Enterprise Financial Reports Fourth Quarter and Full Year 2022 Results

Fourth Quarter Results

Net income of $60.0 million, $1.58 per diluted common share
Net interest margin of 4.66%, quarterly increase of 56 basis points
Total loans of $9.7 billion, quarterly increase of $382 million, or 16% annualized
Return on Average Assets (“ROAA”) of 1.83%
Return on Average Tangible Common Equity (“ROATCE”)1 of 22.62%
Tangible common equity to tangible assets1 of 8.43%
Tangible book value per share1 of $28.67, quarterly increase of 7.7%
Increased quarterly dividend $0.01 to $0.25 per common share for the first quarter 2023

2022 Results

Net income of $203.0 million, or $5.31 per diluted common share
ROAA of 1.52%
ROATCE1 of 19.10%
Repurchased 700,473 shares and increased annual dividend 20%

Jim Lally, President and Chief Executive Officer of Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company” or “EFSC”), commented, “We finished 2022 with strong financial results in the fourth quarter and the full year. Our performance is a result of our commitment to building partnerships with our clients, the execution of our strategic initiatives and our diversified business platform. We reported earnings per share (“EPS”) of $1.58 for the fourth quarter and $5.31 for 2022, both of which are records for the Company. We also achieved loan growth of 16% and 8% for the fourth quarter, annualized, and full year, respectively. Our record earnings in the fourth quarter resulted in a 1.83% return on average assets and a 22.62% return on average tangible common equity.1 For the full year, we had a 1.52% return on average assets and a 19.10% return on average tangible common equity.1 As we look to 2023, we are excited for the opportunity to continue the strong momentum we built during 2022.”

1 Return on average tangible common equity, tangible common equity to tangible assets, and tangible book value per share are non-GAAP measures. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.

Full-Year Highlights

Please note comparisons to the prior year are impacted by the acquisition of First Choice Bancorp (“First Choice” or “FCBP”) in the third quarter of 2021.

For 2022, net income was $203.0 million, or $5.31 per diluted share, compared to $133.1 million, or $3.86 per diluted share, in 2021. Pre-provision net revenue (“PPNR”)2 for 2022 was $258.8 million, compared to $207.5 million in 2021. Organic earning-asset growth and expansion of net interest margin due to the increase in market interest rates were the primary contributors to the PPNR increase in 2022. Additionally, 2022 included the first full year of operations from the FCBP acquisition.

The Company’s asset sensitive balance sheet benefited from the increase in market interest rates during 2022. Net interest margin (“NIM”) expanded to 3.89% in 2022, from 3.41% in 2021. The increase in NIM and average interest-earning asset growth of $1.7 billion resulted in total net interest income of $473.9 million in 2022, a 32% increase from $360.2 million in 2021.

Noninterest income was $59.2 million, a decrease of 13% from $67.7 million in 2021. While the increase in interest rates benefited net interest income, higher interest rates resulted in lower mortgage banking and tax credit income. The Company also became subject to the Durbin Amendment limitation on interchange income in 2022, which reduced card services revenue. Total noninterest expense was $274.2 million in 2022, a 12% increase from $245.9 million in 2021. However, the core efficiency ratio3 remained stable at 49.8% in 2022, compared to 49.5% in 2021.

Credit quality remained favorable, with nonperforming assets declining to 0.08% of total assets, from 0.23% at the end of 2021. Net charge-offs were 0.04% of average loans in 2022, compared to 0.14% in 2021. The improvements in credit quality resulted in the allowance for credit losses declining to 1.41% of total loans at the end of 2022, from 1.61% at the end of 2021. Excluding guaranteed portions of loans, which includes Paycheck Protection Program (“PPP”) loans, the allowance to loans ratio was 1.56% and 1.84% at the end of 2022 and 2021, respectively. The allowance for credit losses to nonperforming loans increased year-over-year as nonperforming loans declined $18.0 million, or 64%, from the prior year. A provision benefit of $0.6 million was recorded in 2022, compared to a provision expense of $13.4 million in 2021.

The Company maintained a strong liquidity position in 2022, with total deposits of $10.8 billion, a loan-to-deposit ratio of 89.9% and cash and investment securities of $2.6 billion. This compares to total deposits of $11.3 billion, a loan-to-deposit ratio of 79.5% and cash and investment securities of $3.9 billion in 2021. Total deposits include a significant non-interest bearing deposit portfolio that comprises 42.9% of total deposits at December 31, 2022.

Total shareholders’ equity was $1.5 billion at the end of both 2022 and 2021. Net income of $203.0 million was partially offset by a decline in the fair value of available for sale investment securities of $149.8 million from the increase in market interest rates. In addition, the Company returned $66.5 million to common shareholders through dividends of $33.6 million, or $0.90 per share, and share repurchases of $32.9 million in 2022.

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

3 Core efficiency ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.

Fourth Quarter Highlights

Earnings - Net income in the fourth quarter 2022 was $60.0 million, an increase of $9.8 million compared to the linked quarter and an increase of $9.2 million from the prior year quarter. EPS was $1.58 per diluted common share for the fourth quarter 2022, compared to $1.32 and $1.33 per diluted common share for the linked and prior year quarters, respectively.
PPNR - PPNR2 of $78.6 million in the fourth quarter 2022 increased $13.7 million and $15.2 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 operating revenue, partially offset by an increase in noninterest expense.
Net interest income and NIM - Net interest income of $138.8 million for the fourth quarter 2022 increased $14.5 million and $36.8 million from the linked and prior year quarters, respectively. NIM was 4.66% for the fourth quarter 2022, compared to 4.10% and 3.32% for the linked and prior year quarters, respectively. Net interest income and NIM benefited from higher average loan and investment balances and expanding yields on earning assets, partially offset by higher deposit costs and a decline in average interest-earning cash.
Noninterest income - Noninterest income of $16.9 million for the fourth quarter 2022 increased $7.4 million from the linked quarter and declined $5.8 million from the prior year quarter. The increase from the linked quarter was primarily due to an increase in tax credit income and fees earned on community development investments. Tax credit income in the linked quarter was lower due to the impact from the increase in certain market interest rates on tax credit projects carried at fair value. The decrease in noninterest income from the prior year quarter was primarily due to lower fees from community development investments, tax credit income and card services revenue.
Loans - Total loans increased $382.2 million from the linked quarter to $9.7 billion as of December 31, 2022. Loans grew 16.5%, on an annualized basis, from the linked quarter and 11.3% for the year when excluding PPP loan balances. Average loans totaled $9.4 billion for the fourth quarter 2022, compared to $9.2 billion and $9.0 billion for the linked and prior year quarters, respectively.
Asset quality - The allowance for credit losses to loans was 1.41% at December 31, 2022, compared to 1.50% at September 30, 2022 and 1.61% at December 31, 2021. Nonperforming assets to total assets was 0.08% at December 31, 2022, compared to 0.14% and 0.23% at September 30, 2022 and December 31, 2021, respectively. A provision for credit losses of $2.1 million and $0.7 million was recorded in the fourth quarter 2022 and the linked quarter, respectively. A provision benefit of $3.7 million was recorded in the prior year quarter.
Deposits - Total deposits decreased $228.4 million from $11.1 billion as of the linked quarter to $10.8 billion as of December 31, 2022. The Company has actively managed its deposit rates to remain competitive and to support deposit retention. This has been accomplished while maintaining a relatively low increase in deposit yields compared to the overall increase in market interest rates. The decline in deposits from the linked quarter and the end of the prior year was due primarily to the managed run-off of certain interest-rate sensitive, large balance accounts and reflects a shift in our deposit mix aligned with our disciplined focus on relationship-based, lower-cost deposits. These customers were single service customers and were not part of broader banking relationships. Additionally, certain large deposit outflows experienced in the year were related to customer business transactions. Average deposits totaled $11.0 billion for the fourth quarter 2022, compared to $11.2 billion for both the linked and prior year quarters. At December 31, 2022, noninterest-bearing deposit accounts represented 42.9% of total deposits, and the loan to deposit ratio was 89.9%.
Capital - Total shareholders’ equity was $1.5 billion and the tangible common equity to tangible assets ratio1 was 8.4% at December 31, 2022, compared to 7.9% at September 30, 2022. 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 December 31, 2022. The Company’s common equity tier 1 ratio and total risk-based capital ratio was 11.1% and 14.2%, respectively, at December 31, 2022.

The Company’s Board of Directors approved a quarterly dividend of $0.25 per common share, payable on March 31, 2023 to shareholders of record as of March 15, 2023, an increase of $0.01, or 4%, compared to the fourth quarter 2022. 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) December 15, 2022 to (but excluding) March 15, 2023. The dividend will be payable on March 15, 2023 to shareholders of record on February 28, 2023.

Net Interest Income

Average Balance Sheets

The following table presents, for the periods indicated, certain information related to our average interest-earning assets and interest-bearing liabilities, as well as, the corresponding interest rates earned and paid, all on a tax-equivalent basis.

Quarter ended

December 31, 2022

September 30, 2022

December 31, 2021

($ 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

9,423,984

139,432

5.87

9,230,738

118,642

5.10

9,030,982

98,412

4.32

Securities2

2,204,211

16,191

2.91

2,202,255

14,717

2.65

1,753,159

10,146

2.30

Interest-earning deposits

367,100

3,097

3.35

765,258

4,190

2.17

1,589,008

590

0.15

Total interest-earning assets

11,995,295

158,720

5.25

12,198,251

137,549

4.47

12,373,149

109,148

3.50

Noninterest-earning assets

991,273

959,870

894,044

Total assets

12,986,568

13,158,121

13,267,193

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing demand accounts

2,242,268

4,136

0.73

2,200,619

1,707

0.31

2,383,059

491

0.08

Money market accounts

2,696,417

9,509

1.40

2,791,822

6,067

0.86

2,853,655

1,412

0.20

Savings accounts

775,488

100

0.05

828,747

0.03

776,695

0.03

Certificates of deposit

524,938

1,017

0.77

554,987

844

0.60

616,347

831

0.53

Total interest-bearing deposits

6,239,111

14,762

0.94

6,376,175

8,687

0.54

6,629,756

2,798

0.17

Subordinated debentures and notes

155,359

2,376

6.07

155,225

2,313

5.91

171,453

2,439

5.64

FHLB advances

8,864

104

4.65

25,543

103

1.60

50,000

199

1.58

Securities sold under agreements to repurchase

182,362

282

0.61

198,027

123

0.25

246,525

0.10

Other borrowings

26,993

378

5.56

19,984

179

3.55

24,270

1.39

Total interest-bearing liabilities

6,612,689

17,902

1.07

6,774,954

11,405

0.67

7,122,004

5,581

0.31

Noninterest-bearing liabilities:

Demand deposits

4,763,503

4,778,720

4,537,247

Other liabilities

119,784

109,943

112,546

Total liabilities

11,495,976

11,663,617

11,771,797

Shareholders' equity

1,490,592

1,494,504

1,495,396

Total liabilities and shareholders' equity

12,986,568

13,158,121

13,267,193

Total net interest income

140,818

126,144

103,567

Net interest margin

4.66

4.10

3.32

1 Average balances include nonaccrual loans. Interest income includes loan fees of $3.7 million, $3.6 million, and $6.3 million for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

2 Non-taxable income is presented on a fully tax-equivalent basis using a 25.2% tax rate. The tax-equivalent adjustments were $2.0 million, $1.9 million, and $1.5 million for the three months ended December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

Net interest income for the fourth quarter was $138.8 million, an increase of $14.5 million from the linked quarter and an increase of $36.8 million from the prior year period. Interest income increased during the quarter due to an increase in certain market interest rates combined with organic loan growth, driving the 11.7% increase in net interest income over the linked quarter. The effective federal funds rate for the fourth quarter 2022 was 3.65%, an increase of 145 basis points, compared to the linked quarter, and a 357 basis point increase over the prior year quarter. Average total loans increased $193.2 million, or 8.3% on an annualized basis, from the linked quarter. The increase in loan interest income was partially offset by higher interest expense on the deposit portfolio, which also reflects an increase in interest rates.

The earning asset yield was 5.25% in the fourth quarter 2022, an increase of 78 basis points compared to the linked quarter. The average loan yield was 5.87% in the fourth quarter 2022, an increase of 77 basis points from the linked quarter. The average loan yield increased due to the repricing of variable-rate loans and the origination of new loans at an average rate of 6.64%. Approximately 17% of the variable-rate loan portfolio reprices on the first day of each quarter and thus, interest income in the period did not benefit from the current quarter’s rate movement. These loans will reset early in the first quarter of 2023.

The average investment yield was 2.91%, an increase of 26 basis points from the linked quarter, while the average investment balance remained relatively stable. The investment yield increased due to the purchase of new investments at higher yields. Investments purchased in the fourth quarter 2022 had a tax equivalent average yield of 5.14%. The yield on interest earning cash deposits was 3.35%, an increase of 118 basis points from the linked quarter, while the average balance declined $398.2 million from the linked quarter to $367.1 million in the fourth quarter 2022.

The interest-bearing liability yield was 1.07% in the fourth quarter 2022, an increase of 40 basis points compared to the linked quarter. The average cost of interest-bearing deposits was 0.94% in the fourth quarter 2022, an increase of 40 basis points over the linked quarter. The increase was primarily due to higher rates paid on money market accounts, which increased 54 basis points to 1.40% in the fourth quarter 2022, and interest bearing demand deposits that increased 42 basis points to 0.73% in the current quarter. The total cost of deposits, including noninterest-bearing demand accounts, was 53 basis points during the fourth quarter 2022.

NIM, on a tax equivalent basis, was 4.66% in the fourth quarter 2022, an increase of 56 basis points from the linked quarter and an increase of 134 basis points from the prior year quarter, as changing interest rates had a greater impact on assets with variable interest rates than on deposit costs. The pace of deposit rate increases has continued to lag the increase in loan rates, resulting in a positive impact on our NIM.

Loans

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

Quarter ended

($ in thousands)

December 31,

2022

September 30,

2022

June 30,

2022

March 31,

2022

December 31,

2021

C&I

1,904,654

1,780,677

1,641,740

1,438,607

1,478,689

CRE investor owned

2,176,424

2,106,458

1,977,806

1,982,645

1,955,087

CRE owner occupied

1,174,094

1,133,467

1,118,895

1,138,106

1,112,463

SBA loans*

1,312,378

1,269,065

1,284,279

1,249,929

1,241,449

Sponsor finance*

635,061

650,102

647,180

641,476

508,469

Life insurance premium finance*

817,115

779,606

748,376

695,640

653,028

Tax credits*

559,605

507,681

550,662

518,020

486,881

SBA PPP loans

7,272

13,165

49,175

134,084

271,958

Residential real estate

379,924

381,634

391,867

410,173

430,985

Construction and land development

534,753

513,452

626,577

610,830

625,526

Other

235,858

219,680

232,619

236,563

253,107

Total loans

9,737,138

9,354,987

9,269,176

9,056,073

9,017,642

Total loan yield

5.87

5.10

4.51

4.34

4.32

Variable interest rate loans to total loans

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

*Specialty loan category

Loans totaled $9.7 billion at December 31, 2022, increasing $382.2 million, compared to the linked quarter. Excluding PPP loans, loans grew $388.0 million, or 16.5% on an annualized basis, from the linked quarter. The increase was driven primarily by C&I and CRE loans with an increase of $124.0 million and $110.6 million, respectively. The specialty lending areas also increased, specifically in tax credits, SBA, and life insurance premium finance, partially offset by a small decline in sponsor finance. Average line utilization was approximately 41% for the quarter ended December 31, 2022, compared to 43% and 40% 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)

December 31,

2022

September 30,

2022

June 30,

2022

March 31,

2022

December 31,

2021

Nonperforming loans*

9,981

18,184

19,560

21,160

28,024

Other real estate

269

955

1,459

3,493

Nonperforming assets*

10,250

18,453

20,515

22,619

31,517

Nonperforming loans to total loans

0.10

0.19

0.21

0.23

0.31

Nonperforming assets to total assets

0.08

0.14

0.16

0.17

0.23

Allowance for credit losses to loans

1.41

1.50

1.52

1.54

1.61

Net charge-offs (recoveries)

2,075

478

(175

)

1,521

3,263

*Guaranteed balances excluded

6,708

6,532

6,063

3,954

6,481

Nonperforming assets declined $8.2 million during the fourth quarter 2022 and $21.3 million from the prior year quarter. Net charge-offs to average loans were nine basis points in the fourth quarter 2022, compared to two basis points in the linked quarter and 14 basis points in the prior year quarter. The Company recorded a provision for credit losses of $2.1 million in the fourth quarter 2022, compared to a provision for credit losses of $0.7 million in the linked quarter and a provision benefit of $3.7 million in the prior year quarter when economic forecasts were improving. The provision for credit losses in the fourth quarter primarily relates to growth in loans and unfunded commitments and a modest deterioration of economic forecasts, partially offset by an overall improvement in credit quality.

The allowance for credit losses to loans was 1.41% at December 31, 2022, a decrease of nine basis points from the linked quarter. The decline in nonperforming loans and a related decrease in specific loan reserves, along with a shift in the composition of the loan portfolio to categories with lower reserve levels, drove the decline in the ratio of allowance for credit losses to loans. This decline was partially offset by a modest decline in economic forecasts. Loan growth in the quarter was primarily in commercial real estate and C&I loans that generally have a lower reserve level. The ratio of allowance for credit losses to nonperforming loans increased in the current quarter as nonperforming loans declined $8.2 million and $18.0 million from the linked and prior year quarter, respectively.

Deposits

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

Quarter ended

($ in thousands)

December 31,

2022

September 30,

2022

June 30,

2022

March 31,

2022

December 31,

2021

Noninterest-bearing demand accounts

4,642,732

4,642,539

4,746,478

4,881,043

4,578,436

Interest-bearing demand accounts

2,256,295

2,270,898

2,197,957

2,547,482

2,465,884

Money market and savings accounts

3,399,415

3,617,249

3,562,982

3,678,135

3,691,186

Brokered certificates of deposit

118,968

129,039

129,064

129,017

128,970

Other certificates of deposit

411,740

397,869

456,137

468,458

479,323

Total deposit portfolio

10,829,150

11,057,594

11,092,618

11,704,135

11,343,799

Noninterest-bearing deposits to total deposits

42.9

42.0

42.8

41.7

40.4

Total cost of deposits

0.53

0.31

0.13

0.10

Total deposits at December 31, 2022 were $10.8 billion, a decrease of $228.4 million from September 30, 2022, and a decrease of $514.6 million from December 31, 2021. Deposits declined from the end of the prior year due primarily to the managed run-off of certain interest-rate sensitive, large balance accounts and reflects a shift in the deposit mix aligned with the Company’s disciplined focus on relationship-based, lower-cost deposits. These customers were single service customers and were not part of broader banking relationships.

Noninterest Income and Expense

The following tables present a comparative summary of the major components of noninterest income, other income, and noninterest expense for the periods indicated:

Linked quarter comparison

Prior year comparison

Quarter ended

($ in thousands)

December 31,

2022

September 30,

2022

Increase

(decrease)

December 31,

2021

Increase

(decrease)

Deposit service charges

4,463

4,951

(488

)

(10

) %

3,962

501

Wealth management revenue

2,423

2,432

)

—

2,687

(264

)

(10

) %

Card services revenue

2,345

2,652

(307

)

(12

) %

3,223

(878

)

(27

) %

Tax credit income (loss)

2,389

(3,625

)

6,014

166

4,374

(1,985

)

(45

) %

Other income

5,253

3,044

2,209

8,384

(3,131

)

(37

) %

Total noninterest income

16,873

9,454

7,419

22,630

(5,757

)

(25

) %

Total noninterest income for the fourth quarter 2022 was $16.9 million, an increase of $7.4 million from the linked quarter and a decrease of $5.8 million from the prior year quarter. The increase from the linked quarter was primarily due to an increase in tax credit income and fees earned on community development investments (included in Other income). Tax credit income in the current quarter was higher as market interest rates did not negatively impact tax credits held at fair value and tax credit sales reflected seasonal activity. Conversely, an increase in certain interest rates in the third quarter 2022 increased the discount rate used in the fair value of these projects, resulting in a lower fair value. The decrease in noninterest income from the prior year quarter was primarily due to lower fees from community development investments, lower tax credit income, and lower card services revenue. The Durbin Amendment limits the amount of interchange income the Company can earn on debit card transactions. This limitation went into effect for the Company in the third quarter 2022 and reduced card services revenue.

Linked quarter comparison

Prior year comparison

Quarter ended

($ in thousands)

December 31,

2022

September 30,

2022

Increase

(decrease)

December 31,

2021

Increase

(decrease)

BOLI

773

769

746

Community development investments

2,775

170

2,605

1,532

4,966

(2,191

)

(44

) %

Mortgage banking

—

(45

)

(100

) %

507

(507

)

(100

) %

Private equity fund distribution

433

369

577

573

(140

)

(24

) %

Servicing fees

181

655

(474

)

(72

) %

269

(88

)

(33

) %

Swap fees

189

166

108

Miscellaneous income

902

1,175

(273

)

(23

) %

1,215

(313

)

(26

) %

Total other income

5,253

3,044

2,209

8,384

(3,131

)

(37

) %

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 is primarily earned from servicing SBA loans and may fluctuate based on prepayment experience and changes to the discount rate used in the valuation of the servicing rights. Mortgage banking revenue has declined since the prior year quarter due to higher interest rates, which have reduced sales volume.

Linked quarter comparison

Prior year comparison

Quarter ended

($ in thousands)

December 31,

2022

September 30,

2022

Increase

(decrease)

December 31,

2021

Increase

(decrease)

Employee compensation and benefits

38,175

36,999

1,176

33,488

4,687

Occupancy

4,248

4,497

(249

)

) %

4,510

(262

)

) %

Deposit costs

13,256

7,661

5,595

4,745

8,511

179

Merger-related expenses

—

2,320

(2,320

)

(100

) %

Other expense

21,470

19,686

1,784

18,631

2,839

Total noninterest expense

77,149

68,843

8,306

63,694

13,455

Noninterest expense was $77.1 million for the fourth quarter 2022, compared to $68.8 million for the linked quarter, and $63.7 million for the prior year quarter. Employee compensation and benefits increased $1.2 million from the linked quarter primarily due to higher performance-based incentive accruals, resulting from fourth quarter growth and continued overall improvement in the Company’s financial performance. Deposit costs increased $5.6 million and $8.5 million from the linked and prior year quarters, respectively, primarily due to variable deposit costs in certain of the Company’s specialized deposit businesses that are impacted by higher interest rates, as well as increasing average balances. The increase in noninterest expense of $13.5 million from the prior year quarter was primarily due to an $8.5 million increase in deposit costs that are higher due to growth in specialized deposits and the increase in market interest rates; a $4.7 million increase in employee compensation from merit increases throughout 2021 and 2022 and growth in the associate base; and generally higher operating expenses due to an expanded business platform (e.g. first full year for First Choice). These increases were partially offset by a reduction of $2.3 million in merger costs from the First Choice acquisition recognized in the prior year quarter.

For the fourth quarter 2022, the Company’s efficiency ratio was 49.6%, compared to 51.5% and 51.1% for the linked quarter and prior year quarter, respectively. The Company’s core efficiency ratio3 was 48.1% for the quarter ended December 31, 2022, compared to 49.8% for the linked quarter and 47.5% for the prior year quarter.

3 Core efficiency ratio is a non-GAAP measure. Please refer to discussion and reconciliation of this measure in the accompanying financial tables.

Income Taxes

The Company’s effective tax rate was 22% for both the quarter ended December 31, 2022 and September 30, 2022, compared to 21% for the prior year quarter.

Capital

The following table presents total equity and various EFSC capital ratios for the most recent five quarters:

Quarter ended

Percent

December 31,

2022*

September 30,

2022

June 30,

2022

March 31,

2022

December 31,

2021

Shareholders’ equity

1,522,263

1,446,218

1,447,412

1,473,177

1,529,116

Total risk-based capital to risk-weighted assets

14.2

14.4

14.7

Tier 1 capital to risk weighted assets

12.6

12.5

12.7

13.0

Common equity tier 1 capital to risk-weighted assets

11.1

11.0

10.9

11.0

11.3

Tangible common equity to tangible assets

8.4

7.9

7.8

7.6

8.1

Leverage ratio

10.9

10.4

9.8

9.6

9.7

*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 $1.5 billion at December 31, 2022, an increase of $76.0 million from the linked quarter. The increase from the linked quarter was primarily due to the current quarter’s net income of $60.0 million and a $22.9 million increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income was due to a net fair value increase in the Company’s fixed-rate, available-for-sale investment portfolio from changes in market interest rates during the period, partially offsetting the unrealized losses recognized earlier in 2022. Offsetting these increases were $9.9 million in common and preferred dividends. The Company’s tangible common book value per share increased 7.7% in the current quarter to $28.67 at December 31, 2022, compared to $26.62 and $28.28 in the linked and prior year quarters, respectively. The Company’s regulatory capital ratios continue to exceed the “well-capitalized” regulatory benchmark.

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, financial metrics adjusted for PPP impact, core efficiency ratio, the tangible common equity ratio, and tangible book value per 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, financial metrics adjusted for PPP impact, core efficiency ratio, the tangible common equity ratio, and tangible book value per 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, January 24, 2023. During the call, management will review the fourth quarter 2022 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 1-888-550-5279 (Conference ID #7004515). A recorded replay of the conference call will be available on the website approximately two hours after the call’s completion. Visit https://bit.ly/EFSC4Q2022 to register. The replay will be available for approximately two weeks following the conference call.

About Enterprise Financial Services Corp

Enterprise Financial Services Corp (Nasdaq: EFSC), with approximately $13.1 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, 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, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the First Choice acquisition and other acquisitions.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “opportunity,” “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, including the First Choice acquisition, 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, 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 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 ongoing disruption to the financial market and other economic activity caused by the continuing COVID-19 pandemic, 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, 2021, 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

Year ended

(in thousands, except per share data)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Dec 31, 2022

Dec 31, 2021

EARNINGS SUMMARY

Net interest income

138,835

124,290

109,613

101,165

102,060

473,903

360,194

Provision (benefit) for credit losses

2,123

676

658

(4,068

)

(3,660

)

(611

)

13,385

Noninterest income

16,873

9,454

14,194

18,641

22,630

59,162

67,743

Noninterest expense

77,149

68,843

65,424

62,800

63,694

274,216

245,919

Income before income tax expense

76,436

64,225

57,725

61,074

64,656

259,460

168,633

Income tax expense

16,435

14,025

12,576

13,381

13,845

56,417

35,578

Net income

60,001

50,200

45,149

47,693

50,811

203,043

133,055

Preferred stock dividends

937

938

1,229

—

4,041

—

Net income available to common shareholders

59,064

49,263

44,211

46,464

50,811

199,002

133,055

Diluted earnings per common share

1.58

1.32

1.19

1.23

1.33

5.31

3.86

Return on average assets

1.83

1.51

1.34

1.42

1.52

1.16

Return on average common equity

16.52

13.74

12.65

12.87

13.81

13.95

10.49

ROATCE1

22.62

18.82

17.44

17.49

18.81

19.10

14.18

Net interest margin (tax equivalent)

4.66

4.10

3.55

3.28

3.32

3.89

3.41

Efficiency ratio

49.55

51.47

52.84

52.42

51.08

51.44

57.47

Core efficiency ratio1

48.10

49.81

51.11

50.58

47.45

49.79

49.47

Loans

9,737,138

9,354,987

9,269,176

9,056,073

9,017,642

Average loans

9,423,984

9,230,738

9,109,131

9,005,875

9,030,982

9,193,682

8,055,873

Assets

13,054,172

12,994,787

13,084,506

13,706,769

13,537,358

Average assets

12,986,568

13,158,121

13,528,474

13,614,003

13,267,193

13,319,624

11,467,310

Deposits

10,829,150

11,057,594

11,092,618

11,704,135

11,343,799

Average deposits

11,002,614

11,154,895

11,530,432

11,494,212

11,167,003

11,293,806

9,573,056

Period end common shares outstanding

37,253

37,223

37,206

37,516

37,820

Dividends per common share

0.24

0.23

0.22

0.21

0.20

0.90

0.75

Tangible book value per common share1

28.67

26.62

26.63

27.06

28.28

Tangible common equity to tangible assets1

8.43

7.86

7.80

7.62

8.13

Total risk-based capital to risk-weighted assets

14.2

14.4

14.7

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

Year ended

($ in thousands, except per share data)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Dec 31, 2022

Dec 31, 2021

INCOME STATEMENTS

NET INTEREST INCOME

Interest income

156,737

135,695

116,069

106,581

107,641

515,082

383,230

Interest expense

17,902

11,405

6,456

5,416

5,581

41,179

23,036

Net interest income

138,835

124,290

109,613

101,165

102,060

473,903

360,194

Provision (benefit) for credit losses

2,123

676

658

(4,068

)

(3,660

)

(611

)

13,385

Net interest income after provision (benefit) for credit losses

136,712

123,614

108,955

105,233

105,720

474,514

346,809

NONINTEREST INCOME

Deposit service charges

4,463

4,951

4,749

4,163

3,962

18,326

15,428

Wealth management revenue

2,423

2,432

2,533

2,622

2,687

10,010

10,259

Card services revenue

2,345

2,652

3,514

3,040

3,223

11,551

11,880

Tax credit income (loss)

2,389

(3,625

)

1,186

2,608

4,374

2,558

8,028

Other income

5,253

3,044

2,212

6,208

8,384

16,717

22,148

Total noninterest income

16,873

9,454

14,194

18,641

22,630

59,162

67,743

NONINTEREST EXPENSE

Employee compensation and benefits

38,175

36,999

36,028

35,827

33,488

147,029

124,904

Occupancy

4,248

4,497

4,309

4,586

4,510

17,640

16,286

Branch closure expenses

—

3,441

Merger-related expenses

—

2,320

—

22,082

Other expense

34,726

27,347

25,087

22,387

23,376

109,547

79,206

Total noninterest expense

77,149

68,843

65,424

62,800

63,694

274,216

245,919

Income before income tax expense

76,436

64,225

57,725

61,074

64,656

259,460

168,633

Income tax expense

16,435

14,025

12,576

13,381

13,845

56,417

35,578

Net income

60,001

50,200

45,149

47,693

50,811

203,043

133,055

Preferred stock dividends

937

938

1,229

—

4,041

—

Net income available to common shareholders

59,064

49,263

44,211

46,464

50,811

199,002

133,055

Basic earnings per common share

1.59

1.32

1.19

1.23

1.33

5.32

3.86

Diluted earnings per common share

1.58

1.32

1.19

1.23

1.33

5.31

3.86

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

($ in thousands)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

BALANCE SHEETS

ASSETS

Cash and due from banks

229,580

264,078

271,763

252,706

209,177

Interest-earning deposits

69,808

489,825

680,343

1,735,708

1,819,508

Debt and equity investments

2,309,512

2,171,942

2,172,318

1,993,927

1,855,583

Loans held for sale

1,228

785

4,615

4,270

6,389

Loans

9,737,138

9,354,987

9,269,176

9,056,073

9,017,642

Allowance for credit losses

(136,932

)

(140,572

)

(140,546

)

(139,212

)

(145,041

)

Total loans, net

9,600,206

9,214,415

9,128,630

8,916,861

8,872,601

Fixed assets, net

42,985

43,882

46,028

46,900

47,915

Goodwill

365,164

Intangible assets, net

16,919

18,217

19,528

20,855

22,286

Other assets

418,770

426,479

396,117

370,378

338,735

Total assets

13,054,172

12,994,787

13,084,506

13,706,769

13,537,358

LIABILITIES AND SHAREHOLDERS’ EQUITY

Noninterest-bearing deposits

4,642,732

4,642,539

4,746,478

4,881,043

4,578,436

Interest-bearing deposits

6,186,418

6,415,055

6,346,140

6,823,092

6,765,363

Total deposits

10,829,150

11,057,594

11,092,618

11,704,135

11,343,799

Subordinated debentures and notes

155,433

155,298

155,164

155,031

154,899

FHLB advances

100,000

—

50,000

Other borrowings

324,119

197,422

226,695

228,846

353,863

Other liabilities

123,207

138,255

112,617

95,580

105,681

Total liabilities

11,531,909

11,548,569

11,637,094

12,233,592

12,008,242

Shareholders’ equity:

Preferred stock

71,988

Common stock

373

372

395

398

Treasury stock

—

(73,528

)

(73,528

)

Additional paid-in capital

982,660

979,543

976,684

1,010,446

1,018,799

Retained earnings

597,574

547,506

506,849

523,136

492,682

Accumulated other comprehensive (loss) income

(130,332

)

(153,191

)

(108,481

)

(59,260

)

18,777

Total shareholders’ equity

1,522,263

1,446,218

1,447,412

1,473,177

1,529,116

Total liabilities and shareholders’ equity

13,054,172

12,994,787

13,084,506

13,706,769

13,537,358

Year ended

December 31, 2022

December 31, 2021

($ in thousands)

Average

Balance

Interest

Income/

Expense

Average

Yield/

Rate

Average

Balance

Interest

Income/

Expense

Average

Yield/

Rate

Assets

Interest-earning assets:

Loans1, 2

9,193,682

456,703

4.97

8,055,873

349,112

4.33

Securities2

2,100,687

54,822

2.61

1,567,993

37,773

2.41

Interest-earning deposits

1,074,165

10,599

0.99

1,084,853

1,496

0.14

Total interest-earning assets

12,368,534

522,124

4.22

10,708,719

388,381

3.63

Noninterest-earning assets

951,090

758,591

Total assets

13,319,624

11,467,310

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing demand accounts

2,318,363

7,038

0.30

2,122,752

1,614

0.08

Money market accounts

2,781,579

19,306

0.69

2,557,836

4,669

0.18

Savings accounts

819,043

305

0.04

724,768

225

0.03

Certificates of deposit

569,272

3,509

0.62

570,496

4,160

0.73

Total interest-bearing deposits

6,488,257

30,158

0.46

5,975,852

10,668

0.18

Subordinated debentures and notes

155,160

9,166

5.91

195,686

10,960

5.60

FHLB advances

33,467

599

1.79

59,945

803

1.34

Securities sold under agreements to repurchase

211,039

487

0.23

225,895

235

0.10

Other borrowings

22,812

769

3.37

26,427

370

1.40

Total interest-bearing liabilities

6,910,735

41,179

0.60

6,483,805

23,036

0.36

Noninterest-bearing liabilities:

Demand deposits

4,805,549

3,597,204

Other liabilities

104,581

109,148

Total liabilities

11,820,865

10,190,157

Shareholders' equity

1,498,759

1,277,153

Total liabilities and shareholders' equity

13,319,624

11,467,310

Total net interest income

480,945

365,345

Net interest margin

3.89

3.41

1 Average balances include nonaccrual loans. Interest income includes loan fees of $16.7 million and $28.4 million for the years ended December 31, 2022 and December 31, 2021, respectively. Loan fees in 2022 and 2021 included PPP fees of $4.1 million and $21.7 million, respectively.

2 Non-taxable income is presented on a fully tax-equivalent basis using a 25.2% tax rate. The tax-equivalent adjustments were $7.0 million and $5.1 million for the years ended December 31, 2022 and December 31, 2021, respectively.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

($ in thousands)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

LOAN PORTFOLIO

Commercial and industrial

3,859,882

3,709,893

3,596,701

3,398,723

3,392,375

Commercial real estate

4,628,371

4,438,647

4,294,375

4,278,138

4,176,928

Construction real estate

611,565

583,649

724,163

702,630

734,073

Residential real estate

395,537

397,450

413,727

432,639

454,052

Other

241,783

225,348

240,210

243,943

260,214

Total loans

9,737,138

9,354,987

9,269,176

9,056,073

9,017,642

DEPOSIT PORTFOLIO

Noninterest-bearing demand accounts

4,642,732

4,642,539

4,746,478

4,881,043

4,578,436

Interest-bearing demand accounts

2,256,295

2,270,898

2,197,957

2,547,482

2,465,884

Money market and savings accounts

3,399,415

3,617,249

3,562,982

3,678,135

3,691,186

Brokered certificates of deposit

118,968

129,039

129,064

129,017

128,970

Other certificates of deposit

411,740

397,869

456,137

468,458

479,323

Total deposits

10,829,150

11,057,594

11,092,618

11,704,135

11,343,799

AVERAGE BALANCES

Loans

9,423,984

9,230,738

9,109,131

9,005,875

9,030,982

Securities

2,204,211

2,202,255

2,068,119

1,923,969

1,753,159

Interest-earning assets

11,995,295

12,198,251

12,579,211

12,711,116

12,373,149

Assets

12,986,568

13,158,121

13,528,474

13,614,003

13,267,193

Deposits

11,002,614

11,154,895

11,530,432

11,494,212

11,167,003

Shareholders’ equity

1,490,592

1,494,504

1,474,267

1,536,221

1,495,396

Tangible common equity1

1,035,896

1,038,495

1,016,940

1,077,529

1,071,902

YIELDS (tax equivalent)

Loans

5.87

5.10

4.51

4.34

4.32

Securities

2.91

2.65

2.51

2.31

2.30

Interest-earning assets

5.25

4.47

3.76

3.45

3.50

Interest-bearing deposits

0.94

0.54

0.24

0.17

Deposits

0.53

0.31

0.13

0.10

Subordinated debentures

6.07

5.91

5.84

5.81

5.64

FHLB advances and other borrowed funds

1.39

0.66

0.51

0.41

0.43

Interest-bearing liabilities

1.07

0.67

0.37

0.30

0.31

Net interest margin

4.66

4.10

3.55

3.28

3.32

1 Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

PPP details:

Quarter ended

($ in thousands, except per share data)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

PPP loans outstanding, net of deferred fees

7,272

13,165

49,175

134,084

271,958

Average PPP loans outstanding, net

11,546

26,113

89,152

194,382

365,295

PPP interest and fee income recognized

471

1,557

2,858

4,864

PPP deferred fees remaining

119

524

1,851

4,215

PPP average yield

2.78

7.16

7.01

5.96

5.28

Quarter ended

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Financial Metrics:

Reported

Excluding

PPP*

Reported

Excluding

PPP*

Reported

Excluding

PPP*

Reported

Excluding

PPP*

EPS

1.32

1.31

1.19

1.15

1.23

1.17

1.33

1.23

ROAA

1.51

1.34

1.31

1.42

1.38

1.52

1.45

PPNR ROAA*

1.96

1.95

1.73

1.70

1.64

1.89

1.80

Tangible common equity/tangible assets*

7.86

7.80

7.83

7.62

7.70

8.13

8.31

Leverage ratio

10.4

9.8

9.6

9.7

10.0

NIM

4.10

3.55

3.52

3.28

3.23

3.32

3.26

* Non-GAAP measures. Refer to discussion and reconciliation of these measures in the accompanying financial tables.

Table only includes periods where PPP impacted reported results. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable.

ENTERPRISE FINANCIAL SERVICES CORP

CONSOLIDATED FINANCIAL SUMMARY (unaudited) (continued)

Quarter ended

(in thousands, except per share data)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

ASSET QUALITY

Net charge-offs (recoveries)

2,075

478

(175

)

1,521

3,263

Nonperforming loans

9,981

18,184

19,560

21,160

28,024

Classified assets

99,122

98,078

96,801

93,199

100,797

Nonperforming loans to total loans

0.10

0.19

0.21

0.23

0.31

Nonperforming assets to total assets

0.08

0.14

0.16

0.17

0.23

Allowance for credit losses to loans

1.41

1.50

1.52

1.54

1.61

Allowance for credit losses to loans, excluding guaranteed loans

1.56

1.67

1.69

1.73

1.84

Allowance for credit losses to nonperforming loans

1,371.9

773.1

718.5

657.9

517.6

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

0.09

0.02

(0.01

) %

0.07

0.14

WEALTH MANAGEMENT

Trust assets under management

1,885,394

1,691,230

1,757,228

1,943,428

2,083,543

SHARE DATA

Book value per common share

38.93

36.92

36.97

37.35

38.53

Tangible book value per common share1

28.67

26.62

26.63

27.06

28.28

Market value per share

48.96

44.04

41.50

47.31

47.09

Period end common shares outstanding

37,253

37,223

37,206

37,516

37,820

Average basic common shares

37,257

37,241

37,243

37,788

38,228

Average diluted common shares

37,415

37,348

37,282

37,858

38,311

CAPITAL2

Total risk-based capital to risk-weighted assets

14.2

14.4

14.7

Tier 1 capital to risk-weighted assets

12.6

12.5

12.7

13.0

Common equity tier 1 capital to risk-weighted assets

11.1

11.0

10.9

11.0

11.3

Tangible common equity to tangible assets1

8.4

7.9

7.8

7.6

8.1

1 Refer to Reconciliations of Non-GAAP Financial Measures table for a reconciliation of these measures to GAAP.

2 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.

ENTERPRISE FINANCIAL SERVICES CORP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Quarter ended

Year ended

($ in thousands)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Dec 31, 2022

Dec 31, 2021

CORE EFFICIENCY RATIO*

Net interest income (GAAP)

138,835

124,290

109,613

101,165

102,060

473,903

360,194

Tax equivalent adjustment

1,983

1,854

1,699

1,506

1,507

7,042

5,151

Net interest income - FTE (non-GAAP)

140,818

126,144

111,312

102,671

103,567

480,945

365,345

Noninterest income

16,873

9,454

14,194

18,641

22,630

59,162

67,743

Less gain (loss) on sale of other real estate owned

—

(22

)

(90

)

—

(93

)

884

Total core revenue (non-GAAP)

157,691

135,576

125,416

121,331

126,197

540,014

433,972

Noninterest expense (GAAP)

77,149

68,843

65,424

62,800

63,694

274,216

245,919

Less amortization of intangibles

1,299

1,310

1,328

1,430

1,491

5,367

5,691

Less branch closure expenses

—

3,441

Less merger-related expenses

—

2,320

—

22,082

Core noninterest expense (non-GAAP)

75,850

67,533

64,096

61,370

59,883

268,849

214,705

Core efficiency ratio (non-GAAP)

48.10

49.81

51.11

50.58

47.45

49.79

49.47

*In the fourth quarter 2022, the core efficiency calculation was modified to include tax equivalent income and exclude amortization of intangibles. The prior period calculations have been adjusted to conform to the current period presentation.

Quarter ended

($ in thousands, except per share data)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

TANGIBLE BOOK VALUE PER SHARE AND TANGIBLE COMMON EQUITY RATIO

Shareholders’ equity

1,522,263

1,446,218

1,447,412

1,473,177

1,529,116

Less preferred stock

71,988

Less goodwill

365,164

Less intangible assets

16,919

18,217

19,528

20,855

22,286

Tangible common equity

1,068,192

990,849

990,732

1,015,170

1,069,678

Period end shares outstanding

37,253

37,223

37,206

37,516

37,820

Tangible book value per share

28.67

26.62

26.63

27.06

28.28

Total assets

13,054,172

12,994,787

13,084,506

13,706,769

13,537,358

Less goodwill

365,164

Less intangible assets

16,919

18,217

19,528

20,855

22,286

Tangible assets

12,672,089

12,611,406

12,699,814

13,320,750

13,149,908

Tangible common equity to tangible assets

8.43

7.86

7.80

7.62

8.13

Quarter Ended

Year ended

($ in thousands)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Dec 31, 2022

Dec 31, 2021

RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE)

Average shareholder’s equity

1,490,592

1,494,504

1,474,267

1,536,221

1,495,396

1,498,759

1,277,153

Less average preferred stock

71,988

35,322

71,988

8,903

Less average goodwill

365,164

307,614

Less average intangible assets

17,544

18,857

20,175

21,540

23,008

19,516

22,460

Average tangible common equity

1,035,896

1,038,495

1,016,940

1,077,529

1,071,902

1,042,091

938,176

Net income available to common shareholders

59,064

49,263

44,211

46,464

50,811

199,002

133,055

ROATCE

22.62

18.82

17.44

17.49

18.81

19.10

14.18

Quarter ended

Year ended

($ in thousands)

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Dec 31, 2022

Dec 31, 2021

CALCULATION OF PRE-PROVISION NET REVENUE

Net interest income

138,835

124,290

109,613

101,165

102,060

473,903

360,194

Noninterest income

16,873

9,454

14,194

18,641

22,630

59,162

67,743

Less noninterest expense

77,149

68,843

65,424

62,800

63,694

274,216

245,919

Branch closure expenses

—

3,441

Merger-related expenses

—

2,320

—

22,082

PPNR

78,559

64,901

58,383

57,006

63,316

258,849

207,541

Average assets

12,986,568

13,158,121

13,528,474

13,614,003

13,267,193

13,319,624

11,467,310

ROAA - GAAP net income

1.83

1.51

1.34

1.42

1.52

1.16

PPNR ROAA

2.40

1.96

1.73

1.70

1.89

1.94

1.81

Quarter Ended

($ in thousands, except per share data)

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

IMPACT OF PAYCHECK PROTECTION PROGRAM*

Net income (GAAP)

50,200

45,149

47,693

50,811

PPP interest and fee income

(471

)

(1,557

)

(2,858

)

(4,864

)

Related tax effect

119

392

720

1,226

Adjusted net income (non-GAAP)

49,848

43,984

45,555

47,173

Preferred stock dividends

937

938

1,229

—

Adjusted net income available to common shareholders (non-GAAP)

48,911

43,046

44,326

47,173

Average diluted common shares

37,348

37,282

37,858

38,311

EPS (GAAP) net income available to common shareholders

1.32

1.19

1.23

1.33

EPS - Adjusted net income available to common shareholders

1.31

1.15

1.17

1.23

Average Assets (GAAP)

13,158,121

13,528,474

13,614,003

13,267,193

Average PPP loans, net

(26,113

)

(89,152

)

(194,382

)

(365,295

)

Adjusted average assets (non-GAAP)

13,132,008

13,439,322

13,419,621

12,901,898

ROAA (GAAP) net income

1.51

1.34

1.42

1.52

ROAA - Adjusted net income, adjusted average assets

1.51

1.31

1.38

1.45

PPNR (non-GAAP) (see reconciliation above)

64,901

58,383

57,006

63,316

PPP interest and fee income

(471

)

(1,557

)

(2,858

)

(4,864

)

Adjusted PPNR (non-GAAP)

64,430

56,826

54,148

58,452

PPNR ROAA

1.96

1.73

1.70

1.89

PPNR ROAA - adjusted PPNR, adjusted average assets

1.95

1.70

1.64

1.80

Tangible assets (non-GAAP) (see reconciliation above)

12,611,406

12,699,814

13,320,750

13,149,908

PPP loans outstanding, net

(13,165

)

(49,175

)

(134,084

)

(271,958

)

Adjusted tangible assets (non-GAAP)

12,598,241

12,650,639

13,186,666

12,877,950

Tangible common equity (non-GAAP) (see reconciliation above)

990,849

990,732

1,015,170

1,069,678

Tangible common equity to tangible assets

7.86

7.80

7.62

8.13

Tangible common equity to tangible assets - adjusted tangible assets

7.86

7.83

7.70

8.31

Average assets for leverage ratio

12,918,632

13,265,790

13,273,520

12,915,944

Average PPP loans, net

(26,113

)

(89,152

)

(194,382

)

(365,295

)

Adjusted average assets for leverage ratio (non-GAAP)

12,892,519

13,176,638

13,079,138

12,550,649

Tier 1 capital

1,340,252

1,295,791

1,271,342

1,257,462

Leverage ratio

10.4

9.8

9.6

9.7

Leverage ratio - adjusted average assets for leverage ratio

10.4

9.8

9.7

10.0

Net interest income - tax equivalent

126,144

111,312

102,671

103,567

PPP interest and fee income

(471

)

(1,557

)

(2,858

)

(4,864

)

Adjusted net interest income - tax equivalent

125,673

109,755

99,813

98,703

Average earning assets (GAAP)

12,198,251

12,579,211

12,711,116

12,373,149

Average PPP loans, net

(26,113

)

(89,152

)

(194,382

)

(365,295

)

Adjusted average earning assets (non-GAAP)

12,172,138

12,490,059

12,516,734

12,007,854

Net interest margin - tax equivalent

4.10

3.55

3.28

3.32

Net interest margin - tax equivalent - adjusted net interest income, adjusted average earning assets

4.10

3.52

3.23

3.26

Loans (GAAP)

9,354,987

9,269,176

9,056,073

9,017,642

PPP and other guaranteed loans, net

(924,605

)

(967,396

)

(1,023,509

)

(1,151,895

)

Adjusted loans (non-GAAP)

8,430,382

8,301,780

8,032,564

7,865,747

Allowance for credit losses

140,572

140,546

139,212

145,041

Allowance for credit losses/loans (GAAP)

1.50

1.52

1.54

1.61

Allowance for credit losses/loans - adjusted loans

1.67

1.69

1.73

1.84

*Table only includes periods where PPP impacted reported results. Calculations not adjusted for increase in average deposits or increase in deposit expense, as applicable.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005718/en/

Investor Relations: Keene Turner, Executive Vice President and CFO (314) 512-7233 Media: Steve Richardson, Senior Vice President (314) 995-5695

Enterprise Financial Ser... (NASDAQ:EFSC)
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