Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q1 2017 Earnings Presentation
30 slides from Enterprise Financial Services's earnings presentation, May 5, 2017
Slide 1: Enterprise Financial Services Corp First Quarter 2017 Investor Presentation
ENTERPRISE FINANCIAL SERVICES CORP FIRST QUARTER 2017 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statement
2 FORWARD-LOOKING STATEMENT 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. Forward-looking statements typically are identified with us
Slide 3: Company Snapshot - EFSC
3 COMPANY SNAPSHOT - EFSC FDIC Data TOTAL ASSETS $5.1 Billion MARKET CAP Billion Concentrated on Private Businesses and Owner Families Relationship Driven Attract Top Talent in Markets Product Breadth • Banking • Trust & Wealth Management • Treasury Management Proven Ability to Grow Commercial & Ind
Slide 4: Executive Leadership Team
4 EXECUTIVE LEADERSHIP TEAM James B. Lally, 49, President & Chief Executive Officer, EFSC 14 Keene S. Turner, 37, Executive Vice President & Chief Financial Officer, EFSC 3 Scott R. Goodman, 53, President, Enterprise Bank & Trust 14 Douglas N. Bauche, 47, Chief Credit Officer, Enterprise Bank & Trus
Slide 5: Differentiated Business Model: Built for Quality Earnings Growth
5 DIFFERENTIATED BUSINESS MODEL: BUILT FOR QUALITY EARNINGS GROWTH Enterprise Bank Financial & Estate Planning Tax Credit Brokerage Business & Succession Planning Trust Administration Enterprise Trust Investment Management Enterprise University Treasury Management Personal & Private Banking Commerci
Slide 6: Three Urban Markets
6 Phoenix Kansas City St. Louis Loans $236MM $614MM $2.2B Deposits $113MM $733MM 3.2B Branches 2 8 19 Deposit Market Share 1 38th/0.12% 15th/1.27% 4th/4.27% Primary Competitors 1 JP Morgan Chase Wells Fargo Bank of America UMB Commerce Bank of America US Bancorp Bank of America Commerce THREE URBAN
Slide 7: Focused Loan Growth Strategies
7 Tax Credit Programs. $142 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. $430 Million in M&A Related Loans Outstanding, Partnering
Slide 8: History of Strong C&I Growth
8 HISTORY OF STRONG C&I GROWTH $763 $963 $1,042 $1,264 $1,484 $1,633 2011 2012 2013 2014 2015 2016 In millions
Slide 9: Marketing & Sales Funnel
9 MARKETING & SALES FUNNEL Awareness Interest Consideration Intent Evaluation Purchase NOW… …FUTURE Marketing Sales Marketing Sales
Slide 10: Opportunities Exist: Client Satisfaction Drivers
10 OPPORTUNITIES EXIST CLIENT SATISFACTION DRIVERS Client satisfaction scores are industry leading. We’re focused on leveraging ways to improve industry understanding and being a consultative partner to clients. 1. Ease of doing business 2. Relationship Satisfaction 3. Understanding of your industry
Slide 11: Acquisition of Jefferson County Bancshares, Inc. (JCB)
11 ACQUISITION OF JEFFERSON COUNTY BANCSHARES, INC. (JCB) CLOSED FEBRUARY 10, 2017 Consistent with M&A Expansion Strategy Enhanced EFSC‟s footprint in the St. Louis MSA, while building total balance sheet size to $5 billion in assets Top four deposit market share in the St. Louis MSA Expanded bran
Slide 12: Drivers of Loan Growth
12 DRIVERS OF LOAN GROWTH Enterprise Value Lending 7% Life Insurance Premium Finance 4% General Commercial & Industrial 4% Commercial/ Construction RE 12% Residential RE 4% Consumer & Other 3% JCB Acquisition 66% Enterprise Value Lending Life Insurance Premium Finance General Commercial & Industrial
Slide 13: Portfolio Loan Trends
13 PORTFOLIO LOAN TRENDS $2,833 $2,884 $3,038 $3,118 $3,853 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 In Millions *Note: 12% excluding acquisition of JCB JCB $678
Slide 14: Attractive Deposit Mix
14 26% 38% 15% 21% ATTRACTIVE DEPOSIT MIX CD Interest Bearing Transaction Accts DDA MMA & Savings MAR 31, 2017 $4.0B Significant DDA Composition Stable Cost of Deposits Improving Core Funding 71% of Core Deposits are Commercial Customers Cost of Deposits 0.38% 38% Deposit Growth* Q1 2016 – Q1 2017 I
Slide 15: Financial Scorecard
15 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 SCORECARD 26% 27%
Slide 16: Earnings Per Share Trend
16 EARNINGS PER SHARE TREND $0.59 $0.03 < $0.02> < $0.05> < $0.03> $0.01 $0.06 $0.59 Q4 '16 Net Interest Income Portfolio Loan Loss Provision Non Interest Income Non Interest Expense JCB Acquisition Income Tax Item Q1 '17 Changes in Core EPS* Note: * A Non GAAP Measure, Refer to Appendix for Reconci
Slide 17: Core Net Interest Income Trend
17 CORE NET INTEREST INCOME TREND* In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $29.6 $30.2 $31.5 $32.2 $37.6 3.54% 3.52% 3.54% 3.44% 3.63% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 $12.0 $13.0 $14.0 $15.0 $16.0 $17.0 $1
Slide 18: Credit Trends for Portfolio Loans
18 CREDIT TRENDS FOR PORTFOLIO LOANS -1 bps -6 bps 14 bps 12 bps -1 bps Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Net Charge-offs (1) Q1 2017 EFSC PEER(2) NPA’S/ASSETS = 0.33% 0.66% NPL’S/LOANS = 0.36% 0.77% ALLL/NPL’S = 283% 112% ALLL/LOANS (4) = 1.02% 1.04% (1) Portfolio loans only, excludes non-core acq
Slide 19: Operating Expenses Trend
19 OPERATING EXPENSES TREND* In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $6.1 $6.5 $6.4 $7.0 $7.0 $1.7 $1.6 $1.7 $1.7 $1.9 $12.6 $12.3 $12.1 $12.4 $16.0 57.4% 56.3% 52.8% 52.7% 56.0% -2 3 8 13 18 23 28 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Other Occupancy Employee compe
Slide 20: Positive Momentum in Core Earnings Per Share
20 POSITIVE MOMENTUM IN CORE* EARNINGS PER SHARE $0.28 $0.31 $0.37 $0.33 $0.35 $0.38 $0.44 $0.49 $0.47 $0.49 $0.49 $0.59 $0.59 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 111% Core EPS Gro
Slide 21: Three-Year Financial Highlights
21 THREE-YEAR FINANCIAL HIGHLIGHTS Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation Total Core Non-Interest Income $26,787 $25,575 Core Net Income $41,237 $33,791 Core Earnings Per Share (diluted) $2.03 $1.66 Core Return on Average Equity 11.10% 10.08% Core Return on Average Assets 1
Slide 22: Capital Levels Prudently Managed to Facilitate Growth and Returns
22 First Quarter 2017 Dividend of $0.11 Per Common Share 2,000,000 Share Common Stock Repurchase Plan ~ 10% of EFSC Outstanding Shares No Specified End Date Disciplined, Patient Approach Based on Market Conditions Sufficient Capital to Support Growth Plans CAPITAL LEVELS PRUDENTLY MANAGED TO F
Slide 23: Highly Focused, Proven Business Model
23 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 118% 63% EFSC Index 3-Year Total Shareholder Return Note: Index = SNL U.S. Bank $1B
Slide 24: Appendix 1Q 2017 EFSC
24 APPENDIX 1Q 2017 EFSC INVESTOR PRESENTATION
Slide 25: Balance Sheet Positioned for Growth
25 BALANCE SHEET POSITIONED FOR GROWTH Modest Asset Sensitivity (200 BPS Rate Shock Increases NII By 4.3%) 56% Floating Rate Loans, with Three-Year Average Duration High-quality, Cash-flowing Securities Portfolio with Four-Year Average Duration 26% Non-Interest Bearing DDA to Total Deposits 8.3% Tan
Slide 26: Successful FDIC-Assisted Acquisition Strategy
26 SIGNIFICANT EARNINGS CONTRIBUTION (PRE-TAX) SUCCESSFUL FDIC-ASSISTED ACQUISITION STRATEGY Terminated all loss share agreements with the FDIC in December 2015 Early termination charge from Q4 2015 earned back 100% in Q1 2016 2015 2016 Q1 „17 $7,529 $15,018 $1,102 Dollars in Thousands Accretable yi
Slide 27: Earnings Per Share: Reported vs. Core EPS
27 EARNINGS PER SHARE $0.56 <$0.03> $0.06 $0.59 EPS Non-Core Acquired Assets Merger Related Expenses Core EPS * A Non GAAP Measure, Refer to Appendix for Reconciliation Reported vs. Core EPS* Q1 2017
Slide 28: Use of Non-GAAP Financial Measures
28 USE OF NON-GAAP FINANCIAL MEASURES The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as Core net inter
Slide 29: Reconciliation of Non-GAAP Financial Measures
29 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, (in thousands, except per share data) 2017 2016 2016 2016 2016 CORE PERFORMANCE MEASURES Net interest income 38,642$ 35,454$ 33,830$ 33,783$ 32,428$ Less: Incremental accretion income 1,075 3,279 2,296 3,571 2,8
Slide 30: Q&A 1Q 2017 EFSC
30 Q&A 1Q 2017 EFSC INVESTOR PRESENTATION
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