Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q4 2021 Earnings Presentation
40 slides from Enterprise Financial Services's earnings presentation, Jan 31, 2022
Slide 1: Enterprise Financial Services Corp Fourth Quarter 2021 Investor Presentation
Enterprise Financial Services Corp Fourth Quarter 2021 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: 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 – 18 years DOUGLAS N. BAUCH
Slide 4: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $13.5 Billion Market Cap Operates in St. Louis Kansas City Phoenix $1.8 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 5: Differentiated Business Model: Provides Multiple Channels to Drive Growth and Earnings
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 6: 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 $0.5 $2.8 $4.4 $1.8 $1.4 $1.1 $0.4 $2.2 Loans* Deposits St. Louis California New Mexico Kansas City Arizona Specialty $— $2.0 $4.0 MSA Branches Deposit Market Ra
Slide 7: Focused Loan Growth Strategies
Focused Loan Growth Strategies Total Loans Specialty market segments represent 31% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $487 million in loans outstanding related to Federal, Historic, and Missouri Affordable Housing
Slide 8: Total Loan Trends
In Millions 25% Total Loan Growth PPP* $613 PPP $397 *Excludes Seacoast PPP loans of $86 million included in acquisition total. **Excludes First Choice PPP loans of $206 million included in acquisition total. Seacoast $1,224 First Choice $1,944 Total Loan Trends PPP** $233 PPP $738 PPP $272 8
Slide 9: Drivers of Loan Growth - Year over Year
Portfolio Balance Pe rc en ta ge G ro w th $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 39% 55% 25% 91% 4Q20 - 4Q21 Increase of $1.8 Billion -24% 6%4% 3% 6% 19%6% 9
Slide 10: Loan Portfolio
Loan Portfolio Total $9.0 Billion CRE 34.0% Construction 6.9% Residential 4.8% Other 2.8% Sponsor Finance 5.6% LIPF 6.6% Tax Credit 5.4% SBA 13.8% PPP 3.0% C&I 17.1% Loans by Product Type Real Estate/ Rental/Leasing 27.3% Finance and Insurance 14.9% Accommodation/Food Service 8.7%Manufacturing 6.8%
Slide 11: Loan Details - QTR
Loan Details - QTR 4Q21 3Q21 QTR Change C&I $ 1,538 $ 1,458 $ 80 CRE, Investor Owned 1,955 1,935 20 CRE, Owner Occupied 1,113 1,163 (50) SBA loans*1 1,241 1,200 41 Sponsor Finance* 508 455 53 Life Insurance Premium Financing* 594 573 21 Tax Credits* 487 462 25 Residential Real Estate 431 520 (89) Co
Slide 12: Loan Details - LTM
Loan Details - LTM 4Q21 4Q20 LTM Change First Choice Net Organic Change C&I $ 1,538 $ 1,103 $ 435 $ 299 $ 136 CRE, Investor Owned 1,955 1,421 534 554 (20) CRE, Owner Occupied 1,113 826 287 291 (4) SBA loans*1 1,241 896 345 164 181 Sponsor Finance* 508 396 112 — 112 Life Insurance Premium Financing*
Slide 13: Total Loans By Business Unit
Total Loans By Business Unit In Millions Note: Excludes PPP and Other loans **3Q21 includes First Choice acquisition *3Q21 includes acquired First Choice SBA loans 13
Slide 14: Attractive Deposit Mix
40% 33% 5% 22% Attractive Deposit Mix CD Interest-Bearing Transaction Accounts DDA MMA & Savings • Significant DDA Composition • Stable, Low Cost Deposit Portfolio • Improving Core Funding 42% Deposit Growth 4Q20 – 4Q21 In Millions Total Deposits $11.3 Billion 34.0% 34.2% 36.0% 40.4% 40.4% Seacoast
Slide 15: Specialty Deposits
Specialty Deposits Community Associations $658 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $444 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party Escrow $441 million in deposi
Slide 16: Core Funding Mix and Cost of Funds
58%22% 11% 6% 36% 24% 21% 9% 4% 34% 27% 20% 12%3% 46% 23% 30% Core Funding Mix Commercial Business Banking Consumer 4Q21 Brokered deposits: $488 4Q20 Brokered deposits: $445 In Millions $3,193 29% $2,716 36% $1,246 12% $1,015 14% $4,195 39% $2,653 35% Cost of Funds1 Commercial Business Banking Consu
Slide 17: Earnings Per Share Trend - 4Q21
Earnings Per Share Trend - 4Q21 Change in EPS 17
Slide 18: Earnings Per Share Trend - 2021
Earnings Per Share Trend - 2021 Change in EPS 18
Slide 19: Net Interest Income Trend
Net Interest Income Trend In Millions 32% NII Growth PPP Income $10.3 PPP Income $4.9 PPP Income $8.5 PPP Income $7.9 PPP Income $6.0 * First Choice acquisition completed 7/21/21. 19
Slide 20: Net Interest Margin
Net Interest Margin Components of Interest-bearing LiabilitiesComponents of Interest-earning Assets 3Q21 3.40 % 4Q20 3.56 % Cash/Liquidity (0.09) % Cash/Liquidity (0.36) % Loans 0.03 % Loans 0.14 % Investments (0.03) % Investments (0.08) % Cost of Funds 0.01 % Cost of Funds 0.15 % 4Q21 3.32 % 4Q21 Y
Slide 21: Credit Trends for Loans
Credit Trends for Loans 4Q21 3Q21 4Q20 NPAs/Assets 0.23% 0.35% 0.45% NPLs/Loans 0.31% 0.46% 0.53% ACL/NPLs 517.6% 366.0% 354.9% ACL/Loans** 1.84% 1.94% 2.31% Annualized Net Charge-offs (Recoveries) to Average Loans In Millions bps bps bps bps bps In Millions Loan Growth and Average Line of Credit Ut
Slide 22: Allowance for Credit Losses for Loans
Allowance for Credit Losses for Loans In Thousands • 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 and qualitative factors 4Q21 In Thousands Loans ACL ACL as a % of Loans Comme
Slide 23: Noninterest Income Trend
Noninterest Income Trend Other Fee Income DetailFee Income In Millions 19.3% 12.5% 16.5% 15.3% 18.1% 23
Slide 24: Operating Expenses Trend
Operating Expenses Trend Other Operating Expenses DetailOperating Expenses In Millions 50.9% 55.2% 51.9% 51.3% 49.2% 24
Slide 25: Capital
Capital *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Excludes PPP loans. 8.0% 12.1% 12.3% 12.3% 12.2% EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate – Strong earnings profile – Sustainable dividend profile Supporting Robust Asset Growth – Organic loan and
Slide 26: Five-Year Financial Highlights
Five-Year Financial Highlights Earnings Per Share (diluted) Adjusted Earnings Per Share (diluted)(1) Adjusted Return on Average Tangible Common Equity(1) Return on Average Assets Noninterest Expense to Average Assets Total Assets $3.83 $3.78 19.59% 1.64% 2.19% $5,646 2018 $3.55 $4.08 18.51% 1.35% 2.
Slide 27: Balance Sheet Positioned for Growth
Modest Asset Sensitivity (50bp increase in interest rate increases NII 3-4%) 63% Adjustable Rate Loans High-quality, Cash-flowing Securities Portfolio with Six-Year Average Duration 40.4% Non- Interest Bearing DDA to Total Deposits 8.31% Tangible Common Equity/Tangible Assets* Balance Sheet Position
Slide 28: Appendix
Appendix Fourth Quarter 2021 EFSC Investor Presentation
Slide 29: Financial Highlights - 4Q21
Financial Highlights - 4Q21 Capital • Tangible Common Equity/Tangible Assets* 8.13%; Adjusted for PPP* 8.31% • Quarterly dividend of $0.20 per share, increased 5% to $0.21 in first quarter 2022 • Repurchased 577,478 shares at an average price of $47.65 per share • Redeemed $50.0 million subordinated
Slide 30: PPP Loans
• 1% coupon, 5.0% ytd average yield • 14% 2 year maturity; 86% 5 year maturity • No PPP loans or servicing have been sold • Forgiveness process started October 29, 2020 • Total PPP fees $39.0 million, $4.2 million unearned Total $272 Million PPP Loans by Size $ In Millions PPP Loans Size Number of L
Slide 31: Sponsor Finance Loans
Total $508 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 • M
Slide 32: Hospitality Loans
Hospitality Loans Size Number of Loans Balance Average Balance > $10 Million 10 $138.9 $13.9 $5-10 Million 26 183.6 7.1 $2-5 Million 66 226.1 3.4 < $2 Million 509 260.1 0.5 Total 611 $808.7 $1.3 Hospitality Loans by Size $ In Millions Total $809 Million • Weighted average LTV approximately 60-63% •
Slide 33: 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 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
Reconciliation of Non-GAAP Financial Measures Quarter ended (in thousands) Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Net interest income $ 102,060 $ 97,273 $ 81,738 $ 79,123 $ 77,446 Less incremental accretion income — — — — 856 Core net interest income 102,060 97,273 81,738 7
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended (in thousands) December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 Total shareholders' equity $ 1,529,116 $ 1,439,635 $ 1,118,301 $ 1,092,497 $ 1,078,975 Less preferred stock 71,988 — — — — Less goodwill 365,
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended (in thousands) December 31, 2021 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net interest income $ 102,060 $ 360,194 $ 270,001 $ 238,717 $ 191,905 $ 177,304 Noninterest income 22,630
Slide 38: Quarter ended Year ended (in thousands, except per share data) December 31, 2021 December
Quarter ended Year ended (in thousands, except per share data) December 31, 2021 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net income - GAAP $ 50,811 $ 133,055 $ 74,384 $ 92,739 $ 89,217 $ 48,190 Branch closure expenses — 3,441 — — — — CECL double coun
Slide 39: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year ended ($ in thousands, except per share data) December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Total shareholders' equity $ 1,529,116 $ 1,078,975 $ 867,185 $ 603,804 $ 548,573 Less preferred stock 71,988 — —
Slide 40: Q&A Fourth Quarter 2021
Q&A Fourth Quarter 2021 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q4 2021 Earnings Presentation on 6ix