Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — Q1 2018 Earnings Presentation
35 slides from Enterprise Financial Services's earnings presentation, May 7, 2018
Slide 1: Enterprise Financial Services Corp First Quarter 2018 Investor Presentation
Enterprise Financial Services Corp First Quarter 2018 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. Forward-looking statements typically are identified with use
Slide 3: Company Snapshot - EFSC
Company Snapshot - EFSC Total Assets FOCUSED BUSINESS MODEL: $ 5.4 Billion • Attract Top Talent in Markets • Proven Ability to Grow Market Cap Commercial & Industrial "C&I" $ Talent Loans 1.2 Billion • Product Breadth ◦ Banking Operates in ◦ Trust & Wealth Management ◦ Treasury Management Strength K
Slide 4: Executive Leadership Team
Executive Leadership Team Name, Age, Title Years at Enterprise James B. Lally, 50, President & Chief Executive Officer, EFSC 14 Keene S. Turner, 38, Executive Vice President & Chief Financial Officer, EFSC 4 Scott R. Goodman, 54, President, Enterprise Bank & Trust 14 Douglas N. Bauche, 48, Chief Cre
Slide 5: Differentiated Business Model: Built for Quality Earnings Growth
Differentiated Business Model: Built for Quality Earnings Growth Focused and Well-Defined Targeted Array of Banking Experienced Bankers and Strategy Aimed at Business and Wealth Management Advisors Owners, Executives and Services to Meet our Client's Professionals. Needs 5
Slide 6: Three Urban Markets
Three Urban Markets Arizona Kansas Loans $305MM $682MM $2.3B Deposits $166MM $718MM $3.4B Branches 2 7 19 Deposit Market Share 1 39th/0.12% 16th/1.29% 5th/4.23% JPMorgan Chase UMB US Bancorp Primary Competitors 1 Wells Fargo Commerce Bank of America Bank of America Bank of America Commerce 1 Source:
Slide 7: Focused Loan Growth Strategies
Focused Loan Growth Strategies Specialized Market Segments Represent 29% of Total Portfolio Loans, Offering Competitive Advantages, Risk Adjusted Pricing and Fee Income Opportunities. 5.9% 10.5% Total Portfolio Loans 8.8% Expectations for Future Growth Include 1.4% Continued Focus in these Specializ
Slide 8: History of Strong C&I Growth
History of Strong C&I Growth $1,982 In Millions $1,774 16% 5-Year CAGR $1,545 $1,259 $1,060 $949 Q1 '13 Q1 '14 Q1 '15 Q1 '16 Q1 '17 Q1 '18 8
Slide 9: Buying Process
Buying Process Buyer’s Journey Identify Research Solution Select Exploration Strategy Products Need Sales Process
Slide 10: Customer Focus
Customer Focus Source: Greenwich Associates 10
Slide 11: Portfolio Loan Trends
Portfolio Loan Trends 8% Total Loan Growth In Millions $4,162 $3,997 $4,067 $3,853 $3,859 Q1' 17 Q2' 17 Q3 '17 Q4' 17 Q1' 18 11
Slide 12: Drivers of Loan Growth
Drivers of Loan Growth March 31, 2016 – March 31, 2017 March 31, 2017 – March 31, 2018 $1.0 Billion $309 Million Commercial/ General Commercial & Construction RE 12% Industrial 4% Residential RE 4% Life Insurance Premium Commercial/ Consumer and Other Construction RE 32% Finance 4% 3% Enterprise Val
Slide 13: Attractive Deposit Mix
Attractive Deposit Mix March 31, 2018 $4.3B DDA • Significant DDA Composition 26% • Stable Cost of Deposits Interest Bearing • Improving Core Funding Transaction Accts 20% In Millions 25.7% 26.0% 25.8% 27.0% 25.7% 39% $4,281 $4,156 MMA & $4,032 $4,059 15% $3,921 Savings CD Cost of Deposits 0.61% 6%
Slide 14: Core Funding Mix By Business Line
Core Funding Mix By Business Line In Millions Consumer $1,429 39% Commercial $1,666 46% Business Banking $544 15% Commercial Business Banking Consumer 1% 2% 2% 3% 1% 3% 6% 9% 26% 43% 18% 32% 18% 54% 20% 29% 21% 12% Notes: Excludes brokered deposits 14
Slide 15: Financial Scorecard
Financial Scorecard Q1 2018 Compared to Q1 2017 42% Continued Growth in Core EPS 21% 11 bps 2% Drive Net Interest Defend Net Interest Achieve Further Income Growth in Margin Improvement in Dollars with Favorable Operating Leverage Loan Growth Trends 6% Enhance Deposit Levels to Support Growth Core E
Slide 16: Earnings Per Share - Q1 2018 Reported vs. Core EPS
Earnings Per Share - Q1 2018 Reported vs. Core EPS* $(0.06) $0.90 $0.84 EPS Non-Core Core EPS Acquired Assets * A Non-GAAP Measure, Refer to Appendix for Reconciliation 16
Slide 17: Earnings Per Share Trend - Q1 2018 Changes in Core EPS
Earnings Per Share Trend - Q1 2018 Changes in Core EPS* $0.04 $0.02 $(0.08) $0.12 $(0.03) $0.84 $0.77 Q4 '17 Net Interest Portfolio Loan Noninterest Noninterest Income Tax Q1 '18 Income Loss Provision Income Expense Expense Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation 17
Slide 18: Core Net Interest Income Trend
Core Net Interest Income Trend* In Millions 3.76% 3.75% 3.73% 3.74% 3.63% $45.4 $44.1 $44.9 $43.0 $37.6 21% Core NII Growth Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Core Net Interest Income FTE Core Net Interest Margin Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 18
Slide 19: Credit Trends for Portfolio Loans
Credit Trends for Portfolio Loans Net Charge-offs (1) Portfolio Loan Growth $138 61 bps In Millions $95 33 bps $70 $56 8bps (1) bps (2)bps $7 (2) Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 In Millions Provisions for Portfolio Loans Q1 2018 EFSC Peer(3) $3.6 $3.2 NPA’s/Asse
Slide 20: Core Fee Income
Core Fee Income* In Millions Core Fee Income Other Core Fee Income Detail $11.1 $1.5 $2.3 $0.2 $8.4 $8.5 $1.9 $7.9 $2.2 $0.2 $1.8 $1.7 $0.1 $7.0 $1.5 $1.5 $0.1 $1.4 $1.5 $0.1 $0.2 $0.1 $0.2 $0.1 $0.6 $0.2 $1.0 $2.3 $0.1 $0.2 $0.2 $1.7 $1.9 $1.8 $1.5 $0.4 $0.4 $2.9 $0.2 $2.8 $2.8 $2.9 $1.5 $1.5 $2.5
Slide 21: Operating Expenses Trend
Operating Expenses Trend* In Millions 56.0% 54.5% 54.0% 51.6% 50.2% $29.1 $27.8 $28.1 $27.1 $24.9 $15.3 $16.5 $15.8 $15.1 $15.2 $2.4 $2.3 $2.4 $2.4 $1.9 $9.7 $9.6 $10.4 $10.2 $7.8 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Other Occupancy Employee compensation and benefits Core Efficiency Ratio* Note: * A N
Slide 22: Positive Momentum in Core Earnings Per Share
Positive Momentum in Core Earnings Per Share* $0.84 $0.77 Four-Year CAGR 32% $0.66 $0.59 $0.59 $0.56 $0.49 $0.49 $0.49 $0.47 $0.44 $0.37 $0.38 $0.35 $0.33 $0.31 $0.28 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 '18 200% Core EPS
Slide 23: Five-Year Financial Highlights
Five-Year Financial Highlights In Thousands, except per share date 2018 Q1 2017 2016 2015 2014 Core Net Interest Income $45,405 $169,586 $123,515 $107,618 $98,438 Total Core Non-Interest Income $8,520 $34,378 $26,787 $25,575 $24,548 Core Net Income $19,585 $59,912 $41,237 $33,791 $26,043 Core Earnin
Slide 24: Capital Levels Prudently Managed to Facilitate Growth and Returns
Capital Levels Prudently Managed to Facilitate Growth and Returns In Millions Core ROATCE Capital Uses the Past 5 Years 20.0% 18.64% $250 18.0% $200 $175 16.0% $142 14.46% $150 14.0% $100 12.18% 12.0% 11.22% $34 $50 $25 9.77% 10.0% $0 h A e s t & as d ow M h en 8.0% r rc id G u iv ep D 2014 2015 201
Slide 25: Enterprise Financial
Enterprise Financial • 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 Total Shareholder Return 5-Year Total Shareholder
Slide 26: 1st Quarter 2018 EFSC Appendix
1st Quarter 2018 EFSC Investor Presentation Appendix
Slide 27: Acquisition of Jefferson County Bancshares, Inc. (JCB)
Acquisition of Jefferson County Bancshares, Inc. (JCB) Closed February 10, 2017 Snapshot • Consistent with M&A Expansion Strategy • Enhanced EFSC's footprint in the St. Louis MSA, while building total balance sheet size to $5 billion in assets • Top five deposit market share in St. Louis MSA Achieve
Slide 28: Effective Tax Rate Reconciliation
Effective Tax Rate Reconciliation Q1 2018 2017 Q4 2017 Federal Tax Rate 21.00% 35.00% 35.00% State Tax, Net of Federal Benefit 2.65% 1.94% 1.94% Excess Tax Benefits (4.06)% (2.47)% (1.25)% Tax Credit Investments (3.98)% (1.89)% (3.62)% Other Tax Adjustments (0.31)% (2.28)% (3.90)% Pre-DTA Effective
Slide 29: Balance Sheet Positioned for Growth
Balance Sheet Positioned for Growth Modest Asset High-quality, 59% Floating Cash-flowing 8.13% Sensitivity 25.7% 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 4.0%)
Slide 30: Successful FDIC-Assisted Acquisition Strategy
Successful FDIC-Assisted Acquisition Strategy Significant Earnings Contribution (Pre-tax) Completed 4 Contributed $74 2,016 2017 2018 Q1 FDIC-Assisted Million in Net Transactions Earnings Since Since December $15,018 $8,106 $1,765 Acquisition 2009 Dollars in Thousands Significant Terminated all loss
Slide 31: Capital Management
Capital Management Tangible Common Equity/Tangible Assets • 2,000,000 Share Common Stock Repurchase Plan • ~ 10% of EFSC Outstanding Shares 8.69% 8.88% 8.76% • No Specified End Date 7.78% 8.14% 8.13% • Disciplined, Patient Approach Based on Market Conditions • Repurchased 64,915 shares at an average
Slide 32: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as core net interest
Slide 33: Reconciliation of Non-GAAP Financial Measures (Quarterly)
Reconciliation of Non-GAAP Financial Measures For the Quarter ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, ($ in thousands, except per share data) 2018 2017 2017 2017 2017 CORE PERFORMANCE MEASURES Net interest income $ 46,171 $ 47,404 $ 45,625 $ 45,633 $ 38,642 Less: Incremental accretion income 7
Slide 34: Reconciliation of Non-GAAP Financial Measures (Annual)
Reconciliation of Non-GAAP Financial Measures For the Year ended December 31, December 31, December 31, December 31, ($ in thousands, except per share data) 2017 2016 2015 2014 CORE PERFORMANCE MEASURES Net interest income $ 177,304 $ 135,495 $ 120,410 $ 117,368 Less: Incremental accretion income 7,
Slide 35: 1st Quarter 2018 EFSC Q&A
1st Quarter 2018 EFSC Investor Presentation Q&A
Enterprise Financial Services — Q1 2018 Earnings Presentation on 6ix