Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q4 2015 Earnings Presentation
30 slides from Enterprise Financial Services's earnings presentation, Mar 3, 2016
Slide 1: Enterprise Financial Services Corp Fourth Quarter 2015 Investor Presentation
ENTERPRISE FINANCIAL SERVICES CORP FOURTH QUARTER 2015 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
1 Some of the information in this report contains “forward-looking statements” within the meaning of and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified with use of terms such as “ma
Slide 3: Company Snapshot
2 COMPANY SNAPSHOT FDIC Data ENTERPRISE BANK $3.6 Billion IN TOTAL ASSETS ENTERPRISE TRUST $1.5 Billion IN ASSETS UNDER ADMINISTRATION CONCENTRATED ON PRIVATE BUSINESSES AND OWNER FAMILIES RELATIONSHIP DRIVEN ATTRACT TOP TALENT IN MARKETS PRODUCT BREADTH • BANKING • TRUST & WEALTH MANAGEMENT • TREAS
Slide 4: Differentiated Business Model: Built for Quality Earnings Growth
3 DIFFERENTIATED BUSINESS MODEL: BUILT FOR QUALITY EARNINGS GROWTH FOCUSED AND WELL-DEFINED STRATEGY AIMED AT BUSINESS OWNERS, EXECUTIVES AND PROFESSIONALS TARGETED ARRAY OF BANKING AND WEALTH MANAGEMENT SERVICES TO MEET OUR CLIENTS’ NEEDS EXPERIENCED BANKERS AND ADVISORS Enterprise Bank Financial &
Slide 5: Enterprise University: A Key Brand Differentiator
4 EU is a Continuing Series of More than 30 High-Impact Workshops for Business Owners DESIGNED TO HELP MANAGEMENT TEAMS GROW THEIR BUSINESSES EU IS OFFERED SEMI-ANNUALLY TO ENTERPRISE CLIENTS AND PROSPECTS ALIKE ENTERPRISE UNIVERSITY: A KEY BRAND DIFFERENTIATOR EU is Unique and Highly Valued; A Clea
Slide 6: St. Louis: Strong Track Record of Success
5 6th RANKED IN DEPOSIT SHARE1, LARGEST PUBLICLY HELD BANK BASED IN ST. LOUIS2 STRONG TRACK RECORD OF SUCCESS IN ST. LOUIS 1 6/30/15 FDIC data 2 Excludes Bank Unit of Stifel Nicolaus 3 Excludes specialized lending products $1.5 BILLION WEALTH MANAGEMENT BUSINESS $1.43 BILLION IN LOANS $1.5 BILLION I
Slide 7: Kansas City: Additional Growth Opportunities
6 ENTERED MARKET IN 2000 $535 Million IN LOANS $580 Million IN DEPOSITS ADDITIONAL GROWTH OPPORTUNITIES STRONG FOOTPRINT IN DESIRABLE Johnson County SIMILARITY TO ST. LOUIS’ Stable and Diverse Economic Profile ENABLES SIMILAR MARKET STRATEGIES Kansas City
Slide 8: Phoenix: Additional Growth Opportunities
7 ADDITIONAL GROWTH OPPORTUNITIES Source: 6/30/15 FDIC data, SNL Financial ESTABLISHED PRESENCE IN 2009 $190 Million IN LOANS $98 Million IN DEPOSITS Phoenix-Mesa-Scottsdale, AZ REBOUNDING ECONOMY WITH Strong Growth POTENTIAL. Twelfth Largest Metro AREA IN THE NATION HIGHLY CONCENTRATED BANKING MARK
Slide 9: Cross-Selling and Business Banking Initiatives Complement Primary Commercial Strategy
8 CROSS-SELLING AND BUSINESS BANKING INITIATIVES COMPLEMENT PRIMARY COMMERCIAL STRATEGY HIGH Client Satisfaction PAVES WAY FOR ADD-ON PRODUCT SALES TREASURY MANAGEMENT Product Implementations Rose 30% FROM 2014; CROSS-SELLS ACCOUNTED FOR 40% OF OVERALL IMPLEMENTATIONS IN 2015 Business Banking Initia
Slide 10: History of Strong C&I Growth
9 HISTORY OF STRONG C&I GROWTH $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2010 2011 2012 2013 2014 2015 $594 In millions $763 $963 $1,042 $1,264 $1,484
Slide 11: Focused Loan Growth Strategies
10 Tax Credit Programs. $137 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. Enterprise Value Lending. $350 MILLION IN M&A RELATED LOANS OUTSTANDING, PARTNERING
Slide 12: Drivers of Loan Growth
11 DRIVERS OF LOAN GROWTH Enterprise Value Lending 43.0% Life Insurance Premium Finance 14.0% General Commercial & Industrial 14.0% Commercial/ Construction RE 15.0% Residential RE 3.5% Consumer & Other 10.5% ENTERPRISE VALUE LENDING LIFE INSURANCE PREMIUM FINANCE GENERAL COMMERCIAL & INDUSTRIAL COM
Slide 13: Portfolio Loan Trends
12 PORTFOLIO LOAN TRENDS $2,434 $2,436 $2,543 $2,602 $2,751 12/31/2014 3/31/2015 6/30/2015 9/30/2015 12/31/2015 In Millions
Slide 14: Attractive Deposit Mix
13 26% 41% 13% 20% ATTRACTIVE DEPOSIT MIX CD Interest Bearing Transaction Accts DDA MMA & Savings DEC 31, 2015 $2,785MM Significant DDA COMPOSITION Declining COST OF DEPOSITS IMPROVING Core Funding 80% OF Core Deposits ARE COMMERCIAL CUSTOMERS $2,492 $2,675 $2,692 $2,814 $2,785 25.8% 25.5% 24.5% 24.
Slide 15: Financial Priorities
14 CONTINUED GROWTH IN CORE EPS DRIVE NET INTEREST INCOME GROWTH IN DOLLARS WITH FAVORABLE LOAN GROWTH TRENDS DEFEND NET INTEREST MARGIN MAINTAIN HIGH QUALITY CREDIT PROFILE ACHIEVE FURTHER IMPROVEMENT IN OPERATING LEVERAGE ENHANCE DEPOSIT LEVELS TO SUPPORT GROWTH FINANCIAL PRIORITIES 48% 12%
Slide 16: Positive Momentum in Core Earnings Per Share
15 POSITIVE MOMENTUM IN CORE* EARNINGS PER SHARE $0.33 $0.35 $0.38 $0.44 $0.49 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 48% CORE EPS GROWTH FROM Q4 2014 TO Q4 2015
Slide 17: Reported vs. Core EPS 2015 YTD
16 EARNINGS PER SHARE $22,387 $1.89 <$0.23> $1.66 EPS Non-Core Acquired Assets Core EPS In Millions * A Non GAAP Measure, Refer to Appendix for Reconciliation REPORTED VS. CORE EPS* 2015 YTD
Slide 18: Full Year Earnings Per Share Trend
17 FULL YEAR EARNINGS PER SHARE TREND $1.29 $0.29 < $0.01> $0.03 $0.06 $1.66 2014 YTD Net Interest Income Portfolio Loan Loss Provision Non Interest Income Non Interest Expense 2015 YTD In Millions CHANGES IN CORE EPS* Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation
Slide 19: Net Interest Income Driving Core Revenue Growth
18 NET INTEREST INCOME DRIVING CORE REVENUE GROWTH* In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $25.7 $25.6 $26.3 $27.1 $28.7 3.45% 3.46% 3.46% 3.41% 3.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $18.0 $19.0 $20.0 $21.0 $22.0 $23.0 $24.0 $25.0 $26.0 $27.0 $28
Slide 20: Credit Trends for Portfolio Loans
19 CREDIT TRENDS FOR PORTFOLIO LOANS 10 bps 25 bps 11 bps 2 bps -10 bps Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Net Charge-offs (1) 2014 NCO = 7 bps (1) Portfolio loans only, excludes PCI (Purchased Credit Impaired) loans $2.0 $1.6 $2.2 $0.6 $0.5 $- $0.6 $1.2 $1.8 $2.4 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15
Slide 21: Managed Operating Expenses Improving Efficiency
20 MANAGED OPERATING EXPENSES* IMPROVING EFFICIENCY In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $20.2 $19.1 $19.0 $19.3 $20.0 62.8% 60.7% 57.6% 58.6% 56.1% -20 -5 10 25 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Operating Expenses* Core Efficiency Ratio*
Slide 22: Dividend Increase and Share Repurchase Plan
21 FIRST QUARTER 2016 DIVIDEND INCREASED 13% TO $0.09 PER COMMON SHARE 4TH CONSECUTIVE INCREASE 2,000,000 SHARE COMMON STOCK REPURCHASE PLAN INSTITUTED ~ 10% OF EFSC OUTSTANDING SHARES NO SPECIFIED END DATE DISCIPLINED, PATIENT APPROACH BASED ON MARKET CONDITIONS SUFFICIENT CAPITAL TO SUPPOR
Slide 23: Highly Focused, Proven Business Model
22 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 190% 91% EFSC Index 5-Year Total S
Slide 24: Appendix 4Q 2015
23 APPENDIX 4Q 2015 INVESTOR PRESENTATION
Slide 25: Reported vs. Core EPS Q4 2015
24 EARNINGS PER SHARE $22,387 $0.52 < $0.03> $0.49 EPS Non-Core Acquired Assets Core EPS In Millions * A Non GAAP Measure, Refer to Appendix for Reconciliation REPORTED VS. CORE EPS* Q4 2015
Slide 26: Earnings Per Share Trend – Fourth Quarter
25 EARNINGS PER SHARE TREND – FOURTH QUARTER $0.44 $0.05 $0.04 < $0.02> < $0.02> $0.49 Q3 '15 Net Interest Income Non Interest Income Non Interest Expense Income Tax Rate Q4 '15 In Millions CHANGES IN CORE EPS* Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation
Slide 27: Balance Sheet Positioned for Growth
26 BALANCE SHEET POSITIONED FOR GROWTH Modest Asset Sensitivity (200 BPS RATE SHOCK INCREASES NII BY 4.1%) 62% FLOATING RATE LOANS, WITH THREE-YEAR AVERAGE DURATION High-quality, Cash-flowing SECURITIES PORTFOLIO WITH FOUR YEAR AVERAGE DURATION 26% DDA TO TOTAL DEPOSITS 8.9% Tangible Common Equity/T
Slide 28: Significant Earnings Contribution (Pre-Tax)
27 SIGNIFICANT EARNINGS CONTRIBUTION (PRE-TAX) Significant CONTRIBUTION TO FUTURE EARNINGS WITH ESTIMATED FUTURE ACCRETABLE YIELD OF $25 Million SUCCESSFUL FDIC-ASSISTED ACQUISITION STRATEGY SUCCESSFULLY ENTERED INTO AGREEMENT TO TERMINATE ALL EXISTING LOSS SHARE AGREEMENTS WITH THE FDIC IN DECEMBER
Slide 29: Use of Non-GAAP Financial Measures
28 USE OF NON-GAAP FINANCIAL MEASURES The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as Core net incom
Slide 30: Reconciliation of Non-GAAP Financial Measures
29 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (in thousands) 2015 2015 2015 2015 2014 2015 2014 CORE PERFORMANCE MEASURES Net interest income 32,079$ 30,006$ 29,280$ 29,045$ 30,816$ 120,410$ 117,368$ Less: Incremental accretion income 3,412
Enterprise Financial Services — Q4 2015 Earnings Presentation on 6ix