHLB borrowing capacity FRB borrowing capacity Fed Funds lines Unpledged securities Borrowing capacity/Deposits 3Q22 4Q22 1Q23 $ in Billions End of Period and Average Loans to Depo
Slide 32: Investment Portfolio
Investment Portfolio 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 5% U.S. Treasury bills 9% TOTAL $2.3 Billion • Effe
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
Capital TBV/Share Dividends per Share 2018 2019 2020 2021 2022 1Q23 Common dividend payments Share repurchases 2018 2019 2020 2021 2022 1Q23 $ in Millions 34
Slide 35: Regulatory Capital
Regulatory Capital CET1 Tier 1 Total Risk Based Capital Minimum "Well Capitalized" Ratio Optimal Capital Levels 2018 2019 2020 2021 2022 1Q23 8.0% 12.6%12.6% 11.1% 12.1% 13.0% 11.4%12.0% 35
Slide 36: Balance Sheet Positioned for Growth
63% Adjustable Rate Loans High-quality, Cash-flowing Securities Portfolio with 5.5 Year Average Duration 37.6% Non- Interest Bearing DDA to Total Deposits 8.81% TCE/TA1 8.43% adjusted2 11.2% CET1 9.7% adjusted3 Balance Sheet Positioned for Growth 1Tangible Common Equity/Tangible Assets is a non-GAAP
Slide 37: Appendix
Appendix First Quarter 2023 EFSC Investor Presentation
Slide 38: Financial Highlights - 1Q23
Financial Highlights - 1Q23* Capital • Tangible Common Equity/Tangible Assets** 8.81%, compared to 8.43% • Tangible Book Value Per Common Share $30.55, compared to $28.67 • CET1 Ratio 11.2%, compared to 11.1% • Quarterly common stock dividend of $0.25 per share in first quarter 2023 • Quarterly pref
Slide 39: Financial Highlights, continued - 1Q23
Financial Highlights, continued - 1Q23* *Comparisons noted below are to the linked quarter unless otherwise noted. 1Excludes insured accounts, collateralized accounts, accounts that qualify for pass-through insurance, reciprocal accounts, and affiliated accounts. Loans & Deposits • Loans $10.0 billi
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) March 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Shareholders' equity (GAAP) $ 1,592,820 $ 1,522,263 $ 1,529,116 $ 1,078,975 Less preferred stock 71,988 71,988 71,988 — Less goodwill 36
Slide 43: Reconciliation of Non-GAAP Financial Measures
Quarter ended Year ended ($ in thousands) March 31, 2023 December 31, 2022 December 31, 2022 December 31, 2021 December 31, 2020 Average shareholder’s equity (GAAP) $ 1,568,451 $ 1,490,592 $ 1,498,759 $ 1,277,153 $ 902,875 Less average preferred stock 71,988 71,988 71,988 8,903 — Less average goodwi
Slide 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended ($ in thousands) March 31, 2023 December 31, 2022 December 31, 2022 Net interest income $ 139,529 $ 138,835 $ 473,903 Noninterest income 16,898 16,873 59,162 Less gain on sale of investment securities 381 — — Less gain (loss) on
Slide 45: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended ($ in thousands) March 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 Net interest income (GAAP) $ 139,529 $ 473,903 $ 360,194 $ 270,001 $ 238,717 $ 191,905 Tax-equivalent adjus
Slide 46: Q&A First Quarter 2023
Q&A First Quarter 2023 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q1 2023 Earnings Presentation on 6ix