Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2024 Earnings Presentation
45 slides from Enterprise Financial Services's earnings presentation, Oct 29, 2024
Slide 1: Enterprise Financial Services Corp 2024 Third Quarter Investor Presentation
Enterprise Financial Services Corp 2024 Third Quarter Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
2 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
Slide 3: Enterprise Financial Services Corp Operates in...
3 Enterprise Financial Services Corp Operates in St. Louis Kansas City Phoenix New Mexico Los Angeles Las Vegas The Company has deposit and SBA loan production offices across the country. San Diego Dallas* Orlando Focused on Privately Owned Businesses and Business Owners Commercial Lending Lending V
Slide 4: Economic View of Regional Markets
4 Economic View of Regional Markets State/Metro Population (in millions)2 Unemployment Rate2 Average Household Income (in thousands)2 Gross Product (in billions)2 1Q24 YTD FY2023 Midwest Total Loans1 / Total Deposits $3.2 billion / $6.2 billion Missouri 6.3 3.52% $160 $448 St. Louis 2.8 3.65% $191 $
Slide 5: Executive Leadership Team
5 Executive Leadership Team JAMES B. LALLY 56, President & Chief Executive Officer, EFSC Enterprise Tenure – 20 years KEENE S. TURNER 45, SEVP, Chief Financial Officer, EFSC Enterprise Tenure – 11 years SCOTT R. GOODMAN 60, SEVP, President, Enterprise Bank & Trust Enterprise Tenure – 21 years DOUGLA
Slide 6: EFSC Awards and Recognition
6 EFSC Awards and Recognition Doing Well by Doing Good Award Promote community service, philanthropy and charitable giving to make a difference in the communities they service. Women in the Workplace Honoree Company policies, practices, development and data that show our commitment to supporting and
Slide 7: Flexible Balance Sheet - Well Managed and Positioned for Growth
7 Cycle to date asset beta of 53%4 Annual % change in NII: +100 bp 3.5% -100 bp (3.6)% Annual % change in NII including variable deposit servicing expense in NIE: +100 bp 2.2% -100 bp (2.3)% 61%* Adjustable rate loans High-quality, cash- flowing securities portfolio with 4.9 average duration Loan po
Slide 8: Loan and Deposit Trends
8 $2.4 $2.8 $3.2 $4.1 $4.4 $5.3 $7.2 $9.0 $9.7 $10.9 $11.1 $2.5 $2.8 $3.2 $4.2 $4.6 $5.8 $8.0 $11.3 $10.8 $12.2 $12.5 EFSC Loans Acquired Loans EFSC Deposits Acquired Deposits 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q24 $ In Billions 17.4 % 10 yr D epo sit G row th C AGR 1 (11. 6% 1 exc l
Slide 9: M&A Diversifies & Complements Organic Growth
9 M&A Diversifies & Complements Organic Growth M&A Strategy Growth History $5.3 $5.6 $7.3 $9.8 $13.5 $13.1 $14.5 $4.4 $6.1 $8.5 $11.3 $0.9 $1.2 $1.3 $2.2 EFSC Assets Merger Contribution 2017 2018 2019 2020 2021 2022 2023 $ In Billions Strategically enhanced geographic diversification and product lin
Slide 10: Strengths vs KRX Peers
10 Strengths vs KRX Peers1 3Q24 NIM 3.26% 3.50% 4.17% KRX Median KRX Top Quartile EFSC AOCI Adjusted 10-Year TBV CAGR 7.8% 9.5% 11.0% KRX Median KRX Top Quartile EFSC 10-Year TTM EPS CAGR 6.1% 9.0% 14.2% KRX Median KRX Top Quartile EFSC NIB Deposits 25.6% 29.3% 31.6% KRX Median KRX Top Quartile EFSC
Slide 11: Value Proposition
11 Value Proposition EFSC Adding Shareholder Value Experience Performance Discipline • Tenured management team ◦ Average years of tenure: 16 years • Abundant industry experience ◦ Average years of industry experience: 23 years • Diversification across geographic regions and product lines • History o
Slide 12: Financial Highlights
Z ENTERPRISE Financial Services Corp Financial Highlights
Slide 13: Financial Highlights - 3Q24
13 Financial Highlights - 3Q24* Capital • Tangible Common Equity/Tangible Assets** 9.50%, compared to 9.18% • Tangible Book Value Per Common Share** $37.26, compared to $35.02 • CET1 Ratio 11.9%, compared to 11.7% • Repurchased 195,114 shares at an average price of $49.73 • Quarterly common stock di
Slide 14: Financial Highlights, continued - 3Q24
14 Financial Highlights, continued - 3Q24* *Comparisons noted below are to the linked quarter unless otherwise noted. **A Non-GAAP Measure, Refer to Appendix for Reconciliation. Loans & Deposits • Loans $11.1 billion, up $79.9 million • Loan/Deposit Ratio 89% • Deposits $12.5 billion, up $182.9 mill
Slide 15: Total Loan Trends
15 Total Loan Trends $7,225 $9,018 $9,737 $10,884 $11,080 90.5% 79.5% 89.9% 89.4% 88.9% Loans PPP Loans/Deposits 2020 2021 2022 2023 3Q24 $ In Millions PPP $272 PPP $699
Slide 16: Loan Details
16 Loan Details 3Q24 2Q24 3Q23 Qtr Change LTM Change C&I $ 2,145 $ 2,107 $ 2,020 $ 38 $ 125 CRE Investor Owned 2,347 2,309 2,260 38 87 CRE Owner Occupied 1,323 1,314 1,256 9 67 SBA loans* 1,273 1,269 1,309 4 (36) Sponsor Finance* 819 866 888 (47) (69) Life Insurance Premium Financing* 1,030 996 928
Slide 17: Loans By Region
17 Loans By Region Specialty Lending $3,871 $3,959 $3,990 3Q23 2Q24 3Q24 $ In Millions Midwest $3,260 $3,279 $3,194 3Q23 2Q24 3Q24 Southwest $1,464 $1,649 $1,680 3Q23 2Q24 3Q24 Note: Excludes “Other” loans; Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX), West
Slide 18: Focused Loan Growth Strategies
18 Tax Credit Programs 6.5% Sponsor Finance 7.4% Life Insurance Premium Financing 9.3% SBA 11.5% Other 65.3% Focused Loan Growth Strategies Total Loans Lending verticals provide a competitive advantage, risk adjusted pricing and fee income opportunities. Tax Credit Programs $724 million in loans out
Slide 19: Loan Portfolio
19 Loan Portfolio Total $11.1 billion C&I 41.8% CRE 44.4% Construction 8.1% Residential 3.2% Other 2.5% Loans by Product Type Real Estate/ Rental/Leasing 26.0% Finance and Insurance 19.6% Accommodation/ Food Service 9.4% Manufacturing 6.9% Construction 5.2% Other Services 5.0% Other 27.9% Loans by I
Slide 20: Sponsor Finance
20 Sponsor Finance Administrative and Support 9.9% Construction 6.2% Health Care and Social Assistance 12.4% Manufacturing 23.7% Wholesale Trade 14.0% Other 33.8% Sponsor Finance Loans by Industry TypeSponsor Finance Loans & Deposits by Period $888.0 $872.3 $865.2 $865.9 $819.1 $375.9 $403.0 $359.0
Slide 21: Office CRE (Non-owner Occupied)
21 Office CRE (Non-owner Occupied) Total $503.1 million Midwest 46.9% Southwest 27.5% West 20.6% Specialty 5.0% Office CRE Loans by Location Real Estate/ Rental/Leasing 87.7% Health Care and Social Assistance 3.4% Other 8.9% Office CRE Loans by Industry Type Size Average Risk Rating Number of Loans
Slide 22: Allowance for Credit Losses for Loans
22 $139.5 $4.2 $(3.9) $139.8 ACL 2Q24 Portfolio Changes Net Charge-offs ACL 3Q24 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 macroecon
Slide 23: Credit Trends for Loans
23 Credit Trends for Loans 3Q24 YTD 2023 2022 2021 2020 NPLs/Loans 0.26 % 0.40 % 0.10 % 0.31 % 0.53 % NPAs/Assets 0.22 % 0.34 % 0.08 % 0.23 % 0.45 % Criticized & Classified Loans/Loans 4.87 % 4.06 % 4.09 % 5.52 % 6.42 % ACL/NPLs 492.6 % 308.2 % 1371.90 % 517.60 % 354.90 % ACL/Loans* 1.38 % 1.35 % 1.
Slide 24: Investment Portfolio Breakout
24 Investment Portfolio Breakout AFS & HTM Securities Obligations of U.S. Government- sponsored enterprises 11% Obligations of states and political subdivisions 42% Agency mortgage- backed securities, 35% Corporate debt securities 6% U.S. Treasury bills 6% TOTAL $2.6 billion • Effective duration of
Slide 25: EFSC Borrowing Capacity
25 EFSC Borrowing Capacity $5.1 $5.1 $5.3 $1.3 $1.2 $1.2 $2.6 $2.6 $2.6 $0.1 $0.1 $0.1 $1.1 $1.2 $1.4 42% 42% 43% FHLB borrowing capacity FRB borrowing capacity Fed Funds lines Unpledged securities Borrowing capacity/Deposits 1Q24 2Q24 3Q24 $ In Billions End of Period and Average Loans to Deposits 8
Slide 26: Total Deposits and Deposit Mix
26 34.0% 40.4% 42.9% 32.5% 31.6% 32% 33%11% 24% $7,985 $11,344 $10,829 $12,176 $12,465 0.32% 0.11% 0.27% 1.58% 2.18% Deposits Cost of deposits Noninterest bearing % 2020 2021 2022 2023 3Q24 CD Interest-Bearing Demand Accounts DDA MMA & Savings $ In Millions Total Deposits $12.5 billion 3Q24 Deposit
Slide 27: Deposit Details
27 Deposit Details 3Q24 2Q24 3Q23 Qtr Change LTM Change Noninterest-bearing demand accounts $ 3,934 $ 3,928 $ 3,852 $ 6 $ 82 Interest-bearing demand accounts 3,049 2,952 2,750 97 299 Money market accounts 3,568 3,474 3,211 94 357 Savings accounts 553 565 626 (12) (73) Certificates of deposit: Broker
Slide 28: Deposits By Region
28 Deposits By Region Deposit Verticals** $2,693 $3,033 $3,093 3Q23 2Q24 3Q24 $ In Millions Midwest(*)** $6,098 $6,111 $6,205 3Q23 2Q24 3Q24 Southwest $1,802 $1,984 $1,971 3Q23 2Q24 3Q24 West* $1,317 $1,154 $1,196 3Q23 2Q24 3Q24 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (
Slide 29: Differentiated Deposit Verticals
29 Differentiated Deposit Verticals 37.7% 36.8% 25.5% Community Associations $1.2 billion in deposit accounts specifically designed to serve the needs of community associations. Property Management $1.1 billion in deposits. Specializing in the compliance of Property Management Trust Accounts. Legal
Slide 30: Core Funding Mix
30 Core Funding Mix Commercial Business Banking Consumer $ In Millions 1At September 30, 2024 2Excludes insured accounts, collateralized accounts, accounts that qualify for pass-through insurance, reciprocal accounts, and affiliated accounts. Note: Brokered deposits were $0.7 billion at 3Q24 Deposit
Slide 31: Capital Strategy
31 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 enhanc
Slide 32: Capital: TBV and Common Dividends per Share
32 Capital TBV* and Common Dividends per Share $25.48 $28.28 $28.67 $33.85 $37.26 $0.72 $0.75 $0.90 $1.00 $0.78 TBV/Share Dividends per Share 2020 2021 2022 2023 3Q24 YTD Return of Capital $35.1 $86.8 $66.5 $37.4 $47.6 $19.8 $26.2 $33.6 $37.4 $29.2 $15.3 $60.6 $32.9 $18.4 Common dividend payments Sh
Slide 33: Regulatory Capital
33 Regulatory Capital 10.0% 14.0% 14.9% 14.7% 14.2% 14.2% 14.8% 6.5% 10.0% 10.9% 11.3% 11.1% 11.3% 11.9% 9.3% 10.1% 10.9% CET1 Tier 1 Total Risk Based Capital CET1 excluding unrealized losses* Minimum "Well Capitalized" Ratio Optimal Capital Levels 2020 2021 2022 2023 3Q24 8.0% 12.6% 12.7% 12.1% 13.
Slide 34: Net Interest Income Trend
34 Net Interest Income Trend $ In Millions $270.0 $360.2 $473.9 $562.6 $421.7 3.56% 3.41% 3.89% 4.43% 4.17% 0.36% 0.08% 1.68% 5.03% 5.31% Net Interest Income Net Interest Margin Avg Federal Funds Rate 2020 2021 2022 2023 3Q24 YTD 2020 2021 2022 2023 3Q24 YTD Net Interest Income - FTE $ 273.2 $ 365.3
Slide 35: Noninterest Income Trend
35 Noninterest Income Trend $ In Millions $54.5 $67.7 $59.2 $68.7 $49.1 $17.0 $22.1 $16.7 $22.9 $17.4 $6.6 $8.0 $2.6 $9.2 $2.9 $11.7 $15.4 $18.3 $16.6 $13.6 $9.5 $11.9 $11.6 $10.0 $7.5 $9.7 $10.3 $10.0 $10.0 $7.7 16.8% 15.8% 11.1% 10.9% 10.4% Other Tax Credit Income Deposit Services Charge Card Serv
Slide 36: Noninterest Expense Trend
36 Noninterest Expense Trend $167.2 $245.9 $274.2 $348.2 $285.5 $57.2 $65.0 $78.5 $94.8 $71.7 $14.2 $31.1 $72.3 $65.8 $13.5 $16.3 $17.6 $16.5 $12.9 $92.3 $124.9 $147.0 $164.6 $135.1 $4.2 $22.1 $3.4 48.7% 49.7% 49.8% 53.4% 58.9% Other Deposit costs Occupancy Employee compensation and benefits Merger-
Slide 37: Appendix
Zz ENTERPRISE inancial Services Corp \ Appendix
Slide 38: ESG Highlights
38 ■ Selected by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury to receive $353 million of New Markets Tax Credits allocations since 2011. ■ In 2023, our portfolio included the financing of over $2.1 billion in small business, small farm and
Slide 39: Best-In-Class Technology Partnerships
39 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) TARG
Slide 40: Use of Non-GAAP Financial Measures
40 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 additional financial measures, such as tangible
Slide 41: Reconciliation of Non-GAAP Financial Measures
41 Reconciliation of Non-GAAP Financial Measures Tangible Common Equity Ratio Period end (in thousands, except per share data) September 30, 2024 June 30, 2024 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Shareholders' equity (GAAP) $ 1,832,011 $ 1,755,273 $ 1,716,068 $ 1,
Slide 42: Allowance Coverage Ratio Adjusted for Guaranteed Loans
42 Allowance Coverage Ratio Adjusted for Guaranteed Loans Period end ($ in thousands) September 30, 2024 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Loans (GAAP) $ 11,079,892 $ 10,884,118 $ 9,737,138 $ 9,017,642 $ 7,224,935 Less guaranteed loans, net 928,272 932,118 960,2
Slide 43: Year-to-date Year ended ($ in thousands) September 30, 24 December 31, 2023 December 31,
43 Year-to-date Year ended ($ in thousands) September 30, 2024 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Net interest income (GAAP) $ 421,726 $ 562,592 $ 473,903 $ 360,194 $ 270,001 Tax-equivalent adjustment 6,173 8,079 7,042 5,151 3,190 Less incremental accretion incom
Slide 44: Reconciliation of Non-GAAP Financial Measures
44 Reconciliation of Non-GAAP Financial Measures Quarter ended Year-to-date ($ in thousands) September 30, 2024 June 30, 2024 September 30, 2024 December 31, 2023 Average shareholder’s equity $ 1,804,369 $ 1,748,240 $ 1,763,917 $ 1,623,121 Less average preferred stock 71,988 71,988 71,988 71,988 Les
Slide 45: gv ENTERPRISE
gv ENTERPRISE Financial Services Corp \
Enterprise Financial Services — Q3 2024 Earnings Presentation on 6ix