48 slides from Enterprise Financial Services's earnings presentation, Jan 30, 2024
Slide 1: Fourth Quarter 2023 Investor Presentation
Fourth Quarter 2023 Investor Presentation Exhibit 99.1 Enterprise Financial Services Corp
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: Performance versus Peer Banks
Peer Banks $10-50B Median[3] Top Quartile[3] FY2023 Return on average assets(1) 1.41 % 0.95 % 1.22 % Return on average tangible common equity(1) 16.25 % 13.47 % 17.11 % Net interest margin 4.43 % 3.29 % 3.53 % Efficiency ratio(2) 53.42 % 57.53 % 51.16 % Tangible common equity/tangible assets(1) 8.96
Slide 5: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 56, President & Chief Executive Officer, EFSC Enterprise Tenure – 20 years KEENE S. TURNER 44, SEVP, Chief Financial Officer, EFSC Enterprise Tenure – 10 years SCOTT R. GOODMAN 60, SEVP, President, Enterprise Bank & Trust Enterprise Tenure – 20 years DOUGLAS
Slide 6: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $14.5 Billion Market Cap* Operates in St. Louis Kansas City Phoenix $1.6 Billion • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Commercial and Specialty Lending ◦ SBA ◦ Specialty Deposits ◦ Card Services ◦ Treasury Management • R
Slide 7: Differentiated Business Model
Differentiated Business Model Focused and Well-Defined Strategy Aimed at Business Owners, Executives and Professionals. Community Banking • Business banking model • C&I focus • Treasury management services • CRE lending • Consumer loans/ deposits • 42 branch locations • 55 ATMs and ITMs Lending Spec
Slide 8: Best-In-Class Technology Partnerships
Best-In-Class Technology Partnerships Client journey supported by a competitive digital product set. Customer surveys Salesforce integrated with core for 360 client view Client Portal Online Banking integrated with treasury products Integrations for APIs for HOA/PM Positive Pay (Check & ACH) TARGET
Slide 9: Diversified Revenue Streams
Treasury Management $2.2B in Assets Under Management Card Services Tax Credit Services Mortgage Banking Community Development Other Services Midwest Southwest West Specialty Lending Net Interest Income Noninterest Income Midwest 34.2% Southwest 15.5% West 12.5% Specialty Lending 37.8% $562.6 Million
Slide 10: Regional and National Markets
Regional and National Markets 1 Source: 2023 data for market rank and market share; S&P Global Market Intelligence. $3.9 $3.3 $1.6 $1.8 $2.8 $6.2 $1.8 $1.4 Loans* Deposits Specialty Midwest Southwest West $— $2.5 $5.0 MSA Branches Deposit Market Rank1 Deposit Market Share1 St. Louis, MO-IL 17 5 4.4%
Slide 11: Focused Loan Growth Strategies
6.7% 8.0% 8.8% 11.8% 64.7% Focused Loan Growth Strategies Total Loans Specialty market segments represent 35% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $735 million in loans outstanding related to Federal, Historic, and A
Slide 12: Total Loan Trends
Total Loan Trends $5,314 $7,225 $9,018 $9,737 $10,884 92.1% 90.5% 79.5% 89.9% 89.4% Loans PPP Loans/Deposits 2019 2020 2021 2022 2023 In Millions PPP $272 PPP $699 PPP $699 12
Slide 13: 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 $4.5B $5.0B (50)% (25)% 0% 25% 50% 75% 100% CRE 30% Commercial/Construction RE C&I SBA Life Insurance Premium Finance Sponsor Finance Tax Credits Residential RE Other C&I 25% 4Q22 - 4Q23 Increase of $1.1
Slide 14: Loan Portfolio
Total $10.9 billion Loans by Product Type Real Estate/ Rental/Leasing 25.4% Finance and Insurance 18.4% Accommodation/ Food Service 9.0% Manufacturing 6.5% Construction 6.4% Other Services 5.4% Other 28.9% Loans by Industry Type Fixed 39.0% Prime 25.8%SOFR 25.0% Other Adjustable 10.2% Loans by Rate
Slide 15: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Total $482.0 Million Midwest 50.3% Southwest 29.6% West 14.9% Specialty 5.2% Office CRE Loans by Location Real Estate/ Rental/Leasing 85.2% Health Care and Social Assistance 3.3% Other 11.5% Office CRE Loans by Industry Type Size Average Risk Rating Number of Loans Ba
Slide 16: Loan Details - LTM
4Q23 4Q22 LTM 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 360 380 (20) Construction and Land
Slide 17: Loan Details - QTR
4Q23 3Q23 QTR 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 360 365 (5) Construction and Land Dev
Slide 18: Loan By Region
Specialty Lending $3,382 $3,871 $3,898 4Q22 3Q23 4Q23 In Millions Midwest $3,214 $3,260 $3,338 4Q22 3Q23 4Q23 Southwest $1,242 $1,464 $1,566 4Q22 3Q23 4Q23 West $1,656 $1,755 $1,813 4Q22 3Q23 4Q23 Note: Excludes “Other” loans Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, L
Slide 19: Deposit Details - LTM
Deposit Details - LTM 4Q23 4Q22 LTM 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 Total deposits
Slide 20: Deposit Details - QTR
Deposit Details - QTR 4Q23 3Q23 QTR 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 deposits $
Slide 21: Deposit By Region
Specialty Deposits** $2,051 $2,693 $2,778 4Q22 3Q23 4Q23 In Millions Midwest (*)** $5,413 $6,098 $6,219 4Q22 3Q23 4Q23 Southwest $1,845 $1,802 $1,828 4Q22 3Q23 4Q23 West* $1,520 $1,317 $1,351 4Q22 3Q23 4Q23 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX)
Slide 22: Deposit Mix
23.0% 34.0% 40.4% 42.9% 32.5% 33% 33%10% 24% $5,771 $7,985 $11,344 $10,829 $12,176 0.92% 0.32% 0.11% 0.27% 1.58% Deposits Cost of deposits Noninterest bearing % 2019 2020 2021 2022 2023 CD Interest-Bearing Demand Accounts DDA MMA & Savings In Millions Total Deposits $12.2 billion 4Q23 Deposit Mix 22
Slide 23: Specialty Deposits
39.6% 30.7% 29.7% Community Associations $1.1 billion in deposit accounts specifically designed to serve the needs of community associations. Property Management $854 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third Party Escrow and Trust Services $824
Slide 24: Core Funding Mix
37% 32% 30% 43% 35% 17% 4% 7% 31% 18% 18% 24% 2% Core Funding Mix Commercial Business Banking Consumer In Millions $2,879$1,270$4,512 1At December 31, 2023 2Excludes insured accounts, collateralized accounts, accounts that qualify for pass- through insurance, reciprocal accounts, and affiliated acco
Slide 25: Earnings Per Share Trend - 4Q23
Earnings Per Share Trend - 4Q23 $1.17 $0.26 $(0.21) $(0.08) $0.02 $1.16 3Q23 Operating Revenue Provision for Credit Losses Noninterest Expense Change in Effective Tax Rate 4Q23 Change in EPS 25
Slide 26: Earnings Per Share Trend - 2023
$5.31 $2.05 $(0.78) $(1.54) $0.03 $5.07 2022 Operating Revenue Provision for Credit Losses Noninterest Expense Change in Effective Tax Rate 2023 Change in EPS Earnings Per Share Trend - 2023 26
Slide 27: Net Interest Income Trend
In Millions $238.7 $270.0 $360.2 $473.9 $562.6 3.80% 3.56% 3.41% 3.89% 4.43% 2.16% 0.36% 0.08% 1.68% 5.03% Net Interest Income Net Interest Margin Average Effective Federal Funds Rate 2019 2020 2021 2022 2023 Net Interest Income Trend 27
Slide 28: Credit Trends for Loans
Credit Trends for Loans 2019 2020 2021 2022 2023 NPLs/Loans 0.50 % 0.53 % 0.31 % 0.10 % 0.40 % NPAs/Assets 0.45 % 0.45 % 0.23 % 0.08 % 0.34 % Criticized & Classified Loans/Loans 5.03 % 6.42 % 5.52 % 4.09 % 4.06 % ACL/NPLs 163.80 % 354.90 % 517.60 % 1371.90 % 308.2 % ACL/Loans* 0.81 % 2.31 % 1.84 % 1
Slide 29: Allowance for Credit Losses for Loans
$142.1 $21.2 $(28.5) $134.8 ACL 3Q23 Portfolio Changes Net Charge-offs ACL 4Q23 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 macroeconomi
Slide 30: Noninterest Income Trend
Noninterest Income Trend In Millions $49.2 $54.5 $67.7 $59.2 $68.7 $9.9 $9.7 $10.3 $10.0 $10.0 $12.8 $11.7 $15.4 $18.3 $16.6 $9.2 $9.5 $11.9 $11.6 $10.0 $11.9 $17.0 $22.1 $16.7 $22.9 $5.4 $6.6 $8.0 $2.6 $9.2 17.1% 16.8% 15.8% 11.1% 10.9% Wealth Management Deposit Services Charge Card Services Other
Slide 31: Noninterest Expense Trend
Noninterest Expense Trend In Millions $165.5 $167.2 $245.9 $274.2 $348.2 $53.7 $57.2 $65.0 $78.5 $92.4 $14.2 $31.1 $72.3 $2.4 $12.5 $13.5 $16.3 $17.6 $16.5 $81.3 $92.3 $124.9 $147.0 $164.6 $18.0 $4.2 $22.1 $3.4 50.1% 48.7% 49.7% 49.8% 53.4% Other Deposit costs FDIC special assessment Occupancy Emplo
Slide 32: EFSC Borrowing Capacity
EFSC Borrowing Capacity $4.2 $4.3 $4.4 $0.8 $0.9 $1.0 $2.6 $2.5 $2.5 $0.1 $0.1 $0.1$0.7 $0.8 $0.8 36% 36% 37% FHLB borrowing capacity FRB borrowing capacity Fed Funds lines Unpledged securities Borrowing capacity/Deposits 2Q23 3Q23 4Q23 In Billions End of Period and Average Loans to Deposits 90% 90%
Slide 33: Investment Portfolio Breakout
Investment Portfolio Breakout AFS & HTM Securities Obligations of U.S. Government- sponsored enterprises 12% Obligations of states and political subdivisions 42% Agency mortgage- backed securities, 32% Corporate debt securities 6% U.S. Treasury bills 8% TOTAL $2.4 Billion • Effective duration of 5.9
Slide 34: Capital Strategy
Capital Strategy EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate Supports 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 c
Slide 35: Capital TBV and Dividends per Share
Capital TBV and Dividends per Share $23.76 $25.48 $28.28 $28.67 $33.85 $0.62 $0.72 $0.75 $0.90 $1.00 TBV/Share Dividends per Share 2019 2020 2021 2022 2023 Return of Capital $32.1 $35.1 $86.8 $66.5 $37.4 $16.6 $19.8 $26.2 $33.6 $15.5 $15.3 $60.6 $32.9 Common dividend payments Share repurchases 2019
Slide 36: Regulatory Capital
Regulatory Capital 10.0% 14.0% 12.9% 14.9% 14.7% 14.2% 14.2% 6.5% 10.0% 9.9% 10.9% 11.3% 11.1% 11.3% 9.3% 10.1% CET1 Tier 1 Total Risk Based Capital CET1 excluding unrealized losses* Minimum "Well Capitalized" Ratio Optimal Capital Levels 2019 2020 2021 2022 2023 8.0% 12.7%12.6%12.1% 13.0% 11.4%12.0
Slide 37: Balance Sheet Positioned for Growth
61% Adjustable Rate Loans High-quality, Cash- flowing Securities Portfolio with 5.9 Year Average Duration 32.5% Noninterest- Bearing DDA to Total Deposits 8.96% TCE/TA1 8.67% adjusted2 11.3% CET1 10.1% adjusted3 Balance Sheet Positioned for Growth 1Tangible Common Equity/Tangible Assets is a non-GAA
Slide 38: Appendix
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Slide 39: Financial Highlights - 4Q23
*Comparisons noted below are to the linked quarter unless otherwise noted. **A Non-GAAP Measure, Refer to Appendix for Reconciliation. Capital • Tangible Common Equity/Tangible Assets** 8.96%, compared to 8.51% • Tangible Book Value Per Common Share** $33.85, compared to $31.06 • CET1 Ratio 11.3%, c
Slide 40: Financial Highlights, continued - 4Q23
*Comparisons noted below are to the linked quarter unless otherwise noted. Loans & Deposits • Loans $10.9 billion, up $267.3 million • Loan/Deposit Ratio 89% • Deposits $12.2 billion, up $266.5 million • Noninterest-bearing Deposits/Total Deposits 33% Asset Quality • Nonperforming Loans/Loans 0.40%
Slide 41: Financial Highlights - Full Year 2023
Capital • Tangible Common Equity/Tangible Assets** 8.96%, compared to 8.43% • Tangible Book Value Per Share** $33.85, compared to $28.67, increase of 18% • Common stock dividend increased to $1.00 per share, compared to $0.90 per share • Net Income $194.1 million, down $9.0 million; EPS $5.07 compar
Slide 42: ESG Highlights
■ Selected by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury to receive $303 million of New Markets Tax Credits allocations since 2011. ■ In 2022 we invested over $1.8 billion in programs designed to promote small business and community devel
Slide 43: 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 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Period end (in thousands, except per share data) December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Shareholders' equity (GAAP) $ 1,716,068 $ 1,611,880 $ 1,522,263 $ 1,529,116 $ 1,078,975 $ 867,18
Slide 45: Quarter ended Year ended ($ in thousands) December 31, 2023 September 30, 2023 December
Quarter ended Year ended ($ in thousands) December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022 December 31, 2021 Average shareholder’s equity (GAAP) $ 1,652,882 $ 1,648,605 $ 1,623,121 $ 1,498,759 $ 1,277,153 Less average preferred stock 71,988 71,988 71,988 71,988 8,903 Less ave
Slide 46: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended ($ in thousands) December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022 Net interest income $ 140,732 $ 141,639 $ 562,592 $ 473,903 Noninterest income 25,452 12,085 68,725 59,162 FDIC special assessment 2,412 —
Slide 47: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year ended ($ in thousands) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Net interest income (GAAP) $ 562,592 $ 473,903 $ 360,194 $ 270,001 $ 238,717 Tax-equivalent adjustment 8,079 7,042 5,151 3,190 1,611 Les
Slide 48: Enterprise Financial Services Corp
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