Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — IPO Roadshow (October 2016)
48 slides from Enterprise Financial Services's IPO roadshow presentation, Oct 26, 2016
Slide 1: Slide 1
Slide 2: Subordinated Debt Offering, October 26, 2016
S UBORDINATED D EBT O FFERING O CTOBER 26, 2016 E NTERPRISE F INANCIAL S ERVICES C ORP NASDAQ: EFSC Filed pursuant to Rule 433 Issuer Free-Writing Prospectus dated October 26, 2016 Relating to Preliminary Prospectus Supplement dated October 26, 2016 Registration Number 333-197878 Filed pursuant to R
Slide 3: Forward-Looking Statements
Forward-Looking Statements Readers should note that, in addition to the historical information contained herein, this presentation contains "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
Slide 4: Table of Contents
Table of Contents Objectives and Overview Financial Overview Loan Portfolio and Asset Quality Liquidity and Funding Capital Overview Pro Forma Interest Coverage and Capital Ratios Summary
Slide 5: Objectives and Overview
A |. OBJECTIVES AND OVERVIEW
Slide 6: Offering Terms: Fixed-to-Floating Rate Subordinated Notes
Issuer: Enterprise Financial Services Corp (NASDAQ: EFSC) Security: [ ]% Fixed-to- Floating Rate Subordinated Notes Rating: BBB by Kroll Bond Rating Agency A rating reflects only the view of the rating agency, and is not a recommendation to buy, sell or hold the Subordinated Notes. Any rating can be
Slide 7: Company Snapshot
Company Snapshot Enterprise Bank $3.9 Billion In Total Assets Enterprise trust $1.5 Billion In Assets Under Administration Established in 1988 Headquartered in St. Louis, MO Concentrated on Private Businesses and Owner Families Relationship Driven Attract Top Talent in Markets Product Breadth Bankin
Slide 8: Management Profiles
Source: Company Documents Management Profiles
Slide 9: Additional Growth Opportunities
Additional Growth Opportunities Excludes specialized lending products Pro forma for the recently announced acquisition of Jefferson County Bancshares, Inc. Excludes bank subsidiary of Stifel Nicolaus Source: Company documents $2.2 billion in loans $3.1 billion in deposits 4th ranked in deposit marke
Slide 10: Deposit Market Share by Market
St. Louis, MO Kansas City, MO-KS Phoenix-Mesa-Scottsdale, AZ Deposit Market Share Banking offices and deposit market share pro forma for the recently announced acquisition of Jefferson County Bancshares, Inc. Source: SNL Financial; deposit market share data as of June 30, 2016 (1)
Slide 11: Third Quarter 2016 Financial Highlights
Key Metrics Net income of $12 million for the three months ended September 30, 2016, a year over year increase of 22% ROAA of 1.23% for the three months ended September 30, 2016, up from 1.13% for the three months ended September 30, 2015 ROAE of 12.46% for the three months ended September 30, 2016,
Slide 12: Third Quarter 2016 Balance Sheet, Portfolio Quality and Capital
Third Quarter 2016 Financial Highlights Source: Company documents and SNL Financial Balance Sheet/ Portfolio Quality Total Portfolio loans of $3 billion, a year over year increase of 17% Total year over year non-interest bearing deposit growth of 10% Non-performing assets of 0.59% of total assets Ne
Slide 13: Financial Overview
A FINANCIAL OVERVIEW
Slide 14: Consolidated Summary of Financial Information
2011 2012 2013 2014 2015 2016 YTD Consolidated Summary of Financial Information * A non-GAAP measure or measures. Refer to appendix for discussion and reconciliation Source: Company documents
Slide 15: Total Assets
In millions 3% 5-Year CAGR YoY Growth: 20.6% (1.5)% (4.7)% 3.4% 10.1% 11.2% Source: Company documents Total Assets
Slide 16: Total Portfolio Loans
10% 5-Year CAGR YoY Growth: 7.4% 11.0% 1.5% 13.9% 13.0% 16.7% Source: Company documents Total Portfolio Loans In millions
Slide 17: Total C&I Loans
18% 5-Year CAGR YoY Growth: 28.5% 26.2% 8.2% 21.3% 17.4% 17.1% Source: Company documents Total C&I Loans In millions
Slide 18: Focused Loan Growth Strategies
Tax Credit Programs. $149 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 Total Portfolio Loans Specialized Market Segments have Grown to 28% of Total Portfolio
Slide 19: Drivers of Loan Growth
Sept 30, 2015 – Sept 30, 2016 Drivers of Loan Growth $436 Million Tax Credits 0.9% General Commercial & Industrial 15.3% Commercial / Construction RE 32.8% Enterprise Value Lending 25.7% Residential RE 10.3% Consumer & Other 3.3% Life Insurance Premium Finance 11.7% Source: Company documents
Slide 20: Total Deposits
In millions YoY Growth: 21.5% (4.7)% (4.7)% (1.7)% 11.8% 11.0% Core deposits equal Total Deposits - (Time Deposits > $100,000 ) Source: Company Documents Total Deposits
Slide 21: Net Interest Margin
* A non-GAAP measure or measures. Refer to appendix for discussion and reconciliation Source: Company documents Net Interest Margin
Slide 22: Non Interest Income
FY 2015 Q3 2016 * A non-GAAP measure or measures. Refer to appendix for discussion and reconciliation Source: Company documents Non Interest Income Reconciliation
Slide 23: Non Interest Expense
* A non-GAAP measure or measures. Refer to appendix for discussion and reconciliation Source: Company documents Non Interest Expense In millions
Slide 24: Loan Portfolio and Asset Quality
Loan Portfolio and Asset Quality
Slide 25: Loan Composition as of September 30, 2016
Specialized Lending (National Platform) St. Louis Phoenix Kansas City Loans by Geography Concentrations by Loan Classification Commercial & Industrial Commercial Real Estate Construction Real Estate Residential Real Estate Consumer Loan Composition as of September 30, 2016 ($3.1 Billion) Source: Com
Slide 26: Allowance Coverage
Allowance Coverage In thousands Source: Company documents; Financial Data as of September 30, 2016 Note: Amounts and ratios exclude PCI loans and other assets previously covered under FDIC loss share agreements, except for their inclusion in Total Assets
Slide 27: Asset Quality – Non-Performing Assets
Source: Company documents; Financial Data as of September 30, 2016 Note: Amounts and ratios exclude PCI loans and other assets previously covered under FDIC loss share agreements, except for their inclusion in Total Assets Asset Quality – Non-Performing Assets In thousands
Slide 28: Asset Quality – Net Charge-offs
Source: Company documents; Financial Data as of September 30, 2016 Asset Quality – Net Charge-offs In thousands
Slide 29: Liquidity and Funding
A IV. LIQUIDITY AND FUNDING
Slide 30: Deposit Mix
Source: Company documents Interest- Bearing Money Market & Savings Non-Interest Bearing Deposit Composition ($3.1 Billion) Time Deposits < $100k Time Deposits > $100k Brokered TD Cost of Paying Liabilities Deposit Mix
Slide 31: Liquidity: Investment Portfolio
Source: Company documents Investment Portfolio as of September 30, 2016 ($521 Million) Agency CMOs MBS Pools Agency MBS Municipals Overall Duration of Portfolio of 3 Years Liquidity
Slide 32: Interest Rate Risk – Earnings at Risk
Source: Company documents Variance in Projected Net Interest Income (NII) vs. Projected NII under Flat Rates as of September 30, 2016 Interest Rate Risk – Earnings at Risk
Slide 33: Capital Overview
A V. CAPITAL OVERVIEW
Slide 34: Capital
TCE/TA* Tier 1 Leverage Ratio Tier 1 Capital Ratio* Total Risk-Based Capital Ratio* Capital * A non-GAAP measure or measures. Refer to appendix for discussion and reconciliation Source: Company documents
Slide 35: CRE Concentration Guidelines
Source: Company documents ADC Loans as a Percentage of Risk Based Capital CRE Concentration Guidelines CRE Loans ( Construction & Perm) as a Percentage of Risk Based Capital
Slide 36: Pro Forma Interest Coverage and Capital Ratios
Pro Forma Interest Coverage and Capital Ratios
Slide 37: Pro forma information cautionary note
Results after the merger with Jefferson County Bancshares, Inc. may be materially different from those shown in the unaudited pro forma combined financial information included in this presentation, which is determined by a combination of historical results of the Company and JCB and assumptions by C
Slide 38: Pro Forma Capital
Pro forma capital ratios assume the Jefferson County acquisition closed on September 30, 2016 (actual closing expected to occur in Q1 2017), and assumes a $35.0 million gross subordinated note offering, with an underwriting discount of 1.50%, and offering costs of $375,000 ; Capital ratios assume a
Slide 39: Pro Forma Interest Coverage
Financial data pro forma for EFSC 9/30 financials and subsequent note offering “Interest Coverage” calculation assumes a $35 million gross subordinated note offering with 5.00% initial coupon Financial data Pro Forma for the recently announced acquisition of Jefferson County Bancshares, Inc. and sub
Slide 40: Summary
A Vil. SUMMARY
Slide 41: Highly Focused, Proven Business Model
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 Enterprise Financial Services Corp
Slide 42: Balance Sheet Positioned for Growth
64% Floating Rate Loans, with Three-Year Average Duration High-quality, Cash-flowing Securities Portfolio with Three Year Average Duration 24% DDA to Total Deposits 9.0% Tangible Common Equity/Tangible Assets Source: Company documents Balance Sheet Positioned for Growth
Slide 43: Appendix
Appendix
Slide 44: Market Demographics
Source: SNL Financial No. of Branches Deposits in Market ($000) Market Rank Deposit Market Share (%) Population Change 2016-2021 (%) HH Income 2016 ($) HH Income Change 2016-2021 (%) Market Demographics
Slide 45: Ownership Profile
Source: SNL Financial Directors and Executive Officers as a group control 5% of the outstanding shares in aggregate (19 Different Stakeholders) Outside Shareholders own approximately 25% of the company Institutional investors own 70% of the outstanding shares No shareholder owns more than 10% of the
Slide 46: 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 income margin and other Core performance me
Slide 47: Reconciliation of Non-GAAP Financial Measures
Source: Company documents RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Slide 48: Reconciliation of Non-GAAP Financial Measures (in thousands)
Source: Company documents RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands) 9/30/2016 (1) 9/30/2016 6/30/2016 3/31/2016 12/31/2015 12/31/2014 12/31/2013 12/31/2012 12/31/2011 REGULATORY CAPITAL TO RISK-WEIGHTED ASSETS Total shareholders' equity 488,232 $ 381,098 $ 371,629 $ 359,384 $ 350,
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