Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2015 Earnings Presentation
29 slides from Enterprise Financial Services's earnings presentation, Nov 10, 2015
Slide 1: Third Quarter 2015 Investor Presentation
ENTERPRISE FINANCIAL SERVICES CORP PETER F. BENOIST, PRESIDENT & CEO KEENE S. TURNER, EXECUTIVE VICE PRESIDENT & CFO SCOTT R. GOODMAN, PRESIDENT, ENTERPRISE BANK & TRUST THIRD QUARTER 2015 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
1 Some of the information in this report contains “forward-looking statements” within the meaning of and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified with use of terms such as “ma
Slide 3: Company Snapshot
2 COMPANY SNAPSHOT FDIC Data ENTERPRISE BANK $3.5 Billion IN TOTAL ASSETS ENTERPRISE TRUST $1.4 Billion IN ASSETS UNDER ADMINISTRATION CONCENTRATED ON PRIVATE BUSINESSES AND OWNER FAMILIES RELATIONSHIP DRIVEN ATTRACT TOP TALENT IN MARKETS PRODUCT BREADTH • BANKING • TRUST & WEALTH MANAGEMENT • TREAS
Slide 4: Differentiated Business Model: Built for Quality Earnings Growth
3 DIFFERENTIATED BUSINESS MODEL: BUILT FOR QUALITY EARNINGS GROWTH FOCUSED AND WELL-DEFINED STRATEGY AIMED AT BUSINESS OWNERS, EXECUTIVES AND PROFESSIONALS TARGETED ARRAY OF BANKING AND WEALTH MANAGEMENT SERVICES TO MEET OUR CLIENTS’ NEEDS EXPERIENCED BANKERS AND ADVISORS Enterprise Bank Financial &
Slide 5: Enterprise University: A Key Brand Differentiator
4 EU is a Continuing Series of More than 30 High-Impact Workshops for Business Owners DESIGNED TO HELP MANAGEMENT TEAMS GROW THEIR BUSINESSES EU IS OFFERED SEMI-ANNUALLY TO ENTERPRISE CLIENTS AND PROSPECTS ALIKE ENTERPRISE UNIVERSITY: A KEY BRAND DIFFERENTIATOR EU is Unique and Highly Valued; A Clea
Slide 6: Strong Track Record of Success in St. Louis
5 6th RANKED IN DEPOSIT SHARE, LARGEST PUBLICLY HELD BANK BASED IN ST. LOUIS* STRONG TRACK RECORD OF SUCCESS IN ST. LOUIS *Excludes Bank Units of Scottrade, Stifel Nicolaus, 6/30/15 FDIC data $1.4 BILLION WEALTH MANAGEMENT BUSINESS $1.8 BILLION IN LOANS $1.4 BILLION IN DEPOSITS CONSISTENT ABILITY TO
Slide 7: Kansas City: Additional Growth Opportunities
6 ENTERED MARKET IN 2000 $629 Million IN LOANS $615 Million IN DEPOSITS ADDITIONAL GROWTH OPPORTUNITIES STRONG FOOTPRINT IN DESIRABLE Johnson County SIMILARITY TO ST. LOUIS’ Stable and Diverse Economic Profile ENABLES SIMILAR MARKET STRATEGIES Kansas City
Slide 8: Phoenix: Additional Growth Opportunities
7 ADDITIONAL GROWTH OPPORTUNITIES Source: 6/30/14 FDIC data, SNL Financial ESTABLISHED PRESENCE IN 2009 $164 Million IN LOANS $90 Million IN DEPOSITS Phoenix-Mesa-Scottsdale, AZ REBOUNDING ECONOMY WITH Strong Growth POTENTIAL. RANKED 10 of 100 Largest Metro AREAS IN OVERALL ECONOMIC PERFORMANCE POST
Slide 9: Cross-Selling and Business Banking Initiatives
8 CROSS-SELLING AND BUSINESS BANKING INITIATIVES COMPLEMENT PRIMARY COMMERCIAL STRATEGY HIGH Client Satisfaction PAVES WAY FOR ADD-ON PRODUCT SALES TREASURY MANAGEMENT Product Implementations Rose 18% IN 2014; 40% OF ALL NEW IMPLEMENTATIONS WERE CROSS-SELLS TO CURRENT CLIENTS Business Banking Initia
Slide 10: History of Strong C&I Growth
9 HISTORY OF STRONG C&I GROWTH $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2010 2011 2012 2013 2014 9/30/2015 $594 In millions $763 $963 $1,042 $1,270 $1,371
Slide 11: Focused Loan Growth Strategies
10 Tax Credit Programs. $145 MILLION IN LOANS OUTSTANDING RELATED TO FEDERAL NEW MARKETS, HISTORIC AND MISSOURI AFFORDABLE HOUSING TAX CREDITS. $183 MILLION IN FEDERAL & STATE NEW MARKETS TAX CREDITS AWARDED TO DATE. Enterprise Value Lending. $246 MILLION IN M&A RELATED LOANS OUTSTANDING, PARTNERING
Slide 12: Drivers of Loan Growth
11 DRIVERS OF LOAN GROWTH Enterprise Value Lending 23.3% Life Insurance Premium Finance 14.9% General Commercial & Industrial 21.9% Commercial/ Construction RE, 15.9% Residential RE 0.5% Consumer & Other 23.5% ENTERPRISE VALUE LENDING LIFE INSURANCE PREMIUM FINANCE GENERAL COMMERCIAL & INDUSTRIAL CO
Slide 13: Portfolio Loan Trends
12 PORTFOLIO LOAN TRENDS $2,295 $2,434 $2,436 $2,543 $2,602 2,000 2,200 2,400 2,600 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015 In Millions
Slide 14: Attractive Deposit Mix
13 25% 40% 16% 19% ATTRACTIVE DEPOSIT MIX CD Interest Bearing Transaction Accts DDA MMA & Savings SEPT 30, 2015 $2,814MM Significant DDA BASE Declining COST OF DEPOSITS IMPROVING Core Funding 80% OF Core Deposits ARE COMMERCIAL CUSTOMERS $2,510 $2,492 $2,675 $2,692 $2,814 27.7% 25.8% 25.5% 24.5% 24.
Slide 15: Financial Priorities
14 CONTINUED GROWTH IN CORE EPS DRIVE NET INTEREST INCOME GROWTH IN DOLLARS WITH FAVORABLE LOAN GROWTH TRENDS DEFEND NET INTEREST MARGIN MAINTAIN HIGH QUALITY CREDIT PROFILE ACHIEVE FURTHER IMPROVEMENT IN OPERATING LEVERAGE ENHANCE DEPOSIT LEVELS TO SUPPORT GROWTH FINANCIAL PRIORITIES 19% 9% 4
Slide 16: Positive Momentum in Core Earnings Per Share
15 POSITIVE MOMENTUM IN CORE* EARNINGS PER SHARE $0.37 $0.33 $0.35 $0.38 $0.44 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 19% CORE EPS GROWTH FROM Q3 2014 TO Q3 2015
Slide 17: Reported vs. Core EPS 2015 YTD
16 EARNINGS PER SHARE $22,387 $1.37 <$0.20> $1.17 EPS Non-Core Covered Assets Core EPS In Millions * A Non GAAP Measure, Refer to Appendix for Reconciliation (1) FDIC Loss Sharing Agreements REPORTED VS. CORE EPS* 2015 YTD (1)
Slide 18: Net Interest Income Driving Core Revenue Growth
17 NET INTEREST INCOME DRIVING CORE REVENUE GROWTH* In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $24.9 $25.7 $25.6 $26.3 $27.1 3.41% 3.45% 3.46% 3.46% 3.41% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $18.0 $19.0 $20.0 $21.0 $22.0 $23.0 $24.0 $25.0 $26.0 $27.0 $28
Slide 19: Credit Trends for Portfolio Loans
18 CREDIT TRENDS FOR PORTFOLIO LOANS -5 bps 10 bps 25 bps 11 bps 2 bps Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Net Charge-offs (1) 2014 NCO = 7 bps (1) Portfolio loans only, excludes PCI loans $0.1 $2.0 $1.6 $2.2 $0.6 $- $0.6 $1.2 $1.8 $2.4 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Provision for Portfolio Loans
Slide 20: Managed Operating Expenses Improving Efficiency
19 MANAGED OPERATING EXPENSES* IMPROVING EFFICIENCY In Millions Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $19.3 $20.2 $19.1 $19.0 $19.3 62.8% 62.8% 60.7% 57.6% 58.6% -200.0% -180.0% -160.0% -140.0% -120.0% -100.0% -80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% -20 -5
Slide 21: Fourth Quarter Dividend Increased 14%
20 FOURTH QUARTER DIVIDEND INCREASED 14% TO $0.08 PER COMMON SHARE 3RD CONSECUTIVE INCREASE 2,000,000 SHARE COMMON STOCK REPURCHASE PLAN INSTITUTED ~ 10% OF EFSC OUTSTANDING SHARES NO SPECIFIED END DATE DISCIPLINED, PATIENT APPROACH BASED ON MARKET CONDITIONS SUFFICIENT CAPITAL TO SUPPORT GR
Slide 22: Highly Focused, Proven Business Model
21 HIGHLY FOCUSED, Proven BUSINESS MODEL STRONG TRACK RECORD OF Commercial Loan Growth DIFFERENTIATED COMPETITIVE Lending Expertise Replicating ST. LOUIS MODEL IN Kansas City AND Phoenix DEMONSTRATED PROGRESS TOWARD INCREASED RETURNS AND Enhancing Shareholder Value 190% 98% EFSC Index 5-Year Total S
Slide 23: Appendix 3Q 2015
22 APPENDIX 3Q 2015 INVESTOR PRESENTATION
Slide 24: Reported vs. Core EPS Q3 2015
23 EARNINGS PER SHARE $22,387 $0.48 <$0.04> $0.44 EPS Non-Core Covered Assets Core EPS In Millions * A Non GAAP Measure, Refer to Appendix for Reconciliation (1) FDIC Loss Sharing Agreements REPORTED VS. CORE EPS* Q3 2015 (1)
Slide 25: Balance Sheet Positioned for Growth
24 BALANCE SHEET POSITIONED FOR GROWTH Modest Asset Sensitivity (200 BPS RATE SHOCK INCREASES NII BY 3.3%) 62% FLOATING RATE LOANS, WITH THREE-YEAR AVERAGE DURATION High-quality, Cash-flowing SECURITIES PORTFOLIO WITH FOUR YEAR AVERAGE DURATION 25% DDA TO TOTAL DEPOSITS 8.9% Tangible Common Equity/T
Slide 26: Significant Earnings Contribution (Pre-Tax)
25 SIGNIFICANT EARNINGS CONTRIBUTION (PRE-TAX) Significant CONTRIBUTION TO FUTURE EARNINGS WITH ESTIMATED FUTURE ACCRETABLE YIELD OF $26 Million Loss Share Agreements EXPIRATION DATES SUCCESSFUL FDIC-ASSISTED ACQUISITION STRATEGY 2013 2014 2015 YTD $15,459 $10,860 $9,616 Dollars in Thousands Accreta
Slide 27: Use of Non-GAAP Financial Measures
26 USE OF NON-GAAP FINANCIAL MEASURES The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as Core net incom
Slide 28: Reconciliation of Non-GAAP Financial Measures
27 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (in thousands) 2015 2015 2015 2014 2014 2015 2014 CORE PERFORMANCE MEASURES Net interest income 30,006$ 29,280$ 29,045$ 30,816$ 27,444$ 88,331$ 86,552$ Less: Incremental accretion income 2,919 3,
Slide 29: 3Q 2015
28 3Q 2015 INVESTOR PRESENTATION
Enterprise Financial Services — Q3 2015 Earnings Presentation on 6ix