Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2019 Earnings Presentation
37 slides from Enterprise Financial Services's earnings presentation, Nov 12, 2019
Slide 1: Third Quarter 2019 Investor Presentation
Exhibit 99.1 Enterprise Financial Services Corp Third Quarter 2019 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information in this report 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 1995, and by Section 27A of the Securities Act of 1933, as amended
Slide 3: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets FOCUSED BUSINESS MODEL: $ 7.3 Billion • Attract Top Talent in Markets • Proven Ability to Grow Market Cap Commercial & Industrial “C&I” Talent Loans $ Billion • Product Breadth 1.1 ◦ Banking Operates in ◦ Trust & Wealth Management ◦ Treasury Management Strength K
Slide 4: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY KEENE S. TURNER SCOTT R. GOODMAN 51, President & Chief Executive 40, Executive Vice President 55, President, Officer, EFSC & Chief Financial Officer, EFSC Enterprise Bank & Trust Enterprise Tenure – 16 years Enterprise Tenure – 6 years Enterprise Tenure – 16
Slide 5: Differentiated Business Model: Built for Quality Earnings Growth
Differentiated Business Model: Built for Quality Earnings Growth FocusedTarget and Well-Defined Audience TargetedTailored Array Solutions of Banking ExperiencedExpertise Bankers and StrategyFocused Aimed and at Well-Defined Business Targetedand Wealth Array Management of Banking Experienced,Advisors
Slide 6: Four Urban Markets
Four Urban Markets Phoenix Kansas City New Mexico St. Louis Arizona Kansas Loans 1 $388MM $785MM $663MM $2.4B Deposits 1 $202MM $784MM $1.0B $3.5B Branches 2 7 6 19 Deposit Market 32nd/0.17% 16th/1.29% 7th/3.23% 4th/4.59% Share 2, 3 JPMorgan Chase UMB Wells Fargo US Bancorp Primary Wells Fargo Comme
Slide 7: Strategic Combination with Trinity Capital Corporation
Strategic Combination with Trinity Capital Corporation (“Trinity”) Closed March 8, 2019, Converted May 28, 2019 Trinity Overview ▪ Headquartered in Los Alamos, New Mexico, Trinity was founded in 1963 by local investors to provide full-service banking to the community that developed around the Los Al
Slide 8: Focused Loan Growth Strategies
Focused Loan Growth Strategies 5.1% Specialized Market Segments Represent 26% of 8.0% Total Loans, Offering Competitive Advantages, Risk Adjusted Pricing and Fee Income Opportunities. 9.0% 1.4% 2.6% Expectations for future growth includes continued focus in these specialized market segments. Total L
Slide 9: History of Strong C&I Growth
History of Strong C&I Growth $2,303 $2,036 In Millions 13% 5-Year CAGR $1,865 $1,624 $1,409 $1,230 Q3 ‘14 Q3 ‘15 Q3 ‘16 Q3 ‘17 Q3 ‘18 Q3 ‘19 9
Slide 10: Buying Process
Buying Process Buyer’s Journey Sales Process
Slide 11: Customer Focus
Customer Focus Source: Greenwich Associates 11
Slide 12: Total Loan Trends
Total Loan Trends In Millions 23% Total Loan Growth* $5,149 $5,228 $5,017 Trinity $682 $4,267 $4,350 Q3' 18 Q4' 18 Q1' 19 Q2' 19 Q3' 19 *Note: 7% Excluding Acquisition of Trinity 12
Slide 13: Drivers of Loan Growth
Drivers of Loan Growth $399 Million $946 Million $237 Million $961 Million 6% 8% 11% 9% 3% 1% 5% 9% 12% 5% 14% 4% 4% 7% 5% 13% 37% 59% 13% 69% 64% 1% 25% 15% 1% Q3 2015 - Q3 2016 Q3 2016 - Q3 2017 Q3 2017 - Q3 2018 Q3 2018 - Q3 2019 Acquisition General C&I Commercial/Construction RE Tax Credits Agri
Slide 14: Attractive Deposit Mix
Attractive Deposit Mix Total Deposits DDA $5.6 Billion 23% • Significant DDA Composition • Stable Cost of Deposits Interest-Bearing Transaction 23% • Improving Core Funding Accounts 39% MMA & In Millions 15% Savings 25.2% 24.0% 21.4% 21.3% 23.0% $5,537 $5,559 $5,624 CD Trinity $4,588 $1,094 $4,210 C
Slide 15: Core Funding Mix
Q3 2019 Brokered deposits: $603 Core Funding Mix Q3 2018 Brokered deposits: $529 In Millions Commercial Business Banking Consumer $1,714 $1,868 $515 $789 $1,453 $2,364 47% 37% 14% 16% 39% 47% 4% 11% 8% 38% 35% 7% 16% 15% 10% 17% 24% 22% 20% 11% 20% 32% 17% 23% 54% 55% 41% 42% 31% 23% 6% Q3 2018 Q3 2
Slide 16: Financial Scorecard
Financial Scorecard Q3 2019 Compared to Q3 2018 11% Continued Growth in EPS 31% 5 bps 1% Drive Net Interest Defend Core Net Achieve Further Income Growth in Interest Margin1 Improvement in Core Dollars with Favorable Operating Leverage1 Loan Growth Trends 34% Enhance Deposit Levels to Support Growth
Slide 17: Earnings Per Share Trend - Q3 2019
Earnings Per Share Trend - Q3 2019 Changes in EPS $0.30 $(0.01) $0.03 $0.05 $0.03 $1.08 $0.68 Q2 ‘19 Incremental Noninterest Noninterest Merger-Related Change in Q3 ‘19 Accretion Income Expense Expenses Shares/ETR 17
Slide 18: Net Interest Income Trend
Net Interest Income Trend In Millions 3.74% 3.77% 3.79% 3.80% 3.69% $61.7 $63.0 $60.8 $60.9 $50.6 $52.3 $48.1 $51.2 $47.6 $48.5 28% Core NII Growth Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Core Net Interest Income* Incremental Accretion On Non-core Acquired Assets FTE Core Net Interest Margin* Note: * A N
Slide 19: Credit Trends for Loans
Credit Trends for Loans Net Charge-offs Total Loan Growth (1) In Millions 26 bps $132 23 bps $83 $79 16 bps 8 bps 8bps $(9) $(15) Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Provision for Loan Losses Q3 2019 EFSC Peer(2) In Millions NPAs/Assets = 0.33% 0.62% $2.3 $2.1 NPLs/
Slide 20: Noninterest Income Trend
Noninterest Income Trend In Millions Fee Income Other Fee Income Detail $13.6 $1.2 $12.0 $0.6 $4.0 $10.7 $4.0 $2.9 $2.3 $9.2 $1.0 $8.4 $0.2 $0.2 $2.9 $2.3 $0.2 $1.4 $1.7 $0.4 $0.2 $2.4 $2.5 $2.3 $0.2 $0.2 $1.8 $1.8 $1.8 $0.3 $0.4 $1.7 $0.1 $0.3 $3.4 $3.2 $1.4 $0.3 $0.2 $3.0 $2.9 $2.9 $0.2 $0.2 $0.4
Slide 21: Operating Expenses Trend
Operating Expenses Trend 54.1% 52.2% 53.3% 51.7% 49.8% $49.1 In Millions $10.3 $39.8 $38.2 $7.3 $0.4 $29.9 $30.7 $1.3 $20.7 $0.7 $20.8 $19.4 $16.3 $16.6 $3.2 $3.2 $2.4 $2.4 $2.6 $14.9 $13.8 $10.5 $10.4 $10.5 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Other Occupancy Employee compensation and benefits Merger
Slide 22: Positive Momentum in Earnings Per Share
Positive Momentum in Earnings Per Share $1.08 $1.02 $0.97 $0.95 Five-Year CAGR 21% $0.90 $0.69 $0.67 $0.67 $0.68 $0.61 $0.59 $0.56 $0.54 $0.52 $0.50 $0.48 $0.46 $0.43 $0.41 $0.32 $0.30 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3
Slide 23: Five-Year Financial Highlights
Five-Year Financial Highlights In Thousands, except per share data 2019 YTD 2018 2017 2016 2015 Net Interest Income $177,104 $191,905 $177,304 $135,495 $120,410 Total Noninterest Income $34,758 $38,347 $34,394 $29,059 $20,675 Net Income $63,649 $89,217 $48,190 $48,837 $38,450 Earnings Per Share (dil
Slide 24: Capital Levels Prudently Managed to Facilitate Growth and Returns
Capital Levels Prudently Managed to Facilitate Growth and Returns In Millions ROATCE* Capital Uses the Past 5 Years** 22.0% $350 $314 20.0% $300 $277 19.59% 19.83% $250 18.0% 18.50% $200 16.0% 14.67% $150 15.52% 14.0% 15.16% 12.77% 14.42% $100 $53 $48 12.0% 11.63% $50 10.0% $0 h A e s 2015 2016 2017
Slide 25: Enterprise Financial Services Corp
Enterprise Financial Services Corp • Highly Focused, Proven Business Model • Strong Track Record of Commercial Loan Growth • Differentiated Competitive Lending Expertise • Enhanced Core Funding Capabilities • Increased Returns and Enhanced Shareholder Value 3 Year 5 Year 158% 84% 35% 30% EFSC Index
Slide 26: 3rd Quarter 2019 EFSC Appendix
3rd Quarter 2019 EFSC Investor Presentation Appendix
Slide 27: Effective Tax Rate Reconciliation
Effective Tax Rate Reconciliation YTD 2019 2018 Federal Tax Rate 21.00% 21.00% State Tax, Net of Federal Benefit 2.19% 2.32% Excess Tax Benefits (0.60)% (1.56)% Tax Credit Investments (0.98)% (4.66)% Merger Expenses 0.60% —% Other Tax Adjustments (2.07)% 0.23% Pre-DTA Effective Tax Rate 20.14% 17.33
Slide 28: Earnings Per Share Trend - 2019 Year to Date
Earnings Per Share Trend - 2019 Year to Date Changes in EPS $0.26 $0.10 $(0.02) $1.23 $(0.77) $(0.66) $(0.50) $2.81 $2.45 2018 Net Interest Incremental Loan Loss Noninterest Noninterest Merger-Related Change in 2019 Income Accretion Provision Income Expense Expense Shares/ETR 28
Slide 29: Balance Sheet Positioned for Growth
Balance Sheet Positioned for Growth Modest Asset High-quality, 60% Floating Cash-flowing 8.54% Sensitivity 23.0% Rate Loans, Securities Tangible (200 BPS Non-Interest with Two-Year Portfolio with Common Rate Shock Bearing DDA to Average Four-Year Equity/Tangible Increases NII Total Deposits By 4.1%)
Slide 30: Successful FDIC-Assisted Acquisition Strategy
Successful FDIC-Assisted Acquisition Strategy Significant Earnings Contribution (Pre-tax) Completed 4 Contributed $85 2017 2018 2019 Q3 FDIC-Assisted Million in Net Transactions Earnings Since $8,106 $8,079 $5,588 Since December Acquisition 2009 Dollars in Thousands Significant Terminated all loss s
Slide 31: Capital Maintenance
Capital Maintenance Tangible Common Equity/Tangible Assets* • 2,000,000 Share Common Stock Repurchase Plan • 646,139 Remaining Shares Under Authorization 8.69% 8.88% 8.76% 8.66% 8.54% 8.14% • No Specified End Date • Disciplined, Patient Approach Based on Market Conditions • Sufficient Capital to Sup
Slide 32: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as net interest marg
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter ended For the Nine Months ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, ($ in thousands, except per share data) 2019 2019 2019 2018 2018 2019 2018 CORE PERFORMANCE MEASURES Net interest income $ 63,046 $ 61,715 $ 52,343 $
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Year ended December 31, December 31, December 31, December 31, ($ in thousands, except per share data) 2018 2017 2016 2015 CORE PERFORMANCE MEASURES Net interest income $ 191,905 $ 177,304 $ 135,495 $ 120,410 Less: Incremental accretion income 3,
Slide 35: Reconciliation of Non-GAAP Financial Measures: Tangible Common Equity Ratio
Reconciliation of Non-GAAP Financial Measures Tangible Common Equity Ratio September December 31, December 31, December 31, December 31, December 31, (in thousands) 30, 2019 2018 2017 2016 2015 2014 Total shareholders' equity $ 846,095 $ 603,804 $ 548,573 $ 387,098 $ 350,829 $ 316,241 Less: Goodwill
Slide 36: Reconciliation of Non-GAAP Financial Measures: Merger-Related and Tax Items
Reconciliation of Non-GAAP Financial Measures Impact of Merger-Related and Tax Items For the Nine Months ended For the Year ended September December December December December (in thousands, except per share data) 30, 2019 31, 2018 31, 2017 31, 2016 31, 2015 IMPACT OF MERGER-RELATED AND TAX ITEMS Ne
Slide 37: 3rd Quarter 2019 EFSC Q&A
3rd Quarter 2019 EFSC Investor Presentation Q&A For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q3 2019 Earnings Presentation on 6ix