Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q2 2021 Earnings Presentation
41 slides from Enterprise Financial Services's earnings presentation, Aug 3, 2021
Slide 1: Enterprise Financial Services Corp Second Quarter 2021 Investor Presentation
Enterprise Financial Services Corp Second Quarter 2021 Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation may be considered “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 regarding Enterprise Financial Services C
Slide 3: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 53, President & Chief Executive Officer, EFSC Enterprise Tenure – 17 years KEENE S. TURNER 41, EVP, Chief Financial Officer, EFSC Enterprise Tenure – 7 years SCOTT R. GOODMAN 57, President, Enterprise Bank & Trust Enterprise Tenure – 18 years DOUGLAS N. BAUCH
Slide 4: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $10.3 Billion Market Cap FOCUSED BUSINESS MODEL: Operates in St. LouisKansas City Phoenix $1.4 Billion • Attract Top Talent in Markets • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Banking ◦ Trust & Wealth Management ◦ Treasury
Slide 5: ESG Highlights
■ There were no layoffs or pay reductions as a result of the pandemic and on-site essential employees received premium wages for a period of time. ■ 70% of employees worked remotely during the pandemic. ■ In 2020 we invested over $1.5 billion in programs designed to promote small business and commun
Slide 6: Differentiated Business Model: Built for Quality Earnings Growth
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 Client’s Needs Experienced Bankers and Advisors Targeted Audience Focused an
Slide 7: Customer Focus
Customer Focus Source: Greenwich Associates 71 NPS NET PROMOTER SCORE A measure of client satisfaction INDUSTRY AVERAGE: 54 7
Slide 8: First Choice Overview - Closed July 21, 2021
▪ Total Assets: $2.4 Billion ▪ Gross Loans: $2.0 Billion, including PPP of $296 Million ▪ Deposits: $1.9 Billion ▪ ROAA: 1.71% ytd June 2021, excluding merger costs ▪ ROATCE: 19.7% ytd June 2021, excluding merger costs ▪ Efficiency Ratio1: 44.8% ytd June 2021 ▪ NIM: 4.2% ytd June 2021 ▪ Attractive c
Slide 9: Regional and National Markets
Regional and National Markets Kansas City Phoenix New Mexico San Diego1 St. Louis Specialty Lending & Deposits Loans 2 $775MM $480MM $595MM $266MM $2.1B $2.4B Deposits $1.1B $343MM $1.3B $238MM $4.3B $1.4B Branches 7 2 6 5 19 17 LPO 5 DPO Deposit Market Share 3, 4 15th/1.45% 26th/0.22% 10th/2.91% 13
Slide 10: Focused Loan Growth Strategies
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 $423 million in loans outstanding related to Federal, Historic, and Missouri Affordable Housing
Slide 11: Total Loan Trends
Total Loan Trends In Millions 18% Total Lo an Growth PPP $819 PPP* $613 PPP $738 *Represents PPP loans originated by EFSC Seacoast $1,224 PPP $397 PPP $808 11
Slide 12: Drivers of Loan Growth - Year over Year
Portfolio Balance Pe rc en ta ge G ro w th 2Q20 - 2Q21 $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B (50)% (25)% 0% 25% 50% 75% 100% Drivers of Loan Growth - Year over Year 40% 17% -7% 50% 6% 91% -38% 9% 6% 4%7% -2% Increase of $1.1 Billion 12
Slide 13: Loan Portfolio
Loan Portfolio Total $7.2 Billion CRE 31.2% Construction 6.5% Residential 4.2% Other 3.1% Sponsor Finance 6.4% LIPF 7.8% Tax Credit 5.9% SBA 14.0% PPP 5.5% C&I 15.4% Loans by Product Type Real Estate/ Rental/Leasing 24.0% Finance and Insurance 15.4% Accommodation/Food Service 8.1%Manufacturing 8.0%
Slide 14: Loan Details
Loan Details 2Q21 1Q21 QTR Change 2Q20 LTM Change C&I $ 1,116 $ 1,049 $ 67 $ 1,052 $ 64 CRE, Investor Owned 1,467 1,491 (24) 1,299 168 CRE, Owner Occupied 789 806 (17) 782 7 SBA loans*1 1,011 941 70 17 994 Sponsor Finance* 464 394 70 383 81 Life Insurance Premium Financing* 564 543 21 521 43 Tax Cre
Slide 15: Total Loans By Business Unit
Total Loans By Business Unit In Millions Note: Excludes PPP and Other loans **Acquisition of Seacoast closed on November 12, 2020 *1Q21 and 2Q21 include acquired Seacoast SBA loans 15
Slide 16: PPP Loans
• 1% coupon, 4.3% ytd average yield • 24% 2 year maturity; 76% 5 year maturity • No PPP loans or servicing have been sold • Forgiveness process started October 29, 2020 • 1,190 PPP loans totaling $22.7 million are < $50,000; $2.2 million in fees • $779.4 million has been forgiven/repaid as of June 3
Slide 17: Attractive Deposit Mix
36% 35% 6% 23% Attractive Deposit Mix CD Interest-Bearing Transaction Accounts DDA MMA & Savings • Significant DDA Composition • Stable, Low Cost Deposit Portfolio • Improving Core Funding 29% Deposit Growth 2Q20 – 2Q21 In Millions Total Deposits $8.6 Billion 29.3% 28.9% 34.0% 34.2% 36.0% Seacoast $
Slide 18: Specialty Deposits
Specialty Deposits Community Associations $495 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $362 million in deposits. Specializing in the compliance on Property Management Trust Accounts. Third-Party Escrow $101 million in deposi
Slide 19: Core Funding Mix
59%21% 10% 7% 37% 23% 22% 10% 4% 32% 23% 20% 16% 5% 48% 19% 31% Core Funding Mix Commercial Business Banking Consumer 2Q21 Brokered deposits: $449 2Q20 Brokered deposits: $548 In Millions $2,760 34% $2,480 40% $1,217 15% $1,019 17% $2,793 34% $2,653 43% Cost of Funds1 Commercial Business Banking Con
Slide 20: Earnings Per Share Trend - 2Q21 Change in EPS
Earnings Per Share Trend - 2Q21 Change in EPS 1Q21 2Q21Net Interest Income Noninterest Income Provision for Credit Losses Merger-Related Expense $0.96 $1.23 Noninterest Expense 20
Slide 21: Net Interest Income Trend
Net Interest Income Trend In Millions 24% NII Growth PPP Income $10.3 PPP Income $4.1 PPP Income $5.2 PPP Income $8.5 PPP Income $7.9 *Seacoast acquisition completed 11/12/20. 21
Slide 22: Net Interest Margin
Net Interest Margin Components of Interest-bearing LiabilitiesComponents of Interest-earning Assets 1Q21 3.50 % Cash/Liquidity (0.05) % Loans 0.01 % Investments (0.01) % Cost of funds 0.01 % 2Q21 3.46 % Net Interest Margin Trend Net Interest Margin Bridge 0.37% 22
Slide 23: Credit Trends for Loans
Credit Trends for Loans 2Q21 1Q21 2Q20 NPAs/Assets 0.44% 0.42% 0.55% NPLs/Loans 0.58% 0.50% 0.68% ALLL/NPLs 303.4% 358.8% 265.9% ALLL/Loans** 2.09% 2.22% 2.07% Net Charge-offs (Recoveries) In Millions bps bps bps bps bps In Millions Loan Growth and Line of Credit Utilization* *Excludes acquisition o
Slide 24: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans In Thousands $131,527 $128,185• New loans and changes in composition of existing loans • Changes in risk ratings, past due status and reserves on individually evaluated loans • Charge-offs and recoveries 2Q21 In Thousands ACL Loans ACL as a % of Loans Commercial
Slide 25: Noninterest Income Trend
Noninterest Income Trend Other Fee Income DetailFee Income In Millions 13.1% 16.6% 19.3% 12.5% 16.5% 25
Slide 26: Operating Expenses Trend
Operating Expenses Trend * A Non-GAAP Measure, Refer to Appendix for Reconciliation In Millions 26
Slide 27: Capital
Capital *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Excludes PPP loans. 8.0% 11.4% 11.6% 12.1% 12.3% 12.3% ♦ EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate – Strong earnings profile – Sustainable dividend profile Supporting Robust Asset Growth – Organic
Slide 28: Earnings Per Share Trend
Earnings Per Share Trend Note: 2Q21, 1Q21, 4Q20, 3Q20, 3Q19, 2Q19, 1Q19, 4Q18, 1Q17, 2Q17, and 4Q16 include merger related charges. Periods after 4Q19 include the impact of the adoption of CECL on the provision for credit losses. 4Q17 includes the impact of deferred tax asset charges due to tax refo
Slide 29: Five-Year Financial Highlights
Five-Year Financial Highlights Noninterest Income Net Income Earnings Per Share (diluted) Return on Average Tangible Common Equity(1) Return on Average Assets Total Assets Net Interest Income $38 $89 $3.83 19.83% 1.64% $5,646 $192 2018 $49 $93 $3.55 16.08% 1.35% $7,334 $239 2019 $55 $74 $2.76 11.23%
Slide 30: Modest Asset Sensitivity / Balance Sheet Positioned for Growth
Modest Asset Sensitivity (200 BPS Rate Shock Increases NII By 8.9%) 57% Floating Rate Loans, with Three-Year Average Duration High-quality, Cash-flowing Securities Portfolio with Six-Year Average Duration 36.0% Non- Interest Bearing DDA to Total Deposits 8.32% Tangible Common Equity/Tangible Assets*
Slide 31: Appendix Second Quarter 2021 EFSC
Appendix Second Quarter 2021 EFSC Investor Presentation
Slide 32: Financial Highlights - 2Q21
Financial Highlights - 2Q21 Capital • Tangible Common Equity/Tangible Assets* - 8.32%; Adjusted for PPP* 8.66% • Quarterly dividend of $0.18 per share; increased 6% to $0.19 in third quarter 2021 • Repurchased 251,637 shares at an average price of $47.00 per share • Net Income $38.4 million; Earning
Slide 33: Sponsor Finance Loans
Total $464 Million • Internally reviewed 100% of the portfolio to identify businesses most at risk for impacts from COVID-19. • 30% of the portfolio is secured by working capital assets properly margined and monitored by borrowing base. • 60%+ of the portfolio companies have received PPP funding • 9
Slide 34: Hospitality Loans
Hospitality Loans Size Number of Loans Balance Average Balance > $10 Million 6 $83.6 $13.9 $5-10 Million 18 126.4 7.0 $2-5 Million 52 184.2 3.5 < $2 Million 441 210.9 0.5 Total 517 $605.1 $1.2 Hospitality Loans by Size $ In Millions Total $605 Million • Weighted average LTV approximately 60-63% • La
Slide 35: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common e
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter ended ($ in thousands, except per share data) Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 CORE PERFORMANCE MEASURES Net interest income $ 81.738 $ 79.123 $ 77,446 $ 63,354 $ 65,833 Less: Incremental accretion income —
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (in thousands) June 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Total shareholders' equity $ 1,118,301 $ 1,078,975 $ 867,185 $ 603,804 $ 548,573 Less: Goodwill 260,567 260,567 210,344 117,345 117,345 Less: Intangible
Slide 38: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (in thousands) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Total shareholders' equity $ 1,118,301 $ 1,092,497 $ 1,078,975 $ 882,267 $ 867,963 Less: Goodwill 260,567 260,567 260,567 210,344 210,344 Less: Intangible asse
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Six Months Ended For the Year Ended (in thousands) June 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net interest income $ 160,861 $ 270,001 $ 238,717 $ 191,905 $ 177,304 Noninterest income 27,494 54,503 49,176
Slide 40: Reconciliation of Non-GAAP Financial Measures
For the Six Months Ended For the Year Ended (in thousands, except per share data) June 30, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 IMPACT OF MERGER-RELATED AND TAX ITEMS Net income - GAAP $ 68,331 $ 74,384 $ 92,739 $ 89,217 $ 48,190 Merger related expense 5,091 4
Slide 41: Q&A Second Quarter 2021 EFSC
Q&A Second Quarter 2021 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q2 2021 Earnings Presentation on 6ix