Enterprise Financial Services Corporation · NASDAQ:EFSC
Enterprise Financial Services — FY2017 Earnings Presentation
35 slides from Enterprise Financial Services's earnings presentation, Jan 26, 2018
Slide 1: Fourth Quarter and Full Year 2017 Investor Presentation
Enterprise Financial Services Corp Fourth Quarter and Full Year 2017 Investor Presentation
Slide 2: Forward-Looking Statements
2 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 u
Slide 3: Company Snapshot - EFSC
3 Company Snapshot - EFSC FDIC Data Total Assets $5.3 Billion Market Cap Concentrated on Private Businesses and Owner Families Relationship Driven Attract Top Talent in Markets Product Breadth • Banking • Trust & Wealth Management • Treasury Management Proven Ability to Grow Commercial & Industrial
Slide 4: Executive Leadership Team
4 Executive Leadership Team 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 Credit Officer, Enterprise Bank & Trus
Slide 5: Differentiated Business Model: Built for Quality Earnings Growth
5 Differentiated Business Model: Built for Quality Earnings Growth Enterprise Bank Financial & Estate Planning Tax Credit Brokerage Business & Succession Planning Trust Administration Enterprise Trust Investment Management Enterprise University Treasury Management Personal & Private Banking Commerci
Slide 6: Three Urban Markets
6 Three Urban Markets Phoenix Kansas City St. Louis Loans $291MM $658MM $2.3B Deposits $120MM $689MM $3.3B Branches 2 7 19 Deposit Market Share 1 39th/0.12% 16th/1.29% 5th/4.23% Primary Competitors 1 JPMorgan Chase Wells Fargo Bank of America UMB Commerce Bank of America US Bancorp Bank of America C
Slide 7: Focused Loan Growth Strategies
7 Focused Loan Growth Strategies Tax Credit Programs. $235 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. $408 Million in M&A Related
Slide 8: History of Strong C&I Growth
8 Q4 '12 Q4 '13 Q4 '14 Q4 '15 Q4 '16 Q4 '17 $963 $1,042 $1,264 $1,484 $1,633 $1,919 History of Strong C&I Growth In Millions 15% 5- Year CAG R
Slide 9: Marketing & Sales Funnel
9 Marketing & Sales Funnel NOW… …FUTURE Marketing Sales Marketing Sales
Slide 10: Opportunities Exist - Client Satisfaction Drivers
10 1. Opportunities Exist - Client Satisfaction Drivers Client satisfaction scores are industry leading. We’re focused on leveraging ways to improve industry understanding and being a consultative partner to clients. Ease of doing business Relationship Satisfaction Understanding of your industry Pro
Slide 11: Acquisition of Jefferson County Bancshares, Inc.
11 Enhanced EFSC’s footprint in the St. Louis MSA, while building total balance sheet size to $5 billion in assets Consistent with M&A Expansion Strategy Acquisition of Jefferson County Bancshares, Inc. (JCB) Closed February 10, 2017 • Successfully completed core systems conversion on May 22, 2017 •
Slide 12: Portfolio Loan Trends
12 Q4' 16 Q1' 17 Q2' 17 Q3 '17 Q4' 17 $3,118 $3,859 $3,997 $4,067 $3,853 Portfolio Loan Trends In Millions 9% Total Loan Growth * *Note: 30% including acquisition of JCB JCB $678
Slide 13: Drivers of Loan Growth
13 Drivers of Loan Growth $949 Million December 31, 2016 – December 31, 2017 JCB Acquisition 70% Enterprise Value Lending 2% Life Insurance Premium Finance 6% General Commercial & Industrial 3% Commercial/Construction RE 11% Tax Credits 8%
Slide 14: Attractive Deposit Mix
14 27% 37% 14% 22% Deposits JCB DDA % Q4'16 Q1'17 Q2'17 Q3 '17 Q4 '17 $3,233 $3,921 $4,059 $4,156$4,032 26.8% 25.7% 26.0% 25.8% 27.0% Attractive Deposit Mix CD Interest Bearing Transaction Accts DDA MMA & Savings December 31, 2017 $4.2B • Significant DDA Composition • Stable Cost of Deposits • Impro
Slide 15: Core Funding Mix
15 Core Funding Mix Commercial: 52% Consumer: 39% Business Banking: 9% 45% 20% 31% 1% 2% 1% 53% 25% 13% 3% 4% 2% Commercial Business Banking 6% 27% 29% 11% 18% 9% Consumer By Business Line Notes: Excludes brokered deposits
Slide 16: Financial Scorecard
16 Financial Scorecard 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 Q4 2017
Slide 17: Earnings Per Share - Full Year
17 Earnings Per Share - Full Year * A Non-GAAP Measure, Refer to Appendix for Reconciliation Reported vs. Core EPS* $2.07 $0.52 $(0.20) $0.18 $0.01 $2.58 EPS Merger Related Expenses Core EPSDTA Revaluation Non-Core Acquired Assets Other
Slide 18: Earnings Per Share Trend - Full Year
18 Earnings Per Share Trend - Full Year Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation $2.03 $0.78 $(0.12) $0.10 $(0.38) $0.17 $2.58 Changes in Core EPS* Q4 '16 Net Interest Income Portfolio Loan Loss Provision Noninterest Income Noninterest Expense Q4 '17Income Tax Expense
Slide 19: Earnings Per Share Trend - Q4 2017
19 Earnings Per Share Trend - Q4 2017 Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation $0.66 $0.04 $(0.02) $0.08 $(0.04) $0.05 $0.77 Changes in Core EPS* Q3 '17 Net Interest Income Portfolio Loan Loss Provision Noninterest Income Noninterest Expense Q4 '17Income Tax Expense
Slide 20: Core Net Interest Income Trend
20 Core Net Interest Income Trend* Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation In Millions Core Net Interest Income FTE Core Net Interest Margin Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 $32.2 $37.6 $43.0 $44.1 $44.9 3.44% 3.63% 3.76% 3.75% 3.73% 40% Core NII Growt h
Slide 21: Credit Trends for Portfolio Loans
21 Credit Trends for Portfolio Loans Portfolio Loan Growth Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 $80 $56 $7 $138 $70 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 12 (1) 64 8 33 Q4 2017 EFSC Peer(3) NPA’s/Assets = 0.31% 0.66% NPL’s/Loans = 0.39% 0.79% ALLL/NPL’s = 243.3% 120.2% ALLL/Loans = 0.95% 1.05% In Million
Slide 22: Core Fee Income
22 Core Fee Income* Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation Other Core Fee Income DetailCore Fee Income In Millions Wealth Management Deposit Services Charge Other State Tax Credits Card Services Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 $1.7 $1.8 $2.0 $2.1 $2.2 $2.2 $2.5 $2.8 $2.8
Slide 23: Operating Expenses Trend
23 Operating Expenses Trend* Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation In Millions Other Occupancy Employee compensation and benefits Core Efficiency Ratio* Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 $7.0 $7.8 $9.7 $9.6 $10.4 $1.7 $1.9 $2.3 $2.4 $2.4 $12.4 $21.1 $15.2 $24.9 $15.8 $27.
Slide 24: Effective Tax Rate Reconciliation
24 Effective Tax Rate Reconciliation 2017 Q4 2017 Q3 2017 Federal Tax Rate 35.00% 35.00% 35.00% State Tax, Net of Federal Benefit 1.94% 1.94% 1.97% Excess Tax Benefits (2.47)% (1.25)% (0.01)% Tax Credit Investments (1.89)% (3.62)% (2.69)% Other Tax Adjustments (2.28)% (3.90)% (1.77)% Pre-DTA Effecti
Slide 25: Positive Momentum in Core Earnings Per Share
25 Positive Momentum in Core Earnings Per Share* Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation 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 $0.33 $0.35 $0.38 $0.44 $0.49 $0.47 $0.49 $0.49 $0.59 $0.59 $0.56 $0.66 $0.77 133% Core EPS Gro
Slide 26: Three-Year Financial Highlights
26 Three-Year Financial Highlights Note: Core is a Non-GAAP Measure, Refer to Appendix for Reconciliation Total Core Non-Interest Income Core Net Income Core Earnings Per Share (diluted) Core Return on Average Tangible Common Equity Core Return on Average Assets Total Assets Core Net Interest Income
Slide 27: Capital Levels Prudently Managed to Facilitate Growth and Returns
27 Capital Levels Prudently Managed to Facilitate Growth and Returns • 2,000,000 Share Common Stock Repurchase Plan • ~ 10% of EFSC Outstanding Shares • No Specified End Date • Disciplined, Patient Approach Based on Market Conditions • Repurchased 429,955 shares at an average price of $38.69 in the
Slide 28: Enterprise Financial
28 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 Note: Index = SNL U.S. Bank $1B - $5B, as of 9/30/201
Slide 29: Appendix
Appendix 4th Quarter and Full Year 2017 EFSC Investor Presentation
Slide 30: Modest Asset Sensitivity
30 Modest Asset Sensitivity (200 BPS Rate Shock Increases NII By 2.7%) 58% Floating Rate Loans, with Three-Year Average Duration High-quality, Cash-flowing Securities Portfolio with Four-Year Average Duration 27% Non-Interest Bearing DDA to Total Deposits 8.14% Tangible Common Equity/Tangible Assets
Slide 31: Successful FDIC-Assisted Acquisition Strategy
31 Successful FDIC-Assisted Acquisition Strategy Significant Earnings Contribution (Pre-tax) Terminated all loss share agreements with the FDIC in December 2015 Early termination charge from Q4 2015 earned back 100% in Q1 2016 2015 2,016 2017 $7,529 $15,018 $8,106 Dollars in Thousands Accretable yie
Slide 32: Earnings Per Share - Q4 2017
32 Earnings Per Share - Q4 2017 * A Non-GAAP Measure, Refer to Appendix for Reconciliation Reported vs. Core EPS* $0.32 $0.52 $(0.07) $0.77 EPS Non-Core Acquired Assets Core EPSDTA Revaluation
Slide 33: Use of Non-GAAP Financial Measures
33 Use of Non-GAAP Financial Measures The Company's accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”) and the prevailing practices in the banking industry. However, the Company provides other financial measures, such as core net inter
Slide 34: Reconciliation of Non-GAAP Financial Measures
34 Reconciliation of Non-GAAP Financial Measures For the Quarter ended ($ in thousands, except per share data) Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 CORE PERFORMANCE MEASURES Net interest income $ 47,404 $ 45,625 $ 45,633 $ 38,642 $ 35,454 Less: Incremental accretion incom
Slide 35: Q&A
Q&A 4th Quarter and Full Year 2017 EFSC Investor Presentation
Enterprise Financial Services — FY2017 Earnings Presentation on 6ix