Attached files
| file | filename |
|---|---|
| EX-99.1 - EARNINGS RELEASE - ENTERPRISE FINANCIAL SERVICES CORP | ex991financialstatementsan.htm |
| 8-K - 8-K - ENTERPRISE FINANCIAL SERVICES CORP | a8kearningsreleasedoc033117.htm |
Enterprise Financial Services Corp
2017 FIRST QUARTER EARNINGS RELEASE
2
Some of the information in this report contains “forward-looking statements” within the meaning of and intended to be covered by the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified with
use of terms such as “may,” “might,” “will, “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “could,”
“continue” and the negative of these terms and similar words, although some forward-looking statements may be expressed differently.
Forward-looking statements also include, but are not limited to, statements regarding plans, objectives, expectations or consequences
of announced transactions and statements about the future performance, operations products and services of the Company and its
subsidiaries. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. You should be aware
that our actual results could differ materially from those anticipated by the forward-looking statements or historical performance due to
a number of factors, including, but not limited to: our ability to efficiently integrate acquisitions into our operations, retain the customers
of these businesses and grow the acquired operations; reputational risks; 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 within the banking industry; competition from
banks and other financial institutions; our ability to attract and retain relationship officers and other key personnel; burdens imposed by
federal and state regulation; changes in regulatory requirements; changes in accounting regulation or standards applicable to banks;
and other risks discussed under the caption “Risk Factors” of our most recently filed Form 10-K and in Part II, 1A of our most recently
filed Form 10-Q, all of which could cause the Company‟s actual results to differ from those set forth in the forward-looking statements.
Readers are cautioned not to place undue reliance on our forward-looking statements, which reflect management‟s analysis and
expectations only as of the date of such statements. Forward-looking statements speak only as of the date they are made, and the
Company does not intend, and undertakes no obligation, to publicly revise or update forward-looking statements after the date of this
report, whether as a result of new information, future events or otherwise, except as required by federal securities law. You should
understand that it is not possible to predict or identify all risk factors. Readers should carefully review all disclosures we file from time
to time with the Securities and Exchange Commission (the “SEC”) which are available on our website at www.enterprisebank.com under
"Investor Relations."
FORWARD-LOOKING STATEMENTS
3
SUSTAIN CORE GROWTH TRENDS
SUCCESSFULLY CONVERT AND INTEGRATE JEFFERSON
COUNTY BANCSHARES (“JCB”)
MAINTAIN FOCUS ON LONG-TERM STRATEGIC DEVELOPMENT
2017 FOCUS
4
CONTINUED GROWTH IN CORE EPS
DRIVE NET INTEREST INCOME GROWTH
IN DOLLARS WITH FAVORABLE LOAN
GROWTH TRENDS
DEFEND NET INTEREST MARGIN
MAINTAIN HIGH QUALITY CREDIT
PROFILE
ACHIEVE FURTHER IMPROVEMENT IN
OPERATING LEVERAGE
ENHANCE DEPOSIT LEVELS TO
SUPPORT GROWTH
FINANCIAL SCORECARD
26%
27%
9 bps
2 bps NPLs/Loans
1%
38%
Q1 2017 Compared to Q1 2016
5
PORTFOLIO LOAN TRENDS
$2,833
$2,884
$3,038
$3,118
$3,853
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
In Millions
*Note: 12% excluding acquisition of JCB
JCB $678
6
$1,545 $1,541
$1,599
$1,633
$1,774
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
COMMERCIAL & INDUSTRIAL LOAN TRENDS
In Millions
JCB $79
7
PORTFOLIO LOAN DETAILS
Q1 ‟17 Q4 „16
QTR
CHANGE
JCB Q1 „16
LTM
CHANGE
ENTERPRISE VALUE LENDING $ 430 $ 389 $ 41 - $ 360 $ 70
C&I GENERAL 890 794 96 79 760 130
LIFE INSURANCE PREMIUM
FINANCING
312 306 6 - 272 40
TAX CREDIT 142 144 (2) - 153 (11)
COMMERCIAL REAL ESTATE 1,541 1,089 452 466 949 592
RESIDENTIAL REAL ESTATE 360 241 119 121 202 158
CONSUMER & OTHER 178 155 23 12 137 41
PORTFOLIO LOANS $ 3,853 $ 3,118 $ 735 $ 678 $ 2,833 $ 1,020
In Millions
8
PORTFOLIO LOANS BY BUSINESS UNIT
$1,427
$1,556
$2,210
$700
$900
$1,100
$1,300
$1,500
$1,700
$1,900
$2,100
$2,300
Q1 '16 Q4 '16 Q1 '17
St. Louis
$532 $591
$614
0
200
400
600
800
1000
1200
1400
Q1 '16 Q4 '16 Q1 '17
$188 $226 $236
0
500
1000
1500
Q1 '16 Q4 '16 Q1 '17
Arizona
In Millions
Kansas City
$686
$745 $793
$-
$200
$400
$600
$800
$1,000
Q1 '16 Q4 '16 Q1 '17
Specialized Lending
JCB $678
9
DEPOSIT TRENDS
$2,932
$3,028
$3,125
$3,233
$4,032
24.5% 24.9% 24.4% 26.8% 25.7%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
800
1,300
1,800
2,300
2,800
3,300
3,800
4,300
Deposits DDA %
Last Twelve Months Growth Rate = 38%, 11% Excluding Acquisition of JCB
In Millions
JCB $774
10
EARNINGS PER SHARE
$0.56
<$0.03> $0.06 $0.59
EPS Non-Core Acquired
Assets
Merger Related
Expenses
Core
EPS
* A Non GAAP Measure, Refer to Appendix for Reconciliation
REPORTED VS. CORE EPS*
Q1 2017
11
EARNINGS PER SHARE TREND
$0.59
$0.03 < $0.02>
< $0.05>
< $0.03> $0.01
$0.06 $0.59
Q4 '16 Net Interest
Income
Portfolio
Loan Loss
Provision
Non Interest
Income
Non Interest
Expense
JCB
Acquisition
Income Tax
Item
Q1 '17
CHANGES IN CORE EPS*
Note: * A Non GAAP Measure, Refer to Appendix for Reconciliation
12
CORE NET INTEREST INCOME TREND*
In Millions
Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation
$29.6 $30.2
$31.5 $32.2
$37.6
3.54% 3.52% 3.54% 3.44% 3.63%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
$17.0
$18.0
$19.0
$20.0
$21.0
$22.0
$23.0
$24.0
$25.0
$26.0
$27.0
$28.0
$29.0
$30.0
$31.0
$32.0
$33.0
$34.0
$35.0
$36.0
$37.0
$38.0
$39.0
$40.0
$41.0
$42.0
$43.0
$44.0
$45.0
$46.0
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Core Net Interest Income* FTE Core Net Interest Margin*
13
CREDIT TRENDS FOR PORTFOLIO LOANS
-1 bps
-6 bps
14 bps
12 bps
-1 bps
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Net Charge-offs (1)
Q1 2017 EFSC PEER(2)
NPA’S/ASSETS = 0.33% 0.66%
NPL’S/LOANS = 0.36% 0.77%
ALLL/NPL’S = 283% 112%
ALLL/LOANS (4) = 1.02% 1.04%
(1) Portfolio loans only, excludes non-core acquired loans
(2) Peer data as of 12/31/2016 (source: SNL Financial)
(3) Excludes JCB
(4)1.65% including JCB Credit Mark
In Millions
$82
$51
$154
$80
$56
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Portfolio Loan Growth (3)
In Millions
Net Charge-offs (1)
2016 NCO = 5 bps
$0.8 $0.7
$3.0
$1.0
$1.5
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Provision for Portfolio Loans
14
CORE FEE INCOME*
Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation
Other Core Fee Income Detail Core Fee Income
$1.7 $1.6 $1.7 $1.7 $1.8
$2.0 $2.2 $2.2 $2.2
$2.5
$1.8 $2.1
$2.7 $2.2
$2.5 $0.5
$0.2
$0.2 $1.7
$0.2
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Wealth Management Deposit Service Charges Other State Tax Credits
$6.0 $6.1
$6.8
$7.8
$7.0
$0.8
$1.0 $1.0
0.2
$0.2
$0.4
$0.7
$0.9
$1.0
$0.1
$0.1
$0.1
Q1 '16 Q4 '16 Q1 '17
Miscellaneous CDE Card Services Mortgage
$2.2
$1.8
$2.5
In Millions
15
OPERATING EXPENSES TREND*
In Millions
Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation
$6.1 $6.5 $6.4 $7.0 $7.0
$1.7 $1.6 $1.7
$1.7 $1.9
$12.6 $12.3 $12.1
$12.4
$16.0
57.4% 56.3%
52.8% 52.7%
56.0%
-2
3
8
13
18
23
28
Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Other Occupancy Employee compensation and benefits Core Efficiency Ratio*
$20.4
$21.1 $20.2 $20.4
$24.9
16
POSITIVE MOMENTUM IN CORE*
EARNINGS PER SHARE
$0.28
$0.31
$0.37
$0.33
$0.35
$0.38
$0.44
$0.49
$0.47
$0.49 $0.49
$0.59 $0.59
Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17
Note: * A Non-GAAP Measure, Refer to Appendix for Reconciliation
111% Core EPS Growth from Q1 2014 to Q1 2017
Appendix
18
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 margin and other Core performance measures, in this presentation that are considered “non-GAAP financial
measures.” Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial
position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable
measure calculated and presented in accordance with GAAP.
The Company considers its Core performance measures presented in this presentation 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 and related income and expenses, the impact of nonrecurring 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 Gain or loss of other real
estate from non-core acquired loans and expenses directly related to the non-core acquired loans and other assets formerly
covered under FDIC loss share agreements. Core performance measures also exclude certain other income and expense items,
such as executive separation costs, merger related expenses, facilities charges, and gain/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 these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and
ratios, provide meaningful supplemental information regarding the Company's performance and capital strength. The Company's
management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing the
Company's operating results and related trends and when forecasting future periods. However, these non-GAAP measures and
ratios should be considered in addition to, and not as a substitute for or preferable to, ratios prepared in accordance with GAAP.
In the tables below, the Company has provided a reconciliation of, where applicable, the most comparable GAAP financial
measures and ratios to the non-GAAP financial measures and ratios, or a reconciliation of the non-GAAP calculation of the
financial measure for the periods indicated.
Peer group data consists of median of publicly traded banks with total assets from $1-$10 billion with commercial loans greater
than 20% and consumer loans less than 10%.
19
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(in thousands, except per share data) 2017 2016 2016 2016 2016
CORE PERFORMANCE MEASURES
Net interest income 38,642$ 35,454$ 33,830$ 33,783$ 32,428$
Less: Incremental accretion income 1,075 3,279 2,296 3,571 2,834
Core net interest income 37,567 32,175 31,534 30,212 29,594
Total noninterest income 6,976 9,029 6,976 7,049 6,005
Less: Gain (loss) on sale of other real estate from non-core acquired loans - 1,085 (225) 705 -
Less: Other income from non-core acquired assets - 95 287 239 -
Less: Gain on sale of investment securities - - 86 - -
Core noninterest income 6,976 7,849 6,828 6,105 6,005
Total core revenue 44,543 40,024 38,362 36,317 35,599
Provision for portfolio loan losses 1,533 964 3,038 716 833
Total noninterest expense 26,736 23,181 20,814 21,353 20,762
Less: Merger related expenses 1,667 1,084 302 - -
Less: Facilities disposal - 1,040 - - -
Less: Other expenses related to non-core acquired loans 123 172 270 325 327
Less: Executive severance - - - 332 -
Less: Other non-core expenses - (209) - 250 -
Core noninterest expense 24,946 21,094 20,242 20,446 20,435
Core income before income tax expense 18,064 17,966 15,082 15,155 14,331
Core income tax expense 4,916 6,021 5,142 5,237 4,897
Core net income 13,148$ 11,945$ 9,940$ 9,918$ 9,434$
Core diluted earnings per share 0.59$ 0.59$ 0.49$ 0.49$ 0.47$
Core return on average assets 1.17% 1.19% 1.04% 1.07% 1.04%
Core return on average common equity 11.29% 12.31% 10.47% 10.89% 10.66%
Core return on average tangible common equity 13.75% 13.44% 11.46% 11.98% 11.76%
Core efficiency ratio 56.01% 52.70% 52.77% 56.30% 57.40%
NET INTEREST MARGIN TO CORE NET INTEREST MARGIN (FULLY TAX EQUIVALENT)
Net interest income 39,147$ 35,884$ 34,263$ 34,227$ 32,887$
Less: Incremental accretion income 1,075 3,279 2,296 3,571 2,834
Core net interest income 38,072$ 32,605$ 31,967$ 30,656$ 30,053$
Average earning assets 4,259,198$ 3,767,272$ 3,589,080$ 3,506,801$ 3,413,792$
Reported net interest margin 3.73% 3.79% 3.80% 3.93% 3.87%
Core net interest margin 3.63% 3.44% 3.54% 3.52% 3.54%
For the Quarter ended
20
Q & A
FIRST QUARTER 2017 EARNINGS WEBCAST