Third Quarter Results
- Net income of $44.7 million, $1.17 per diluted common
share
- Net interest margin of 4.33%, quarterly decrease of 16 basis
points
- Net interest income of $141.6 million, quarterly increase of
$0.9 million
- Total loans of $10.6 billion, quarterly increase of $104.2
million
- Total deposits of $11.9 billion, quarterly increase of
$290.0 million
- Tangible common equity to tangible assets1 of 8.51%
Jim Lally, President and Chief Executive Officer of Enterprise
Financial Services Corp (Nasdaq: EFSC) (the “Company” or
“EFSC”), said today upon the release of EFSC’s third quarter
earnings, “We had strong third quarter operating results with
earnings per share of $1.17, a net interest margin of 4.33%, and a
return on average assets of 1.26%. In a challenging environment, we
continued to expand net interest income while strengthening
liquidity and increasing our customer base. In line with our
expectations, loan growth moderated this quarter, and we
successfully increased customer deposits and reduced wholesale
funding. The strength of our balance sheet and operating revenue
has us well-positioned to continue delivering long-term shareholder
value.”
Highlights
- Earnings - Net income in the third quarter 2023 was
$44.7 million, a decrease of $4.5 million, compared to the linked
quarter and a decrease of $5.5 million from the prior year quarter.
Earnings per share (“EPS”) was $1.17 per diluted common share for
the third quarter 2023, compared to $1.29 and $1.32 per diluted
common share for the linked and prior year quarters,
respectively.
- Pre-provision net revenue2 (“PPNR”) - PPNR of $65.1
million in the third quarter 2023 decreased $3.8 million from the
linked quarter and increased $0.2 million from the prior year
quarter.
- Net interest income and net interest margin (“NIM”) -
Net interest income of $141.6 million for the third quarter 2023
increased $0.9 million and $17.3 million from the linked and prior
year quarters, respectively. NIM was 4.33% for the third quarter
2023, compared to 4.49% and 4.10% for the linked and prior year
quarters, respectively. Net interest income has benefited from
higher average loan and investment balances combined with expanding
yields on earning assets. NIM decreased 16 basis points from the
linked quarter, primarily due to the increase in deposit interest
expense and increased 23 basis points from the prior year quarter
primarily due to an increase in earning asset yields.
- Noninterest income - Noninterest income of $12.1 million
for the third quarter 2023 decreased $2.2 million and increased
$2.6 million from the linked and prior year quarters, respectively.
The decline from the linked quarter was primarily due to a decrease
in tax credit and community development income, partially offset by
a gain on the sale of SBA loans. The increase from the prior year
quarter was primarily due to the gain on sale of SBA loans.
- Noninterest expense - Noninterest expense of $88.6
million for the third quarter 2023 increased $2.7 million and $19.8
million from the linked and prior year quarters, respectively. The
increase from both the linked and prior year quarters was primarily
due to an increase in variable deposit costs and employee
compensation.
- Loans - Loans totaled $10.6 billion at September 30,
2023, an increase of $104.2 million, or 3.9% on an annualized
basis, from the linked quarter and an increase of $1.3 billion, or
13.5%, from the prior year period. Average loans totaled $10.5
billion for the quarter ended September 30, 2023, compared to $10.3
billion and $9.2 billion for the linked and prior year quarters,
respectively.
- Asset quality - The allowance for credit losses to total
loans was 1.34% at both September 30, 2023 and June 30, 2023 and
1.50% at September 30, 2022. The ratio of nonperforming assets to
total assets was 0.40% at September 30, 2023, compared to 0.12% and
0.14% at June 30, 2023 and September 30, 2022, respectively. The
provision for credit losses of $8.0 million recorded in the third
quarter 2023 was primarily related to net charge-offs of $6.9
million and the increase in nonperforming assets.
- Deposits - Total deposits increased $290.0 million from
the linked quarter to $11.9 billion as of September 30, 2023.
Average deposits totaled $11.9 billion for the quarter ended
September 30, 2023, compared to $11.4 billion and $11.2 billion for
the linked and prior year quarters, respectively. At September 30,
2023, noninterest-bearing deposit accounts totaled $3.9 billion, or
32.3% of total deposits, and the loan to deposit ratio was
89.1%.
- Liquidity - The Company’s total available on- and
off-balance-sheet liquidity was approximately $4.7 billion at
September 30, 2023. On-balance-sheet liquidity consisted of cash of
$370.7 million and $790.9 million in unpledged investment
securities at September 30, 2023. Off-balance-sheet liquidity
consisted of $945.1 million available through the Federal Home Loan
Bank, $2.5 billion available through the Federal Reserve and $120.0
million through correspondent bank lines. The Company also has an
unused $25.0 million revolving line of credit and maintains a shelf
registration allowing for the issuance of various forms of equity
and debt securities.
- Capital - Total shareholders’ equity was $1.6 billion
and the tangible common equity to tangible assets ratio3 was 8.51%
at September 30, 2023, compared to 8.65% at June 30, 2023. The
tangible common equity to tangible assets ratio, adjusted for
unrealized losses on held-to-maturity securities,3 was 7.91% at
September 30, 2023 and 8.25% at June 30, 2023. Enterprise Bank
& Trust remains “well-capitalized,” with a common equity tier 1
ratio of 12.1% and a total risk-based capital ratio of 13.1% as of
September 30, 2023. The Company’s common equity tier 1 ratio and
total risk-based capital ratio were 11.2% and 14.1%, respectively,
at September 30, 2023. The Company’s Board of Directors approved a
quarterly dividend of $0.25 per common share, payable on December
29, 2023 to shareholders of record as of December 15, 2023. The
board of directors also declared a cash dividend of $12.50 per
share of Series A Preferred Stock (or $0.3125 per depositary share)
representing a 5% per annum rate for the period commencing (and
including) September 15, 2023 to (but excluding) December 15, 2023.
The dividend will be payable on December 15, 2023 to holders of
record of Series A Preferred Stock as of November 30, 2023.
Net Interest Income and NIM
Average Balance Sheets
The following table presents, for the periods indicated, certain
information related to our average interest-earning assets and
interest-bearing liabilities, as well as the corresponding average
interest rates earned and paid, all on a tax-equivalent basis.
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
($ 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:
Loans1, 2
$
10,521,966
$
180,382
6.80
%
$
10,284,873
$
170,314
6.64
%
$
9,230,738
$
118,642
5.10
%
Securities2
2,302,850
18,076
3.11
2,297,995
17,550
3.06
2,202,255
14,717
2.65
Interest-earning deposits
335,771
4,509
5.33
173,785
2,095
4.84
765,258
4,190
2.17
Total interest-earning assets
13,160,587
202,967
6.12
12,756,653
189,959
5.97
12,198,251
137,549
4.47
Noninterest-earning assets
908,273
915,332
959,870
Total assets
$
14,068,860
$
13,671,985
$
13,158,121
Liabilities and Shareholders’
Equity
Interest-bearing liabilities:
Interest-bearing demand accounts
$
2,672,084
$
13,701
2.03
%
$
2,509,805
$
10,120
1.62
%
$
2,200,619
$
1,707
0.31
%
Money market accounts
3,079,221
26,427
3.40
2,920,079
20,499
2.82
2,791,822
6,067
0.86
Savings accounts
646,187
250
0.15
686,973
227
0.13
828,747
69
0.03
Certificates of deposit
1,519,119
14,976
3.91
1,219,500
10,526
3.46
554,987
844
0.60
Total interest-bearing deposits
7,916,611
55,354
2.77
7,336,357
41,372
2.26
6,376,175
8,687
0.54
Subordinated debentures and notes
155,769
2,466
6.28
155,632
2,431
6.27
155,225
2,313
5.91
FHLB advances
10,326
141
5.42
98,912
1,279
5.19
25,543
103
1.60
Securities sold under agreements to
repurchase
146,893
969
2.61
162,606
704
1.74
198,027
123
0.25
Other borrowings
50,571
337
2.66
133,770
1,419
4.25
19,984
179
3.55
Total interest-bearing liabilities
8,280,170
59,267
2.84
7,887,277
47,205
2.40
6,774,954
11,405
0.67
Noninterest-bearing liabilities:
Demand deposits
4,005,923
4,051,456
4,778,720
Other liabilities
134,162
111,915
109,943
Total liabilities
12,420,255
12,050,648
11,663,617
Shareholders' equity
1,648,605
1,621,337
1,494,504
Total liabilities and shareholders'
equity
$
14,068,860
$
13,671,985
$
13,158,121
Total net interest income
$
143,700
$
142,754
$
126,144
Net interest margin
4.33
%
4.49
%
4.10
%
1 Average balances include nonaccrual
loans. Interest income includes loan fees of $3.3 million, $3.7
million, and $3.6 million for the three months ended September 30,
2023, June 30, 2023, and September 30, 2022, respectively.
2 Non-taxable income is presented on a
fully tax-equivalent basis using a 25.2% tax rate. The
tax-equivalent adjustments were $2.1 million, $2.1 million, and
$1.9 million for the three months ended September 30, 2023, June
30, 2023, and September 30, 2022, respectively.
Net interest income for the third quarter 2023 was $141.6
million, an increase of $0.9 million, compared to the linked
quarter and an increase of $17.3 million from the prior year
quarter. Net interest income on a tax equivalent basis was $143.7
million, $142.8 million and $126.1 million for the current, linked
and prior year quarters, respectively. The increase from the linked
and prior year quarters reflects the benefit of higher market
interest rates on the Company’s asset sensitive balance sheet
combined with organic growth.
Interest income increased $13.0 million during the third quarter
2023 primarily due to an increase of $10.1 million in loan interest
income and a $2.4 million increase in interest on cash accounts.
Loan interest income has increased from continued loan growth and
higher loan yields. Interest on loans benefited from a 16 basis
point increase in yield and a $237.1 million increase in average
loan balances, compared to the linked quarter. The average interest
rate of new loan originations in the third quarter 2023 was 7.89%.
Interest on cash accounts increased due to a 49 basis point
increase in yield and a $162.0 million increase in average
balances.
Interest expense increased $12.1 million in the third quarter
2023 primarily due to a $14.0 million increase in deposit interest
expense. This increase was partially offset by a $1.1 million
decrease in interest expense on other borrowings. The increase in
deposit interest expense reflects a shift in the deposit mix from
demand deposits to interest-bearing deposits, particularly money
market accounts and certificates of deposit, as well as higher
rates paid on deposits. The average cost of interest-bearing
deposits was 2.77%, an increase of 51 basis points compared to the
linked quarter. The increase in cost was primarily due to higher
interest rates paid on commercial balances. The total cost of
deposits, including noninterest-bearing demand accounts, was 1.84%
during the third quarter 2023, compared to 1.46% in the linked
quarter. The decrease in interest expense on other borrowings was
primarily due to a decline in average borrowings that were reduced
due to the increase in liquidity from the growth in core
deposits.
NIM, on a tax equivalent basis, was 4.33% in the third quarter
2023, a decrease of 16 basis points from the linked quarter and an
increase of 23 basis points from the prior year quarter. For the
month of September 2023, the loan portfolio yield was 6.89% and the
cost of total deposits was 2.0%.
Investments
Quarter ended
September 30, 2023
June 30, 2023
September 30, 2022
($ in thousands)
Carrying Value
Net
Unrealized
Loss
Carrying Value
Net
Unrealized
Loss
Carrying Value
Net
Unrealized
Loss
Available-for-sale (AFS)
$
1,487,104
$
(235,013
)
$
1,550,375
$
(179,857
)
$
1,466,912
$
(225,675
)
Held-to-maturity (HTM)
730,655
(108,780
)
723,959
(71,673
)
646,393
(109,294
)
Total
$
2,217,759
$
(343,793
)
$
2,274,334
$
(251,530
)
$
2,113,305
$
(334,969
)
Investment securities totaled $2.2 billion at September 30,
2023, a decrease of $56.6 million from the linked quarter. The
decrease was primarily due to a $55.2 million decline in the fair
value of available-for-sale securities due to a decline in
longer-term rates in the quarter. Investment purchases in the third
quarter 2023 had a weighted average, tax equivalent yield of
5.60%.
The average duration of the investment portfolio was 5.6 years
at September 30, 2023. The Company utilizes the investment
portfolio to lengthen the overall duration of the balance sheet.
The expected cash flow from pay downs, maturities and interest over
the next 12 months is approximately $270 million. The tangible
common equity to tangible assets ratio adjusted for unrealized
losses on held-to-maturity securities4 was 7.91% at September 30,
2023, compared to 8.25% at June 30, 2023.
Loans
The following table presents total loans for the most recent
five quarters:
Quarter ended
($ in thousands)
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
September 30,
2022
C&I
$
2,020,303
$
2,029,370
$
2,005,539
$
1,904,654
$
1,780,677
CRE investor owned
2,260,220
2,290,701
2,239,932
2,176,424
2,106,458
CRE owner occupied
1,255,885
1,208,675
1,173,985
1,174,094
1,133,467
SBA loans*
1,309,497
1,327,667
1,315,732
1,312,378
1,269,065
Sponsor finance*
888,000
879,491
677,529
635,061
650,102
Life insurance premium financing*
928,486
912,274
859,910
817,115
779,606
Tax credits*
683,580
609,137
547,513
559,605
507,681
SBA PPP loans
4,940
5,173
5,438
7,272
13,165
Residential real estate
364,618
354,588
348,726
379,924
381,634
Construction and land development
639,555
599,375
590,509
534,753
513,452
Other
261,736
296,172
247,105
235,858
219,680
Total loans
$
10,616,820
$
10,512,623
$
10,011,918
$
9,737,138
$
9,354,987
Total loan yield
6.80
%
6.64
%
6.33
%
5.87
%
5.10
%
Variable interest rate loans to total
loans
61
%
62
%
63
%
63
%
63
%
*Specialty loan category
Loans totaled $10.6 billion at September 30, 2023, increasing
$104.2 million, compared to the linked quarter. The increase was
primarily in tax credit and owner-occupied CRE loans. Loan sales of
$33.3 million mitigated growth in the SBA category during the
current quarter. Total loan growth in the third quarter was
moderated by net line paydowns of $212.8 million. Average line
utilization was approximately 41% for the third quarter 2023,
compared to 45% and 43% for the linked and prior year quarters,
respectively.
Asset Quality
The following table presents the categories of nonperforming
assets and related ratios for the most recent five quarters:
Quarter ended
($ in thousands)
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
Nonperforming loans*
$
48,932
$
16,112
$
11,972
$
9,981
$
18,184
Other
6,933
—
250
269
269
Nonperforming assets*
$
55,865
$
16,112
$
12,222
$
10,250
$
18,453
Nonperforming loans to total loans
0.46
%
0.15
%
0.12
%
0.10
%
0.19
%
Nonperforming assets to total assets
0.40
%
0.12
%
0.09
%
0.08
%
0.14
%
Allowance for credit losses to total
loans
1.34
%
1.34
%
1.38
%
1.41
%
1.50
%
Net charge-offs (recoveries)
$
6,856
$
2,973
$
(264
)
$
2,075
$
478
*Guaranteed balances excluded
$
5,974
$
6,666
$
6,835
$
6,708
$
6,532
Nonperforming assets increased $39.8 million during the third
quarter 2023 and increased $37.4 million from the prior year
quarter. Nonperforming loans increased $32.8 million and $30.7
million from the linked and prior year quarters, respectively. OREO
and repossessed assets increased $6.9 million and $6.7 million from
the linked and prior year quarters, respectively. The increase in
nonperforming loans in the third quarter 2023 was primarily due to
three relationships in the C&I and CRE categories of $1.8
million and $31.0 million, respectively. The increase in OREO and
repossessed assets in the third quarter 2023 represented one
relationship that had a related charge-off of $4.7 million in the
current period. Annualized net charge-offs totaled 26 basis points
of average loans in the third quarter 2023, compared to 12 basis
points and two basis points in the linked and prior year quarters,
respectively.
The provision for credit losses totaled $8.0 million in the
third quarter 2023, compared to $6.3 million and $0.7 million in
the linked and prior year quarters, respectively. The provision for
credit losses in the third quarter 2023 was primarily related to
net charge-offs, an increase in nonperforming loans, and loan
growth, partially offset by an improvement in forecasted economic
factors. The allowance for credit losses to total loans was 1.34%
at both September 30, and June 30, 2023 compared to 1.50% in the
prior year quarter.
Deposits
The following table presents deposits broken out by type for the
most recent five quarters:
Quarter ended
($ in thousands)
September 30,
2023
June 30,
2023
March 31,
2023
December 31,
2022
September 30,
2022
Noninterest-bearing demand accounts
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
$
4,642,539
Interest-bearing demand accounts
2,749,598
2,629,339
2,395,901
2,256,295
2,270,898
Money market and savings accounts
3,837,145
3,577,856
3,672,539
3,399,415
3,617,249
Brokered certificates of deposit
695,551
893,808
369,505
118,968
129,039
Other certificates of deposit
775,127
638,296
524,168
411,740
397,869
Total deposit portfolio
$
11,909,907
$
11,619,860
$
11,154,636
$
10,829,150
$
11,057,594
Noninterest-bearing deposits to total
deposits
32.3
%
33.4
%
37.6
%
42.9
%
42.0
%
Total costs of deposits
1.84
%
1.46
%
0.92
%
0.53
%
0.31
%
Total deposits at September 30, 2023 were $11.9 billion, an
increase of $290.0 million and $852.3 million from the linked and
prior year quarters, respectively. Excluding brokered certificates
of deposits, deposits increased $488.0 million and $285.8 million,
from the linked and prior year quarters, respectively. The mix of
the deposit portfolio continued the shift from noninterest bearing
demand deposits to higher cost categories that began in the first
quarter 2023. Competitive pricing pressures and the Federal
Reserve’s monetary policy actions have continued to pressure
industry-wide deposit flows. Reciprocal deposits, which are placed
through third party programs to provide FDIC insurance on larger
deposit relationships, totaled $1.1 billion at September 30, 2023,
compared to $926.6 million at June 30, 2023.
Total estimated insured deposits, which includes collateralized
deposits, reciprocal accounts and accounts that qualify for
pass-through insurance, totaled $8.5 billion, or 71% of total
deposits, at the end of September 30, 2023, compared to $8.3
billion, or 72% of total deposits, in the linked quarter.
Noninterest Income
The following table presents a comparative summary of the major
components of noninterest income for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
September 30,
2023
June 30,
2023
Increase
(decrease)
September 30,
2022
Increase
(decrease)
Deposit service charges
4,187
3,910
$
277
7
%
4,951
$
(764
)
(15
)%
Wealth management revenue
2,614
2,472
142
6
%
2,432
182
7
%
Card services revenue
2,560
2,464
96
4
%
2,652
(92
)
(3
)%
Tax credit income (loss)
(2,673
)
368
(3,041
)
(826
)%
(3,625
)
952
26
%
Other income
5,397
5,076
321
6
%
3,044
2,353
77
%
Total noninterest income
$
12,085
$
14,290
$
(2,205
)
(15
)%
$
9,454
$
2,631
28
%
Total noninterest income was $12.1 million for the third quarter
2023, a decrease of $2.2 million from the linked quarter and an
increase of $2.6 million from the prior year quarter. The decrease
from the linked quarter was primarily due to a decrease in tax
credit income. Tax credit income is typically highest in the fourth
quarter of each year and will vary in other periods based on
transaction volumes and fair value changes on credits carried at
fair value. The discount rate used in the fair value determination
is the 10-year SOFR swap rate, which increased 70 basis points in
the third quarter. The increase from the prior year quarter was
primarily due to Other income, as further discussed below.
The following table presents a comparative summary of the major
components of other income for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
September 30,
2023
June 30,
2023
Increase
(decrease)
September 30,
2022
Increase
(decrease)
BOLI
$
822
$
797
$
25
3
%
$
769
$
53
7
%
Community development investments
338
2,077
(1,739
)
(84
)%
170
168
99
%
Private equity fund distribution
181
371
(190
)
(51
)%
64
117
183
%
Servicing fees
701
407
294
72
%
655
46
7
%
Swap fees
54
173
(119
)
(69
)%
166
(112
)
(67
)%
Gain on SBA loan sales
1,514
—
1,514
NM
—
1,514
NM
Miscellaneous income
1,787
1,251
536
43
%
1,220
567
46
%
Total other income
$
5,397
$
5,076
$
321
6
%
$
3,044
$
2,353
77
%
NM - Not meaningful
Community development and private equity distributions included
in other income are not consistent sources of income and fluctuate
based on distributions from the underlying funds. Servicing fee
income may also fluctuate based on prepayment experience and
changes to the discount rate used in the valuation of the servicing
rights. Swap fee income is generated from customer hedging
activities and varies based on customer transaction volume. The
decrease in community development income of $1.7 million compared
to the linked quarter was partially offset by a $1.5 million gain
on the sale of SBA loans in the third quarter 2023. The $2.4
million increase in Other income from the prior year quarter was
primarily due to the gain on sale of SBA loans.
Noninterest Expense
The following table presents a comparative summary of the major
components of noninterest expense for the periods indicated:
Linked quarter comparison
Prior year comparison
Quarter ended
Quarter ended
($ in thousands)
September 30,
2023
June 30, 2023
Increase
(decrease)
September 30,
2022
Increase
(decrease)
Employee compensation and benefits
$
40,771
$
41,641
$
(870
)
(2
)%
$
36,999
$
3,772
10
%
Occupancy
4,198
3,954
244
6
%
4,497
(299
)
(7
)%
Deposit costs
20,987
16,980
4,007
24
%
7,661
13,326
174
%
Other expense
22,688
23,381
(693
)
(3
)%
19,686
3,002
15
%
Total noninterest expense
$
88,644
$
85,956
$
2,688
3
%
$
68,843
$
19,801
29
%
Employee compensation and benefits decreased $0.9 million from
the linked quarter due to a decrease in benefit costs, primarily
due to lower claims on self-insured medical policies. Deposit costs
relate to certain specialized deposit businesses that are impacted
by higher interest rates as well as increasing average balances.
Deposit costs increased $4.0 million from the linked quarter
primarily due to higher average balances and an increase in
expenses related to the earnings credit earned on these
accounts.
The increase in noninterest expense of $19.8 million from the
prior year quarter was primarily an increase in the associate base,
merit increases throughout 2022 and 2023, and an increase in
variable deposit costs.
For the third quarter 2023, the Company’s core efficiency ratio5
was 56.2%, compared to 54.0% for the linked quarter and 49.8% for
the prior year quarter.
Income Taxes
The Company’s effective tax rate was 22% for each of the
current, linked and prior year quarters.
Capital
The following table presents total equity and various EFSC
capital ratios for the most recent five quarters:
Quarter ended
($ in thousands)
September 30,
2023*
June 30,
2023
March 31,
2023
December 31,
2022
September 30,
2022
Shareholders’ equity
$
1,611,880
$
1,618,233
$
1,592,820
$
1,522,263
$
1,446,218
Total risk-based capital to risk-weighted
assets
14.1
%
14.1
%
14.3
%
14.2
%
14.2
%
Tier 1 capital to risk weighted assets
12.6
%
12.5
%
12.6
%
12.6
%
12.6
%
Common equity tier 1 capital to
risk-weighted assets
11.2
%
11.1
%
11.2
%
11.1
%
11.0
%
Leverage ratio
10.9
%
11.0
%
11.1
%
10.9
%
10.4
%
Tangible common equity to tangible
assets
8.51
%
8.65
%
8.81
%
8.43
%
7.86
%
*Capital ratios for the current quarter
are preliminary and subject to, among other things, completion and
filing of the Company’s regulatory reports and ongoing regulatory
review.
Total equity was $1.6 billion at September 30, 2023, a decrease
of $6.4 million from the linked quarter. The decrease was primarily
due to a $44.4 million decrease in accumulated other comprehensive
income, primarily due to a net fair value decrease in the Company’s
fixed-rate, available-for-sale investment portfolio, and common and
preferred stock dividends of $10.3 million. The decrease was
partially offset by current period net income of $44.7 million. The
Company’s tangible common book value per share was $31.06 at
September 30, 2023, compared to $31.23 and $26.62 in the linked and
prior year quarters, respectively.
The Company’s regulatory capital ratios continue to exceed the
“well-capitalized” regulatory benchmark. Capital ratios for the
current quarter are subject to, among other things, completion and
filing of the Company’s regulatory reports and ongoing regulatory
review.
________________________________
1 Tangible common equity to tangible
assets is a non-GAAP measure. Refer to discussion and
reconciliation of this measure in the accompanying financial
tables.
2 Pre-provision net revenue is a non-GAAP
measure. Refer to discussion and reconciliation of this measure in
the accompanying financial tables.
3 Tangible common equity to tangible
assets ratio and the tangible common equity to tangible assets
ratio adjusted for unrealized losses on held-to-maturity securities
are non-GAAP measures. Refer to discussion and reconciliation of
these measures in the accompanying financial tables.
4 The tangible common equity to tangible
assets ratio adjusted for unrealized losses on held-to-maturity
securities is a non-GAAP measure. Refer to discussion and
reconciliation of this measure in the accompanying financial
tables.
5 Core efficiency ratio is a non-GAAP
measure. Refer to discussion and reconciliation of this measure in
the accompanying financial tables.
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, ROATCE, PPNR return on average assets
(“PPNR ROAA”), core efficiency ratio, the tangible common equity
ratio, and tangible book value per common share, 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, ROATCE,
PPNR ROAA, core efficiency ratio, the tangible common equity ratio,
and tangible book value per common share, 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, that 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, October 24, 2023. During the call,
management will review the third quarter 2023 results and related
matters. This press release as well as a related slide presentation
will be accessible on the Company’s website at
www.enterprisebank.com under “Investor Relations” prior to the
scheduled broadcast of the conference call. The call can be
accessed via this same website page, or via telephone at
1-888-330-2413 (Conference ID 70045, press # to reach an operator).
We encourage participants to pre-register for the conference call
using the following link:
https://bit.ly/EFSC3Q2023EarningsCallRegistration. Callers who
pre-register will be given a conference passcode and unique PIN to
gain immediate access to the call and bypass the live operator.
Participants may pre-register at any time, including up to and
after the call start time. A recorded replay of the conference call
will be available on the website after the call’s completion. The
replay will be available for at least two weeks following the
conference call.
About Enterprise Financial Services Corp
Enterprise Financial Services Corp (Nasdaq: EFSC), with
approximately $14.0 billion in assets, is a financial holding
company headquartered in Clayton, Missouri. Enterprise Bank &
Trust, a Missouri state-chartered trust company with banking powers
and a wholly-owned subsidiary of EFSC, operates branch offices in
Arizona, California, Florida, Kansas, Missouri, Nevada, and New
Mexico, and SBA loan and deposit production offices throughout the
country. Enterprise Bank & Trust offers a range of business and
personal banking services and wealth management services.
Enterprise Trust, a division of Enterprise Bank & Trust,
provides financial planning, estate planning, investment management
and trust services to businesses, individuals, institutions,
retirement plans and non-profit organizations. Additional
information is available at www.enterprisebank.com.
Enterprise Financial Services Corp’s common stock is traded on
the Nasdaq Stock Market under the symbol “EFSC.” Please visit our
website at www.enterprisebank.com to see our regularly posted
material information.
Forward-looking Statements
Readers should note that, in addition to the historical
information contained herein, this press release contains
“forward-looking statements” within the meaning of, and intended to
be covered by, the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are
based on management’s current expectations and beliefs concerning
future developments and their potential effects on the Company
including, without limitation, plans, strategies and goals, and
statements about the Company’s expectations regarding revenue and
asset growth, financial performance and profitability, loan and
deposit growth, liquidity, yields and returns, loan diversification
and credit management, shareholder value creation and the impact of
acquisitions.
Forward-looking statements are typically identified by words
such as “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” “pro forma” and other similar
words and expressions. Forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over
time. Forward-looking statements speak only as of the date they are
made. Because forward-looking statements are subject to assumptions
and uncertainties, actual results or future events could differ,
possibly materially, from those anticipated in the forward-looking
statements and future results could differ materially from
historical performance. They are neither statements of historical
fact nor guarantees or assurances of future performance. While
there is no assurance that any list of risks and uncertainties or
risk factors is complete, important factors that could cause actual
results to differ materially from those in the forward-looking
statements include the following, without limitation: 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 and market conditions, high unemployment rates, higher
inflation and its impacts (including U.S. federal government
measures to address higher inflation), U.S. fiscal debt, budget and
tax matters, and any slowdown in global economic growth, risks
associated with rapid increases or decreases in prevailing interest
rates, our ability to attract and retain deposits and access to
other sources of liquidity, 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 legislative or regulatory requirements, as
well as current, pending or future legislation or regulation that
could have a negative effect on our revenue and businesses,
including rules and regulations relating to bank products and
financial services, changes in accounting policies and practices or
accounting standards, changes in the method of determining LIBOR
and the phase out of LIBOR, natural disasters, terrorist
activities, war and geopolitical matters (including the war in
Israel and potential for a broader regional conflict and the war in
Ukraine and the imposition of additional sanctions and export
controls in connection therewith), or pandemics, including the
COVID-19 pandemic, and their effects on economic and business
environments in which we operate, including the related disruption
to the financial market and other economic activity, and those
factors and risks referenced from time to time in the Company’s
filings with the Securities and Exchange Commission (the “SEC”),
including in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2022, and the Company’s other
filings with the SEC. The Company cautions that the preceding list
is not exhaustive of all possible risk factors and other factors
could also adversely affect the Company’s results.
For any forward-looking statements made in this press release or
in any documents, EFSC claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Readers are cautioned not to place undue reliance on any
forward-looking statements. Except to the extent required by
applicable law or regulation, EFSC disclaims any obligation to
revise or publicly release any revision or update to any of the
forward-looking statements included herein to reflect events or
circumstances that occur after the date on which such statements
were made.
ENTERPRISE FINANCIAL SERVICES
CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited)
Quarter ended
Nine months ended
(in thousands, except per share data)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
EARNINGS SUMMARY
Net interest income
$
141,639
$
140,692
$
139,529
$
138,835
$
124,290
$
421,860
$
335,068
Provision (benefit) for credit losses
8,030
6,339
4,183
2,123
676
18,552
(2,734
)
Noninterest income
12,085
14,290
16,898
16,873
9,454
43,273
42,289
Noninterest expense
88,644
85,956
80,983
77,149
68,843
255,583
197,067
Income before income tax expense
57,050
62,687
71,261
76,436
64,225
190,998
183,024
Income tax expense
12,385
13,560
15,523
16,435
14,025
41,468
39,982
Net income
44,665
49,127
55,738
60,001
50,200
149,530
143,042
Preferred stock dividends
938
937
938
937
937
2,813
3,104
Net income available to common
shareholders
$
43,727
$
48,190
$
54,800
$
59,064
$
49,263
$
146,717
$
139,938
Diluted earnings per common share
$
1.17
$
1.29
$
1.46
$
1.58
$
1.32
$
3.91
$
3.73
Return on average assets
1.26
%
1.44
%
1.72
%
1.83
%
1.51
%
1.47
%
1.42
%
Return on average common equity
11.00
%
12.48
%
14.85
%
16.52
%
13.74
%
12.73
%
13.09
%
ROATCE1
14.49
%
16.53
%
19.93
%
22.62
%
18.82
%
16.90
%
17.92
%
Net interest margin (tax equivalent)
4.33
%
4.49
%
4.71
%
4.66
%
4.10
%
4.50
%
3.64
%
Efficiency ratio
57.66
%
55.46
%
51.77
%
49.55
%
51.47
%
54.95
%
52.22
%
Core efficiency ratio1
56.18
%
54.04
%
50.47
%
48.10
%
49.80
%
53.55
%
50.46
%
Assets
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
$
12,994,787
Average assets
$
14,068,860
$
13,671,985
$
13,131,195
$
12,986,568
$
13,158,121
$
13,627,448
$
13,431,863
Period end common shares outstanding
37,385
37,359
37,311
37,253
37,223
Dividends per common share
$
0.25
$
0.25
$
0.25
$
0.24
$
0.23
$
0.75
$
0.66
Tangible book value per common share
$
31.06
$
31.23
$
30.55
$
28.67
$
26.62
Tangible common equity to tangible
assets1
8.51
%
8.65
%
8.81
%
8.43
%
7.86
%
Total risk-based capital to risk-weighted
assets2
14.1
%
14.1
%
14.3
%
14.2
%
14.2
%
1Refer to Reconciliations of Non-GAAP
Financial Measures table for a reconciliation of these measures to
GAAP.
2Capital ratios for the current quarter
are preliminary and subject to, among other things, completion and
filing of the Company’s regulatory reports and ongoing regulatory
review.
ENTERPRISE FINANCIAL SERVICES
CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited) (continued)
Quarter ended
Nine months ended
($ in thousands, except per share
data)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
INCOME STATEMENTS
NET INTEREST INCOME
Interest income
$
200,906
$
187,897
$
169,033
$
156,737
$
135,695
$
557,836
$
358,345
Interest expense
59,267
47,205
29,504
17,902
11,405
135,976
23,277
Net interest income
141,639
140,692
139,529
138,835
124,290
421,860
335,068
Provision (benefit) for credit losses
8,030
6,339
4,183
2,123
676
18,552
(2,734
)
Net interest income after provision
(benefit) for credit losses
133,609
134,353
135,346
136,712
123,614
403,308
337,802
NONINTEREST INCOME
Deposit service charges
4,187
3,910
4,128
4,463
4,951
12,225
13,863
Wealth management revenue
2,614
2,472
2,516
2,423
2,432
7,602
7,587
Card services revenue
2,560
2,464
2,338
2,345
2,652
7,362
9,206
Tax credit income (loss)
(2,673
)
368
1,813
2,389
(3,625
)
(492
)
169
Other income
5,397
5,076
6,103
5,253
3,044
16,576
11,464
Total noninterest income
12,085
14,290
16,898
16,873
9,454
43,273
42,289
NONINTEREST EXPENSE
Employee compensation and benefits
40,771
41,641
42,503
38,175
36,999
124,915
108,854
Occupancy
4,198
3,954
4,061
4,248
4,497
12,213
13,392
Deposit costs
20,987
16,980
12,720
13,256
7,661
50,688
17,826
Other expense
22,688
23,381
21,699
21,470
19,686
67,767
56,995
Total noninterest expense
88,644
85,956
80,983
77,149
68,843
255,583
197,067
Income before income tax expense
57,050
62,687
71,261
76,436
64,225
190,998
183,024
Income tax expense
12,385
13,560
15,523
16,435
14,025
41,468
39,982
Net income
$
44,665
$
49,127
$
55,738
$
60,001
$
50,200
$
149,530
$
143,042
Preferred stock dividends
938
937
938
937
937
2,813
3,104
Net income available to common
shareholders
$
43,727
$
48,190
$
54,800
$
59,064
$
49,263
$
146,717
$
139,938
Basic earnings per common share
$
1.17
$
1.29
$
1.47
$
1.59
$
1.32
$
3.93
$
3.74
Diluted earnings per common share
$
1.17
$
1.29
$
1.46
$
1.58
$
1.32
$
3.91
$
3.73
ENTERPRISE FINANCIAL SERVICES
CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited) (continued)
Quarter ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
BALANCE SHEET
ASSETS
Cash and due from banks
$
190,806
$
202,702
$
210,813
$
229,580
$
264,078
Interest-earning deposits
184,245
125,328
81,241
69,808
489,825
Securities and other investments
2,279,578
2,340,821
2,338,746
2,309,512
2,171,942
Loans held for sale
212
551
261
1,228
785
Loans
10,616,820
10,512,623
10,011,918
9,737,138
9,354,987
Allowance for credit losses
(142,133
)
(141,319
)
(138,295
)
(136,932
)
(140,572
)
Total loans, net
10,474,687
10,371,304
9,873,623
9,600,206
9,214,415
Fixed assets, net
41,268
41,988
42,340
42,985
43,882
Goodwill
365,164
365,164
365,164
365,164
365,164
Intangible assets, net
13,425
14,544
15,680
16,919
18,217
Other assets
475,657
408,752
398,114
418,770
426,479
Total assets
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
$
12,994,787
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing deposits
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
$
4,642,539
Interest-bearing deposits
8,057,421
7,739,299
6,962,113
6,186,418
6,415,055
Total deposits
11,909,907
11,619,860
11,154,636
10,829,150
11,057,594
Subordinated debentures and notes
155,844
155,706
155,569
155,433
155,298
FHLB advances
—
150,000
100,000
100,000
—
Other borrowings
182,372
199,390
213,489
324,119
197,422
Other liabilities
165,039
127,965
109,468
123,207
138,255
Total liabilities
12,413,162
12,252,921
11,733,162
11,531,909
11,548,569
Shareholders’ equity:
Preferred stock
71,988
71,988
71,988
71,988
71,988
Common stock
374
374
373
373
372
Additional paid-in capital
992,044
988,355
984,281
982,660
979,543
Retained earnings
715,303
680,981
642,153
597,574
547,506
Accumulated other comprehensive loss
(167,829
)
(123,465
)
(105,975
)
(130,332
)
(153,191
)
Total shareholders’ equity
1,611,880
1,618,233
1,592,820
1,522,263
1,446,218
Total liabilities and shareholders’
equity
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
$
12,994,787
ENTERPRISE FINANCIAL SERVICES
CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited) (continued)
Nine months ended
September 30, 2023
September 30, 2022
($ in thousands)
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
AVERAGE BALANCE SHEET
ASSETS
Interest-earning assets:
Loans1, 2
$
10,203,291
$
503,458
6.60
%
$
9,116,072
$
317,271
4.65
%
Securities2
2,296,485
52,743
3.07
2,065,800
38,631
2.50
Interest-earning deposits
206,110
7,799
5.06
1,312,442
7,502
0.76
Total interest-earning assets
12,705,886
564,000
5.93
12,494,314
363,404
3.89
Noninterest-earning assets
921,562
937,549
Total assets
$
13,627,448
$
13,431,863
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities:
Interest-bearing demand accounts
$
2,462,988
$
29,728
1.61
%
$
2,344,007
$
2,902
0.17
%
Money market accounts
2,942,970
62,397
2.83
2,810,278
9,797
0.47
Savings accounts
688,157
707
0.14
833,721
205
0.03
Certificates of deposit
1,139,489
28,555
3.35
584,213
2,492
0.57
Total interest-bearing deposits
7,233,604
121,387
2.24
6,572,219
15,396
0.31
Subordinated debentures and notes
155,633
7,306
6.28
155,093
6,790
5.85
FHLB advances
73,020
2,752
5.04
41,758
495
1.58
Securities sold under agreements to
repurchase
174,783
2,422
1.85
220,703
224
0.14
Other borrowings
79,396
2,109
3.55
21,402
372
2.32
Total interest-bearing liabilities
7,716,436
135,976
2.36
7,011,175
23,277
0.44
Noninterest-bearing liabilities:
Demand deposits
4,178,038
4,819,718
Other liabilities
119,883
99,458
Total liabilities
12,014,357
11,930,351
Shareholders' equity
1,613,091
1,501,512
Total liabilities and shareholders'
equity
$
13,627,448
$
13,431,863
Total net interest income
$
428,024
$
340,127
Net interest margin
4.50
%
3.64
%
1 Average balances include nonaccrual
loans. Interest income includes loan fees of $10.7 million and
$13.0 million for the nine months ended September 30, 2023 and
September 30, 2022, respectively.
2 Non-taxable income is presented on a
fully tax-equivalent basis using a 25.2% tax rate. The
tax-equivalent adjustments were $6.2 million and $5.1 million for
the nine months ended September 30, 2023 and 2022,
respectively.
ENTERPRISE FINANCIAL SERVICES
CORP
CONSOLIDATED FINANCIAL SUMMARY
(unaudited) (continued)
Quarter ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
LOAN PORTFOLIO
Commercial and industrial
$
4,448,535
$
4,360,862
$
4,032,189
$
3,859,882
$
3,709,893
Commercial real estate
4,794,355
4,802,293
4,699,302
4,628,371
4,438,647
Construction real estate
723,796
671,573
663,264
611,565
583,649
Residential real estate
376,120
368,867
364,059
395,537
397,450
Other
274,014
309,028
253,104
241,783
225,348
Total loans
$
10,616,820
$
10,512,623
$
10,011,918
$
9,737,138
$
9,354,987
DEPOSIT PORTFOLIO
Noninterest-bearing demand accounts
$
3,852,486
$
3,880,561
$
4,192,523
$
4,642,732
$
4,642,539
Interest-bearing demand accounts
2,749,598
2,629,339
2,395,901
2,256,295
2,270,898
Money market and savings accounts
3,837,145
3,577,856
3,672,539
3,399,415
3,617,249
Brokered certificates of deposit
695,551
893,808
369,505
118,968
129,039
Other certificates of deposit
775,127
638,296
524,168
411,740
397,869
Total deposits
$
11,909,907
$
11,619,860
$
11,154,636
$
10,829,150
$
11,057,594
AVERAGE BALANCES
Loans
$
10,521,966
$
10,284,873
$
9,795,045
$
9,423,984
$
9,230,738
Securities
2,302,850
2,297,995
2,288,451
2,204,211
2,202,255
Interest-earning assets
13,160,587
12,756,653
12,189,750
11,995,295
12,198,251
Assets
14,068,860
13,671,985
13,131,195
12,986,568
13,158,121
Deposits
11,922,534
11,387,813
10,913,489
11,002,614
11,154,895
Shareholders’ equity
1,648,605
1,621,337
1,568,451
1,490,592
1,494,504
Tangible common equity1
1,197,486
1,169,091
1,115,052
1,035,896
1,038,495
YIELDS (tax equivalent)
Loans
6.80
%
6.64
%
6.33
%
5.87
%
5.10
%
Securities
3.11
3.06
3.03
2.91
2.65
Interest-earning assets
6.12
5.97
5.69
5.25
4.47
Interest-bearing deposits
2.77
2.26
1.56
0.94
0.54
Deposits
1.84
1.46
0.92
0.53
0.31
Subordinated debentures and notes
6.28
6.27
6.28
6.07
5.91
FHLB advances and other borrowed funds
2.76
3.45
2.60
1.39
0.66
Interest-bearing liabilities
2.84
2.40
1.72
1.07
0.67
Net interest margin
4.33
4.49
4.71
4.66
4.10
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)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
ASSET QUALITY
Net charge-offs (recoveries)
$
6,856
$
2,973
$
(264
)
$
2,075
$
478
Nonperforming loans
48,932
16,112
11,972
9,981
18,184
Classified assets
184,393
108,065
110,384
99,122
98,078
Nonperforming loans to total loans
0.46
%
0.15
%
0.12
%
0.10
%
0.19
%
Nonperforming assets to total assets
0.40
%
0.12
%
0.09
%
0.08
%
0.14
%
Allowance for credit losses to total
loans
1.34
%
1.34
%
1.38
%
1.41
%
1.50
%
Allowance for credit losses to
nonperforming loans
290.5
%
877.1
%
1,155.2
%
1,371.9
%
773.1
%
Net charge-offs (recoveries) to average
loans -annualized
0.26
%
0.12
%
(0.01
)%
0.09
%
0.02
%
WEALTH MANAGEMENT
Trust assets under management
$
2,129,408
$
1,992,563
$
1,956,146
$
1,885,394
$
1,691,230
MARKET DATA
Book value per common share
$
41.19
$
41.39
$
40.76
$
38.93
$
36.92
Tangible book value per common share1
$
31.06
$
31.23
$
30.55
$
28.67
$
26.62
Market value per share
$
37.50
$
39.10
$
44.59
$
48.96
$
44.04
Period end common shares outstanding
37,385
37,359
37,311
37,253
37,223
Average basic common shares
37,405
37,347
37,305
37,257
37,241
Average diluted common shares
37,520
37,495
37,487
37,415
37,347
CAPITAL
Total risk-based capital to risk-weighted
assets2
14.1
%
14.1
%
14.3
%
14.2
%
14.2
%
Tier 1 capital to risk-weighted
assets2
12.6
%
12.5
%
12.6
%
12.6
%
12.6
%
Common equity tier 1 capital to
risk-weighted assets2
11.2
%
11.1
%
11.2
%
11.1
%
11.0
%
Tangible common equity to tangible
assets1
8.51
%
8.65
%
8.81
%
8.43
%
7.86
%
1Refer to Reconciliations of Non-GAAP
Financial Measures table for a reconciliation of these measures to
GAAP.
2Capital ratios for the current quarter
are preliminary and subject to, among other things, completion and
filing of the Company’s regulatory reports and ongoing regulatory
review.
ENTERPRISE FINANCIAL SERVICES
CORP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
Quarter ended
Nine months ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
CORE EFFICIENCY RATIO
Net interest income (GAAP)
$
141,639
$
140,692
$
139,529
$
138,835
$
124,290
$
421,860
$
335,068
Tax-equivalent adjustment
2,061
2,062
2,041
1,983
1,854
6,164
5,059
Noninterest income (GAAP)
12,085
14,290
16,898
16,873
9,454
43,273
42,289
Less gain on sale of investment
securities
—
—
381
—
—
381
—
Less gain (loss) on sale of other real
estate owned
—
97
90
—
(22
)
187
(93
)
Core revenue (non-GAAP)
155,785
156,947
157,997
157,691
135,620
470,729
382,509
Noninterest expense (GAAP)
88,644
85,956
80,983
77,149
68,843
255,583
197,067
Less amortization on intangibles
1,118
1,136
1,239
1,299
1,310
3,493
4,068
Core noninterest expense (non-GAAP)
87,526
84,820
79,744
75,850
67,533
252,090
192,999
Core efficiency ratio (non-GAAP)
56.18
%
54.04
%
50.47
%
48.10
%
49.80
%
53.55
%
50.46
%
Quarter ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
TANGIBLE COMMON EQUITY, TANGIBLE BOOK
VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO
Shareholders’ equity
$
1,611,880
$
1,618,233
$
1,592,820
$
1,522,263
$
1,446,218
Less preferred stock
71,988
71,988
71,988
71,988
71,988
Less goodwill
365,164
365,164
365,164
365,164
365,164
Less intangible assets
13,425
14,544
15,680
16,919
18,217
Tangible common equity
$
1,161,303
$
1,166,537
$
1,139,988
$
1,068,192
$
990,849
Less net unrealized losses on HTM
portfolio, after tax of 25.2%
81,367
53,611
48,630
61,435
81,752
Tangible common equity adjusted for
unrealized losses on HTM securities
$
1,079,936
$
1,112,926
$
1,091,358
$
1,006,757
$
909,097
Common shares outstanding
37,385
37,359
37,311
37,253
37,223
Tangible book value per share
$
31.06
$
31.23
$
30.55
$
28.67
$
26.62
Total assets
$
14,025,042
$
13,871,154
$
13,325,982
$
13,054,172
$
12,994,787
Less goodwill
365,164
365,164
365,164
365,164
365,164
Less intangible assets
13,425
14,544
15,680
16,919
18,217
Tangible assets
$
13,646,453
$
13,491,446
$
12,945,138
$
12,672,089
$
12,611,406
Tangible common equity to tangible
assets
8.51
%
8.65
%
8.81
%
8.43
%
7.86
%
Tangible common equity to tangible assets
adjusted for unrealized losses on HTM securities
7.91
%
8.25
%
8.43
%
7.94
%
7.21
%
Quarter Ended
Nine months ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY (ROATCE)
Average shareholder’s equity
$
1,648,605
$
1,621,337
$
1,568,451
$
1,490,592
$
1,494,504
$
1,613,091
$
1,501,512
Less average preferred stock
71,988
71,988
71,988
71,988
71,988
71,988
71,988
Less average goodwill
365,164
365,164
365,164
365,164
365,164
365,164
365,164
Less average intangible assets
13,967
15,094
16,247
17,544
18,857
15,094
20,181
Average tangible common equity
$
1,197,486
$
1,169,091
$
1,115,052
$
1,035,896
$
1,038,495
$
1,160,845
$
1,044,179
Net income available to common
shareholders (GAAP)
$
43,727
$
48,190
$
54,800
$
59,064
$
49,263
$
146,717
$
139,938
ROATCE
14.49
%
16.53
%
19.93
%
22.62
%
18.82
%
16.90
%
17.92
%
Quarter ended
Nine months ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Sep 30, 2023
Sep 30, 2022
CALCULATION OF PRE-PROVISION NET
REVENUE (PPNR)
Net interest income
$
141,639
$
140,692
$
139,529
$
138,835
$
124,290
$
421,860
$
335,068
Noninterest income
12,085
14,290
16,898
16,873
9,454
43,273
42,289
Less gain on sale of investment
securities
—
—
381
—
—
381
—
Less gain (loss) on sale of other real
estate owned
—
97
90
—
(22
)
187
(93
)
Less noninterest expense
88,644
85,956
80,983
77,149
68,843
255,583
197,067
PPNR
$
65,080
$
68,929
$
74,973
$
78,559
$
64,923
$
208,982
$
180,383
Average assets
$
14,068,860
$
13,671,985
$
13,131,195
$
12,986,568
$
13,158,121
$
13,627,448
$
13,431,863
ROAA - GAAP
1.26
%
1.44
%
1.72
%
1.83
%
1.51
%
1.47
%
1.42
%
PPNR ROAA
1.84
%
2.02
%
2.32
%
2.40
%
1.96
%
2.05
%
1.80
%
Quarter ended
($ in thousands)
Sep 30, 2023
Jun 30, 2023
CALCULATION OF ESTIMATED INSURED
DEPOSITS
Estimated uninsured deposits per Call
Report
$
3,886,299
$
3,821,266
Collateralized/affiliate deposits
(455,553
)
(508,100
)
Accrued interest on deposits
(6,231
)
(5,052
)
Adjusted uninsured/uncollateralized
deposits
3,424,515
3,308,114
Estimated insured/collateralized
deposits
8,485,392
8,311,746
Total deposits
$
11,909,907
$
11,619,860
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023311797/en/
Investor Relations: Keene Turner, Senior Executive Vice
President and CFO (314) 512-7233 Media: Steve Richardson, Senior
Vice President (314) 995-5695
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