Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2020 Earnings Presentation
47 slides from Enterprise Financial Services's earnings presentation, Nov 4, 2020
Slide 1: Enterprise Financial Services Corp Third Quarter 2020 Investor Presentation
Exhibit 99.1 Filed by Enterprise Financial Services Corp Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Seacoast Commerce Banc Holdings SEC Registration Statement No.: 333-248758 Enterprise Financial Services Corp Third Quarter 2020 Investor Presentation
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: Notice to Seacoast Shareholders
Notice to Seacoast Shareholders This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the Company’s proposed acquisition of Seacoast, the Company filed a registration statement on For
Slide 4: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets FOCUSED BUSINESS MODEL: $ 8.4 Billion • Attract Top Talent in Markets • Proven Ability to Grow Market Cap Commercial & Industrial “C&I” Talent Loans $ Million • Product Breadth 715 ◦ Banking Operates in ◦ Trust & Wealth Management ◦ Treasury Management Strength •
Slide 5: Financial Highlights - Q3 '20
Financial Highlights - Q3 '20 • Net Income $18.0 million; Earnings per Share $0.68 • PPNR* $38.0 million Earnings • ROAA 0.86%; PPNR ROAA* 1.81% • ROATCE* 10.94% • Total Loans $6.1 billion Loans & • PPP Loans $819.1 million • Loan/Deposits 92% Deposits • Total Deposits $6.7 billion • Noninterest-bea
Slide 6: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY KEENE S. TURNER SCOTT R. GOODMAN 52, President & Chief Executive 41, EVP, Chief Financial 56, President, Officer, EFSC Officer, EFSC Enterprise Bank & Trust Enterprise Tenure – 17 years Enterprise Tenure – 7 years Enterprise Tenure – 17 years DOUGLAS N. BAUCH
Slide 7: Differentiated Business Model: Built for Quality Earnings Growth
Differentiated Business Model: Built for Quality Earnings Growth FocusedTargeted 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,Adviso
Slide 8: Customer Focus
Customer Focus 71 NPS NET PROMOTER SCORE A measure of client satisfaction INDUSTRY AVERAGE: 54 Source: Greenwich Associates 8
Slide 9: Seacoast Overview
Seacoast Overview Company Overview Branch Map ▪ Headquartered in San Diego, California, and recognized as a leading small business lender throughout much of the United States. ▪ Focused on highly scalable specialty lending and deposit niches. ➢ SBA Lending: Predominantly an SBA 7(a), real-estate sec
Slide 10: Seacoast Transaction Highlights
Seacoast Transaction Highlights ▪ Further expansion into Southwestern markets and entry into California, with capacity to attract national specialty deposits in higher growth markets Further ➢ Ability to add specialty low-cost core deposits with a focus on scalable niche property management deposits
Slide 11: Four Urban Markets
Four Urban Markets Phoenix Kansas City New Mexico St. Louis Arizona Kansas Loans 1, 4 $407MM $817MM $614MM $2.5B Deposits 1 $285MM $964MM $1.1B $4.0B Branches 2 7 6 19 Deposit Market th th th th Share 2, 3 27 /0.22% 15 /1.45% 100 /2.91% 4 /4.49% JPMorgan Chase UMB Wells Fargo US Bancorp Primary Well
Slide 12: Focused Loan Growth Strategies
Focused Loan Growth Strategies Specialized market segments represent 25% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Expectations for future growth includes continued focus in these specialized market segments. Total Loans Tax Credit Programs
Slide 13: History of Strong C&I Growth
History of Strong C&I Growth 5-Year CAGR In Millions 17% PPP $819 13
Slide 14: Total Loan Trends
Total Loan Trends 17% Total Loan Growth In Millions PPP PPP $808 $819 14
Slide 15: Drivers of Loan Growth - Year over Year
Drivers of Loan Growth - Year over Year Q3 '19 - Q3 '20 100% 91% 75% 50% 25% 12% 6% 1% 8% Percentage Growth 6% 0% -6% -10% -7% (25)% $0.4B $0.8B $1.2B $1.6B $2.0B $2.4B Portfolio Balance 15
Slide 16: Loan Portfolio
Loan Portfolio Loans by Product Type Loans by Industry Type Real Estate/ Finance and Construction 7.4% Rental/Leasing Insurance Residential 5.2% 25.8% 16.6% Other 2.3% CRE 30.5% Manufacturing EVL 6.0% 9.0% Other Other Services LIPF 8.5% 30.8% 6.2% Accomodation/Food Tax Credit 6.0% Construction Servi
Slide 17: PPP Loans
PPP Loans Total $819 Million PPP Loans by Industry PPP Loans by Location Professional Technical 14.6% Health Care 8.5% Southeast Manufacturing 3.5% Midwest 16.5% Retail Trade 7.4% 68.6% West 3.8% Admin/Sup port/Waste Northeast Mgmt… 2.2% Construction 17.7% Other Southwest 28.6% 21.9% ➢ 1% coupon, 2.
Slide 18: Loan Deferrals Summary
Loan Deferrals Summary Loan Deferrals by Industry In Millions Interest deferred at September 30, 2020 $4.5 Other Hospitality 29.9% Total Loans Receiving Deferrals $690.8 15.6% Less: Loans Moved Out of Deferral Status 551.5 Retail Trade Total Total Loans in Deferral Status at September 30, 2020 $139.
Slide 19: Loan Deferrals
Loan Deferrals Loan Deferrals by Loan Type Aging of Loan Deferrals In Thousands In Thousands Loans Loans in 2nd Round Total Moved out Deferral Deferrals Current 30-89 Days 90+ Days Total Deferrals of Deferral Status (Included Past Due Past Due Status Q3 ‘20 in Q3 ’20) Commercial Real Commercial Real
Slide 20: Credit Trends for Loans
Credit Trends for Loans Net Charge-offs (annualized) Loan Growth and Line of Credit Utilization In Millions bps bps bps bps bps EFSC Q3 '20 Q2 '20 In Millions NPAs/Assets* = 0.59% 0.61% NPLs/Loans* = 0.75% 0.78% ALLL/NPLs = 311.1% 265.9% ALLL/Loans* = 2.32% 2.07% *A Non-GAAP Measure, Refer to Append
Slide 21: Change in Allowance for Credit Losses for Loans
Change in Allowance for Credit Losses for Loans In Thousands • New loans • Changes in • Qualitative • Change in • Changes in macro- reserves for reserves for composition of economic certain loan individually existing loans factors segments, evaluated loans including: • Changes in • Changes in Hospit
Slide 22: Attractive Deposit Mix
Attractive Deposit Mix Total Deposits Interest-Bearing DDA Transaction $6.7 Billion Accounts 29% • Significant DDA Composition 23% • Stable, Low Cost Deposit Portfolio • Improving Core Funding 9% In Millions 29.3% 28.9% CD 23.0% 23.0% 22.6% 39% MMA & Savings 19% Deposit Growth Q3 2019 – Q3 2020 22
Slide 23: Core Funding Mix
Q3 2020 Brokered deposits: $553 Core Funding Mix Q3 2019 Brokered deposits: $603 Commercial Business Banking Consumer In Millions $1,868 $2,661 $789 $1,002 $2,364 $2,460 37% 44% 16% 16% 47% 40% Cost of Funds1 CD Maturities Business In Millions Balance Weighted Avg Rate Commercial Banking Consumer Br
Slide 24: Earnings Per Share Trend - Q3 2020
Earnings Per Share Trend - Q3 2020 Changes in EPS $0.68 $0.56 Q2 ‘20 Net Interest Incremental Provision for Noninterest Merger-Related Q3 ‘20 Income Accretion Credit Losses Income Expense 24
Slide 25: Net Interest Income Trend
Net Interest Income Trend In Millions 1% NII Growth 25
Slide 26: Noninterest Income Trend
Noninterest Income Trend In Millions Fee Income Other Fee Income Detail 26
Slide 27: Operating Expenses Trend
Operating Expenses Trend In Millions $0.4 Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 27
Slide 28: Adjusted Operating Leverage Trend
Adjusted Operating Leverage Trend Q4 ‘16 Q1 ‘17 Q2 ‘17 Q3 ‘17 Q4 ‘17 Q1 ‘18 Q2 ‘18 Q3 ‘18 Q4 ‘18 Q1 ‘19 Q2 ‘19 Q3 ‘19 Q4 ‘19 Q1 ‘20 Q2 ‘20 Q3 ‘20 YoY Adjusted Operating Revenue Growth YoY Adjusted Noninterest Expense Growth Adjusted Operating Leverage 28
Slide 29: Capital
Capital TBV and Dividends per Share $0.18 $0.18 $0.18 $0.17 $0.16 $24.22 $24.80 $22.82 $23.76 $23.38 Q3 ‘19 Q4 ‘19 Q1 ‘20 Q2 ‘20 Q3 ‘20 TBV/Share Dividends per Share 11.8% 11.2% 11.4% 11.0% 11.4% Holding Company liquidity position 8.0% continues to support our strategic capital planning initiatives,
Slide 30: 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 • Strong Capital Provides Flexibility Tota
Slide 31: 3rd Quarter 2020 EFSC Appendix
3rd Quarter 2020 EFSC Investor Presentation Appendix
Slide 32: Earnings Per Share Trend
Earnings Per Share Trend Note: Q3 2019, Q2 2019, Q1 2019, Q4 2018, Q1 2017, Q2 2017, and Q4 2016 include merger related charges. Q1 2020, Q2 2020, and Q3 2020 include the impact of an increase in provision for credit losses due to the adoption of CECL. Q4 2017 includes the impact of deferred tax ass
Slide 33: Five-Year Financial Highlights
Five-Year Financial Highlights In millions, except per share data 2016 2017 2018 2019 2020 YTD Net Interest Income $135 $177 $192 $239 $193 Noninterest Income $29 $34 $38 $49 $36 Net Income $49 $48 $89 $93 $45 Earnings Per Share (diluted) $2.41 $2.07 $3.83 $3.55 $1.73 Adjusted Earnings Per Share (di
Slide 34: Balance Sheet Positioned for Growth
Balance Sheet Positioned for Growth Modest Asset High-quality, 50% Floating Cash-flowing Sensitivity 28.9% Non- 8.89% Tangible Rate Loans, Securities (200 BPS Interest Bearing Common with Two-Year Portfolio with Rate Shock DDA to Total Equity/Tangible Average Five-Year Increases NII Deposits Assets*
Slide 35: Enterprise Value Lending (EVL)
Enterprise Value Lending (EVL) Total $367 Million EVL Loans by Industry EVL Loans by Location Other 20.6% Southeast 21.2% Health Care Midwest 5.2% 35.4% Manufacturing West Admin/Support 35.1% 9.0% /Waste Mgmt 9.1% Northeast Southwest 22.0% Professional Wholesale Trade 12.4% Technical 14.7% 15.3% ➢ I
Slide 36: Hospitality Loans
Hospitality Loans Total $382 Million Hospitality Loans by Product Type Hospitality Loans by Subsector C&I Construction Food and Drink 17.3% 22.8% Services 21.2% EVL 4.4% Tax Credit Hotels and 3.7% Campgrounds Commercial Amusement 57.9% Real Estate Residential and 51.4% 0.4% Recreation 20.9% ➢ Averag
Slide 37: Retail Commercial Real Estate
Retail Commercial Real Estate Total $355 Million Retail CRE Loans by Location Retail CRE Loans by Subsector Midwest 50.8% Northeast Real 3.3% Estate/Rental/ Leasing 95.7% West Accomodation/ 14.1% Food Service 2.6% Southeast Other Southwest 1.8% 1.7% 30.0% Retail CRE Loans by Size $ In Millions ➢ App
Slide 38: Energy-Related Loans
Energy-Related Loans Total $128 Million Energy-Related Loans by Product Type Energy-Related Loans by Subsector Transportation/ Warehousing Aircraft C&I Retail Trade 11.0% 3.7% 50.6% 22.6% EVL Utilities 10.5% 8.9% Residential/ Consumer Wholesale 0.4% Trade 9.5% Manufacturing 38.5% CRE 27.9% Construct
Slide 39: Agricultural Lending
Agricultural Lending Total $191 Million Agricultural Lending by Product Type Agricultural Lending by Subsector Other 14.2% Hog & Pig Farming Misc Crop 32.8% CRE - Owner 4.9% Occupied C&I 78.9% Dairy Cattle 21.1% 5.2% Soybean 5.2% Corn Farming 22.0% Beef Cattle 15.7% $ In Millions ➢ Experienced farmi
Slide 40: Aircraft and Owner-Occupied Auto Dealer Lending/Loans
Aircraft and Owner-Occupied Auto Dealer Lending/Loans Total $146 Million Aircraft & OO-Auto Dealer Lending by Aircraft & OO-Auto Dealer Lending by Product Type Subsector Manufacturing C&I 6.1% 2.3% Aircraft Finance Transportation/ 47.2% Warehousing 5.6% Educational Retail Trade Services 4.1% CRE-Own
Slide 41: Loans Secured by Marketable Securities
Loans Secured by Marketable Securities Total $597 Million Loans Secured by Marketable Loans secured by Marketable Securities by Securities by Product Type Subsector Management Finance & 4.0% Insurance 87.0% Other C&I 9.0% 8.4% Other Life Insurance 5.2% Premium Finance 86.4% Loans Secured by Marketab
Slide 42: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as adjusted EPS, cor
Slide 43: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter ended For the Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, ($ in thousands, except per share data) 2020 2020 2020 2019 2019 2020 2020 CORE PERFORMANCE MEASURES Net interest income $ 63,354 $ 65,833 $ 63,368 $
Slide 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Tangible Common Equity Ratio September 30, December 31, December 31, December 31, December 31, December 31, (in thousands) 2020 2019 2018 2017 2016 2015 Total shareholders' equity $ 882,267 $ 867,185 $ 603,804 $ 548,573 $ 387,098 $ 350,829 Less: Goodwill
Slide 45: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Impact of Paycheck Protection Program Quarter Ended September 30, (in thousands) 2020 June 30, 2020 Tangible assets - Non-GAAP (see reconciliation above) $ 8,135,812 $ 8,123,961 PPP loans outstanding, net (819,100) (807,814) Adjusted tangible assets - No
Slide 46: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Impact of Merger-Related and Tax Items For the Nine Months ended For the Year ended September 30, December 31, December 31, December 31, December 31, (in thousands, except per share data) 2020 2019 2018 2017 2016 IMPACT OF MERGER-RELATED AND TAX ITEMS Ne
Slide 47: 3rd Quarter 2020 EFSC Q&A
3rd Quarter 2020 EFSC Investor Presentation Q&A For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q3 2020 Earnings Presentation on 6ix