Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q4 2023 Earnings Presentation
32 slides from Enterprise Financial Services's earnings presentation, Jan 23, 2024
Slide 1: 2023 Fourth Quarter Earnings Webcast
Exhibit 99.2 Enterprise Financial Services Corp 2023 Fourth Quarter Earnings Webcast
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: Financial Highlights - 4Q23
Financial Highlights - 4Q23* • Net Income $44.5 million, down $0.1 million; EPS $1.16 • Net Interest Income $140.7 million, down $0.9 million; NIM 4.23% Earnings • PPNR** $75.8 million, up $10.7 million • ROAA** 1.28%, compared to 1.26%; PPNR ROAA** 2.10%, compared to 1.84% • ROATCE** 14.98%, compar
Slide 4: Financial Highlights, continued - 4Q23
Financial Highlights, continued - 4Q23* • Loans $10.9 billion, up $267.3 million Loans & • Loan/Deposit Ratio 89% Deposits • Deposits $12.2 billion, up $266.5 million • Noninterest-bearing Deposits/Total Deposits 33% • Nonperforming Loans/Loans 0.40% • Nonperforming Assets/Assets 0.34% Asset • Allow
Slide 5: Financial Highlights, continued - 2023
Financial Highlights, continued - 2023* • Net Income $194.1 million, down $9.0 million; EPS $5.07 compared to $5.31 • Net Interest Income $562.6 million, up $88.7 million; NIM 4.43%, compared to 3.89% Earnings • PPNR** $284.8 million, up $25.8 million • ROAA** 1.42%, compared to 1.52%; PPNR ROAA**2.
Slide 6: Areas of Focus
Areas of Focus Organic Loan and Deposit Growth • Continue Funding Loan Growth with Customer Deposits • Build Franchise Value by Expanding Existing and Acquiring New Relationships Disciplined Loan and Deposit Pricing Focused Credit Underwriting and Monitoring • Third Party Agricultural Loan Portfolio
Slide 7: Loan Trends
Loan Trends In Millions wth 12% Total Loan Gro $10,884 $10,513 $10,617 $10,012 $9,737 4Q22 1Q23 2Q23 3Q23 4Q23 7
Slide 8: Loan Details - LTM
Loan Details - LTM In Millions LTM 4Q23 4Q22 Change C&I $ 2,186 $ 1,905 $ 281 CRE Investor Owned 2,292 2,176 116 CRE Owner Occupied 1,262 1,174 88 SBA loans* 1,282 1,312 (30) Sponsor Finance* 872 635 237 Life Insurance Premium Finance* 956 817 139 Tax Credits* 735 560 175 Residential Real Estate 360
Slide 9: Loan Details - QTR
Loan Details - QTR In Millions QTR 4Q23 3Q23 Change C&I $ 2,186 $ 2,020 $ 166 CRE Investor Owned 2,292 2,260 32 CRE Owner Occupied 1,262 1,256 6 SBA loans* 1,282 1,309 (27) Sponsor Finance* 872 888 (16) Life Insurance Premium Finance* 956 928 28 Tax Credits* 735 684 51 Residential Real Estate 360 36
Slide 10: Loan By Region
Loan By Region In Millions Specialty Lending Midwest $3,871 $3,898 $3,382 $3,214 $3,260 $3,338 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Southwest West $1,755 $1,813 $1,566 $1,656 $1,464 $1,242 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Note: Excludes “Other” loans Region Components: Midwest (St. Louis & Kansas City), South
Slide 11: Deposit Details - LTM
Deposit Details - LTM In Millions LTM 4Q23 4Q22 Change Noninterest-bearing demand accounts $ 3,959 $ 4,643 $ (684) Interest-bearing demand accounts 2,950 2,256 694 Money market accounts 3,399 2,655 744 Savings accounts 595 744 (149) Certificates of deposit: Brokered 483 119 364 Other 790 412 378 Tot
Slide 12: Deposit Details - QTR
Deposit Details - QTR In Millions QTR 4Q23 3Q23 Change Noninterest-bearing demand accounts $ 3,959 $ 3,852 $ 107 Interest-bearing demand accounts 2,950 2,750 200 Money market accounts 3,399 3,211 188 Savings accounts 595 626 (31) Certificates of deposit: Brokered 483 696 (213) Other 790 775 15 Total
Slide 13: Deposit By Region
Deposit By Region In Millions Specialty Deposits** Midwest (*)** $6,098 $6,219 $5,413 $2,693 $2,778 $2,051 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Southwest West* $1,845 $1,802 $1,828 $1,520 $1,317 $1,351 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ,
Slide 14: Specialty Deposits
Specialty Deposits 29.7% • $2.78 billion - Specialty deposits, representing 23% of total deposits • $2.81 billion - Average specialty deposits for 4Q23 • $21.6 million - Related deposit costs in noninterest expense, resulting in an average specialty deposit cost of 3.05% • $126.7 thousand - Average
Slide 15: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer Specialty In Millions $4,512 $1,270 $2,879 $2,778 4% 7% 17% 2% 30% 24% 4Q23 37% 43% 31% 34% 58% 35% 18% 7% 32% 18% Net New/Closed Deposit Accounts Overview BUSINESS COMMERCIAL CONSUMER SPECIALTY BANKING • Estimated uninsured deposits of $3.8 bill
Slide 16: Earnings Per Share Trend - 4Q23
Earnings Per Share Trend - 4Q23 Change in EPS $0.26 $0.02 $(0.21) $(0.08) $1.17 $1.16 3Q23 Operating Provision for Credit Noninterest Change in Effective 4Q23 Revenue Losses Expense Tax Rate 16
Slide 17: Net Interest Income Trend
Net Interest Income Trend Stable Net Interest Income In Millions $138.8 $139.5 $140.7 $141.6 $140.7 5.26% 5.33% 4.99% 4.66% 4.71% 3.65% 4.52% 4.49% 4.33% 4.23% 4Q22 1Q23 2Q23 3Q23 4Q23 Net Interest Income Net Interest Margin Avg Fed Funds Rate 17
Slide 18: Net Interest Margin
Net Interest Margin Margin Bridge 0.06% 0.01% 0.01% (0.04)% (0.14)% 4.33% 4.23% 3Q23 Loans Securities Other Earning Asset Funding Mix Cost of Funds 4Q23 Mix Components of Interest-earning Assets Components of Interest-bearing Liabilities 6.80% 6.87% 3.09% 6.64% 2.84% 6.33% 5.87% 2.40% 3.03% 6.20% 2.
Slide 19: Credit Trends
Credit Trends Annualized Net Charge-offs (Recoveries) to Average Loans Loan Growth and Average Line of Credit Utilization 41.0% 42.4% 44.6% 41.0% 42.0% In Millions 106 bps $501 $382 $275 $267 9 bps 12 bps (1) bps $104 26 bps 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 Organic Loans Avg Line Dr
Slide 20: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans Key Assumptions: 4Q23 ACL as a % of • Reasonable and supportable forecast Loans ACL In Millions Loans period is one year with a one year reversion period. Commercial and industrial $ 4,673 $ 59 1.26 % • Forecast considers a weighted average Commercial real estat
Slide 21: Noninterest Income Trend
Noninterest Income Trend In Millions Noninterest Income Other Noninterest Income Detail $6.3 10.8% 10.8% 15.3% $6.1 9.2% 7.9% $0.5 $0.7 $25.5 $5.3 $5.4 $5.1 $2.5 $0.4 $1.0 $0.4 $1.7 $1.5 $2.7 $0.2 $4.3 $16.9 $16.9 $0.2 $1.3 $2.4 $2.5 $14.3 $12.1 $0.6 $2.1 $0.3 $2.8 $0.1 $2.3 $2.3 $2.5 $2.6 $0.3 $0.8
Slide 22: Noninterest Expense Trend
Noninterest Expense Trend In Millions Noninterest Expense Other Noninterest Expense Detail 54.0% 56.2% 53.1% 48.1% 50.5% $92.6 $24.6 $88.6 $23.4 $1.1 $86.0 $22.7 $81.0 $21.4 $21.7 $1.1 $1.1 $2.7 $77.1 $1.2 $1.9 $1.3 $2.1 $39.7 $0.9 $1.9 $2.6 $40.7 $1.6 $2.9 $5.1 $41.6 $2.6 $1.6 $42.5 $2.8 $1.4 $38.2
Slide 23: Capital
Capital Tangible Common Equity/Tangible Assets* TBV and Dividends per Share $0.24 $0.25 $0.25 $0.25 $0.25 8.96% 8.81% $33.85 8.65% 8.51% $30.55 $31.23 $31.06 8.43% $28.67 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 Tangible Common Equity/Tangible Assets TBV/Share Dividends per Share Regulatory
Slide 24: Appendix
Appendix
Slide 25: Investment Portfolio
Investment Portfolio Investment Portfolio Breakout AFS & HTM Securities In Millions Obligations of U.S. Obligations of $1,800 $160 Government- states and political sponsored subdivisions enterprises 42% $1,200 $— 12% TOTAL U.S. Treasury $2.4 Billion $600 $(160) bills 8% $— $(320) Corporate debt 4Q22
Slide 26: Liquidity
Liquidity Strong Liquidity Profile EFSC Borrowing Capacity In Billions 36% 36% 37% • $1.0 billion available FHLB capacity • $2.5 billion available FRB capacity $4.2 $4.3 $4.4 • $120 million in six federal funds lines $0.7 $0.8 $0.8 $0.1 $0.1 $0.1 • $809 million unpledged investment securities • $433
Slide 27: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Total $482.0 Million Office CRE Loans by Location Office CRE Loans by Industry Type Southwest Real Estate/ Midwest 29.6% Rental/Leasing 50.3% 85.2% West 14.9% Health Care and Social Specialty Other Assistance 5.2% 11.5% 3.3% • Average loan-to-origination value 49% Off
Slide 28: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common e
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, ($ in thousands) 2023 2023 2023 2023 2022 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 1,716,068 $ 1,611,880 $ 1,618,233 $ 1,592,820 $ 1,52
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, ($ in thousands) 2023 2023 2023 2023 2022 2023 2022 RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE) Average shareholder’s equity $ 1,652,882 $ 1,648,605 $ 1,621,337 $ 1,56
Slide 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, ($ in thousands) 2023 2023 2023 2023 2022 2023 2022 CORE EFFICIENCY RATIO Net interest income (GAAP) $ 140,732 $ 141,639 $ 140,692 $ 139,529 $ 138,835 $ 562,592 $ 473,903 Ta
Slide 32: Enterprise Financial Services Corp
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Enterprise Financial Services — Q4 2023 Earnings Presentation on 6ix