8-K
ENTERPRISE FINANCIAL SERVICES CORP (EFSC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 25, 2022
ENTERPRISE FINANCIAL SERVICES CORP
(Exact name of registrant as specified in its charter)
| Delaware | 001-15373 | 43-1706259 | |||
|---|---|---|---|---|---|
| (State or Other Jurisdiction <br>of Incorporation) | (Commission <br>File Number) | (IRS Employer <br>Identification No.) | 150 N. Meramec Avenue, St. Louis, Missouri<br><br>(Address of principal executive offices) | 63105<br><br>(Zip Code) | |
| --- | --- |
Registrant's telephone number, including area code
(314) 725-5500
| Not applicable |
|---|
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | EFSC | Nasdaq Global Select Market |
| Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.00% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A | EFSCP | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 25, 2022, Enterprise Financial Services Corp (the "Company" or "EFSC") issued a press release announcing financial information for the quarter ended March 31, 2022. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
On April 26, 2022, at 10:00 a.m. Central time, the Company intends to hold a webcast to present information on its results of operations for the quarter ended March 31, 2022. The slide presentation which will accompany the webcast is furnished as Exhibit 99.2 and is incorporated herein by reference.
The press release, slide presentation and information contained therein and in this Item 2.02 shall not be deemed “filed” with the Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
99.1 Press Release dated April 25, 2022.
99.2 Presentation to be conductedApril26, 2022.
104 The cover page of this Current Report on Form 8-K, formatted in Inline XBRL.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENTERPRISE FINANCIAL SERVICES CORP | |||
|---|---|---|---|
| Date: | April 25, 2022 | By: | /s/ Troy R. Dumlao |
| Troy R. Dumlao | |||
| Senior Vice President and Chief Accounting Officer |
Document
EXHIBIT 99.1
ENTERPRISE FINANCIAL REPORTS FIRST QUARTER 2022 RESULTS
First Quarter Results
•Net income of $47.7 million, $1.23 per diluted common share
•Net interest margin (tax equivalent) of 3.28%
•Pre-provision return on average assets1 of 1.70%
•Increased quarterly dividend 5% to $0.22 per common share for the second quarter
•Repurchased 351,090 shares at an average price of $48.35 per share
St. Louis, Mo. April 25, 2022 – Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $47.7 million for the first quarter 2022, a decrease of $3.1 million compared to the linked fourth quarter (“linked quarter”) and an increase of $17.8 million from the prior year quarter. Earnings per diluted common share (“EPS”) was $1.23 for the first quarter 2022, compared to $1.33 and $0.96 for the linked and prior year quarters, respectively.
Jim Lally, EFSC’s President and Chief Executive Officer, commented, “I am pleased with our start to 2022. We had solid loan growth, continued success in deposit building and improvement in our strong credit quality metrics. We continue to remain focused on delivering on our strategic initiatives and positioning our company as a best-in-class financial partner in the communities we serve.”
Highlights
Comparisons to the prior year are impacted by the acquisition of First Choice Bancorp (“First Choice” or “FCBP”) in the third quarter of 2021.
•Earnings - Net income in the first quarter 2022 was $47.7 million, a decrease of $3.1 million compared to the linked quarter and an increase of $17.8 million from the prior year quarter. EPS was $1.23 per diluted common share for the first quarter 2022, compared to $1.33 and $0.96 per diluted common share for the linked and prior year quarters, respectively.
•Pre-provision net revenue1 (“PPNR”) - PPNR of $57.0 million in the first quarter 2022 decreased $6.3 million and increased $16.3 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to a decline in Paycheck Protection Program (“PPP”) loan income and lower noninterest income that typically declines from a peak in the fourth quarter. The increase from the prior year quarter was primarily due to the positive contribution from the First Choice acquisition and expansion in net interest income from organic loan and deposit growth.
•Net interest income and net interest margin (“NIM”) - Net interest income of $101.2 million for the first quarter 2022 decreased $0.9 million and increased $22.0 million from the linked and prior year quarters, respectively. NIM was 3.28% for the first quarter 2022, compared to 3.32% and 3.50% for the linked quarter and prior year quarter, respectively. The underlying base NIM was relatively stable in the period, excluding the impact of certain items discussed below.
•Noninterest income - Noninterest income of $18.6 million for the first quarter 2022 decreased $4.0 million and increased $7.4 million from the linked quarter and prior year quarter, respectively. A decline in tax credit income from a seasonally strong linked quarter and a decline in other income were the primary
1 Pre-provision return on average assets is a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.
drivers of the linked quarter decrease. The increase from the prior year quarter was primarily due to higher tax credit income and deposit service charge income from the First Choice acquisition.
•Loans - Total loans increased $38.4 million from the linked quarter to $9.1 billion as of March 31, 2022. PPP loans declined $137.9 million. Excluding PPP loans, loans grew $176.3 million, or 8%, on an annualized basis from the linked quarter. Loan growth in the quarter was attributed primarily to the specialty lending niches. Average loans totaled $9.0 billion for the quarter ended March 31, 2022 compared to $9.0 billion and $7.2 billion for the linked and prior year quarters, respectively.
•Asset quality - The allowance for credit losses to total loans was 1.54% at March 31, 2022, compared to 1.61% at December 31, 2021 and 1.80% at March 31, 2021. Loan growth and a provision benefit in the first quarter 2022 contributed to the decline in the ratio of allowance for credit losses to total loans. Nonperforming assets to total assets was 0.17% at March 31, 2022 compared to 0.23% and 0.42% at December 31, 2021 and March 31, 2021, respectively. Due to the improvement in credit quality and macroeconomic forecasts, a provision benefit of $4.1 million was recorded in the first quarter 2022, compared to a provision benefit of $3.7 million in the linked quarter and a $46,000 provision expense in the prior year quarter.
•Deposits - Total deposits increased $360.3 million from the linked quarter to $11.7 billion as of March 31, 2022. The specialty deposit groups have had continued success in generating deposit growth, increasing deposits by $273.7 million in the first quarter 2022 as compared to the linked quarter. Average deposits totaled $11.5 billion for the quarter ended March 31, 2022 compared to $11.2 billion and $8.2 billion for the linked and prior year quarters, respectively. Noninterest-bearing deposit accounts represented 41.7% of total deposits, and the loan to deposit ratio was 77.4% at March 31, 2022.
•Capital - Total shareholders’ equity was $1.5 billion and the tangible common equity to tangible assets ratio2 was 7.6% at March 31, 2022, compared to 8.1% at December 31, 2021. The decline in the tangible common equity ratio was primarily due to a $78.0 million decrease in accumulated other comprehensive income driven primarily from a decrease in the fair value of the available-for-sale investment portfolio. Enterprise Bank & Trust’s regulatory capital ratios remain “well-capitalized,” with a common equity tier 1 ratio of 12.2% and a total risk-based capital ratio of 13.3% as of March 31, 2022. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.0% and 14.4%, respectively, at March 31, 2022.
The Company repurchased 351,090 shares totaling $17.0 million in the first quarter 2022 for an average price of $48.35 per share. The Company has 349,383 shares available for repurchase under its common stock repurchase authorization.
The Company’s Board of Directors unanimously approved a quarterly dividend of $0.22 per common share, payable on June 30, 2022 to shareholders of record as of June 15, 2022, an increase of $0.01, or 5.0%, compared to the first quarter 2022. The Board of Directors also declared a cash dividend of $12.50 per share of Series A Preferred Stock (or $0.3125 per depositary share) representing a 5% per annum rate for the period commencing (and including) March 15, 2022 to (but excluding) June 15, 2022. The dividend will be payable on June 15, 2022 to shareholders of record on May 31, 2022.
2 Tangible common equity to tangible assets ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
Net Interest Income
Average Balance Sheets
The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as, the corresponding interest rates earned and paid, all on a tax-equivalent basis.
| December 31, 2021 | March 31, 2021 | ||||||||||||||||
| ( in thousands) | Interest <br>Income/<br>Expense | Average Yield/ Rate | Average<br>Balance | Interest<br>Income/<br>Expense | Average Yield/ Rate | Average<br>Balance | Interest<br>Income/<br>Expense | Average Yield/ Rate | |||||||||
| Assets | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Loans* | 9,005,875 | $ | 96,301 | 4.34 | % | $ | 9,030,982 | $ | 98,412 | 4.32 | % | $ | 7,192,776 | $ | 77,073 | 4.35 | % |
| Securities* | 10,969 | 2.31 | 1,753,159 | 10,146 | 2.30 | 1,417,305 | 8,818 | 2.52 | |||||||||
| Interest-earning deposits | 817 | 0.19 | 1,589,008 | 590 | 0.15 | 679,659 | 189 | 0.11 | |||||||||
| Total interest-earning assets | 108,087 | 3.45 | 12,373,149 | 109,148 | 3.50 | 9,289,740 | 86,080 | 3.76 | |||||||||
| Noninterest-earning assets | 894,044 | 650,312 | |||||||||||||||
| Total assets | 13,614,003 | $ | 13,267,193 | $ | 9,940,052 | ||||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Interest-bearing transaction accounts | 2,505,319 | $ | 536 | 0.09 | % | $ | 2,383,059 | $ | 491 | 0.08 | % | $ | 1,887,059 | $ | 328 | 0.07 | % |
| Money market accounts | 1,460 | 0.21 | 2,853,655 | 1,412 | 0.20 | 2,350,592 | 975 | 0.17 | |||||||||
| Savings | 66 | 0.03 | 776,695 | 64 | 0.03 | 654,662 | 48 | 0.03 | |||||||||
| Certificates of deposit | 797 | 0.53 | 616,347 | 831 | 0.53 | 537,166 | 1,312 | 0.99 | |||||||||
| Total interest-bearing deposits | 2,859 | 0.17 | 6,629,756 | 2,798 | 0.17 | 5,429,479 | 2,663 | 0.20 | |||||||||
| Subordinated debentures | 2,220 | 5.81 | 171,453 | 2,439 | 5.64 | 203,694 | 2,819 | 5.61 | |||||||||
| FHLB advances | 195 | 1.58 | 50,000 | 199 | 1.58 | 50,000 | 195 | 1.58 | |||||||||
| Securities sold under agreements to repurchase | 60 | 0.09 | 246,525 | 60 | 0.10 | 231,527 | 60 | 0.11 | |||||||||
| Other borrowings | 82 | 1.46 | 24,270 | 85 | 1.39 | 28,650 | 100 | 1.42 | |||||||||
| Total interest-bearing liabilities | 5,416 | 0.30 | 7,122,004 | 5,581 | 0.31 | 5,943,350 | 5,837 | 0.40 | |||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||
| Demand deposits | 4,537,247 | 2,777,900 | |||||||||||||||
| Other liabilities | 112,546 | 122,321 | |||||||||||||||
| Total liabilities | 11,771,797 | 8,843,571 | |||||||||||||||
| Shareholders' equity | 1,495,396 | 1,096,481 | |||||||||||||||
| Total liabilities and shareholders' equity | 13,614,003 | $ | 13,267,193 | $ | 9,940,052 | ||||||||||||
| Total net interest income | $ | 102,671 | $ | 103,567 | $ | 80,243 | |||||||||||
| Net interest margin | 3.28 | % | 3.32 | % | 3.50 | % | |||||||||||
| * Non-taxable income is presented on a tax-equivalent basis using a 25.2% and 24.9% tax rate in 2022 and 2021, respectively. The tax-equivalent adjustments were 1.5 million for the three months ended March 31, 2022 and December 31, 2021, and 1.1 million for the three months ended March 31, 2021. |
All values are in US Dollars.
Net interest income for the first quarter decreased $0.9 million to $101.2 million from $102.1 million in the linked quarter, and increased $22.0 million from the prior year period. NIM, on a tax equivalent basis, was 3.28% for the first quarter, compared to 3.32% in the linked quarter, and 3.50% in the first quarter 2021. The decrease in net interest income from the linked quarter was primarily due to a $2.0 million decline in PPP income as the PPP loan portfolio continues to wind down. This decline was partially offset by an increase in income from loan growth, an expanded investment portfolio and a decline in interest expense from the redemption of $50.0 million of subordinated debentures in the fourth quarter 2021.
NIM decreased four basis points from the linked quarter to 3.28% for the first quarter 2022, primarily due to a five basis point decrease in earning asset yields. The decrease in the earning asset yields was due primarily to higher levels of cash related to continued deposit growth. Excluding the impact of higher low-yielding cash balances, NIM was relatively stable compared to the linked quarter. The average loan yield expanded two basis points to 4.34% in the first quarter 2022 as compared to the linked quarter. The increase was primarily due to the repricing of variable-rate loans and the increase in short-term LIBOR and Prime rates from the Federal Reserve’s 25 basis point increase in the target federal funds rate in March 2022.
Loans
The following table presents total loans for the most recent five quarters:
| Quarter ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | |||||||||||||||||||
| ($ in thousands) | March 31, 2022 | December 31, 2021 | FCBPa | Legacy EFSCa | Consolidated | June 30, 2021 | March 31, 2021 | ||||||||||||
| C&I | $ | 1,498,151 | $ | 1,538,155 | $ | 242,740 | $ | 1,215,338 | $ | 1,458,078 | $ | 1,116,229 | $ | 1,048,839 | |||||
| CRE investor owned | 1,982,645 | 1,955,087 | 553,490 | 1,381,794 | 1,935,284 | 1,467,243 | 1,491,244 | ||||||||||||
| CRE owner occupied | 1,138,106 | 1,112,463 | 301,929 | 861,307 | 1,163,236 | 789,220 | 805,581 | ||||||||||||
| SBA loans* | 1,249,929 | 1,241,449 | 160,833 | 1,038,925 | 1,199,758 | 1,010,727 | 941,075 | ||||||||||||
| Sponsor finance* | 641,476 | 508,469 | — | 454,431 | 454,431 | 463,744 | 394,207 | ||||||||||||
| Life insurance premium financing* | 636,096 | 593,562 | — | 572,492 | 572,492 | 564,366 | 543,084 | ||||||||||||
| Tax credits* | 518,020 | 486,881 | — | 462,168 | 462,168 | 423,258 | 387,968 | ||||||||||||
| SBA PPP loans | 134,084 | 271,958 | 206,284 | 232,675 | 438,959 | 396,660 | 737,660 | ||||||||||||
| Residential real estate | 410,173 | 430,985 | 226,321 | 293,538 | 519,859 | 302,007 | 299,517 | ||||||||||||
| Construction and land development | 610,830 | 625,526 | 219,600 | 432,627 | 652,227 | 467,586 | 438,303 | ||||||||||||
| Other | 236,563 | 253,107 | 32,547 | 227,544 | 260,091 | 225,227 | 201,303 | ||||||||||||
| Total loans | $ | 9,056,073 | $ | 9,017,642 | $ | 1,943,744 | $ | 7,172,839 | $ | 9,116,583 | $ | 7,226,267 | $ | 7,288,781 | |||||
| Total loan yield | 4.34 | % | 4.32 | % | 4.32 | % | 4.35 | % | 4.35 | % | |||||||||
| Variable interest rate loans to total loans | 63 | % | 63 | % | 63 | % | 57 | % | 56 | % | |||||||||
| Certain prior period amounts have been reclassified among the categories to conform to the current period presentation. | |||||||||||||||||||
| *Specialty loan category | |||||||||||||||||||
| a Amounts reported are as of September 30, 2021 and are separately shown attributable to the FCBP loan portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition loan portfolio. |
Loans totaled $9.1 billion at March 31, 2022, increasing $38.4 million compared to the linked quarter. PPP loans declined $137.9 million in the first quarter 2022 from continued loan forgiveness by the Small Business Administration (“SBA”). Excluding PPP loans, loans grew $176.3 million, or 8% on an annualized basis, from the linked quarter. The increase was driven by specialty lending, particularly Sponsor Finance that increased $133.0 million in the first quarter 2022. Average line draw utilization was 39.9% for both the quarter ended March 31, 2022 and the linked quarter, compared to 37.0% for the prior-year quarter.
Asset Quality
The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:
| Quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Nonperforming loans* | $ | 21,160 | $ | 28,024 | $ | 41,554 | $ | 42,252 | $ | 36,659 | |||||
| Other real estate | 1,459 | 3,493 | 3,493 | 3,612 | 6,164 | ||||||||||
| Nonperforming assets* | $ | 22,619 | $ | 31,517 | $ | 45,047 | $ | 45,864 | $ | 42,823 | |||||
| Nonperforming loans to total loans | 0.23 | % | 0.31 | % | 0.46 | % | 0.58 | % | 0.50 | % | |||||
| Nonperforming assets to total assets | 0.17 | % | 0.23 | % | 0.35 | % | 0.44 | % | 0.42 | % | |||||
| Allowance for credit losses to total loans | 1.54 | % | 1.61 | % | 1.67 | % | 1.77 | % | 1.80 | % | |||||
| Net charge-offs | $ | 1,521 | $ | 3,263 | $ | 1,850 | $ | 869 | $ | 5,647 | |||||
| *Guaranteed balances excluded | $ | 3,954 | $ | 6,481 | $ | 5,109 | $ | 3,930 | $ | 3,873 |
Nonperforming assets continued to improve in the first quarter 2022, declining $8.9 million from the linked quarter. Net charge-offs were $1.5 million, or seven basis points of average loans, compared to 14 basis points in the linked quarter and 32 basis points in the prior year quarter. Due to the improvement in credit quality and forecasted macroeconomic factors, the Company recorded a provision benefit of $4.1 million for the first quarter 2022 compared to a benefit of $3.7 million for the linked quarter and a $46,000 provision for the prior year quarter.
Deposits
The following table presents deposits broken out by type for the most recent five quarters:
| Quarter ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | |||||||||||||||||||||
| ($ in thousands) | March 31, 2022 | December 31, 2021 | FCBPa | Legacy EFSCa | Consolidated | June 30, 2021 | March 31, 2021 | ||||||||||||||
| Noninterest-bearing accounts | $ | 4,881,043 | $ | 4,578,436 | $ | 1,041,622 | $ | 3,334,091 | $ | 4,375,713 | $ | 3,111,581 | $ | 2,910,216 | |||||||
| Interest-bearing transaction accounts | 2,547,482 | 2,465,884 | 317,301 | 1,936,338 | 2,253,639 | 2,013,129 | 1,990,308 | ||||||||||||||
| Money market and savings accounts | 3,678,135 | 3,691,186 | 370,179 | 3,201,073 | 3,571,252 | 3,000,460 | 3,093,569 | ||||||||||||||
| Brokered certificates of deposit | 129,017 | 128,970 | 78,714 | 50,209 | 128,923 | 50,209 | 50,209 | ||||||||||||||
| Other certificates of deposit | 468,458 | 479,323 | 51,832 | 446,416 | 498,248 | 464,125 | 471,142 | ||||||||||||||
| Total deposit portfolio | $ | 11,704,135 | $ | 11,343,799 | $ | 1,859,648 | $ | 8,968,127 | $ | 10,827,775 | $ | 8,639,504 | $ | 8,515,444 | |||||||
| Noninterest-bearing deposits to total deposits | 41.7 | % | 40.4 | % | 56.0 | % | 37.2 | % | 40.4 | % | 36.0 | % | 34.2 | % | |||||||
| aAmounts reported are as of September 30, 2021 and are shown separately attributable to the FCBP deposit portfolio acquired on July 21, 2021, and the Company’s pre-FCBP acquisition deposit portfolio. |
Total deposits at March 31, 2022 were $11.7 billion, an increase of $360.3 million from December 31, 2021, and an increase of $3.2 billion from March 31, 2021. The increase from the linked quarter was primarily due to continued success in the deposit specialty areas, particularly community associations and escrow relationships. The increase over the prior year is due to the First Choice acquisition and organic growth.
Core deposits, defined as total deposits excluding certificates of deposits, were $11.1 billion at March 31, 2022, an increase of $371.2 million from the linked quarter. The Company’s participation in PPP, the interest rate environment and high personal savings rate, particularly in the New Mexico market, have contributed to the increase in deposits. Noninterest-bearing deposits were $4.9 billion at March 31, 2022, or 41.7% of total deposits. The total cost of deposits was 0.10% for both the current and linked quarters, compared to 0.13% for the prior year quarter.
Noninterest Income
The following table presents a comparative summary of the major components of noninterest income for the periods indicated:
| Linked quarter comparison | Prior year comparison | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter ended | Quarter ended | |||||||||||||
| ($ in thousands) | March 31, 2022 | December 31, 2021 | Increase (decrease) | March 31, 2021 | Increase (decrease) | |||||||||
| Deposit service charges | $ | 4,163 | $ | 3,962 | $ | 201 | 5 | % | $ | 3,084 | $ | 1,079 | 35 | % |
| Wealth management revenue | 2,622 | 2,687 | (65) | (2) | % | 2,483 | 139 | 6 | % | |||||
| Card services revenue | 3,040 | 3,223 | (183) | (6) | % | 2,496 | 544 | 22 | % | |||||
| Tax credit income (expense) | 2,608 | 4,374 | (1,766) | (40) | % | (1,041) | 3,649 | 351 | % | |||||
| Other income | 6,208 | 8,384 | (2,176) | (26) | % | 4,268 | 1,940 | 45 | % | |||||
| Total noninterest income | $ | 18,641 | $ | 22,630 | $ | (3,989) | (18) | % | $ | 11,290 | $ | 7,351 | 65 | % |
Total noninterest income for the first quarter 2022 was $18.6 million, a decrease of $4.0 million from the linked quarter and an increase of $7.4 million from the prior year quarter. The decrease from the linked quarter was primarily due to decreases in tax credit and other income. Tax credit income was seasonally high in the linked quarter and typically declines in the first quarter of the year. Other income in the linked quarter included $5.0 million of fees from community development investments, compared to $2.2 million in the first quarter 2022. The increase from the prior year quarter was broad-based, reflecting higher volumes in all categories. First Choice noninterest income partially contributed to the increase over the prior year, primarily in deposit service charges and SBA servicing fees included in other income.
Noninterest Expenses
Noninterest expense was $62.8 million for the first quarter 2022, compared to $63.7 million for the linked quarter, and $52.9 million for the prior year quarter. The Company did not incur any merger related expenses in the first quarter 2022, compared to $2.3 million in the linked quarter and $3.1 million in the prior year quarter, respectively. Salary and employee benefits increased $2.3 million from the linked quarter due to annual merit increases that became effective on March 1, 2022 and employer payroll taxes that are seasonally higher in the first quarter each year. The increase from the prior year quarter was primarily due to the First Choice acquisition, merit increases provided to employees throughout 2021 and an increase in deposit customer analysis expense.
For the first quarter 2022, the Company’s efficiency ratio was 52.4% compared to 51.1% and 58.5% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio3 was 52.4% for the quarter ended March 31, 2022, compared to 49.2% for the linked quarter and 55.0% for the prior year quarter.
3 Core efficiency ratio is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.
Income Taxes
The Company’s effective tax rate was 22% for the quarter ended March 31, 2022, compared to 21% for the linked quarter and 20% for the prior year quarter. The Company’s effective tax rate has increased due to an expanded geographic footprint and the related state tax apportionment.
Capital
The following table presents various EFSC capital ratios for the most recent five quarters:
| Quarter ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Percent | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||
| Total risk-based capital to risk-weighted assets | 14.4 | % | 14.7 | % | 14.5 | % | 14.9 | % | 15.1 | % |
| Tier 1 capital to risk weighted assets | 12.7 | % | 13.0 | % | 12.2 | % | 12.3 | % | 12.3 | % |
| Common equity tier 1 capital to risk-weighted assets | 11.0 | % | 11.3 | % | 11.2 | % | 11.1 | % | 11.0 | % |
| Tangible common equity to tangible assets | 7.6 | % | 8.1 | % | 8.4 | % | 8.3 | % | 8.2 | % |
Total equity was $1.5 billion at March 31, 2022, a decrease of $55.9 million from the linked quarter. The decrease from the linked quarter was primarily due to a $78.0 million decline in accumulated other comprehensive income. This was due to a net fair value decline in the Company’s fixed-rate, available-for-sale investment portfolio from an increase in interest rates during the period. The Company’s tangible common book value per share was $27.06 at March 31, 2022, compared to $28.28 and $25.92 in the linked and prior year quarters, respectively.
The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark. Capital ratios for the current quarter are subject to, among other things, completion and filing of the Company’s regulatory reports and ongoing regulatory review.
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 equity, PPNR, PPNR return on average assets (“PPNR ROAA”), financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, in this release that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
The Company considers its tangible common equity, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, collectively “core performance measures,” presented in this earnings release and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures exclude certain other income and expense items, such as merger-related expenses, facilities charges, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject.
The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-
GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated.
Conference Call and Webcast Information
The Company will host a conference call and webcast at 10:00 a.m. Central Time on Tuesday, April 26, 2022. During the call, management will review the first quarter 2022 results and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at www.enterprisebank.com under “Investor Relations” prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-888-394-8218 (Conference ID #3278323). A recorded replay of the conference call will be available on the website approximately two hours after the call’s completion. Visit http://bit.ly/EFSC1Q2022 and register to receive a dial in number, passcode, and pin number. The replay will be available for approximately two weeks following the conference call.
About Enterprise Financial Services Corp
Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $13.7 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices throughout the country. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.
Enterprise Financial Services Corp’s common stock is traded on the Nasdaq Stock Market under the symbol “EFSC.” Please visit our website at www.enterprisebank.com to see our regularly posted material information.
Forward-looking Statements
Readers should note that, in addition to the historical information contained herein, this press release 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. Such forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the First Choice acquisition and other acquisitions.
Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the First Choice acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic conditions, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in regulatory requirements, changes in accounting policies and practices or accounting standards, changes in the method of determining LIBOR and the phase out of LIBOR, natural disasters, war (including the war in Ukraine) or terrorist activities, or pandemics, including the COVID-19 pandemic, and their effects on economic and business environments in which we operate, including the ongoing disruption to the financial market and other economic activity caused by the COVID-19 pandemic, and those factors and risks referenced from time to time in the
Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and the Company’s other filings with the SEC. For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made.
For more information contact
Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Steve Richardson, Senior Vice President (314) 995-5695
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
| Quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | ||||||||||
| EARNINGS SUMMARY | |||||||||||||||
| Net interest income | $ | 101,165 | $ | 102,060 | $ | 97,273 | $ | 81,738 | $ | 79,123 | |||||
| Provision (benefit) for credit losses | (4,068) | (3,660) | 19,668 | (2,669) | 46 | ||||||||||
| Noninterest income | 18,641 | 22,630 | 17,619 | 16,204 | 11,290 | ||||||||||
| Noninterest expense | 62,800 | 63,694 | 76,885 | 52,456 | 52,884 | ||||||||||
| Income before income tax expense | 61,074 | 64,656 | 18,339 | 48,155 | 37,483 | ||||||||||
| Income tax expense | 13,381 | 13,845 | 4,426 | 9,750 | 7,557 | ||||||||||
| Net income | 47,693 | 50,811 | 13,913 | 38,405 | 29,926 | ||||||||||
| Preferred stock dividends | 1,229 | — | — | — | — | ||||||||||
| Net income available to common shareholders | $ | 46,464 | $ | 50,811 | $ | 13,913 | $ | 38,405 | $ | 29,926 | |||||
| Diluted earnings per common share | $ | 1.23 | $ | 1.33 | $ | 0.38 | $ | 1.23 | $ | 0.96 | |||||
| Return on average assets | 1.42 | % | 1.52 | % | 0.45 | % | 1.50 | % | 1.22 | % | |||||
| Return on average common equity | 12.87 | % | 13.81 | % | 3.96 | % | 13.79 | % | 11.07 | % | |||||
| Return on average tangible common equity1 | 17.49 | % | 18.81 | % | 5.37 | % | 18.44 | % | 14.92 | % | |||||
| Net interest margin (tax equivalent) | 3.28 | % | 3.32 | % | 3.40 | % | 3.46 | % | 3.50 | % | |||||
| Efficiency ratio | 52.42 | % | 51.08 | % | 66.92 | % | 53.56 | % | 58.49 | % | |||||
| Core efficiency ratio1 | 52.43 | % | 49.22 | % | 51.30 | % | 51.86 | % | 55.02 | % | |||||
| Total loans | $ | 9,056,073 | $ | 9,017,642 | $ | 9,116,583 | $ | 7,226,267 | $ | 7,288,781 | |||||
| Total average loans | $ | 9,005,875 | $ | 9,030,982 | $ | 8,666,353 | $ | 7,306,471 | $ | 7,192,776 | |||||
| Total assets | $ | 13,706,769 | $ | 13,537,358 | $ | 12,888,016 | $ | 10,346,993 | $ | 10,190,699 | |||||
| Total average assets | $ | 13,614,003 | $ | 13,267,193 | $ | 12,334,558 | $ | 10,281,344 | $ | 9,940,052 | |||||
| Total deposits | $ | 11,704,135 | $ | 11,343,799 | $ | 10,827,775 | $ | 8,639,504 | $ | 8,515,444 | |||||
| Total average deposits | $ | 11,494,212 | $ | 11,167,003 | $ | 10,297,153 | $ | 8,580,211 | $ | 8,207,379 | |||||
| Period end common shares outstanding | 37,516 | 37,820 | 38,372 | 31,185 | 31,259 | ||||||||||
| Dividends per common share | $ | 0.21 | $ | 0.20 | $ | 0.19 | $ | 0.18 | $ | 0.18 | |||||
| Tangible book value per common share | $ | 27.06 | $ | 28.28 | $ | 27.38 | $ | 26.85 | $ | 25.92 | |||||
| Tangible common equity to tangible assets1 | 7.62 | % | 8.13 | % | 8.40 | % | 8.32 | % | 8.18 | % | |||||
| Total risk-based capital to risk-weighted assets | 14.4 | % | 14.7 | % | 14.5 | % | 14.9 | % | 15.1 | % | |||||
| 1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP. |
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
| Quarter ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||
| INCOME STATEMENTS | ||||||||||
| NET INTEREST INCOME | ||||||||||
| Interest income | $ | 106,581 | $ | 107,641 | $ | 103,228 | $ | 87,401 | $ | 84,960 |
| Interest expense | 5,416 | 5,581 | 5,955 | 5,663 | 5,837 | |||||
| Net interest income | 101,165 | 102,060 | 97,273 | 81,738 | 79,123 | |||||
| Provision (benefit) for credit losses | (4,068) | (3,660) | 19,668 | (2,669) | 46 | |||||
| Net interest income after provision for credit losses | 105,233 | 105,720 | 77,605 | 84,407 | 79,077 | |||||
| NONINTEREST INCOME | ||||||||||
| Deposit service charges | 4,163 | 3,962 | 4,520 | 3,862 | 3,084 | |||||
| Wealth management revenue | 2,622 | 2,687 | 2,573 | 2,516 | 2,483 | |||||
| Card services revenue | 3,040 | 3,223 | 3,186 | 2,975 | 2,496 | |||||
| Tax credit income (expense) | 2,608 | 4,374 | 3,325 | 1,370 | (1,041) | |||||
| Other income | 6,208 | 8,384 | 4,015 | 5,481 | 4,268 | |||||
| Total noninterest income | 18,641 | 22,630 | 17,619 | 16,204 | 11,290 | |||||
| NONINTEREST EXPENSE | ||||||||||
| Employee compensation and benefits | 35,827 | 33,488 | 33,722 | 28,132 | 29,562 | |||||
| Occupancy | 4,586 | 4,510 | 4,496 | 3,529 | 3,751 | |||||
| Branch closure expenses | — | — | 3,441 | — | — | |||||
| Merger-related expenses | — | 2,320 | 14,671 | 1,949 | 3,142 | |||||
| Other expense | 22,387 | 23,376 | 20,555 | 18,846 | 16,429 | |||||
| Total noninterest expense | 62,800 | 63,694 | 76,885 | 52,456 | 52,884 | |||||
| Income before income tax expense | 61,074 | 64,656 | 18,339 | 48,155 | 37,483 | |||||
| Income tax expense | 13,381 | 13,845 | 4,426 | 9,750 | 7,557 | |||||
| Net income | $ | 47,693 | $ | 50,811 | $ | 13,913 | $ | 38,405 | $ | 29,926 |
| Preferred stock dividends | 1,229 | — | — | — | — | |||||
| Net income available to common shareholders | $ | 46,464 | $ | 50,811 | $ | 13,913 | $ | 38,405 | $ | 29,926 |
| Basic earnings per common share | $ | 1.23 | $ | 1.33 | $ | 0.38 | $ | 1.23 | $ | 0.96 |
| Diluted earnings per common share | $ | 1.23 | $ | 1.33 | $ | 0.38 | $ | 1.23 | $ | 0.96 |
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
| Quarter ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||
| BALANCE SHEETS | ||||||||||
| ASSETS | ||||||||||
| Cash and due from banks | $ | 252,706 | $ | 209,177 | $ | 179,826 | $ | 126,789 | $ | 103,367 |
| Interest-earning deposits | 1,735,708 | 1,819,508 | 1,216,470 | 889,960 | 788,464 | |||||
| Debt and equity investments | 1,993,927 | 1,855,583 | 1,717,442 | 1,585,847 | 1,463,818 | |||||
| Loans held for sale | 4,270 | 6,389 | 5,068 | 5,763 | 8,531 | |||||
| Loans | 9,056,073 | 9,017,642 | 9,116,583 | 7,226,267 | 7,288,781 | |||||
| Allowance for credit losses | (139,212) | (145,041) | (152,096) | (128,185) | (131,527) | |||||
| Total loans, net | 8,916,861 | 8,872,601 | 8,964,487 | 7,098,082 | 7,157,254 | |||||
| Fixed assets, net | 46,900 | 47,915 | 48,697 | 50,972 | 52,078 | |||||
| Goodwill | 365,164 | 365,164 | 365,415 | 260,567 | 260,567 | |||||
| Intangible assets, net | 20,855 | 22,286 | 23,777 | 20,358 | 21,670 | |||||
| Other assets | 370,378 | 338,735 | 366,834 | 308,655 | 334,950 | |||||
| Total assets | $ | 13,706,769 | $ | 13,537,358 | $ | 12,888,016 | $ | 10,346,993 | $ | 10,190,699 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Noninterest-bearing deposits | $ | 4,881,043 | $ | 4,578,436 | $ | 4,375,713 | $ | 3,111,581 | $ | 2,910,216 |
| Interest-bearing deposits | 6,823,092 | 6,765,363 | 6,452,062 | 5,527,923 | 5,605,228 | |||||
| Total deposits | 11,704,135 | 11,343,799 | 10,827,775 | 8,639,504 | 8,515,444 | |||||
| Subordinated debentures | 155,031 | 154,899 | 204,103 | 203,940 | 203,778 | |||||
| FHLB advances | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | |||||
| Federal funds purchased | — | — | — | — | — | |||||
| Other borrowings | 228,846 | 353,863 | 243,770 | 234,509 | 229,389 | |||||
| Other liabilities | 95,580 | 105,681 | 122,733 | 100,739 | 99,591 | |||||
| Total liabilities | 12,233,592 | 12,008,242 | 11,448,381 | 9,228,692 | 9,098,202 | |||||
| Shareholders’ equity: | ||||||||||
| Preferred stock | 71,988 | 71,988 | — | — | — | |||||
| Common stock | 395 | 398 | 404 | 330 | 332 | |||||
| Treasury stock | (73,528) | (73,528) | (73,528) | (73,528) | (73,528) | |||||
| Additional paid-in capital | 1,010,446 | 1,018,799 | 1,031,146 | 688,945 | 698,005 | |||||
| Retained earnings | 523,136 | 492,682 | 461,711 | 474,282 | 441,511 | |||||
| Accumulated other comprehensive income (loss) | (59,260) | 18,777 | 19,902 | 28,272 | 26,177 | |||||
| Total shareholders’ equity | 1,473,177 | 1,529,116 | 1,439,635 | 1,118,301 | 1,092,497 | |||||
| Total liabilities and shareholders’ equity | $ | 13,706,769 | $ | 13,537,358 | $ | 12,888,016 | $ | 10,346,993 | $ | 10,190,699 |
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
| Quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | ||||||||||
| LOAN PORTFOLIO | |||||||||||||||
| Commercial and industrial | $ | 3,398,723 | $ | 3,392,375 | $ | 3,379,171 | $ | 2,930,805 | $ | 3,079,643 | |||||
| Commercial real estate | 4,278,138 | 4,176,928 | 4,179,712 | 3,200,748 | 3,186,970 | ||||||||||
| Construction real estate | 702,630 | 734,073 | 747,758 | 556,776 | 510,501 | ||||||||||
| Residential real estate | 432,639 | 454,052 | 542,690 | 305,497 | 303,047 | ||||||||||
| Other | 243,943 | 260,214 | 267,252 | 232,441 | 208,620 | ||||||||||
| Total loans | $ | 9,056,073 | $ | 9,017,642 | $ | 9,116,583 | $ | 7,226,267 | $ | 7,288,781 | |||||
| DEPOSIT PORTFOLIO | |||||||||||||||
| Noninterest-bearing accounts | $ | 4,881,043 | $ | 4,578,436 | $ | 4,375,713 | $ | 3,111,581 | $ | 2,910,216 | |||||
| Interest-bearing transaction accounts | 2,547,482 | 2,465,884 | 2,253,639 | 2,013,129 | 1,990,308 | ||||||||||
| Money market and savings accounts | 3,678,135 | 3,691,186 | 3,571,252 | 3,000,460 | 3,093,569 | ||||||||||
| Brokered certificates of deposit | 129,017 | 128,970 | 128,923 | 50,209 | 50,209 | ||||||||||
| Other certificates of deposit | 468,458 | 479,323 | 498,248 | 464,125 | 471,142 | ||||||||||
| Total deposit portfolio | $ | 11,704,135 | $ | 11,343,799 | $ | 10,827,775 | $ | 8,639,504 | $ | 8,515,444 | |||||
| AVERAGE BALANCES | |||||||||||||||
| Total loans | $ | 9,005,875 | $ | 9,030,982 | $ | 8,666,353 | $ | 7,306,471 | $ | 7,192,776 | |||||
| Debt and equity investments | 1,923,969 | 1,753,159 | 1,594,938 | 1,502,582 | 1,417,305 | ||||||||||
| Interest-earning assets | 12,711,116 | 12,373,149 | 11,513,279 | 9,615,981 | 9,289,741 | ||||||||||
| Total assets | 13,614,003 | 13,267,193 | 12,334,558 | 10,281,344 | 9,940,052 | ||||||||||
| Deposits | 11,494,212 | 11,167,003 | 10,297,153 | 8,580,211 | 8,207,379 | ||||||||||
| Shareholders’ equity | 1,536,221 | 1,495,396 | 1,394,096 | 1,116,969 | 1,096,481 | ||||||||||
| Tangible common equity1 | 1,077,529 | 1,071,902 | 1,028,001 | 835,405 | 813,568 | ||||||||||
| YIELDS (tax equivalent) | |||||||||||||||
| Total loans | 4.34 | % | 4.32 | % | 4.32 | % | 4.35 | % | 4.35 | % | |||||
| Debt and equity investments | 2.31 | 2.30 | 2.38 | 2.46 | 2.52 | ||||||||||
| Interest-earning assets | 3.45 | 3.50 | 3.60 | 3.70 | 3.76 | ||||||||||
| Interest-bearing deposits | 0.17 | 0.17 | 0.17 | 0.18 | 0.20 | ||||||||||
| Total deposits | 0.10 | 0.10 | 0.11 | 0.12 | 0.13 | ||||||||||
| Subordinated debentures | 5.81 | 5.64 | 5.55 | 5.60 | 5.61 | ||||||||||
| FHLB advances and other borrowed funds | 0.41 | 0.43 | 0.43 | 0.49 | 0.46 | ||||||||||
| Interest-bearing liabilities | 0.30 | 0.31 | 0.35 | 0.37 | 0.40 | ||||||||||
| Net interest margin | 3.28 | 3.32 | 3.40 | 3.46 | 3.50 |
1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.
PPP details:
| Quarter ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||
| PPP loans outstanding, net of deferred fees | $ | 134,084 | $ | 271,958 | $ | 438,959 | $ | 396,660 | $ | 737,660 | ||||||||||||||||||||
| Average PPP loans outstanding, net | 194,382 | 365,295 | 489,104 | 664,375 | 692,161 | |||||||||||||||||||||||||
| PPP interest and fee income recognized | 2,858 | 4,864 | 6,048 | 7,940 | 8,475 | |||||||||||||||||||||||||
| PPP deferred fees remaining | 1,851 | 4,215 | 7,428 | 12,243 | 16,676 | |||||||||||||||||||||||||
| PPP average yield | 5.96 | % | 5.28 | % | 4.91 | % | 4.79 | % | 4.97 | % | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | ||||||||||||||||||||||||||
| Financial Metrics: | As Reported | Excluding PPP* | As Reported | Excluding PPP* | As Reported | Excluding PPP* | As Reported | Excluding PPP* | As Reported | Excluding PPP* | ||||||||||||||||||||
| EPS | $ | 1.23 | $ | 1.17 | $ | 1.33 | $ | 1.23 | $ | 0.38 | $ | 0.25 | $ | 1.23 | $ | 1.04 | $ | 0.96 | $ | 0.75 | ||||||||||
| ROAA | 1.42 | % | 1.38 | % | 1.52 | % | 1.45 | % | 0.45 | % | 0.31 | % | 1.50 | % | 1.35 | % | 1.22 | % | 1.03 | % | ||||||||||
| PPNR ROAA* | 1.70 | % | 1.64 | % | 1.89 | % | 1.80 | % | 1.81 | % | 1.68 | % | 1.85 | % | 1.65 | % | 1.66 | % | 1.41 | % | ||||||||||
| Tangible common equity/tangible assets* | 7.62 | % | 7.70 | % | 8.13 | % | 8.31 | % | 8.40 | % | 8.71 | % | 8.32 | % | 8.66 | % | 8.18 | % | 8.84 | % | ||||||||||
| Leverage ratio | 9.6 | % | 9.7 | % | 9.7 | % | 10.0 | % | 9.7 | % | 10.2 | % | 9.4 | % | 10.0 | % | 9.5 | % | 10.2 | % | ||||||||||
| NIM | 3.28 | % | 3.23 | % | 3.32 | % | 3.26 | % | 3.40 | % | 3.33 | % | 3.46 | % | 3.36 | % | 3.50 | % | 3.39 | % | ||||||||||
| Allowance for credit losses/loans | 1.54 | % | 1.73 | % | 1.61 | % | 1.84 | % | 1.67 | % | 1.94 | % | 1.77 | % | 2.09 | % | 1.80 | % | 2.22 | % | ||||||||||
| * Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable. The ratio of allowance for credit losses to loans excludes all guaranteed loans, including PPP loans. |
ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
| Quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | ||||||||||
| ASSET QUALITY | |||||||||||||||
| Net charge-offs | $ | 1,521 | $ | 3,263 | $ | 1,850 | $ | 869 | $ | 5,647 | |||||
| Nonperforming loans | 21,160 | 28,024 | 41,554 | 42,252 | 36,659 | ||||||||||
| Classified assets | 93,199 | 100,797 | 104,220 | 100,063 | 114,713 | ||||||||||
| Nonperforming loans to total loans | 0.23 | % | 0.31 | % | 0.46 | % | 0.58 | % | 0.50 | % | |||||
| Nonperforming assets to total assets | 0.17 | % | 0.23 | % | 0.35 | % | 0.44 | % | 0.42 | % | |||||
| Allowance for credit losses to total loans | 1.54 | % | 1.61 | % | 1.67 | % | 1.77 | % | 1.80 | % | |||||
| Allowance for credit losses to nonperforming loans | 657.9 | % | 517.6 | % | 366.0 | % | 303.4 | % | 358.8 | % | |||||
| Net charge-offs to average loans (annualized) | 0.07 | % | 0.14 | % | 0.08 | % | 0.05 | % | 0.32 | % | |||||
| WEALTH MANAGEMENT | |||||||||||||||
| Trust assets under management | $ | 1,943,428 | $ | 2,083,543 | $ | 2,017,178 | $ | 1,945,293 | $ | 1,809,001 | |||||
| Trust assets under administration | 2,400,679 | 2,556,266 | 2,486,152 | 2,487,545 | 2,427,448 | ||||||||||
| MARKET DATA | |||||||||||||||
| Book value per common share | $ | 37.35 | $ | 38.53 | $ | 37.52 | $ | 35.86 | $ | 34.95 | |||||
| Tangible book value per common share1 | $ | 27.06 | $ | 28.28 | $ | 27.38 | $ | 26.85 | $ | 25.92 | |||||
| Market value per share | $ | 47.31 | $ | 47.09 | $ | 45.28 | $ | 46.39 | $ | 49.44 | |||||
| Period end common shares outstanding | 37,516 | 37,820 | 38,372 | 31,185 | 31,259 | ||||||||||
| Average basic common shares | 37,788 | 38,228 | 36,878 | 31,265 | 31,247 | ||||||||||
| Average diluted common shares | 37,858 | 38,311 | 36,946 | 31,312 | 31,306 | ||||||||||
| CAPITAL | |||||||||||||||
| Total risk-based capital to risk-weighted assets | 14.4 | % | 14.7 | % | 14.5 | % | 14.9 | % | 15.1 | % | |||||
| Tier 1 capital to risk-weighted assets | 12.7 | % | 13.0 | % | 12.2 | % | 12.3 | % | 12.3 | % | |||||
| Common equity tier 1 capital to risk-weighted assets | 11.0 | % | 11.3 | % | 11.2 | % | 11.1 | % | 11.0 | % | |||||
| Tangible common equity to tangible assets1 | 7.6 | % | 8.1 | % | 8.4 | % | 8.3 | % | 8.2 | % | |||||
| 1Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP. |
ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
| Quarter ended | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||||
| CORE PERFORMANCE MEASURES | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 101,165 | $ | 102,060 | $ | 97,273 | $ | 81,738 | $ | 79,123 | ||||||||||||||||||||||
| Noninterest income | 18,641 | 22,630 | 17,619 | 16,204 | 11,290 | |||||||||||||||||||||||||||
| Less: Gain on sale of other real estate owned | 19 | — | 335 | 549 | — | |||||||||||||||||||||||||||
| Core noninterest income | 18,622 | 22,630 | 17,284 | 15,655 | 11,290 | |||||||||||||||||||||||||||
| Total core revenue | 119,787 | 124,690 | 114,557 | 97,393 | 90,413 | |||||||||||||||||||||||||||
| Noninterest expense | 62,800 | 63,694 | 76,885 | 52,456 | 52,884 | |||||||||||||||||||||||||||
| Less: Branch closure expenses | — | — | 3,441 | — | — | |||||||||||||||||||||||||||
| Less: Merger-related expenses | — | 2,320 | 14,671 | 1,949 | 3,142 | |||||||||||||||||||||||||||
| Core noninterest expense | 62,800 | 61,374 | 58,773 | 50,507 | 49,742 | |||||||||||||||||||||||||||
| Core efficiency ratio | 52.43 | % | 49.22 | % | 51.30 | % | 51.86 | % | 55.02 | % | Quarter ended | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS | ||||||||||||||||||||||||||||||||
| Shareholders’ equity | $ | 1,473,177 | $ | 1,529,116 | $ | 1,439,635 | $ | 1,118,301 | $ | 1,092,497 | ||||||||||||||||||||||
| Less preferred stock | 71,988 | 71,988 | — | — | — | |||||||||||||||||||||||||||
| Less goodwill | 365,164 | 365,164 | 365,415 | 260,567 | 260,567 | |||||||||||||||||||||||||||
| Less intangible assets | 20,855 | 22,286 | 23,777 | 20,358 | 21,670 | |||||||||||||||||||||||||||
| Tangible common equity | $ | 1,015,170 | $ | 1,069,678 | $ | 1,050,443 | $ | 837,376 | $ | 810,260 | ||||||||||||||||||||||
| Total assets | $ | 13,706,769 | $ | 13,537,358 | $ | 12,888,016 | $ | 10,346,993 | $ | 10,190,699 | ||||||||||||||||||||||
| Less goodwill | 365,164 | 365,164 | 365,415 | 260,567 | 260,567 | |||||||||||||||||||||||||||
| Less intangible assets | 20,855 | 22,286 | 23,777 | 20,358 | 21,670 | |||||||||||||||||||||||||||
| Tangible assets | $ | 13,320,750 | $ | 13,149,908 | $ | 12,498,824 | $ | 10,066,068 | $ | 9,908,462 | ||||||||||||||||||||||
| Tangible common equity to tangible assets | 7.62 | % | 8.13 | % | 8.40 | % | 8.32 | % | 8.18 | % | ||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||||||
| AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY | ||||||||||||||||||||||||||||||||
| Average shareholder’s equity | $ | 1,536,221 | $ | 1,495,396 | $ | 1,096,481 | ||||||||||||||||||||||||||
| Less average preferred stock | 71,988 | 35,322 | — | |||||||||||||||||||||||||||||
| Less average goodwill | 365,164 | 365,164 | 260,567 | |||||||||||||||||||||||||||||
| Less average intangible assets | 21,540 | 23,008 | 22,346 | |||||||||||||||||||||||||||||
| Average tangible common equity | $ | 1,077,529 | $ | 1,071,902 | $ | 813,568 | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| ($ in thousands) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||||
| CALCULATION OF PRE-PROVISION NET REVENUE | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 101,165 | $ | 102,060 | $ | 97,273 | $ | 81,738 | $ | 79,123 | ||||||||||||||||||||||
| Noninterest income | 18,641 | 22,630 | 17,619 | 16,204 | 11,290 | |||||||||||||||||||||||||||
| Less: Noninterest expense | 62,800 | 63,694 | 76,885 | 52,456 | 52,884 | |||||||||||||||||||||||||||
| Branch closure expenses | — | — | 3,441 | — | — | |||||||||||||||||||||||||||
| Merger-related expenses | — | 2,320 | 14,671 | 1,949 | 3,142 | |||||||||||||||||||||||||||
| PPNR | $ | 57,006 | $ | 63,316 | $ | 56,119 | $ | 47,435 | $ | 40,671 | ||||||||||||||||||||||
| Average assets | $ | 13,614,003 | $ | 13,267,193 | $ | 12,334,558 | $ | 10,281,344 | $ | 9,940,052 | ||||||||||||||||||||||
| ROAA - GAAP net income | 1.42 | % | 1.52 | % | 0.45 | % | 1.50 | % | 1.22 | % | ||||||||||||||||||||||
| PPNR ROAA - PPNR | 1.70 | % | 1.89 | % | 1.81 | % | 1.85 | % | 1.66 | % | ||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| ($ in thousands, except per share data) | Mar 31,<br>2022 | Dec 31,<br>2021 | Sep 30,<br>2021 | Jun 30,<br>2021 | Mar 31,<br>2021 | |||||||||||||||||||||||||||
| IMPACT OF PAYCHECK PROTECTION PROGRAM | ||||||||||||||||||||||||||||||||
| Net income - GAAP | $ | 47,693 | $ | 50,811 | $ | 13,913 | $ | 38,405 | $ | 29,926 | ||||||||||||||||||||||
| PPP interest and fee income | (2,858) | (4,864) | (6,048) | (7,940) | (8,475) | |||||||||||||||||||||||||||
| Related tax effect | 720 | 1,226 | 1,506 | 1,977 | 2,110 | |||||||||||||||||||||||||||
| Adjusted net income - Non-GAAP | $ | 45,555 | $ | 47,173 | $ | 9,371 | $ | 32,442 | $ | 23,561 | ||||||||||||||||||||||
| Preferred stock dividends | 1,229 | — | — | — | — | |||||||||||||||||||||||||||
| Adjusted net income available to common shareholders- Non-GAAP | $ | 44,326 | $ | 47,173 | $ | 9,371 | $ | 32,442 | $ | 23,561 | ||||||||||||||||||||||
| Average diluted common shares | 37,858 | 38,311 | 36,946 | 31,312 | 31,303 | |||||||||||||||||||||||||||
| EPS - GAAP net income available to common shareholders | $ | 1.23 | $ | 1.33 | $ | 0.38 | $ | 1.23 | $ | 0.96 | ||||||||||||||||||||||
| EPS - Adjusted net income available to common shareholders | $ | 1.17 | $ | 1.23 | $ | 0.25 | $ | 1.04 | $ | 0.75 | ||||||||||||||||||||||
| Average Assets - GAAP | $ | 13,614,003 | $ | 13,267,193 | $ | 12,334,558 | $ | 10,281,344 | $ | 9,940,052 | ||||||||||||||||||||||
| Average PPP loans, net | (194,382) | (365,295) | (489,104) | (664,375) | (692,161) | |||||||||||||||||||||||||||
| Adjusted average assets - Non-GAAP | $ | 13,419,621 | $ | 12,901,898 | $ | 11,845,454 | $ | 9,616,969 | $ | 9,247,891 | ||||||||||||||||||||||
| ROAA - GAAP net income | 1.42 | % | 1.52 | % | 0.45 | % | 1.50 | % | 1.22 | % | ||||||||||||||||||||||
| ROAA - Adjusted net income, adjusted average assets | 1.38 | % | 1.45 | % | 0.31 | % | 1.35 | % | 1.03 | % | ||||||||||||||||||||||
| PPNR - Non-GAAP (see reconciliation above) | $ | 57,006 | $ | 63,316 | $ | 56,119 | $ | 47,435 | $ | 40,671 | ||||||||||||||||||||||
| PPP interest and fee income | (2,858) | (4,864) | (6,048) | (7,940) | (8,475) | |||||||||||||||||||||||||||
| Adjusted PPNR - Non-GAAP | $ | 54,148 | $ | 58,452 | $ | 50,071 | $ | 39,495 | $ | 32,196 | ||||||||||||||||||||||
| PPNR ROAA - PPNR | 1.70 | % | 1.89 | % | 1.81 | % | 1.85 | % | 1.66 | % | ||||||||||||||||||||||
| PPNR ROAA - adjusted PPNR, adjusted average assets | 1.64 | % | 1.80 | % | 1.68 | % | 1.65 | % | 1.41 | % | ||||||||||||||||||||||
| Tangible assets - Non-GAAP (see reconciliation above) | $ | 13,320,750 | $ | 13,149,908 | $ | 12,498,824 | $ | 10,066,068 | $ | 9,908,462 | ||||||||||||||||||||||
| PPP loans outstanding, net | (134,084) | (271,958) | (438,959) | (396,660) | (737,660) | |||||||||||||||||||||||||||
| Adjusted tangible assets - Non-GAAP | $ | 13,186,666 | $ | 12,877,950 | $ | 12,059,865 | $ | 9,669,408 | $ | 9,170,802 | ||||||||||||||||||||||
| Tangible common equity Non - GAAP (see reconciliation above) | $ | 1,015,170 | $ | 1,069,678 | $ | 1,050,443 | $ | 837,376 | $ | 810,260 | ||||||||||||||||||||||
| Tangible common equity to tangible assets | 7.62 | % | 8.13 | % | 8.40 | % | 8.32 | % | 8.18 | % | ||||||||||||||||||||||
| Tangible common equity to tangible assets - adjusted tangible assets | 7.70 | % | 8.31 | % | 8.71 | % | 8.66 | % | 8.84 | % | ||||||||||||||||||||||
| Average assets for leverage ratio | $ | 13,273,520 | $ | 12,915,944 | $ | 11,972,171 | $ | 10,021,240 | $ | 9,675,300 | ||||||||||||||||||||||
| Average PPP loans, net | (194,382) | (365,295) | (489,104) | (664,375) | (692,161) | |||||||||||||||||||||||||||
| Adjusted average assets for leverage ratio - Non-GAAP | $ | 13,079,138 | $ | 12,550,649 | $ | 11,483,067 | $ | 9,356,865 | $ | 8,983,139 | ||||||||||||||||||||||
| Tier 1 capital | $ | 1,271,342 | $ | 1,257,462 | $ | 1,166,529 | $ | 937,840 | $ | 914,459 | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| Leverage ratio | 9.6 | % | 9.7 | % | 9.7 | % | 9.4 | % | 9.5 | % | ||||||||||||||||||||||
| Leverage ratio - adjusted average assets for leverage ratio | 9.7 | % | 10.0 | % | 10.2 | % | 10.0 | % | 10.2 | % | ||||||||||||||||||||||
| Net interest income - tax equivalent | $ | 102,671 | $ | 103,567 | $ | 98,573 | $ | 82,962 | $ | 80,243 | ||||||||||||||||||||||
| PPP interest and fee income | (2,858) | (4,864) | (6,048) | (7,940) | (8,475) | |||||||||||||||||||||||||||
| Adjusted net interest income - tax equivalent | $ | 99,813 | $ | 98,703 | $ | 92,525 | $ | 75,022 | $ | 71,768 | ||||||||||||||||||||||
| Average earning assets -GAAP | $ | 12,711,116 | $ | 12,373,149 | $ | 11,513,279 | $ | 9,615,981 | $ | 9,289,741 | ||||||||||||||||||||||
| Average PPP loans, net | (194,382) | (365,295) | (489,104) | (664,375) | (692,161) | |||||||||||||||||||||||||||
| Adjusted average earning assets - Non-GAAP | $ | 12,516,734 | $ | 12,007,854 | $ | 11,024,175 | $ | 8,951,606 | $ | 8,597,580 | ||||||||||||||||||||||
| Net interest margin - tax equivalent | 3.28 | % | 3.32 | % | 3.40 | % | 3.46 | % | 3.50 | % | ||||||||||||||||||||||
| Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets | 3.23 | % | 3.26 | % | 3.33 | % | 3.36 | % | 3.39 | % | ||||||||||||||||||||||
| Loans - GAAP | $ | 9,056,073 | $ | 9,017,642 | $ | 9,116,583 | $ | 7,226,267 | $ | 7,288,781 | ||||||||||||||||||||||
| PPP and other guaranteed loans, net | (1,023,509) | (1,151,895) | (1,277,452) | (1,106,414) | (1,377,302) | |||||||||||||||||||||||||||
| Adjusted loans - Non-GAAP | $ | 8,032,564 | $ | 7,865,747 | $ | 7,839,131 | $ | 6,119,853 | $ | 5,911,479 | ||||||||||||||||||||||
| Allowance for credit losses | $ | 139,212 | $ | 145,041 | $ | 152,096 | $ | 128,185 | $ | 131,527 | ||||||||||||||||||||||
| Allowance for credit losses/loans - GAAP | 1.54 | % | 1.61 | % | 1.67 | % | 1.77 | % | 1.80 | % | ||||||||||||||||||||||
| Allowance for credit losses/loans - adjusted loans | 1.73 | % | 1.84 | % | 1.94 | % | 2.09 | % | 2.22 | % |
18
q12022efscearningsreleas
Enterprise Financial Services Corp 2022 First Quarter Earnings Webcast Exhibit 99.2
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 based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the Company's integration of First Choice Bancorp ("First Choice") and other acquisitions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “pro forma” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions, including the First Choice acquisition, into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic conditions, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in regulatory requirements, changes in accounting policies and practices or accounting standards, changes in the method of determining LIBOR and the phase out of LIBOR, natural disasters, war (including the war in Ukraine) or terrorist activities, or pandemics, including the COVID-19 pandemic, and their effects on economic and business environments in which we operate, including the ongoing disruption to the financial market and other economic activity caused by the COVID-19 pandemic, and those factors and risks referenced from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and the Company’s other filings with the SEC. For any forward-looking statements made in this press release or in any documents, EFSC claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only, are not forecasts and may not reflect actual results. Except to the extent required by applicable law or regulation, EFSC disclaims any obligation to revise or publicly release any revision or update to any of the forward-looking statements included herein to reflect events or circumstances that occur after the date on which such statements were made. 2
Financial Highlights - 1Q22 Capital • Tangible Common Equity/Tangible Assets* 7.62%; Adjusted for PPP* 7.70% • Accumulated other comprehensive income declined $78.0 million primarily from a decrease in the fair value of the available-for-sale investment portfolio • Quarterly dividend of $0.21 per common share, increased 5% to $0.22 in second quarter 2022 • Declared and paid first preferred stock dividend of $1.2 million • Repurchased 351,090 shares at an average price of $48.35 per share • Net Income $47.7 million; EPS $1.23 • PPNR* $57.0 million • ROAA 1.42%; PPNR ROAA* 1.70% • ROATCE* 17.49% Earnings *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Loans & Deposits • Total Loans $9.1 billion • PPP Loans, $134 million, net of deferred fees • Loan/Deposits 77% • Total Deposits $11.7 billion • Noninterest-bearing Deposits/Total Deposits 42% Asset Quality • Nonperforming Assets/Assets 0.17% • Nonperforming Loans/Loans 0.23% • Allowance Coverage Ratio 1.54%; 1.73% adjusted for guaranteed loans including PPP 3
Areas of Focus Organic Loan Growth and Pipeline Expand Tax Credit Business, Geographically • Strategically Deploy $60 Million New Markets Tax Credit Allocation Talent Acquisitions to Accelerate Higher Growth • Complementary California Associates • Practice Finance • Phoenix • Texas Continued Integration of California Market 4
In Millions 24% Total Loan Growth *Excludes First Choice PPP loans of $206 million included in acquisition total. First Choice $1,944 Total Loan Trends PPP* $233 PPP $134 PPP $738 PPP $397 PPP $272 5
Loan Details - LTM 1Q22 1Q21 LTM Change First Choice Net Organic Change C&I $ 1,498 $ 1,049 $ 449 $ 269 $ 180 CRE, Investor Owned 1,983 1,491 492 568 (76) CRE, Owner Occupied 1,138 806 332 278 54 SBA loans*1 1,250 941 309 158 151 Sponsor Finance* 641 394 247 — 247 Life Insurance Premium Financing* 636 543 93 — 93 Tax Credits* 518 388 130 — 130 Residential Real Estate 410 300 110 143 (33) Construction and Land Development 611 438 173 153 20 Other 237 201 36 32 4 Subtotal $ 8,922 $ 6,551 $ 2,371 $ 1,601 $ 770 SBA PPP loans 134 738 (604) 78 (682) Total Loans $ 9,056 $ 7,289 $ 1,767 $ 1,679 $ 88 *Specialty loan category. 1Includes $1.0 billion and $617 million of SBA guaranteed loans for 1Q22 and 1Q21, respectively. In Millions 6
Loan Details - QTR 1Q22 4Q21 QTR Change C&I $ 1,498 $ 1,538 $ (40) CRE, Investor Owned 1,983 1,955 28 CRE, Owner Occupied 1,138 1,113 25 SBA loans*1 1,250 1,241 9 Sponsor Finance* 641 508 133 Life Insurance Premium Financing* 636 594 42 Tax Credits* 518 487 31 Residential Real Estate 410 431 (21) Construction and Land Development 611 626 (15) Other 237 253 (16) Subtotal $ 8,922 $ 8,746 $ 176 SBA PPP loans 134 272 (138) Total Loans $ 9,056 $ 9,018 $ 38 *Specialty loan category. 1Includes $1.0 billion and $854 million of SBA guaranteed loans for 1Q22 and 4Q21, respectively. In Millions 7
Total Loans By Business Unit In Millions Note: Excludes PPP and Other loans **4Q21 and 1Q22 include First Choice acquisition *4Q21 and 1Q22 include acquired First Choice SBA loans 8
Specialty Deposits Community Associations $767 million in deposit accounts specifically designed to serve the needs of community associations. Property Management $480 million in deposits. Specializing in the compliance of Property Management Trust Accounts. Third-Party Escrow $587 million in deposits. Growing product line providing independent escrow services. Trust Services $67 million in deposit accounts. Providing services to nondepository trust companies. Specialty deposits of $2.5 billion represent 21% of total deposits. Includes high composition of noninterest-bearing deposits with a low cost of funds. Other $594 million in deposit accounts primarily related to Sponsor Finance and Life Insurance Premium Financing loans. 1Q21 2Q21 3Q21 4Q21 1Q22 Community Assoc Property Mgmt Third- Party Escrow Trust Services Other $— $250 $500 $750 In Millions 9
Earnings Per Share Trend - 1Q22 Change in EPS 10
Net Interest Income Trend In Millions 28% NII Growth PPP Income $2.9 PPP Income $8.5 PPP Income $7.9 PPP Income $6.0 * First Choice acquisition completed 7/21/21. PPP Income $4.9 11
Net Interest Margin Components of Interest-bearing LiabilitiesComponents of Interest-earning Assets 4Q21 3.32 % Cash/Liquidity (0.04) % Loans 0.01 % Investments (0.01) % 1Q22 3.28 % Net Interest Margin Trend Net Interest Margin Bridge 12
Credit Trends for Loans 1Q22 4Q21 1Q21 NPAs/Assets 0.17% 0.23% 0.42% NPLs/Loans 0.23% 0.31% 0.50% ACL/NPLs 657.9% 517.6% 358.8% ACL/Loans** 1.73% 1.84% 2.22% Annualized Net Charge-offs (Recoveries) to Average Loans In Millions bps bps bps bps bps In Millions Loan Growth and Average Line of Credit Utilization* *Excludes acquisition of Seacoast for 4Q20 & First Choice for 3Q21 **Excludes guaranteed loans. *Excludes acquisition of First Choice for 3Q21 **Excludes guaranteed loans. 13
Allowance for Credit Losses for Loans In Thousands • 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 and qualitative factors 1Q22 In Thousands Loans ACL ACL as a % of Loans Commercial and industrial $ 3,398,723 $ 60,975 1.79 % Commercial real estate 4,278,138 53,232 1.24 % Construction real estate 702,630 12,983 1.85 % Residential real estate 432,639 7,109 1.64 % Other 243,943 4,913 2.01 % Total $ 9,056,073 $ 139,212 1.54 % Reserves on sponsor finance, which is included in the categories above, represented $19.1 million. Total ACL percentage of loans excluding PPP and other government guaranteed loans was 1.73% Key Assumptions: • Reasonable and supportable forecast period is one year with a one year reversion period. • Forecast considers a weighted average of baseline, upside and downside scenarios. • Primary macroeconomic factors: ◦ Percentage change in GDP ◦ Unemployment ◦ Percentage change in Retail Sales ◦ Percentage change in CRE Index 14
Noninterest Income Trend Other Fee Income DetailFee Income In Millions 12.5% 16.5% 15.3% 18.1% 15.6% 15
Operating Expenses Trend Other Operating Expenses DetailOperating Expenses In Millions 55.2% 51.9% 51.3% 49.2% 52.4% 16
Capital *A Non-GAAP Measure, Refer to Appendix for Reconciliation. Excludes PPP loans. 8.0% 12.3% 12.3% 12.2% 13.0% EFSC Capital Strategy: Low Cost - Highly Flexible High Capital Retention Rate – Strong earnings profile – Sustainable dividend profile Supporting Robust Asset Growth – Organic loan and deposit growth – High quality M&A to enhance commercial franchise and geographic diversification Maintain High Quality Capital Stack – Minimize WACC over time (preferred, sub debt, etc.) – Optimize capital levels T1 Common ~10%, Tier 1 ~12%, and Total Capital ~14% Maintain 8-9% TCE – Common stock repurchases – 351,090 repurchased at average price of $48.35 in 1Q22 – M&A deal structures – Drives ROATCE above peer levels 12.7% 17
Appendix First Quarter 2022 Earnings Webcast
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 equity, ROATCE, PPNR, PPNR return on average assets (“PPNR ROAA”), financial metrics adjusted for PPP impact, core efficiency ratio, and the tangible common equity ratio, in this presentation that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position, or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The Company considers its tangible common equity, ROATCE, PPNR, PPNR ROAA, financial metrics adjusted for PPP impact, core efficency ratio and the tangible common equity ratio, collectively “core performance measures,” presented in this report and the included tables as important measures of financial performance, even though they are non-GAAP measures, as they provide supplemental information by which to evaluate the impact of certain non-comparable items, and the Company’s operating performance on an ongoing basis. Core performance measures include exclude certain other income and expense items, such as merger related expenses, facilities charges, and the gain or loss on sale of investment securities, the Company believes to be not indicative of or useful to measure the Company’s operating performance on an ongoing basis. The attached tables contain a reconciliation of these core performance measures to the GAAP measures. The Company believes that the tangible common equity ratio provides useful information to investors about the Company’s capital strength even though it is considered to be a non-GAAP financial measure and is not part of the regulatory capital requirements to which the Company is subject. The Company believes these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding the Company’s performance and capital strength. The Company’s management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the Company’s operating results and related trends and when forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the attached tables, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the financial measures for the periods indicated. 19
Reconciliation of Non-GAAP Financial Measures Quarter ended ($ in thousands) Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 SHAREHOLDERS’ EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS Shareholders’ equity $ 1,473,177 $ 1,529,116 $ 1,439,635 $ 1,118,301 $ 1,092,497 Less preferred stock 71,988 71,988 — — — Less goodwill 365,164 365,164 365,415 260,567 260,567 Less intangible assets 20,855 22,286 23,777 20,358 21,670 Tangible common equity $ 1,015,170 $ 1,069,678 $ 1,050,443 $ 837,376 $ 810,260 Total assets $ 13,706,769 $ 13,537,358 $ 12,888,016 $ 10,346,993 $ 10,190,699 Less goodwill 365,164 365,164 365,415 260,567 260,567 Less intangible assets 20,855 22,286 23,777 20,358 21,670 Tangible assets $ 13,320,750 $ 13,149,908 $ 12,498,824 $ 10,066,068 $ 9,908,462 Tangible common equity to tangible assets 7.62 % 8.13 % 8.40 % 8.32 % 8.18 % 20
Reconciliation of Non-GAAP Financial Measures Quarter ended ($ in thousands) Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 CALCULATION OF PRE-PROVISION NET REVENUE Net interest income $ 101,165 $ 102,060 $ 97,273 $ 81,738 $ 79,123 Noninterest income 18,641 22,630 17,619 16,204 11,290 Less noninterest expense 62,800 63,694 76,885 52,456 52,884 Branch-closure expenses — — 3,441 — — Merger-related expenses — 2,320 14,671 1,949 3,142 PPNR $ 57,006 $ 63,316 $ 56,119 $ 47,435 $ 40,671 Average assets $ 13,614,003 $ 13,267,193 $ 12,334,558 $ 10,281,344 $ 9,940,052 ROAA - GAAP net income 1.42 % 1.52 % 0.45 % 1.50 % 1.22 % PPNR ROAA - PPNR 1.70 % 1.89 % 1.81 % 1.85 % 1.66 % Quarter ended ($ in thousands) Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 IMPACT OF PAYCHECK PROTECTION PROGRAM Tangible assets - Non-GAAP (see reconciliation above) $ 13,320,750 $ 13,149,908 $ 12,498,824 $ 10,066,068 $ 9,908,462 PPP loans outstanding, net (134,084) (271,958) (438,959) (396,660) (737,660) Adjusted tangible assets - Non-GAAP $ 13,186,666 $ 12,877,950 $ 12,059,865 $ 9,669,408 $ 9,170,802 Tangible common equity Non - GAAP (see reconciliation above) $ 1,015,170 $ 1,069,678 $ 1,050,443 $ 837,376 $ 810,260 Tangible common equity to tangible assets 7.62 % 8.13 % 8.40 % 8.32 % 8.18 % Tangible common equity to tangible assets - adjusted tangible assets 7.70 % 8.31 % 8.71 % 8.66 % 8.84 % AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY Average shareholder’s equity $ 1,536,221 Less average preferred stock 71,988 Less average goodwill 365,164 Less average intangible assets 21,540 Average tangible common equity $ 1,077,529 Return on average tangible common equity 17.49 % 21
Reconciliation of Non-GAAP Financial Measures Quarter ended ($ in thousands) Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 CORE PERFORMANCE MEASURES Net interest income 101,165 102,060 97,273 81,738 79,123 Noninterest income 18,641 22,630 17,619 16,204 11,290 Less gain on sale of other real estate owned 19 — 335 549 — Core noninterest income 18,622 22,630 17,284 15,655 11,290 Core revenue 119,787 124,690 114,557 97,393 90,413 Noninterest expense 62,800 63,694 76,885 52,456 52,884 Less branch closure expenses — — 3,441 — — Less merger-related expenses — 2,320 14,671 1,949 3,142 Core noninterest expense 62,800 61,374 58,773 50,507 49,742 Core efficiency ratio 52.43 % 49.22 % 51.30 % 51.86 % 55.02 % 22
Q & A First Quarter 2022 Earnings Webcast