Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2023 Earnings Presentation
31 slides from Enterprise Financial Services's earnings presentation, Oct 24, 2023
Slide 1: Enterprise Financial Services Corp 2023 Third Quarter Earnings Webcast
Enterprise Financial Services Corp 2023 Third 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 - 3Q23
Financial Highlights - 3Q23* • Net Income $44.7 million, down $4.5 million; EPS $1.17 • Net Interest Income $141.6 million, up $0.9 million; NIM 4.33% Earnings • PPNR** $65.1 million, down $3.8 million • ROAA 1.26%, compared to 1.44%; PPNR ROAA** 1.84%, compared to 2.02% • ROATCE** 14.49%, compared
Slide 4: Financial Highlights, continued - 3Q23
Financial Highlights, continued - 3Q23* • Loans $10.6 billion, up $104.2 million • Loan/Deposit Ratio 89% Loans & • Deposits $11.9 billion, up $290.0 million Deposits • Estimated uninsured deposits of $3.4 billion,** or 29% of total deposits • Noninterest-bearing Deposits/Total Deposits 32% • Nonper
Slide 5: 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 Maintain Strong Asset Quality Maintain a Strong Balance Sheet Focus on Long-term Ear
Slide 6: Loan Trends
Loan Trends In Millions wth 13% Total Loan Gro $10,513 $10,617 $10,012 $9,737 $9,355 3Q22 4Q22 1Q23 2Q23 3Q23 6
Slide 7: Loan Details - LTM
Loan Details - LTM In Millions LTM 3Q23 3Q22 Change C&I $ 2,020 $ 1,781 $ 239 CRE Investor Owned 2,260 2,106 154 CRE Owner Occupied 1,256 1,133 123 SBA loans* 1,309 1,269 40 Sponsor Finance* 888 650 238 Life Insurance Premium Financing* 928 780 148 Tax Credits* 684 508 176 Residential Real Estate 36
Slide 8: Loan Details - QTR
Loan Details - QTR In Millions QTR 3Q23 2Q23 Change C&I $ 2,020 $ 2,029 $ (9) CRE Investor Owned 2,260 2,291 (31) CRE Owner Occupied 1,256 1,209 47 SBA loans* 1,309 1,328 (19) Sponsor Finance* 888 880 8 Life Insurance Premium Financing* 928 912 16 Tax Credits* 684 609 75 Residential Real Estate 365
Slide 9: Loans By Region
Loans By Region In Millions Specialty Lending Midwest $3,734 $3,871 $3,241 $3,320 $3,260 $3,115 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Southwest West $1,743 $1,755 $1,605 $1,415 $1,464 $1,161 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Note: Excludes PPP and Other loans; Region Components: Midwest (St. Louis & Kansas City
Slide 10: Deposit Details - LTM
Deposit Details - LTM In Millions LTM 3Q23 3Q22 Change Noninterest-bearing demand accounts $ 3,852 $ 4,643 $ (791) Interest-bearing demand accounts 2,750 2,271 479 Money market accounts 3,211 2,793 418 Savings accounts 626 824 (198) Certificates of deposit: Brokered 696 129 567 Other 775 398 377 Tot
Slide 11: Deposit Details - QTR
Deposit Details - QTR In Millions QTR 3Q23 2Q23 Change Noninterest-bearing demand accounts $ 3,852 $ 3,881 $ (29) Interest-bearing demand accounts 2,750 2,629 121 Money market accounts 3,211 2,913 298 Savings accounts 626 665 (39) Certificates of deposit: Brokered 696 894 (198) Other 775 638 137 Tot
Slide 12: Deposits By Region
Deposits By Region In Millions Specialty Deposits Midwest* $5,640 $5,627 $5,221 $3,164 $2,861 $2,422 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Southwest West* $1,827 $1,811 $1,802 $1,588 $1,308 $1,317 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, La
Slide 13: Specialty Deposits
Specialty Deposits Specialty deposits of $3.2 billion represent 27% of total deposits. 18.6% 19.6% Includes high composition of noninterest- bearing deposits with a low cost of funds. In Millions $1,000 3Q22 4Q22 $500 1Q23 2Q23 26.2% 3Q23 35.6% $— Community Property Third-Party Other Assoc Mgmt Escr
Slide 14: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer Specialty In Millions $3,612 $1,254 $2,941 $3,164 4% 7% 14% 3% 30% 21% 3Q23 34% 47% 29% 34% 58% 33% 19% 7% 35% 21% Net New/Closed Deposit Accounts Overview BUSINESS COMMERCIAL CONSUMER SPECIALTY BANKING • Estimated uninsured deposits of $3.4 bill
Slide 15: Earnings Per Share Trend - 3Q23
Earnings Per Share Trend - 3Q23 Change in EPS $(0.03) $(0.04) $(0.05) $1.29 $1.17 2Q23 Operating Provision for Credit Noninterest 3Q23 Revenue Losses Expense 15
Slide 16: Net Interest Income Trend
Net Interest Income Trend h 14% NII Growt In Millions $138.8 $139.5 $140.7 $141.6 $124.3 5.26% 4.99% 4.66% 4.71% 4.10% 3.65% 4.52% 4.49% 4.33% 2.20% 3Q22 4Q22 1Q23 2Q23 3Q23 Net Interest Income Net Interest Margin Avg Fed Funds Rate 16
Slide 17: Net Interest Margin
Net Interest Margin Margin Bridge 0.09% 0.01% 0.05% (0.03)% (0.28)% 4.49% 4.33% 2Q23 Loans Securities Other Earning Asset Funding Mix Cost of Funds 3Q23 Mix Components of Interest-earning Assets Components of Interest-bearing Liabilities 6.64% 6.80% 2.84% 6.33% 5.87% 2.40% 2.77% 5.10% 6.12% 5.97% 1.
Slide 18: Credit Trends
Credit Trends Annualized Net Charge-offs (Recoveries) to Average Loans Loan Growth and Average Line of Credit Utilization 42.5% 41.0% 42.4% 44.6% 41.0% In Millions 26 bps $501 9 bps $382 $275 2 bps 12 bps (1) bps $86 $104 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Organic Loans Avg Line Draw
Slide 19: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans Key Assumptions: 3Q23 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 $ 4,449 $ 62 1.39 % • Forecast considers a weighted average Commercial real estat
Slide 20: Noninterest Income Trend
Noninterest Income Trend In Millions Noninterest Income Other Noninterest Income Detail 10.8% 10.8% 9.2% 7.9% $6.1 7.1% $0.5 $5.3 $5.4 $5.1 $0.4 $16.9 $16.9 $0.4 $1.7 $1.5 $2.4 $2.5 $14.3 $12.1 $9.5 $2.6 $2.3 $2.3 $2.5 $0.2 $0.6 $2.1 $0.3 $2.4 $2.8 $4.5 $4.1 $2.6 $0.1 $2.4 $3.0 $0.3 $2.7 $0.2 $0.8 $
Slide 21: Noninterest Expense Trend
Noninterest Expense Trend In Millions Noninterest Expense Other Noninterest Expense Detail 54.0% 56.2% 49.8% 48.1% 50.5% $23.4 $22.7 $88.6 $21.7 $1.1 $86.0 $21.4 $1.1 $81.0 $1.2 $1.9 $19.6 $1.3 $2.1 $77.1 $0.9 $1.9 $1.3 $2.6 $1.6 $2.9 $68.8 $1.8 $2.6 $1.6 $40.7 $41.6 $2.8 $1.4 $2.0 $1.6 $42.5 $3.7 $
Slide 22: Capital
Capital Tangible Common Equity/Tangible Assets* TBV and Dividends per Share $0.23 $0.24 $0.25 $0.25 $0.25 8.81% $31.23 $31.06 8.65% 8.51% $28.67 $30.55 8.43% $26.62 7.86% 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Tangible Common Equity/Tangible Assets TBV/Share Dividends per Share Regulatory
Slide 23: Appendix
Appendix
Slide 24: Investment Portfolio
Investment Portfolio Investment Portfolio Breakout AFS & HTM Securities In Millions Obligations of U.S. $1,800 $160 Government- sponsored enterprises Obligations of $1,200 $— 13% states and political TOTAL subdivisions U.S. Treasury $2.2 Billion 42% $600 $(160) bills 8% $— $(320) Corporate debt Agen
Slide 25: Liquidity
Liquidity Strong Liquidity Profile EFSC Borrowing Capacity In Billions • $945 million available FHLB capacity 37% 36% 36% • $2.5 billion available FRB capacity $4.2 $4.3 $4.1 • $120 million in seven federal funds lines $0.5 $0.7 $0.8 $0.1 $0.1 $0.1 • $791 million unpledged investment securities • $3
Slide 26: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Total $483.6 Million Office CRE Loans by Location Office CRE Loans by Industry Type Southwest 29.6% Real Estate/ Rental/Leasing Midwest 85.8% 50.2% West Information 14.9% 1.8% Other 4.3% Health Care and Specialty Social Assistance 5.3% Finance and Insurance 3.3% 1.1%
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as tangible common e
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, ($ in thousands) 2023 2023 2023 2022 2022 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 1,611,880 $ 1,618,233 $ 1,592,820 $ 1,522,263 $ 1,44
Slide 29: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, ($ in thousands) 2023 2023 2023 2022 2022 RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE) Average shareholder’s equity $ 1,648,605 $ 1,621,337 $ 1,568,451 $ 1,490,592 $ 1,494,504 Less average prefer
Slide 30: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, ($ in thousands) 2023 2023 2023 2022 2022 CORE EFFICIENCY RATIO Net interest income (GAAP) $ 141,639 $ 140,692 $ 139,529 $ 138,835 $ 124,290 Tax-equivalent adjustment 2,061 2,062 2,041 1,983 1,854 Net
Slide 31: Enterprise Financial Services Corp
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Enterprise Financial Services — Q3 2023 Earnings Presentation on 6ix