Market Overview

Enterprise Financial Reports Fourth Quarter 2015 and Year End Results

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Reported Highlights

  • 2015 net income of $38.5 million, or $1.89 per diluted share
  • Fourth quarter net income of $10.7 million, or $0.52 per diluted share
  • Commercial and industrial ("C&I") loans grow 17% during 2015 and total portfolio loans grow 13%
  • Successfully completed early termination of all existing loss share agreements with the FDIC
  • 13% cash dividend increase to $0.09 per share in the first quarter of 2016 from $0.08 per share in the fourth quarter of 2015



Core Highlights1

  • 2015 core net income of $33.8 million, or $1.66 per diluted share, up 30% from 2014
  • Fourth quarter core net income of $0.49 per diluted share, increased 11% over the linked quarter, and 48% compared to the prior year quarter
  • Fourth quarter core net interest income of $28.7 million, up 23% annualized from the linked quarter, and 12% from the prior year quarter



ST. LOUIS, Jan. 28, 2016 (GLOBE NEWSWIRE) -- Enterprise Financial Services Corp (NASDAQ: EFSC) (the "Company") reported net income of $38.5 million for the year ended December 31, 2015, an increase of $11.3 million or 42% as compared to the prior year.  Net income per diluted share was $1.89 for the year ended December 31, 2015, an increase of 40% compared to $1.35 per diluted share for the prior year.  The Company recorded net income of $10.7 million for the quarter ended December 31, 2015, an increase of 79% compared to net income of $6.0 million for the prior year period.  Net income per diluted share was $0.52 for the fourth quarter of 2015, an increase of 73% compared to $0.30 per diluted share for the fourth quarter of 2014.  During the fourth quarter of 2015, the Company successfully completed early termination of all existing loss share agreements with the FDIC, resulting in a pretax charge of $2.4 million, or $0.07 per diluted share.  Fourth quarter 2014 net income was impacted by a $2.9 million, or $0.09 per diluted share, penalty on the early payoff of $50 million of debt with the Federal Home Loan Bank of Des Moines ("FHLB") and $1.0 million, or $0.03 per diluted share, of facilities charges to dispose of office property.

On a core basis1, the Company reported net income of $33.8 million, or $1.66 per diluted share for the year ended December 31, 2015 compared to $26.0 million, or $1.29 per diluted share in 2014.  The increase was due to an increase in net interest income from strong loan growth and reduced noninterest expenses.  Core net earnings for the fourth quarter of 2015 were $10.1 million, or $0.49 per diluted share, compared to $6.7 million, or $0.33 per diluted share in the prior year period.  The increase was primarily due to increases in net interest income and fee income, and lower provision for loan losses.

The Company's Board approved an additional one cent per common share increase in the Company's quarterly dividend to $0.09 per common share from $0.08 for the first quarter of 2016, payable on March 31, 2016 to shareholders of record as of March 15, 2016.

Peter Benoist, President and CEO, commented, "Strong loan growth coupled with core margin expansion resulted in a 48% year over year increase in fourth quarter core earnings.  Our ability to grow loans at a robust rate, consistent with our guidance for the year, while preserving core net interest margin, generated continued gains in net interest income. That revenue growth, coupled with higher noninterest income and lower noninterest expenses, led to a 30% increase in core net income in 2015."

"Adding in our continuing success in winding down loss share assets, Enterprise reported a 42% increase in net income and a 40% rise in EPS in 2015, resulting in record earnings for the year, " noted Benoist.  "The profitability measures we reported, including an ROAA of 1.14% and ROAE of 11.47%, are consistent with the standards of high performance that we've set for ourselves and establish a strong foundation going into 2016.  Reflecting this, the board raised the dividend for the fourth consecutive quarter."

"I'm extremely proud of everyone on the Enterprise team," said Benoist. "Their commitment to our values and strategies continue to drive Enterprise's superior results and outstanding client loyalty."

Net interest income

Net interest income in the fourth quarter increased $2.1 million from the linked third quarter, and $1.3 million from the prior year period due to strong growth in portfolio loan balances and lower interest expense from the payoff of higher cost debt in the prior year.  The net interest margin, on a fully tax equivalent basis, was 3.91% for the fourth quarter of 2015, an increase of 14 basis points compared to 3.77% in the linked third quarter, and a decrease of 22 basis points from 4.13% in the fourth quarter of 2014.

The yield on Portfolio loans was 4.16% in the fourth quarter, consistent with the linked third quarter, and three basis points lower than the fourth quarter of 2014.  The yield on Purchased credit impaired ("PCI") loans was 24.79% in the fourth quarter, as compared to 19.41% in the linked quarter and 26.47% in the prior year period.

The cost of interest-bearing deposits was 0.48% in the fourth quarter of 2015, declining two basis points from the linked third quarter, and eight basis points lower than the fourth quarter of 2014, primarily from lower time deposit balances.  The cost of interest-bearing liabilities was 0.50% in the quarter, declining three basis points from the linked quarter, and 13 basis points from the fourth quarter of 2014.  The improvement was primarily due to the prepayment of $50 million of FHLB borrowings in December 2014 and the aforementioned improvement in deposit costs.

Core net interest margin, defined as the net interest margin (fully tax equivalent), including contractual interest on PCI loans, but excluding the incremental accretion on these loans, was as follows:

 For the Quarter ended For the Year ended
($ in thousands)December 31,
 2015
 September 30,
 2015
 December 31,
 2014
 December 31,
 2015
 December 31,
 2014
Core net interest margin13.50% 3.41% 3.45% 3.46% 3.42%
Core net interest income128,667  27,087  25,667  107,618  98,438 
               

Core net interest income1 increased 23% on an annualized basis compared to the linked third quarter as our loan portfolio also grew 23% on an annualized basis, while our total cost of deposits declined three basis points.  Core net interest margin increased nine basis points when compared to the linked quarter, largely due to fees on loans, redeployment of cash and shorter duration assets into the loan portfolio, and a continued decline in higher cost time deposit balances.  Core net interest margin grew five basis points from the prior year quarter primarily due to strong portfolio loan growth, offset by lower balances of PCI loans.  The Company continues to manage its balance sheet to grow core net interest income and expects to maintain or improve core net interest margin over the coming quarters; however, pressure on funding costs and continued reductions in PCI loan balances could negate the expected trends in core net interest margin.

Portfolio loans

Portfolio loans totaled $2.8 billion at December 31, 2015, increasing $149 million, or 23% annualized, compared to the linked quarter.  On a year over year basis, portfolio loans increased $317 million, or 13%.  The Company experienced strong loan growth during 2015 and expects to achieve a 10% or above portfolio loan growth rate for 2016.

Commercial and industrial ("C&I") loans increased $118.9 million during the fourth quarter of 2015 compared to the linked third quarter of 2015.  C&I loans represented 54% of the Company's loan portfolio at December 31, 2015, compared to 52% at September 30, 2015.  C&I loans increased $220 million, or 17%, since December 31, 2014.  During 2015, the Company also grew loans in all other major categories. 

The Company continues to focus on originating high-quality C&I relationships, as they typically have variable interest rates and allow for cross selling opportunities involving other banking products.  Our specialized market segments, particularly life insurance premium finance and enterprise value lending, have contributed to the growth in the C&I category.  C&I loan growth also supports our efforts to maintain the Company's asset sensitive interest rate risk position.  At December 31, 2015, 62% of our portfolio loans had variable interest rates. 

PCI loans and Other real estate from PCI loans

On December 7, 2015, the Company entered into an agreement with the FDIC to terminate all existing loss share agreements associated with the assets and assumption of liabilities acquired in four FDIC-assisted transactions from 2009 through 2011.  Under the terms of the agreement, the FDIC made a net payment to the bank of $1.3 million.  The agreement eliminated the FDIC clawback liability of $3.5 million and the FDIC loss share receivable of $7.2 million.  Accordingly, a required expense of $2.4 million was recorded as part of noninterest expense in the fourth quarter of 2015, which the Company expects to earn back within the next 12 months.  The normal activity of covered assets during the fourth quarter of 2015 prior to the date of the termination agreement was recorded in the applicable line items, and the Change in FDIC receivable of $0.6 million reflects this activity.  The termination agreement does not change the Company's accounting for PCI loans, therefore, contractual and expected cash flows on PCI loans will continue to be remeasured on a periodic basis.  Following the date of the termination agreement, the FDIC will not share in any remaining loan losses or expenses, nor recoveries, of prior losses. 

PCI loans totaled $74.8 million at December 31, 2015, a decrease of $9.0 million, or 11%, from the linked third quarter, and $24.3 million, or 25% from the prior year, primarily as a result of principal paydowns and accelerated loan payoffs.

The following table illustrates the financial contribution of PCI loans and Other real estate covered under FDIC loss share until the termination of the agreements in the fourth quarter of 2015:

 For the Quarter ended For the Year ended
(in thousands)  income/(expense)December 31,
2015
 September 30,
2015
 December 31,
2014
 December 31,
2015
 December 31,
2014
Contractual interest income$1,430  $1,248  $1,840  $5,426  $7,407 
Accelerated cash flows and other incremental accretion3,412  2,919  5,149  12,792  18,930 
Estimated funding cost(337) (293) (326) (1,276) (1,403)
Total net interest income4,505  3,874  6,663  16,942  24,934 
Provision reversal/(Provision) for loan losses917  227  (126) 4,414  (1,083)
Gain on sale of other real estate81  31  195  107  445 
FDIC loss share termination(2,436)     (2,436)  
Change in FDIC loss share receivable(580) (1,241) (1,781) (5,030) (9,307)
Change in FDIC clawback liability  (298) (141) (760) (1,201)
Other expenses(423) (287) (541) (1,558) (2,926)
PCI assets income before income tax expense$2,064  $2,306  $4,269  $11,679  $10,862 
          
          

In the fourth quarter of 2015, provision reversal of $0.9 million was recorded for certain loan pools due to lower estimated credit losses.  At December 31, 2015 the remaining accretable yield on the portfolio was estimated to be $25 million and the non-accretable difference was approximately $27 million.

Asset quality for Portfolio loans and Other real estate

The following table presents the categories of nonperforming assets and related ratios for the most recent five quarters:

 For the Quarter ended
(in thousands)December 31,
 2015
 September 30,
 2015
 June 30,
 2015
 March 31,
 2015
 December 31,
 2014
Nonperforming loans$9,100  $9,123  $17,498  $15,143  $22,244 
Other real estate from originated loans3,218  1,575  1,933  2,024  $1,896 
Other real estate from PCI loans5,148         
Nonperforming assets$17,466  $10,698  $19,431  $17,167  $24,140 
Nonperforming loans to total loans0.33% 0.35% 0.69% 0.62% 0.91%
Nonperforming assets to total assets0.48% 0.30% 0.58% 0.52% 0.74%
Net charge-offs (recoveries)$(647) $113  $672  $1,478  $582 
                    

Nonperforming loans were $9.1 million at December 31, 2015 and September 30, 2015, and decreased 59% from $22.2 million at December 31, 2014.  During the quarter ended December 31, 2015, there were $0.1 million of charge-offs, $1.0 million of other principal reductions, $1.6 million of assets transferred to other real estate,  $0.2 million moved to performing loans, and $2.9 million of additions to nonperforming loans.  The net additions to nonperforming loans were primarily related to four unrelated accounts.

The Company's allowance for loan losses was 1.22% of loans at December 31, 2015, representing 368% of nonperforming loans, as compared to 1.24% at September 30, 2015, representing 354% of nonperforming loans, and 1.24% at December 31, 2014, representing 136% of nonperforming loans.  The increase in the ratio of allowance for loan losses to nonperforming loans from the prior year period is primarily due to the 59% decrease in nonperforming loans discussed previously.

Nonperforming assets as a percentage of total assets were 0.48% at December 31, 2015, compared to 0.30% at September 30, 2015 and 0.74% at December 31, 2014.  The increase from the linked quarter primarily resulted from the reclassification of $5.1 million of other real estate previously covered under FDIC loss share agreements into Nonperforming assets.  Excluding this reclassification, Nonperforming assets as a percentage of total assets were 0.34% at December 31, 2015.  Other real estate totaled $8.4 million at December 31, 2015, an increase of $6.8 million from September 30, 2015.  At December 31, 2014, other real estate totaled $1.9 million. During the fourth quarter of 2015, the Company sold $1.6 million of other real estate.

Deposits

Total deposits at December 31, 2015 were $2.8 billion, a decrease of $29.4 million, or 1%, from September 30, 2015, and an increase of $293.1 million, or 12%, from December 31, 2014.  The increase in deposits over the year reflects the enhanced deposit gathering efforts in both commercial and business banking.

Noninterest-bearing deposits increased $25.7 million compared to September 30, 2015, and increased $74.5 million compared to December 31, 2014.  The composition of Noninterest-bearing deposits remained stable at 26% of total deposits at December 31, 2015, compared to December 31, 2014, and contributed to the five basis points decline in the overall cost of deposits since December 31, 2014.

Noninterest income

Deposit service charges for the fourth quarter of 2015 of $2.0 million were relatively flat compared to the linked quarter, and grew 9% compared to the prior year quarter, due to new and expanded deposit customer relationships.  Wealth management revenues were relatively stable at $1.7 million compared to the linked third quarter and the prior year period.

Trust assets under management were $872.9 million at December 31, 2015, an increase of $24.4 million, or 3%, when compared to the linked period ended September 30, 2015, and an increase of $7.5 million when compared to the prior year.  The increase in Trust assets under management as compared to the linked quarter ended September 30, 2015 was primarily due to market appreciation.

Trust assets under administration were $1.5 billion at December 31, 2015, an increase of $41.5 million, or 3%, when compared to the linked quarter, and remained stable when compared to the year ended December 31, 2014.

Gains from state tax credit brokerage activities, net of fair value market adjustments on tax credit assets, were $1.7 million for the fourth quarter of 2015, compared to $0.3 million for the linked third quarter, and $1.4 million in the fourth quarter of 2014.  Sales of state tax credits can vary by quarter, but generally occur in the first and fourth quarters of the year depending on client demand and availability of the tax credits.

Other noninterest income of $1.7 million decreased 8% from the linked quarter, and increased 3% from the prior year period.  The decrease from the linked quarter was due to a decline in allocation fees from tax credit projects.  On a core basis, other noninterest income was relatively stable compared to the fourth quarter of 2014.

Noninterest expense

Noninterest expenses were $22.9 million for the quarter ended December 31, 2015, compared to $19.9 million for the quarter ended September 30, 2015 and $24.8 million for the quarter ended December 31, 2014.  Noninterest expenses for the fourth quarter of 2015 included a charge of $2.4 million for the aforementioned FDIC loss share agreement termination.  Core noninterest expenses1, which exclude certain non-comparable expenses and expenses directly related to PCI loans and assets, were $20.0 million for the quarter ended December 31, 2015, compared to $19.3 million for the linked quarter, and $20.2 million for the prior year period.

The Company's Core efficiency ratio1 was 56.1% for the quarter ended December 31, 2015, compared to 58.6% for the linked quarter, and 62.8% for the prior year period, and reflects overall expense management and revenue growth trends.

The Company anticipates total noninterest expenses to be between $19 million and $21 million per quarter for 2016.

Other business results

The total risk based capital ratio1 was 12.02% at December 31, 2015, compared to 12.29% at September 30, 2015, and 13.40% at December 31, 2014.  The Company's Common equity tier 1 capital ratio1 was 9.18% at December 31, 2015 compared to 9.37% at September 30, 2015 and 10.15% at December 31, 2014.  The tangible common equity ratio1 was 8.88% at December 31, 2015, versus 8.90% at September 30, 2015, and 8.69% at December 31, 2014. 

The total risk based capital and Common equity tier 1 capital ratios decreased from the linked quarter due to loan growth and the termination of loss share agreements with the FDIC, and decreased from the prior year period primarily due to the impact of the new regulatory guidelines under Basel III.  The slight decrease in the tangible common equity ratio as compared to the linked quarter was due to a reduction in unrealized gains in the investment portfolio.  Capital ratios for the current quarter are based on the Basel III regulatory capital framework as applied to the Company's current businesses and operations and are subject to, among other things, completion and filing of the Company's regulatory reports and ongoing regulatory review and implementation guidance.  The attached tables contain a reconciliation of these ratios to U.S. GAAP financial measures.

The Company's effective tax rate was 33.8% for the quarter ended December 31, 2015, compared to 32.7% for the quarter ended September 30, 2015, and 32.0% for the prior year period.  The Company's effective tax rate for the years ended December 31, 2015 and 2014 was 34.2% and 33.8%, respectively. 

Use of Non-GAAP financial measures1

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 income margin and other Core performance measures, tangible common equity ratio and Tier 1 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 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 PCI loans and related income and expenses, the impact of certain non-comparable items, and the Company's operating performance on an ongoing basis.  Core performance measures include contractual interest on PCI loans but exclude incremental accretion on these loans.  Core performance measures also exclude the Change in FDIC receivable, Gain or loss of other real estate from PCI loans, and expenses directly related to the PCI loans and other assets formerly covered under FDIC loss share agreements.  Core performance measures also exclude certain other income and expense items 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 and the Tier 1 common equity ratios provide useful information to investors about  the Company's capital strength even though they are considered to be non-GAAP financial measures and are 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 tables below, 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 measure for the periods indicated.

The Company will host a conference call and webcast at 2:30 p.m. Central time on Thursday, January 28, 2016.  During the call, management will review the fourth quarter of 2015 results and related matters.  This press release as well as a related slide presentation will be accessible on Enterprise Financial Services Corp's website at www.enterprisebank.com under "Investor Relations" beginning prior to the scheduled broadcast of the conference call.  The call can be accessed via this same website page, or via telephone at 1-800-533-7954 (Conference ID #112511.) A recorded replay of the conference call will be available on the website beginning two hours after the call's completion. The telephone replay will be available at 1-888-203-1112 (replay passcode #112511.)  The replays will be available for approximately two weeks following the conference call.

Enterprise Financial Services Corp operates commercial banking and wealth management businesses in metropolitan St. Louis, Kansas City, and Phoenix.  The Company is primarily focused on serving the needs of privately held businesses, their owner families, executives and professionals.

Readers should note that in addition to the historical information contained herein, this press release contains forward-looking statements, including but not limited to statements about the Company's plans, expectations and projections of future financial and operating results, which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements.  We use the words "expect" and "intend" and variations of such words and similar expressions in this communication to identify such forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, 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, our 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 regulation or standards applicable to banks, as well as other risk factors described in the Company's 2014 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events unless required under the federal securities laws.

1 A non-GAAP measure.  Refer to discussion & reconciliation of these measures in the accompanying financial tables.

ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited)
 
 For the Quarter ended For the Year ended
(in thousands, except per share data)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Dec 31,
 2015
 Dec 31,
 2014
EARNINGS SUMMARY             
Net interest income$32,079  $30,006  $29,280  $29,045  $30,816  $120,410  $117,368 
Provision for loan losses - portfolio loans543  599  2,150  1,580  1,968  4,872  4,409 
Provision (provision reversal) for loan losses - purchased credit impaired loans(917) (227)   (3,270) 126  (4,414) 1,083 
Noninterest income6,557  4,729  5,806  3,583  4,852  20,675  16,631 
Noninterest expense22,886  19,932  19,458  19,950  24,795  82,226  87,463 
Income before income tax expense16,124  14,431  13,478  14,368  8,779  58,401  41,044 
Income tax expense5,445  4,722  4,762  5,022  2,812  19,951  13,871 
Net income$10,679  $9,709  $8,716  $9,346  $5,967  $38,450  $27,173 
              
Diluted earnings per share$0.52  $0.48  $0.43  $0.46  $0.30  $1.89  $1.35 
Return on average assets1.20% 1.13% 1.06% 1.16% 0.73% 1.14% 0.86%
Return on average common equity12.14% 11.38% 10.56% 11.78% 7.50% 11.47% 9.01%
Return on average tangible common equity13.43% 12.65% 11.77% 13.19% 8.43% 12.77% 10.19%
Net interest margin (fully tax equivalent)3.91% 3.77% 3.85% 3.92% 4.13% 3.86% 4.07%
Efficiency ratio59.23% 57.38% 55.46% 61.14% 69.52% 58.28% 65.27%
              
CORE PERFORMANCE SUMMARY1          
Net interest income$28,667  $27,087  $26,277  $25,587  $25,667  $107,618  $98,438 
Provision for loan losses543  599  2,150  1,580  1,968  4,872  4,409 
Noninterest income7,056  5,939  6,741  5,839  6,438  25,575  24,548 
Noninterest expense20,027  19,347  19,030  19,068  20,170  77,472  79,369 
Income before income tax expense15,153  13,080  11,838  10,778  9,967  50,849  39,208 
Income tax expense5,073  4,204  4,134  3,647  3,264  17,058  13,165 
Net income$10,080  $8,876  $7,704  $7,131  $6,703  $33,791  $26,043 
              
Diluted earnings per share$0.49  $0.44  $0.38  $0.35  $0.33  $1.66  $1.29 
Return on average assets1.13% 1.03% 0.93% 0.88% 0.82% 1.00% 0.82%
Return on average common equity11.46% 10.41% 9.34% 8.99% 8.43% 10.08% 8.63%
Return on average tangible common equity12.68% 11.56% 10.41% 10.06% 9.47% 11.22% 9.77%
Net interest margin (fully tax equivalent)3.50% 3.41% 3.46% 3.46% 3.45% 3.46% 3.42%
Efficiency ratio56.06% 58.58% 57.64% 60.67% 62.83% 58.17% 64.53%
              
1Non-GAAP measures.  Refer to discussion & reconciliation of these measures in the accompanying financial tables.



ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
 For the Quarter ended For the Year ended
(in thousands, except per share data)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Dec 31,
 2015
 Dec 31,
 2014
INCOME STATEMENTS             
NET INTEREST INCOME             
Total interest income$35,096  $33,180  $32,352  $32,151  $34,385  $132,779  $131,754 
Total interest expense3,017  3,174  3,072  3,106  3,569  12,369  14,386 
Net interest income32,079  30,006  29,280  29,045  30,816  120,410  117,368 
Provision for portfolio loans543  599  2,150  1,580  1,968  4,872  4,409 
Provision (provision reversal) for purchased credit impaired loans(917) (227)   (3,270) 126  (4,414) 1,083 
Net interest income after provision for loan losses32,453  29,634  27,130  30,735  28,722  119,952  111,876 
              
NONINTEREST INCOME             
Wealth management revenue1,716  1,773  1,778  1,740  1,751  7,007  6,942 
Deposit service charges2,025  2,044  1,998  1,856  1,864  7,923  7,181 
Gain on sale of other real estate81  32  9  20  17  142  1,531 
State tax credit activity, net1,651  321  74  674  1,392  2,720  2,252 
Gain on sale of investment securities      23    23   
Change in FDIC loss share receivable(580) (1,241) (945) (2,264) (1,781) (5,030) (9,307)
Other income1,664  1,800  2,892  1,534  1,609  7,890  8,032 
Total noninterest income6,557  4,729  5,806  3,583  4,852  20,675  16,631 
              
NONINTEREST EXPENSE             
Employee compensation and benefits11,833  11,475  11,274  11,513  11,350  46,095  47,232 
Occupancy1,653  1,605  1,621  1,694  1,528  6,573  6,526 
FDIC clawback  298  50  412  141  760  1,201 
FDIC loss share termination2,436          2,436   
FHLB prepayment penalty        2,936    2,936 
Facilities disposal charge        1,004    1,004 
Other6,964  6,554  6,513  6,331  7,836  26,362  28,564 
Total noninterest expenses22,886  19,932  19,458  19,950  24,795  82,226  87,463 
              
Income before income tax expense16,124  14,431  13,478  14,368  8,779  58,401  41,044 
Income tax expense5,445  4,722  4,762  5,022  2,812  19,951  13,871 
Net income$10,679  $9,709  $8,716  $9,346  $5,967  $38,450  $27,173 
              
Basic earnings per share$0.53  $0.49  $0.44  $0.47  $0.30  $1.92  $1.38 
Diluted earnings per share$0.52  $0.48  $0.43  $0.46  $0.30  $1.89  $1.35 



ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
 At the Quarter ended
(in thousands)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
BALANCE SHEETS         
ASSETS         
Cash and due from banks$47,935  $46,775  $49,498  $56,420  $42,903 
Interest-earning deposits47,222  81,115  51,298  43,913  63,093 
Debt and equity investments512,939  530,577  465,133  467,343  463,168 
Loans held for sale6,598  4,275  5,446  7,843  4,033 
          
Portfolio loans2,750,737  2,602,156  2,542,555  2,435,559  2,433,916 
Less:  Allowance for loan losses33,441  32,251  31,765  30,288  30,185 
Portfolio loans, net2,717,296  2,569,905  2,510,790  2,405,271  2,403,731 
Purchased credit impaired loans, net of the allowance for loan losses64,583  72,397  76,050  83,163  83,693 
Total loans, net2,781,879  2,642,302  2,586,840  2,488,434  2,487,424 
          
Other real estate18,366  1,575  1,933  2,024  1,896 
Other real estate covered under FDIC loss share1  6,795  7,909  3,560  5,944 
Fixed assets, net14,842  14,395  14,726  14,911  14,753 
State tax credits, held for sale45,850  48,207  42,062  42,411  38,309 
FDIC loss share receivable  8,619  10,332  11,644  15,866 
Goodwill30,334  30,334  30,334  30,334  30,334 
Intangible assets, net3,075  3,323  3,595  3,880  4,164 
Other assets109,443  98,249  101,972  102,578  105,116 
Total assets$3,608,483  $3,516,541  $3,371,078  $3,275,295  $3,277,003 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Noninterest-bearing deposits$717,460  $691,758  $658,258  $680,997  $642,930 
Interest-bearing deposits2,067,131  2,122,205  2,033,300  1,993,634  1,848,580 
Total deposits2,784,591  2,813,963  2,691,558  2,674,631  2,491,510 
Subordinated debentures56,807  56,807  56,807  56,807  56,807 
Federal Home Loan Bank advances110,000  75,000  73,000  6,000  144,000 
Other borrowings270,326  194,684  188,546  186,864  239,883 
Other liabilities35,930  32,524  28,737  24,884  28,562 
Total liabilities3,257,654  3,172,978  3,038,648  2,949,186  2,960,762 
Shareholders' equity350,829  343,563  332,430  326,109  316,241 
Total liabilities and shareholders' equity$3,608,483  $3,516,541  $3,371,078  $3,275,295  $3,277,003 
          
1Due to termination of the Company's loss share agreements with the FDIC in the fourth quarter of 2015, Other real estate covered under FDIC loss share was reclassified to Other real estate.



ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
 For the Quarter ended
(in thousands)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
LOAN PORTFOLIO1         
Commercial and industrial$1,484,327  $1,365,422  $1,329,303  $1,259,365  $1,264,487 
Commercial real estate771,023  750,001  759,893  751,944  740,754 
Construction real estate161,061  152,099  149,854  138,034  143,878 
Residential real estate196,498  188,985  185,587  180,253  185,252 
Consumer and other137,828  145,649  117,918  105,963  99,545 
Total portfolio loans2,750,737  2,602,156  2,542,555  2,435,559  2,433,916 
Purchased credit impaired loans74,758  83,736  87,644  94,788  99,103 
Total loans$2,825,495  $2,685,892  $2,630,199  $2,530,347  $2,533,019 
          
DEPOSIT PORTFOLIO         
Noninterest-bearing accounts$717,460  $691,758  $658,258  $680,997  $642,930 
Interest-bearing transaction accounts564,420  529,052  507,889  494,228  508,941 
Money market and savings accounts1,146,523  1,136,557  1,014,481  933,908  834,287 
Certificates of deposit356,188  456,596  510,930  565,498  505,352 
Total deposit portfolio$2,784,591  $2,813,963  $2,691,558  $2,674,631  $2,491,510 
          
AVERAGE BALANCES         
Portfolio loans$2,631,256  $2,540,948  $2,482,291  $2,425,962  $2,368,475 
Purchased credit impaired loans77,485  85,155  92,168  97,201  104,732 
Loans held for sale5,495  4,255  6,605  3,560  3,703 
Interest earning assets3,304,827  3,201,181  3,096,294  3,047,815  2,998,467 
Total assets3,528,423  3,416,716  3,310,578  3,268,369  3,234,485 
Deposits2,832,313  2,788,245  2,667,640  2,590,961  2,501,098 
Shareholders' equity348,908  338,368  330,999  321,772  315,557 
Tangible common equity315,380  304,583  296,931  287,423  280,920 
          
YIELDS (fully tax equivalent)         
Portfolio loans4.16% 4.16% 4.17% 4.15% 4.19%
Purchased credit impaired loans24.79% 19.41% 18.33% 20.85% 26.47%
Total loans4.75% 4.66% 4.68% 4.79% 5.13%
Securities2.27% 2.23% 2.26% 2.35% 2.29%
Interest-earning assets4.27% 4.17% 4.24% 4.33% 4.60%
Interest-bearing deposits0.48% 0.50% 0.52% 0.54% 0.56%
Total deposits0.36% 0.39% 0.39% 0.40% 0.41%
Subordinated debentures2.26% 2.19% 2.18% 2.15% 2.14%
Borrowed funds0.24% 0.28% 0.29% 0.36% 0.77%
Cost of paying liabilities0.50% 0.53% 0.54% 0.56% 0.63%
Net interest margin3.91% 3.77% 3.85% 3.92% 4.13%
          
1Certain prior period balances have been reclassified to reflect changes in internal organizational structure and certain Call Report reclassifications.



ENTERPRISE FINANCIAL SERVICES CORP
CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)
 
 For the Quarter ended
(in thousands, except per share data)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
ASSET QUALITY         
Net charge-offs (recoveries)1$(647) $113  $672  $1,478  $582 
Nonperforming loans19,100  9,123  17,498  15,143  22,244 
Classified assets67,761  62,679  61,722  63,001  77,898 
Nonperforming loans to total loans10.33% 0.35% 0.69% 0.62% 0.91%
Nonperforming assets to total assets20.48% 0.30% 0.58% 0.52% 0.74%
Allowance for loan losses to total loans11.22% 1.24% 1.25% 1.24% 1.24%
Allowance for loan losses to nonperforming loans1367.5% 353.5% 181.5% 200.0% 135.7%
Net charge-offs (recoveries) to average loans (annualized)1(0.10)% 0.02% 0.11% 0.25% 0.10%
          
WEALTH MANAGEMENT         
Trust assets under management$872,877  $848,515  $889,616  $894,456  $865,414 
Trust assets under administration1,477,917  1,436,372  1,514,140  1,517,171  1,478,864 
          
MARKET DATA         
Book value per common share$17.53  $17.21  $16.67  $16.36  $15.94 
Tangible book value per common share$15.86  $15.53  $14.96  $14.64  $14.20 
Market value per share$28.35  $25.17  $22.77  $20.66  $19.73 
Period end common shares outstanding20,017  19,959  19,947  19,935  19,838 
Average basic common shares20,007  19,995  19,978  19,934  19,858 
Average diluted common shares20,386  20,261  20,168  20,157  20,140 
          
CAPITAL         
Total capital to risk-weighted assets312.02% 12.29% 12.43% 12.59% 13.40%
Tier 1 capital to risk-weighted assets310.77% 11.04% 11.18% 11.34% 12.14%
Common equity tier 1 capital to risk-weighted assets39.18% 9.37% 9.44% 9.54% 10.15%
Tangible common equity to tangible assets8.88% 8.90% 8.94% 9.01% 8.69%
          
1Portfolio loans only
2Excludes ORE covered by FDIC shared-loss arrangements, except for inclusion in total assets.  Beginning with the quarter ended December 31, 2015, ORE covered by FDIC shared-loss arrangements is zero.
3Beginning with the quarter ended March 31, 2015, the implementation of revised regulatory capital guidelines under Basel III has resulted in differences in these items when compared to prior periods.



ENTERPRISE FINANCIAL SERVICES CORP
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
 
 For the Quarter ended For the Year ended
(in thousands)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
 Dec 31,
 2015
 Dec 31,
 2014
              
CORE PERFORMANCE MEASURES    
Net interest income$32,079  $30,006  $29,280  $29,045  $30,816  $120,410  $117,368 
Less: Incremental accretion income3,412  2,919  3,003  3,458  5,149  12,792  18,930 
Core net interest income28,667  27,087  26,277  25,587  25,667  107,618  98,438 
Total noninterest income6,557  4,729  5,806  3,583  4,852  20,675  16,631 
Less: Change in FDIC loss share receivable(580) (1,241) (945) (2,264) (1,781) (5,030) (9,307)
Less (plus): Gain (loss) on sale of other real estate from PCI loans81  31  10  (15) 195  107  445 
Less: Gain on sale of investment securities      23    23   
Less: Closing fee            945 
Core noninterest income7,056  5,939  6,741  5,839  6,438  25,575  24,548 
Total core revenue35,723  33,026  33,018  31,426  32,105  133,193  122,986 
Provision for portfolio loans543  599  2,150  1,580  1,968  4,872  4,409 
Total noninterest expense22,886  19,932  19,458  19,950  24,795  82,226  87,463 
Less: FDIC clawback  298  50  412  141  760  1,201 
Less: FDIC loss share termination2,436          2,436   
Less: Other loss share expenses423  287  378  470  544  1,558  2,953 
Less: FHLB prepayment penalty        2,936    2,936 
Less: Facilities disposal charge        1,004    1,004 
Core noninterest expense20,027  19,347  19,030  19,068  20,170  77,472  79,369 
Core income before income tax expense15,153  13,080  11,838  10,778  9,967  50,849  39,208 
Core income tax expense5,073  4,204  4,134  3,647  3,264  17,058  13,165 
Core net income$10,080  $8,876  $7,704  $7,131  $6,703  $33,791  $26,043 
Core diluted earnings per share$0.49  $0.44  $0.38  $0.35  $0.33  $1.66  $1.29 
Core return on average assets1.13% 1.03% 0.93% 0.88% 0.82% 1.00% 0.82%
Core return on average common equity11.46% 10.41% 9.34% 8.99% 8.43% 10.08% 8.63%
Core return on average tangible common equity12.68% 11.56% 10.41% 10.06% 9.47% 11.22% 9.77%
Core efficiency ratio56.06% 58.58% 57.64% 60.67% 62.83% 58.17% 64.53%
              
NET INTEREST MARGIN TO CORE NET INTEREST MARGIN    
Net interest income (fully tax equivalent)$32,546  $30,437  $29,691  $29,467  $31,223  $122,141  $119,002 
Less: Incremental accretion income3,412  2,919  3,003  3,458  5,149  12,792  18,930 
Core net interest income (fully tax equivalent)$29,134  $27,518  $26,688  $26,009  $26,074  $109,349  $100,072 
Average earning assets$3,304,827  $3,201,181  $3,096,294  $3,047,815  $2,998,467  $3,163,339  $2,921,978 
Reported net interest margin (fully tax equivalent)3.91% 3.77% 3.85% 3.92% 4.13% 3.86% 4.07%
Core net interest margin (fully tax equivalent)3.50% 3.41% 3.46% 3.46% 3.45% 3.46% 3.42%



 At the Quarter ended
(in thousands)Dec 31,
 2015
 Sep 30,
 2015
 Jun 30,
 2015
 Mar 31,
 2015
 Dec 31,
 2014
COMMON EQUITY TIER 1 CAPITAL TO RISK-WEIGHTED ASSETS
Shareholders' equity$350,829  $343,563  $332,430  $326,109  $316,241 
Less: Goodwill30,334  30,334  30,334  30,334  30,334 
Less: Intangible assets, net of deferred tax liabilities1759  820  887  958  4,164 
Less (Plus): Unrealized gains (losses)218  2,973  1,249  3,379  1,681 
Plus: Qualifying trust preferred securities55,100  55,100  55,100  55,100  55,100 
Plus: Other58  58  58  59  58 
Total tier 1 capital$374,676  $364,594  $355,118  $346,597  $335,220 
Less: Qualifying trust preferred securities55,100  55,100  55,100  55,100  55,100 
Less: Other123  23  23  23   
Common equity tier 1 capital$319,553  $309,471  $299,995  $291,474  $280,120 
          
Total risk-weighted assets$3,479,760  $3,301,671  $3,176,587  $3,055,652  $2,760,729 
          
Common equity tier 1 capital to risk-weighted assets9.18% 9.37% 9.44% 9.54% 10.15%
          
SHAREHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS
Shareholders' equity$350,829  $343,563  $332,430  $326,109  $316,241 
Less: Goodwill30,334  30,334  30,334  30,334  30,334 
Less: Intangible assets3,075  3,323  3,595  3,880  4,164 
Tangible common equity$317,420  $309,906  $298,501  $291,895  $281,743 
          
Total assets$3,608,483  $3,516,541  $3,371,078  $3,275,295  $3,277,003 
Less: Goodwill30,334  30,334  30,334  30,334  30,334 
Less: Intangible assets3,075  3,323  3,595  3,880  4,164 
Tangible assets$3,575,074  $3,482,884  $3,337,149  $3,241,081  $3,242,505 
          
Tangible common equity to tangible assets8.88% 8.90% 8.94% 9.01% 8.69%
          
1 Beginning with the quarter ended March 31, 2015, the implementation of revised regulatory capital guidelines under Basel III has resulted in differences in these items when compared to prior periods.

 

For more information contact: Jerry Mueller, Senior Vice President (314) 512-7251 Ann Marie Mayuga, AMM Communications (314) 485-9499

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