Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q1 2019 Earnings Presentation
36 slides from Enterprise Financial Services's earnings presentation, May 7, 2019
Slide 1: First Quarter 2019 Investor Presentation
Exhibit 99.1 Enterprise Financial Services Corp First Quarter 2019 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some of the information in this report contains “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, and by Section 27A of the Securities Act of 1933, as amended
Slide 3: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets FOCUSED BUSINESS MODEL: $ 6.9 Billion • Attract Top Talent in Markets • Proven Ability to Grow Market Cap Commercial & Industrial “C&I” Talent Loans $ Billion • Product Breadth 1.1 ◦ Banking Operates in ◦ Trust & Wealth Management ◦ Treasury Management Strength K
Slide 4: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY KEENE S. TURNER SCOTT R. GOODMAN 51, President & Chief Executive 39, Executive Vice President 55, President, Enterprise Bank & Officer, EFSC & Chief Financial Officer, EFSC Trust Enterprise Tenure – 15 years Enterprise Tenure – 6 years Enterprise Tenure – 16
Slide 5: Differentiated Business Model: Built for Quality Earnings Growth
Differentiated Business Model: Built for Quality Earnings Growth FocusedTarget and Well-Defined Audience TargetedTailored Array Solutions of Banking ExperiencedExpertise Bankers and StrategyFocused Aimed and at Well-Defined Business Targetedand Wealth Array Management of Banking Experienced,Advisors
Slide 6: Four Urban Markets
Four Urban Markets Phoenix Kansas City New Mexico St. Louis Arizona Kansas Loans $353MM $730MM $682MM $2.3B Deposits $198MM $785MM $1.1B $3.5B Branches 2 7 6 19 Deposit Market 29th/0.22% 17th/1.28% 7th/3.60% 4th/4.45% Share 1, 2 JPMorgan Chase UMB Wells Fargo US Bancorp Primary Wells Fargo Commerce
Slide 7: Strategic Combination with Trinity Capital Corporation
Strategic Combination with Trinity Capital Corporation (“Trinity”) Closed March 8, 2019 Trinity Overview ▪ Headquartered in Los Alamos, New Mexico, Trinity was founded in 1963 by local investors to provide full-service banking to the community that developed around the Los Alamos National Laboratory
Slide 8: Focused Loan Growth Strategies
Focused Loan Growth Strategies 4.7% Specialized Market Segments Represent 27% of 8.8% Total Portfolio Loans, Offering Competitive Advantages, Risk Adjusted Pricing and Fee Income Opportunities. 8.8% 1.7% 2.5% Expectations for future growth includes continued focus in these specialized market segment
Slide 9: History of Strong C&I Growth
History of Strong C&I Growth $2,227 Trinity $65 $1,985 In Millions 16% 5-Year CAGR $1,985 $1,774 $1,774 $1,545 $1,545 $1,265 $1,265 $1,060 $1,060 Q1 ‘14 Q1 ‘15 Q1 ‘16 Q1 ‘17 Q1 ‘18 Q1 ‘19 9
Slide 10: Buying Process
Buying Process Buyer’s Journey Sales Process
Slide 11: Customer Focus
Customer Focus Source: Greenwich Associates 11
Slide 12: Total Loan Trends
Total Loan Trends In Millions 20% Total Loan Growth* $5,017 Trinity $682 $4,276 $4,350 $4,191 $4,267 Q1' 18 Q2' 18 Q3' 18 Q4' 18 Q1' 19 *Note: 3% Excluding Acquisition of Trinity 12
Slide 13: Drivers of Loan Growth
Drivers of Loan Growth $366 Million $995 Million $300 Million $826 Million 4% 3% 8% 2% 9% 8% 7% 1% 1% 2% 4% 5% 5% 6% 13% 4% 10% 36% 7% 12% 58% 4% 76% 68% 10% 26% 11% Q1 2015 - Q1 2016 Q1 2016 - Q1 2017 Q1 2017 - Q1 2018 Q1 2018 - Q1 2019 Acquisition General C&I Commercial/Construction RE Tax Credits
Slide 14: Attractive Deposit Mix
Attractive Deposit Mix Total Deposits DDA $5.5 Billion 21% • Significant DDA Composition • Stable Cost of Deposits Interest-Bearing Transaction 25% • Improving Core Funding Accounts 39% In MMA & Savings Millions 15% 25.7% 24.7% 25.2% 24.0% 21.4% $5,537 CD Trinity $4,588 $1,094 $4,281 $4,248 $4,210 C
Slide 15: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer In Millions $1,666 $1,952 $544 $567 $1,429 $2,429 46% 39% 15% 12% 39% 49% 9% 9% 32% 33% 3% 5% 18% 14% 18% 14% 22% 21% 20% 12% 21% 22% 29% 54% 55% 22% 43% 41% 26% 31% 6% 3% Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2019 Brokered deposits:
Slide 16: Financial Scorecard Q1 2019 Compared to Q1 2018
Financial Scorecard Q1 2019 Compared to Q1 2018 26% Continued Growth in EPS Consistent 13% 5 bps efficiency ratio Drive Net Interest Defend Core Net Achieve Further Income Growth in Interest Margin1 Improvement in Core Dollars with Favorable Operating Leverage1 Loan Growth Trends 29% Enhance Deposit
Slide 17: Earnings Per Share Trend - Q1 2019
Earnings Per Share Trend - Q1 2019 Changes in EPS $(0.20) $(0.08) $(0.07) $1.02 $0.67 Q4 ‘18 Merger Related Change in Other Operating Q1 ‘19 Expenses Shares/ETR Results 17
Slide 18: Net Interest Income Trend
Net Interest Income Trend In Millions 3.74% 3.75% 3.74% 3.77% 3.79% $52.3 $50.6 $47.0 $48.1 $46.2 $51.2 $47.6 $48.5 $45.4 $46.8 13% Core NII Growth Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Core Net Interest Income* Incremental Accretion On Non-core Acquired Assets FTE Core Net Interest Margin* Note: * A N
Slide 19: Credit Trends for Loans
Credit Trends for Loans Net Charge-offs Total Loan Growth (1) In Millions 26 bps 23 bps $94 $85 $83 16 bps 6 bps (2) bps $(9) $(15) Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Net Provision for Loans Q1 2019 EFSC Peer(2) In Millions NPAs/Assets = 0.24% 0.57% $2.3 $2.1 NPLs/
Slide 20: Noninterest Income Trend
Noninterest Income Trend In Millions Fee Income Other Fee Income Detail $2.8 $2.8 $10.7 $0.1 $0.1 $9.5 $9.7 $0.1 $9.2 $0.2 $0.3 $2.3 $2.3 $0.2 $8.4 $1.0 $0.3 $2.8 $0.2 $0.3 $2.8 $2.3 $1.4 $1.7 $0.1 $0.1 $1.7 $0.3 $0.2 $1.7 $1.8 $0.3 $1.5 $1.8 $1.8 $0.1 $1.4 $0.2 $0.2 $0.4 $2.1 $0.2 $2.8 $3 $3.0 $2.9
Slide 21: Operating Expenses Trend
Operating Expenses Trend 54.1% 54.0% 52.4% 52.2% 49.8% $39.8 In Millions $7.3 $30.7 $29.9 $29.1 $29.2 $1.3 $0.7 $19.4 $16.5 $16.6 $16.3 $16.6 $2.4 $2.3 $2.4 $2.4 $2.6 $10.2 $10.3 $10.5 $10.4 $10.5 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Other Occupancy Employee compensation and benefits Merger related ex
Slide 22: Positive Momentum in Earnings Per Share
Positive Momentum in Earnings Per Share $1.02 $0.97 $0.95 $0.90 Five-Year CAGR 17% $0.69 $0.67 $0.67 $0.61 $0.59 $0.56 $0.54 $0.52 $0.50 $0.48 $0.46 $0.43 $0.41 $0.36 $0.32 $0.30 $0.30 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1
Slide 23: Five-Year Financial Highlights
Five-Year Financial Highlights In Thousands, except per share data Q1 2019 2018 2017 2016 2015 Net Interest Income $52,343 $191,905 $177,304 $135,495 $120,410 Total Noninterest Income $9,230 $38,347 $34,394 $29,059 $20,675 Net Income $16,156 $89,217 $48,190 $48,837 $38,450 Earnings Per Share (dilute
Slide 24: Capital Levels Prudently Managed to Facilitate Growth and Returns
Capital Levels Prudently Managed to Facilitate Growth and Returns In Millions ROATCE* Capital Uses the Past 5 Years** 22.0% $350 $314 20.0% $300 19.59% 19.83% $250 $233 18.0% 17.53% $200 16.0% 14.67% $150 15.52% 14.0% 12.77% 14.42% $100 12.0% 12.93% $41 $38 11.63% $50 10.0% $0 h A e s 2015 2016 2017
Slide 25: Enterprise Financial Services Corp
Enterprise Financial Services Corp • Highly Focused, Proven Business Model • Strong Track Record of Commercial Loan Growth • Differentiated Competitive Lending Expertise • Enhanced Core Funding Capabilities • Increased Returns and Enhanced Shareholder Value 3 Year 5 Year 115% 56% 63% 45% EFSC Index
Slide 26: 1st Quarter 2019 EFSC Appendix
1st Quarter 2019 EFSC Investor Presentation Appendix
Slide 27: Effective Tax Rate Reconciliation
Effective Tax Rate Reconciliation Q1 2019 2018 Q1 2018 Federal Tax Rate 21.00% 21.00% 21.00% State Tax, Net of Federal Benefit 2.42% 2.32% 2.65% Excess Tax Benefits (2.07)% (1.56)% (4.06)% Tax Credit Investments (0.88)% (4.66)% (3.98)% Nondeductible-Merger Expenses 1.29% —% —% Other Tax Adjustments
Slide 28: Balance Sheet Positioned for Growth
Balance Sheet Positioned for Growth Modest Asset High-quality, 60% Floating Cash-flowing 8.35% Sensitivity 21.0% Rate Loans, Securities Tangible (200 BPS Non-Interest with Two-Year Portfolio with Common Rate Shock Bearing DDA to Average Four-Year Equity/Tangible Increases NII Total Deposits By 5.1%)
Slide 29: Successful FDIC-Assisted Acquisition Strategy
Successful FDIC-Assisted Acquisition Strategy Significant Earnings Contribution (Pre-tax) Completed 4 Contributed $81 2017 2018 Q1 2019 FDIC-Assisted Million in Net Transactions Earnings Since $8,106 $8,079 $1,419 Since December Acquisition 2009 Dollars in Thousands Significant Terminated all loss s
Slide 30: Capital Maintenance
Capital Maintenance Tangible Common Equity/Tangible Assets* • 2,000,000 Share Common Stock Repurchase Plan • 948,895 Remaining Shares Under 8.88% Authorization 8.69% 8.76% 8.66% 8.35% 8.14% • No Specified End Date • Disciplined, Patient Approach Based on Market Conditions • Sufficient Capital to Sup
Slide 31: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company’s accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as net interest marg
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Quarter ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, ($ in thousands, except per share data) 2019 2018 2018 2018 2018 CORE PERFORMANCE MEASURES Net interest income $ 52,343 $ 50,593 $ 48,093 $ 47,048 $ 46,171 Less: Incremental accretion income 1
Slide 33: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures For the Year ended December 31, December 31, December 31, December 31, ($ in thousands, except per share data) 2018 2017 2016 2015 CORE PERFORMANCE MEASURES Net interest income $ 191,905 $ 177,304 $ 135,495 $ 120,410 Less: Incremental accretion income 3,
Slide 34: Reconciliation of Non-GAAP Financial Measures: Tangible Common Equity Ratio
Reconciliation of Non-GAAP Financial Measures Tangible Common Equity Ratio March 31, December 31, December 31, December 31, December 31, December 31, (in thousands) 2019 2018 2017 2016 2015 2014 Total shareholders' equity $ 797,835 $ 603,804 $ 548,573 $ 387,098 $ 350,829 $ 316,241 Less: Goodwill 207
Slide 35: Reconciliation of Non-GAAP Financial Measures: Merger-Related and Tax Items
Reconciliation of Non-GAAP Financial Measures Impact of Merger-Related and Tax Items For the Quarter ended For the Year ended March 31, December December December December (in thousands, except per share data) 2019 31, 2018 31, 2017 31, 2016 31, 2015 IMPACT OF MERGER-RELATED AND TAX ITEMS Net income
Slide 36: 1st Quarter 2019 EFSC Q&A
1st Quarter 2019 EFSC Investor Presentation Q&A
Enterprise Financial Services — Q1 2019 Earnings Presentation on 6ix