Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q2 2022 Earnings Presentation
40 slides from Enterprise Financial Services's earnings presentation, Aug 15, 2022
Slide 1: Enterprise Financial Services Corp Second Quarter 2022 Investor Presentation
Enterprise Financial Services Corp Second Quarter 2022 Investor Presentation Exhibit 99.1
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: Company Highlights
Enterprise Financial Services Corp Guiding People to a Lifetime of Financial Success Company Highlights 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 flourish. Target Market P
Slide 4: Key Metrics
Key Metrics Credit Profitability Balance Sheet Peer Banks $10-50B Median Top Quartile 2Q22 YTD FY2021 Return on average tangible common equity(1) 17.46 % 18.29 % 15.48 % 16.96 % Net interest margin 3.41 % 3.41 % 2.98 % 3.18 % Efficiency ratio(1) 52.62 % 51.61 % 56.30 % 49.52 % Tangible common equity
Slide 5: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 54, President & Chief Executive Officer, EFSC Enterprise Tenure – 18 years KEENE S. TURNER 42, EVP, Chief Financial Officer, EFSC Enterprise Tenure – 8 years SCOTT R. GOODMAN 58, President, Enterprise Bank & Trust Enterprise Tenure – 19 years DOUGLAS N. BAUCH
Slide 6: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $13.1 Billion Market Cap Operates in St. Louis Kansas City Phoenix $1.5 Billion • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Commercial and Specialty Lending ◦ SBA ◦ Specialty Deposits ◦ Card Services ◦ Treasury Management • Re
Slide 7: Differentiated Business Model
Differentiated Business Model: Provides Multiple Channels to Drive Growth and Earnings Focused and Well-Defined Strategy Aimed at Business Owners, Executives and Professionals. Targeted Array of Banking and Wealth Management Services to Meet our Client’s Needs Experienced Bankers and Advisors Commun
Slide 8: Diversified Revenue
Diversified Revenue (2021 financial data) Treasury Management $1.9B in Assets Under Management Tax Credit Services Mortgage Banking Community Development Other Services St. Louis Kansas City Southwest Region New Mexico Southern California Specialty Lending Net Interest Income Noninterest Income St.
Slide 9: Regional and National Markets
Regional and National Markets 1 Source: 6/30/21 data for market rank and market share; S&P Global Market Intelligence. $2.2 $1.7 $0.5 $0.8 $0.7 $3.1 $4.2 $1.5 $1.4 $1.2 $0.4 $2.4 Loans* Deposits St. Louis California New Mexico Kansas City Arizona Specialty $— $2.0 $4.0 MSA Branches Deposit Market Ra
Slide 10: Focused Loan Growth Strategies
5.9% 7.0% 7.4% 13.9% Focused Loan Growth Strategies Total Loans Specialty market segments represent 34% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $551 million in loans outstanding related to Federal, Historic, and Missour
Slide 11: Total Loan Trends
Total Loan Trends $4,097 $4,350 $5,314 $7,225 $9,018 $9,269 98.6% 94.8% 92.1% 90.5% 79.5% 83.6% Loans PPP Loans/Deposits 2017 2018 2019 2020 2021 2Q22 In Millions PPP $272 PPP $699 PPP $49 11
Slide 12: Drivers of Loan Growth - Year over Year
Portfolio Balance Pe rc en ta ge G ro w th $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B (25)% 0% 25% 50% 75% Drivers of Loan Growth - Year over Year 49% Commercial/Construction RE C&I PPP Life Insurance Premium Finance Sponsor Finance Residential RE Tax Credits SBA Other 29% 91% 2Q21 - 2Q22
Slide 13: Loan Portfolio
Loan Portfolio Total $9.3 Billion CRE 33.4% Construction 6.8% Residential 4.2% Other 2.5% Sponsor Finance 7.0% LIPF 7.4% Tax Credit 5.9% SBA 13.9% PPP 0.5% C&I 18.4% Loans by Product Type Real Estate/ Rental/Leasing 26.3% Finance and Insurance 16.2% Accommodatio n/Food Service 8.0% Manufacturing 7.2
Slide 14: Office Commercial Real Estate
Office Commercial Real Estate Total $443.2 Million Midwest 57.2% Northeast 0.9% Southeast 0.8% Southwest 25.3% West 15.8% Office CRE Loans by Location Real Estate/ Rental/Leasing 92.1% Information 2.1% Health Care and Social Assistance 1.6% Professional Services 1.6% Retail Trade 1.0% Finance and In
Slide 15: Loan Details - LTM
Loan Details - LTM 2Q22 2Q21 LTM Change First Choice Net Organic Change C&I $ 1,702 $ 1,116 $ 586 $ 328 $ 258 CRE, Investor Owned 1,978 1,467 511 595 (84) CRE, Owner Occupied 1,119 789 330 260 70 SBA loans* 1,284 1,011 273 155 118 Sponsor Finance* 647 464 183 — 183 Life Insurance Premium Financing*
Slide 16: Loan Details - QTR
Loan Details - QTR 2Q22 1Q22 QTR Change C&I $ 1,702 $ 1,498 $ 204 CRE, Investor Owned 1,978 1,983 (5) CRE, Owner Occupied 1,119 1,138 (19) SBA loans* 1,284 1,250 34 Sponsor Finance* 647 641 6 Life Insurance Premium Financing* 688 636 52 Tax Credits* 551 518 33 Residential Real Estate 392 410 (18) Co
Slide 17: Total Loans By Business Unit
Total Loans By Business Unit Specialty Lending* $2,382 $2,981 $3,133 2Q21 1Q22 2Q22 In Millions St. Louis $2,106 $2,124 $2,207 2Q21 1Q22 2Q22 Southwest Region $480 $615 $658 2Q21 1Q22 2Q22 Kansas City $775 $806 $824 2Q21 1Q22 1Q22 New Mexico $595 $511 $488 2Q21 1Q22 2Q22 Note: Excludes PPP and Other
Slide 18: Deposits
43% 32% 5% 20% $4,156 $4,588 $5,771 $7,985 $11,344 $11,093 0.44% 0.79% 0.92% 0.32% 0.11% 0.13% Deposits Cost of deposits Noninterest bearing % 2017 2018 2019 2020 2021 2Q22 Deposit Mix CD Interest-Bearing Demand Accounts DDA MMA & Savings In Millions Total Deposits $11.1 Billion 27.0% 24.0% 23.0% 34
Slide 19: Specialty Deposits
Specialty Deposits 35.0% 22.4% 14.7% 2.7% 25.3% Community Associations $840 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $539 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party
Slide 20: Core Funding Mix and CD Maturities
63% 19% 8% 8% 7% 35% 22% 24% 9% 3% 4% 37% 23% 22% 10% 4% 45% 25% 27% Core Funding Mix Commercial Business Banking Consumer In Millions $3,033 29% $2,760 34% $1,320 12% $1,217 15% $3,757 36% $2,793 34% Cost of Funds1 Commercial Business Banking Consumer Specialty Brokered Nonmaturity Deposits 0.15% 0
Slide 21: Earnings Per Share Trend - 2Q22
Earnings Per Share Trend - 2Q22 $1.23 $0.08 $(0.10) $(0.05) $0.01 $0.02 $1.19 1Q22 Operating Revenue Provision for Credit Losses Noninterest Expense Preferred Stock Dividends Change in Shares 2Q22 Change in EPS 21
Slide 22: Net Interest Income Trend
Net Interest Income Trend In Millions $177.3 $191.9 $238.7 $270.0 $360.2 $210.8 3.88% 3.82% 3.80% 3.56% 3.41% 3.41% Net Interest Income Net Interest Margin 2017 2018 2019 2020 2021 2Q22 YTD 22
Slide 23: Credit Trends for Loans
Credit Trends for Loans 2017 2018 2019 2020 2021 2Q22 YTD NPAs/Assets 0.31% 0.30% 0.45% 0.45% 0.23% 0.16% NPLs/Loans 0.38% 0.38% 0.50% 0.53% 0.31% 0.21% ACL/NPLs 243.3% 259.6% 163.8% 354.9% 517.6% 718.5% ACL/Loans* 1.04% 1.00% 0.81% 2.31% 1.84% 1.69% Provision expense (benefit) $ 10.1 $ 6.6 $ 6.4 $
Slide 24: Allowance for Credit Losses for Loans
$139.2 $1.5 $(0.2) $140.5 ACL 1Q22 Portfolio Changes Net Recoveries ACL 2Q22 Allowance for Credit Losses for Loans In Millions • New loans and changes in composition of existing loans • Changes in risk ratings, past due status and reserves on individually evaluated loans • Changes in macroeconomic a
Slide 25: Noninterest Income Trend
Noninterest Income Trend In Millions $34.4 $38.3 $49.2 $54.5 $67.7 $32.8 $8.1 $8.2 $9.9 $9.7 $10.3 $5.2 $11.1 $11.7 $12.8 $11.7 $15.4 $8.9 $5.4 $6.7 $9.2 $9.5 $11.9 $6.5 $7.2 $8.9 $11.9 $17.0 $22.1 $8.4 $2.6 $2.8 $5.4 $6.6 $8.0 $3.8 16.3% 16.7% 17.1% 16.8% 15.8% 13.5% Wealth Management Deposit Servi
Slide 26: Operating Expenses Trend
Operating Expenses Trend In Millions $115.1 $119.0 $165.5 $167.2 $245.9 $128.2 $38.1 $42.2 $53.7 $57.2 $79.2 $47.4 $9.1 $9.5 $12.5 $13.5 $16.3 $8.9 $61.4 $66.0 $81.3 $92.3 $124.9 $71.9 $6.5 $1.3 $18.0 $4.2 $22.1 $3.4 52.9% 52.0% 52.4% 51.0% 51.6% 52.6% Other Occupancy Employee compensation and benef
Slide 27: Capital Strategy
Capital Strategy EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate Supporting Robust Asset Growth Maintain High Quality Capital Stack Maintain 8-9% TCE • Strong earnings profile • Sustainable dividend profile • Organic loan and deposit growth • High quality M&A to enhance
Slide 28: Capital TBV and Dividends per Share
Capital TBV and Dividends per Share $18.20 $20.95 $23.76 $25.48 $28.28 $26.63 $0.44 $0.47 $0.62 $0.72 $0.75 $0.43 TBV/Share Dividends per Share 2017 2018 2019 2020 2021 2Q22 YTD Return of Capital $26.8 $30.2 $32.1 $35.1 $86.8 $49.0 $10.2 $10.8 $16.6 $19.8 $26.2 $16.1 $16.6 $19.4 $15.5 $15.3 $60.6 $3
Slide 29: Regulatory Capital
Regulatory Capital 10.0% 14.0% 12.2% 13.0% 12.9% 14.9% 14.7% 14.2% 6.5% 10.0% 8.9% 9.8% 9.9% 10.9% 11.3% 10.9% CET1 Tier 1 Total Risk Based Capital Minimum "Well Capitalized" Ratio Optimal Capital Levels 2017 2018 2019 2020 2021 2Q22 8.0% 12.5%13.0% 10.3% 11.4% 12.1% 11.1% 12.0% 29
Slide 30: Balance Sheet Positioned for Growth
Modest Asset Sensitivity (100 bp increase in interest rate increases NII 6%) 64% Adjustable Rate Loans High-quality, Cash-flowing Securities Portfolio with Six-Year Average Duration 42.8% Non- Interest Bearing DDA to Total Deposits 7.83% Tangible Common Equity/Tangible Assets* Balance Sheet Position
Slide 31: Appendix
Appendix Second Quarter 2022 EFSC Investor Presentation
Slide 32: Financial Highlights - 2Q22
• Net Income $45.1 million; EPS $1.19 • PPNR* $58.4 million • ROAA 1.34%; PPNR ROAA* 1.73% • ROATCE* 17.44% Earnings Financial Highlights - 2Q22 Capital • Tangible Common Equity/Tangible Assets* 7.80%; Adjusted for PPP* 7.83% • Accumulated other comprehensive income declined $49.2 million primarily
Slide 33: ESG Highlights
■ Selected in 2021 by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury to receive a $60 million allocation of New Markets Tax Credits. ■ In 2021 we invested over $1.6 billion in programs designed to promote small business and community developm
Slide 34: 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 tangible common e
Slide 35: Reconciliation of Non-GAAP Financial Measures
Quarter ended Year-to-date Year ended (in thousands) June 30, 2022 June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Net income available to common shareholders - GAAP $ 44,211 $ 90,675 $ 133,055 $ 74,384 $ 92,739 Branch-closure expenses — — 3,441 — — CECL double count — — 25,353 8
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year-to-date Year ended (in thousands) June 30, 2022 June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net interest income $ 109,613 $ 210,778 $ 360,194 $ 270,001 $ 238,717 $ 191,905 $ 1
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended (in thousands) June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Shareholders' equity $ 1,447,412 $ 1,529,116 $ 1,078,975 $ 867,185 Less preferred stock 71,988 71,988 — — Less goodwill 365,164 365,164 260,567 21
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended (in thousands) June 30, 2022 December 31, 2021 Net interest income $ 109,613 $ 360,194 Noninterest income 14,194 67,743 Noninterest expense (65,424) (245,919) Branch-closure expenses — 3,441 Merger-related expenses — 22,082 PPNR
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended (in thousands, except per share data) June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Shareholders' equity $ 1,447,412 $ 1,529,116 $ 1,078,975 $ 867,185 $ 603,804 $ 548,573
Slide 40: Q&A Second Quarter 2022
Q&A Second Quarter 2022 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q2 2022 Earnings Presentation on 6ix