Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q1 2024 Earnings Presentation
46 slides from Enterprise Financial Services's earnings presentation, May 8, 2024
Slide 1: Enterprise Financial Services Corp 2024 First Quarter Investor Presentation
Enterprise Financial Services Corp 2024 First Quarter 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: Enterprise Financial Services Corp Differentiated Business Model
Enterprise Financial Services Corp Operates in St. Louis Kansas City Phoenix New Mexico Los Angeles Las Vegas The Company has deposit and SBA loan production offices across the country. San Diego Dallas* Orlando Focused on Privately Owned Businesses and Business Owners Commercial Lending Lending Ver
Slide 4: Economic View of Markets
Economic View of Markets State/Metro Population (in millions)2 Unemployment Rate2 Average Household Income (in thousands)2 Gross Product (in billions)2 1Q24 YTD FY2023 Midwest Total Loans1 / Total Deposits $3.4 billion / $6.2 billion Missouri 6.2 3.27% $154 $430 St. Louis 2.8 3.47% $183 $218 Kansas
Slide 5: EFSC Awards and Recognition
EFSC Awards and Recognition Doing Well by Doing Good Award Promote community service, philanthropy and charitable giving to make a difference in the communities they service. America’s Best Banks No. 3 on the Forbes® list of America’s Best Banks based on growth, credit quality and profitability. Wom
Slide 6: Flexible Balance Sheet - Well Managed and Positioned for Growth
Cycle to date asset beta of 51% Annual % change in NII: +100 bp 3.3% -100 bp (3.4)% Annual % change in NII including variable deposit servicing expense in NIE: +100 bp 1.8% -100 bp (2.0)% 61%* Adjustable rate loans High-quality, cash- flowing securities portfolio with 5.7 average duration Loan portf
Slide 7: Loan and Deposit Trends
$2.4 $2.8 $3.2 $4.1 $4.4 $5.3 $7.2 $9.0 $9.7 $10.9 $11.0 $2.5 $2.8 $3.2 $4.2 $4.6 $5.8 $8.0 $11.3 $10.8 $12.2 $12.3 EFSC Loans Acquired Loans EFSC Deposits Acquired Deposits 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1Q24 $ In Billions 17.4 % 1 0 yr Dep osit Gro wth CAG R1 (11. 4% 1 exc ludi
Slide 8: M&A Diversifies & Complements Organic Growth
M&A Diversifies & Complements Organic Growth M&A Strategy Growth History $5.3 $5.6 $7.3 $9.8 $13.5 $13.1 $14.5 $4.4 $6.1 $8.5 $11.3 $0.9 $1.2 $1.3 $2.2 EFSC Assets Merger Contribution 2017 2018 2019 2020 2021 2022 2023 $ In Billions Strategically enhanced geographic diversification and product lines
Slide 9: Value Proposition: EFSC Adding Shareholder Value
Value Proposition EFSC Adding Shareholder Value Experience Performance Discipline • Tenured management team ◦ Average years of tenure: 16 years • Abundant industry experience ◦ Average years of industry experience: 23 years • Diversification across geographic regions and product lines • History of s
Slide 10: Financial Highlights
Z ENTERPRISE Financial Services Corp Financial Highlights
Slide 11: Financial Highlights - 1Q24
Financial Highlights - 1Q24* Capital • Tangible Common Equity/Tangible Assets** 9.01%, compared to 8.96% • Tangible Book Value Per Common Share** $34.21, compared to $33.85 • CET1 Ratio 11.4%, compared to 11.3% • Quarterly common stock dividend of $0.25 per share in first quarter 2024 • Quarterly pr
Slide 12: Financial Highlights, continued - 1Q24
Financial Highlights, continued - 1Q24* *Comparisons noted below are to the linked quarter unless otherwise noted. **A Non-GAAP Measure, Refer to Appendix for Reconciliation. Loans & Deposits • Loans $11.0 billion, up $144.4 million • Loan/Deposit Ratio 90% • Deposits $12.3 billion, up $77.3 million
Slide 13: Total Loan Trends
Total Loan Trends $7,225 $9,018 $9,737 $10,884 $11,028 90.5% 79.5% 89.9% 89.4% 90.0% Loans PPP Loans/Deposits 2020 2021 2022 2023 1Q24 In Millions PPP $272 PPP $699 13
Slide 14: Loan Details
Loan Details 1Q24 4Q23 1Q23 Qtr Change LTM Change C&I $ 2,264 $ 2,186 $ 2,006 $ 78 $ 258 CRE Investor Owned 2,281 2,292 2,240 (11) 41 CRE Owner Occupied 1,280 1,262 1,174 18 106 SBA loans* 1,275 1,282 1,316 (7) (41) Sponsor Finance* 865 872 678 (7) 187 Life Insurance Premium Financing* 1,004 956 860
Slide 15: Loans By Region
Loans By Region Specialty Lending $3,503 $3,898 $3,918 1Q23 4Q23 1Q24 In Millions Midwest $3,267 $3,338 $3,412 1Q23 4Q23 1Q24 Southwest $1,327 $1,566 $1,605 1Q23 4Q23 1Q24 Note: Excludes “Other” loans; Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX), West (Sou
Slide 16: Focused Loan Growth Strategies
6.5% 7.8% 9.1% 11.6% 65.0% Focused Loan Growth Strategies Total Loans Lending verticals provide a competitive advantage, risk adjusted pricing and fee income opportunities. Tax Credit Programs $718 million in loans outstanding related to Federal, Historic, and Affordable Housing tax credits. $303 mi
Slide 17: Loan Portfolio
Loan Portfolio Total $11.0 billion C&I 43.2% CRE 43.6% Construction 7.4% Residential 3.3% Other 2.5% Loans by Product Type Real Estate/ Rental/Leasing 25.2% Finance and Insurance 19.0% Accommodation/ Food Service 9.3% Manufacturing 6.6% Construction 5.8% Other Services 5.2% Other 28.9% Loans by Indu
Slide 18: Sponsor Finance
Sponsor Finance Administrative and Support 10.9% Construction 8.4% Health Care and Social Assistance 12.0% Manufacturing 22.7% Wholesale Trade 12.0% Other 34.0% Sponsor Finance Loans by Industry TypeSponsor Finance Loans & Deposits by Period $677.5 $879.5 $888.0 $872.3 $865.2 $320.0 $307.3 $375.9 $4
Slide 19: Office CRE (Non-owner Occupied)
Office CRE (Non-owner Occupied) Midwest 48.9% Southwest 27.8% West 18.2% Specialty 5.1% Office CRE Loans by Location Real Estate/ Rental/Leasing 86.2% Health Care and Social Assistance 3.7% Other 10.1% Office CRE Loans by Industry Type Size Average Risk Rating Number of Loans Balance Average Balance
Slide 20: Allowance for Credit Losses on Loans
$134.8 $6.6 $(5.9) $135.5 ACL 4Q23 Portfolio Changes Net Charge-offs ACL 1Q24 Allowance for Credit Losses on 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 macroeconomic
Slide 21: Credit Trends for Loans
Credit Trends for Loans 2020 2021 2022 2023 1Q24 NPLs/Loans 0.53 % 0.31 % 0.10 % 0.40 % 0.32 % NPAs/Assets 0.45 % 0.23 % 0.08 % 0.34 % 0.30 % Criticized & Classified Loans/Loans 6.42 % 5.52 % 4.09 % 4.06 % 4.00 % ACL/NPLs 354.90 % 517.60 % 1371.90 % 308.2 % 380.2 % ACL/Loans* 2.31 % 1.84 % 1.56 % 1.
Slide 22: 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 5.7
Slide 23: EFSC Borrowing Capacity
EFSC Borrowing Capacity $4.3 $4.4 $5.2 $0.9 $1.0 $1.3 $2.5 $2.5 $2.6 $0.1 $0.1 $0.1$0.8 $0.8 $1.1 36% 37% 42% FHLB borrowing capacity FRB borrowing capacity Fed Funds lines Unpledged securities Borrowing capacity/Deposits 3Q23 4Q23 1Q24 In Billions End of Period and Average Loans to Deposits 90% 91%
Slide 24: Total Deposits and Deposit Mix
34.0% 40.4% 42.9% 32.5% 31.1% 31% 33%12% 24% $7,985 $11,344 $10,829 $12,176 $12,254 0.32% 0.11% 0.27% 1.58% 2.13% Deposits Cost of deposits Noninterest bearing % 2020 2021 2022 2023 1Q24 CD Interest-Bearing Demand Accounts DDA MMA & Savings In Millions Total Deposits $12.3 billion 1Q24 Deposit Mix 2
Slide 25: Deposit Details
Deposit Details 1Q24 4Q23 1Q23 Qtr Change LTM Change Noninterest-bearing demand accounts $ 3,805 $ 3,959 $ 4,192 $ (154) $ (387) Interest-bearing demand accounts 2,956 2,950 2,396 6 560 Money market accounts 3,431 3,399 2,960 32 471 Savings accounts 576 595 713 (19) (137) Certificates of deposit: Br
Slide 26: Deposits By Region
Deposits By Region Specialty Deposits** $2,431 $2,778 $2,901 1Q23 4Q23 1Q24 In Millions Midwest(*)** $5,472 $6,219 $6,206 1Q23 4Q23 1Q24 Southwest $1,835 $1,828 $1,886 1Q23 4Q23 1Q24 West* $1,417 $1,351 $1,261 1Q23 4Q23 1Q24 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ,
Slide 27: Differentiated Deposit Verticals
Differentiated Deposit Verticals 40.3% 33.5% 26.2% Community Associations $1.2 billion in deposit accounts specifically designed to serve the needs of community associations. Property Management $972 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third Par
Slide 28: Core Funding Mix
Core Funding Mix Commercial Business Banking Consumer In Millions $2,769$1,358$4,315 1At March 31, 2024 2Excludes insured accounts, collateralized accounts, accounts that qualify for pass-through insurance, reciprocal accounts, and affiliated accounts. Note: Brokered deposits were $0.9 billion at 1Q
Slide 29: 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 30: Capital: TBV and Common Dividends per Share
Capital TBV* and Common Dividends per Share $25.48 $28.28 $28.67 $33.85 $34.21 $0.72 $0.75 $0.90 $1.00 $0.25 TBV/Share Dividends per Share 2020 2021 2022 2023 1Q24 Return of Capital $35.1 $86.8 $66.5 $37.4 $9.4 $19.8 $26.2 $33.6 $37.4 $15.3 $60.6 $32.9 Common dividend payments Share repurchases 2020
Slide 31: Regulatory Capital
Regulatory Capital 10.0% 14.0% 14.9% 14.7% 14.2% 14.2% 14.3% 6.5% 10.0% 10.9% 11.3% 11.1% 11.3% 11.4% 9.3% 10.1% 10.0% CET1 Tier 1 Total Risk Based Capital CET1 excluding unrealized losses* Minimum "Well Capitalized" Ratio Optimal Capital Levels 2020 2021 2022 2023 1Q24 8.0% 12.8%12.6% 12.7% 12.1% 1
Slide 32: Earnings Per Share Trend - 1Q24
Earnings Per Share Trend - 1Q24 $1.16 $(0.34) $0.26 $(0.02) $(0.01) $1.05 4Q23 Operating Revenue Provision for Credit Losses Noninterest Expense Change in Effective Tax Rate 1Q24 Change in EPS 32
Slide 33: Net Interest Income Trend
Net Interest Income Trend In Millions $270.0 $360.2 $473.9 $562.6 $137.7 3.56% 3.41% 3.89% 4.43% 4.13% 0.36% 0.08% 1.68% 5.03% 5.33% Net Interest Income Net Interest Margin Avg Federal Funds Rate 2020 2021 2022 2023 1Q24 YTD 33
Slide 34: Noninterest Income Trend
Noninterest Income Trend In Millions $54.5 $67.7 $59.2 $68.7 $12.2 $17.0 $22.1 $16.7 $22.9 $5.0 $6.6 $8.0 $2.6 $9.2 $(2.2) $11.7 $15.4 $18.3 $16.6 $4.4 $9.5 $11.9 $11.6 $10.0 $2.4 $9.7 $10.3 $10.0 $10.0 $2.6 16.8% 15.8% 11.1% 10.9% 8.1% Other Tax Credit Income Deposit Services Charge Card Services W
Slide 35: Noninterest Expense Trend
Noninterest Expense Trend $167.2 $245.9 $274.2 $348.2 $93.5 $57.2 $65.0 $78.5 $92.4 $23.0 $14.2 $31.1 $72.3 $20.3 $2.4 $13.5 $16.3 $17.6 $16.5 $4.3 $92.3 $124.9 $147.0 $164.6 $45.3 $4.2 $22.1 $3.4 48.7% 49.7% 49.8% 53.4% 60.2% Other Deposit costs FDIC special assessment Occupancy Employee compensati
Slide 36: Appendix
Zz ENTERPRISE inancial Services Corp \ Appendix
Slide 37: 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 2023, our portfolio included the financing of over $2.1 billion in small business, small farm and com
Slide 38: 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 39: 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 – 21 years DOUGLAS
Slide 40: 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 41: Reconciliation of Non-GAAP Financial Measures: Tangible Common Equity Ratio
Reconciliation of Non-GAAP Financial Measures Tangible Common Equity Ratio Period end (in thousands, except per share data) March 31, 2024 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Shareholders' equity (GAAP) $ 1,731,725 $ 1,716,068 $ 1,522,263 $ 1,529,116 $ 1,078,975 L
Slide 42: Reconciliation: Adjusted ROAA and Allowance Coverage Ratio
Quarter ended Year ended ($ in thousands) March 31, 2024 December 31, 2023 December 31, 2023 Net income (GAAP) $ 40,401 $ 44,529 $ 194,059 FDIC special assessment 625 2,412 2,412 Core conversion expense 350 — — Related tax effect (242) (598) (598) Net income adjusted (non-GAAP) $ 41,134 $ 46,343 $ 1
Slide 43: Reconciliation: Net Interest Income and Core Efficiency Ratio
Year-to-date Year ended ($ in thousands) March 31, 2024 December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Net interest income (GAAP) $ 137,728 $ 562,592 $ 473,903 $ 360,194 $ 270,001 Tax-equivalent adjustment 2,040 8,079 7,042 5,151 3,190 Less incremental accretion income — — —
Slide 44: Reconciliation: Return on Average Tangible Common Equity
Quarter ended ($ in thousands) March 31, 2024 December 31, 2023 Average shareholder’s equity (GAAP) $ 1,738,698 $ 1,652,882 Less average preferred stock 71,988 71,988 Less average goodwill 365,164 365,164 Less average intangible assets 11,770 12,858 Average tangible common equity (non-GAAP) $ 1,289,
Slide 45: PPNR & PPNR ROAA Reconciliation
Quarter ended Year ended ($ in thousands) March 31, 2024 December 31, 2023 December 31, 2023 Net interest income $ 137,728 $ 140,732 $ 562,592 Noninterest income 12,158 25,452 68,725 FDIC special assessment 625 2,412 2,412 Core conversion expense 350 — — Less gain on sale of investment securities —
Slide 46: Enterprise Financial Services Corp
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Enterprise Financial Services — Q1 2024 Earnings Presentation on 6ix