Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q3 2022 Earnings Presentation
45 slides from Enterprise Financial Services's earnings presentation, Nov 7, 2022
Slide 1: Third Quarter 2022 Investor Presentation
Enterprise Financial Services Corp Third Quarter 2022 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: 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: Key Metrics
Key Metrics Credit Profitability Balance Sheet Peer Banks $10-50B Median Top Quartile 3Q22 YTD FY2021 Return on average tangible common equity(1) 17.92 % 18.29 % 15.48 % 16.96 % Net interest margin 3.64 % 3.41 % 2.98 % 3.18 % Efficiency ratio(2) 50.48 % 49.47 % 56.30 % 49.52 % Tangible common equity
Slide 5: Executive Leadership Team
Executive Leadership Team JAMES B. LALLY 54, President & Chief Executive Officer, EFSC Enterprise Tenure – 18 years KEENE S. TURNER 43, EVP, Chief Financial Officer, EFSC Enterprise Tenure – 9 years SCOTT R. GOODMAN 58, President, Enterprise Bank & Trust Enterprise Tenure – 19 years DOUGLAS N. BAUCH
Slide 6: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets $13 Billion Market Cap* Operates in St. Louis Kansas City Phoenix $2.0 Billion • Proven Ability to Grow Commercial & Industrial “C&I” Loans • Product Breadth ◦ Commercial and Specialty Lending ◦ SBA ◦ Specialty Deposits ◦ Card Services ◦ Treasury Management • Rel
Slide 7: Differentiated Business Model
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 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
Diversified Revenue (2021 financial data) Treasury Management $1.9B in Assets Under Management Tax Credit Services Mortgage Banking Community Development Other Services Midwest Southwest West Specialty Lending Net Interest Income Noninterest Income Midwest 37.6% Southwest 16.1%West 11.7% Specialty L
Slide 10: Regional and National Markets
Regional and National Markets 1 Source: 6/30/22 data for market rank and market share; S&P Global Market Intelligence. $3.2 $3.1 $1.2 $1.7 $2.4 $5.2 $1.8 $1.6 Loans* Deposits Specialty Midwest Southwest West $— $2.0 $4.0 $6.0 MSA Branches Deposit Market Rank1 Deposit Market Share1 St. Louis, MO-IL 1
Slide 11: Focused Loan Growth Strategies
5.4% 6.9% 7.7% 13.6% Focused Loan Growth Strategies Total Loans Specialty market segments represent 34% of total loans, offering competitive advantages, risk adjusted pricing and fee income opportunities. Tax Credit Programs $508 million in loans outstanding related to Federal, Historic, and Afforda
Slide 12: Total Loan Trends
Total Loan Trends $4,097 $4,350 $5,314 $7,225 $9,018 $9,355 98.6% 94.8% 92.1% 90.5% 79.5% 84.6% Loans PPP Loans/Deposits 2017 2018 2019 2020 2021 3Q22 In Millions PPP $272 PPP $699 PPP $13 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 (250)% (200)% (150)% (100)% (50)% 0% 50% 100% 150% 200% 250% Drivers of Loan Growth - Year over Year 1% Commercial/Construction RE C&I PPP Life Insurance Premium Finance Sponsor Finance Residential RE Ta
Slide 14: Loan Portfolio
Loan Portfolio Total $9.4 Billion CRE 34.6% Construction 5.5% Residential 4.1% Other 2.3% Sponsor Finance 6.9% LIPF 7.7% Tax Credit 5.4% SBA 13.6% PPP 0.2% C&I 19.7% Loans by Product Type Real Estate/ Rental/Leasing 26.3% Finance and Insurance 16.1% Accommodation/ Food Service 8.5% Manufacturing 7.3
Slide 15: Office Commercial Real Estate
Office Commercial Real Estate Total $444.8 Million Midwest 59.1% Southwest 27.0% West 11.0% Specialty 3.0% Office CRE Loans by Location Real Estate/ Rental/Leasing 90.1% Information 2.1% Health Care and Social Assistance 2.6% Professional Services 1.6% Retail Trade 1.0% Other Services 0.9% Other 1.7
Slide 16: Loan Details - LTM
Loan Details - LTM 3Q22 3Q21 LTM Change C&I $ 1,843 $ 1,458 $ 385 CRE Investor Owned 2,106 1,935 171 CRE Owner Occupied 1,133 1,163 (30) SBA loans* 1,269 1,200 69 Sponsor Finance* 650 455 195 Life Insurance Premium Finance* 718 573 145 Tax Credits* 508 462 46 Residential Real Estate 382 520 (138) Co
Slide 17: Loan Details - QTR
Loan Details - QTR 3Q22 2Q22 QTR Change C&I $ 1,843 $ 1,702 $ 141 CRE, Investor Owned 2,106 1,978 128 CRE, Owner Occupied 1,133 1,119 14 SBA loans* 1,269 1,284 (15) Sponsor Finance* 650 647 3 Life Insurance Premium Finance* 718 688 30 Tax Credits* 508 551 (43) Residential Real Estate 382 392 (10) Co
Slide 18: Total Loans By Region
Total Loans By Region Specialty Lending $2,611 $3,133 $3,179 3Q21 2Q22 3Q22 In Millions Midwest $2,908 $3,031 $3,115 3Q21 2Q22 3Q22 Southwest $1,100 $1,146 $1,161 3Q21 2Q22 3Q22 Note: Excludes PPP and Other loans; Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM, Las Vegas, TX
Slide 19: Deposit Details - LTM
Deposit Details - LTM 3Q22 3Q21 LTM Change Noninterest-bearing demand accounts $ 4,643 $ 4,376 $ 267 Interest-bearing demand accounts 2,271 2,254 17 Money market accounts 2,793 2,822 (29) Savings accounts 824 749 75 Certificates of deposit: Brokered 129 129 — Other 398 498 (100) Total deposits $ 11,
Slide 20: Deposit Details - QTR
Deposit Details - QTR 3Q22 2Q22 QTR Change Noninterest-bearing demand accounts $ 4,643 $ 4,747 $ (104) Interest-bearing demand accounts 2,271 2,198 73 Money market accounts 2,793 2,726 67 Savings accounts 824 837 (13) Certificates of deposit: Brokered 129 129 — Other 398 456 (58) Total Deposits $ 11
Slide 21: Total Deposits By Region
Total Deposits By Region Specialty Deposits $1,912 $2,403 $2,422 3Q21 2Q22 3Q22 In Millions Midwest $5,268 $5,328 $5,221 3Q21 2Q22 3Q22 Southwest $1,701 $1,820 $1,827 3Q21 2Q22 3Q22 West $1,947 $1,542 $1,588 3Q21 2Q22 3Q22 Note: Region Components: Midwest (St. Louis & Kansas City), Southwest (AZ, NM
Slide 22: Deposit Mix and Cost of Deposits
42% 33% 5% 20% $4,156 $4,588 $5,771 $7,985 $11,344 $11,058 0.44% 0.79% 0.92% 0.32% 0.11% 0.18% Deposits Cost of deposits Noninterest bearing % 2017 2018 2019 2020 2021 3Q22 YTD Deposit Mix CD Interest-Bearing Demand Accounts DDA MMA & Savings In Millions Total Deposits $11.1 Billion 27.0% 24.0% 23.0
Slide 23: Specialty Deposits
Specialty Deposits 40.0% 23.0% 12.9% 2.3% 21.8% Community Associations $969 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $556 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party
Slide 24: Core Funding Mix and CD Maturities
63% 21% 8% 6% 7% 35% 22% 24% 9% 3% 7% 34% 24% 21% 10% 4% 53% 21% 25% Core Funding Mix Commercial Business Banking Consumer In Millions $2,993 28% $2,982 29% $1,267 12% $1,226 12% $3,840 37% $4,028 40% Cost of Funds1 Commercial Business Banking Consumer Specialty Brokered Nonmaturity Deposits 0.43% 0
Slide 25: Earnings Per Share Trend - 3Q22
Earnings Per Share Trend - 3Q22 $1.19 $0.20 $(0.07) $1.32 2Q22 Operating Revenue Noninterest Expense 3Q22 Change in EPS 25
Slide 26: Net Interest Income Trend
Net Interest Income Trend In Millions $177.3 $191.9 $238.7 $270.0 $360.2 $335.1 3.88% 3.82% 3.80% 3.56% 3.41% 3.64% 1.00% 1.83% 2.16% 0.36% 0.08% 1.04% Net Interest Income Net Interest Margin Avg Fed Funds Rate 2017 2018 2019 2020 2021 3Q22 YTD 26
Slide 27: Credit Trends for Loans
Credit Trends for Loans 2017 2018 2019 2020 2021 3Q22 YTD NPLs/Loans 0.38% 0.38% 0.50% 0.53% 0.31% 0.19% NPAs/Assets 0.31% 0.30% 0.45% 0.45% 0.23% 0.14% ACL/NPLs 243.3% 259.6% 163.8% 354.9% 517.6% 773.1% ACL/Loans* 1.04% 1.00% 0.81% 2.31% 1.84% 1.67% Provision expense (benefit) $ 10.1 $ 6.6 $ 6.4 $
Slide 28: Allowance for Credit Losses for Loans
$140.5 $0.5 $(0.5) $140.5 ACL 2Q22 Portfolio Changes Net Recoveries ACL 3Q22 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 macroeconomic a
Slide 29: Noninterest Income Trend
Noninterest Income Trend In Millions $34.4 $38.3 $49.2 $54.5 $67.7 $42.3 $8.1 $8.2 $9.9 $9.7 $10.3 $7.5 $11.1 $11.7 $12.8 $11.7 $15.4 $14.0 $5.4 $6.7 $9.2 $9.5 $11.9 $9.2 $7.2 $8.9 $11.9 $17.0 $22.1 $11.4 $2.6 $2.8 $5.4 $6.6 $8.0 $0.2 16.3% 16.7% 17.1% 16.8% 15.8% 11.2% Wealth Management Deposit Ser
Slide 30: Operating Expenses Trend
Operating Expenses Trend In Millions $115.1 $119.0 $165.5 $167.2 $245.9 $197.1 $38.1 $42.2 $53.7 $57.2 $79.2 $74.8$9.1 $9.5 $12.5 $13.5 $16.3 $13.4$61.4 $66.0 $81.3 $92.3 $124.9 $108.9 $6.5 $1.3 $18.0 $4.2 $22.1 $3.4 52.9% 52.0% 52.4% 51.0% 51.6% 52.2% Other Occupancy Employee compensation and benef
Slide 31: Capital Strategy
Capital Strategy EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate Supporting 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
Slide 32: Capital TBV and Dividends per Share
Capital TBV and Dividends per Share $18.20 $20.95 $23.76 $25.48 $28.28 $26.62 $0.44 $0.47 $0.62 $0.72 $0.75 $0.66 TBV/Share Dividends per Share 2017 2018 2019 2020 2021 3Q22 YTD Return of Capital $26.8 $30.2 $32.1 $35.1 $86.8 $57.6 $10.2 $10.8 $16.6 $19.8 $26.2 $24.7 $16.6 $19.4 $15.5 $15.3 $60.6 $3
Slide 33: Regulatory Capital
Regulatory Capital 10.0% 14.0% 12.2% 13.0% 12.9% 14.9% 14.7% 14.2% 6.5% 10.0% 8.9% 9.8% 9.9% 10.9% 11.3% 11.0% CET1 Tier 1 Total Risk Based Capital Minimum "Well Capitalized" Ratio Optimal Capital Levels 2017 2018 2019 2020 2021 3Q22 8.0% 12.6%13.0% 10.3% 11.4% 12.1% 11.1% 12.0% 33
Slide 34: Modest Asset Sensitivity
Modest Asset Sensitivity (100 bp increase in interest rate increases NII 4%) 63% Adjustable Rate Loans High-quality, Cash-flowing Securities Portfolio with Six-Year Average Duration 42.0% Non- Interest Bearing DDA to Total Deposits 7.86% Tangible Common Equity/Tangible Assets* Balance Sheet Position
Slide 35: Appendix
Appendix Third Quarter 2022 EFSC Investor Presentation
Slide 36: Financial Highlights - 3Q22
Financial Highlights - 3Q22* Capital • Tangible Common Equity/Tangible Assets** 7.86%, compared to 7.80% • Tangible Book Value Per Share** $26.62, compared to $26.63 • CET1 Ratio 11.0%, compared to 10.9% • Accumulated other comprehensive income declined $44.7 million primarily from a decrease in the
Slide 37: Financial Highlights, continued - 3Q22
Financial Highlights, continued - 3Q22* *Comparisons noted below are to the linked quarter unless otherwise noted. **A Non-GAAP Measure, Refer to Appendix for Reconciliation. Loans & Deposits • Loans $9.4 billion, up $85.8 million • PPP Loans, $13.2 million, net of deferred fees, down $36.0 million
Slide 38: ESG Highlights
■ Selected in 2021 by the Community Development Financial Institutions Fund (CDFI Fund) of the U.S. Department of the Treasury to receive a $60 million allocation of New Markets Tax Credits. ■ In 2021 we invested over $1.6 billion in programs designed to promote small business and community developm
Slide 39: 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 40: Reconciliation of Non-GAAP Financial Measures
Quarter ended Year-to-date Year ended (in thousands) September 30, 2022 June 30, 2022 September 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Net income available to common shareholders - GAAP $ 49,263 $ 44,211 $ 139,938 $ 133,055 $ 74,384 $ 92,739 Branch-closure expenses — — — 3,44
Slide 41: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year-to-date Year ended (in thousands) September 30, 2022 September 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Net interest income $ 124,290 $ 335,068 $ 360,194 $ 270,001 $ 238,717 $ 1
Slide 42: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Period end (in thousands) September 30, 2022 June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Shareholders' equity $ 1,446,218 $ 1,447,412 $ 1,529,116 $ 1,078,975 $ 867,185 Less preferred stock 71,988 71,988 71,988 — — Less goodwill 36
Slide 43: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Quarter ended Year ended (in thousands) September 30, 2022 June 30, 2022 December 31, 2021 Net interest income $ 124,290 $ 109,613 $ 360,194 Noninterest income 9,454 14,194 67,743 Noninterest expense (68,843) (65,424) (245,919) Branch-closure expenses —
Slide 44: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Period end (in thousands, except per share data) September 30, 2022 June 30, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Shareholders' equity $ 1,446,218 $ 1,447,412 $ 1,529,116 $ 1,078,975 $ 867,185 $ 6
Slide 45: Q&A
Q&A Third Quarter 2022 EFSC Investor Presentation For more information contact Keene Turner, Executive Vice President and CFO (314) 512-7233
Enterprise Financial Services — Q3 2022 Earnings Presentation on 6ix