Enterprise Financial Reports First Quarter 2020 Results

First Quarter Results

  • Net income of $12.9 million, $0.48 per diluted share, including the impact of provision for credit losses of $0.63 per share
  • Net interest margin (tax equivalent) of 3.79%
  • Return on average assets of 0.70%
  • Loans increased $143.2 million, or 11% annualized
  • Deposits increased $218.9 million, or 15% annualized

ST. LOUIS--()--Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”) reported net income of $12.9 million for the first quarter 2020, a decrease of $16.2 million compared to the linked fourth quarter (“linked quarter”) and a decrease of $3.3 million from the prior year quarter. Earnings per diluted share (“EPS”) was $0.48 for the first quarter 2020, compared to $1.09 and $0.67 for the linked and prior year quarters, respectively. Net income and EPS in the current quarter declined from the linked quarter and prior year quarter primarily due to an increase in provision for credit losses, described in more detail below. Merger-related expenses also impacted the results in the prior year quarter.

In the first quarter of 2020, the Company adopted the new accounting standard, commonly referred to as CECL, to estimate credit losses. Due to current economic conditions, the provision for credit losses was $22.3 million for the first quarter 2020, compared to $1.3 million for the linked quarter and $1.5 million for the first quarter 2019. CECL requires economic forecasts to be factored into determining estimated losses. As a result, CECL will typically require a higher level of provision at the start of an economic downturn.

Jim Lally, EFSC’s President and Chief Executive Officer, commented, “Currently, we are faced with unprecedented and rapidly evolving global challenges presented by the COVID-19 pandemic. Our sympathy goes out to everyone who has been impacted, and we are thankful for all the healthcare workers and other essential business employees who continue to keep us safe. The pandemic and resulting social distancing measures across the country have had a profound impact on how business has been conducted across all industries. Considering these challenges, it has been extremely encouraging to see how our associates have risen to the task of working remotely while continuing to serve our customers. We are actively working with our customers to provide support for all their financial needs. Our associates worked around the clock to put an operational framework in place for the rollout of the SBA’s Paycheck Protection Program. I am proud to say that we have processed over 1,500 applications and have received approval from the SBA to fund more than $680 million of loans to our customers, providing much needed relief to over 67,000 employees within our communities.”

Lally continued, “Despite the challenges of the COVID-19 pandemic and the substantial decrease in short-term interest rates, we had a strong first quarter. We had record operating revenue of $76.8 million, an expanded net interest margin and a stable efficiency ratio. While our provision for credit losses increased under CECL, we believe our asset quality is strong, and our loan portfolio continues to grow. Our focus on continuous improvement, which has been a cornerstone of our strategic plan, has served us well in this environment. We have taken proactive and disciplined steps to ensure the safety of our employees and customers as well as to manage our financial performance. We believe our liquidity, strong balance sheet and capital levels will aid us in navigating these uncertain times and position us to continue to serve our customers and communities.”

Highlights

The Company closed its acquisition of Trinity Capital Corporation (“Trinity”) on March 8, 2019. The results of operations of Trinity are included in our results from this date forward, which may affect certain comparisons to the first quarter of 2019.

  • Earnings - Net income in the first quarter 2020 was $12.9 million and EPS was $0.48. Pre-tax pre-provision income1 (“PTPP”) of $38.1 million in the first quarter 2020, increased $0.4 million and $16.4 million from the linked-quarter and first quarter 2019, respectively.
  • Net interest income and net interest margin - Net interest income of $63.4 million for the first quarter 2020, increased $1.8 million and $11.0 million, from the linked quarter and first quarter 2019. The net interest margin (“NIM”) was 3.79% for the first quarter 2020, compared to 3.68% and 3.87% for the linked quarter and first quarter 2019, respectively.
  • Loans - Total loans grew $143.2 million, or 10.8% annualized, to $5.5 billion as of March 31, 2020. Year-over-year, loans grew $440.4 million, or 8.8%, from $5.0 billion as of March 31, 2019. Growth in the loan portfolio was broad-based across most lending categories.
  • Deposits - Total deposits grew $218.9 million, or 15.3% annualized, to $6.0 billion as of March 31, 2020. Year-over-year, deposits grew $452.8 million, or 8.2%, from $5.5 billion as of March 31, 2019. Noninterest deposit accounts represented 22.6% of total deposits at March 31, 2020, and the loan to deposit ratio was 91.1%.
  • Asset quality - The allowance for loan losses to total loans increased to 1.69% at March 31, 2020 from 0.81% and 0.86% at December 31, and March 31, 2019, respectively. The adoption of the CECL accounting standard on January 1, 2020 increased the allowance by $28.4 million and the allowance coverage ratio by 0.53% of total loans. The provision for credit losses on loans for the first quarter 2020 increased the allowance by $21.7 million.
  • Capital - Total shareholders’ equity was $846.4 million and the tangible common equity to tangible assets ratio was 8.42% at March 31, 2020. Regulatory capital ratios remain “well-capitalized”, with a common equity tier 1 ratio of 9.58% and a total risk-based capital ratio of 12.85%.

    In the first quarter 2020, the Company repurchased 456,251 shares at an average price of $33.64 prior to suspending its repurchase of shares through the share repurchase plan in March. There are 95,907 shares available for repurchase under the existing authorization.

    The Company’s Board of Directors approved a quarterly dividend of $0.18 per common share, payable on June 30, 2020 to shareholders of record as of June 15, 2020.
  • Liquidity - The Company maintains a high level of both on-balance-sheet and off-balance-sheet liquidity. At March 31, 2020, on-balance-sheet liquidity consisted of cash and unpledged investment securities of $1.1 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.

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

Net Interest Income

Net interest income for the first quarter increased $1.8 million to $63.4 million from $61.6 million in the linked quarter, and increased $11.0 million from the prior year period. The increase from the linked quarter was primarily due to growth in the average loan portfolio while the increase from the prior year period was primarily due to the Trinity acquisition and organic growth. NIM, on a tax equivalent basis, was 3.79% for the first quarter, compared to 3.68% in the linked quarter, and 3.87% in the first quarter of 2019.

Core net interest income and core net interest margin noted in the table below exclude incremental accretion on non-core acquired loans.

 

Quarter ended

($ in thousands)

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

Net interest income

$

63,368

 

 

$

61,613

 

 

$

63,046

 

 

$

61,715

 

 

$

52,343

 

Less: Incremental accretion income2

1,273

 

 

576

 

 

2,140

 

 

910

 

 

1,157

 

Core net interest income3

$

62,095

 

 

$

61,037

 

 

$

60,906

 

 

$

60,805

 

 

$

51,186

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (tax equivalent)

3.79

%

 

3.68

%

 

3.81

%

 

3.86

%

 

3.87

%

Core net interest margin3 (tax equivalent)

3.71

 

 

3.64

 

 

3.69

 

 

3.80

 

 

3.79

 

2 Represents incremental accretion income on non-core acquired loans which were acquired from the FDIC and previously covered by shared-loss agreements.

3 Core net interest income and core net interest margin are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

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, 2020

 

December 31, 2019

 

March 31, 2019

($ 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, excluding incremental accretion*

$

5,352,243

 

 

$

66,017

 

 

4.96

%

 

$

5,279,500

 

 

$

67,085

 

 

5.04

%

 

$

4,511,387

 

 

$

59,973

 

 

5.39

%

Debt and equity investments*

1,346,968

 

 

9,708

 

 

2.90

 

 

1,322,017

 

 

9,699

 

 

2.92

 

 

896,936

 

 

6,292

 

 

2.84

 

Short-term investments

92,248

 

 

300

 

 

1.31

 

 

102,989

 

 

406

 

 

1.56

 

 

102,166

 

 

447

 

 

1.77

 

Total earning assets

6,791,459

 

 

76,025

 

 

4.50

 

 

6,704,506

 

 

77,190

 

 

4.57

 

 

5,510,489

 

 

66,712

 

 

4.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning assets

572,146

 

 

 

 

 

 

617,990

 

 

 

 

 

 

445,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

7,363,605

 

 

 

 

 

 

$

7,322,496

 

 

 

 

 

 

$

5,956,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

$

1,375,154

 

 

$

1,338

 

 

0.39

%

 

$

1,325,363

 

 

$

1,620

 

 

0.48

%

 

$

1,077,289

 

 

$

1,790

 

 

0.67

%

Money market accounts

1,811,090

 

 

4,740

 

 

1.05

 

 

1,693,357

 

 

5,797

 

 

1.36

 

 

1,521,878

 

 

6,515

 

 

1.74

 

Savings

542,993

 

 

143

 

 

0.11

 

 

543,571

 

 

195

 

 

0.14

 

 

299,731

 

 

183

 

 

0.25

 

Certificates of deposit

793,213

 

 

3,667

 

 

1.86

 

 

846,253

 

 

4,096

 

 

1.92

 

 

712,269

 

 

3,332

 

 

1.90

 

Total interest-bearing deposits

4,522,450

 

 

9,888

 

 

0.88

 

 

4,408,544

 

 

11,708

 

 

1.05

 

 

3,611,167

 

 

11,820

 

 

1.33

 

Subordinated debentures

141,295

 

 

1,919

 

 

5.46

 

 

141,217

 

 

1,945

 

 

5.46

 

 

124,154

 

 

1,648

 

 

5.38

 

FHLB advances

220,453

 

 

895

 

 

1.63

 

 

291,057

 

 

1,371

 

 

1.87

 

 

215,420

 

 

1,398

 

 

2.63

 

Securities sold under agreements to repurchase

201,887

 

 

343

 

 

0.68

 

 

170,481

 

 

308

 

 

0.72

 

 

187,297

 

 

274

 

 

0.59

 

Other borrowings

34,270

 

 

275

 

 

3.23

 

 

36,220

 

 

293

 

 

3.21

 

 

14,900

 

 

134

 

 

3.65

 

Total interest-bearing liabilities

5,120,355

 

 

13,320

 

 

1.05

 

 

5,047,519

 

 

15,625

 

 

1.23

 

 

4,152,938

 

 

15,274

 

 

1.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

1,315,267

 

 

 

 

 

 

1,347,748

 

 

 

 

 

 

1,088,323

 

 

 

 

 

Other liabilities

62,948

 

 

 

 

 

 

67,555

 

 

 

 

 

 

52,371

 

 

 

 

 

Total liabilities

6,498,570

 

 

 

 

 

 

6,462,822

 

 

 

 

 

 

5,293,632

 

 

 

 

 

Shareholders' equity

865,035

 

 

 

 

 

 

859,674

 

 

 

 

 

 

662,454

 

 

 

 

 

Total liabilities and shareholders' equity

$

7,363,605

 

 

 

 

 

 

$

7,322,496

 

 

 

 

 

 

$

5,956,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core net interest income3

 

 

62,705

 

 

 

 

 

 

61,565

 

 

 

 

 

 

51,438

 

 

 

Core net interest margin3

 

 

 

 

3.71

%

 

 

 

 

 

3.64

%

 

 

 

 

 

3.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incremental accretion on non-core acquired loans

 

 

1,273

 

 

 

 

 

 

576

 

 

 

 

 

 

1,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net interest income

 

 

$

63,978

 

 

 

 

 

 

$

62,141

 

 

 

 

 

 

$

52,595

 

 

 

Net interest margin

 

 

 

 

3.79

%

 

 

 

 

 

3.68

%

 

 

 

 

 

3.87

%

* Non-taxable income is presented on a tax-equivalent basis using a 24.7% tax rate. The tax-equivalent adjustments were $0.6 million for the three months ended March 31, 2020, $0.5 million for the three months ended December 31, 2019, and $0.3 million for the three months ended March 31, 2019.

3 Core net interest income and core net interest margin are non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

NIM increased 11 basis points from the linked quarter to 3.79% during the current quarter primarily due to an 18 basis point decrease in the cost of funds partially offset by lower loan yields. Significant reductions in interest rates, including one-month LIBOR, continue to impact the Company’s variable-rate loans. The Company responded to interest rate trends by reducing the cost of certain managed money market and interest-bearing transaction accounts. This effort improved the cost of money market accounts by 31 basis points compared to the linked quarter. Additionally, the Company entered into interest rate swap transactions to hedge its exposure to variability on a portion of the Company’s floating-rate debt.

The Company manages its balance sheet to defend against pressures on core net interest margin, which could be negatively impacted by continued competition for deposits, current interest rate conditions, and downward movement in short-term rates.

Loans

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

 

Quarter ended

($ in thousands)

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

C&I - general

$

1,186,240

 

 

$

1,186,667

 

 

$

1,174,569

 

 

$

1,103,908

 

 

$

1,128,755

 

CRE investor owned - general

1,319,316

 

 

1,290,258

 

 

1,281,332

 

 

1,235,596

 

 

1,183,471

 

CRE owner occupied - general

584,491

 

 

582,579

 

 

566,219

 

 

591,401

 

 

576,026

 

Enterprise value lendinga

440,764

 

 

428,896

 

 

417,521

 

 

445,981

 

 

439,500

 

Life insurance premium financinga

496,471

 

 

472,822

 

 

468,051

 

 

465,777

 

 

440,693

 

Residential real estate - general

346,461

 

 

366,261

 

 

386,174

 

 

409,200

 

 

432,556

 

Construction and land development - general

445,909

 

 

428,681

 

 

403,590

 

 

376,597

 

 

345,207

 

Tax creditsa

354,046

 

 

294,210

 

 

265,626

 

 

268,405

 

 

235,454

 

Agriculture

168,237

 

 

139,873

 

 

136,249

 

 

131,671

 

 

126,088

 

Consumer and other - general

115,582

 

 

124,090

 

 

128,683

 

 

120,961

 

 

109,327

 

Total Loans

$

5,457,517

 

 

$

5,314,337

 

 

$

5,228,014

 

 

$

5,149,497

 

 

$

5,017,077

 

 

 

 

 

 

 

 

 

 

 

Total loan yield

5.06

%

 

5.08

%

 

5.47

%

 

5.49

%

 

5.50

%

Total C&I loans to total loans

45

%

 

44

%

 

44

%

 

44

%

 

44

%

Variable interest rate loans to total loans

60

%

 

59

%

 

60

%

 

60

%

 

60

%

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

a Specialized categories may include a mix of C&I, CRE, Construction and land development, or Consumer and other loans.

Loans totaled $5.5 billion at March 31, 2020, increasing $143.2 million, or 10.8% annualized, compared to the linked quarter. Year-over-year, loans increased $440.4 million, or 8.8%.

In the first quarter 2020, the Company implemented several loan programs to assist its customers impacted by the COVID-19 pandemic. These programs include consumer and business deferral programs and expanded small business lines of credit. In April 2020, the Company began offering loans through the SBA’s Paycheck Protection Program that was part of the CARES Act passed by Congress.

Asset Quality

On January 1, 2020, the Company adopted the new accounting standard, commonly referred to as CECL, to estimate credit losses. Prior to the adoption of CECL, purchased credit impaired (PCI) loans were accounted for in performing pools of loans and were not individually identified as nonaccrual or classified. Under the CECL accounting model, the Company elected not to maintain PCI pools for certain loans which are now accounted for individually. Thus they are now included in nonperforming and classified loans. PCI loans are referred to as purchased credit deteriorated (PCD) under CECL.

The adoption of CECL impacted certain financial metrics as noted in the following table:

($ in thousands)

Allowance for
Loan Losses

 

Reserve for
Unfunded
Commitments

 

Nonperforming
Loans

 

Classified
Assets

Balance, 12/31/2019

$

43,288

 

 

$

430

 

 

$

26,425

 

 

$

85,897

 

CECL adoption4

28,387

 

 

2,413

 

 

8,462

 

 

25,819

 

PCD loans immediately charged-off5

(1,680

)

 

 

 

(1,680

)

 

(1,680

)

Balance, 1/1/2020

69,995

 

 

2,843

 

 

33,207

 

 

110,036

 

Provision for credit losses

21,695

 

 

849

 

 

 

 

 

Net recoveries

497

 

 

 

 

 

 

 

Net increase (decrease)

 

 

 

 

3,997

 

 

(5,282

)

Balance, 3/31/2020

$

92,187

 

 

$

3,692

 

 

$

37,204

 

 

$

104,754

 

 

 

 

 

 

 

 

 

4 Loan balances at March 31, 2020

5 Under the Company’s credit policy, nonaccrual loans less than $100,000 are immediately charged-off.

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

 

Quarter ended

($ in thousands)

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

Nonperforming loans

$

37,204

 

 

$

26,425

 

 

$

15,569

 

 

$

19,842

 

 

$

9,607

 

Other real estate

5,072

 

 

6,344

 

 

8,498

 

 

10,531

 

 

6,804

 

Nonperforming assets

$

42,276

 

 

$

32,769

 

 

$

24,067

 

 

$

30,373

 

 

$

16,411

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

0.68

%

 

0.50

%

 

0.30

%

 

0.39

%

 

0.19

%

Nonperforming assets to total assets

0.56

 

 

0.45

 

 

0.33

 

 

0.42

 

 

0.24

 

Allowance for loan losses to total loans

1.69

 

 

0.81

 

 

0.85

 

 

0.85

 

 

0.86

 

Net charge-offs

$

1,183

 

 

$

2,544

 

 

$

1,070

 

 

$

970

 

 

$

1,826

 

 

Nonperforming loans increased $10.8 million to $37.2 million at March 31, 2020 from $26.4 million at December 31, 2019 primarily due to the adoption of CECL that added $6.8 million in PCD loans that were previously accounted for in an accruing pool of loans. In the first quarter 2020, the Company had net charge-offs of $1.2 million, primarily due to the administrative charge-off of nonaccrual loans less than $100,000 under the Company’s credit policy. Other real estate decreased during the first quarter 2020 due to write-downs of $0.8 million and sales of $0.5 million.

The Company recorded a provision for credit losses of $22.3 million for the first quarter 2020 compared to $1.3 million for the linked quarter and $1.5 million for the first quarter 2019, respectively. The increase in the provision for credit losses in the first quarter 2020 was primarily due to a change in economic forecasts, which worsened significantly in March due to the COVID-19 pandemic, the resulting slow-down of business activity and rise in unemployment. To the extent that the Company does not recognize charge-offs and economic forecasts improve in future periods, the Company could recognize a reversal of provision for credit losses. Conversely, if economic conditions and the Company’s forecast continue to worsen, the Company could recognize elevated levels of provision for credit losses.

Deposits

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

 

Quarter ended

($ in thousands)

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

Noninterest-bearing accounts

$

1,354,571

 

 

$

1,327,348

 

 

$

1,295,450

 

 

$

1,181,577

 

 

$

1,186,508

 

Interest-bearing transaction accounts

1,389,603

 

 

1,367,444

 

 

1,307,855

 

 

1,392,586

 

 

1,389,826

 

Money market and savings accounts

2,479,828

 

 

2,249,784

 

 

2,201,052

 

 

2,162,605

 

 

2,156,031

 

Brokered certificates of deposit

170,667

 

 

215,758

 

 

209,754

 

 

213,138

 

 

180,788

 

Other certificates of deposit

595,237

 

 

610,689

 

 

610,269

 

 

609,432

 

 

623,960

 

Total deposit portfolio

$

5,989,906

 

 

$

5,771,023

 

 

$

5,624,380

 

 

$

5,559,338

 

 

$

5,537,113

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits to total deposits

22.6

%

 

23.0

%

 

23.0

%

 

21.3

%

 

21.4

%

 

Total deposits at March 31, 2020 were $6.0 billion, an increase of $218.9 million from December 31, 2019, and an increase of $452.8 million from March 31, 2019.

Core deposits, defined as total deposits excluding certificates of deposits, were $5.2 billion at March 31, 2020, an increase of $279.4 million from the linked quarter. Noninterest-bearing deposits were $1.4 billion at March 31, 2020, an increase of $27.2 million compared to December 31, 2019, and an increase of $168.1 million compared to March 31, 2019. The total cost of deposits was 0.68% for the current quarter compared to 0.81% and 1.02% for the linked quarter and prior year quarter, respectively.

Noninterest Income

Total noninterest income for first quarter 2020 was $13.4 million, a decrease of $1.0 million from the linked quarter, and an increase of $4.2 million from the first quarter 2019. The decrease from the linked quarter is from lower tax credit income that typically peaks in the fourth quarter of the year. Income from the Company’s customer swap program continued to expand, totaling $1.1 million in the first quarter 2020, compared to $0.8 million in the linked quarter and $0.2 million in the first quarter 2019. The Company also recognized $0.7 million from a bank-owned life insurance claim in the first quarter 2020. The increase from the prior year quarter was driven by contributions from a full quarter of Trinity’s operations in 2020.

Noninterest Expenses

Noninterest expenses were $38.7 million for the first quarter 2020, compared to $38.4 million for the linked quarter, and $39.8 million for the first quarter 2019. The increase from the linked quarter is primarily due to merit increases and the reset of annual payroll tax limits, offset by a decrease in variable compensation. In the first quarter 2020, variable compensation accruals were decreased commensurate with the decrease in profitability. The decrease in noninterest expense from the first quarter 2019 was primarily due to a decline in merger-related expenses following the acquisition of Trinity, offset by a full quarter of Trinity’s operating expense in 2020.

The Company’s core efficiency ratio6 was 51.2% for the quarter ended March 31, 2020, compared to 50.7% for the linked quarter and 54.1% for the prior year period.

 

6 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 19% for the quarter ended March 31, 2020 compared to 20% for the linked quarter and prior year quarter, respectively.

Capital

The following table presents various EFSC capital ratios:

 

Quarter ended

Percent

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

Total risk-based capital to risk-weighted assets

12.85

%

 

12.90

%

 

12.72

%

 

12.62

%

 

12.86

%

Tier 1 capital to risk weighted assets

11.03

 

 

11.40

 

 

11.17

 

 

11.06

 

 

11.25

 

Common equity tier 1 capital to risk-weighted assets

9.58

 

 

9.90

 

 

9.64

 

 

9.51

 

 

9.64

 

Tangible common equity to tangible assets7

8.42

 

 

8.89

 

 

8.54

 

 

8.43

 

 

8.35

 

7 Tangible common equity to tangible assets is a non-GAAP measure. Refer to discussion and reconciliation of this measure in the accompanying financial tables.

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 core net interest income, core net interest margin, tangible common equity, core efficiency ratios, ROATCE, PTPP, 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 core net interest income, core net interest margin, core efficiency ratio, ROATCE, PTPP, 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 non-core acquired loans, which were acquired from the FDIC and previously covered by shared-loss agreements, and the 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 non-core acquired loans, but exclude incremental accretion on these loans. Core performance measures also exclude expenses directly related to non-core acquired loans. Core performance measures also 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 21, 2020. During the call, management will review the first quarter of 2020 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 1-800-458-4148 (Conference ID #2361796). A recorded replay of the conference call will be available on the website two hours after the call’s completion. Visit http://bit.ly/EFSC1Q2020earnings 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 $7 billion in assets, is a financial holding company headquartered in Clayton, Missouri. Enterprise Bank & Trust, a Missouri state-chartered trust company with banking powers and a wholly-owned subsidiary of EFSC, operates 34 branch offices in Arizona, Kansas, Missouri and New Mexico. Enterprise Bank & Trust offers a range of business and personal banking services and wealth management services. Enterprise Trust, a division of Enterprise Bank & Trust, provides financial planning, estate planning, investment management and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. Additional information is available at www.enterprisebank.com.

Enterprise Financial Services Corp’s common stock is traded on the Nasdaq Stock Market under the symbol “EFSC.” Please visit our website at www.enterprisebank.com to see our regularly posted material information.

Forward-looking Statements

Readers should note that, in addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of acquisitions.

Forward-looking statements include, but are not limited to, statements about the Company’s plans, expectations, and projections of future financial and operating results, as well as statements regarding the Company’s plans, objectives, expectations or consequences of announced transactions. The Company uses words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,” “continue,” and “intend”, and variations of such words and similar expressions, in this release to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that could cause or contribute to such differences include, but are not limited to, the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses and grow the acquired operations, as well as credit risk, changes in the appraised valuation of real estate securing impaired loans, outcomes of litigation and other contingencies, exposure to general and local economic conditions, risks associated with rapid increases or decreases in prevailing interest rates, consolidation in the banking industry, competition from banks and other financial institutions, the Company’s ability to attract and retain relationship officers and other key personnel, burdens imposed by federal and state regulation, changes in regulatory requirements, changes in accounting policies and practices or accounting standards, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which changed how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption on January 1, 2020, uncertainty regarding the future of LIBOR, natural disasters, war or terrorist activities, or pandemics, or the outbreak of COVID-19 or similar outbreaks, and their effects on economic and business environments in which we operate, as well as other risk factors described in the Company’s 2019 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission (the “SEC”). 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.

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited)

 

 

Quarter ended

(in thousands, except per share data)

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

Net interest income

$

63,368

 

 

$

61,613

 

 

$

63,046

 

 

$

61,715

 

 

$

52,343

 

Provision for credit losses

22,264

 

 

1,341

 

 

1,833

 

 

1,722

 

 

1,476

 

Noninterest income

13,408

 

 

14,418

 

 

13,564

 

 

11,964

 

 

9,230

 

Noninterest expense

38,673

 

 

38,354

 

 

38,239

 

 

49,054

 

 

39,838

 

Income before income tax expense

15,839

 

 

36,336

 

 

36,538

 

 

22,903

 

 

20,259

 

Income tax expense

2,971

 

 

7,246

 

 

7,469

 

 

4,479

 

 

4,103

 

Net income

$

12,868

 

 

$

29,090

 

 

$

29,069

 

 

$

18,424

 

 

$

16,156

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.48

 

 

$

1.09

 

 

$

1.08

 

 

$

0.68

 

 

$

0.67

 

Return on average assets

0.70

%

 

1.58

%

 

1.60

%

 

1.05

%

 

1.10

%

Return on average common equity

5.98

 

 

13.43

 

 

13.66

 

 

9.09

 

 

9.89

 

Return on average tangible common equity

8.22

 

 

18.54

 

 

19.08

 

 

12.92

 

 

12.93

 

Net interest margin (tax equivalent)

3.79

 

 

3.68

 

 

3.81

 

 

3.86

 

 

3.87

 

Core net interest margin (tax equivalent)1

3.71

 

 

3.64

 

 

3.69

 

 

3.80

 

 

3.79

 

Efficiency ratio

50.37

 

 

50.45

 

 

49.91

 

 

66.58

 

 

64.70

 

Core efficiency ratio1

51.21

 

 

50.73

 

 

51.73

 

 

53.30

 

 

54.06

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

7,500,643

 

 

$

7,333,791

 

 

$

7,346,791

 

 

$

7,181,855

 

 

$

6,932,757

 

Total average assets

7,363,605

 

 

7,322,496

 

 

7,222,357

 

 

7,057,605

 

 

5,956,086

 

Total deposits

5,989,906

 

 

5,771,023

 

 

5,624,380

 

 

5,559,338

 

 

5,537,113

 

Total average deposits

5,837,717

 

 

5,756,292

 

 

5,597,343

 

 

5,582,072

 

 

4,699,490

 

Period end common shares outstanding

26,161

 

 

26,543

 

 

26,613

 

 

26,906

 

 

26,878

 

Dividends per common share

$

0.18

 

 

$

0.17

 

 

$

0.16

 

 

$

0.15

 

 

$

0.14

 

Tangible book value per common share

$

23.38

 

 

$

23.76

 

 

$

22.82

 

 

$

21.74

 

 

$

20.80

 

Tangible common equity to tangible assets1

8.42

%

 

8.89

%

 

8.54

%

 

8.43

%

 

8.35

%

Total risk-based capital to risk-weighted assets

12.85

 

 

12.90

 

 

12.72

 

 

12.62

 

 

12.86

 

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,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

INCOME STATEMENTS

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

 

 

 

 

 

 

 

Total interest income

$

76,688

 

 

$

77,238

 

 

$

81,078

 

 

$

79,201

 

 

$

67,617

 

Total interest expense

13,320

 

 

15,625

 

 

18,032

 

 

17,486

 

 

15,274

 

Net interest income

63,368

 

 

61,613

 

 

63,046

 

 

61,715

 

 

52,343

 

Provision for credit losses

22,264

 

 

1,341

 

 

1,833

 

 

1,722

 

 

1,476

 

Net interest income after provision for credit losses

41,104

 

 

60,272

 

 

61,213

 

 

59,993

 

 

50,867

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Deposit service charges

3,143

 

 

3,254

 

 

3,246

 

 

3,366

 

 

2,935

 

Wealth management revenue

2,501

 

 

2,618

 

 

2,661

 

 

2,661

 

 

1,992

 

Card services revenue

2,247

 

 

2,409

 

 

2,494

 

 

2,461

 

 

1,790

 

Tax credit income

2,036

 

 

3,425

 

 

1,238

 

 

572

 

 

158

 

Gain (loss) on sale of investment securities

4

 

 

(94

)

 

337

 

 

 

 

 

Other income

3,477

 

 

2,806

 

 

3,588

 

 

2,904

 

 

2,355

 

Total noninterest income

13,408

 

 

14,418

 

 

13,564

 

 

11,964

 

 

9,230

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

21,685

 

 

20,411

 

 

20,845

 

 

20,687

 

 

19,352

 

Occupancy

3,347

 

 

3,461

 

 

3,179

 

 

3,188

 

 

2,637

 

Merger-related expenses

 

 

 

 

393

 

 

10,306

 

 

7,270

 

Other

13,641

 

 

14,482

 

 

13,822

 

 

14,873

 

 

10,579

 

Total noninterest expense

38,673

 

 

38,354

 

 

38,239

 

 

49,054

 

 

39,838

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

15,839

 

 

36,336

 

 

36,538

 

 

22,903

 

 

20,259

 

Income tax expense

2,971

 

 

7,246

 

 

7,469

 

 

4,479

 

 

4,103

 

Net income

$

12,868

 

 

$

29,090

 

 

$

29,069

 

 

$

18,424

 

 

$

16,156

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.49

 

 

$

1.10

 

 

$

1.09

 

 

$

0.69

 

 

$

0.68

 

Diluted earnings per share

0.48

 

 

1.09

 

 

1.08

 

 

0.68

 

 

0.67

 

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Quarter ended

($ in thousands)

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

98,619

 

 

$

74,769

 

 

$

153,730

 

 

$

106,835

 

 

$

85,578

 

Interest-earning deposits

88,794

 

 

96,217

 

 

106,747

 

 

85,315

 

 

139,389

 

Debt and equity investments

1,382,149

 

 

1,354,527

 

 

1,354,986

 

 

1,328,767

 

 

1,198,413

 

Loans held for sale

8,430

 

 

5,570

 

 

6,281

 

 

1,437

 

 

654

 

 

 

 

 

 

 

 

 

 

 

Loans

5,457,517

 

 

5,314,337

 

 

5,228,014

 

 

5,149,497

 

 

5,017,077

 

Less: Allowance for loan losses

92,187

 

 

43,288

 

 

44,555

 

 

43,822

 

 

43,095

 

Total loans, net

5,365,330

 

 

5,271,049

 

 

5,183,459

 

 

5,105,675

 

 

4,973,982

 

 

 

 

 

 

 

 

 

 

 

Fixed assets, net

59,358

 

 

60,013

 

 

59,216

 

 

58,888

 

 

60,301

 

Goodwill

210,344

 

 

210,344

 

 

211,251

 

 

211,251

 

 

207,632

 

Intangible assets, net

24,585

 

 

26,076

 

 

27,626

 

 

29,201

 

 

31,048

 

Other assets

263,034

 

 

235,226

 

 

243,495

 

 

254,486

 

 

235,760

 

Total assets

$

7,500,643

 

 

$

7,333,791

 

 

$

7,346,791

 

 

$

7,181,855

 

 

$

6,932,757

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,354,571

 

 

$

1,327,348

 

 

$

1,295,450

 

 

$

1,181,577

 

 

$

1,186,508

 

Interest-bearing deposits

4,635,335

 

 

4,443,675

 

 

4,328,930

 

 

4,377,761

 

 

4,350,605

 

Total deposits

5,989,906

 

 

5,771,023

 

 

5,624,380

 

 

5,559,338

 

 

5,537,113

 

Subordinated debentures

141,336

 

 

141,258

 

 

141,179

 

 

141,100

 

 

140,668

 

FHLB advances

222,000

 

 

222,406

 

 

461,426

 

 

389,446

 

 

180,466

 

Other borrowings

205,918

 

 

265,172

 

 

199,634

 

 

198,104

 

 

212,171

 

Other liabilities

95,047

 

 

66,747

 

 

74,077

 

 

68,366

 

 

64,504

 

Total liabilities

6,654,207

 

 

6,466,606

 

 

6,500,696

 

 

6,356,354

 

 

6,134,922

 

Shareholders’ equity

846,436

 

 

867,185

 

 

846,095

 

 

825,501

 

 

797,835

 

Total liabilities and shareholders’ equity

$

7,500,643

 

 

$

7,333,791

 

 

$

7,346,791

 

 

$

7,181,855

 

 

$

6,932,757

 

 

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

 

 

Quarter Ended

($ in thousands)

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

LOAN PORTFOLIO

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

2,469,013

 

 

$

2,361,157

 

 

$

2,303,495

 

 

$

2,265,480

 

 

$

2,227,050

 

Commercial real estate

2,048,357

 

 

1,997,321

 

 

1,967,888

 

 

1,940,958

 

 

1,870,040

 

Construction real estate

469,627

 

 

457,273

 

 

433,486

 

 

404,557

 

 

369,365

 

Residential real estate

346,758

 

 

366,261

 

 

386,173

 

 

409,200

 

 

432,902

 

Consumer and other

123,762

 

 

132,325

 

 

136,972

 

 

129,302

 

 

117,720

 

Total loans

$

5,457,517

 

 

$

5,314,337

 

 

$

5,228,014

 

 

$

5,149,497

 

 

$

5,017,077

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT PORTFOLIO

 

 

 

 

 

 

 

 

 

Noninterest-bearing accounts

$

1,354,571

 

 

$

1,327,348

 

 

$

1,295,450

 

 

$

1,181,577

 

 

$

1,186,508

 

Interest-bearing transaction accounts

1,389,603

 

 

1,367,444

 

 

1,307,855

 

 

1,392,586

 

 

1,389,826

 

Money market and savings accounts

2,479,828

 

 

2,249,784

 

 

2,201,052

 

 

2,162,605

 

 

2,156,031

 

Brokered certificates of deposit

170,667

 

 

215,758

 

 

209,754

 

 

213,138

 

 

180,788

 

Other certificates of deposit

595,237

 

 

610,689

 

 

610,269

 

 

609,432

 

 

623,960

 

Total deposit portfolio

$

5,989,906

 

 

$

5,771,023

 

 

$

5,624,380

 

 

$

5,559,338

 

 

$

5,537,113

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

Total loans

$

5,352,243

 

 

$

5,279,500

 

 

$

5,178,009

 

 

$

5,095,181

 

 

$

4,511,387

 

Debt and equity investments

1,346,968

 

 

1,322,017

 

 

1,312,860

 

 

1,246,529

 

 

896,936

 

Interest-earning assets

6,791,459

 

 

6,704,506

 

 

6,604,083

 

 

6,453,001

 

 

5,510,489

 

Total assets

7,363,605

 

 

7,322,496

 

 

7,222,357

 

 

7,057,605

 

 

5,956,086

 

Deposits

5,837,717

 

 

5,756,292

 

 

5,597,343

 

 

5,582,072

 

 

4,699,490

 

Shareholders’ equity

865,035

 

 

859,674

 

 

843,974

 

 

813,106

 

 

662,454

 

Tangible common equity1

629,390

 

 

622,502

 

 

604,331

 

 

571,890

 

 

506,560

 

 

 

 

 

 

 

 

 

 

 

YIELDS (tax equivalent)

 

 

 

 

 

 

 

 

 

Total loans

5.06

%

 

5.08

%

 

5.47

%

 

5.49

%

 

5.50

%

Debt and equity investments

2.90

 

 

2.91

 

 

2.90

 

 

2.95

 

 

2.84

 

Interest-earning assets

4.58

 

 

4.60

 

 

4.90

 

 

4.95

 

 

4.99

 

Interest-bearing deposits

0.88

 

 

1.05

 

 

1.20

 

 

1.21

 

 

1.33

 

Total deposits

0.68

 

 

0.81

 

 

0.94

 

 

0.94

 

 

1.02

 

Subordinated debentures

5.46

 

 

5.46

 

 

5.50

 

 

5.57

 

 

5.38

 

FHLB advances and other borrowed funds

1.33

 

 

1.57

 

 

1.99

 

 

2.07

 

 

1.75

 

Interest-bearing liabilities

1.05

 

 

1.23

 

 

1.41

 

 

1.42

 

 

1.49

 

Net interest margin

3.79

 

 

3.68

 

 

3.81

 

 

3.86

 

 

3.87

 

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,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

ASSET QUALITY

 

 

 

 

 

 

 

 

 

Net charge-offs

$

1,183

 

 

$

2,544

 

 

$

1,070

 

 

$

970

 

 

$

1,826

 

Nonperforming loans

37,204

 

 

26,425

 

 

15,569

 

 

19,842

 

 

9,607

 

Classified assets

104,754

 

 

85,897

 

 

93,984

 

 

91,715

 

 

79,750

 

Nonperforming loans to total loans

0.68

%

 

0.50

%

 

0.30

%

 

0.39

%

 

0.19

%

Nonperforming assets to total assets

0.56

 

 

0.45

 

 

0.33

 

 

0.42

 

 

0.24

 

Allowance for loan losses to total loans

1.69

 

 

0.81

 

 

0.85

 

 

0.85

 

 

0.86

 

Allowance for loan losses to nonperforming loans

247.8

 

 

163.8

 

 

286.2

 

 

220.9

 

 

448.6

 

Net charge-offs to average loans (annualized)

0.09

 

 

0.19

 

 

0.08

 

 

0.08

 

 

0.16

 

 

 

 

 

 

 

 

 

 

 

WEALTH MANAGEMENT

 

 

 

 

 

 

 

 

 

Trust assets under management

$

1,445,521

 

 

$

1,671,082

 

 

$

1,583,260

 

 

$

1,627,050

 

 

$

1,587,627

 

Trust assets under administration

2,139,673

 

 

2,524,478

 

 

2,404,950

 

 

2,428,551

 

 

2,405,673

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

Book value per common share

$

32.36

 

 

$

32.67

 

 

$

31.79

 

 

$

30.68

 

 

$

29.68

 

Tangible book value per common share1

23.38

 

 

23.76

 

 

22.82

 

 

21.74

 

 

20.80

 

Market value per share

27.91

 

 

48.21

 

 

40.75

 

 

41.60

 

 

40.77

 

Period end common shares outstanding

26,161

 

 

26,543

 

 

26,613

 

 

26,906

 

 

26,878

 

Average basic common shares

26,473

 

 

26,540

 

 

26,778

 

 

26,887

 

 

23,927

 

Average diluted common shares

26,539

 

 

26,668

 

 

26,868

 

 

26,940

 

 

24,083

 

 

 

 

 

 

 

 

 

 

 

CAPITAL

 

 

 

 

 

 

 

 

 

Total risk-based capital to risk-weighted assets

12.85

%

 

12.90

%

 

12.72

%

 

12.62

%

 

12.86

%

Tier 1 capital to risk-weighted assets

11.03

 

 

11.40

 

 

11.17

 

 

11.06

 

 

11.25

 

Common equity tier 1 capital to risk-weighted assets

9.58

 

 

9.90

 

 

9.64

 

 

9.51

 

 

9.64

 

Tangible common equity to tangible assets1

8.42

 

 

8.89

 

 

8.54

 

 

8.43

 

 

8.35

 

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,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

CORE PERFORMANCE MEASURES

Net interest income

$

63,368

 

 

$

61,613

 

 

$

63,046

 

 

$

61,715

 

 

$

52,343

 

Less: Incremental accretion income

1,273

 

 

576

 

 

2,140

 

 

910

 

 

1,157

 

Core net interest income

62,095

 

 

61,037

 

 

60,906

 

 

60,805

 

 

51,186

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

13,408

 

 

14,418

 

 

13,564

 

 

11,964

 

 

9,230

 

Less: Other income from non-core acquired assets

 

 

4

 

 

1,001

 

 

2

 

 

365

 

Less: Gain on sale of investment securities

4

 

 

(94

)

 

337

 

 

 

 

 

Less: Other non-core income

 

 

 

 

 

 

266

 

 

 

Core noninterest income

13,404

 

 

14,508

 

 

12,226

 

 

11,696

 

 

8,865

 

 

 

 

 

 

 

 

 

 

 

Total core revenue

75,499

 

 

75,545

 

 

73,132

 

 

72,501

 

 

60,051

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

38,673

 

 

38,354

 

 

38,239

 

 

49,054

 

 

39,838

 

Less: Other expenses related to non-core acquired loans

12

 

 

33

 

 

18

 

 

103

 

 

103

 

Less: Merger-related expenses

 

 

 

 

393

 

 

10,306

 

 

7,270

 

Core noninterest expense

38,661

 

 

38,321

 

 

37,828

 

 

38,645

 

 

32,465

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio

51.21

%

 

50.73

%

 

51.73

%

 

53.30

%

 

54.06

%

 

 

 

 

 

 

 

 

 

 

NET INTEREST MARGIN TO CORE NET INTEREST MARGIN (TAX EQUIVALENT)

Net interest income

$

63,978

 

 

$

62,141

 

 

$

63,483

 

 

$

62,109

 

 

$

52,595

 

Less: Incremental accretion income

1,273

 

 

576

 

 

2,140

 

 

910

 

 

1,157

 

Core net interest income

$

62,705

 

 

$

61,565

 

 

$

61,343

 

 

$

61,199

 

 

$

51,438

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

6,791,459

 

 

$

6,704,506

 

 

$

6,604,083

 

 

$

6,453,005

 

 

$

5,510,489

 

Reported net interest margin

3.79

%

 

3.68

%

 

3.81

%

 

3.86

%

 

3.87

%

Core net interest margin

3.71

 

 

3.64

 

 

3.69

 

 

3.80

 

 

3.79

 

 

 

Quarter ended

($ in thousands)

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Jun 30,
2019

 

Mar 31,
2019

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

Shareholders’ equity

$

846,436

 

 

$

867,185

 

 

$

846,095

 

 

$

825,501

 

 

$

797,835

 

Less: Goodwill

210,344

 

 

210,344

 

 

211,251

 

 

211,251

 

 

207,632

 

Less: Intangible assets

24,585

 

 

26,076

 

 

27,626

 

 

29,201

 

 

31,048

 

Tangible common equity

$

611,507

 

 

$

630,765

 

 

$

607,218

 

 

$

585,049

 

 

$

559,155

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

7,500,643

 

 

$

7,333,791

 

 

$

7,346,791

 

 

$

7,181,855

 

 

$

6,932,757

 

Less: Goodwill

210,344

 

 

210,344

 

 

211,251

 

 

211,251

 

 

207,632

 

Less: Intangible assets

24,585

 

 

26,076

 

 

27,626

 

 

29,201

 

 

31,048

 

Tangible assets

$

7,265,714

 

 

$

7,097,371

 

 

$

7,107,914

 

 

$

6,941,403

 

 

$

6,694,077

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

8.42

%

 

8.89

%

 

8.54

%

 

8.43

%

 

8.35

%

 

 

Quarter ended

($ in thousands)

Mar 31,
2020

 

Dec 31,
2019

 

Mar 31,
2019

AVERAGE SHAREHOLDERS’ EQUITY AND AVERAGE TANGIBLE COMMON EQUITY

Average shareholder’s equity

$

865,035

 

 

$

859,674

 

 

$

662,454

 

Less average goodwill

210,344

 

 

210,344

 

 

141,422

 

Less average intangible assets

25,301

 

 

26,828

 

 

14,472

 

Average tangible common equity

$

629,390

 

 

$

622,502

 

 

$

506,560

 

 

 

Quarter Ended

($ in thousands)

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

CALCULATION OF PRE-TAX, PRE-PROVISION INCOME

Net interest income

$

63,368

 

 

$

61,613

 

 

$

63,046

 

 

$

61,715

 

 

$

52,343

 

Noninterest income

13,408

 

 

14,418

 

 

13,564

 

 

11,964

 

 

9,230

 

Noninterest expense

38,673

 

 

38,354

 

 

38,239

 

 

49,054

 

 

39,838

 

PTPP income

38,103

 

 

37,677

 

 

38,371

 

 

24,625

 

 

21,735

 

Provision for credit losses

22,264

 

 

1,341

 

 

1,833

 

 

1,722

 

 

1,476

 

Income before income tax expense

15,839

 

 

36,336

 

 

36,538

 

 

22,903

 

 

20,259

 

Income tax expense

2,971

 

 

7,246

 

 

7,469

 

 

4,479

 

 

4,103

 

Net income

$

12,868

 

 

$

29,090

 

 

$

29,069

 

 

$

18,424

 

 

$

16,156

 

 

Contacts

Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Karen Loiterstein, Senior Vice President (314) 512-7141

Release Summary

Enterprise Financial reports first quarter 2020 results.

Contacts

Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233
Media: Karen Loiterstein, Senior Vice President (314) 512-7141