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Enterprise Financial Reports First Quarter 2021 Results

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First Quarter Results

  • Net income of $29.9 million, $0.96 per diluted share
  • Net interest margin (tax equivalent) of 3.50%
  • Return on average assets of 1.22%
  • Maintained dividend of $0.18 per share for second quarter
  • Completed systems integration of Seacoast Commerce Banc Holdings ("Seacoast")
  • Announced the acquisition of First Choice Bancorp ("First Choice"), a California based $2.5 billion commercial bank

Enterprise Financial Services Corp (NASDAQ:EFSC) (the "Company" or "EFSC") reported net income of $29.9 million for the first quarter 2021, an increase of $1.0 million compared to the linked fourth quarter ("linked quarter") and an increase of $17.1 million from the prior year quarter. Earnings per diluted share ("EPS") was $0.96 for the first quarter 2021, compared to $1.00 and $0.48 for the linked and prior year quarters, respectively.

Jim Lally, EFSC's President and Chief Executive Officer, commented, ‘Today we announced the acquisition of First Choice headquartered in Cerritos, California. This transaction strengthens our California presence with a pro forma asset base of $3.8 billion. I am excited about how this adds to our expected growth prospects and diversification of our business, particularly in close proximity to the successful first quarter core systems integration for Seacoast. We are off to a solid start in 2021, with earnings of $0.96 per share and continued execution on the Paycheck Protection Program ("PPP") for the benefit of our customers. In addition, we issued our inaugural Environmental, Social and Governance report during March. I am pleased that we have taken the first step in reporting our ESG efforts and demonstrating the importance of our ESG objectives in meeting our mission."

Highlights

  • Earnings - Net income in the first quarter 2021 was $29.9 million, an increase of $1.0 million compared to the linked quarter and an increase of $17.1 million from the prior year quarter. EPS was $0.96 per diluted share for the first quarter 2021, compared to $1.00 and $0.48 per diluted share for the linked and prior year quarters, respectively. Merger-related expenses from the Seacoast transaction reduced net income $2.4 million, or $0.07 per share. The increase in net income and EPS from the prior year quarter was primarily due to a decrease of $22.2 million in the provision for credit losses.
  • Pre-provision net revenue1 ("PPNR") - PPNR of $40.7 million in the first quarter 2021 decreased $6.8 million and increased $2.6 million from the linked and prior year quarters, respectively. The decrease from the linked quarter was primarily due to a decline in tax credit revenue and PPP fees. The increase from the prior year quarter was primarily from the Seacoast acquisition that was completed in the fourth quarter and income from PPP that started in the second quarter of 2020.

1 PPNR is a non-GAAP measure. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

  • Net interest income and net interest margin ("NIM") - Net interest income of $79.1 million for the first quarter 2021 increased $1.7 million and $15.8 million from the linked quarter and prior year quarter, respectively. NIM was 3.50% for the first quarter 2021, compared to 3.66% and 3.79% for the linked quarter and prior year quarter, respectively.
  • Noninterest income - Noninterest income of $11.3 million for the first quarter 2021 decreased $7.2 million and $2.1 million from the linked quarter and prior year quarter, respectively. The decrease was primarily due to a decline in tax credit activity caused by delays in projects, which declined $5.1 million from the linked quarter and $3.1 million from the prior year quarter.
  • Loans - Total loans increased $63.8 million, or 3.6% on an annualized basis, from the linked quarter to $7.3 billion as of March 31, 2021. Year-over-year, loans grew $1.8 billion, or 33.6% from $5.5 billion as of March 31, 2020, primarily due to Seacoast loans of $1.2 billion upon acquisition and PPP loans of $737.7 million. Average loans totaled $7.2 billion for the quarter ended March 31, 2021 compared to $6.8 billion and $5.4 billion for the linked and prior year quarters, respectively.

PPP details:

 

Quarter ended

($ in thousands, except per share data)

March 31, 2021

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

PPP loans outstanding, net of deferred fees

$

737,660

 

 

$

698,645

 

 

$

819,100

 

 

$

807,814

 

Average PPP loans outstanding, net

692,161

 

 

806,697

 

 

813,244

 

 

634,632

 

PPP average loan size

220

 

 

187

 

 

216

 

 

224

 

PPP interest and fee income

8,475

 

 

10,261

 

 

5,226

 

 

4,083

 

PPP deferred fees

16,676

 

 

11,304

 

 

19,522

 

 

22,414

 

PPP average yield

4.97

%

 

5.06

%

 

2.56

%

 

2.59

%

 

Quarter ended

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

 

June 30, 2020

Financial Metrics:

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

 

As

Reported

 

Excluding

PPP*

EPS

$

0.96

 

 

$

0.75

 

 

$

1.00

 

 

$

0.73

 

 

$

0.68

 

 

$

0.53

 

 

$

0.56

 

 

$

0.44

 

ROAA

1.22

%

 

1.03

%

 

1.26

%

 

1.01

%

 

0.86

%

 

0.74

%

 

0.72

%

 

0.62

%

PPNR ROAA

1.66

%

 

1.41

%

 

2.07

%

 

1.78

%

 

1.81

%

 

1.73

%

 

1.87

%

 

1.81

%

Tangible common

equity/tangible

assets*

8.18

%

 

8.84

%

 

8.40

%

 

9.07

%

 

7.99

%

 

8.89

%

 

7.81

%

 

8.67

%

Leverage ratio

9.5

%

 

10.2

%

 

10.0

%

 

11.0

%

 

9.2

%

 

10.2

%

 

9.2

%

 

10.0

%

NIM

3.50

%

 

3.39

%

 

3.66

%

 

3.52

%

 

3.29

%

 

3.37

%

 

3.53

%

 

3.62

%

Allowance for

credit losses on

loans/loans

1.80

%

 

2.01

%

 

1.89

%

 

2.09

%

 

2.01

%

 

2.32

%

 

1.80

%

 

2.07

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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.

  • Asset quality - The allowance for credit losses on loans to total loans was 1.80% at March 31, 2021, compared to 1.89% and 1.69% at December 31, 2020 and March 31, 2020, respectively. Nonperforming assets to total assets was 0.50% at March 31, 2021 compared to 0.45% and 0.56% at December 31, 2020 and March 31, 2020, respectively. The decline in the allowance to total loans ratio in the first quarter 2021 was primarily due to loan charge-offs of $6.5 million, the majority of which had been reserved for in a prior period. High-quality credit metrics, continued improvement in economic forecasts and relatively stable loan volumes resulted in a nominal provision for credit losses in the current quarter.
  • Deposits - Total deposits increased $530.1 million, or 6.6%, from the linked quarter to $8.5 billion as of March 31, 2021. Year-over-year, deposits grew $2.5 billion, or 42.2%, from $6.0 billion as of March 31, 2020. Average deposits totaled $8.2 billion for the quarter ended March 31, 2021 compared to $7.3 billion and $5.8 billion for the linked and prior year quarters, respectively. Deposits from the Seacoast acquisition and PPP loans contributed to the increase over the prior year period. Specialty deposits increased $163.4 million over the linked quarter primarily attributable to community associations and sponsor finance. The St. Louis, Kansas City, and New Mexico regions also experienced significant growth of $132.5 million, $129.3 million, and $77.5 million, respectively, over the linked quarter. Noninterest deposit accounts represented 34.2% of total deposits and the loan to deposit ratio was 85.6% at March 31, 2021.
  • Capital - Total shareholders' equity was $1.1 billion and the tangible common equity to tangible assets ratio was 8.2% at March 31, 2021, compared to 8.4% at December 31, 2020. The Bank's regulatory capital ratios remain "well-capitalized," with a common equity tier 1 ratio of 12.4% and a total risk-based capital ratio of 13.6% as of March 31, 2021. The Company's common equity tier 1 ratio and total risk-based capital ratio was 11.0% and 15.1%, respectively, at March 31, 2021.

The Company has 95,907 shares available for repurchase under the existing common stock repurchase authorization.

The Company's Board of Directors approved a quarterly dividend of $0.18 per common share, payable on June 30, 2021 to shareholders of record as of June 15, 2021.

  • Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At March 31, 2021, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.0 billion. Off-balance-sheet liquidity totaled $1.8 billion through the Federal Home Loan Bank, Federal Reserve and correspondent bank lines. The Company also has an unused $25 million revolving line of credit and maintains a shelf registration allowing for the issuance of various forms of equity and debt securities.

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.

 

Quarter ended

 

March 31, 2021

 

December 31, 2020

 

March 31, 2020

($ in thousands)

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans*

$

7,192,776

 

 

$

77,073

 

 

4.35

%

 

$

6,780,702

 

 

$

76,044

 

 

4.46

%

 

$

5,352,243

 

 

$

67,290

 

 

5.06

%

Debt and equity

investments*

1,417,305

 

 

8,818

 

 

2.52

 

 

1,395,806

 

 

8,986

 

 

2.56

 

 

1,346,968

 

 

9,707

 

 

2.90

 

Short-term investments

679,659

 

 

189

 

 

0.11

 

 

347,629

 

 

120

 

 

0.14

 

 

92,248

 

 

300

 

 

1.31

 

Total earning assets

9,289,740

 

 

86,080

 

 

3.76

 

 

8,524,137

 

 

85,150

 

 

3.97

 

 

6,791,459

 

 

77,297

 

 

4.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets

650,312

 

 

 

 

 

 

617,022

 

 

 

 

 

 

572,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

9,940,052

 

 

 

 

 

 

$

9,141,159

 

 

 

 

 

 

$

7,363,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and

Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

transaction accounts

$

1,887,059

 

 

$

328

 

 

0.07

%

 

$

1,584,369

 

 

$

265

 

 

0.07

%

 

$

1,375,154

 

 

$

1,338

 

 

0.39

%

Money market accounts

2,350,592

 

 

975

 

 

0.17

 

 

2,175,111

 

 

1,016

 

 

0.19

 

 

1,811,090

 

 

4,740

 

 

1.05

 

Savings

654,662

 

 

48

 

 

0.03

 

 

620,248

 

 

46

 

 

0.03

 

 

542,993

 

 

143

 

 

0.11

 

Certificates of deposit

537,166

 

 

1,312

 

 

0.99

 

 

567,456

 

 

1,739

 

 

1.22

 

 

793,213

 

 

3,667

 

 

1.86

 

Total interest-bearing

deposits

5,429,479

 

 

2,663

 

 

0.20

 

 

4,947,184

 

 

3,066

 

 

0.25

 

 

4,522,450

 

 

9,888

 

 

0.88

 

Subordinated debentures

203,694

 

 

2,819

 

 

5.61

 

 

203,564

 

 

2,824

 

 

5.52

 

 

141,295

 

 

1,919

 

 

5.46

 

FHLB advances

50,000

 

 

195

 

 

1.58

 

 

244,730

 

 

603

 

 

0.98

 

 

220,453

 

 

895

 

 

1.63

 

Securities sold under

agreements to repurchase

231,527

 

 

60

 

 

0.11

 

 

231,836

 

 

64

 

 

0.11

 

 

201,887

 

 

343

 

 

0.68

 

Other borrowings

28,650

 

 

100

 

 

1.42

 

 

30,095

 

 

110

 

 

1.45

 

 

34,270

 

 

275

 

 

3.23

 

Total interest-bearing

liabilities

5,943,350

 

 

5,837

 

 

0.40

 

 

5,657,409

 

 

6,667

 

 

0.47

 

 

5,120,355

 

 

13,320

 

 

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

2,777,900

 

 

 

 

 

 

2,363,890

 

 

 

 

 

 

1,315,267

 

 

 

 

 

Other liabilities

122,321

 

 

 

 

 

 

127,843

 

 

 

 

 

 

62,948

 

 

 

 

 

Total liabilities

8,843,571

 

 

 

 

 

 

8,149,142

 

 

 

 

 

 

6,498,570

 

 

 

 

 

Shareholders' equity

1,096,481

 

 

 

 

 

 

992,017

 

 

 

 

 

 

865,035

 

 

 

 

 

Total liabilities and

shareholders' equity

$

9,940,052

 

 

 

 

 

 

$

9,141,159

 

 

 

 

 

 

$

7,363,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net interest income

 

 

$

80,243

 

 

 

 

 

 

$

78,483

 

 

 

 

 

 

$

63,977

 

 

 

Net interest margin

 

 

 

 

3.50

%

 

 

 

 

 

3.66

%

 

 

 

 

 

3.79

%

* Non-taxable income is presented on a tax-equivalent basis using a 24.9% and 24.7% tax rate in 2021 and 2020, respectively. The tax-equivalent adjustments were $1.1 million for the three months ended March 31, 2021, and $0.6 million for each of the three months ended December 31, 2020 and March 31, 2020.

Net interest income for the first quarter increased $1.7 million to $79.1 million from $77.4 million in the linked quarter, and increased $15.8 million from the prior year period. NIM, on a tax equivalent basis, was 3.50% for the first quarter, compared to 3.66% in the linked quarter, and 3.79% in the first quarter of 2020. The increase in net interest income from the linked quarter was primarily due to the full quarter of earnings on acquired Seacoast assets and lower interest expense on paying liabilities, partially offset by reduced income from PPP loans and purchase accounting adjustments.

NIM decreased 16 basis points from the linked quarter to 3.50% during the current quarter primarily due to a 21 basis point decrease in earning asset yields. The decrease in the earning asset yield was primarily due to higher levels of cash related to PPP funds and deposit growth (13 bps), reduced income from PPP forgiveness (11 bps) and lower levels of accretion from purchase accounting (5 bps), partially offset by the full-quarter impact of acquired Seacoast assets (8 bps).

The cost of interest-bearing liabilities declined seven basis points from the linked quarter, primarily due to the full-quarter impact of lower cost deposits from Seacoast, lower rates on time deposits, and a reduction in expense on borrowings.

Loans

The following table presents total loans for the most recent five quarters:

 

Quarter ended

 

 

 

December 31, 2020

 

 

 

 

 

 

($ in thousands)

March 31,

2021

 

Seacoasta

 

Legacy

EFSCa

 

Consolidated

 

September 30,

2020

 

June 30, 2020

 

March 31,

2020

C&I

$

1,048,839

 

 

$

16,079

 

 

$

1,086,981

 

 

$

1,103,060

 

 

$

1,075,421

 

 

$

1,052,373

 

 

$

1,180,675

 

CRE investor owned

1,491,244

 

 

107,449

 

 

1,313,456

 

 

1,420,905

 

 

1,281,567

 

 

1,298,801

 

 

1,316,501

 

CRE owner occupied

805,581

 

 

98,134

 

 

727,712

 

 

825,846

 

 

766,919

 

 

782,258

 

 

743,962

 

SBA loans

941,075

 

 

874,578

 

 

21,352

 

 

895,930

 

 

15,927

 

 

17,195

 

 

17,381

 

SBA PPP loans

737,660

 

 

85,729

 

 

612,916

 

 

698,645

 

 

819,100

 

 

807,814

 

 

 

Sponsor finance

394,207

 

 

 

 

396,487

 

 

396,487

 

 

367,337

 

 

383,458

 

 

440,764

 

Life insurance premium

financing

543,084

 

 

 

 

534,092

 

 

534,092

 

 

517,559

 

 

520,705

 

 

496,472

 

Residential real estate

299,517

 

 

9,138

 

 

308,953

 

 

318,091

 

 

321,258

 

 

326,467

 

 

346,225

 

Construction and land

development

438,303

 

 

32,535

 

 

441,864

 

 

474,399

 

 

450,225

 

 

455,686

 

 

445,909

 

Tax credits

387,968

 

 

 

 

382,602

 

 

382,602

 

 

368,908

 

 

363,222

 

 

354,046

 

Other

201,303

 

 

764

 

 

174,114

 

 

174,878

 

 

142,086

 

 

132,072

 

 

115,582

 

Total Loans

$

7,288,781

 

 

$

1,224,406

 

 

$

6,000,529

 

 

$

7,224,935

 

 

$

6,126,307

 

 

$

6,140,051

 

 

$

5,457,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loan yield

4.35

%

 

 

 

 

 

4.46

%

 

4.08

%

 

4.31

%

 

5.06

%

Variable interest rate loans

to total loans

56

%

 

 

 

 

 

57

%

 

50

%

 

51

%

 

60

%

 

Certain prior period amounts have been reclassified among the categories to conform to the current period presentation.

a Amounts reported are as of December 31, 2020 and are separately shown attributable to the Seacoast loan portfolio acquired on November 12, 2020, and the Company's pre-Seacoast acquisition loan portfolio.

Loans totaled $7.3 billion at March 31, 2021, increasing $63.8 million, or 3.6% on an annualized basis, compared to the linked quarter. Year-over-year, loans increased $1.8 billion, or 33.6%. The year-over-year increase was primarily due to the Seacoast acquisition and PPP loans. The largest growth categories, excluding PPP, compared to the linked quarter were investor-owned CRE, SBA, other, life insurance premium finance, and tax credits. Line draw utilization continues to decline. For the quarter ended March 31, 2021 average line draw utilization was 37.0% compared to 38.1% and 47.3% for the linked quarter and prior-year quarter, respectively.

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,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Nonperforming loans*

$

36,659

 

 

$

38,507

 

 

$

39,623

 

 

$

41,473

 

 

$

37,204

 

Other real estate

6,164

 

 

5,330

 

 

4,835

 

 

4,874

 

 

5,072

 

Nonperforming assets*

$

42,823

 

 

$

43,837

 

 

$

44,458

 

 

$

46,347

 

 

$

42,276

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

0.50

%

 

0.53

%

 

0.65

%

 

0.68

%

 

0.68

%

Nonperforming assets to total assets

0.42

%

 

0.45

%

 

0.53

%

 

0.55

%

 

0.56

%

Allowance for loan losses to total loans

1.80

%

 

1.89

%

 

2.01

%

 

1.80

%

 

1.69

%

Net charge-offs (recoveries)

$

5,647

 

 

$

(612)

 

 

$

1,027

 

 

$

309

 

 

$

1,183

 

*Excludes government guaranteed balances.

Nonperforming loans decreased $1.8 million to $36.7 million at March 31, 2021 from $38.5 million at December 31, 2020. Activity during the current quarter primarily included additions of $6.2 million, reductions of $1.6 million, and charge-offs of $6.5 million. The addition of $6.2 million during the quarter was primarily from a $4.2 million retail relationship that went on nonaccrual. Other real estate increased during the first quarter 2021 due to one addition of $1.2 million partially offset by sales of $0.4 million.

The Company recorded a provision for credit losses of $46.3 thousand for the first quarter 2021 compared to $9.5 million for the linked quarter and $22.3 million for the prior year quarter. While the majority of the charge-offs in the quarter were reserved for in a prior period, a provision of approximately $3.0 million was recognized on a retail loan that defaulted in the quarter. The impact on the provision for credit losses of this loan was offset by an improvement in the economic forecast, net of qualitative adjustments.

Deposits

The following table presents deposits broken out by type for the most recent five quarters:

 

Quarter ended

 

 

 

December 31, 2020

 

 

 

 

 

 

($ in thousands)

March 31,

2021

 

Seacoasta

 

Legacy

EFSCa

 

Consolidated

 

September 30,

2020

 

June 30, 2020

 

March 31,

2020

Noninterest-bearing

accounts

$

2,910,216

 

 

$

666,447

 

 

$

2,045,381

 

 

$

2,711,828

 

 

$

1,929,540

 

 

$

1,965,868

 

 

$

1,354,571

 

Interest-bearing

transaction accounts

1,990,308

 

 

55,590

 

 

1,712,907

 

 

1,768,497

 

 

1,499,756

 

 

1,508,535

 

 

1,389,603

 

Money market and

savings accounts

3,093,569

 

 

327,471

 

 

2,627,498

 

 

2,954,969

 

 

2,634,885

 

 

2,566,011

 

 

2,479,828

 

Brokered certificates of

deposit

50,209

 

 

 

 

50,209

 

 

50,209

 

 

65,209

 

 

85,414

 

 

170,667

 

Other certificates of

deposit

471,142

 

 

10,325

 

 

489,561

 

 

499,886

 

 

546,836

 

 

573,752

 

 

595,237

 

Total deposit portfolio

$

8,515,444

 

 

$

1,059,833

 

 

$

6,925,556

 

 

$

7,985,389

 

 

$

6,676,226

 

 

$

6,699,580

 

 

$

5,989,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

deposits to total deposits

34.2

%

 

62.9

%

 

29.5

%

 

34.0

%

 

28.9

%

 

29.3

%

 

22.6

%

aAmounts reported are as of December 31, 2020 and are shown separately attributable to the Seacoast deposit portfolio acquired on November 12, 2020, and the Company's pre-Seacoast acquisition deposit portfolio.

Total deposits at March 31, 2021 were $8.5 billion, an increase of $530.1 million from December 31, 2020, and an increase of $2.5 billion from March 31, 2020.

Core deposits, defined as total deposits excluding certificates of deposits, were $8.0 billion at March 31, 2021, an increase of $558.8 million from the linked quarter. The Company's participation in PPP continues to contribute to the increase in deposits. Money market and savings accounts increased $138.6 million compared to the linked quarter, while interest-bearing and noninterest-bearing deposits increased $221.8 million and $198.4 million, respectively. Noninterest-bearing deposits were $2.9 billion at March 31, 2021, or 34.2% of total deposits. Certificates of deposit decreased $28.7 million from the linked quarter and $244.6 million from the prior year quarter. The total cost of deposits was 0.13% for the current quarter compared to 0.17% and 0.68% for the linked quarter and prior year quarter, respectively.

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,

2021

 

December 31,

2020

 

Increase (decrease)

 

March 31,

2020

 

Increase (decrease)

Service charges on deposit accounts

$

3,084

 

 

$

3,160

 

 

$

(76)

 

 

(2)

%

 

$

3,143

 

 

$

(59)

 

 

(2)

%

Wealth management revenue

2,483

 

 

2,449

 

 

34

 

 

1

%

 

2,501

 

 

(18)

 

 

(1)

%

Card services revenue

2,496

 

 

2,511

 

 

(15)

 

 

(1)

%

 

2,247

 

 

249

 

 

11

%

Tax credit income (expense)

(1,041)

 

 

4,048

 

 

(5,089)

 

 

126

%

 

2,036

 

 

(3,077)

 

 

(151)

%

Miscellaneous income

4,268

 

 

6,338

 

 

(2,070)

 

 

(33)

%

 

3,481

 

 

787

 

 

23

%

Total noninterest income

$

11,290

 

 

$

18,506

 

 

$

(7,216)

 

 

(39)

%

 

$

13,408

 

 

$

(2,118)

 

 

(16)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income for the first quarter 2021 was $11.3 million, a decrease of $7.2 million from the linked quarter and a decrease of $2.1 million from the prior year quarter. The decrease from the linked quarter and prior year quarter was primarily due to a decline in tax credit income. Several tax credit projects that were expected to close in the quarter were delayed and did not close. In addition, projects carried at fair value recognized a reduced valuation during the quarter due to an increase in the longer-term LIBOR swap rates used in the valuation process. The decline in miscellaneous income from the linked quarter was due to income earned on community development investments in the fourth quarter 2020 that did not reoccur in the current period.

Noninterest Expenses

Noninterest expense was $52.9 million for the first quarter 2021, compared to $51.1 million for the linked quarter, and $38.7 million for the first quarter 2020. The increase from the linked quarter and prior year quarter was primarily due to having a full quarter of Seacoast operations, which totaled $10.2 million in the first quarter 2021. Merger-related expenses were $3.1 million and $2.6 million in the current and linked quarters, respectively. The Company does not expect to incur any additional material merger expenses related to the Seacoast transaction.

For the first quarter 2021, the Company's efficiency ratio was 58.5% compared to 53.2% and 50.4% for the linked quarter and prior year quarter, respectively. The Company's core efficiency ratio2 was 55.0% for the quarter ended March 31, 2021, compared to 50.9% for the linked quarter and 51.2% for the prior year quarter.

2 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 20% for the quarter ended March 31, 2021, compared to 18% in the linked quarter and 19% in the prior year quarter.

Capital

The following table presents various EFSC capital ratios:

 

Quarter ended

Percent

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

Total risk-based capital to risk-weighted assets

15.1

%

 

14.9

%

 

14.6

%

 

14.4

%

 

12.9

%

Tier 1 capital to risk weighted assets

12.3

%

 

12.1

%

 

11.6

%

 

11.4

%

 

11.0

%

Common equity tier 1 capital to risk-

weighted assets

11.0

%

 

10.9

%

 

10.2

%

 

9.9

%

 

9.6

%

Tangible common equity to tangible assets

8.2

%

 

8.4

%

 

8.0

%

 

7.8

%

 

8.4

%

The Company's regulatory capital ratios continue to expand due to the Company's earnings profile and manageable dividend payout ratio. The decline in the tangible common equity to tangible assets ratio was primarily due to continued growth in the balance sheet from PPP loans and the related deposit balances. 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 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 27, 2021. During the call, management will review the first quarter of 2021 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 1-800-353-6461 (Conference ID #2910583). 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/EFSC1Q2021earnings 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

Enterprise Financial Services Corp (NASDAQ:EFSC), with approximately $10.2 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 39 branch offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico, and SBA loan and deposit production offices in Arizona, California, Colorado, Illinois, Indiana, Massachusetts, Michigan, Nevada, Ohio, Oregon, Texas, Utah, and Washington. 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

Certain statements contained in this Current Report on Form 8-K may be considered forward-looking statements regarding Enterprise, including its wholly-owned subsidiary EB&T, First Choice, including its wholly-owned subsidiary FCB, and Enterprise's proposed acquisition of First Choice and FCB. These forward-looking statements may include: statements regarding the acquisition, the consideration payable in connection with the acquisition, and the ability of the parties to consummate the acquisition. 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 that Enterprise anticipated in its 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 possibility: that expected benefits of the acquisition may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the acquisition may not be timely completed, if at all; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive transaction agreement; the outcome of any legal proceedings that may be instituted against Enterprise or First Choice; that prior to the completion of the acquisition or thereafter, Enterprise's and First Choice's respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies; that required regulatory, Enterprise shareholder or First Choice shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that adverse regulatory conditions may be imposed in connection with regulatory approvals of the acquisition; reputational risks and the reaction of the companies' employees or customers to the transaction; diversion of management time on acquisition-related issues; that the COVID-19 pandemic, including uncertainty and volatility in financial, commodities and other markets, and disruptions to banking and other financial activity, could harm Enterprise and First Choice's business, financial position and results of operations, and could adversely affect the timing and anticipated benefits of the proposed acquisition; and those factors and risks referenced from time to time in Enterprise's filings with the Securities and Exchange Commission, or the SEC, including in Enterprise's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, its other filings with the SEC. For any forward-looking statements made in this Current Report on Form 8-K or in any documents, Enterprise 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, Enterprise 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.

Additional Information About the Acquisition and Where to Find It

In connection with the proposed acquisition transaction, along with other relevant documents, a registration statement on Form S-4 will be filed with the SEC that will include a joint proxy statement/prospectus to be distributed to the shareholders of Enterprise and First Choice in connection with their votes on the acquisition. SHAREHOLDERS OF ENTERPRISE AND FIRST CHOICE ARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION AND RELATED MATTERS. FREE COPIES OF THESE DOCUMENTS MAY BE OBTAINED AS DESCRIBED BELOW.

The final joint proxy statement/prospectus will be mailed to shareholders of Enterprise and First Choice. Investors and security holders will be able to obtain the documents, and any other documents Enterprise has filed with the SEC, free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by Enterprise in connection with the proposed acquisition will be available free of charge by (1) accessing Enterprise's website at www.enterprisebank.com under the "Investor Relations" link, (2) writing Enterprise at 150 North Meramec, Clayton, Missouri 63105, Attention: Investor Relations, (3) accessing First Choice's website at https://investors.firstchoicebankca.com under the "SEC Filings" tab, or (4) writing First Choice at 17785 Center Court Drive, N Suite 750, Cerritos, CA 90703, Attention: General Counsel.

Participants in Solicitation

First Choice and certain of their directors and executive officers, and Enterprise and certain of their directors, executive officers and other certain members of management and employees, may be deemed to be participants in the solicitation of proxies from the shareholders of First Choice and the shareholders of Enterprise in connection with the merger. Information about the directors and executive officers of Enterprise is set forth in the proxy statement for Enterprise's 2021 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 17, 2021. Information about the directors and officers of First Choice will be set forth in the Form-10-K/A, to be filed with the SEC on or about April 27, 2021 and in the proxy statement of First Choice to be filed on Schedule 14A during the third quarter of 2021. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document, once filed, may be obtained as described in the preceding paragraph.

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited)

 

 

Quarter ended

(in thousands, except per share data)

Mar 31,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

Net interest income

$

79,123

 

 

$

77,446

 

 

$

63,354

 

 

$

65,833

 

 

$

63,368

 

Provision for credit losses

46

 

 

9,463

 

 

14,080

 

 

19,591

 

 

22,264

 

Noninterest income

11,290

 

 

18,506

 

 

12,629

 

 

9,960

 

 

13,408

 

Noninterest expense

52,884

 

 

51,050

 

 

39,524

 

 

37,912

 

 

38,673

 

Income before income tax expense

37,483

 

 

35,439

 

 

22,379

 

 

18,290

 

 

15,839

 

Income tax expense

7,557

 

 

6,508

 

 

4,428

 

 

3,656

 

 

2,971

 

Net income

$

29,926

 

 

$

28,931

 

 

$

17,951

 

 

$

14,634

 

 

$

12,868

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.96

 

 

$

1.00

 

 

$

0.68

 

 

$

0.56

 

 

$

0.48

 

Return on average assets

1.22

%

 

1.26

%

 

0.86

%

 

0.72

%

 

0.70

%

Return on average common equity

11.07

%

 

11.60

%

 

8.06

%

 

6.78

%

 

5.98

%

Return on average tangible common equity

14.92

%

 

15.73

%

 

10.94

%

 

9.28

%

 

8.22

%

Net interest margin (tax equivalent)

3.50

%

 

3.66

%

 

3.29

%

 

3.53

%

 

3.79

%

Efficiency ratio

58.49

%

 

53.20

%

 

52.02

%

 

50.02

%

 

50.37

%

Core efficiency ratio1

55.02

%

 

50.93

%

 

51.04

%

 

50.66

%

 

51.21

%

 

 

 

 

 

 

 

 

 

 

Total assets

$

10,190,699

 

 

$

9,751,571

 

 

$

8,367,976

 

 

$

8,357,501

 

 

$

7,500,643

 

Total average assets

9,940,052

 

 

9,141,159

 

 

8,341,968

 

 

8,158,204

 

 

7,363,605

 

Total deposits

8,515,444

 

 

7,985,389

 

 

6,676,226

 

 

6,699,580

 

 

5,989,906

 

Total average deposits

8,207,379

 

 

7,311,074

 

 

6,666,368

 

 

6,551,734

 

 

5,837,717

 

Period end common shares outstanding

31,259

 

 

31,210

 

 

26,210

 

 

26,196

 

 

26,161

 

Dividends per common share

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

 

$

0.18

 

Tangible book value per common share

$

25.92

 

 

$

25.48

 

 

$

24.80

 

 

$

24.22

 

 

$

23.38

 

Tangible common equity to tangible assets1

8.18

%

 

8.40

%

 

7.99

%

 

7.81

%

 

8.42

%

Total risk-based capital to risk-weighted assets

15.1

%

 

14.9

%

 

14.6

%

 

14.4

%

 

12.9

%

 

 

 

 

 

 

 

 

 

 

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,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

INCOME STATEMENTS

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

 

 

 

 

 

 

 

Total interest income

$

84,960

 

 

$

84,113

 

 

$

70,787

 

 

$

73,191

 

 

$

76,688

 

Total interest expense

5,837

 

 

6,667

 

 

7,433

 

 

7,358

 

 

13,320

 

Net interest income

79,123

 

 

77,446

 

 

63,354

 

 

65,833

 

 

63,368

 

Provision for credit losses

46

 

 

9,463

 

 

14,080

 

 

19,591

 

 

22,264

 

Net interest income after provision for credit losses

79,077

 

 

67,983

 

 

49,274

 

 

46,242

 

 

41,104

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Deposit service charges

3,084

 

 

3,160

 

 

2,798

 

 

2,616

 

 

3,143

 

Wealth management revenue

2,483

 

 

2,449

 

 

2,456

 

 

2,326

 

 

2,501

 

Card services revenue

2,496

 

 

2,511

 

 

2,498

 

 

2,225

 

 

2,247

 

Tax credit income (expense)

(1,041)

 

 

4,048

 

 

748

 

 

(221)

 

 

2,036

 

Other income

4,268

 

 

6,338

 

 

4,129

 

 

3,014

 

 

3,481

 

Total noninterest income

11,290

 

 

18,506

 

 

12,629

 

 

9,960

 

 

13,408

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

29,562

 

 

26,174

 

 

22,040

 

 

22,389

 

 

21,685

 

Occupancy

3,751

 

 

3,517

 

 

3,408

 

 

3,185

 

 

3,347

 

Merger-related expenses

3,142

 

 

2,611

 

 

1,563

 

 

 

 

 

Other

16,429

 

 

18,748

 

 

12,513

 

 

12,338

 

 

13,641

 

Total noninterest expense

52,884

 

 

51,050

 

 

39,524

 

 

37,912

 

 

38,673

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

37,483

 

 

35,439

 

 

22,379

 

 

18,290

 

 

15,839

 

Income tax expense

7,557

 

 

6,508

 

 

4,428

 

 

3,656

 

 

2,971

 

Net income

$

29,926

 

 

$

28,931

 

 

$

17,951

 

 

$

14,634

 

 

$

12,868

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.96

 

 

$

1.00

 

 

$

0.68

 

 

$

0.56

 

 

$

0.49

 

Diluted earnings per share

$

0.96

 

 

$

1.00

 

 

$

0.68

 

 

$

0.56

 

 

$

0.48

 

 

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Quarter ended

($ in thousands)

Mar 31,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

103,367

 

 

$

99,760

 

 

$

98,816

 

 

$

100,804

 

 

$

98,619

 

Interest-earning deposits

788,464

 

 

445,569

 

 

301,773

 

 

254,830

 

 

88,794

 

Debt and equity investments

1,463,818

 

 

1,448,803

 

 

1,375,931

 

 

1,387,001

 

 

1,382,149

 

Loans held for sale

8,531

 

 

13,564

 

 

14,032

 

 

16,029

 

 

8,430

 

 

 

 

 

 

 

 

 

 

 

Loans

7,288,781

 

 

7,224,935

 

 

6,126,307

 

 

6,140,051

 

 

5,457,517

 

Less: Allowance for loan losses

131,527

 

 

136,671

 

 

123,270

 

 

110,270

 

 

92,187

 

Total loans, net

7,157,254

 

 

7,088,264

 

 

6,003,037

 

 

6,029,781

 

 

5,365,330

 

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

52,078

 

 

53,169

 

 

56,807

 

 

58,231

 

 

59,358

 

Goodwill

260,567

 

 

260,567

 

 

210,344

 

 

210,344

 

 

210,344

 

Intangible assets, net

21,670

 

 

23,084

 

 

21,820

 

 

23,196

 

 

24,585

 

Other assets

334,950

 

 

318,791

 

 

285,416

 

 

277,285

 

 

263,034

 

Total assets

$

10,190,699

 

 

$

9,751,571

 

 

$

8,367,976

 

 

$

8,357,501

 

 

$

7,500,643

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

2,910,216

 

 

$

2,711,828

 

 

$

1,929,540

 

 

$

1,965,868

 

 

$

1,354,571

 

Interest-bearing deposits

5,605,228

 

 

5,273,561

 

 

4,746,686

 

 

4,733,712

 

 

4,635,335

 

Total deposits

8,515,444

 

 

7,985,389

 

 

6,676,226

 

 

6,699,580

 

 

5,989,906

 

Subordinated debentures

203,778

 

 

203,637

 

 

203,510

 

 

203,384

 

 

141,336

 

FHLB advances

50,000

 

 

50,000

 

 

250,000

 

 

250,000

 

 

222,000

 

Other borrowings

229,389

 

 

301,081

 

 

239,038

 

 

227,961

 

 

205,918

 

Other liabilities

99,591

 

 

132,489

 

 

116,935

 

 

108,613

 

 

95,047

 

Total liabilities

9,098,202

 

 

8,672,596

 

 

7,485,709

 

 

7,489,538

 

 

6,654,207

 

Shareholders' equity

1,092,497

 

 

1,078,975

 

 

882,267

 

 

867,963

 

 

846,436

 

Total liabilities and shareholders' equity

$

10,190,699

 

 

$

9,751,571

 

 

$

8,367,976

 

 

$

8,357,501

 

 

$

7,500,643

 

 

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Quarter ended

($ in thousands)

Mar 31,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

LOAN PORTFOLIO

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

3,079,643

 

 

$

3,088,995

 

 

$

3,152,394

 

 

$

3,143,197

 

 

$

2,469,013

 

Commercial real estate

3,186,970

 

 

3,087,827

 

 

2,027,886

 

 

2,048,444

 

 

2,048,357

 

Construction real estate

510,501

 

 

546,686

 

 

474,727

 

 

481,221

 

 

469,627

 

Residential real estate

303,047

 

 

319,179

 

 

321,792

 

 

326,992

 

 

346,758

 

Other

208,620

 

 

182,248

 

 

149,508

 

 

140,197

 

 

123,762

 

Total loans

$

7,288,781

 

 

$

7,224,935

 

 

$

6,126,307

 

 

$

6,140,051

 

 

$

5,457,517

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT PORTFOLIO

 

 

 

 

 

 

 

 

 

Noninterest-bearing accounts

$

2,910,216

 

 

$

2,711,828

 

 

$

1,929,540

 

 

$

1,965,868

 

 

$

1,354,571

 

Interest-bearing transaction accounts

1,990,308

 

 

1,768,497

 

 

1,499,756

 

 

1,508,535

 

 

1,389,603

 

Money market and savings accounts

3,093,569

 

 

2,954,969

 

 

2,634,885

 

 

2,566,011

 

 

2,479,828

 

Brokered certificates of deposit

50,209

 

 

50,209

 

 

65,209

 

 

85,414

 

 

170,667

 

Other certificates of deposit

471,142

 

 

499,886

 

 

546,836

 

 

573,752

 

 

595,237

 

Total deposit portfolio

$

8,515,444

 

 

$

7,985,389

 

 

$

6,676,226

 

 

$

6,699,580

 

 

$

5,989,906

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

Total loans

$

7,192,776

 

 

$

6,780,701

 

 

$

6,112,715

 

 

$

6,032,076

 

 

$

5,352,243

 

Debt and equity investments

1,417,305

 

 

1,395,806

 

 

1,361,515

 

 

1,361,853

 

 

1,346,968

 

Interest-earning assets

9,289,741

 

 

8,524,136

 

 

7,770,084

 

 

7,571,196

 

 

6,791,459

 

Total assets

9,940,052

 

 

9,141,159

 

 

8,341,968

 

 

8,158,204

 

 

7,363,605

 

Deposits

8,207,379

 

 

7,311,074

 

 

6,666,368

 

 

6,551,734

 

 

5,837,717

 

Shareholders' equity

1,096,481

 

 

992,017

 

 

885,496

 

 

868,163

 

 

865,035

 

Tangible common equity1

813,568

 

 

731,813

 

 

652,663

 

 

633,946

 

 

629,390

 

 

 

 

 

 

 

 

 

 

 

YIELDS (tax equivalent)

 

 

 

 

 

 

 

 

 

Total loans

4.35

%

 

4.46

%

 

4.08

%

 

4.31

%

 

5.06

%

Debt and equity investments

2.52

 

 

2.56

 

 

2.56

 

 

2.72

 

 

2.90

 

Interest-earning assets

3.76

 

 

3.97

 

 

3.67

 

 

3.93

 

 

4.58

 

Interest-bearing deposits

0.20

 

 

0.25

 

 

0.31

 

 

0.37

 

 

0.88

 

Total deposits

0.13

 

 

0.17

 

 

0.22

 

 

0.27

 

 

0.68

 

Subordinated debentures

5.61

 

 

5.52

 

 

5.53

 

 

5.50

 

 

5.46

 

FHLB advances and other borrowed funds

0.46

 

 

0.61

 

 

0.74

 

 

0.56

 

 

1.33

 

Interest-bearing liabilities

0.40

 

 

0.47

 

 

0.54

 

 

0.55

 

 

1.05

 

Net interest margin

3.50

 

 

3.66

 

 

3.29

 

 

3.53

 

 

3.79

 

 

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,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

ASSET QUALITY

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

$

5,647

 

 

$

(612)

 

 

$

1,027

 

 

$

309

 

 

$

1,183

 

Nonperforming loans

36,659

 

 

38,507

 

 

39,623

 

 

41,473

 

 

37,204

 

Classified assets

114,713

 

 

123,808

 

 

84,710

 

 

96,678

 

 

104,754

 

Nonperforming loans to total loans

0.50

%

 

0.53

%

 

0.65

%

 

0.68

%

 

0.68

%

Nonperforming assets to total assets

0.42

%

 

0.45

%

 

0.53

%

 

0.55

%

 

0.56

%

Allowance for loan losses to total loans

1.80

%

 

1.89

%

 

2.01

%

 

1.80

%

 

1.69

%

Allowance for loan losses to nonperforming loans

358.8

%

 

354.9

%

 

311.1

%

 

265.9

%

 

247.8

%

Net charge-offs (recoveries) to average loans (annualized)

0.32

%

 

(0.04)

%

 

0.07

%

 

0.02

%

 

0.09

%

 

 

 

 

 

 

 

 

 

 

WEALTH MANAGEMENT

 

 

 

 

 

 

 

 

 

Trust assets under management

$

1,809,001

 

 

$

1,783,089

 

 

$

1,641,980

 

 

$

1,602,358

 

 

$

1,445,521

 

Trust assets under administration

2,427,448

 

 

2,504,318

 

 

2,433,026

 

 

2,455,111

 

 

2,139,673

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

Book value per common share

$

34.95

 

 

$

34.57

 

 

$

33.66

 

 

$

33.13

 

 

$

32.36

 

Tangible book value per common share1

$

25.92

 

 

$

25.48

 

 

$

24.80

 

 

$

24.22

 

 

$

23.38

 

Market value per share

$

49.44

 

 

$

34.95

 

 

$

27.27

 

 

$

31.12

 

 

$

27.91

 

Period end common shares outstanding

31,259

 

 

31,210

 

 

26,210

 

 

26,196

 

 

26,161

 

Average basic common shares

31,247

 

 

28,929

 

 

26,217

 

 

26,180

 

 

26,473

 

Average diluted common shares

31,306

 

 

28,968

 

 

26,228

 

 

26,195

 

 

26,539

 

 

 

 

 

 

 

 

 

 

 

CAPITAL

 

 

 

 

 

 

 

 

 

Total risk-based capital to risk-weighted assets

15.1

%

 

14.9

%

 

14.6

%

 

14.4

%

 

12.9

%

Tier 1 capital to risk-weighted assets

12.3

%

 

12.1

%

 

11.6

%

 

11.4

%

 

11.0

%

Common equity tier 1 capital to risk-weighted assets

11.0

%

 

10.9

%

 

10.2

%

 

9.9

%

 

9.6

%

Tangible common equity to tangible assets1

8.2

%

 

8.4

%

 

8.0

%

 

7.8

%

 

8.4

%

 

 

 

 

 

 

 

 

 

 

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,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

CORE PERFORMANCE MEASURES

Net interest income

$

79,123

 

 

$

77,446

 

 

$

63,354

 

 

$

65,833

 

 

$

63,368

 

Less: Incremental accretion income

 

 

856

 

 

1,235

 

 

719

 

 

1,273

 

Core net interest income

79,123

 

 

76,590

 

 

62,119

 

 

65,114

 

 

62,095

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

11,290

 

 

18,506

 

 

12,629

 

 

9,960

 

 

13,408

 

Less: Gain on sale of investment securities

 

 

 

 

417

 

 

 

 

4

 

Less: Other non-core income

 

 

 

 

 

 

265

 

 

 

Core noninterest income

11,290

 

 

18,506

 

 

12,212

 

 

9,695

 

 

13,404

 

 

 

 

 

 

 

 

 

 

 

Total core revenue

90,413

 

 

95,096

 

 

74,331

 

 

74,809

 

 

75,499

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

52,884

 

 

51,050

 

 

39,524

 

 

37,912

 

 

38,673

 

Less: Other expenses related to non-core acquired loans

 

 

8

 

 

25

 

 

12

 

 

12

 

Less: Merger-related expenses

3,142

 

 

2,611

 

 

1,563

 

 

 

 

 

Core noninterest expense

49,742

 

 

48,431

 

 

37,936

 

 

37,900

 

 

38,661

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio

55.02

%

 

50.93

%

 

51.04

%

 

50.66

%

 

51.21

%

 

Quarter ended

($ in thousands)

Mar 31,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

SHAREHOLDERS' EQUITY TO TANGIBLE COMMON EQUITY AND TOTAL ASSETS TO TANGIBLE ASSETS

Shareholders' equity

$

1,092,497

 

 

$

1,078,975

 

 

$

882,267

 

 

$

867,963

 

 

$

846,436

 

Less: Goodwill

260,567

 

 

260,567

 

 

210,344

 

 

210,344

 

 

210,344

 

Less: Intangible assets

21,670

 

 

23,084

 

 

21,820

 

 

23,196

 

 

24,585

 

Tangible common equity

$

810,260

 

 

$

795,324

 

 

$

650,103

 

 

$

634,423

 

 

$

611,507

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

10,190,699

 

 

$

9,751,571

 

 

$

8,367,976

 

 

$

8,357,501

 

 

$

7,500,643

 

Less: Goodwill

260,567

 

 

260,567

 

 

210,344

 

 

210,344

 

 

210,344

 

Less: Intangible assets

21,670

 

 

23,084

 

 

21,820

 

 

23,196

 

 

24,585

 

Tangible assets

$

9,908,462

 

 

$

9,467,920

 

 

$

8,135,812

 

 

$

8,123,961

 

 

$

7,265,714

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

8.18

%

 

8.40

%

 

7.99

%

 

7.81

%

 

8.42

%

 

 

Quarter Ended

($ in thousands)

Mar 31,

2021

 

Dec 31,

2020

 

Mar 31,

2020

AVERAGE SHAREHOLDERS' EQUITY AND AVERAGE TANGIBLE COMMON EQUITY

Average shareholder's equity

$

1,096,481

 

 

$

992,017

 

 

$

865,035

 

Less average goodwill

260,567

 

 

237,639

 

 

210,344

 

Less average intangible assets

22,346

 

 

22,565

 

 

25,301

 

Average tangible common equity

$

813,568

 

 

$

731,813

 

 

$

629,390

 

 

 

 

 

 

 

Quarter Ended

($ in thousands)

Mar 31,

2021

 

Dec 31,

2020

 

Sep 30,

2020

 

Jun 30,

2020

 

Mar 31,

2020

CALCULATION OF PRE-PROVISION NET REVENUE

Net interest income

$

79,123

 

 

$

77,446

 

 

$

63,354

 

 

$

65,833

 

 

$

63,368

 

Noninterest income

11,290

 

 

18,506

 

 

12,629

 

 

9,960

 

 

13,408

 

Less: Noninterest expense

52,884

 

 

51,050

 

 

39,524

 

 

37,912

 

 

38,673

 

Merger-related expenses

3,142

 

 

2,611

 

 

1,563

 

 

 

 

 

PPNR (excluding merger-related expenses)

$

40,671

 

 

$

47,513

 

 

$

38,022