Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Debt Investor Presentation (May 2020)
38 slides from Enterprise Financial Services's debt investor presentation, May 15, 2020
Slide 1: Enterprise Financial Services Corp May 2020
Enterprise Financial Services Corp May 2020
Slide 2: Forward Looking Statements
Forward Looking Statements In addition to historical information, some of the information in this presentation 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
Slide 3: Terms of the Proposed Offering
Terms of the Proposed OfferingIssuer Enterprise Financial Services Corp Security Subordinated Notesdue 2030 Rating BBB by Kroll Offering Type SEC Registered Amount $50 Million Rate Structure Fixed-to-Floating Rate Maturity 10Years Call Date 5 Years Covenants Consistent with regulatory limitationsof
Slide 4: About Enterprise Financial Services Corp
About Enterprise Financial Services Corp
Slide 5: Company Overview and Financial Highlights
5 Enterprise Financial Services Corp Company Overview Financial Highlights Note: Financial metrics as of or for the quarter ended March 31, 2020 1)See Appendix for reconciliation of non-GAAPfinancial measures •NASDAQ: EFSC •Headquartered in Clayton, MO •Within the St. Louis, MO MSA •Enterprise Bank
Slide 6: Four Urban Markets
6 Four Urban MarketsSt. Louis Kansas City New Mexico Phoenix Loans¹ $2.6 billion $832 million $636 million $383 million Total Deposits ($000)¹ $3.7billion $826 million $1.0 billion $233 million Branches ² 21 7 6 2 Deposit Market Share³ 4th/ 4.59% 16th/ 1.29% 7th/ 3.23% 30th/ 0.17% Primary Competitor
Slide 7: The Enterprise Story
The Enterprise Story 7 Our Mission Guiding people to a lifetime of financial success Our Vision To be a company where our associates are proud to work, that delivers ease of navigation to our customers and value to our investors, while helping our communities flourish7
Slide 8: Executive Leadership Team
Executive Leadership TeamJames B. LallyKeene S. Turner, CPAPresident & Chief Executive Officer, EFSCEVP & Chief Financial Officer, EFSCYears at Enterprise: 16 │ Years in Banking: 28Years at Enterprise: 6 │ Years in Banking: 20Scott R. GoodmanDoug BauchePresident, Enterprise Bank & TrustChief Credit
Slide 9: Business Line Overview
Business Line Overview Business and Personal Banking Services •Lending services include C&I, CRE, real estate construction and development, residential real estate, and consumer loans •Wide variety of deposit products •Complete suite of treasury management and international trade services •Tax credi
Slide 10: Financial Summary
Financial Summary ee
Slide 11: Balance Sheet Metrics
$6.9 $7.2 $7.3 $7.3 $7.5 $6.6 $6.7 $6.8 $6.9 $7.0 $7.1 $7.2 $7.3 $7.4 $7.5 $7.6 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 Total Assets ($B) Balance Sheet Metrics Total Assets Total Deposits Gross Loans$5.0 $5.1 $5.2 $5.3 $5.5 $4.7 $4.8 $4.9 $5.0 $5.1 $5.2 $5.3 $5.4 $5.5 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 G
Slide 12: Earnings and Profitability Metrics
Return on Average Assets Return on Average Equity1.10% 1.05% 1.60% 1.58% 0.70% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 ROAA (%) 9.89% 9.09% 13.66% 13.43% 5.98% 12.93% 12.92% 19.08% 18.54% 8.22% 0.00% 4.00% 8.00% 12.00% 16.00% 20.00% 24.00% 2019Q
Slide 13: Noninterest Income and Noninterest Expense
2.0 2.7 2.7 2.6 2.5 2.9 3.4 3.2 3.3 3.1 1.8 2.4 2.5 2.4 2.2 0.2 0.6 1.2 3.4 2.0 2.3 2.9 4.0 2.7 3.6 $9.2 $12.0 $13.6 $14.4 $13.4 $0.0 $3.0 $6.0 $9.0 $12.0 $15.0 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 Wealth Management Deposit Services Charges Card Services Tax Credit Income Other Noninterest Income and
Slide 14: Historical Capital Ratios
Historical Capital Ratios 1)See Appendix for reconciliation of non-GAAPfinancial measures TCE / TA ¹ Tier 1 Leverage Ratio Tier 1 Capital Ratio Total Risk Based Capital Ratio8.35% 8.43% 8.54% 8.89% 8.42% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 TCE / TA (%) 11.43% 9.81
Slide 15: Loan Diversification
Loan Diversification Note: Financial data as of March 31, 2020 1)Dollars in millions Loan Composition by Product Type Total Loans by Business Unit ¹ Loan Composition by Industry Type CRE34.9% Construction8.2% Residential6.3% Consumer2.1% EVL8.1% LIPF9.1% Tax Credit6.5% Agriculture3.1% C&I21.7% Real
Slide 16: Loan Summary
Loan Summary Note: Dollars in millions 1)Specialized categories may include a mix of C&I, CRE, Construction and land development, or Consumer & Other loans 2020Q1 2019Q4 2019Q1 C&I –General $1,186 $1,187 $1,129 CRE, Investor Owned –General 1,319 1,290 1,183 CRE, Owner Occupied –General 585 582 576 E
Slide 17: Loan Portfolio: C&I and Commercial Real Estate by Industry
Loan Portfolio: C&I and Commercial Real Estate by Industry Note: Financial data as of March 31, 2020 Investor Owned CRE Loans by Industry Owner Occupied CRE Loans by Industry C&I Loans by Industry Finance and Insurance 34.7% Manufacturing 14.1% Wholesale Trade9.6% Professional Services7.0% Real Esta
Slide 18: Loan Portfolio: Enterprise Value Lending and Hospitality
Loan Portfolio: Enterprise Value Lending and Hospitality Note: Financial data as of March 31, 2020 Hospitality Enterprise Value Lending (EVL) Manufacturing 34.4% Professional Technical 15.1% Wholesale Trade14.5% Waste Management10.1% Construction4.8% Arts & Entertainment4.0% Other17.1% Total $441 Mi
Slide 19: Loan Portfolio: Energy-Related and Agricultural
Loan Portfolio: Energy-Related and Agricultural Note: Financial data as of March 31, 2020 Agricultural Energy-Related Hog & Pig Farming 28.3% Corn Farming 21.5% Beef Cattle18.3% Dairy Cattle5.9% Soybean Farming5.6% Misc Crop10.0% Other10.4% Total $168 Million •80% of the portfolio is attributable to
Slide 20: Loan Portfolio: Auto Dealer / Aircraft Lending and Marketable Securities
Aircraft Finance 53.5% CRE-Owner Occupied 43.8% C&I2.7% Retail Trade 75.5% Real Estate, Rental, Leasing 6.3% Transportation & Warehousing4.8% Manufacturing4.4% Other9.0% Loan Portfolio: Auto Dealer / Aircraft Lending and Secured by Marketable Securities Note: Financial data as of March 31, 2020 Secu
Slide 21: Summary Asset Quality
Summary Asset Quality Non-Performing Assets Non-Performing Loans Net Charge-Offs Loan Loss Reserves$16.4 $30.4 $24.1 $32.8 $42.3 0.24% 0.42% 0.33% 0.45% 0.56% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 NPAs ($M) NP
Slide 22: Deposit Mix
Deposit Mix Note: Financial data as of March 31, 2020; dollars in millions 1)Excludes reciprocal deposits Deposit Composition Cost of Total Deposits Brokered Deposits ¹$519.1 $574.4 $501.4 $519.6 $593.3 9.37% 10.33% 8.91% 9.00% 9.91% 8.00% 8.50% 9.00% 9.50% 10.00% 10.50% $0.0 $100.0 $200.0 $300.0 $4
Slide 23: Securities Portfolio
Securities Portfolio Note: Financial data as of March 31, 2020 •The following table presents the amortized cost, gross unrealized gains and losses and fair value of securities available for sale and held to maturity: •At March 31, 2020, there were no holdings of securities of any one issuer in an am
Slide 24: Liquidity Detail
Liquidity Detail Note: Financial data as of March 31, 2020 1)The Bank has unsecured federal funds lines with six correspondent banks Additional Sources of Bank Funding Dividend Capacity Holding Company Detail •Under Federal Reserve policies, financial holding companies may pay cash dividends on comm
Slide 25: Interest Rate Risk
•Interest rate risk management practices are aimed at optimizing net interest income, while guarding against deterioration that could be caused by certain interest rate scenarios •The Company determines the sensitivity of its short-term future earnings to a hypothetical plus or minus 100 to 300 basi
Slide 26: Illustrative Impact of the Proposed Debt Offering
Illustrative Impact of the Proposed Debt Offering 1)Assumes $50.0 million in gross subordinated notes, a 5.50% coupon, variable underwriting fees of 1.50%, fixed offering costs of $300,000 and that proceeds from the offering are invested in cash (0% risk weight); assumes that 0% of net offering proc
Slide 27: Capital Ratios Over Time
Capital Ratios Over Time 1)Assumes $50.0 million in gross subordinated notes, a 5.50% coupon, variable underwriting fees of 1.50%, fixed offering costs of $300,000 and that proceeds from the offering are invested in cash (0% risk weight); assumes that 0% of net offering proceeds are down-streamed to
Slide 28: Summary
SummaryHighly focused, proven business model Incredibletrack record of commercial loan growth Wide productbreadth and diversifiedincome stream Differentiated competitive lending expertise Thoughtful expansion into Kansas City, Phoenix and New Mexico Strong profitabilitywith a balance sheet positione
Slide 29: COVID-19 Pandemic Response Overview
COVID-19 Pandemic Response Overview
Slide 30: Timeline of Actions: Key Milestones
Timeline of Actions: Key Milestones JAN. 23 Discussions begin about virus FEB. 27 Developed COVID-19 Communication and Action Plan Taskforce (CAP Taskforce) MAR. 10 Restricted travel and began canceling in-person meetings and events MAR. 23 Various internal controls adjusted for further contingencie
Slide 31: Associate Protection & Assistance
Associate Protection & Assistance Regular pay for associates unable to work from home due to COVID-19 relatedillness, caring for ill family member or childcare school closures Health benefits expanded to cover COVID-19 related issues Premium Pay for retail associates working in roles that require di
Slide 32: Community and Client Programs
Community and Client ProgramsAs a preferred provider of SBA Section 7(a) loans, we provided a live client virtual event to walk through SBA Loan Relief Programs. (2,500 attendees, 500+ webinar downloads) Donated $50,000 in the St. Louis Small Business Relief Fund set up by St. Louis County, City and
Slide 33: SBA Paycheck Protection Program (PPP)
SBA Paycheck Protection Program (PPP) Our Focus We are committed to getting loans for applicants approved and funded as quickly and efficiently as possible. Dedicated team of our most experienced associates focused since April 3 on the PPP loan process Centralized process created with assembly line
Slide 34: Appendix
Appendix
Slide 35: 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 36: CECL Adjustment
36 CECL Adjustment Balance: March 31, 2020 Net Recoveries Provision for Credit Losses PCDLoans Charged-off ¹ CECL Adoption Balance: December 31, 2019 Note: Dollars in thousands 1)Under the Company’s credit policy, nonaccrual loans less than $100,000 are immediately charged-off
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAPFinancial MeasuresQuarter ended ($ in thousands) Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 CORE PERFORMANCE MEASURES Net interest income $ 63,368 $ 61,613 $ 63,046 $ 61,715 $ 52,343 Less: Incremental accretion income 1,273 576 2,140 910 1,157 Core net
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAPFinancial MeasuresQuarter ended ($ in thousands) Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 846,436 $ 867,185 $ 846,095 $ 825,501 $ 797,835 Less:
Enterprise Financial Services — Debt Investor Presentation (May 2020) on 6ix